SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange
Act of 1934.
September 29, 1999
Date of Report (Date of earliest event reported)
INTERWEST HOME MEDICAL, INC.
(Exact name of Registrant as specified in its charter)
Utah 0-14189 87-0462042
------------------------ ------------------- ------------------
State of Incorporation Commission File No. IRS Employer
Identification No.
235 East 6100 South
Salt Lake City, UT 84047
(Address of principal executive offices)
(801) 261-5100
(Registrant's telephone number)
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Item 2. Acquisition or Disposition of Assets
General
Interwest Home Medical, Inc's. (the "Company") revenue and income are
derived from the sale and rental of the home medical equipment and services. The
Company's products and services include home oxygen and respiratory care
services, home medical equipment, supplies, and rehabilitation products and
services.
On August 5, 1999, the Company entered into an Asset Purchase Agreement
(the "Agreement") to purchase the business and substantially all of the assets
(the "Assets") related to the Denver, Colorado operations of HealthCor Holdings,
Inc. ("HealthCor"). The sellers of the assets included HealthCor and two of its
affiliated companies. HealthCor is currently in a bankruptcy reorganization and
the Agreement, and the closing of the sale of the Assets, were approved by the
order of the United States Bankruptcy Court, For the North District of Texas,
Dallas Division on September 21, 1999.
The sale and purchase of the assets as agreed to in the Agreement closed
on September 29, 1999. The sale was effective as of August 1, 1999.
Additional Information
The description contained herein of the sale and purchase of the Assets,
the Assets Purchase Agreement and other related agreements is qualified in its
entirety by reference to the Asset Purchase Agreement attached hereto as an
exhibit.
Purchase Price. The total purchase price paid by the Company for the
Assets was $4,100,000. The Company paid $3,700,000 of the purchase price in
cash. The remaining $400,000 was paid by delivery of a Promissory Note. The Note
is payable in full on March 29, 1999. The Note is secured by the Assets.
Representations and Warranties. The Agreement contains standard
representations and warranties by the parties.
Non- Competition. As a condition to the closing of the Agreement, the
sellers entered into a Non-Competition Agreement pursuant to which they agreed
not to engage, directly or indirectly, in the home medical equipment and durable
medical equipment business in the State of Colorado for a period of five years
from the closing of the Agreement.
Item 7. Financial Statements and Exhibits
(a) Financial Statements. No financial statements are required to be filed
in connection with the acquisition reported on in this Form 8-K.
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(B) Exhibits. Attached hereto is a copy of the executed Asset Purchase
Agreement. All schedules and exhibits thereto have been omitted.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: October 11, 1999 INTERWEST HOME MEDICAL, INC..
By /s/ James E. Robinson
James E. Robinson, President
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ASSET PURCHASE AGREEMENT
By and Between
HEALTHCOR OXYGEN & MEDICAL EQUIPMENT, INC.,
a Texas Corporation,
HEALTHCOR HOLDINGS, INC.,
a Delaware Corporation, and
HEALTHCOR, INC.,
a Delaware Corporation,
as Sellers,
and
INTERWEST MEDICAL EQUIPMENT DISTRIBUTORS, INC.,
a Utah Corporation,
as Purchaser,
Dated August 5, 1999
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Page
TABLE OF CONTENTS
Page
ARTICLE I ARTICLE I............................................DEFINITIONS1
ARTICLE II PURCHASE AND SALE OF ASSETS....................................3
2.1 Purchase and Sale of Assets......................................3
2.2 Excluded Assets..................................................4
2.3 Assumed Liabilities..............................................4
2.4 Employees........................................................6
2.5 Assumption of Executory Contracts................................6
2.6 Bankruptcy Court Approval........................................6
ARTICLE III PURCHASE PRICE; CLOSING........................................6
3.1 Purchase Price...................................................6
3.2 Release of Funds in Escrow Accounts..............................7
3.3 Execution and Closing............................................7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER.......................8
4.1 Organization; Good Standing......................................8
4.2 Approvals and Consents; Non-Contravention........................8
4.3 Transactions with Affiliates.....................................9
4.4 Title to Assets..................................................9
4.5 Condition of Assets..............................................9
4.6 Governmental Licenses...........................................10
4.7 Taxes...........................................................10
4.8 Litigation......................................................11
4.9 Reports and Governmental Compliance.............................11
4.10 Employee Benefit Plans; Labor Controversies.....................12
4.11 Financial Statements and Records of the Seller..................12
4.12 Absence of Certain Changes......................................12
4.13 Material Undisclosed Liabilities................................13
4.14 Contracts and Agreements........................................13
4.15 Finders and Brokers.............................................14
4.16 Intellectual Property...........................................14
4.17 Absence of Adverse Contracts....................................14
4.18 Books and Records...............................................14
4.19 No Inducement...................................................15
4.20 Environmental, Health, and Safety Matters.......................15
4.21 No Liability to Third Party Payors..............................15
4.22 Information.....................................................15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER...................15
5.1 Organization and Good Standing..................................15
5.2 Due Authorization...............................................15
5.3 Approvals and Consents; Non-Contravention.......................15
5.4 Brokers.........................................................16
5.5 Financing.......................................................16
ARTICLE VI CERTAIN COVENANTS AND AGREEMENTS..............................16
6.1 Access..........................................................16
6.2 Retention of Records............................................17
6.3 Best Efforts; Consents..........................................17
6.4 Public Announcements............................................17
6.5 Ordinary Course of Business.....................................18
6.6 Section 363 Motion..............................................18
6.7 Certain Governmental Filings....................................18
6.8 Sales Taxes Relating to Sale and Purchase of Assets.............18
6.9 Breakup Fee.....................................................18
ARTICLE VII CONDITIONS TO PURCHASER'S CLOSING.............................19
7.1 Representations, Etc............................................19
7.2 Consents........................................................19
7.3 No Adverse Litigation...........................................19
7.4 Material Adverse Changes........................................19
7.5 Closing Deliveries..............................................19
7.6 Certificate of Sellers..........................................19
7.7 Bankruptcy Court Approval.......................................20
7.8 Termination of Certain Assumed Contracts........................20
ARTICLE VIII CONDITIONS TO THE SELLER'S CLOSING............................20
8.1 Representations, Etc............................................20
8.2 Consents........................................................20
8.3 No Adverse Litigation...........................................20
8.4 Closing Deliveries..............................................20
8.5 Certificate of Purchaser........................................20
8.6 Bankruptcy Court Approval.......................................21
ARTICLE IX SURVIVAL......................................................21
ARTICLE X INDEMNIFICATION OF THE SELLER.................................21
ARTICLE XI INDEMNIFICATION OF PURCHASER..................................21
ARTICLE XII GENERAL RULES REGARDING INDEMNIFICATION.......................22
12.1 Indemnification Procedures......................................22
12.2 Floor and Ceiling Provisions....................................23
12.3 Other Remedies..................................................24
ARTICLE XIII TERMINATION...................................................24
13.1 Termination Rights..............................................24
13.2 Effect of Termination...........................................24
ARTICLE XIV MISCELLANEOUS PROVISIONS......................................25
14.1 Expenses........................................................25
14.2 Amendment.......................................................25
14.3 Notices.........................................................25
14.4 Assignment......................................................25
14.5 Counterparts....................................................25
14.6 Headings........................................................25
14.7 Entire Agreement................................................25
14.8 Waiver..........................................................25
14.9 Governing Law; Dispute Resolution...............................25
14.10 Intended Beneficiaries..........................................26
14.11 Mutual Contribution.............................................26
14.12 Number and Gender...............................................26
14.13 Severability....................................................26
14.14 Certain References..............................................26
14.15 Time of the Essence.............................................27
Schedules
2.2 Excluded Assets
2.3 Assumed Liabilities
2.5 Assumption of Executory Contracts
IV Seller's Disclosure Schedule
V Purchaser's Disclosure Schedule
Exhibits
Exhibit A - Earnest Money Escrow Agreement
Exhibit B - Purchaser's Promissory Note
Exhibit C - Bill of Sale and Assignment
Exhibit D - Confidentiality Agreement and Non-Competition Agreement
Exhibit E - Liabilities Undertaking
Exhibit F - Security Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of August 5,
1999, is by and between HealthCor Oxygen & Medical Equipment, Inc., a Texas
corporation ("HOME"), HealthCor Holdings, Inc., a Delaware corporation,
HealthCor, Inc., a Delaware corporation (together with HOME, the "Sellers" and
each, individually, a "Seller") and Interwest Medical Equipment Distributors,
Inc., a Utah corporation ("Purchaser").
PRELIMINARY STATEMENTS:
1. On July 27, 1999, the Sellers filed (the "Filing") voluntary petitions
pursuant to Chapter 11 of the United States Bankruptcy Code (the "Code"), which
Filing requires the reviewing bankruptcy court (the "Bankruptcy Court") to
approve the terms of this Agreement and the transactions and ancillary
agreements contemplated hereby pursuant to Section 363 of the Code (the "Final
Court Approval").
2. The Sellers desire to sell, transfer and assign to the Purchaser, and
the Purchaser desires to purchase and acquire from the Sellers, certain assets
of the Sellers related to the Sellers' home medical equipment and durable
medical equipment (HME/DME) business in Denver, Colorado (the "Business") which
are included in the Sellers' bankruptcy estate.
3. The terms and provisions of this Agreement are expressly subject to
Final Court Approval and the Closing (as such term is defined below) is
conditioned upon the receipt of such Final Court Approval.
4. In anticipation of an interim period between the Filing and receipt of
the Final Court Approval, Purchaser and HOME have also executed that certain
Management Letter Agreement dated as of July 28, 1999, in order to preserve the
ongoing value of the Acquired Assets (as such term is defined below) by
providing for the continuity of services by Purchaser and as consideration for
Purchaser to enter into this Agreement (the "Management Agreement").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and certain other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I - DEFINITIONS
The following definitions shall apply in connection with the
interpretation of this Agreement:
"Acquired Assets" - See Section 2.1.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Assumed Contracts" - See Section 2.5.
"Assumed Liabilities"- See Section 2.3.
"Bankruptcy Court" - See Preliminary Statement 1.
"Business" - See Preliminary Statement 2.
"Closing and Closing Date" - See Section 3.3.
"Code" - See Preliminary Statement 1.
"Disclosure Schedule" - See Article IV.
"Effective Date" means the date the Management Agreement commences in
accordance with its terms.
"Encumbrance" - See Section 2.1.
"Exclude Asset" - See Section 2.2.
"Excluded Liabilities" - See Section 2.3.
"Environmental, Health, and Safety Requirements" means all federal, state,
local and foreign statutes, regulations, ordinances and similar provisions
having the force or effect of law, all judicial and administrative orders and
determinations, and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation.
"Filing" - See Preliminary Statement 1.
"Final Court Approval" - See Preliminary Statement 1.
"Government Licenses" - See Section 4.6.
"HOME" - See the introductory paragraph to this Agreement.
"Knowledge" means actual knowledge after reasonable investigation.
"Intellectual Property" - See Section 4.16.
"Interim Financial Statements" See Section 4.11.
"Interim Period" means the forty-five (45) day period following the Filing.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Management Agreement" - See Preliminary Statement 4.
"Material Contracts" - See Section 4.14.
"Permitted Encumbrances" - See Section 2.3.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Transactions" means the sale and purchase of the Acquired Assets provided
for and agreed to herein and all other matters and agreements provided for
herein.
"Transaction Agreements" - means this Agreement, the Earnest Money Escrow
Agreement, the Purchaser's Note, the Bill of Sale and Assignment,
Confidentiality and Non-Competition Agreement, the Security Agreement, the
Liability Undertaking and any other agreements contemplated hereby or thereby.
ARTICLE II - PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale of Assets. Subject to the terms and conditions and in
reliance upon the representations and warranties of the Sellers contained in
this Agreement, at the Closing, the Sellers shall assign, transfer, convey and
deliver to the Purchaser, and the Purchaser shall purchase from the Sellers, all
of the Sellers' right, title and interest in, to and under all of the assets of
the Sellers used, useful or necessary to the operation of the Business as
presently conducted ("Acquired Assets"). The Acquired Assets include, without
limitation, the following assets, together with replacements thereof and
additions thereto made between the date hereof and the Closing Date (as defined
herein), whether or not on the books and records of the Sellers:
(a) All furniture, fixtures, equipment, inventory and all other tangible
assets and personal property, owned or leased by the Sellers, which is used,
useful or necessary in or to the operation of the Business which is located at
2480 West Fourth Avenue, Unit 24, Denver, Colorado;
(b) All of the Sellers' contracts including, without limitation, the
Material Contracts (as defined herein) listed on the Disclosure Schedule (as
defined herein) and intangible property rights relating to the Business,
including, without limitation, (i) proprietary information, trade secrets and
confidential information, technical information and data; (ii) machinery and
equipment warranties related to the Acquired Assets; (iii) rights in any causes
of action related to or in connection wit the Acquired Assets; (iv) all other
documentation relating to the operation of the Business, including all licenses,
permits and approvals issued by any governmental authority or otherwise
necessary or relating to the operation of the Business which are transferable;
and (v) the goodwill and going concern value of the Business;
(c) All of the Sellers' books and records related to the operation of the
Business, including, without limitation: (i) all policy and procedure manuals;
(ii) all financial, accounting and property tax records; (iii) all computer data
and programs; (iv) all market data; and (v) all correspondence with and
documents pertaining to suppliers, governmental authorities and other third
parties; provided, however, the Sellers shall have the right to have access to
such books and records during normal business hours in order to complete Tax
Returns or other required governmental filings;
(d) All client, employee and patient lists and files kept in the ordinary
course operation of the Business; and
(e) All other assets (tangible and intangible) owned by the Sellers and
used, useful or necessary in or to the operation of the Business as presently
conducted and not otherwise an Excluded Asset (as defined herein).
Subject to Section 2.3 below, the Acquired Assets shall be assigned and
transferred to Purchaser at Closing free and clear of all liens, security
interests, charges, encumbrances and rights of others (each, an "Encumbrance")
other than Permitted Encumbrances.
2.2 Excluded Assets. Notwithstanding anything else contained in this
Agreement to the contrary, the assets of the Sellers specifically listed on
Schedule 2.2 ("Excluded Assets"), will not be sold, transferred or assigned by
the Sellers to Purchaser and are not included as part of the Acquired Assets.
2.3 Assumed Liabilities. Notwithstanding anything else contained in this
Agreement to the contrary, Purchaser shall assume those liabilities (the
"Assumed Liabilities") of the Sellers which are specifically identified on
Schedule 2.3 attached hereto. The Assumed Liabilities shall be "Permitted
Encumbrances" on the Acquired Assets. Except for the Assumed Liabilities, the
Purchaser has not agreed to pay, shall not be required to assume and shall have
no liability or obligation with respect to any debt, obligation, responsibility
or liability of the Business, the Sellers, any Affiliate or successor of the
Sellers, or any claim against any of the foregoing, whether known or unknown,
contingent or absolute, or otherwise (the "Excluded Liabilities"). Each Seller
agrees to take all actions and do all things reasonably necessary to ensure that
the Purchaser is not liable for any Excluded Liabilities. Without limiting the
generality of the foregoing, except for the Assumed Liabilities, Purchaser shall
not assume or become liable to pay, perform or discharge:
(a) Any and all liabilities and obligations of the Sellers, whether or not
reflected on the books and records of the Sellers on the Closing Date, under any
contract, lease, debt, note, negotiable instrument or other written commitment;
(b) Any liability or reimbursement obligation to Medicaid, Medicare or any
other third party payor arising out of or relating to the operation of the
Business for periods prior to the Effective Date;
(c) Any and all liabilities or obligations of the Sellers for personal
injury (including sickness, trauma, disease, pain and suffering, loss of future
earnings, death, punitive damages and the like), property damage, and other
damage and injury claims arising out of the Sellers' (or any predecessor's)
conduct of the Business prior to the Effective Date, whether or not any claim or
litigation has been instituted with respect thereto and whether or not any claim
is covered, partially or fully, by insurance;
(d) Any liabilities related to any former or current employee or agent of
the Sellers, including any liabilities under or associated with any employee
benefit plan, any actions asserted by or on behalf of any former or current
employee or agent of the Sellers, any claims for wages, bonuses, commissions or
other forms of compensation, and any claims under any insurance policies of the
Sellers related to their respective employees engaged in the day-to-day
operation of the Business prior to th Effective Date;
(e) Any federal, state or local income or other Tax payable with respect to
the Business, Acquired Assets, properties or operations of the Sellers or any of
their respective Affiliates for any period prior to the Effective Date;
(f) Any liabilities or obligations arising out of any breach by the Sellers
of any of the contracts, agreements or documents entered into in connection with
the Assumed Liabilities, including, but not limited to liabilities or
obligations arising out of penalties, late charges or the Sellers' failure to
perform any such Assumed Liability prior to the Effective Date;
(g) Any obligation or liability of the Sellers under any benefit plan,
including without limitation, any profit sharing plan or any pension plan;
(h) Any obligation or liability by or on behalf of the Sellers for any
finder's, broker's or advisor's fee and expenses or the like incurred in
connection with the transactions contemplated by this Agreement;
(i) Any obligation or liability of the Sellers arising under this Agreement
or the transactions contemplated hereby;
(j) Any obligations or liability arising as a result of the failure or
alleged failure of the Sellers to comply with any applicable local, state or
federal law, ordinance, regulation, order or decree including, without
limitation, any claim, obligation, liability, loss, damage or expense, of
whatever kind or nature, contingent or otherwise, incurred or imposed or based
upon any provision of federal, state or local law or regulations or common law,
pertaining to health, safety or environmental protection and arising out of any
act or omission of a Seller, its employees, agents or representatives, or
arising out of a Seller's ownership, use, control or operation of any facility,
site, area or property from which any substance was released into the
environment (the term "release" meaning any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment, and the term "environment" meaning any surface
or ground water, drinking water supply, land, surface or subsurface strata, or
the ambient air); and
(k) Any liabilities, damages, costs, expenses and fees arising out of any
lawsuit or proceeding related to the Business or Acquired Assets and based on
claims or causes of action arising prior to the Effective Date; or
(l) Any liabilities for payment of all accounts payable accrued,
outstanding, or resulting from, the operation of the Business prior to the
Effective Date.
2.4 Employees. Following the Closing, the Business may be operated as a
separate subsidiary of Purchaser or as part of Purchaser. Purchaser agrees to
give preference to former employees of the Business, however Purchaser may, but
is under no obligation to retain all or some of the current employees of the
Sellers to continue to work for Purchaser.
2.5 Assumption of Executory Contracts. Attached hereto as Schedule 2.5 is
a complete and accurate list of all contracts to be assumed and assigned by the
Sellers pursuant to Section 363 of the Code by the means of motion(s) to assume
such made at or about the time of the Filing (the "Assumed Contracts").
Notwithstanding anything herein to the contrary, all such Assumed Contracts are
hereby transferred, conveyed and assigned to the Purchaser with all rights,
title and interests therein and theret as part of the Assumed Liabilities,
pending Final Court Approval.
2.6 Bankruptcy Court Approval. The terms and provisions of this Agreement
and the Closing hereof are expressly subject to the receipt of the Final Court
Approval.
ARTICLE III - PURCHASE PRICE; CLOSING
3.1 Purchase Price. In consideration of the sale, transfer, conveyance,
assignment and delivery of the Acquired Assets by the Sellers to Purchaser, and
in reliance upon the representations and warranties made herein by the Sellers,
Purchaser will, in full payment thereof and as payment for the non-competition
covenants provided for herein, pay to the Sellers, the total purchase price of
four million, one hundred thousand dollars ($4,100,000), payable as follows:
(a) at the Closing, the amount of three million, three hundred thousand
dollars ($3,300,000), less the amount of any obligations of the Sellers under
any Material Contracts (other than the Assumed Contracts) assumed by Purchaser,
by wire transfer in immediately available funds to an account or accounts
designated by the Sellers (the "Closing Cash Payment");
(b) upon execution hereof, the amount of Four Hundred Thousand Dollars
($400,000) to be placed in escrow subject to the terms of the Earnest Money
Escrow Agreement substantially in the form of Exhibit "A" hereto (the "Earnest
Money Escrow"); and
(c) at the Closing, the amount of Four Hundred Thousand Dollars ($400,000)
in the form of Purchaser's Promissory Note (the "Purchaser's Note")
substantially in the form of Exhibit "B" hereto.
3.2 Release of Funds in Escrow Account. The Earnest Money Escrow shall be
promptly released to the Sellers or their respective designee in accordance
with, and subject to, the terms and conditions of the Earnest Money Escrow
Agreement (i) upon the satisfaction of all of the conditions precedent to
Closing set forth in Article VII hereof or as soon thereafter as the Closing may
practically be held, or (ii) upon the termination of the Interim Period (A) in
the event that Purchaser has taken any action that interferes with or refrained
from taking any action necessary to obtaining Final Court Approval or satisfying
the conditions precedent to Closing set forth in Article VII hereof or (B) if
Purchaser fails or refuses to proceed to Closing despite the Sellers'
satisfaction of their conditions precedent to Closing set forth in Article VII
hereof. Subject to, and in accordance with, the terms and conditions of the
Earnest Money Escrow Agreement, if the Closing has not taken place within the
Interi Period and no such actions as described in clause (ii) of this subsection
3.2.2 have been taken or refrained from, the Earnest Money Escrow shall be
released to Purchaser within five (5) business days after the termination of the
Interim Period.
3.3 Execution and Closing. The closing of the Transaction (the "Closing")
shall take place at the Dallas office of Akin, Gump, Strauss, Hauer & Feld,
L.L.P. as promptly as practical following receipt of the Final Court Approval,
pursuant to the terms of Section 2.6 hereof or such other place or date as the
parties may mutually determine (the "Closing Date").
3.3.1 At the Closing, and unless waived by Purchaser, the Sellers will
deliver to Purchaser:
(a) a general Bill of Sale and Assignment duly executed by the Sellers
substantially in the form of Exhibit "C" attached hereto;
(b) a Confidentiality and Non-Competition agreement executed by the Sellers
substantially in the form of Exhibit "D" hereto".
(c) all contracts, files and other data and documents pertaining to the
Acquired Assets (these items may be delivered, at the option of the Sellers,
subsequent to Closing);
At any time and from time to time after the execution hereof, at
Purchaser's request and without further consideration, each Seller will execute
and deliver such other instruments of sale, transfer, conveyance, assignment and
confirmation and take such action as may be necessary in order to transfer,
convey and assign to Purchaser, all of the Acquired Assets, and to put Purchaser
in actual possession and operating control thereof.
3.3.2 Unless otherwise waived in writing by the Sellers, Purchaser shall
deliver to the Sellers the following at the Closing unless otherwise noted:
(a) Purchaser's Promissory Note;
(b) the Closing Cash Payment;
(c) the Earnest Money Escrow and the Earnest Money Escrow Agreement, upon
execution hereof;
(d) a Liabilities Undertaking substantially in the form of Exhibit "E"
attached hereto;
(e) a Security Agreement substantially in the form of Exhibit "F" attached
hereto;
(f) copies of resolutions duly adopted by the Board of Directors of
Purchaser authorizing and approving its performance of the Transaction and the
execution and delivery of this Agreement and the Transaction Agreements,
certified as true and of full force as of Closing by the appropriate officer of
Purchaser; and
(g) certificates of existence and good standing of Purchaser from the State
of Utah, dated the most recent practical date prior to Closing.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER m
Each Seller represents and warrants to the Purchaser that the statements
contained in this Article IV are materially correct and complete as of the date
of this Agreement and will be materially correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Article IV, except as set forth in
the disclosure schedule accompanying this Agreement and accepted by the
Purchaser as evidenced by Purchaser's execution hereof (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the numbered paragraphs contained in this Agreement:
4.1 Organization; Good Standing. Each Seller is a corporation, duly
incorporated, validly existing and in good standing under the laws of its state
of incorporation and has all requisite corporate power and authority to own and
lease the Acquired Assets and to carry on the Business as currently conducted.
Each Seller is duly qualified and licensed to do business and is in good
standing in all jurisdictions where the nature of its business makes such
qualification necessary, except those jurisdictions wherein the failure to so
qualify could not have material adverse effect on the Business or Purchaser's
ownership of the Acquired Assets.
4.2 Approvals and Consents; Non-Contravention.
4.2.1 Except as required by the Code or the Bankruptcy Court
(including the Final Court Approval) or as otherwise forth in the Disclosure
Schedule, no consent, approval, or other action by, or notice to or registration
or filing with, any governmental or administrative agency or authority is
required or necessary to be obtained by the Sellers in connection with the
execution, delivery or performance of the Transaction Agreements by them or the
consummation of the Transaction.
4.2.2 Except as required by the Code or the Bankruptcy Court
(including the Final Court Approval) or as otherwise forth in the Disclosure
Schedule, no consent, approval, waiver or other action by any Person under any
Material Contract, agreement, instrument, or other document, or obligation to
which either Seller is a party or by which it or any of its assets are bound, is
required or necessary for the execution, delivery, and performance of the
Transaction Agreements by the Sellers or the consummation of the Transaction
except as may be specifically required by the terms of any Contract.
4.2.3 Except as forth in the Disclosure Schedule, the execution,
delivery, or performance of the Transaction Agreements by each Seller and the
consummation of the Transaction will not: (i) violate or conflict with the
charter documents or Bylaws of such Seller; (ii) violate or conflict with any
law, regulation, order, judgment, award, administrative interpretation,
injunction, writ, or decree applicable to such Seller or by which it or any of
the Acquired Assets are bound, or any agreement or understanding between any
administrative or regulatory authority, on the one hand, and such Seller on the
other hand which would have a material adverse effect on the Acquired Assets
taken as a whole; or (iii) violate or conflict with, result in a material breach
of, result in or permit the acceleration or termination of, or constitute a
default under any agreement, instrument or understanding to which such Seller is
a party or by which it or any of the Acquired Assets are bound which would have
a material adverse effect on the Acquired Assets taken as a whole.
4.2.4 Bankruptcy Court Approval. This Section 4.2 is expressly conditioned
upon the Sellers obtaining the Final Court Approval in accordance with the terms
of this Agreement. Notwithstanding the execution of this Agreement by the
Sellers, the provisions of this Agreement are not binding on the Sellers until
the Sellers obtain the Final Court Approval.
4.3 Transactions with Affiliates. At the time of the Closing, neither the
Sellers, nor any Affiliate of the Sellers, will have any interest in or will own
any property or right used principally in the conduct of the Business other than
those properties or rights included in the Excluded Assets.
4.4 Title to Assets. At the Closing, the Sellers will transfer to the
Purchaser good and indefeasible title to all of the Acquired Assets, free and
clear of all Encumbrances, other than Permitted Encumbrances.
4.5 Condition of Assets.
(a) All of the Acquired Assets are in good condition and working order,
ordinary wear and tear excepted, and are suitable for the operation of the
Business as presently conducted, free from any known defects except such minor
defects as do not substantially interfere with the continued use thereof.
(b) All inventory of the Sellers used in the conduct of the Business
reflected in the Seller Financial Statements or acquired since the date thereof
was acquired and has been maintained in the ordinary course of business; is of
good and merchantable quality; consists substantially of a quality, quantity and
condition usable, leasable or saleable in the ordinary course of business; is
valued at reasonable amounts based on the ordinary course of business; and is
not subject to any write-down o write-off.
4.6 Governmental Licenses. Except for each Seller's Medicaid and Medicare
provider numbers, the Disclosure Schedule lists all licenses, permits, orders,
approvals, authorizations and filings issued to the Sellers by a governmental or
regulatory authority in connection with the lawful ownership and operation of
the Business as presently conducted (the "Governmental Licenses"), except where
the failure to hold such Governmental License would not have a material adverse
effect on the Business. The Sellers have made available to Purchaser true and
accurate copies of all such Governmental Licenses, and each Governmental License
is in full force and effect and is valid under applicable federal, state and
local laws. The Sellers have not violated any law, rule or regulation applicable
to the operation of the Business as presently conducted (including without
limitation, rules and regulations of the U.S. Department of Health and Human
Services, the U.S. Health Care Finance Administration, the U.S. Food and Drug
Administration, applicable state health care agencies, any provider or
intermediary manual, the Colorado Medicaid or Medicare Manual, or any Medicaid
or Medicare program instruction or memorandum), the result of which violation is
reasonably likely to result in the revocation or termination of any Governmental
License or the imposition of any financial penalty or restriction which could
reasonably expected to have a material adverse effect on the operation of the
Business as presently conducted.
4.7 Taxes. All tax reports and returns required to be filed by or relating
to the Acquired Assets and the Business (including sales, use, income, property,
franchise and employment taxes) have been filed with the appropriate federal,
state and local governmental agencies, except where the failure to file could
not reasonably be expected to have a material adverse effect on the Business or
the Purchaser's ownership of the Acquired Assets. All taxes, penalties,
interest, deficiencies, assessments o other charges, including without
limitation those that are reflected on such reports and returns, that relate to
the Acquired Assets or the Business and are or have been claimed to be due and
payable prior to the Closing Date by any taxing authority have been or will be
paid by the Sellers, except where the failure to pay could not reasonably be
expected to have a material adverse effect on the Business or the Purchaser's
ownership of the Acquired Assets. There are no examinations or audits pending or
unresolved examinations or audit issues with respect to the Sellers' federal,
state or local tax returns which could reasonably be expected to have a material
adverse effect on the Business or the Purchaser's ownership of the Acquired
Assets. All additional taxes, if any, assessed as a result of such examinations
or audits have been paid, except where the failure to pay could not reasonably
be expected to have a material adverse effect on the Business or the Purchaser's
ownership of the Acquired Assets. To the Knowledge of the Sellers, there are no
pending claims or proceedings relating to, or asserted for, taxes, penalties,
interest, deficiencies or assessments against it which could reasonably be
expected to have a material adverse effect on the Business or the Purchaser's
ownership of the Acquired Assets. No waiver or extension of any statute of
limitation is in effect with respect to the taxes or tax returns of the Sellers
which could reasonably be expected to have a material adverse effect on the
Business or the Purchaser's ownership of the Acquired Assets.
4.8 Litigation. Except for proceedings before the Bankruptcy Court or as
set forth on the Disclosure Schedule, there is no order of any court,
governmental agency or authority and no action, suit, proceeding, arbitration or
investigation, judicial, administrative or otherwise, that is pending or, to the
best of the Sellers' Knowledge, threatened against or affecting either Seller
which, if adversely determined, might materially and adversely affect the
Business or the Acquired Assets (including without limitation, any proceedings
regarding the Sellers' operation of the Business under their respective
contracts for home care or under its health care licenses) or which challenges
the validity or propriety of the Transaction.
4.9 Reports and Governmental Compliance.
(a) Each Seller has duly filed all material reports required to be filed by
law or applicable rule, regulation, order, writ or decree of any court,
governmental commission, body or instrumentality and had made payment of all
charges and other payments, if any, shown by such reports to be due and payable
with respect to such Seller's operation and/or ownership of the Business and the
Acquired Assets, except where the failure to make such filings or payments could
not reasonably be expected to have a material adverse effect on the Business or
the Purchaser's ownership of the Acquired Assets. Each Seller has retained all
records and documents pertaining to the Business required to be retained by it
pursuant to any law, ordinance, rule, regulation, order, policy, guideline or
other requirement of any governmental authority, except where the failure to
maintain such records could not reasonably be expected to have a material
adverse effect on the Business
(b) The Sellers and, to the best of their Knowledge, their respective
officers, directors, agents and employees engaged in the day-to-day operation of
the Business have not engaged in any activities that are prohibited under 42
U.S.C.ss.1320a-7b, known as the anti-kickback statute, or the regulations
promulgated thereunder, or related or similar state or local statutes or
regulations
(c) The Sellers and, to the best of their Knowledge, their respective
officers, directors, agents and employees engaged in the day-to-day operations
of the Business have not: (i) knowingly made or caused to be made a false
statement or representation of a material fact in any application for any
benefit or payment; (ii) knowingly made or caused to be made any false statement
or representation of a material fact for use in determining rights to any
benefit or payment; (iii) knowingly failed to disclose knowledge by a claimant
of the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another; (iv) knowingly and
willfully solicited or received any remuneration (including any kickback, bribe
or rebate), directly or indirectly, overtly or covertly, in cash or in kind or
knowingly and willfully offered or paid such remuneration as an inducement (A)
in return for referring an individual to any Person or entity for the furnishing
or arranging for the furnishing of any item or service for which payment may be
made in whole or in part by Medicaid, Medicare or other government program, or
(B) in return for purchasing, leasing or ordering or arranging for or
recommending purchasing, leasing or ordering any good, facility, service or item
for which payment may be made in whole or in part by Medicaid, Medicare or other
government program.
(d) The Sellers and, to the Knowledge of the Sellers, their respective
officers, directors, agents and employees engaged in the day-to-day operation of
the Business have not engaged in any activities that are prohibited under 42
U.S.C.ss.1395nn, known as the self-referral or Stark statute, or the regulations
promulgated thereunder, or related or similar state or local statutes or
regulations. The Business currently is conducted in a manner that will not
violate 42 U.S.C.ss.1395nn as amended
4.10 Employee Benefit Plans; Labor Controversies. Except as otherwise set
forth in the Disclosure Schedule, the Sellers do not have, and are not liable,
contingently or otherwise, for any bonus, deferred compensation, stock purchase,
stock option, pension, life, disability or other insurance, supplemental
unemployment benefit, profit sharing or retirement or retirement plan or
arrangement, formal or informal, written or verbal and whether legally binding
or not, with respect to employees of the Sellers engaged in the day-to-day
operation of the Business as presently conducted. The Disclosure Schedule sets
forth all liabilities of the Sellers under ERISA or similar laws with respect to
employee benefit plans with respect to employees of the Sellers engaged in the
day-to-day operation of the Business as presently conducted. There are no labor
disputes of a material nature pending between the Sellers and any of their
respective employees engaged in the day-to-day operation of the Business and, to
the Knowledge of the Sellers, there are no organizational efforts presently
being made involving any of such employees. The Sellers have complied, in all
material respects, with all material laws relating to the employment of labor,
including any provisions thereof relating to wages, hours, collective bargaining
and the payment of social security and other taxes, and are not liable for any
material arrearages of wages or any taxes or penalties for failure to comply
with any of the foregoing with respect t employees engaged in the day-to-day
operation of the Business.
4.11 Financial Statements and Records of the Sellers.
(a) The Sellers have delivered to the Purchaser or will deliver to the
Purchaser prior to the Closing, true, correct and complete copies of the
following financial statements (the "Seller Financial Statements"): (i) HOME's
unaudited income statement and balance sheet pertaining to the Business as of
and for the year ended December 31, 1998, and (ii) HOME's unaudited income
statement and balance sheet pertaining to the Business as of and for the six
month period ended June 30, 1999 (the " Interim Financial Statements").
(b) The Seller Financial Statements present fairly, in all material
respects, the financial position of the Business as of the dates thereof and the
results of operations thereof for the periods then ended and have been prepared,
in all material respects, in accordance with generally accepted accounting
principals applied on a consistent basis (except that the Interim Financial
Statements omit footnotes and are subject to normal year-end adjustment) and are
in accordance with the books and records of the Sellers pertaining to the
Business.
4.12 Absence of Certain Changes. Except as otherwise set forth in the
Disclosure Schedule, since the date of the Interim Financial Statements, the
Sellers have not: (a) suffered any change in the financial condition of the
Business or results of operations that, individually or in the aggregate, have
had a material adverse effect on the Business or the Acquired Assets except as
may relate to the Filing; (b) acquired or disposed of any asset materially
related to the operation of the Business, or incurred, assumed, guaranteed or
endorsed any liability or obligation materially related to the operation of the
Business, or subjected or permitted to be subjected any material amount of
assets to any Encumbrance (other than Permitted Encumbrances), except in the
ordinary course of business or as contemplated by this Agreement; (c) entered
into or terminated any Material Contract (as hereinafter defined), or agreed or
made any material changes in any Material Contract, other than renewals and
extensions thereof in the ordinary course of business, except in the ordinary
course of business consistent with past practices; (d) with respect to its
employees engaged in the day-to-day operation of the Business, entered into any
collective bargaining, employment, consulting, compensation or similar agreement
with respect to any Person or group, except in the ordinary course of business
consistent with past practice; or (f) with respect to its employees engaged in
the day-to-day operation of the Business, entered into, adopted or amended any
employee benefit plan, except in the ordinary course of business consistent with
past practice.
4.13 Material Undisclosed Liabilities. Except as related to the Filing or
otherwise described in the Seller Financial Statements or the Disclosure
Schedule, the Assets and the Business are not subject to any claim of any
nature, absolute or contingent, involving liability in excess of $5,000 (a
"Material Liability") and, to the Knowledge of the Sellers, no events have
occurred and no circumstances exist that could reasonably be expected to give
rise to any future Material Liability on the Acquired Assets or the Business
since the date of the Interim Financial Statements, other than Material
Liabilities incurred since the date of the Interim Financial Statements in the
ordinary course of the operation of the Business consistent with past practice
(none of which are or, to the Knowledge of the Sellers, will be liabilities for
breach of contract, breach of warranties, torts, infringements or lawsuits which
could reasonably be expected to have a material adverse effect on the Business
or the Purchaser' ownership of the Acquired Assets).
4.14 Contracts and Agreements.
(a) The Disclosure Schedule contains a list, complete and accurate in all
material respects, of all of the contracts and agreements relating to the
Business, the Acquired Assets or the Assumed Liabilities or to which the
Acquired Assets are bound, as of the date hereof, including, without limitation,
the following: (i) contracts that involve remaining aggregate payments by any
party thereto in excess of $5,000; (ii) contracts related to the reimbursement
of services covered by Medicaid or Medicare; (iii) other contracts not made in
the ordinary course of business; and (iv) contracts otherwise material to the
operation of the Business as presently conducted (such contracts and agreements,
being the "Material Contracts"). To the best of each Sellers' Knowledge, such
Seller is not in default with respect to any of the Material Contracts, except
for defaults caused by the Filing or otherwise disclosed on the Disclosure
Schedule.
(b) All of the Material Contracts are valid, binding and enforceable
against the appropriate Seller, subject to the provisions of the Code, and, to
the Knowledge of such Seller, the other parties thereto in accordance with their
respective terms.
(c) Each Seller and, to the best of such Seller's Knowledge, any other
party thereto is not in breach of, or default under, any Material Contract to
which such Seller is a party, except for breaches or defaults related to the
Filing or otherwise disclosed on the Disclosure Schedule. Other than the Filing
or as otherwise disclosed on the Disclosure Schedule, no event or action has
occurred, is pending, or, to the best of such Seller's Knowledge, is threatened,
which after giving of notice, o the lapse of time, or both, would constitute or
result in a breach or default by such Seller or, to the best of such Seller's
Knowledge, any other party thereto.
(d) The Sellers do not have any employment agreements with any of their
respective employees engaged in the day-to-day operation of the Business.
(e) The Sellers have not given any revocable or irrevocable power of
attorney that relates to the Business to any Person for any purpose whatsoever.
(f) The Sellers are not party to any collective bargaining agreements with
respect to any of their respective employees engaged in the day-to-day operation
of the Business.
4.15 Finders and Brokers. All negotiations relating to this Agreement and
the transactions contemplated herein have been carried on by the Sellers
directly with the Purchaser. No Person has as a result of any agreement or
action of the Sellers any valid claim against any of the parties hereto for a
brokerage commission, finder's fee or other like payment.
4.16 Intellectual Property. The Sellers own, are licensed to use or
otherwise have the right to use, all patents, trademarks, trade names, copy
rights, technology, know-how and processes used, useful or necessary in or to
the operation of the Business as presently conducted (collectively, the
"Intellectual Property") and such Intellectual Property other than Intellectual
Property related to the name HealthCor, HealthCor Holdings, Inc. or HealthCor
Oxygen & Medical Equipment, Inc. is described on the Disclosure Schedule. No
material claim has been asserted by any Person with respect to the use of any
Intellectual Property, or challenging or questioning the validity or
effectiveness of any Intellectual Property, and, to the Sellers' Knowledge, the
use of such Intellectual Property by the Sellers does not infringe on the rights
of any Person, except as set forth on the Disclosure Schedule.
4.17 Absence of Adverse Contracts. The Sellers are not party to nor is the
Business or any of the Acquired Assets subject to or bound by any forward
purchase contract, covenant not to compete, confidentiality agreement,
unconditional purchase, take or pay or other agreement which restricts its
ability to conduct the Business as presently conducted or could reasonably be
expected to have a material adverse effect on the Business as presently
conducted.
4.18 Books and Records. All the books and records of the Sellers relating
to the Business are true, correct and complete in all material respects, have
been maintained in accordance with good business practice and in accordance with
all laws, regulations and other requirements applicable to the Business as
presently conducted and accurately reflect, in all material respects, the basis
for the financial condition of the Business set forth in the Seller Financial
Statements.
4.19 No Inducement. Except as set forth in the Disclosure Schedule, neither
the Sellers nor any of their respective affiliates, directors, officers, agents
or employees has made, promised to make or will make any inducement of any kind
to any current employee of the Sellers engaged in the day-to-day operation of
the Business as presently conducted in connection with the Transactions.
4.20 Environmental, Health, and Safety Matters. Insofar as they relate to
the Business, the Sellers are in compliance with all Environmental, Health, and
Safety Requirements except where such non-compliance would not have a material
adverse effect on the Acquired Assets or the Business.
4.21 No Liability to Third Party Payors. The Sellers have not incurred any
material liabilities to Medicare, Medicaid, any insurance company or any other
third party payor for any excess billings, claims, demands or other liability
related to the Business.
4.22 Information. The information concerning the Sellers and the Business
set forth in this Agreement and in Disclosure Schedules is complete and accurate
in all material respects and does not contain any untrue statement of material
fact or omit to state a material fact required to make the statements made in
light of the circumstances under which they were made not misleading. With
respect to information or statements in this Agreement or in the Disclosure
Schedules provided upon either Seller' Knowledge, such Seller believes such
information or statements to be complete and accurate in all material respects
and not misleading.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Purchaser represents and warrants to the Sellers, except as disclosed in
this Agreement, the statements made in this Article V are correct and complete
as of the date hereof and will be correct and complete as of the Closing Time:
5.1 Organization and Good Standing. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to own and
lease its properties and carry on its business as currently conducted.
5.2 Due Authorization. The Purchaser has full power and authority to
execute, deliver and perform the Transaction Agreements and to consummate the
transactions contemplated thereby. The Transaction Agreements constitute legal,
valid and binding obligation of the Purchaser, enforceable against it in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally or general
5.3 Approvals and Consents; Non-Contravention.
5.3.1 Except as set forth in Section 5.3 of the Disclosure Schedule,
no consent, approval, or other action by, or notice to or registration or filing
with, any governmental or administrative agency or authority is required or
necessary to be obtained by Purchaser in connection with the execution, delivery
or performance of this Agreement by Purchaser or the consummation of the
Transaction.
5.3.2 To the best of its Knowledge, no consent, approval, waiver or
other action by any Person under any material contract, agreement, note,
indenture, lease, instrument, or other document, or obligation to which
Purchaser is a party or by which any of its properties or assets are bound is
required or necessary for the execution, delivery, and performance of this
Agreement by Purchaser or the consummation of the Transaction.
5.3.3 The execution, delivery, or performance of this Agreement by
Purchaser and the consummation of the transaction will not (i) violate or
conflict with the charter documents or Bylaws of Purchaser; (ii) violate or
conflict with any law, regulation, order, judgment, award, administrative
interpretation, injunction, writ, or decree applicable to Purchaser or by which
any of their property or assets are bound, or any agreement or understanding
between any administrative or regulatory authority on the one hand, and
Purchaser on the other hand; or (iii) violate or conflict with, result in a
breach of, result in or permit the acceleration or termination of, or constitute
a default under any agreement, instrument, note, indenture, mortgage, lien,
lease, or other contract, arrangement, or understanding to which Purchaser is a
party or by which any of its property or assets are bound.
5.4 Brokers. The Sellers shall be solely responsible for paying the
brokerage fees of Chanin Kirkland Messina LLC which are the only such fees to be
paid in connection with the transactions contemplated by the terms of this
Letter Agreement and the Asset Purchase Agreement.
5.5 Financing. Purchaser has obtained financing in an amount sufficient to
consummate the transactions contemplated by this Agreement and the Transaction
Documents.
ARTICLE VI - CERTAIN COVENANTS AND AGREEMENTS
Purchaser and each Seller covenants and agrees that from and after the
execution and delivery of this Agreement to and including the Closing Date (and
thereafter as reflected below), it shall comply with the covenants set forth
below to the extent applicable to it.
6.1 Access. Upon reasonable notice, the Sellers will give to Purchaser and
its counsel, accountants and other authorized representatives, full access
during reasonable business hours to all of its properties, books, contracts,
documents and records pertaining to the Business, the Acquired Assets or the
Assumed Liabilities and shall furnish the Purchaser with all such information
concerning the Business, the Acquired Assets or the Assumed Liabilities as the
Purchaser may reasonably request. The Sellers will take all action reasonably
necessary to enable the Purchaser, its counsel, accountants and other
representatives to discuss the Business, the Acquired Assets and the Assumed
Liabilities with such persons and at such times as the Purchaser may reasonably
request. In the event that the Closing does not occur and this Agreement is
terminated, the Purchaser shall (i) maintain the confidentiality of all
information obtained from the Sellers in connection with the Transaction
Agreements, except fo such information as is in the public domain; (ii) not use
any such information so obtained to the detriment or competitive disadvantage of
the Sellers; and (iii) promptly return copies of any books, records, contracts
and any other documentation of the Sellers delivered to the Purchasers pursuant
to the Transaction Agreements or the Transaction.
6.2 Retention of Records. For a period of five years after the Closing
Date, Purchaser will preserve and retain the books and records constituting part
of the Acquired Assets and make such books and records available at the then
current administrative headquarters of Purchaser to the Sellers and their
respective officers, employees and agents, upon reasonable notice and at
reasonable times, at the Sellers' cost and expense, it being understood that the
Sellers shall be entitled to make copies of any such books and records as shall
be reasonably necessary.
6.3 Best Efforts; Consents. Each of the parties hereto shall take all
reasonable action necessary to consummate the transactions contemplated by the
Transaction Agreements and will use all necessary and reasonable means at its
disposal to obtain all necessary consents and approvals of other persons and
governmental authorities required to enable it to consummate the Transaction. In
the event any consent or approval necessary to effect the transfer and
assignment of any Material Contract is not obtained on or prior to Closing, each
party will, for a period of one year following the Closing Date, (i) abide by
the requirements of this Section 6.2, and (ii) cooperate with each other in any
lawful and reasonable arrangement to provide that the Purchaser shall receive
the benefits under any Material Contract not assigned and transferred at the
Closing by reason of the failure to obtain such consent (a "Non-Transferred
Instrument"), including, if necessary, at the request and expense (unless any
such failure of performance by a third party is due to the failure to request
the consent of such third party to the transfer and assignment of the
Non-Transferred Instrument) of the Sellers, enforcing performance by any third
party of its obligations in respect of such Non-Transferred Instrument; provided
that, to the extent the parties are successful in providing the material
benefits of any Non-Transferred Instrument to the Purchaser, the Purchaser shall
pay, honor and discharge when due all liabilities of the Sellers related thereto
to the extent the liabilities were incurred, and are attributable to periods,
after the Effective Date. The Sellers shall immediately transfer and assign to
the Purchaser any Non-Transferred Instrument for which a consent has been
received. Notwithstanding anything to the contrary in this Agreement, the
Sellers shall not transfer or assign any interest in any Material Contract, and
the Purchaser shall not assume any liability arising thereunder or resulting
therefrom, if an assignment or transfer or an attempt to make an assignment or
transfer of such Material Contract without the consent or approval of a third
party or governmental authority would constitute a breach or violation thereof
or a violation of applicable law, or affect adversely the rights of the
Purchaser or the Sellers thereunder, until such consent or approval has been
obtained. Notwithstanding any of the foregoing to the contrary, the Purchaser
shall be solely responsible to obtain any non-transferable licenses required by
the State of Colorado or the applicable federal law necessary to operate the
Business; provided that the Sellers, at the Purchaser's request, shall cooperate
with the Purchaser in any lawful and reasonable arrangement to obtain such
licenses.
6.4 Public Announcements. No press release or news media disclosure of the
Transaction will be made by either party without the consent of the other party
which shall not be unreasonably withheld; provided that a party may make an
announcement if, on the advice of counsel and after reasonable notice (one day
notice) to the other party it is required to do so under relevant securities
laws, or NASDAQ rules.
6.5 Ordinary Course of Business. Except as otherwise set forth in the
Disclosure Schedule and as provided for by the Management Agreement, during the
period from the execution and delivery of this Agreement through the Effective
Date, the Sellers shall (a) conduct the operation of the Business in the
ordinary course consistent with past practices, (b) use reasonable best efforts
to maintain and preserve intact the goodwill and business relationships
associated with the Business, (c) not enter int any agreement which involves the
payment by the Sellers of an aggregate amount exceeding $5,000 or which has a
term exceeding one year relating to the Business, the Assets or the Assumed
Liabilities, except in the ordinary course of business consistent with past
practice or (d) take any action which would cause any representation contained
in Article IV to be untrue in any material respect as of the Closing Date.
6.6 Section 363 Motion. The Sellers do hereby undertake to file a motion
pursuant to Section 363 of the Code with respect to this Agreement upon the
Filing or as soon thereafter as is practical, seeking Final Court Approval of
this Agreement and the terms and conditions hereof. If the Final Court Approval
shall be appealed by any Person (or a petition for certiorari or motion for
rehearing or argument shall be filed with respect thereto), the Sellers shall
take all steps, as may be reasonable an appropriate to prosecute such appeal,
petition or motion, or defend against such appeal, petition or motion, and
Purchaser shall cooperate in such efforts. Each of the parties agrees to use
their best efforts to obtain an expedited resolution of any such appeal.
6.7 Certain Governmental Filings.
(a) Each party shall make all filings, applications, statements and reports
to all governmental agencies or entities which are required to be made prior to
the Closing Date by or on its behalf pursuant to any statute, rule or regulation
in connection with the transactions contemplated by this Agreement; and copies
of all such filings, applications, statements and reports shall be provided to
the other.
(b) Prior to or concurrent with the Closing, the Sellers will notify the
applicable authorities and/or agencies in Colorado of the change in ownership of
the Business. The Sellers will cooperate and assist the Purchaser in
transferring all of the Sellers' right, title and interest in, to and under the
Business and the Acquired Assets (other than Sellers' right, title and interest
in Medicaid or Medicare receivables arising out of or relating to the operation
of the Business prior to the Effective Date) to the Purchaser.
6.8 Sales Taxes Relating to Sale and Purchase of Assets. The parties
believe that no state sales taxes or only limited state sales taxes will arise
or be due and owing as a result of the purchase and sale of the Acquired Assets
agreed to herein. In the event any forms, filings or returns are required to be
filed with the State of Colorado or any other state, the Sellers shall make all
of such filings.
6.9 Breakup Fee. If the Bankruptcy Court fails to approve the Asset
Purchase Agreement because another offer for the purchase of the Business has
been obtained and is approved by the bankruptcy court, then, in such event, the
Sellers shall pay to Purchaser the sum of the greater of (i) $50,000 or (ii)
one-third of the amount representing the portion of the purchase price of the
successful competing bid that exceeds $4,100,000 but not to exceed $410,000 (the
"Breakup Fee") for reimbursement of Purchaser's costs and expenses in connection
with the negotiation of and activities incident to this Agreement and the
Management Agreement. The fee will be paid upon the closing of the sale of the
Business (or any substantial portion thereof) to a third party. The obligation
to pay the Breakup Fee shall be an administrative expense payable from the
proceeds of the sale of the business and shall be a lien on the proceeds. The
parties agree that such sum is a reasonable estimate of Purchaser's costs,
expenses and loss, and is fair consideration to induce Purchaser to enter into
this Agreement and the Management Agreement.
ARTICLE VII - CONDITIONS TO PURCHASER'S CLOSING d
All obligations of Purchaser under this Agreement shall be subject to the
fulfillment at or prior to the Closing of the following conditions, it being
understood that Purchaser may, in its sole discretion, waive any or all of such
conditions in whole or in part:
7.1 Representations, Etc. The Sellers shall have performed, in all
material respects, the covenants and agreements contained in this Agreement that
are to be performed by it at or prior to the Closing, and the representations
and warranties of the Sellers contained in this Agreement shall be true and
correct, in all material respects, as of the Closing Date with the same effect
as though made as of the Closing Date, except to the extent such representations
and warranties made as of a specific date shall have been true and correct, in
all material respects, as of the specified date.
7.2 Consents. All consents and approvals of governmental agencies and from
any other third parties required to consummate the transactions contemplated by
this Agreement shall have been requested or obtained without material cost or
other materially adverse consequence to the Purchaser.
7.3 No Adverse Litigation. No order or preliminary or permanent injunction
shall have been entered and no action, suit or other legal or administrative
proceeding by any court or governmental authority, agency or other Person shall
be pending or, to the Sellers' Knowledge, threatened, on the Closing Date which
may have the effect of (a) making any of the transactions contemplated hereby
illegal, (b) materially adversely affecting the value of the Business or the
Acquired Assets or (c) making the Purchaser liable for the payment of a material
amount of damages to any person.
7.4 Material Adverse Changes. Except as otherwise set forth on the
Disclosure Schedule, since the date of the Interim Financing Statements, no
material adverse change has occurred in the Business or the Assets other than
changes related to, or as a result of, the Filing.
7.5 Closing Deliveries. The Purchaser shall have received each of the
documents or items required to be delivered to it pursuant to Section 3.2
hereof.
7.6 Certificate of Sellers. If this Agreement is executed prior to the
Closing, each Seller shall have delivered to Purchaser a certificate, dated as
of the Closing, and signed by the president and secretary of such Seller to the
effect that (i) each of the representations and warranties of such Seller
contained herein and in Disclosure Schedules is true and the information set
forth in Disclosure Schedules is accurate and complete in accordance with the
terms thereof as of the Closing; and (ii) such Seller has performed all
obligations and complied with all covenants required by this Agreement to be
performed and complied with by it prior to the Closing Date.
7.7 Bankruptcy Court Approval. The Final Court Approval shall have been
received on or prior to the termination of the Interim Period. If such Final
Court Approval has not been received within the Interim Period, the Purchaser
may choose to terminate and no longer be bound by the terms and provisions of
this Agreement.
7.8 Termination of Certain Assumed Contracts. The Sellers shall not have
received any oral or written notice of termination or intent to terminate any of
the Assumed Contracts with Columbia, Physicians Health Partners or PacifiCare
prior to the Closing Date and such contracts shall not be terminated prior to
the Closing Date.
ARTICLE VIII - CONDITIONS TO THE SELLER'S CLOSING d
All obligations of the Sellers under this Agreement shall be subject to
the fulfillment at or prior to the Closing of the following conditions, it being
understood that the Sellers may, in their sole discretion, waive any or all of
such conditions in whole or in part:
8.1 Representations, Etc. Purchaser shall have performed in all material
respects the covenants and agreements contained in this Agreement that are to be
performed by Purchaser at or prior to the Closing; and the representations and
warranties of Purchaser contained in this Agreement shall be true and correct,
in all material respects, as of the Closing Date with the same effect as though
made at each such time (except as contemplated or permitted by this Agreement).
8.2 Consents. All consents and approvals of governmental agencies and from
any other third parties required to consummate the transactions contemplated by
this Agreement shall have been requested or obtained without material cost or
other materially adverse consequence to the Seller.
8.3 No Adverse Litigation. No order or preliminary or permanent injunction
shall have been entered and no action, suit or other legal or administrative
proceeding by any court or governmental authority, agency or other Person shall
be pending or threatened on the Closing Date which may have the effect of making
any of the transactions contemplated hereby illegal.
8.4 Closing Deliveries. The Sellers shall have received each of the
documents or items required to be delivered to them pursuant to Section 3.2
hereof.
8.5 Certificate of Purchaser. If this Agreement is executed by the parties
prior to Closing, Purchaser shall have delivered to the Sellers a certificate of
Purchaser, dated the Closing Date and signed by its president and secretary to
the effect that (i) each of the representations and warranties of Purchaser
contained herein is true as of the Closing; and (ii) Purchaser has performed all
obligations and complied with all covenants required by this Agreement to be
performed and complied with by it prior to the Closing Date.
8.6 Bankruptcy Court Approval. The Sellers shall have received the Final
Court Approval.
ARTICLE IX - SURVIVAL
All representations, warranties, covenants and agreements made by any
party to this Agreement or pursuant hereto shall be deemed to be material and to
have been relied upon by the parties hereto and shall survive the Closing for a
period of eighteen (18) months. The representations and warranties hereunder
shall not be affected or diminished by any investigation at any time by or on
behalf of the party for whose benefit such representations and warranties were
made. All statements by a party contained herein or in any certificate, exhibit,
list or other document delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties of such party.
ARTICLE X - INDEMNIFICATION OF THE SELLER
The Purchaser shall indemnify and hold the Sellers harmless from, against,
for and in respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances suffered,
sustained, incurred or required to be paid by the Sellers because of the breach
of any written representation, warranty, agreement or covenant of the Purchaser
contained in or made in connection with this Agreement;
(b) any and all liabilities, obligations, claims and demands arising out of
the ownership and operation of the Business, the Acquired Assets or the Assumed
Liabilities on and after the Effective Date, except to the extent the same
arises from a breach of any written representation, warranty, agreement or
covenant of the Sellers contained in or made in connection with this Agreement;
(c) any liability or reimbursement obligation to Medicaid, Medicare or
other third party payor arising out of or related to the operation of the
Business for periods from and after the Effective Date; and
(d) all reasonable costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by the Sellers in connection
with any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this Section 10.
ARTICLE XI-INDEMNIFICATION OF PURCHASER
The Sellers shall indemnify and hold the Purchaser harmless from, against,
for and in respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances suffered,
sustained, incurred or required to be paid by the Purchaser that result from,
relate to or arise out of (A) a breach of any written representation, warranty,
agreement or covenant of the Sellers contained in this Agreement or (B) the
ownership and operation of the Business, the Acquired Assets or the Assumed
Liabilities prior to the Effective Date;
(b) any federal, state or local income or other Tax (i) payable with
respect to the business, assets, properties or operations of the Sellers or any
member of any affiliated group of which any of the Sellers is a member related
to the operation of the Business or ownership of the Acquired Assets for any
period prior to the Effective Date; or (ii) incident to or arising as a
consequence of the negotiation or consummation by the Sellers of this Agreement
and the transactions contemplated hereby;
(c) any liability or obligation under or in connection with the Excluded
Assets or Excluded Liabilities;
(d) any liability or reimbursement obligation to Medicaid, Medicare or any
other third party payor arising out of or related to the operation of the
Business for periods prior to the Effective Date;
(e) any liability or obligation arising prior to the Effective Date to any
employees, agents or independent contractors of the Sellers whether or not
employed by Purchaser after the Effective Date or under any benefit arrangement
with respect thereto; and
(f) all reasonable costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by the Purchaser in connection
with any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this Section 11.
ARTICLE XII - GENERAL RULES REGARDING INDEMNIFICATION
12.1 Indemnification Procedures. The obligations and liabilities of each
indemnifying party hereunder with respect to claims resulting from the assertion
of liability by the other party or indemnified third parties shall be subject to
the Code and the following terms and conditions:
(a) the indemnified party shall give prompt written notice (which in no
event shall exceed 30 days from the date on which the indemnified party first
became aware of such claim or assertion) to the indemnifying party of any claim
which might give rise to a claim by the indemnified party against the
indemnifying party based on the indemnity agreements contained in Section 10 or
11 hereof, stating the nature and basis of said claims and the amounts thereof,
to the extent known;
(b) if any action, suit or proceeding is brought against the indemnified
party with respect to which the indemnifying party may have liability under the
indemnity agreements contained in Section 10 or 11 hereof, the indemnifying
party will have the right at any time to assume and thereafter conduct the
defense of such action, suit or proceeding with counsel of its choice reasonably
satisfactory to the indemnified party (which, in the case of the Sellers, shall
be deemed to include Akin, Gump Strauss, Hauer & Feld, L.L.P.); provided, that
unless and until an indemnifying party assumes the defense of an action, suit or
proceeding, the indemnified party may defend such action, suit or proceeding in
any manner it reasonably may deem appropriate.
(c) The indemnified party shall make available to the indemnifying party
and its attorneys and accountants all books and records of the indemnified party
relating to such proceedings or litigation, and the parties hereto agree to
render to each other such assistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such action,
suit or proceeding.
(d) In no event shall a party defending an action, suit or proceeding
consent to the entry of any judgment or enter into any settlement of any claims
without the written consent of the other party, which consent shall not be
unreasonably withheld or delayed.
(e) All claims for indemnity hereunder shall be net of any Tax benefit,
insurance recovery, mitigation of damages or similar benefit. If any claims are
made by third parties against an indemnified party for which an indemnifying
party would be liable, and it appears likely that such claims might also be
covered by the indemnified party's insurance policies, the indemnified party
shall make a timely claim under such policies and to the extent that such party
obtains any recovery from such insurance, such recovery shall be offset against
any sums due from an indemnifying party (or shall be repaid by the indemnified
party to the extent that an indemnifying party has already paid any such
amounts). If the indemnified party files a claim under any insurance policy, the
indemnified party shall waive its rights of subrogation against the indemnifying
party with respect to such claim and shall use its reasonable best efforts to
cause the insurer to waive its rights of subrogation against the indemnifying
party. The parties acknowledge, however, that if an indemnified party is
self-insured as to any matters, either directly or through an insurer which
assesses retroactive premiums based on loss experience, then to the extent that
the indemnified party bears the economic burden of any claims through
self-insurance or retroactive premiums or insurance ratings, the indemnifying
party's obligation shall only be reduced by any insurance recovery in excess of
the amount paid or to be paid by the indemnified party in insurance premiums.
12.2 Floor and Ceiling Provisions. Notwithstanding anything to the contrary
in Sections 11 or 12, the Sellers' liability under this Agreement shall be
limited to the amount of the Purchase Price. Further, the Sellers shall have
liability hereunder only if, and to the extent that, the aggregate combined
amount of all indemnification obligations of the Sellers exceeds $10,000.
Notwithstanding anything to the contrary in Sections 10 or 12, the Purchaser's
liability under this Agreement shall be limited to Two Hundred Fifty Thousand
Dollars ($250,000.00). Further, the Purchaser shall have liability hereunder
only if, and to the extent that, the aggregate combined amount of all
indemnification obligations of Purchaser exceeds $10,000.
12.3 Other Remedies. The indemnification provisions set forth in Sections
10,11 and 12, are in addition to, and not in derogation of, any statutory,
equitable or common law remedy any party may have for breach of representation,
warranty or covenant.
ARTICLE XIII - TERMINATION
13.1 Termination Rights. This agreement may be terminated at any time
prior to the Closing Date:
(a) by the mutual consent of the Sellers and Purchaser;
(b) by the Sellers or Purchaser if the Closing has not occurred prior to
the expiration or the Interim Period, provided, however, that the right to
terminate this Agreement under this Section 13.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of Closing to occur on or before such
date;
(c) by the Sellers or Purchaser if the other party refuses or fails to
perform any covenant or agreement required to be performed by it under this
Agreement or if any representation or warranty of any other party proves to have
been inaccurate or misleading in any material respect at the time it was made or
at the Closing and the other party refuses or fails after notice to correct or
make not misleading any such misrepresentation or warranty; and
(d) by Purchaser if any of the Assumed Contracts with Columbia, Physicians
Health Partners or PacifiCare are terminated prior to the Closing Date, or the
Sellers receive oral or written notice of termination or intent to terminate
from such Persons prior to the Closing Date.
Any party desiring to terminate this Agreement shall give written notice
of such termination pursuant to paragraph 14. 3 herein.
13.2 Effect of Termination. If this Agreement is terminated as permitted
by Section 13.1 of this Agreement, such termination will be without liability of
any party (or any shareholder, director, officer, employee, agent, consultant,
or representative of such party) to the other parties to this Agreement;
provided, that if such termination results from the failure of a party to use
its best efforts to fulfill a condition to the performance of the obligations of
the other parties or to perform a covenant of this Agreement or from a breach by
any party to this Agreement, such party will be fully liable up to a maximum of
$15,000 for any and all damages, costs, and expenses (including, but not limited
to, reasonable counsel fees) sustained or incurred by the other parties as a
result of such failure or breach.
ARTICLE XIV - MISCELLANEOUS PROVISIONS
14.1 Expenses. The Purchaser shall pay the fees and expenses incurred by it
in connection with the transactions contemplated by this Agreement, and, each
Seller shall pay the fees and expenses incurred by it in connection with the
transactions contemplated by this Agreement.
14.2 Amendment. This Agreement may be amended at any time but only by an
instrument in writing signed by the parties hereto.
14.3 Notices. All notices and other communications hereunder shall be in
writing, shall be delivered personally or mailed by United States registered or
certified mail, postage prepaid, return receipt requested, or by nationally
recognized "next-day" delivery service, to the parties at the addresses set
forth opposite their names on the signature page hereto (or at such other
address for a party as shall be specified by like notice), and shall be deemed
given upon the receipt or the refusal of the delivery thereof.
14.4 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs and
permitted assigns. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the others; provided, however, that the Purchaser may
assign its rights under this Agreement to any of its wholly-owned subsidiaries
so long as the Purchaser remains liable for all of its obligations hereunder.
14.5 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.
14.6 Headings. The headings of the Sections of this Agreement are inserted
for convenience only and shall not constitute a part hereof.
14.7 Entire Agreement. This Agreement, and the other transaction
agreements, contain the entire understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties, conveyances or undertakings other than those expressly set forth
herein. This Agreement supersedes any prior agreements and understandings
between the parties with respect to the subject matter contained herein.
14.8 Waiver. No attempted waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement, will be effective
unless evidenced by an instrument in writing by the party against whom the
enforcement of any such waiver or consent is sought.
14.9 Governing Law; Dispute Resolution. THE TERMS OF THIS AGREEMENT SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF COLORADO WITHOUT REGARD TO CHOICE OF LAW
PRINCIPLES; PROVIDED, HOWEVER, THAT THE BANKRUPTCY COURT SHALL RETAIN EXCLUSIVE
JURISDICTION AS TO ALL MATTERS PERTAINING TO THIS AGREEMENT AND THE TRANSACTION
CONTEMPLATED HEREBY UNTIL THE CLOSING OR SUCH TIME THEREAFTER AS REQUIRED BY THE
CODE. The parties each agree to attempt in good faith to resolve any
controversy, claim or dispute arisin out of or relating to the Agreement, or
breach thereof (hereinafter collectively referred to as a "Dispute"). In the
event such negotiations fail, the Dispute shall first be submitted for initial
fact-finding mediation to a neutral third party reasonably acceptable to both
the Sellers, on the one hand, and the Purchaser, on the other, in Colorado or at
such other place as the parties mutually agree. Such mediator shall be selected
within thirty (30) days of written notice by either party to the other demanding
such fact-finding mediation. In the event that the Sellers and the Purchaser
cannot resolve the Dispute within sixty (60) days of the initial demand for such
fact-finding mediation, the Sellers and the Purchaser each reserve the right to
demand, within 30 days thereafter, that the Dispute be submitted to arbitration.
Either party may initiate an arbitration proceeding by a request in writing
submitted to the other party. Thereupon, the Dispute shall be settled by
arbitration in accordance wit the American Arbitration Association which shall
appoint three (3) arbitrators, one of which shall be selected by the Sellers,
one by the Purchaser, and the third by the arbitrators selected by the parties
(the "Arbitrators"). The arbitration shall be governed by the Commercial
Arbitration Rules of the American Arbitration Association. The award rendered by
the Arbitrators shall be final and enforcement upon the award may be entered by
any court having jurisdiction thereof. The arbitration shall be conducted in
Denver, Colorado or at such other place as the parties mutually agree. The
Arbitrators shall award reasonable attorney's fees to the prevailing party.
Subject to the foregoing, the costs of such fact-finding mediation and/or
arbitration shall be borne equally by the Sellers and the Purchaser.
Notwithstanding anything in this Section 14.9 to the contrary, either party may
seek injunctive relief to enforce any non-competition or confidentiality
obligations of the other party. NOTWITHSTANDING THE FOREGOING, THE DISPUTE
RESOLUTIONS SET FORTH HEREIN ARE EXPRESSLY SUBJECT TO THE PROVISIONS OF THE
CODE.
14.10 Intended Beneficiaries. The rights and obligations contained in this
Agreement are hereby declared by the parties hereto to have been provided
expressly for the exclusive benefit of such entities as set forth herein and
shall not benefit, and do not benefit, any unrelated third parties.
14.11 Mutual Contribution. The parties to this Agreement and their counsel
have mutually contributed to its drafting. Consequently, no provision of this
Agreement shall be construed against any party on the ground that such party
drafted the provision or caused it to be drafted or the provision contains a
covenant of such party.
14.12 Number and Gender. When required by the context, each number
(singular and plural) shall include all numbers and each gender shall include
the feminine, masculine and neuter.
14.13 Severability. If any provisions of this Agreement as applied to any
part or to any circumstance shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances or the
validity or enforceability of this Agreement.
14.14 Certain References. The term "herein", "hereof" or "hereunder" or
similar terms used in this Agreement refer to this entire Agreement and not to
the particular provision in which the term is used. Unless otherwise stated, all
references herein to Articles, Exhibits, Sections, subsections, or other
provisions are references to Articles, Exhibits, Sections, subsections or other
provisions of this Agreement.
14.15 Time of the Essence. Time is of the essence in the performance of
this Agreement and all of its provisions.
[Signature pages follow] h
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLERS:
HEALTHCOR OXYGEN & MEDICAL EQUIPMENT, INC.
By: ___________________________________
Michael D. Ayres, President
HEALTHCOR HOLDINGS, INC.
By: ___________________________________
Michael D. Ayres, President
HEALTHCOR, INC.
By: ___________________________________
Michael D. Ayres, President
ADDRESS: 8150 North Central Expressway,
Suite M-2000
Dallas, Texas 75206
<PAGE>
PURCHASER:
INTERWEST MEDICAL EQUIPMENT DISTRIBUTORS,
INC.
By:___________________________________
James E. Robinson, President
ADDRESS: James E. Robinson
Interwest Home Medical, Inc.
235 East 6100 South
Salt Lake City, Utah 84107
Copies To: A. O. Headman, Jr.
Cohne, Rappaport & Segal
525 East 100 South
Salt Lake City, UT 84102
<PAGE>
Schedule 2.2
(Excluded Assets)
Accounts receivable (including Medicaid and Medicare receivables) accrued,
arising out of, or related to, the operation of the Business prior to the
Effective Date.
Cash and cash equivalents as of the Effective Date.
Insurance policies of the Sellers covering the Acquired Assets.
The Sellers' Medicaid and Medicare provider numbers.
Minute books/stock reports of the Sellers.
Any right to the name HealthCor, HealthCor Holdings, Inc., HealthCor, Inc.
or HealthCor Oxygen & Medical Equipment, Inc. or any derivations thereof and any
trademarks, service marks or common law rights of the Sellers related thereto.
Any rights or benefits of the Sellers under Material Contracts which are
not Assumed Contracts.
<PAGE>
Schedule 2.3
(Assumed Liabilities)
Obligations of the Sellers under the Assumed Contracts from and after the
Effective Date.
Liabilities or other obligations relating to or arising out of the
operation of the Business from and after the Effective Date.
<PAGE>
Schedule 2.5
(Assumed Contracts)
Durable Medical Equipment and Obstructive Sleep Apnea (OSA) Therapy Service
Agreement dated as of May 1, 1997, between Pacific Care, as
successor-in-interest by way of assignment to FHP of Colorado, Inc., Takecare
Insurance Company and HealthCor Oxygen and Medical Equipment, Inc.
Provider Service Agreement dated as of April 1, 1998, by and between
Columbia-HealthOne LLC and HealthCor Holdings, Inc.
Provider Services Agreement dated as of September 1, 1997, by and between
Physician Health Partners, LLC and HealthCor Oxygen and Medical Equipment, Inc.,
as amended by the First Amendment thereto dated May 1, 1998.
Ancillary Provider Services Agreement effective as of July 1, 1996, by and
between HealthCor, Inc. dba HealthCor and ProHealth, Inc., as amended by the
Addendum thereto dated June 1, 1997.
Preferred Vendor Agreement dated as of November 1, 1997, by and among
Private Heathcare Systems, Inc., the shareholders and subscribers listed on
Exhibit C thereto and HeathCor, Inc.
Business Park Net Lease dated as of May 1, 1997, by and between Bedford
Property Investors, Inc. and HealthCor Holdings, Inc.
<PAGE>
Schedule IV
(Seller's Disclosure Schedule)
4.2 Approvals and Consents; Non-Contravention.
Each of the Material Contracts requires consent to the assignment or
the transfer of the rights thereunder or the Acquired Assets subject thereto to
the extent such assignment or transfer is not accomplished pursuant to the Final
Court Approval.
4.6 Governmental Licenses.
Licenses:
Annual Registration of Drug Establishment 1723244/DEV
Colorado Hazardous Materials HMP-03012
USA DOT
Hazardous Materials Certificate of Registration 070698 001 00379
Sales Tax License 26-21143-000
Colorado Department of Agriculture, Scale and Device License
Business License
Billing Numbers:
Palmetto DME
Colorado Medicaid
4.8 Litigation.
None.
4.10 Employee Benefit Plans; Labor Controversies.
None.
4.12 Absence of Certain Changes.
None.
4.14 Contracts and Agreements.
See the Assumed Contracts listed on Schedule 2.5.
Master Lease Agreement effective March 20, 1996, by and between Gelco
Corporation dba GE Capital Lease Services and HealthCor Holdings, Inc. (see
attached list of vehicles subject to Lease which are included in the Acquired
Assets).
Lease Agreement dated February 26, 1996, by and between TIE National
Leasing Corporaiton and HeathCor Oxygen and Medical Equipment, Inc., as
successor-in-interest to VNS Health Services, Inc. (telephone system).
Konica Lease Agreement No. 8330052 dated April 23, 1997, by HealthCor, Inc.
(copier).
Konica Lease Agreement No. 8330050 dated April 23, 1997, by HealthCor, Inc.
(copier).
*The Sellers have 3 additional Konica copier leases which have not been
located.
Konica Lease Agreement No. 8330053 dated April 23, 1997, by HealthCor, Inc.
(fax).
Equipment Lease (Lease Account No. 3665180001) dated August 25, 1998, by
and between Pitney Bowes Credit Corporation and HealthCor, Inc. (postage
machine).
Master Lease Agreement dated as of March 26, 1997, by and between
HealthCor, Inc. and Chase Equipment Leasing, Inc., as amended.
Equipment Lease Agreement (Lease Contract No. 1196) dated as of December
13, 1996, by and between Information Systems Finance, Inc. and HealthCor
Holdings, Inc.
Nellcor Puritan Bennett Leasing.
Winthrop Lease for Computers.
To the extent each is a party thereto, the Sellers are in default under the
above listed equipment leases for payment defaults. The Sellers intend to seek
bankruptcy court and/or lessor approval to the payoff of the leases to cure the
defaults and to transfer the Acquired Assets subject to the leases to Purchaser
free and clear of all Encumbrances.
4.16 Intellectual Property.
None.
4.19 No Inducement.
None.
<PAGE>
Vehicles Included in Acquired Assets
Vehicle Description Vehicle Identification NumLicenseNPlate NumbState
Year, Make and Model
1996 DODGE CARAVAN 1B4GP44R0TB352270 VVT20L TX
1996 FORD E250 1FTHE24Y4THA83146 50757PH CO
1997 FORD E350 VAN 1FTJS34L6VHB15473 63936PH CO
1996 FORD VAN 150 1FTHE24H2THB57129 66144AA CO
1997 FORD VAN 1FTJS34LXVHB21373 63939PH CO
1997 FORD VAN V8 1FTHE24L0VHA88352 67973PH CO
1997 FORD VAN F350 1FTJS3453VHA02054 63938PH CO
1997 FORD ECONOLINE 250 VAN 1FTHE24L9VHA88348 PBK2097 CO
1997 FORD VAN 1FTJS34L5BHA50860 63935PH CO
1996 FORD VAN 350 1FTJS3451VHA19435 63793PH CO
1997 ISUZU CABOVER JALB4B1KXV7006913 74777AA CO
1998 ISUZU NPR JALC4B14XX7000621 80226AA CO
1998 ISUZU BOX TRUCK JALC4B1K9W7004852 71433AA CO
1999 ISUZU NPRHD BOX BAN JALC4B141X7000622 80227AA CO
1997 FORD E250 1FTHE24L9VHA88351 62974PH CO
1997 ISUZU NPR JALB4B1K9V7009057 74778AA CO
1995 ISUZU NPR JALB4B1K057000355 LT9197 TX
1997 FORD F350 4X4 1FTHF3643VED19578 76210AA CO
1997 FORD TRITON V10-350 1FTWS3DVHA59408 63937PH CO
<PAGE>
Schedule V
(Purchaser's Disclosure Schedule)
<PAGE>
Exhibit A
(Earnest Money Escrow Agreement)
<PAGE>
Exhibit B
(Purchaser's Promissory Note)
<PAGE>
Exhibit C
(Bill of Sale)
<PAGE>
Exhibit D
(Confidentiality and Non Competition Agreement)
<PAGE>
Exhibit E
(Liabilities Undertaking)
<PAGE>
Exhibit F
(Security Agreement)
