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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 13, 1996
UNIVERSAL HOSPITAL SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Minnesota 0-20086 41-0760940
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1250 Northland Plaza, 3800 West 80th Street, Bloomington, Minnesota 55431-4442
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 893-3200
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
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On August 13, 1995, Universal Hospital Services, Inc. ("UHS") acquired
Biomedical Equipment Rental & Sales, Inc. ("BERS") pursuant to a Stock
Purchase Agreement among UHS and the shareholders of BERS. As a result
of the acquisition, UHS acquired all of the outstanding capital stock
of BERS, and BERS became a wholly owned subsidiary of UHS. In
connection with the acquisition, UHS paid approximately $11 million to
the shareholders of BERS and repaid approximately $1.65 million of
outstanding indebtedness of BERS.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Financial Statements of Business Acquired
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It is impracticable to provide the required financial statements
of BERS at this time. These financial statements will be provided
in an amendment to this Current Report on Form 8-K as soon as
practicable, but not later than October 28, 1996.
(b) Pro Forma Financial Information
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It is impracticable to provide the required pro forma financial
information relative to the acquisition of BERS at this time. The
pro forma financial information will be provided in an amendment
to this Current Report on Form 8-K as soon as practicable, but not
later than October 28, 1996.
(c) Exhibits
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Exhibit No. Description
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2 Stock Purchase Agreement dated August 13, 1996 by
and among Universal Hospital Services, Inc., the
shareholders of Biomedical Equipment Rental & Sales,
Inc. (the "Shareholders") and James F. Molidor as
representative of the Shareholders
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 21, 1996 UNIVERSAL HOSPITAL SERVICES, INC.
/s/ David E. Dovenberg
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David E. Dovenberg
Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit
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Number Item Page
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2 Stock Purchase Agreement dated August 13,
1996 by and among Universal Hospital
Services, Inc., the shareholders of
Biomedical Equipment Rental & Sales, Inc.
(the "Shareholders") and James F. Molidor
as representative of the Shareholders
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Exhibit 2
STOCK PURCHASE AGREEMENT
BY AND AMONG
UNIVERSAL HOSPITAL SERVICES, INC.,
THE SHAREHOLDERS OF BIOMEDICAL EQUIPMENT
RENTAL & SALES, INC.
and
James F. Molidor
(as Representative of the Shareholders of Biomedical
Equipment Rental & Sales, Inc.)
August 13, 1996
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated August 13, 1996, by and among Universal
Hospital Services, Inc., a Minnesota Corporation ("UHS"), the shareholders of
Biomedical Equipment Rental & Sales, Inc., a North Carolina corporation
("BERS"), as set forth on the signature page hereto (each a "Shareholder" and
together the "Shareholders") and James F. Molidor (acting solely in his capacity
as representative of the Shareholders pursuant to Article 9 hereof (the
"Shareholders' Representative")).
RECITALS
The Shareholders are the owners of all the issued and outstanding
shares of capital stock (the "Shares") of BERS.
UHS desires to buy all of the Shares from the Shareholders, and the
Shareholders desire to sell all of the Shares to UHS, in accordance with and
subject to the terms and provisions herein set forth.
The rights of the Shareholders with respect to certain provisions of
this Agreement will be represented, after the Closing (as defined in Section
1.3), by the Shareholders' Representative.
NOW, THEREFORE, in consideration of the representations, warranties
and covenants contained herein, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF THE SHARES
On and subject to the terms and conditions set forth in this
Agreement, the Shareholders hereby agree to sell, assign and transfer the Shares
to UHS, and UHS hereby agrees to purchase and acquire the Shares from the
Shareholders. At the closing provided for in this Article 1 hereof, the
Shareholders shall sell, assign, transfer and deliver to UHS good and valid
title to the Shares, free and clear of any liens, claims, charges, security
interests, options or other legal or equitable encumbrances.
1.1. Purchase Price. The total purchase price to be paid by UHS to
the Shareholders for the Shares shall be $12,682,454.85, less Debt (as
hereinafter defined) (the "Purchase Price"). For purposes of this Section 1.1,
the term "Debt" shall include all indebtedness for money borrowed, capital
leases and accounts payable in excess of the greater of normal trade terms or 60
days, each as reflected on the Closing Statement of Debt (as defined in Section
5.9), but shall not include such indebtedness or capital leases incurred with
the written consent of UHS after June
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20, 1996 to finance the acquisition of new medical equipment (but shall include
such indebtedness or capital leases incurred to replace existing equipment).
1.2. Payment of Purchase Price. The Purchase Price shall be paid by
UHS to the Shareholders on the Closing Date (as defined in Section 1.3) by wire
transfer of immediately available funds to the account specified by the
Shareholders in Schedule 1.2 provided that, $1,325,000 of such Purchase Price
shall be delivered to the Escrow Agent (as defined in Section 5.11(d)) in order
to fund the indemnification obligations described in Section 5.11.
1.3. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Smith, Helms,
Mulliss & Moore, LLP, 2800 Two Hannover Square, Raleigh, North Carolina 27601,
on August 13, 1996 or on such date thereafter as the parties hereto shall agree
following the satisfaction of the conditions set forth in Article 6 (the
"Closing Date"). The Closing will be effective as of the close of business on
the Closing Date.
1.4. Deliveries by the Shareholders at Closing. At the Closing, the
Shareholders shall deliver to UHS (a) stock certificates representing the
Shares, duly endorsed for transfer or accompanied by duly executed stock powers
endorsed in blank with requisite stock transfer tax stamps, if any, attached,
(b) the documents contemplated by Section 6.3 and (c) all other documents,
instruments and writings required by this Agreement to be delivered by the
Shareholders at the Closing.
1.5. Deliveries by UHS at Closing. At the Closing, UHS (a) shall pay
to the Shareholders the Purchase Price as provided in Section 1.2, (b) shall
deliver to the Shareholders (i) the documents contemplated by Section 6.2 and
(ii) all other documents, instruments and writings required by this Agreement to
be delivered by UHS at the Closing and (c) shall deliver $1,325,000 of such
Purchase Price to the Escrow Agent pursuant to Section 5.11(d).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF UHS
UHS hereby represents and warrants to the Shareholders as follows:
2.1. Organization and Qualification. UHS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota, and has the requisite corporate power to carry on its business as now
conducted.
2.2. Authority Relative to this Agreement; Non-Contravention. UHS has
the requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by UHS and the consummation by UHS of the transactions contemplated
hereby have been duly authorized by the Board of Directors of UHS, and no other
corporate proceedings on the part of UHS are necessary to authorize
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this Agreement and such transactions. This Agreement has been duly executed and
delivered by UHS and constitutes a valid and binding obligation of UHS,
enforceable in accordance with its terms. UHS is not subject to, or obligated
under, any provision of (a) its Charter (as hereinafter defined) or Bylaws, (b)
any agreement, arrangement or understanding, (c) any license, franchise or
permit or (d) any law, regulation, order, judgment or decree, which would be
breached or violated, or in respect of which a right of termination or
acceleration or any encumbrance on any of its assets would be created, by its
execution, delivery and performance of this Agreement and the consummation by it
of the transactions contemplated hereby, other than any such breaches or
violations which will not, individually or in the aggregate, have a material
adverse effect on the business, operations or financial condition of UHS, or the
consummation of the transactions contemplated hereby. No authorization, consent
or approval of, or filing with, any public body, court or authority is necessary
on the part of UHS for the consummation by it of the transactions contemplated
by this Agreement. As used in this Agreement, the term "Charter" with respect to
any corporation shall mean those instruments that at that time constitute its
charter as filed or recorded under the general corporation or other applicable
law of the jurisdiction of incorporation or association, including the articles
or certificate of incorporation or association, any amendments thereto and any
articles or certificates of merger or consolidation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each of the Shareholders hereby represents and warrants to UHS as
follows:
3.1. Organization and Qualification. BERS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina, and has the requisite corporate power to carry on its business
as now conducted. The copies of the Charter and Bylaws of BERS which have been
provided to UHS prior to the date of this Agreement are correct and complete and
reflect all amendments made thereto through the date hereof. BERS is licensed
or qualified to do business in every jurisdiction in which the nature of its
business or its ownership of property requires it to be licensed or qualified,
except where the failure to be so licensed or qualified would not have or would
not reasonably be expected to have a material adverse effect on the business,
operations or financial condition of BERS.
3.2. Authority Relative to this Agreement; Non-Contravention. Each of
the Shareholders has the requisite power and authority to enter into this
Agreement and to carry out such Shareholders obligations hereunder. This
Agreement has been duly authorized, executed and delivered by each of the
Shareholders and constitutes a valid and binding obligation of each of the
Shareholders, enforceable in accordance with its terms. None of BERS or the
Shareholders is subject to, or obligated under, any provision of (i) in the case
of BERS, its Charter or Bylaws, (ii) any agreement, arrangement or
understanding, (iii)
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any license, franchise or permit or (iv) any law, regulation, order, judgment or
decree, which would be breached or violated, or in respect of which a right of
termination or acceleration or any encumbrance on any of the assets of BERS or
the Shares would be created, by the execution, delivery or performance of this
Agreement, or the consummation of the transactions contemplated hereby. No
authorization, consent or approval of, or filing with, any public body, court or
authority is necessary on the part of BERS or the Shareholders for the
consummation by the Shareholders of the transactions contemplated by this
Agreement.
3.3. Capitalization; Ownership of Shares. The authorized capital
stock of BERS consists of 100,000 shares of common stock, $1.00 par value (the
"BERS Common Stock"). The issued and outstanding shares of BERS Common Stock
consists solely of the 5,000 Shares. Each of the Shareholders represents and
warrants that such Shareholder owns the Shares reflected as owned by her on
Schedule 3.3, free and clear of any lien, pledge, security interest, encumbrance
or charge of any kind, and on the Closing Date, the delivery by such Shareholder
of stock certificates representing the Shares owned by her in a manner set forth
in Section 1.4 will transfer good and valid title to such Shares to UHS, free
and clear of any lien, pledge, security interest, encumbrance or charge of any
kind. The issued and outstanding shares of BERS Common Stock are duly
authorized, validly issued, fully paid and nonassessable and have not been
issued in violation of any preemptive rights. There are no options, warrants,
conversion privileges or other rights, agreements, arrangements or commitments
obligating BERS or the Shareholders to issue, sell, purchase or redeem any
shares of BERS's capital stock or securities or obligations of any kind
convertible into or exchangeable for any shares of, nor are there any stock
appreciation, phantom or similar rights outstanding based upon the book value or
any other attribute of any of the capital stock of BERS, or the earnings or
other attributes of BERS.
3.4. Financial Statements.
(a) The Shareholders have furnished UHS with copies of (i) the
unaudited balance sheet of BERS as of June 30, 1996 (the "Latest Balance Sheet")
and the unaudited statements of income of BERS for the eight-month period then
ended (such statements and the Latest Balance Sheet herein referred to the
"Latest Financial Statements") and (ii) the unaudited balance sheet as of
October 31, 1993 and the related statements of income, shareholders' equity and
cash flows for the year then ended (the "1993 Financial Statement"). The Latest
Financial Statements and the 1993 Financial Statements are based upon the
information contained in the books and records of BERS and fairly present the
financial condition of BERS as of the dates thereof and results of operations,
changes in shareholders' equity and cash flows for the periods referred to
therein.
(b) The Shareholders have furnished UHS with copies of the audited
balance sheet of BERS as of October 31, 1994 and 1995 and the related statements
of income, shareholders' equity and cash flows for the year ended 1995 (the
"Audited Financial Statements"). The Audited Financial Statements (i) are based
upon the information contained in the books and records of BERS; (ii) fairly
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present the financial condition of BERS as of October 31, 1994 and 1995 and
results of operations for the year ended October 31, 1995; and (iii) have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis.
3.5. No Subsidiaries. BERS does not own any stock, partnership
interest, joint venture interest or any other security issued by any other
corporation, organization or entity.
3.6. Absence of Undisclosed Liabilities. All of the obligations or
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, and regardless of when asserted, including Taxes
(as defined in Section 3.12)) with respect to or based upon transactions or
events heretofore occurring ("Liabilities"), required to be reflected on the
Latest Balance Sheet in accordance with generally accepted accounting principles
have been so reflected. BERS has no Liabilities except (a) as reflected on the
Latest Balance Sheet, (b) Liabilities which have arisen after the date of the
Latest Balance Sheet in the ordinary course of business, none of which is a
material uninsured liability, and (c) as otherwise disclosed on Schedule 3.6.
3.7. No Material Adverse Changes. Except as set forth on Schedule
3.7, since the date of the Latest Balance Sheet, there has been no material
adverse change in, and no event, occurrence or development in the business of
BERS that, taken together with other events, occurrences and developments with
respect to such business, has had, or would reasonably be expected to have, a
material adverse effect on the business, operations or financial condition of
BERS or the ability of the Shareholders to consummate the transactions
contemplated hereby.
3.8. Absence of Certain Developments. Except as set forth in the
Latest Balance Sheet and the Latest Financial Statements or on Schedule 3.8,
since May 31, 1996, BERS has not:
(a) borrowed any amount or incurred or become subject to any liability
in excess of $25,000 in the aggregate, except (i) current liabilities incurred
in the ordinary course of business and (ii) liabilities under contracts entered
into in the ordinary course of business;
(b) mortgaged, pledged or subjected to any lien, charge or any other
encumbrance, any of its assets, except (i) liens for current property taxes not
yet due and payable, (ii) temporary liens imposed by law for goods purchased by
BERS and not yet paid for not exceeding $50,000 in the aggregate and (iii) liens
incurred in the ordinary course of business not exceeding $25,000 in the
aggregate;
(c) discharged or satisfied any lien or encumbrance or paid any
liability, in each case with a value in excess of $100,000, other than current
liabilities paid in the ordinary course of business;
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(d) sold, assigned or transferred (including, without limitation,
transfers to any employees, affiliates or shareholders) any tangible assets, or
canceled any debts or claims, in each case, except in the ordinary course of
business;
(e) sold, assigned or transferred (including, without limitation,
transfers to any employees, affiliates or shareholders) any patents, trademarks,
trade names, copyrights, trade secrets or other intangible assets;
(f) disclosed, to any person other than UHS and authorized
representatives of UHS, any proprietary confidential information, other than
pursuant to a confidentiality agreement prohibiting the use or further
disclosure of such information, which agreement is set forth on Schedule 3.8 and
is in full force and effect on the date hereof;
(g) waived any rights of material value or suffered any extraordinary
losses or adverse changes in collection loss experience, whether or not in the
ordinary course of business or consistent with past practice;
(h) declared or paid any dividends or other distributions with respect
to any shares of BERS's capital stock or redeemed or purchased, directly or
indirectly, any shares of BERS's capital stock or any options, except as
permitted by Section 4.1(b)(iv);
(i) issued, sold or transferred any of its equity securities,
securities convertible into or exchangeable for its equity securities or
warrants, options or other rights to acquire its equity securities, or any bonds
or debt securities;
(j) taken any other action or entered into any other transaction other
than in the ordinary course of business and in accordance with past custom and
practice, or entered into any transaction with any employee, officer, director,
affiliate or shareholder, other than employment arrangements otherwise disclosed
in this Agreement and the Schedules hereto, or the transactions contemplated by
this Agreement;
(k) suffered any material theft, damage, destruction or loss of or to
any property or properties owned or used by it, whether or not covered by
insurance;
(l) made or granted any bonus or any wage, salary or compensation
increase to any director, officer, employee or consultant or made or granted any
increase in any employee benefit plan or arrangement, or amended or terminated
any existing employee benefit plan or arrangement, or adopted any new employee
benefit plan or arrangement or made any commitment or incurred any liability to
any labor organization, except as permitted by Section 4.1(c);
(m) made any single capital expenditure or commitment therefor in
excess of $5,000;
(n) made any loans or advances to, or guarantees for the benefit of,
any persons;
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(o) made charitable contributions or pledges which in the aggregate
exceed $1,000;
(p) made any change in accounting principles or practices from those
utilized in the preparation of the Annual Financial Statements; or
(q) agreed to do any of the foregoing.
3.9. Rental Equipment; Inventory.
(a) Schedule 3.9(a) contains a materially complete and accurate
summary of BERS's pool of rental equipment as of June 30, 1996 (the "Rental
Equipment"). Except as otherwise indicated on Schedule 3.9(a), the Rental
Equipment (i) is of a quality and quantity usable and salable at BERS's normal
profit levels, in each case, in the ordinary course of BERS's business, (ii) is
not slow-moving as determined in accordance with past practices, obsolete or
damaged and (iii) is merchantable and fit for its particular use. BERS has on
hand or has ordered and expects timely delivery of such quantities of Rental
Equipment as are reasonably required timely to fill current orders on hand which
require delivery within 60 days and to maintain customer rentals at BERS's
normal level of operations. As of the date of the Latest Balance Sheet, the
values at which rental equipment of BERS is carried on the Latest Balance Sheet
are in accordance with generally accepted accounting principles.
(b) Schedule 3.9(b) contains a materially complete and accurate
summary of BERS's inventory as of June 30, 1996 (the "Inventory"). Except as
otherwise indicated on Schedule 3.9(a), the Inventory (i) is of a quality and
quantity usable and salable at BERS's normal profit levels, in each case, in the
ordinary course of BERS's business, (ii) is not slow-moving as determined in
accordance with past practices, obsolete or damaged and (iii) is merchantable
and fit for its particular use. BERS has on hand or has ordered and expects
timely delivery of such quantities of inventory as are reasonably required
timely to fill current orders on hand which require delivery within 60 days and
to maintain shipment of products at its normal level of operations. As of the
date of the Latest Balance Sheet, the values at which inventory of BERS is
carried on the Latest Balance Sheet are in accordance with generally accepted
accounting principles.
3.10. Accounts Receivable. The accounts receivable reflected on the
Latest Balance Sheet are valid receivables, are not subject to valid
counterclaims or setoffs and are collectible in accordance with their terms,
except to the extent of the bad debt reserve reflected on the Latest Balance
Sheet or as otherwise described on Schedule 3.10.
3.11. Properties.
(a) BERS does not own any real property. The real property demised by
the leases (the "Leases") described in Schedule 3.11 constitutes all of the real
property used or occupied by BERS (the "Real Property"). The Real Property has
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access, sufficient for the conduct of BERS's business as now conducted or as
presently proposed to be conducted, to public roads and to all utilities,
including electricity, sanitary and storm sewer, potable water, natural gas, as
applicable, and such other utilities, as are required to be used in the
operation of the business of BERS at that location.
(b) The Leases are in full force and effect, and BERS holds a valid
and existing leasehold interest under each of the Leases for the term set forth
in Schedule 3.11. BERS has delivered to UHS complete and accurate copies of
each of the Leases, and none of the Leases has been modified in any respect,
except to the extent that such modifications are disclosed by the copies
delivered to UHS. BERS is not in default, and no circumstances exist which, if
unremedied, would, either with or without notice or the passage of time or both,
result in such default under any of the Leases; nor, to the best knowledge of
BERS, is any other party to any of the Leases in default.
(c) BERS owns good and marketable title to each of the tangible
properties and tangible assets reflected on the Latest Balance Sheet or acquired
since the date thereof, free and clear of all liens and encumbrances, except for
(i) liens for current taxes not yet due and payable, (ii) liens set forth on
Schedule 3.11, (iii) the properties subject to the Leases, (iv) assets disposed
of since the date of the Latest Balance Sheet in the ordinary course of
business, (v) liens imposed by law and incurred in the ordinary course of
business for obligations not yet due to carriers, warehousemen, laborers and
materialmen, (vi) temporary liens imposed by law for goods purchased by BERS and
not yet paid for not exceeding $50,000 in the aggregate and (vii) liens in
respect of pledges or deposits under workers' compensation laws.
(d) All of the buildings, machinery, equipment and other tangible
assets necessary for the conduct of BERS's business are in good condition and
repair, ordinary wear and tear excepted, and are usable in the ordinary course
of business. There are no defects in such assets or other conditions relating
thereto which, in the aggregate, materially adversely affect the operation or
value of such assets. BERS owns, or leases under valid leases, all buildings,
machinery, equipment and other tangible assets necessary for the conduct of its
business.
(e) BERS is not in violation of any applicable zoning ordinance or
other law, regulation or requirement relating to the operation of any properties
used in the operation of its business; and none of BERS or the Shareholders have
received any notice of any such violation, or of the existence of any
condemnation proceeding with respect to any properties owned or leased by BERS.
(f) None of BERS or the Shareholders has knowledge of improvements
made or contemplated to be made by any public or private authority, the costs of
which are to be assessed as special taxes or charges against any of the Real
Property, and there are no present assessments.
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3.12. Tax Matters.
(a) BERS has had a valid election to be treated as an S corporation
under Section 1362 of the Internal Revenue Code of 1986, as amended (the
"Code"), in effect for all taxable years, such election has not been revoked or
otherwise terminated and no event has occurred which with a lapse of time would
cause such election to be revoked or otherwise terminated. Except as disclosed
in Schedule 3.17 with respect to employee benefit plans, BERS never has been a
member of any affiliated, combined or unitary group for purposes of any Taxes
(as hereinafter defined).
(b) BERS has: (i) timely filed (or has had timely filed on its
behalf) all returns, declarations, reports, estimates, information returns,
schedules and statements ("Returns") required to be filed or sent by it in
respect of any Taxes or required to be filed or sent by it by any taxing
authority having jurisdiction; (ii) timely and properly paid (or has had paid on
its behalf) all Taxes shown to be due and payable on such Returns; (iii)
established on its Latest Balance Sheet, in accordance with generally accepted
accounting principles, reserves that are adequate for the payment of any Taxes
not yet due and payable; (iv) complied with all applicable laws, rules and
regulations relating to the withholding of Taxes and the payment thereof. All
Returns filed by or on behalf of BERS are correct and complete. BERS has not
requested any extension of time within which to file any Return, which Return
has not since been filed. There are no liens for Taxes upon any assets of BERS,
except liens for Taxes not yet due.
(c) BERS has provided to UHS true and complete copies of all Returns
filed by or on behalf of BERS for all periods ending on or after December 31,
1990.
(d) No deficiency for any Taxes has been proposed, asserted or
assessed against BERS that has not been resolved and paid in full. No waiver,
extension or comparable consent given by BERS regarding the application of the
statute of limitations with respect to any Taxes or Returns is outstanding, nor
is any request for any such waiver or consent pending. Except as set forth on
Schedule 3.12, since December 31, 1990, there has been no Tax audit or other
administrative proceeding or court proceeding with regard to any Taxes or
Returns, nor is any such Tax audit or other proceeding pending, nor is any such
Tax audit or other proceeding threatened with regard to any Taxes or Returns.
BERS does not expect the assessment of any additional Taxes of BERS and is not
aware of any unresolved questions, claims or disputes concerning the liability
for Taxes of BERS which would exceed the estimated reserves established on its
books and records.
(e) BERS is not a party to any tax sharing agreement, contract or
arrangement that would cause BERS to be obligated to pay any Tax obligation of
any other person, except as contemplated in Section 4.1(b)(iv). BERS is not a
party to any agreement, contract or arrangement that would result, separately or
in the aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code and the consummation of the transactions
contemplated by this Agreement will not be a factor causing payments to be made
by BERS that are not
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deductible (in whole or in part) under Section 280G of the Code. No property of
BERS is being treated by BERS as being owned by another person under the
provisions of Section 168(f)(8) of the Code (as in effect prior to amendment by
the Tax Reform Act of 1986) or is being treated by BERS as "tax-exempt use
property" within the meaning of Section 168(h) of the Code. BERS has not engaged
in any transaction that would result in a deemed election under Section 338(e)
of the Code and will not engage in any such transaction within any applicable
"consistency period" (as such term is defined in Section 338 of the Code). BERS
has not filed any consent under Section 341(f) of the Code. BERS is not, and has
not been at any time, a "United States real property holding corporation" within
the meaning of Section 897(c)(2) of the Code.
(f) For purposes of this Agreement, the term "Taxes" means all taxes,
charges, fees, levies, or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, social security,
unemployment, excise, estimated, severance, stamp, occupation, property (real or
personal), or other taxes, customs duties, fees, assessments, or charges of any
kind whatsoever, including, without limitation, all interest and penalties
thereon, and additions to tax or additional amounts imposed by any taxing
authority, domestic or foreign, upon BERS.
3.13. Contracts and Commitments.
(a) Except as set forth on Schedule 3.13, BERS (i) is not a party to
any collective bargaining agreement or contract with any labor union, (ii) is
not a party to any written or oral contract for the employment of any officer,
individual employee or other person on a full-time or consulting basis, or
relating to severance pay for any such person, (iii) is not a party to any (A)
written or oral agreement or understanding to repurchase assets previously sold
(or to indemnify or otherwise compensate the purchaser in respect of such
assets) or (B) agreement for the sale of any capital asset, (iv) is not a party
to any (A) contract or group of related contracts with the same party for the
purchase, sale, rental or lease of products, equipment or services, under which
the undelivered balance of such products, equipment or services under such
contract has a price in excess of $5,000 for any individual contract or $15,000
for any group of related contracts in the aggregate, (B) other contract or group
of related contracts with the same party continuing over a period of more than
six months from the date or dates thereof, which is not entered into in the
ordinary course of business and is either not terminable by it on 30 days' or
less notice without penalty or involves more than $5,000 for any individual
contract or $15,000 in the aggregate for any group of related contracts, or (C)
other agreement material to the business of BERS which is not entered into in
the ordinary course of business, (v) does not have any commitments for capital
expenditures in excess of $5,000, (vi) is not a party to any confidentiality
agreement or any agreement which prohibits BERS from freely engaging in business
anywhere in the world, (vii) is not a party to any agreement or indenture
relating to the borrowing of money or to mortgaging, pledging or otherwise
placing a lien on any of the assets of BERS, (viii) has not guaranteed any
obligation for borrowed money or otherwise and (ix) is not a party to any
license agreement or agreement providing for the payment or receipt of
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royalties or other compensation by BERS in connection with the intellectual
property rights listed on Schedule 3.22.
(b) Except as disclosed on Schedule 3.13, (i) BERS has performed all
obligations required to be performed by it prior to the date hereof in
connection with the contracts or commitments set forth on Schedule 3.13, and
BERS is not in receipt of any claim of default under any contract or commitment
set forth on Schedule 3.13, except for any failures to perform, breaches or
defaults which would not, individually or in the aggregate, have a material
adverse effect on the business, operations or financial condition of BERS; (ii)
BERS has no present expectation or intention of not fully performing any
material obligation pursuant to any contract or commitment set forth on Schedule
3.13; and (iii) to the best knowledge of BERS and the Shareholders, there has
been no cancellation, breach or anticipated breach by any other party to any
contract or commitment set forth on Schedule 3.13, except for any cancellation,
breach or anticipated breach which would not, individually or in the aggregate,
have a material adverse effect on the business, operations or financial
condition of BERS.
(c) Prior to the date of this Agreement, UHS has been supplied with a
true and correct copy of each written contract or commitment, and a written
description of each oral contract or commitment, set forth on Schedule 3.13,
together with all amendments, waivers or other changes thereto.
3.14. Litigation. Except as set forth on Schedule 3.14, there are no
actions, suits, proceedings, orders or investigations pending or, to the best
knowledge of BERS and the Shareholders, threatened against BERS, at law or in
equity, or before or by any federal, state or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign. None
of the matters set forth on Schedule 3.14, individually or in the aggregate,
will have or could reasonably be expected to have a material adverse effect on
the business, operations or financial condition of BERS.
3.15. No Brokers or Finders. There are no claims for brokerage
commissions, finders' fees, investment advisory fees or similar compensation in
connection with the transactions contemplated by this Agreement, based on any
arrangement, understanding, commitment or agreement made by or on behalf of the
Shareholders or BERS, obligating BERS or UHS to pay such claim.
3.16. Employees. Except as set forth on Schedule 3.16, no officers
or employees of BERS have announced their resignation, and, to the best
knowledge of BERS and the Shareholders, no such resignations are anticipated
except as set forth as Schedule 3.16. Except as set forth on Schedule 3.16,
BERS has complied with all laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining, non-discrimination and the payment of social security and other
taxes, except where the failure to so comply would not, individually or in the
aggregate, have a material adverse effect on the business, operations or
financial condition of BERS.
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3.17. Employee Benefit Plans.
(a) Definitions. For the purpose of this Section 3.17, "ERISA" means
the Employee Retirement Income Security Act of 1974, as amended, and the term
"plan" means every plan, fund, contract, program and arrangement (whether
written or not) which is maintained or contributed to by BERS for the benefit of
present or former employees of BERS, including those intended to provide: (a)
medical, surgical, health care, hospitalization, dental, vision, workers'
compensation, life insurance, death, disability, legal services, severance,
sickness or accident benefits (whether or not defined in Section 3(1) of ERISA),
(b) pension, profit sharing, stock bonus, retirement, supplemental retirement or
deferred compensation benefits (whether or not tax qualified and whether or not
defined in Section 3(2) of ERISA), (c) bonus, incentive compensation, stock
option, stock appreciation right, phantom stock or stock purchase benefits, or
(d) salary continuation, unemployment, supplemental unemployment, termination
pay, vacation or holiday benefits (whether or not defined in Section 3(3) of
ERISA).
The term "plan" shall also include every such plan, fund, contract,
program and arrangement: (a) which BERS has committed to implement, establish,
adopt or contribute to in the future, (b) for which BERS is or may be
financially liable as a result of the direct sponsor's affiliation to BERS or
its owners (whether or not such affiliation exists at the date of this Agreement
and notwithstanding that the plan is not maintained by BERS for the benefit of
its employees or former employees), (c) which is in the process of terminating
(but such term does not include any arrangement that has been terminated and
completely wound up prior to the date of this Agreement such that BERS has no
present or potential liability with respect to such arrangement), or (d) for or
with respect to which BERS is or may become liable under any common law
successor doctrine, express successor liability provisions of law, provisions of
a collective bargaining agreement, labor or employment law or agreement with a
predecessor employer.
(b) Disclosure of Plans and Other Information. Schedule 3.17 sets
forth all plans by name and brief description identifying: (i) the type of plan,
(ii) the funding arrangements for the plan, (iii) the sponsorship of the plan,
and (iv) the participating employers in the plan. Schedule 3.17 also sets forth
the identity of each corporation, trade or business (separately for each
category below that applies): (i) which is (or was during the preceding five
years) under common control with BERS within the meaning of Section 414(b) or
(c) of the Code; (ii) which is (or was during the preceding five years) in an
affiliated service group with BERS within the meaning of Section 414(m) of the
Code; (iii) which is (or was during the preceding five years) the legal employer
of persons providing services to BERS as leased employees within the meaning of
Section 414(n) of the Code; and (iv) with respect to which BERS is a successor
employer for purposes of group health or other welfare plan continuation rights
(including Section 601 et. seq. of ERISA) or the Family and Medical Leave Act.
BERS has furnished UHS with true and complete copies of: (i) the most
recent determination letter, if any, received by BERS from the Internal Revenue
Service regarding each plan; (ii) the most recent financial statements and
annual
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report or return, if any, for each plan; (iii) the most recent actuarial
valuation reports, if any, for each plan; and (iv) all documents, trust
agreements, insurance contracts, service agreements and all related contracts
and documents (including any employee summaries and material employee
communications) with respect to each plan.
Schedule 3.17 identifies each employee of BERS who is: (i) absent from
active employment due to short or long term disability; (ii) absent from active
employment on a leave pursuant to the Family and Medical Leave Act or a
comparable state law; (iii) absent from active employment on any other leave or
approved absence; (iv) absent from active employment due to military service
(under conditions that give the employee rights to re-employment); or (v) not an
"at will" employee.
With respect to continuation rights arising under federal or state law
as applied to plans that are group health plans (as defined in Section 601 et.
seq. of ERISA), Schedule 3.17 identifies: (i) each employee, former employee or
qualifying beneficiary who has elected continuation; and (ii) each employee,
former employee or qualifying beneficiary who has not elected continuation
coverage but is still within the period in which such election may be made.
(c) Compliance With Law. Except as disclosed on Schedule 3.17: (i)
all plans intended to be tax qualified under Section 401(a) or Section 403(a) of
the Code are so qualified; (ii) all trusts established in connection with plans
which are intended to be tax exempt under Section 501(a) or (c) of the Code are
so tax exempt; (iii) to the extent required either as a matter of law or to
obtain the intended tax treatment and tax benefits, all plans comply in all
material respects with the requirements of ERISA and the Code; (iv) all plans
have been administered in accordance with the documents and instruments
governing the plans; (v) all reports and filings with governmental agencies
(including but not limited to the Department of Labor, Internal Revenue Service,
Pension Benefit Guaranty Corporation and the Securities and Exchange Commission)
required in connection with each plan have been timely made; (vi) all material
disclosures and notices required by law or plan provisions to be given to
participants and beneficiaries in connection with each plan have been properly
and timely made; and (vii) BERS has made a good faith effort to comply with the
reporting and taxation requirements for FICA taxes with respect to any deferred
compensation arrangements under Section 3121(v) of the Code. For purposes of
this Section 3.17(c), any failure to comply with the requirements of ERISA or
the Code resulting in a fine or penalty shall be deemed to be "material."
(d) Funding. Except as disclosed on Schedule 3.17: (i) all
contributions, premium payments and other payments required to be made in
connection with the plans as of the date of this Agreement have been made; (ii)
proper accrual has been made on the books of BERS for all contributions, premium
payments and other payments due in the current fiscal year but not made as of
the date of this Agreement; (iii) no contribution, premium payment or other
payment has been made in support of any plan that is in excess of the allowable
deduction for federal income tax purposes for the year with respect to which the
contribution was
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made (whether under Section 162, Section 280G, Section 404, Section 419, Section
419A of the Code or otherwise); and (iv) with respect to each plan that is
subject to Section 301 et. seq. of ERISA or Section 412 of the Code, BERS is not
liable for any accumulated funding deficiency as that term is defined in Section
412 of the Code and the projected benefit obligations as of the most recent date
as of which they were determined do not exceed the assets of the plan.
(e) Absence of Certain Claims. Except as disclosed on Schedule 3.17:
(i) no action, suit, charge, complaint, proceeding, hearing, investigation or
claim is pending with regard to any plan other than routine uncontested claims
for benefits; (ii) the consummation of the transactions contemplated by this
Agreement will not cause any plan to increase benefits payable to any
participant or beneficiary; (iii) the consummation of the transactions
contemplated by this Agreement will not: (A) entitle any current or former
employee of BERS to severance pay, unemployment compensation or any other
payment, benefit or award, or (B) accelerate or modify the time of payment or
vesting, or increase the amount of any benefit, award or compensation due any
such employee; (iv) no plan is currently under examination or audit by the
Department of Labor, the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the Securities and Exchange Commission; (v) BERS has no actual or
potential liability arising under Title IV of ERISA as a result of any plan that
has terminated or is in the process of terminating; (vi) BERS has no actual or
potential liability under section 4201 et. seq. of ERISA for either a complete
withdrawal or a partial withdrawal from a multiemployer plan; and (vii) with
respect to the plans, BERS has no liability (either directly or as a result of
indemnification) for (and the transaction contemplated by this Agreement will
not cause any liability for): (A) any excise taxes under section 4971 through
section 4980B, section 4999, section 5000 or any other section of the Code, or
(B) any penalty under section 502(i), section 502(l), Part 6 of Title I or any
other provision of ERISA, or (C) any excise taxes, penalties, damages or
equitable relief as a result of any prohibited transaction, breach of fiduciary
duty or other violation under ERISA or any other applicable law.
(f) Post-Separation Benefits. Except as disclosed on Schedule 3.17:
(i) all accruals required under FAS 106 have been properly accrued on the
financial statements of BERS; (ii) no condition, agreement or plan provision
limits the right of BERS to amend, cut back or terminate any plan (except to the
extent such limitation arises under ERISA); and (iii) BERS has no liability for
life insurance, death or medical benefits after separation from employment other
than: (A) death benefits under the plans identified on Schedule 3.17, or (B)
health care continuation benefits described in section 4980B of the Code.
3.18. Insurance. Schedule 3.18 lists each insurance policy
maintained by BERS with respect to its properties and assets. Prior to the date
hereof, the Shareholders have delivered to UHS complete and accurate copies of
each of the insurance policies described on Schedule 3.18. All such insurance
policies are in full force and effect, and BERS is not in default with respect
to its obligations under any of such insurance policies.
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3.19. Affiliate Transactions. Except as set forth on Schedule 3.19
and other than as described in or contemplated by this Agreement and the
Schedules hereto, no officer, director or employee of BERS or any member of the
immediate family of any such officer, director or employee, or any entity in
which any of such persons owns any beneficial interest (other than any publicly-
held corporation whose stock is traded on a national securities exchange or in
the over-the-counter market and less than one percent of the stock of which is
beneficially owned by any of such persons) (collectively "insiders"), has any
agreement with BERS (other than normal employment arrangements) or any interest
in any property, real, personal or mixed, tangible or intangible, used in or
pertaining to the business of BERS (other than ownership of capital stock of
BERS). None of the insiders has any direct or indirect interest in any
competitor, supplier or customer of BERS or in any person, firm or entity from
whom or to whom BERS leases any property, or in any other person, firm or entity
with whom BERS transacts business of any nature. For purposes of this Section
3.19, the members of the immediate family of an officer, director or employee
shall consist of the spouse, parents, children, siblings, mothers-and fathers-
in-law, sons- and daughters-in-law, and brothers- and sisters-in-law of such
officer, director or employee.
3.20. Compliance with Laws; Permits. BERS has complied in all
respects with all applicable laws and regulations of foreign, federal, state and
local governments and all agencies thereof which affect the business or any
leased properties of BERS and to which BERS may be subject (including, without
limitation, any state or federal acts (including rules and regulations
thereunder) regulating or otherwise affecting, equal employment opportunity,
employee health and safety or the environment), except where the failure to so
comply would not, individually or in the aggregate, have a material adverse
effect on the business, operations or financial condition of BERS or the
Shareholders' ability to consummate the transactions contemplated hereby; and no
claims have been filed by any such governments or agencies against BERS alleging
such a violation of any such law or regulation which have not been resolved to
the satisfaction of such governments or agencies. BERS is not relying on any
exemption from or deferral of any such applicable law, regulation or other
requirement that would not be available to UHS after it acquires the Shares.
BERS holds all of the permits, licenses, certificates and other authorizations
of foreign, federal, state and local governmental agencies required for the
conduct of its business, except where failure to obtain such authorizations
would not, individually or in the aggregate, have a material adverse effect on
the business, operations or financial condition of BERS, or the ability of the
Shareholders to consummate the transactions contemplated hereby. BERS has not
made or agreed to make gifts of money, other property or similar benefits (other
than incidental gifts of articles of nominal value) to any actual or potential
customer, supplier, governmental employee or any other person in a position to
assist or hinder BERS in connection with any actual or proposed transaction.
3.21. Environmental Matters.
(a) As used in this Section 3.21, the following terms shall have the
following meanings:
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(i) "Hazardous Materials" means any dangerous, toxic or hazardous
pollutant, contaminant, chemical, waste, material or substance as defined
in or governed by any federal, state or local law, statute, code,
ordinance, regulation, rule or other requirement relating to such substance
or otherwise relating to the environment or human health or safety,
including without limitation any waste, material, substance, pollutant or
contaminant that might cause any injury to human health or safety or to the
environment or might subject BERS to any imposition of costs or liability
under any Environmental Law.
(ii) "Environmental Laws" means all applicable federal, state,
local and foreign laws, rules, regulations, codes, ordinances, orders,
decrees, directives, permits, licenses and judgments relating to pollution,
contamination or protection of the environment (including, without
limitation, all applicable federal, state, local and foreign laws, rules,
regulations, codes, ordinances, orders, decrees, directives, permits,
licenses and judgments relating to Hazardous Materials in effect as of the
date of this Agreement).
(iii) "Release" shall mean the spilling, leaking, disposing,
discharging, emitting, depositing, ejecting, leaching, escaping or any
other release or threatened release, however defined, whether intentional
or unintentional, of any Hazardous Material.
(b) BERS and the Real Property are in material compliance with all
applicable Environmental Laws.
(c) BERS has obtained, and maintained in full force and effect, all
environmental permits, licenses, certificates of compliance, approvals and other
authorizations necessary to conduct its business and use or occupy the Real
Property (collectively, the "Environmental Permits"). A copy of each such
Environmental Permit shall be provided by BERS to UHS at least 14 days prior to
the Closing. BERS has conducted its business in compliance with all terms and
conditions of the Environmental Permits. BERS has filed all reports and
notifications required to be filed under and pursuant to all applicable
Environmental Laws.
(d) Except as set forth in Schedule 3.21, to the best knowledge of
each of the Shareholders: (i) no Hazardous Materials have been generated,
treated, contained, handled, located, used, manufactured, processed, buried,
incinerated, deposited, stored, or released on, under or about any part of BERS
or the Real Property, (ii) BERS and the Real Property and any improvements
thereon, contain no asbestos, urea, formaldehyde, radon at levels above natural
background, polychlorinated biphenyls (PCBs) or pesticides, and (iii) no
aboveground or underground storage tanks are located on, under or about the Real
Property, or have been located on, under or about the Real Property and then
subsequently been removed or filled. If any such storage tanks exist on, under
or about the Real Property, such storage tanks have been duly registered with
all appropriate governmental entities and are otherwise in compliance with all
applicable Environmental Laws.
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(e) Except as set forth in Schedule 3.21, BERS has not received notice
alleging in any manner that BERS is, or might be potentially responsible for any
Release of Hazardous Materials, or any costs arising under or violation of
Environmental Laws.
(f) No expenditure will be required in order for UHS to comply with
any Environmental Laws in effect at the time of the Closing in connection with
the operation or continued operation of the business of BERS or the Real
Property in a manner consistent with the current operation thereof by BERS.
(g) BERS and the Real Property are not and have not been listed on the
United States Environmental Protection Agency National Priorities List of
Hazardous Waste Sites, or any other list, schedule, law, inventory or record of
hazardous or solid waste sites maintained by any federal, state or local agency.
(h) BERS has disclosed and delivered to UHS all environmental reports
and investigations which BERS or the Shareholders have obtained or ordered with
respect to the business of BERS and the Real Property.
(i) To the best knowledge of each of the Shareholders, no part of the
business of BERS or the Real Property have been used as a landfill, dump or
other disposal, storage, transfer, handling or treatment area for Hazardous
Materials, or as a gasoline service station or a facility for selling,
dispensing, storing, transferring, disposing or handling petroleum and/or
petroleum products.
(j) No lien has been attached or filed against BERS or the Real
Property in favor of any governmental or private entity for (i) any liability or
imposition of costs under or violation of any applicable Environmental Law; or
(ii) any Release of Hazardous Materials.
(k) The Shareholders on behalf of themselves and their respective
successors and assigns, hereby waive, release and agree not to bring any claim,
demand, cause of action or proceeding, including without limitation any cost
recovery action, against UHS under any Environmental Law.
3.22. Intellectual Property Rights; Software.
(a) BERS has not received any notice of any infringement,
misappropriation or violation by BERS of any intellectual property rights
(including, without limitation), patents, patent applications, trademarks,
service marks, trade names, corporate names, copyrights, mask works, trade
secrets and know-how of any third parties and BERS has not infringed,
misappropriated or otherwise violated any such intellectual property rights; and
no infringement, illicit copying, misappropriation or violation has occurred or
will occur with respect to the conduct of BERS's business as now conducted or
solely as a result of the transaction contemplated by this Agreement.
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(b) Except for the J.D. Edwards software, BERS owns or licenses under
valid license agreements all of the software required by BERS for the operation
of its business as now conducted or solely as a result of the transaction
contemplated by this Agreement.
3.23. Customers and Suppliers. Schedule 3.23 lists the 10 largest
customers and seven largest suppliers of BERS for the fiscal year ended October
31, 1995 and for the seven-month period ended May 31, 1996 and sets forth
opposite the name of each such customer or supplier the approximate percentage
of rental revenues by BERS attributable to such customer or supplier for each
such period. Except as set forth on Schedule 3.7 and Schedule 3.23, since the
Balance Sheet Date, no customer or supplier listed on Schedule 3.23 has
indicated that it will stop or decrease the rate of business done with BERS
except for changes in the ordinary course of BERS's business.
3.24. Officers and Directors; Bank Accounts. Schedule 3.24 lists all
officers and directors of BERS and all of BERS's bank accounts (designating each
authorized signer).
3.25. Disclosure. The representations and warranties of BERS and the
Shareholders contained in this Agreement are true and correct in all material
respects, and such representations and warranties do not omit any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no fact known
to BERS or the Shareholders which has not been disclosed to UHS pursuant to this
Agreement and the Schedules hereto which would have or would reasonably be
expected to have a material adverse effect on the business, operations or
financial condition of BERS or the ability of the Shareholders to consummate the
transactions contemplated hereby.
3.26. 338(h)(10) Election Availability.
There is no limitation on the ability of the Shareholders to make the
election under Section 338(h)(10) of the Code referred to in Section 5.12.
ARTICLE 4
CONDUCT OF BUSINESS PENDING THE CLOSING
4.1. Conduct of Business. From the date of this Agreement to the
Closing Date, unless UHS shall otherwise agree in writing or as otherwise
expressly contemplated or permitted by other provisions of this Agreement,
including this Section 4.1:
(a) the business of BERS shall be conducted only in, and the
Shareholders shall cause BERS not take any action except in, the ordinary
course, on an arms-length basis and in accordance, in all material respects,
with all applicable laws, rules and regulations and past practices;
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(b) the Shareholders shall cause BERS not to, directly or indirectly,
(i) amend or propose to amend its Charter or Bylaws; (ii) issue or sell any of
its equity securities, securities convertible into or exchangeable for its
equity securities, warrants, options or other rights to acquire its equity
securities, or any bonds or other securities; (iii) redeem, purchase, acquire or
offer to acquire, directly or indirectly, any shares of capital stock of or any
other ownership interest in BERS; (iv) split, combine or reclassify any
outstanding shares of capital stock of BERS, or declare, set aside or pay any
dividend or other distribution payable in cash, property or otherwise with
respect to shares of capital stock of BERS, provided that BERS may make (A)
quarterly tax distributions to the Shareholders at the times and in the amounts
consistent with past practices and (B) a pro rata tax distribution to the
Shareholders in an amount consistent with past practices with respect to the
period commencing on the day following the last day of the period for which the
most recent regular quarterly tax dividend has been paid and ending on the
Closing Date; (v) borrow any amount or incur or become subject to any material
liability, except liabilities incurred in the ordinary course of business; (vi)
discharge or satisfy any material lien or encumbrance on the properties or
assets of BERS or pay any material liability, except otherwise in the ordinary
course of business, (vii) sell, assign, transfer, mortgage, pledge or subject to
any lien or other encumbrance any of its assets, except (A) in the ordinary
course of business, (B) liens and encumbrances for current property taxes not
yet due and payable and (C) liens and encumbrances which do not materially
affect the value of, or interfere with the past or future use or ability to
convey, the property subject thereto or affected thereby; (viii) cancel any
material debt or claims or waive any rights of material value, except in the
ordinary course of business; (ix) acquire (by merger, exchange, consolidation,
acquisition of stock or assets or otherwise) any corporation, partnership, joint
venture or other business organization or division or material assets thereof,
or assets that are material to BERS; (x) other than as set forth on Schedule
3.10, make any single or group of related capital expenditures or commitments
therefor in excess of $5,000; or (xi) enter into or propose to enter into, or
modify or propose to modify, any agreement, arrangement or understanding with
respect to any of the matters set forth in this Section 4.1(b);
(c) the Shareholders shall cause BERS not to, directly or indirectly,
enter into or modify any employment, severance or similar agreement or
arrangement with, or grant any bonuses, wage, salary or compensation increases,
or severance or termination pay to, or promote, any director, officer, employee,
group of employees or consultant or hire any employee, provided that BERS may
make or grant bonuses not to exceed $200,000 in the aggregate to employees or
consultants of BERS;
(d) except as required by law or contemplated by this Agreement, the
Shareholders shall cause BERS not to adopt or amend any bonus, profit sharing,
stock option, pension, retirement, deferred compensation, or other employee
benefit plan, trust, fund, contract or arrangement for the benefit or welfare of
any employees;
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(e) the Shareholders shall cause BERS to use commercially reasonable
efforts to cause its current insurance policies not to be canceled or terminated
or any of the coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies providing coverage
substantially equal to the coverage under the canceled, terminated or lapsed
policies are in full force and effect;
(f) the Shareholders shall cause BERS not to enter into any settlement
or similar agreement with respect to, or take any other significant action with
respect to the conduct of, any action, suit, proceeding, order or investigation
which is set forth on Schedule 3.14 or to which BERS becomes a party after the
date of this Agreement;
(g) the Shareholders shall cause BERS to use commercially reasonable
efforts to preserve intact in all material respects its business organization
and goodwill and to keep available the services of its officers and employees as
a group and preserve intact material agreements and credit facilities, and the
Shareholders shall confer on a regular and frequent basis with representatives
of UHS, as reasonably requested by UHS, to report on operational matters and the
general status of ongoing operations of BERS;
(h) with respect to properties leased by BERS, the Shareholders shall
cause BERS not to enter into, renew, exercise an option to extend, cancel or
surrender any lease of real property nor allow any such lease to lapse, without
the consent of UHS, except as contemplated by Section 6.3(j);
(i) the Shareholders shall cause BERS not to incur any Debt, except as
reflected on the Closing Statement of Debt; and
(j) the Shareholders shall cause BERS not to agree to do any of the
foregoing.
ARTICLE 5
ADDITIONAL COVENANTS AND AGREEMENTS
5.1. Filings and Approvals. As promptly as practicable after the
execution of this Agreement, each party shall make or cause to be made all
filings and submissions under any laws or regulations applicable to BERS or UHS
for the consummation of the transactions contemplated herein. The Shareholders
will, and shall cause BERS to, coordinate and cooperate with UHS in exchanging
such information, will not make any such filing without providing UHS a final
copy thereof for its review and consent at least two full business days in
advance of the proposed filing and will provide such reasonable assistance as
UHS may request in connection with all of the foregoing. Subject to the terms
and conditions herein provided, each party will use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement.
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5.2. Cooperation. The Shareholders shall cause the representatives of
BERS to confer on a regular and frequent basis with representatives of UHS to
report operational matters and the general status of ongoing operations. The
Shareholders shall cause BERS not to intentionally take any action which would
render, or which reasonably may be expected to render, any representation or
warranty made by it in this Agreement untrue at the Closing.
5.3. Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.
5.4. No Negotiations, etc. The Shareholders will not, and will cause
BERS and BERS's officers, directors, employees, agents and affiliates, not to,
directly or indirectly, solicit, authorize, initiate or encourage submission of,
any proposal, offer, tender offer or exchange offer from any person or entity
(including any of its or their trustees, officers or employees) relating to any
liquidation, dissolution, recapitalization, merger, consolidation or acquisition
or purchase of all or a material portion of the assets or deposits of, or any
equity interest in, BERS, or other similar transaction or business combination
involving BERS or participate in any negotiations in connection with or in
furtherance of any of the foregoing or permit any person other than UHS and its
representatives to have any access to the facilities of, or furnish to any
person other than UHS and its representatives any non-public information with
respect to, BERS, in connection with or in furtherance of any of the foregoing.
The Shareholders shall promptly notify UHS if any such proposal or offer, or any
inquiry from or contact with any person with respect thereto, is made, and shall
promptly provide UHS with such information regarding such proposal, offer,
inquiry or contact as UHS may request.
5.5. Notification of Certain Matters. Each party shall give prompt
notice to the other parties of (a) the occurrence or failure to occur of any
event or the discovery of any information, which occurrence, failure or
discovery would be likely to cause any representation or warranty on its part
contained in this Agreement to be materially untrue or inaccurate when made, at
the Closing Date or at any time prior to the Closing Date and (b) any material
failure of such party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
5.6. Access to Information; Confidentiality.
(a) The Shareholders shall cause BERS to permit UHS full access on
reasonable notice and at reasonable hours to its properties and shall disclose
and make available (together with the right to copy) to UHS and to the internal
auditors, loan review officers, employees, attorneys, accountants and other
representatives of UHS all books, papers and records relating to the assets,
stock, properties, operations, obligations and liabilities of BERS, including,
without limitation, all books of account (including, without limitation, the
general ledgers), tax records, minute books of directors' and shareholders'
meetings, organizational documents, bylaws, contracts and agreements, filings
with any regulatory authority, accountants' work papers, litigation files
(including, without limitation, legal research memoranda),
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documents relating to assets and title thereto (including, without limitation,
abstracts, title insurance policies, surveys, environmental reports, opinions of
title and other information relating to the real and personal property), plans
affecting employees, securities transfer records and shareholder lists, and any
books, papers and records relating to other assets, business activities or
prospects in which UHS may have a reasonable interest, including, without
limitation, its interest in planning for integration and transition with respect
to the business of BERS; provided, however, that the foregoing rights granted to
UHS shall, whether or not and regardless of the extent to which the same are
exercised, in no way affect the nature or scope of the representations,
warranties and covenants of the Shareholders set forth herein. In addition the
Shareholders shall cause BERS to instruct its officers, employees, counsel and
accountants to be available for, and respond to any questions of, such UHS
representatives at reasonable hours and with reasonable notice by UHS to such
individuals, and to cooperate fully with UHS in planning for the integration of
the business of BERS with the business of UHS and its affiliates.
(b) All information furnished by the Shareholders or BERS pursuant
hereto shall be treated as the sole property of the Shareholders and BERS until
the Closing Date, and, if the Closing Date shall not occur, UHS shall return to
the Shareholders, or destroy, all documents or other materials (including copies
thereof) containing, reflecting or referring to such information. In addition,
UHS shall keep confidential all such information and shall not directly or
indirectly use such information for any competitive or other commercial purpose.
The obligation to keep such information confidential shall not apply to (i) any
information which (A) was already in UHS's possession prior to the disclosure
thereof to UHS by the Shareholders or BERS, (B) was then generally known to the
public, (C) became known to the public through no fault of UHS or its
representatives or (D) was disclosed to UHS by a third party not bound by an
obligation of confidentiality or (ii) disclosures required by law, governmental
or regulatory authority.
(c) UHS shall cause BERS to make available to the Shareholders on
reasonable notice and at reasonable hours such books, papers and records
relating to the assets, properties and tax liabilities of BERS as may be
required in connection with any audit of the Shareholders by any taxing
authority or the preparation by the shareholders of tax returns in connection
with periods ending on or prior to the Closing Date or in preparation for
litigation, if any, related to the ownership of BERS by the Shareholders.
5.7. Tax Matters. The Shareholders shall and shall cause BERS to: (a)
file all Returns with respect to any Taxes which, pursuant to applicable law,
must be filed prior to the Closing Date and pay all Taxes shown to be due and
payable on such Returns; (b) provide copies of any such Returns to UHS promptly
upon filing thereof; (c) not make any Tax election or take any other
discretionary position with respect to Taxes affecting BERS without prior
consultation with and consent of UHS; (d) not amend any Return; and (e) not
revoke BERS's election to be treated as an S corporation or take any action
which would cause such election to be revoked or otherwise terminated.
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5.8. Employee Matters.
(a) Douglass Medical, Inc. Group Health, Dental, Life, Accidental
Death & Dismemberment Plan. The Douglass Medical, Inc. Group Health, Dental,
Life, Accidental Death & Dismemberment Plan ("DMI Welfare Plan") shall have
obligations for all claims incurred by BERS employees or their dependents on or
before August 31, 1996. Such date may be extended by mutual agreement between
UHS and the Shareholders. The DMI Welfare Plan shall have both federal and
state law continuation obligations, if any, for all BERS employees with
qualifying events on or before the Closing Date.
(b) Douglass Medical, Inc. 401(k) Plan. UHS shall designate or
establish no later than December 31, 1996, a qualified retirement plan (the
"Transferee Plan") to receive a transfer of the accrued benefit of each employee
of BERS who is participating in the Douglass Medical, Inc. 401(k) Plan as of the
Closing Date (the "Eligible BERS Employees"). The Shareholders will cause the
Plan Administrator of the Douglass Medical, Inc. 401(k) Plan to transfer assets
to the trustee of the Transferee Plan for the benefit of the Eligible BERS
Employees. Such transfer of assets shall commence as soon as administratively
feasible after the Closing Date.
(c) Limitation on Enforcement. This Section 5.8 is an agreement solely
among BERS, the Shareholders and UHS. Nothing in this Section 5.8, whether
express or implied, confers upon any employee of BERS, UHS or any other person,
any rights or remedies, including, but not limited to: (i) any right to
employment or recall, (ii) any right to continued employment for any specified
period or (iii) any right to claim any particular compensation, benefit or
aggregate of benefits, of any kind or nature whatsoever.
5.9. Completion of Audit; Payment of Audit Costs; Delivery of Closing
Statement of Debt.
(a) After the Closing Date, UHS shall cause to be prepared and
furnished to UHS and BERS a balance sheet of BERS as of July 31, 1996 and the
related statements of income, shareholders' equity and cash flows for the nine-
month period then ended, which financial statements shall be audited by
Batchelor, Tillery & Roberts LLP and shall be satisfactory to UHS (the "1996
Audited Financial Statements"). The Shareholders shall be responsible for any
fees and expenses of Batchelor, Tillery & Roberts LLP in connection with the
preparation, completion and delivery of the 1996 Audited Financial Statements in
excess of $15,000 (the "Excess 1996 Audit Costs"), and the Shareholders shall
pay to UHS upon UHS written demand to the Shareholders' Representative the
amount of any such Excess 1996 Audit Costs.
(b) On the Closing Date, the Shareholders shall cause BERS to deliver
a statement of all existing Debt as of the Closing Date (the "Closing Statement
of Debt"). The Closing Statement of Debt shall fairly present the amount of
Debt of BERS as of the Closing Date, and BERS shall have no Debt except as
reflected on the Closing Statement of Debt.
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5.10. Delivery of Updated Rental Equipment Listing. On the Closing
Date, the Shareholders shall deliver to UHS a materially complete and accurate
summary of BERS's pool of rental equipment as of the Closing Date. Unless
otherwise specified on such summary, the rental equipment reflected on such
summary shall be of a quality and quantity usable and salable at BERS's normal
profit levels, in each case, in the ordinary course of BERS's business, shall be
merchantable and fit for its particular use and shall not be obsolete or
damaged.
5.11. Indemnification of UHS.
(a) Subject to the limitations set forth in this Section 5.11(a), the
Shareholders agree to indemnify UHS and hold it harmless against any loss,
liability, Tax (including interest and penalties), damage or expense (including
reasonable legal expenses and costs) or any assertion thereof, whether or not
matured, contingent or prospective in nature ("Losses") which UHS may suffer,
sustain or become subject to as a result of or arising out of (i) any
representation or warranty by the Shareholders or BERS in or in connection with
this Agreement or any Schedule hereto that is not true and correct as of the
date made, (ii) any breach of any covenant or agreement of BERS or the
Shareholders contained in this Agreement or any other agreement entered into by
BERS or the Shareholders in connection with this Agreement and (iii) acts or
omissions of the Shareholders' Representative. Indemnification payments
required by this Section 5.11(a) shall be made net of tax effect (as determined
in accordance with Section 5.11(b)) and only after, and to the extent that, the
total amount of all Losses suffered or sustained by UHS (determined on a pre-tax
basis and in accordance with the provisions of this Section 5.11(a)) exceeds
$150,000 (the "Deductible"), except for (w) any claim for indemnification
pursuant to Section 5.11(a)(ii) hereof arising out of the covenants of the
Shareholders contained in Section 5.9(b) or Section 5.12 hereof, (x) any claim
for indemnification for any Excess 1996 Audit Costs, (y) any acts or omissions
of the Shareholders' Representative and (z) any willful breaches of any covenant
or agreement of the Shareholders, which in each such case shall not be subject
to the Deductible. The aggregate Losses indemnified pursuant to this Section
5.11(a) shall not, however, exceed $1.4 million (the "Maximum Indemnity
Amount"). No claim shall be made for indemnification pursuant to this Section
5.11(a) unless notice of the substance of such claim is given by UHS to the
Shareholders on or prior to the first anniversary of the Closing Date. The
Shareholders' obligation to indemnify UHS pursuant to this Section 5.11(a) shall
be satisfied solely from the escrow fund established as provided in Section
5.11(d). Notwithstanding any provision herein to the contrary, the Shareholders
shall not be liable for, and "Losses" shall not include, claims for: (i)
accounts receivable credits (i.e. overpayments by customers) up to $30,000, (ii)
obsolete inventory up to $9,447 and (iii) unreported or past due property taxes
up to $39,000.
(b) Any amount payable to UHS pursuant to this Section 5.11 shall
include interest on any payment actually made by UHS in respect of Losses at a
rate equal to the then applicable rate quoted by First Bank National Association
for six-month certificates of deposit (adjusted for reserve requirements and
FDIC insurance) from the date of such payment to the date of the indemnification
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payment; provided, however, that in no event will the aggregate of all Losses,
including interest, indemnified pursuant to this Section 5.11 exceed the Maximum
Indemnity Amount. Any amount payable to UHS pursuant to this Section 5.11 shall
take into account any allowable tax benefits attributable to the Losses which
gave rise to indemnification amounts received pursuant to this Section 5.11 and
shall also take into account any increased tax liability of UHS as a result of
inclusion in income of any part of such indemnification payments; provided, that
UHS shall whenever possible treat the receipt of such payments as a reduction of
purchase price. For purposes of determining the amount of any tax benefit or
detriment pursuant to the previous sentence, the marginal combined federal and
state income tax rate of UHS shall be deemed to be forty-two percent (42%).
(c) The following procedures will apply to all claims for indemnity
hereunder. UHS will give the Shareholders' Representative written notice of any
claim for indemnification pursuant to this Section 5.11 within 30 days after UHS
receives notice, or becomes aware of, an event giving rise to such claim for
indemnification and UHS will give copies to the Shareholders' Representative of
all information and documents relating to such claim that are received by UHS
within 20 days after UHS' receipt thereof; provided, however, that the failure
of UHS to give notice or deliver copies of information or documents within the
specified time periods shall not limit UHS's right to claim indemnification
pursuant to this Section 5.11 except to the extent that the Shareholders'
Representative can demonstrate that the Shareholders were actually damaged by
the failure to give notice or provide information or documents within the
specified time periods and except that no claim may be made for indemnification
pursuant to Section 5.11(a) unless notice of the substance of such claim is
given by UHS to the Shareholders' Representative on or prior to the first
anniversary of the Closing Date. The Shareholders' Representative will have the
right to defend any action, proceeding, claim, demand or assessment giving rise
to claim for indemnification pursuant to this Section 5.11, and to select
counsel for any third party claim, which counsel shall be reasonably
satisfactory to UHS, all at the sole cost and expense of the Shareholders;
provided, however, that UHS will be allowed, at its expense, to participate in
such defense; provided, further, that no settlement shall be entered into
without the approval of UHS. Notice of the Shareholders' Representative's
intention to so defend any such action, proceeding, claim, demand or assessment
shall be given to UHS within 20 days after UHS shall have notified the
Shareholders' Representative of the claim (but in all events at least five
business days prior to the date that an answer or other response is due to be
filed or made), which notice shall contain an acknowledgement in writing by the
Shareholders of the obligation to indemnify UHS with respect to such claim
pursuant to this Section 5.11.
(d) On the Closing Date, UHS shall deliver $1,325,000 million of the
Purchase Price to an escrow agent (the "Escrow Agent") selected by the
Shareholders with the consent of UHS, to fund the indemnification obligations
described in this Section 5.11, as provided in Section 1.2. Such funds shall be
held in an account by the Escrow Agent pursuant to an escrow agreement
substantially in the form attached hereto as Exhibit A, among UHS, the
Shareholders and the Escrow Agent, to be executed on and dated as of the Closing
Date.
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5.12. Section 338(h)(10) Election. The Shareholders and UHS agree to
make or cause to be made a timely, effective and irrevocable election under
Section 338(h)(10) of the Code, in form and substance satisfactory to UHS and
the Shareholders, with respect to BERS and to file such election in the manner
required by applicable rules and regulations promulgated under the Code
("Treasury Regulations"). The Shareholders and UHS, jointly, will make such
other similar elections as may be necessary for state income tax purposes, and
for purposes of this Agreement, the term "election" shall be deemed to include
any such state income tax elections. The Shareholders and UHS agree that the
"Aggregate Deemed Sale Price" (as defined under applicable Treasury Regulations)
shall be allocated to be assets of BERS as set forth on Schedule 5.12. UHS
shall prepare for filing all of the tax returns, information returns and
statements ("Reports") that may be required pursuant to Section 338(h)(10) of
the Code, and the Shareholders shall execute such Reports as of the Closing
Date. The Shareholders shall provide information that may be required by UHS
for the purpose of preparing such Reports, shall execute and file such Reports
as reasonably requested by UHS and shall file all other returns and tax
information on a basis that is consistent with such Reports. The Shareholders
and UHS agree that any Tax liability arising out of or in any way attributable
to the foregoing election pursuant to Section 338(h)(10) of the Code (and the
allocation set forth on Schedule 5.12) shall be for the sole account of the
Shareholders.
5.13. Cooperation on Insurance Matters. The Shareholders agree
reasonably to cooperate, and to cause Douglass Medical, Inc. ("DMI") reasonably
to cooperate, in any effort by UHS or BERS following the Closing Date to recover
under the insurance policies referred to in Section 3.18 for losses relating to
occurrences prior to the Closing Date.
ARTICLE 6
CONDITIONS
6.1. Conditions to Obligations of Each Party. The respective
obligations of each party to effect the transactions contemplated hereby shall
be subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) Approvals. All required regulatory and other approvals for the
consummation of the transactions contemplated hereby shall have been
obtained. None of such approvals shall contain any conditions or
restrictions that UHS reasonably believes will materially restrict or limit
the business or activities of UHS or BERS or have a material adverse effect
on, or would be reasonably likely to have a material adverse effect on, the
business, operations or financial condition of UHS, on the one hand, and
BERS, on the other hand.
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(b) No Injunction. No injunction or other order entered by a state or
federal court of competent jurisdiction shall have been issued and remain
in effect which would impair the consummation of the transactions
contemplated hereby.
(c) No Prohibitive Change of Law. There shall have been no law,
statute, rule or regulation, domestic or foreign, enacted or promulgated
which would materially impair the consummation of the transactions
contemplated hereby.
(d) No Termination. No party hereto shall have terminated this
Agreement as permitted herein.
6.2. Additional Conditions to Obligations of the Shareholders. The
obligations of the Shareholders to consummate the transactions contemplated
hereby in accordance with the terms of this Agreement are also subject to the
following conditions:
(a) Representations and Compliance. The representations and
warranties of UHS set forth in Article 2 shall have been true and correct
as of the date hereof, and shall be true and correct as of the Closing Date
as if made at and as of the Closing Date, except where the failure to be
true and correct would not have, or would not reasonably be expected to
have, a material adverse effect on the business, operations or financial
condition of UHS; and UHS shall in all material respects have performed
each obligation and agreement and complied with each covenant to be
performed and complied with by it hereunder at or prior to the Closing
Date.
(b) UHS Officer's Certificate. UHS shall have furnished to the
Shareholders a certificate of the Vice President of Finance and Chief
Financial Officer of UHS, dated as of the Closing Date, in which such
officer shall certify that he has no reason to believe that the conditions
set forth in Section 6.2(a) have not been fulfilled.
6.3. Additional Conditions to Obligations of UHS. The obligation of
UHS to consummate the transactions contemplated hereby in accordance with the
terms of this Agreement is also subject to the following conditions:
(a) Representations and Compliance. The representations and
warranties of the Shareholders in this Agreement shall have been true and
correct as of the date hereof, and such representations and warranties
shall be true and correct as of the Closing Date as if made at and as of
the Closing Date, except where the failure to be true and correct would not
have, or would not reasonably be expected to have, a material adverse
effect on the business, operations or financial condition of BERS; and the
Shareholders shall in all material respects have performed each obligation
and agreement and complied with each covenant to be performed and complied
with by it hereunder at or prior to the Closing Date.
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(b) Closing Documents. The Shareholders shall have furnished to UHS
all of the following:
(i) the minute books, stock transfer records, corporate seal and
other materials related to BERS's corporate administration;
(ii) resignations (effective as of the Closing Date) from such
of BERS's officers as UHS shall have requested and all members of the
BERS's Board of Directors;
(iii) a copy of the Charter of BERS, certified by the Secretary
of State of the State of North Carolina and Certificates of Good Standing
from the Secretaries of State of the States of Maryland, North Carolina,
South Carolina and Virginia evidencing the good standing of BERS in each
such jurisdiction; and
(iv) such other certificates, documents and instruments as UHS
reasonably requests related to the transactions contemplated hereby.
(c) Adverse Proceedings. There shall not be threatened, instituted or
pending any action or proceeding before any court or governmental authority
or agency, domestic or foreign, (i) challenging or seeking to make illegal,
or to delay or otherwise directly or indirectly to restrain or prohibit,
the consummation of the transactions contemplated hereby or seeking to
obtain material damages in connection with the transactions contemplated
hereby, (ii) seeking to prohibit direct or indirect ownership or operation
by UHS of all or a material portion of the business or assets of BERS or of
UHS, or to compel UHS or BERS to dispose of or to hold separately all or a
material portion of the business or assets of UHS or of BERS, as a result
of the transactions contemplated hereby, or (iii) seeking to require direct
or indirect divestiture by UHS of any of its business or assets or of the
business or assets of BERS.
(d) Governmental Action. There shall not be any action taken, or any
statute, rule, regulation, judgment, order or injunction proposed, enacted,
entered, enforced, promulgated, issued or deemed applicable to the
transactions contemplated hereby by any federal, state or other court,
government or governmental authority or agency, which would reasonably be
expected to result, directly or indirectly, in any of the consequences
referred to in Section 6.3(c).
(e) Failure to Disclose. UHS shall not have discovered any fact or
circumstance existing as of the date of this Agreement which has not been
disclosed to UHS, as of the date of this Agreement, in this Agreement, any
Schedule hereto, or any document specifically required to be furnished to
UHS hereunder, regarding BERS which would, individually or in the aggregate
with other such facts and circumstances, (i) materially impair the
consummation of the transactions contemplated by this Agreement, or (ii)
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have a material adverse effect on the business, operations or financial
condition of BERS.
(f) Material Adverse Change. Since the date of this Agreement, there
shall have been no material adverse change in, and no event, occurrence or
development in the business of BERS that, taken together with other events,
occurrences and developments with respect to such business, would have or
would reasonably be expected to have a material adverse effect on, the
business, operations or financial condition of BERS.
(g) BERS Common Stock. As of the Closing Date, all issued and
outstanding shares of BERS Common Stock will be free and clear of any lien,
pledge, security interest, encumbrance or charge of any kind.
(h) Agreement with James Molidor. Prior to or as of the Closing Date,
UHS shall have entered into an agreement with James Molidor satisfactory to
UHS with respect to Mr. Molidor's services to BERS for a period of one year
following the Acquisition and his noncompetition covenant which agreement
shall be substantially in the form of Exhibit B hereto.
(i) Closing Statement of Debt. BERS shall have delivered to UHS the
Closing Statement of Debt which shall meet the requirements of Section 5.9.
(j) Lease Amendment. The lease for the Raleigh, North Carolina
office of BERS shall have been amended to provide for a remaining lease
term of one year following the Closing Date for total cost to BERS of
$137,000.
(k) Services Agreement. BERS and DMI shall have entered into an
agreement (the "Corporate Services Agreement") providing for the
continuation for a period of one year of the services currently provided to
BERS by DMI substantially in the form of Exhibit C hereto.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. This Agreement may be terminated prior to the
Closing Date:
(a) by mutual consent of UHS and the Shareholders;
(b) by either UHS or the Shareholders, if any of the conditions to
such party's obligation to consummate the transactions contemplated in this
Agreement shall have become impossible to satisfy; or
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(c) by either UHS or the Shareholders if the Closing Date is not on or
before September 30, 1996 (unless the failure to consummate the transactions
contemplated hereby by such date shall be due to the action or failure to act of
the party seeking to terminate this Agreement in breach of such party's
obligations under this Agreement).
A party desiring to terminate this Agreement shall give written notice
of such termination and the reasons therefor to the other party.
7.2. Effect of Termination. If this Agreement is terminated as
permitted by Section 7.1, such termination shall be without liability or
obligation of either party (or any shareholder, officer, employee, agent,
consultant or representative of such party) to the other party to this
Agreement, except as may be otherwise provided in law or in equity and except
that the covenants contained in Sections 5.4 and 5.6(b) hereof shall survive
such termination.
7.3. Amendment. This Agreement may not be amended except by an
instrument in writing approved by the parties to this Agreement and signed on
behalf of each of the parties hereto.
7.4. Waiver. At any time prior to the Closing Date, either UHS or the
Shareholders may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto or (b) waive compliance with
any of the agreements of the other party or with any conditions to its own
obligations, in each case only to the extent such obligations, agreements and
conditions are intended for such party's benefit.
ARTICLE 8
COVENANT NOT TO COMPETE
8.1. Covenant Not to Compete. The Shareholders hereby agree that, for
a period of two years after the Effective Date, they will not, without the prior
written consent of UHS, engage in the medical equipment rental or leasing
business within a 200--mile radius of the main office and each of the regional
offices of BERS or UHS.
This covenant not to compete shall not prevent the Shareholders from
owning up to five percent (5%) of the publicly traded stock in any corporation
which engages in the medical equipment rental or leasing business within a 200-
mile radius of the main office and each of the district offices of BERS. For
purposes of this Agreement, the term "publicly traded" shall mean traded on a
recognized national exchange or quoted on the NASDAQ National Market in the
United States of America.
8.2. Solicitation of Customers. The Shareholders hereby agrees that,
for a period of two years after the Effective Date, it shall not, directly or
indirectly, including through third party brokers or agents, (a) solicit,
without the prior written consent of UHS, the medical equipment rental or
leasing business of any past or
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present customer of BERS or (b) encourage any such customer to terminate or
alter such customer's relationship with BERS (or its successor by merger),
except as otherwise provided in Section 8.1.
8.3. Solicitation of Employees. The Shareholders hereby agrees that,
for a period of two years after the Effective Date, it shall not, directly or
indirectly, solicit for employment or offer to hire or hire, without the prior
written consent of UHS, any individual who, as of the date of this Agreement,
was an employee or agent of BERS or UHS or who subsequent to the date of this
Agreement became an employee of BERS or UHS (or any successor by merger),
provided that this provision shall not apply to any such employee whose
employment or relationship with BERS or UHS has been terminated for at least six
months prior to such hiring. This Section 8.3 shall not apply to any employee of
BERS or UHS whose employment is terminated by UHS.
ARTICLE 9
THE SHAREHOLDERS' REPRESENTATIVE
9.1. Appointment. As used in this Agreement, the "Shareholders'
Representative" shall mean James F. Molidor, or any person appointed as a
successor Shareholders' Representative pursuant to Section 9.2 hereof.
9.2. Election and Replacement. During the period ending upon the date
when all obligations under this Agreement have been discharged (including all
indemnification obligations pursuant to Section 5.11), the Shareholders who
immediately prior to the date hereof held BERS Common Stock representing an
aggregate number of shares of BERS Common Stock which exceeded 50% of the amount
of such BERS Common Stock outstanding immediately prior to the date hereof (a
"Majority") may from time to time upon written notice to the Shareholders'
Representative and UHS remove the Shareholders' Representative, and if the
Shareholders' Representative dies, becomes incapacitated, resigns or is removed
by a Majority, the Majority shall appoint a successor Shareholders'
Representative to fill the vacancy so created. If the Majority is required to
but has not appointed a successor Shareholders' Representative within 15
business days from a request by UHS to appoint a successor Shareholders'
Representative, UHS shall have the right to appoint a Shareholders'
Representative to fill the vacancy so created, and shall advise all those who
were holders of BERS Common Stock immediately prior to the date hereof of such
appointment by written notice. A copy of any appointment by the Majority of any
successor Shareholders' Representative shall be provided to UHS promptly after
it shall have been effected.
9.3. Authority. The Shareholders' Representative has been duly
authorized by the Shareholders to act on their behalf as specified in this
Agreement, and this Agreement has been duly authorized, executed and delivered
by the Shareholders' Representative. The Shareholders' Representative shall be
authorized to make and deliver any certificate, notice, consent or instrument
required or permitted to be made or delivered under this Agreement or under the
documents referred to in this Agreement (an "Instrument") which the
Shareholders'
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Representative determines in its sole and absolute discretion to be necessary,
appropriate or desirable, and, in connection therewith, to hire or retain, at
the sole expense of the Shareholders, such counsel, investment bankers,
accountants, representatives and other professional advisors as it determines in
its sole and absolute discretion to be necessary, advisable or appropriate in
order to carry out and perform its rights and obligations hereunder. Any party
receiving an Instrument from the Shareholders' Representative shall have the
right to rely in good faith upon such certification, and to act in accordance
with the Instrument without independent investigation.
9.4. No Liability of UHS. Neither UHS nor any officer, employee,
director or affiliate of UHS shall have any liability whatsoever to any
Shareholder or otherwise arising out of the acts or omissions of the
Shareholders' Representative or any disputes among the Shareholders or among
them and the Shareholders' Representative. UHS shall have no direct liability
to the Shareholders under this Agreement or the other agreements referred to
herein and may rely entirely on its dealings with, and notices to and from, the
Shareholders' Representative to satisfy any obligations it might have under this
Agreement, any agreement referred to herein or otherwise to the Shareholders.
ARTICLE 10
GENERAL PROVISIONS
10.1. Public Statements. None of UHS, BERS or the Shareholders shall
make any public announcement or statement with respect to this Agreement or any
related transactions without the approval of the other party; provided, however,
that UHS may, upon reasonable notice to the Shareholders and BERS, make any
public announcement or statement that it believes is required by federal
securities laws.
10.2. Notices. All notices and other communications hereunder shall
be in writing and shall be sufficiently given if made by hand delivery, by fax,
by telecopier, by overnight delivery service, or by registered or certified mail
(postage prepaid and return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by it by
like notice):
if to UHS:
Universal Hospital Services, Inc.
1250 Northland Plaza
3800 West 80th Street
Bloomington, MN 55431-4442
Attention: Mr. David E. Dovenberg
Fax: (612) 893-3237
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with a copy to:
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402
Attention: Elizabeth C. Hinck, Esq.
Fax: (612) 340-8738
if to the Shareholders or the Shareholders' Representative:
James F. Molidor
Shareholders Representative
415 Ferrington Post
Pittsboro, North Carolina 27312
with a copy to:
Smith Helms Mulliss & Moore, LLP
2800 Two Hannover Square
Raleigh, North Carolina 27601
Attention: Mr. Charles N. Anderson, Jr.
Fax: (919) 755-8800
All such notices and other communications shall be deemed to have been
duly given as follows: when delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if delivered
by mail; when receipt electronically acknowledged, if faxed or telecopied; and
the next day after being delivered to an overnight delivery service.
10.3. Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
Sections and Articles of this Agreement unless otherwise stated. Words such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and words
of like import, unless the context requires otherwise, refer to this Agreement
(including the Exhibits and Schedules hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires.
10.4. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties shall negotiate
in good faith to modify this Agreement and to preserve each party's anticipated
benefits under this Agreement.
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10.5. Governing Law; Venue. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the internal laws of
the State of Minnesota, without giving effect to the principles of conflict of
laws thereof. Any action at law, suit in equity, or judicial proceeding arising
directly, indirectly, or otherwise in connection with, out of, related to or
from this Agreement or any provision hereof, shall be litigated only in the
federal or State courts, as applicable, sitting in the State of North Carolina,
County of Wake. The parties hereto consent to the jurisdiction of such courts
for such purposes. The parties hereto waive any claim to a change of venue
because of the doctrine of forum non conveniens or otherwise.
10.6. Miscellaneous. This Agreement (together with all other
documents and instruments referred to herein): (a) constitutes the entire
agreement, and supersedes all other prior agreements and undertakings, both
written and oral, among the parties, with respect to the subject matter hereof;
(b) is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder and (c) shall not be assigned by operation of law
or otherwise. This Agreement may be executed in two or more counterparts which
together shall constitute a single agreement.
10.7. Survival of Representations, Warranties and Covenants. Subject
to the limitation set forth in Section 5.11(a) hereof, the representations,
warranties and covenants of the parties set forth herein will survive the
Closing, regardless of any investigation made by or on behalf of the parties
hereto or the results of any such investigation, and the participation of a
party in such consummation will not constitute a waiver of any representation,
warranty or covenant of any other party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the date first written above by a duly elected and authorized
officer.
UNIVERSAL HOSPITAL SERVICES,
INC.
By: /s/ David E. Dovenberg
-----------------------
David E. Dovenberg
Chief Financial Officer
BIOMEDICAL EQUIPMENT
RENTAL & SALES, INC.
By: /s/ James Molidor
-----------------------
James Molidor
President
SHAREHOLDERS:
/s/ Sandra P. Henderson
----------------------------
Ms. Sandra P. Henderson
/s/ Katharine M. Douglass
----------------------------
Ms. Katharine M. Douglass
/s/ E. Knox Barker
----------------------------
Ms. E. Knox Barker
SHAREHOLDERS' REPRESENTATIVE:
/s/ James F. Molidor
----------------------------
James F. Molidor
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EXHIBIT A
---------
ESCROW AGREEMENT
This Agreement, dated August 13, 1996, is made by and among Universal
Hospital Services, Inc., a Minnesota corporation ("UHS"), Sandra P. Henderson,
Katharine M. Douglass and E. Knox Barker (the "Shareholders"), James F. Molidor
(acting in his capacity as representative of the Shareholders (the
"Shareholders' Representative")) and Centura Bank, as escrow agent (the "Escrow
Agent").
Reference is made to that certain Stock Purchase Agreement dated August 13,
1996 (the "Stock Purchase Agreement"), by and among UHS, the Shareholders and
the Shareholders' Representative. The Stock Purchase Agreement provides that on
the Closing Date (as defined therein) UHS shall deliver $1,325,000 (the "Escrow
Funds") to the Escrow Agent, to be held in an escrow account in accordance with
the terms of this Escrow Agreement, to fund liquidated indemnification
obligations of the Shareholders under the Stock Purchase Agreement. The parties
hereto desire that the Escrow Agent hold, invest and distribute the Escrow
Funds, together with accrued interest thereon, all in the manner set forth in
this Escrow Agreement. Accordingly, in consideration of consummating the
transactions contemplated by the Stock Purchase Agreement, the covenants and
agreements herein set forth and for other valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
1. Appointment and Agreement of Escrow Agent. UHS and the Shareholders
hereby appoint and designate the Escrow Agent as the escrow agent for the
purposes set forth herein, and the Escrow Agent hereby accepts such appointment
under the terms and conditions set forth herein.
2. Indemnity Obligations Satisfied Solely from Escrow Funds. The
indemnity obligations of Section 5.11(a) of the Stock Purchase Agreement shall
be satisfied solely from the Escrow Funds.
3. Establishment of Escrow.
3.1. Escrow Deposit. On the Closing Date, UHS shall cause the Escrow Funds
to be delivered to the Escrow Agent. The Escrow Funds shall be held and used
only for the purposes of funding the indemnity obligations of the Shareholders
set forth in Section 5.11(a) of the Stock Purchase Agreement ("the Escrow Fund
Indemnities").
3.2. Receipt. The Escrow Agent hereby acknowledges receipt of the Escrow
Funds and agrees to hold and disburse the Escrow Funds in accordance with the
terms and conditions of this Escrow Agreement for the uses and purposes stated
herein.
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3.3. Investment of Escrow Funds. The Escrow Agent agrees to hold and
invest such Escrow Funds, together with interest accrued thereon, in FDIC-
insured bank deposits, short-term government securities, short-term investment
grade securities or other short-term securities of comparable quality in the
categories set forth on Annex A hereto, as directed by the Shareholders'
Representative in writing, but all such securities shall be purchased and held
solely in the name of the Escrow Agent. The Escrow Agent shall have the right
to liquidate any investments held in order to provide funds necessary to make
required payments under this Escrow Agreement. The Escrow Agent shall not be
liable for any loss incurred at such liquidation which is due to fluctuations in
market rates or penalties incurred because of early redemption.
4. Purpose; Term. This Escrow Agreement has been executed and the
deposit of the Escrow Funds hereunder has been made pursuant to Section 5.11(d)
of the Stock Purchase Agreement. The deposit of the Escrow Funds has been made
for the purpose of funding and securing the Escrow Fund Indemnities until the
close of business on the first anniversary of the date hereof (the "Termination
Date").
5. Procedures for Disbursement of the Escrow Funds to UHS. At any time
prior to the Termination Date, whenever there shall be delivered to the Escrow
Agent (a) a certificate signed by UHS and the Shareholders' Representative
certifying or (b) a certified copy of a final, non-appealable judgment of a
court of competent jurisdiction determining, that an amount is due to UHS
pursuant to Section 5.11 of the Stock Purchase Agreement, the Escrow Agent
shall, solely to the extent of the Escrow Funds, promptly (and in no event later
than five business days following receipt of either document referred to in
clauses (a) and (b) of this Section 5) cause Escrow Funds equal to such amount
(but in no event greater than $1,325,000, less the sum of all amounts previously
distributed to UHS under this Agreement) to be delivered to UHS.
6. Termination of Escrow. At the close of business on the Termination
Date, the Escrow Agent shall deliver the balance of any Escrow Funds, together
with interest accrued thereon, to the Shareholders as directed by the
Shareholders' Representative; provided, however, that there shall be deducted
from the amount to be delivered to the Shareholders pursuant to this Section 6
an amount equal to the Escrowed Funds Reserved Amount (as defined in Section 7
hereof) if and only if the notification relating to such Escrowed Funds Reserved
Amount required by Section 7 has been delivered to the Escrow Agent and the
Shareholders' Representative prior to the Termination Date. This Escrow
Agreement shall automatically terminate if and when all the Escrowed Funds shall
have been distributed by the Escrow Agent in accordance with the terms of this
Escrow Agreement.
7. Retention and Disbursement of Escrow Funds Following the Termination
Date. (a) In the event that UHS shall have determined in good faith that it
intends to pursue indemnification claims pursuant to Section 5.11(a) of the
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Stock Purchase Agreement, then UHS shall, at any time prior to the Termination
Date, notify concurrently the Escrow Agent and the Shareholders' Representative
to such effect in writing, which written notice shall describe briefly the
nature of each such claim, the facts and circumstances which give rise to each
such claim and the estimated amount, determined solely by UHS in its good faith
judgment, of the potential liability with respect to each such claim, and the
provisions of the Stock Purchase Agreement or this Escrow Agreement on which
each such claim is based. The Escrow Agent shall have no obligation to verify
that delivery of such notice has been made by UHS to the Shareholders'
Representative, but agrees to forward to the Shareholders' Representative,
promptly, by telecopier and overnight mail, a copy of the notice received by it.
If such notice is delivered to the Escrow Agent on or prior to the Termination
Date, an amount of the Escrow Funds equal to one hundred percent (100%) of the
total of the amounts claimed (but in no event greater than $1,325,000, less the
sum of all amounts other than interest previously distributed to UHS under this
Agreement) shall be set aside and retained (to the extent available in the then
remaining Escrow Funds) by the Escrow Agent as a reserve to cover such claim or
claims (such amounts so set aside and reserved, as reduced from time to time
pursuant to the provisions of this Section 7(b) or of Section 5 hereof, being
herein called the "Escrow Funds Reserved Amount").
(b) Following the Termination Date, the Escrow Agent agrees to hold and
invest such Escrow Funds Reserved Amount, together with accrued interest
thereon, in the same manner as the Escrow Funds hereunder. The Escrow Funds
Reserved Amount shall be disbursed by the Escrow Agent in the same manner as the
Escrow Funds are to be disbursed pursuant to Section 5, but only to cover the
claims identified in the notice sent pursuant to Section 7(a) that led to the
establishment of such Escrow Funds Reserved Amount. In addition, if at any time
UHS determines in good faith that it will not pursue or, under the terms of the
Stock Purchase Agreement, cannot pursue any claim for indemnification to which
all or any portion of the Escrow Funds Reserved Amount relates, or a court of
competent jurisdiction by final, non-appealable judgment so finds, UHS shall
direct the Escrow Agent to disburse all or such portion of the Escrow Funds
Reserved Amount, together with accrued interest thereon, to the Shareholders.
8. The Escrow Agent.
8.1. Indemnification of the Escrow Agent. UHS and the Shareholders,
jointly and severally agree to indemnify and hold the Escrow Agent and its
directors, officers and employees harmless from and against any and all costs,
charges, damages, and attorneys' fees which the Escrow Agent in good faith may
incur or suffer in connection with or arising out of this Escrow Agreement.
8.2. Duties of the Escrow Agent. The Escrow Agent shall have no duties
other than those expressly imposed on it herein and shall not be liable for any
act or omission except for its own gross negligence or willful misconduct.
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8.3. Fees of the Escrow Agent. The fees and charges of the Escrow Agent
(including its attorneys fees and expenses) with respect to this Agreement shall
be paid by the Shareholders in accordance with Escrow Agent's fees set forth on
Annex B.
8.4. Escrow Agent to Follow Instructions of UHS and the Shareholders'
Representative. Any provision herein contained to the contrary notwithstanding,
the Escrow Agent shall at any time and from time to time take such action
hereunder with respect to the Escrow Funds as shall be agreed to in writing by
UHS and the Shareholders' Representative, provided that the Escrow Agent shall
first be indemnified to its satisfaction, jointly and severally, by UHS and the
Shareholders with respect to any of its costs or expenses which might be
involved.
8.5. Delivery of Statements of Account. The Escrow Agent shall provide
monthly statements of account to each of the Shareholders' Representative and
UHS.
8.6. Appointment of Successor Escrow Agent. The Escrow Agent may resign at
any time upon forty-five (45) days' written notice to UHS and the Shareholders'
Representative. UHS and the Shareholders' Representative may by mutual
agreement remove the Escrow Agent by giving thirty (30) days' written notice of
such removal. In the event of the resignation or removal of the Escrow Agent,
UHS and the Shareholders' Representative shall appoint a successor Escrow Agent.
The successor Escrow Agent shall have the same powers and duties as those
conferred upon the Escrow Agent named in this Agreement, and shall agree to be
bound by the terms of this Agreement as though named as the Escrow Agent herein.
Upon the resignation or removal of the Escrow Agent, the Escrow Funds shall be
delivered to the successor escrow agent, with delivery to be made as of the
effective date of the Escrow Agent's resignation or removal. If for any reason
delivery to a successor escrow agent is not possible, the Escrow Agent shall
deliver the Escrow Funds to a party mutually agreed upon by UHS and the
Shareholders' Representative.
9. Other Provisions.
9.1. Notices. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by telex, by
telecopier, or by registered or certified mail (postage prepaid and return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by it by like notice) provided that
communications given to the Escrow Agent shall be considered given when received
by the Escrow Agent and, provided further, that any communications to the Escrow
Agent directing it to make a disbursement from the Escrow Funds will be made by
the Escrow Agent only upon receipt of originally executed copies of such
communication:
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(a) if to UHS:
Universal Hospital Services, Inc.
1250 Northland Plaza
3800 West 80th Street
Bloomington, MN 55431-4442
Attention: Mr. David E. Dovenberg
Fax: (612) 893-3237
with a copy to:
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402
Attention: Elizabeth C. Hinck, Esq.
Fax: (612) 340-8738
(b) if to the Shareholders or the Shareholders' Representative:
James Molidor
Shareholders Representative
415 Fearrington Post
Pittsboro, North Carolina 27312
with a copy to:
Smith Helms Mulliss & Moore, LLP
2800 Two Hannover Square
Raleigh, North Carolina 27601
Attention: Charles N. Anderson, Jr.
Fax: (919) 755-8800
(c) If to the Escrow Agent:
Centura Bank
4700 Six Forks Road
Post Office Box 2351
Raleigh, North Carolina 27602
Attention: R. Gregory Ferrell
Fax: (919) 571-2427
9.2. Benefit and Assignment. The rights and obligations of each party
under this Escrow Agreement may not be assigned without the prior written
consent of all other parties. This Escrow Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
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Nothing in this Escrow Agreement, expressed or implied, is intended to or shall
(i) confer on any person other than the parties hereto, or their respective
successors or assigns, any rights, remedies, obligations or liabilities under or
by reason of this Escrow Agreement, or (ii) constitute the parties hereto as
partners or participants in a joint venture. The Escrow Agent shall not be
obligated to recognize any such succession or assignment, until satisfactory
written evidence thereof shall have been received by it.
9.3. Entire Agreement; Amendment. This Escrow Agreement and the Stock
Purchase Agreement contain all the terms agreed upon by the parties with respect
to the subject matter hereof. This Escrow Agreement may be amended only by a
written instrument signed by the party against which enforcement of any waiver,
change, modification, extension or discharge is sought.
9.4. Headings. The headings of the sections and subsections of this Escrow
Agreement are for ease of reference only and shall not be deemed to evidence or
affect the meaning or construction of any of the provisions hereof.
9.5. Governing Law. This Escrow Agreement shall be construed, as to both
validity and performance, enforced in accordance with and interpreted and
governed by the laws of the State of North Carolina.
9.6. Counterparts. This Escrow Agreement may be executed in multiple
counterparts, all of which taken together shall constitute one instrument.
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IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be
executed on the date first written above by their respective officers on the
date first written above.
UNIVERSAL HOSPITAL SERVICES, INC.
By:
------------------------------
David E. Dovenberg
Vice President of Finance and
Chief Financial Officer
SHAREHOLDERS:
By:
------------------------------
Ms. Sandra P. Henderson
---------------------------------
Ms. Katharine M. Douglas
---------------------------------
Ms. E. Knox Barker
SHAREHOLDERS' REPRESENTATIVE:
---------------------------------
James F. Molidor
CENTURA BANK
By:
------------------------------
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Exhibit B
---------
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of August 13, 1996, by and between Universal
Hospital Services, Inc., a Minnesota corporation ("Buyer"), Biomedical Equipment
Rental & Sales, Inc., a North Carolina corporation (the "Company") and James F.
Molidor, a resident of the State of North Carolina ("Executive").
Executive is employed as an executive officer of the Company.
The Company engages in the medical equipment rental and leasing
business through its offices located in Raleigh and Charlotte, North Carolina,
and Richmond, Virginia. Executive is an executive of the Company and has
extensive knowledge of its business and affairs and of the industry in which the
Company competes.
Buyer proposes to purchase all of the issued and outstanding capital
stock of the Company from the shareholders thereof (the "Acquisition") and such
shareholders and the Company have entered into a Stock Purchase Agreement dated
August 13, 1996 (the "Acquisition Agreement") with Buyer.
The Acquisition is conditioned upon Executive's agreement as to
employment and to refrain from engaging in any activities that are in
competition with the business of the Company or Buyer.
Buyer desires to assure the continuation of the services of Executive
after the effective time of the Acquisition, and Executive desires to be
employed by the Company, on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the
respective agreements of Buyer, the Company and Executive set forth below and as
a condition of the closing of the Acquisition, Buyer, the Company and Executive
agree, and Buyer agrees to cause the Company to perform each of the Company's
agreements, as follows:
1. Employment; Consulting Services.
(a) Effective upon the Acquisition, the Company agrees to employ
Executive, and Executive accepts such employment and agrees to perform services
for the Company, for the period and upon the other terms and conditions set
forth
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in this Agreement. If the Acquisition Agreement is terminated in accordance with
its terms, this Agreement shall not become effective. Upon the effectiveness of
this Agreement and payment of an aggregate of $100,408.36 representing all
amounts owed to Executive by the Company through the date of closing of the
Acquisition (the "Closing Date"), all prior agreements between the Company and
Executive shall terminate, including, without limitation, the letter agreement
dated October 27, 1995 between Executive and the Company and the bonus plan
approved by action of the Board of Directors and stockholder of the Company by
resolutions adopted on November 1, 1990 and modified by resolutions adopted on
January 31, 1992.
(b) Following the term of Executive's employment pursuant to this
Agreement and for a period of two years thereafter, Executive agrees to provide
up to 100 hours annually of consulting services to the Company or Buyer as may
be reasonably requested by Company or Buyer, for the compensation provided in
Section 4(a) hereof.
2. Term. Unless terminated at an earlier date in accordance with
Section 9 of this Agreement, the term of Executive's employment pursuant to
Section 1(a) hereof shall be for a period of one year, commencing on the Closing
Date. Such term of Executive's employment may be extended thereafter upon the
mutual written agreement of Executive and the Company.
3. Position and Duties.
(a) Service with Company. During the term of Executive's employment,
Executive agrees to perform such reasonable employment duties as the Board of
Directors of the Company shall assign to him from time to time (his "Duties").
(b) Performance of Duties. Executive agrees to serve the Company
faithfully and to the best of his ability and to devote such time, attention and
efforts to the business and affairs of the Company during employment by the
Company as required to fulfill his Duties. It is currently anticipated by the
parties hereto that Executive will be required to devote his full time,
attention and efforts to the business and affairs of the Company during the
first four months of his employment pursuant to this Agreement, and that,
thereafter, the amount of Executive's time, attention and efforts required to be
devoted to the business and affairs of the Company would gradually be reduced
such that Executive would be required to devote an aggregate of approximately
1,040 hours of his time to the business and affairs of the Company during the
first year of employment pursuant to Section 1(a) of this Agreement. Executive
hereby confirms that he is under no contractual commitments inconsistent with
his obligations set forth in and contemplated by this Agreement, provided that
it is understood by all parties hereto that Executive may continue to serve as
Chief Executive Officer and Chairman of Douglass Medical, Inc. and that
Executive shall not breach this Agreement solely as a result of serving in such
capacity.
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4. Compensation.
(a) Base Salary. As compensation in full for all services to be
rendered by Executive under this Agreement, the Company shall pay to Executive a
salary of $65,000, less applicable tax and FICA deductions and withholdings,
which salary shall be paid monthly in arrears on a basis in accordance with the
Company's normal payroll procedures and policies. In the event that Executive
provides in excess of 1,040 hours of his services in connection with the
performance of his Duties during the first year of his employment, Executive
shall be compensated at the hourly rate of $62.50 (the "Hourly Rate"), less
applicable tax and FICA deductions and withholdings, for each hour of service in
excess of such amount during such year, payable monthly in arrears on a basis in
accordance with the Company's normal payroll procedures and policies. In the
event that Executive is requested to provide consulting services after the term
of employment under this Agreement, Executive shall be compensated for such
consulting services rendered to the Company or Buyer at the Hourly Rate.
(b) Participation in Benefit Plans. While he is employed by the
Company pursuant to Section 1(a) hereof, Executive shall be entitled to
participate in all employee benefit plans or programs (including health and
accident plans, vacation time and 401(k) plans) of the Company or Buyer, as
applicable, to the extent that Executive meets the requirements for each
individual plan. Neither Buyer nor the Company provides any assurance as to the
adoption or continuance of any particular employee benefit plan or program, and
Executive's participation in any such plan or program shall be subject to the
provisions, rules and regulations applicable thereto.
(c) Expenses. The Company will pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his Duties under this Agreement, subject to the Company's normal
policies for expense verification.
5. Confidential Information. Except as permitted by the Company's
Board of Directors, Executive shall not divulge, furnish or make accessible to
anyone or use in any way (other than in the ordinary course of the business of
the Company) any confidential or secret knowledge or information of the Company
or Buyer that Executive has acquired or shall acquire during the period of his
employment by the Company prior to the Acquisition or will acquire during the
period of his employment by the Company after the Acquisition, whether developed
by himself or by others, concerning any trade secrets, confidential or secret
designs, processes, formulae, plans, devices or material (whether or not
patented or patentable) directly or indirectly useful in any aspect of the
business of the Company
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or Buyer, any customer or supplier lists of the Company or Buyer, any
confidential or secret development or research work of the Company or Buyer, or
any other confidential information or secret aspects of the business of the
Company or Buyer. Executive acknowledges that the above-described knowledge or
information constitutes a unique and valuable asset of the Company or Buyer, as
the case may be, and represents a substantial investment of time and expense by
the Company or Buyer, as the case may be, and that any disclosure or other use
of such knowledge or information other than for the sole benefit of the Company
or Buyer would be wrongful and would cause irreparable harm to the Company or
Buyer. Executive will refrain from any acts or omissions that would reduce the
value of such knowledge or information to the Company or Buyer. The foregoing
obligations of confidentiality shall not apply to any knowledge or information
that is now or subsequently becomes generally publicly known in the form in
which it was obtained from the Company or Buyer, other than as a direct or
indirect result of the breach of this Agreement by Executive.
6. Ventures. If, during Executive's employment, Executive is engaged
in or associated with the planning or implementing of any project, program or
venture involving the Company or Buyer and a third party or parties, all rights
in such project, program or venture shall belong to the Company or Buyer, as the
case may be. Except as approved by the Company's Board of Directors, Executive
shall not be entitled to any interest in such project, program or venture or to
any commission, finder's fee or other compensation in connection therewith other
than the compensation to be paid to Executive as provided in this Agreement.
Executive shall have no interest, direct or indirect, in any vendor or customer
of the Company.
7. Noncompetition Covenants.
(a) Agreement Not to Compete. During the term of Executive's
employment by the Company pursuant to Section 1(a) hereof and through a date
that is the later of (i) 24 months from the date of termination of such
employment (whether such termination is with or without cause, or whether such
termination is occasioned by Executive or the Company) or (ii) 24 months from
the Closing Date, Executive shall not, directly or indirectly, without the prior
written consent of Buyer (i) engage in the medical equipment rental or leasing
business within a 200--mile radius of the main office and each of the regional
offices of the Company or Buyer, in any manner or capacity, including, but not
limited to, as a proprietor, principal, agent, partner, officer, director,
stockholder, employee, member of any association, consultant or otherwise; (ii)
solicit the medical equipment rental or leasing business of any past or present
customer of the Company or Buyer; or (iii) encourage any such customer to
terminate or alter such customer's relationship with the Company or Buyer, all
except in connection with the performance of Executive's Duties pursuant to this
Agreement.
(b) Agreement Not to Hire. During the term of Executive's employment
by the Company pursuant to Section 1(a) hereof and through a date that is the
later of (i) 24 months from the date of termination of such employment (whether
such termination is with or without cause, or whether such termination is
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occasioned by Executive or the Company) or (ii) 24 months from the Closing Date,
Executive shall not, directly or indirectly, without the prior written consent
of Buyer, solicit for employment or offer to hire or hire any individual who, as
of the Closing Date, was an employee or agent of the Company or Buyer or who
subsequent to the Closing Date became an employee of the Company or Buyer (or
any successor by merger), provided that this provision shall not apply to any
such employee whose employment or relationship with the Company or Buyer has
been terminated for at least six months prior to such hiring.
(c) Limitation on Covenant. Ownership by Executive, as a passive
investment, of less than one percent of the outstanding shares of capital stock
of any corporation listed on a national securities exchange or publicly traded
in the over-the-counter market shall not constitute a breach of this Section 7.
(d) Indirect Competition. Executive will not, directly or indirectly,
assist or encourage any other person in carrying out, directly or indirectly,
any activity that would be prohibited by the above provisions of this Section 7
if such activity were carried out by Executive, either directly or indirectly.
In particular, Executive will not, directly or indirectly, induce any employee
of the Company or Buyer to carry out, directly or indirectly, any such activity.
(e) Acknowledgment. Executive agrees that the restrictions and
agreements contained in this Section 7 are reasonable and necessary to protect
the legitimate interests of the Company and Buyer and that any violation of this
Section 7 will cause substantial and irreparable harm to the Company and Buyer
that would not be quantifiable and for which no adequate remedy would exist at
law and accordingly injunctive relief shall be available for any violation of
this Section 7.
(f) Blue Pencil Doctrine. If the duration or geographical extent of,
or business activities covered by, this Section 7 are in excess of what is valid
and enforceable under applicable law, then such provision shall be construed to
cover only that duration, geographical extent or activities that are valid and
enforceable. Executive acknowledges the uncertainty of the law in this respect
and expressly stipulates that this Agreement be given the construction which
renders its provisions valid and enforceable to the maximum extent (not
exceeding its express terms) possible under applicable law.
(g) Noncompetition and Consulting Fee. The Company agrees to pay
Executive the sum of $215,000 in consideration of his continuing compliance with
the noncompetition covenants set forth in this Section 7 and any consulting
services under Section 1(b). Such amount shall be payable in two annual
installments of $105,000 and $110,000, respectively, with the first such
installment being due and payable on the first anniversary of the Closing Date
and the second such installment being due and payable on the second anniversary
of the Closing Date. In the event Executive dies before all of such installments
have been paid to him, the Company shall, upon receipt of satisfactory evidence
of the death of
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Executive and instructions in accordance with applicable law advising the
Company to whom such payments are to be made, pay the remaining payments
required hereunder, when due, to the estate of Executive or to his legal
representative, heirs or beneficiaries in accordance with said instructions.
Buyer and the Company agree that the obligation to pay the noncompetition fee
pursuant to this Section 7(g) is unconditional and is not subject to any right
of set off.
8. Company's Right to Know-How, Trade Secrets and Copyrightable
------------------------------------------------------------
Material.
- --------
(a) Know-How and Trade Secrets. All know-how and trade secret
information conceived of or originated by Executive which arises out of the
performance under this Agreement or any related material or information shall be
the property of the Company, and all rights therein are by this Agreement
assigned to the Company.
(b) Copyrightable Material. All right, title, and interest in all
copyrightable material which Executive shall conceive or originate, either
individually or jointly with others, and which arise out of the performance of
this Agreement, will be the property of the Company and are by this Agreement
assigned to the Company along with ownership of any and all copyrights in the
copyrightable material. Upon request and without further compensation therefor,
but at no expense to Executive, Executive will execute all papers and perform
all other acts necessary to assist the Company to obtain and register copyrights
on such materials in any and all countries. Where applicable, works of
authorship created by Executive for the Company in performing his
responsibilities under this Agreement shall be considered "works made for hire,"
as defined in the U.S. Copyright Act.
9. Termination of Employment.
-------------------------
(a) Grounds for Termination. Executive's employment shall terminate
prior to the expiration of the initial term set forth in Section 2 or any
extension thereof in the event that at any time:
(i) Executive shall die; or
(ii) The Board of Directors of the Company shall determine
that:
(x) Executive has failed, by reason of illness, incapacity
or otherwise, to render services of the character contemplated by this
Agreement for at least 60 days during any three-month period; or
(y) Executive has breached this Agreement in any material
respect, which breach is not cured by Executive or is not capable of
being cured by Executive within 15 days after written notice of such
breach is delivered by Executive; or
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(z) Executive has engaged in willful and material
misconduct, including willful and material failure to perform his
duties as an officer or employee of the Company; or
(iii) The Board of Directors shall terminate Executive's employment
other than pursuant to clause (ii) above; or
(iv) The Executive shall terminate his employment.
(b) Effect of Termination Notwithstanding any termination of
Executive's employment, this Agreement shall continue in full force and effect
in accordance with its terms.
(c) Salary Continuation. If Executive's employment by the Company
is terminated by the Company pursuant to Section 9(a)(ii)(x) or 9(a)(iii), the
Company shall continue to pay to Executive his base salary (less any payments
received by Executive from any disability income insurance policy provided to
him by the Company) and shall continue to provide health insurance benefits for
Executive through the remaining term of Executive's employment pursuant to
Section 2 of this Agreement had Executive's employment not been so terminated by
the Company. If Executive's employment by the Company is terminated pursuant to
Section 9(a)(i), 9(a)(ii)(y), 9(a)(ii)(z) or 9(a)(iv), Executive's right to base
salary and benefits shall immediately terminate, except as may otherwise be
required by applicable law, and subject, in the case of termination pursuant to
Section 9(a)(i) or Section 9(a)(iv), to payment of a pro rata portion of
Executive's base salary through the date of such termination.
(d) Surrender of Records and Property. Upon termination of his
employment with the Company, Executive shall deliver promptly to the Company all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof that relate in
any way to the business, products, practices or techniques of the Company, and
all other property, trade secrets and confidential information of the Company,
including, but not limited to, all documents that in whole or in part contain
any trade secrets or confidential information of the Company, which in any of
these cases are in his possession or under his control.
10. Remedies.
--------
(a) Remedies. Executive acknowledges that it would be difficult to
fully compensate the Company for damages resulting from any breach by him of the
provisions of this Agreement. Accordingly, in the event of any actual or
threatened breach of such provisions, the Company shall (in addition to any
other remedies it may have) be entitled to temporary and/or permanent injunctive
and other
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equitable relief to enforce such provisions, and such relief may be
granted without the necessity of proving actual damages.
(b) Venue. Any action at law, suit in equity, or judicial proceeding
arising directly, indirectly, or otherwise in connection with, out of, related
to or from this Agreement or any provision hereof, shall be litigated only in
the federal or State courts, as applicable, sitting in the State of North
Carolina, County of Wake. Executive and the Company consent to the jurisdiction
of such courts over the subject matter set forth in this Section 10. Each of
Executive and the Company waives any claim to a change of venue because of the
doctrine of forum non conveniens or otherwise.
11. Miscellaneous.
-------------
(a) Governing Law. All matters relating to the interpretation,
construction, validity and enforcement of this Agreement shall be governed by
the internal laws of the State of North Carolina without giving effect to any
choice or conflict of law provision or rule that would cause the application of
laws of any jurisdiction other than the State of North Carolina.
(b) Entire Agreement. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof and supersedes all prior
agreements and understandings with respect to such subject matter, and the
parties hereto have made no agreements, representations or warranties relating
to the subject matter of this Agreement which are not set forth herein.
(c) Amendments. No amendment or modification of this Agreement shall
be deemed effective unless made in writing and signed by the parties hereto.
(d) No Waiver. No term or condition of this Agreement shall be deemed
to have been waived, nor shall there be any estoppel to enforce any provisions
of this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
not be deemed a continuing waiver unless specifically stated, shall operate only
as to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
(e) Assignment. This Agreement shall not be assignable, in whole or
in part, by either party without the written consent of the other party, except
that the Company may, without the consent of Executive, assign its rights and
obligations under this Agreement to any corporation, firm or other business
entity with or into which the Company may merge or consolidate, or to which the
Company may sell or transfer all or substantially all of its assets, or of which
50% or more of the equity investment and of the voting control is owned,
directly or
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indirectly, by, or is under common ownership with, the Company. After any such
assignment by the Company, the Company shall be discharged from all further
liability hereunder and such assignee shall thereafter be deemed to be the
Company for the purposes of all provisions of this Agreement including this
Section 11.
(f) Counterparts. This Agreement may be simultaneously executed in
any number of counterparts, and such counterparts executed and delivered, each
as an original, shall constitute but one and the same instrument.
(g) Severability. To the extent any provision of this Agreement shall
be invalid or unenforceable, it shall be considered deleted herefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect.
(h) Captions and Headings. The captions and paragraph headings used
in this Agreement are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement or any of the provisions
hereof.
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IN WITNESS WHEREOF, Executive, Buyer and the Company have executed
this Agreement as of the date set forth in the first paragraph.
UNIVERSAL HOSPITAL SERVICES, INC.
By:
-------------------------
Its:
-------------------------
BIOMEDICAL EQUIPMENT RENTAL
& SALES, INC.
By:
-------------------------
Its:
-------------------------
------------------------------
James F. Molidor
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Exhibit C
---------
CORPORATE SERVICES AGREEMENT
This Agreement is made as of August 13, 1996, by and between
Biomedical Equipment Rental & Sales, Inc., a North Carolina corporation ("BERS")
and Douglass Medical, Inc., a North Carolina corporation ("DMI").
RECITALS
DMI currently provides BERS with certain services under casual
arrangements. Pursuant to the Stock Purchase Agreement dated August 13, 1996
(the "Stock Purchase Agreement"), the shareholders of BERS have agreed to sell
all of the outstanding capital stock of BERS to Universal Hospital Services,
Inc., a Minnesota corporation ("UHS"). BERS and DMI desire to enter into an
agreement relating to services to be provided by DMI to BERS following the
closing of the acquisition by UHS of all of the outstanding capital stock of
BERS (the "Closing Date").
NOW, THEREFORE, the parties hereto agree as follows:
1. Services. From the Closing Date through August 13, 1997, DMI
agrees to provide to BERS the various administrative support services provided
by DMI to BERS prior to the Closing Date as listed in Appendix A to the
Agreement (the "Administrative Services"), in the manner and to the extent
previously provided to BERS. The nature and scope of the Administrative
Services shall not be greater than that which DMI provided to BERS prior to the
Closing Date. In connection with the Administrative Services, DMI agrees to
provide to BERS the same resources, personnel (to the extent still employed by
DMI) and cooperation as provided prior to the Closing Date.
As consideration for the Administrative Services, BERS shall pay DMI
the amounts for such Administrative Services as set forth on Appendix A. If any
of the Administrative Services are canceled during the term of this Agreement,
payments shall be made for all Administrative Services provided through the
effective date of cancellation. Payments for such cancelled services shall be
pro rated through the date of cancellation.
2. Transition Support. Prior to the termination of the provision of
Administrative Services by DMI hereunder, DMI shall provide, at DMI's expense,
reasonable assistance to BERS in replacing the Administrative Services provided,
which assistance shall include but not be limited to transferring records, files
and
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software (to the extent owned by BERS and transferable by DMI) of BERS from
the computer system of DMI. BERS shall reimburse DMI for any unreasonable or
extraordinary expenses incurred by DMI in providing such transition support.
3. Payment. Payment for all Administrative Services hereunder
shall be made by BERS within ten days following receipt of a written statement
for such Administrative Services from DMI.
4. Effectiveness. This Agreement shall become effective only on and
as of the Closing Date.
5. Proprietary and Confidential Information. Except as specifically
provided herein, neither party hereto shall (i) disclose to any third party any
information of a proprietary or confidential nature in connection with this
Agreement and the performance of the Administrative Services hereunder, except
as required by law, or (ii) use such information other than in the performance
of the Administrative Services hereunder; provided, however, that such
information shall not be regarded as confidential if it (a) is or becomes
publicly known through sources entitled to disclose the same, (b) is disclosed
by a third party entitled to disclose the same, or (c) is developed
independently of any information received from DMI or BERS. The obligations of
the parties hereto set forth in this Section 5 shall service the expiration or
termination of this Agreement for a period of three years.
6. Termination; Cancellation of a Portion of Administrative
Services.
(a) Termination Without Prior Notice. Either party hereto may
immediately terminate this Agreement by written notice without prior notice to
the other party (i) in the event of the other party's voluntary bankruptcy or
insolvency, (ii) in the event that the other party shall make an assignment for
the benefit of creditors, or (iii) in the event that a petition shall have been
filed against the other party under a bankruptcy law, a corporate reorganization
law or any other law for relief of debtors (or other law similar in purpose or
effect), which has caused such other party to have its business effectively
discontinued in its then present form.
(b) Termination With Notice. UHS shall have the option to terminate
this Agreement or cancel a portion of the Administrative Services to be provided
by DMI hereunder upon 30 days prior written notice to DMI. Either party shall
have the right to terminate this Agreement upon 10 days prior written notice to
the other party in the event of a default in the performance of such other
party's obligations hereunder which notice shall specify such default, provided
that if the defaulting party shall have substantially remedied the default
within ten days following such notice of termination such right to terminate
shall cease.
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7. Limitation of Liability; Indemnification. In no event will
either party be liable for any indirect, special or consequential damages in
connection with or arising out of this Agreement. Except as expressly provided
otherwise in this Agreement, each party shall indemnify the other party against
all losses, liabilities, and expenses, including reasonable attorney fees, court
costs, and settlement costs, arising out of, or having to do with, the
indemnifying party's negligence or willful misconduct in providing
Administrative Services under this Agreement or the indemnifying party's breach
of any of the terms and conditions of this Agreement.
8. Notices. All notices and other communications hereunder shall be
in writing and shall be sufficiently given if made by hand delivery, by fax, by
telecopier, by overnight delivery service, or by registered or certified mail
(postage prepaid and return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by it by
like notice):
if to BERS:
Biomedical Equipment Rental & Sales, Inc.
c/o Universal Hospital Services, Inc.
3800 West 80th Street
Bloomington, MN 55431-4442
Attention: Mr. David E. Dovenberg
Fax: (612) 893-3237
with a copy to:
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402
Attention: Elizabeth C. Hinck, Esq.
Fax: (612) 340-8738
if to DMI:
Douglass Medical, Inc.
5908 Triangle Drive
P.O. Box 30369
Raleigh, North Carolina 27622
Attention: Mr. James Molidor
Fax: (919) 881-9198
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with a copy to:
Smith Helms Mulliss & Moore, LLP
2800 Two Hannover Square
Raleigh, North Carolina 27601
Attention: Charles N. Anderson, Jr.
Fax: (919) 755-8800
9. General.
(a) DMI and BERS are independent contractors and shall be free to
exercise their discretion and independent judgment as to the method and means of
performance of the services contracted.
(b) Both parties hereto agree that they shall take appropriate action
by instruction of or agreement with their personnel to ensure that all personnel
performing services under this Agreement shall be bound by and comply with all
of the terms and conditions of this Agreement, including, but not limited to,
the terms and conditions of Section 5 hereof.
(c) Except as otherwise provided in this Agreement, no party hereto
shall assign this Agreement or any rights or obligations hereunder without the
prior written consent of the other party hereto and any such attempted
assignment without such prior written consent shall be void and of no force and
effect. This Agreement shall inure to the benefit of and shall be binding upon
the successors and permitted assigns of the parties hereto.
(d) Neither party hereto shall be liable for any failure of or delay
in the performance of this Agreement for the period that such failure or delay
is due to acts of God, public enemy, civil war, strikes or labor disputes, or
any other cause beyond the parties reasonable control. Each party hereto agrees
to notify the other party hereto promptly of the occurrence of any such cause
and to carry out this Agreement as promptly as practicable after such cause is
terminated.
(e) This Agreement may be amended or modified and any of the terms
and conditions hereof may be waived, only by a written instrument executed by
the parties hereto, or in the case of a waiver, by the party waiving compliance.
Any waiver by either party hereto of any condition, or of the breach of any
provision or term in any one or more instances, shall not be deemed to be nor
construed as a further or continuing waiver of any such condition, or of the
breach of any other provision or term of this Agreement.
(f) This Agreement including the appendices attached hereto and other
documents referred to herein, contains the entire understanding between the
parties hereto with respect to the Administrative Services specified herein and
supersedes and replaces all prior and contemporaneous agreements and
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understanding, oral or written, with regard to such services. All appendices and
exhibits hereto are expressly made a part of this Agreement as fully as though
completely set forth herein.
(g) In the event that any provision of this Agreement is declared by
any court or other judicial or administrative body to be null, void or
unenforceable, such provision shall survive to the extent it is not so declared,
and all of the other provisions of this Agreement shall remain in full force and
effect.
(h) Nothing in this Agreement is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other than DMI or
BERS and their respective successors and permitted assigns. Nothing in this
Agreement is intended to relieve or discharge the obligations or liability of
any third persons to DMI or BERS. No provision of this Agreement shall give any
third persons any right of subrogation or action over or against DMI or BERS.
(i) This Agreement shall be construed, performed and enforced in
accordance with, and governed by, the internal laws of the State of North
Carolina, without giving effect to the principles of conflicts of laws thereof.
(j) The section and paragraph headings in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(k) This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which shall constitute the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the date first written above by a duly elected and authorized
officer.
BIOMEDICAL EQUIPMENT RENTAL &
SALES, INC.
By:
---------------------------
James Molidor
President
DOUGLASS MEDICAL, INC.
By:
---------------------------
James Molidor
Chief Executive Officer
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