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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
September 11, 1996
Date of Report
(Date of earliest event reported)
OCCUPATIONAL HEALTH + REHABILITATION INC
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
02-21428 13-3464527
(Commission File Number) (IRS Employer Identification No.)
175 Derby Street, Suite 36
Hingham, Massachusetts 02043-5048
(Address of principal executive offices) (Zip Code)
(617) 741-5175
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
On September 11, 1996, Occupational Health + Rehabilitation Inc
("OH+R") executed and closed an Asset Purchase Agreement (the "Purchase
Agreement") with Argosy Health, L.P. ("Argosy"), a Pennsylvania limited
partnership. Pursuant to the terms of the Purchase Agreement, OH+R purchased a
70% undivided interest in certain assets, including, but not limited to,
equipment, physical therapy machinery and inventory and supplies (the "Purchased
Assets") of a business division of Argosy which provides industrial on-site
occupational and physical therapy and related assessments, evaluations and
injury prevention programs for employees with work related injuries and
illnesses in New Jersey, Pennsylvania, Delaware, Maryland, Northern Virginia and
the District of Columbia (the "Business"). Also on September 11, 1996, OH+R and
Argosy formed a general partnership by the name of Argosy Health Northeast (the
"Partnership") which will provide the services of the Business and may also
provide management and related services to various occupational and
rehabilitation health centers. OH+R contributed to the Partnership the Purchased
Assets (excluding goodwill) as its initial capital contribution and Argosy
contributed the 30% undivided interest in the assets of the Business (excluding
goodwill) which it retained under the Purchase Agreement.
In consideration of the sale of the Purchased Assets, OH+R agreed to
pay to Argosy: (i) $750,000 in cash, which was paid at closing; (ii) 100,502
shares of OH+R's Common Stock, which are to be delivered to Argosy on January 6,
1997; (iii) an amount equal to 24.5% of net income before taxes of the
Partnership for specified periods ending on September 11, 1999, payable on the
15th day following the end of each calendar quarter; and (iv) $50,000 in cash if
the Partnership's net income before taxes for the twelve months following
September 11, 1996 exceeds $600,000, which, if payable, will be paid no later
than November 10, 1997. The amount of consideration paid to Argosy by OH+R was
established through negotiations between the parties. The cash consideration
paid and payable to Argosy was and will be funded from working capital.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of business acquired.
It is impracticable to provide the required financial
statements at the time of filing of this report but such financial statements
will be filed no later than 60 days after September 26, 1996.
(b) Pro forma financial information.
It is impracticable to provide the required pro forma
financial information at the time of filing of this report but such pro forma
financial information will be filed no later than 60 days after September 26,
1996.
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(c) Exhibits.
2.01 Asset Purchase Agreement by and between Argosy Health, L.P.
and Occupational Health + Rehabilitation Inc dated as of
September 11, 1996 and effective as of September 1, 1996.
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SIGNATURE
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: September 18, 1996 OCCUPATIONAL HEALTH +
REHABILITATION INC
/s/ John C. Garbarino
-----------------------------
John C. Garbarino
President and Chief Executive
Officer
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
OCCUPATIONAL HEALTH + REHABILITATION INC
AND
ARGOSY HEALTH, L.P.
DATED AS OF SEPTEMBER 11, 1996
PENNSYLVANIA SECURITIES NOTICES, INCLUDING NOTICES RELATED TO WITHDRAWAL, APPEAR
ON THE FOLLOWING PAGE.
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RESIDENTS OF THE COMMONWEALTH OF PENNSYLVANIA CAN ONLY TRANSFER THE
SECURITIES BEING OFFERED HEREBY IN ACCORDANCE WITH THE PROVISIONS OF SECTION
203(d) OF THE PENNSYLVANIA SECURITIES ACT AND ARE SUBJECT TO THE FOLLOWING
CONDITIONS:
A. EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR THE SECURITIES BEING
OFFERED HEREBY AGREES NOT TO SELL THESE SECURITIES FOR A PERIOD OF 12 MONTHS
AFTER THE DATE OF PURCHASE EXCEPT AS OTHERWISE PERMITTED BY PENNSYLVANIA LAW.
B. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE PENNSYLVANIA
SECURITIES ACT AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THEY ARE SO REGISTERED
OR AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE ACT BECOMES AVAILABLE.
EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR SECURITIES HAS THE RIGHT,
PURSUANT TO SECTION 207 (M) OF THE PENNSYLVANIA SECURITIES ACT OF 1972, TO
WITHDRAW ITS SUBSCRIPTION FOR SECURITIES AND RECEIVE A FULL REFUND OF ALL MONIES
PAID, WITHIN TWO BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF A
WRITTEN BINDING CONTRACT OF PURCHASE. WITHDRAWAL WILL BE WITHOUT ANY FURTHER
LIABILITY TO SUCH PERSON. TO ACCOMPLISH THIS WITHDRAWAL, A SUBSCRIBER NEED ONLY
SEND A LETTER OR TELEGRAM TO THE ISSUER AT THE ADDRESS SET FORTH IN THIS
AGREEMENT, INDICATING ITS INTENTION TO WITHDRAW.
SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END
OF THE AFOREMENTIONED SECOND BUSINESS DAY. IT IS ADVISABLE TO SEND SUCH LETTER
BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND
TO EVIDENCE THE TIME WHEN IT IS MAILED. IF THE REQUEST IS MADE ORALLY, IN PERSON
OR BY TELEPHONE, TO THE ISSUER, A WRITTEN CONFIRMATION THAT THE REQUEST TO
WITHDRAW HAS BEEN RECEIVED SHOULD BE REQUESTED.
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (hereinafter this "Agreement") is made as
of the 11th day of September, 1996, and is to be effective as of September 1,
1996, by and between ARGOSY HEALTH, L.P., a Pennsylvania limited partnership
(the "Seller"), and OCCUPATIONAL HEALTH + REHABILITATION INC, a Delaware
corporation ("OH+R").
W I T N E S S E T H:
WHEREAS, Seller owns and operates a business division, which provides
industrial on-site occupational and physical therapy and related assessments,
evaluations and injury prevention programs for employees with work-related
injuries and illnesses in New Jersey, Pennsylvania, Delaware, Maryland, Northern
Virginia and the District of Columbia (such business as now being conducted
referred to herein as the "Business");
WHEREAS, OH+R desires to purchase a 70% undivided interest in the
assets, goodwill and business records used in connection with the Business from
Seller, and Seller desires to sell such interest to OH+R on the terms herein
stated;
WHEREAS, in accordance with the terms of a partnership agreement to be
entered into on even date herewith by and between OH+R and Seller (the
"Partnership Agreement"), OH+R and Seller plan to form a general partnership by
the name of Argosy Health Northeast (the "Partnership"), which will provide the
services of the Business after the closing of this Agreement and may provide
management and related services to various occupational and rehabilitation
health centers;
WHEREAS, OH+R plans to contribute to the Partnership as its initial
capital contribution the interest (excluding its interest in goodwill) which it
is purchasing hereunder;
WHEREAS, Seller plans to contribute to the Partnership as its initial
capital contribution the 30% undivided interest in the assets, goodwill and
business records (excluding its interest in goodwill) used in connection with
the Business which it will retain hereunder; and
NOW, THEREFORE, in consideration of the mutual promises made herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
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ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 PURCHASED ASSETS. Subject to the terms and conditions hereof and in
reliance on the representations and warranties set forth herein, on the Closing
Date (as defined herein), Seller shall sell, assign, convey, transfer and
deliver to OH+R, and OH+R shall purchase, for the purchase price set forth in
Article 2 hereof, an undivided seventy percent (70%) interest in all of the
assets, properties and rights, of every kind, nature and description, whether
tangible or intangible, of the Business, excluding only the Excluded Assets (as
defined herein). Such assets, properties and rights, excluding only the Excluded
Assets, are hereafter referred to as the "Purchased Assets," and shall include,
without limitation of the foregoing, the following:
(a) all equipment, physical therapy machinery, fixtures, instruments,
apparatus, furniture, furnishings, and other tangible personal property,
including, without limitation, that listed in Schedule 1.1(a), which are owned
by Seller and utilized in connection with the Business as of the date hereof
(the "Equipment");
(b) all inventories and supplies of the Business, including, without
limitation, the inventory and supplies listed in Schedule 1.1(b), existing as of
the date hereof (the "Inventory");
(c) all rights, claims and benefits of Seller under the contracts,
leases, service agreements, supply orders, purchase orders, understandings,
commitments and other agreements (whether or not written) listed in Schedule
1.1(c) (the "Assigned Contracts");
(d) all items of prepaid expense related to the Business as of the
Closing Date (excluding any item of prepaid expense included in the Excluded
Assets);
(e) all rights of Seller as of the Closing Date under or pursuant to
all warranties, representations and guarantees made by suppliers or other
parties affecting the Equipment or the other Purchased Assets, or by providers
of services furnished to Seller or affecting the Equipment or the other
Purchased Assets;
(f) all licenses, permits, certificates of need or other authorizations
for operating the Business held by Seller in effect on the Closing Date,
including, without limitation, those listed in Schedule 1.1(f); and
(g) all books, records, medical records, files and papers, whether in
hard copy or computer format, used in the Business, including, without
limitation, manuals and data, customer lists, credit files, sales and
advertising materials, promotional literature, market information, marketing
information, information systems, computer programs and software, sales and
purchase correspondence, and lists of present suppliers used in or relating to
the Purchased Assets or the Business.
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1.2 ASSET TRANSFER. At the Closing, Seller shall deliver to OH+R proper
assignments, conveyances and full warranty bills of sale sufficient to convey to
OH+R good and marketable title to the Purchased Assets, free and clear of all
liens, mortgages, leases, pledges, conditional sales agreements, security
interests, options, charges, claims, restrictions and encumbrances of any kind
("Liens"), except for the Assumed Liabilities (as defined herein), as well as
such other instruments of conveyance as counsel for OH+R may reasonably deem
necessary or desirable to effect or evidence the transfers contemplated hereby.
1.3 LICENSED ASSETS. At the Closing, Seller shall license to the
Partnership the exclusive use of the Intellectual Property (as defined herein)
in certain states, and the parties shall enter into the "Intellectual Property
License Agreement" substantially in the form of Exhibit A hereto.
1.4 EXCLUDED ASSETS. Notwithstanding any other provision of this
Agreement, Seller shall not transfer to OH+R any of the following (the "Excluded
Assets"):
(a) any and all cash and cash equivalents in hand, in banks or in
transit for the account of Seller;
(b) all rights, claims and benefits of Seller under contracts, leases,
service agreements, supply orders, purchase orders, understandings, commitments
and other agreements (whether or not written) other than the Assigned Contracts,
including, but not limited to, any employment and non-competition agreements
between Seller and its employees, except to the extent that OH+R elects in
writing to accept the assignment thereof (whereupon it shall be deemed to be an
Assigned Contract);
(c) all accounts receivable relating to the Business as of the Closing
Date, including, but not limited to, those set forth in Schedule 1.4(c) hereto
(the "Accounts Receivable");
(d) all of Seller's interest in and claims and rights with respect to
(i) all patents, copyrights, copyright renewal rights, trademarks, service
marks, logos and trade names (and, in each case, any applications therefor),
including the names "Argosy" and "Argosy Health," computer software (owned by
any Seller, or authored or developed for Seller by any of its employees or
agents), licenses, sublicenses, and franchise agreements of Seller and
including, without limiting the generality of the foregoing, those set forth in
Schedule 1.4(d), and the goodwill appurtenant thereto; and (ii) all know-how,
formulae, processes, techniques, designs, patterns, shapes, inventions (whether
or not patented or patentable), trade secrets, and other technology used in the
Business (collectively, the "Intellectual Property"); and
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(e) those items listed in Schedule 1.4(e) attached hereto.
1.5 LIABILITIES AND OBLIGATIONS.
(a) Obligations Assumed. OH+R agrees, upon consummation of the Closing,
to assume only the liabilities and obligations (i) described on Schedule 1.5(a)
and (ii) arising out of the Assigned Contracts, but only to the extent that the
Assigned Contracts remain unperformed or unfulfilled on, or by their terms
continue after, the Closing Date (as defined herein), and the liabilities and
obligations under the Assigned Contracts arising out of (A) the ownership or use
of the Purchased Assets after the Closing Date (other than those liabilities and
obligations relating to any unpaid balance of the purchase price due from Seller
when it acquired the Purchased Assets or the ownership or use of the Purchased
Assets prior to the Closing Date) or (B) the operation of the Business after the
Closing Date (the "Assumed Liabilities").
(b) Liabilities and Obligations Not Assumed. OH+R shall not assume or
become obligated to pay any liabilities or obligations of Seller or of the
Business whatsoever, other than the Assumed Liabilities, and Seller agrees to
discharge, when and as they become due and payable, all liabilities and
obligations not assumed by OH+R (the "Excluded Liabilities"). Without limiting
the foregoing, the Excluded Liabilities shall include:
(i) any and all contracts, leases, purchase orders, supply
orders, distribution agreements, understandings, commitments and other
agreements (whether or not written), including, but not limited to, any
employment and non-competition agreements between Seller and its employees to
which Seller is a party, other than the Assigned Contracts;
(ii) any and all liabilities and obligations arising out of
the conduct of the Business prior to the Closing Date, including obligations
with respect to employees;
(iii) all Taxes (as that term is defined in Section 4.18(b))
incurred by Seller or in connection with the conduct of the Business prior to
the Closing Date;
(iv) all costs, expenses, liabilities and damages resulting
from the claim, suit or action of any person alleging death or injury to such
person or to another person or any loss or damage to property based upon, or
resulting or arising from, any service rendered by Seller, or any of its
officers, employees or agents, prior to the Closing Date;
(v) except as described on Schedule 1.5 (a), any liabilities
arising prior to the Closing Date out of the purchase or other acquisition of
any of the Purchased Assets, including, but not limited to, any liability for
all or any portion of the unpaid balance of the purchase price of any capital
assets or supplies;
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(vi) any accrued wage, welfare benefit, bonus or other form of
compensation owed as of the Closing Date to any shareholder, director, officer,
employee or agent of Seller; and
(vii) any other liabilities or obligations other than the
Assigned Contracts arising in whole or in part out of any act or occurrence
prior to the Closing Date, whether known or determined or unknown or
undetermined as of that date.
ARTICLE 2
PURCHASE PRICE
2.1 CONSIDERATION. In consideration of the transfer of the Purchased
Assets, at the Closing or at such other time indicated, OH+R shall deliver to
Seller the "Purchase Price," which shall consist of the following:
(a) cash at the Closing in the amount of $750,000;
(b) shares of OH+R common stock, $.001 par value per share, with the
number of shares (the "Shares") to be determined by dividing $500,000 by the
average closing price per share of the OH+R common stock as reported on The
Nasdaq Stock Market for the five trading days preceding the Closing, with the
Shares to be delivered to Seller on January 6, 1997;
(c) earn-out payments equal to 24.5% of Pre-Tax Profits (as defined
herein), for each of the following periods (collectively, "Earn-Out Payments"):
(A) the period commencing on the Closing Date and ending December 31, 1996; (B)
the periods commencing January 1 and ending December 31 of each of the years
1997 and 1998; and (C) the period commencing on January 1, 1999 and ending on
the third anniversary of the Closing Date. As used in this Agreement, "Pre-Tax
Profits" shall mean the net income before taxes of the Partnership for the
respective periods as determined in accordance with generally accepted
accounting principles, except that (i) no amount of OH+R corporate overhead
shall be allocated to the Partnership in calculating such net income, and (ii)
Pre-Tax Profits shall not include any amortization of goodwill acquired by OH+R
pursuant to this Agreement. Each such Earn-Out Payment shall be due and payable
on the 15th day following the end of each calendar quarter based on the
Partnership's Pre-Tax Profits for that quarter regardless of any distributions
made by the Partnership to OH+R. If the Pre-Tax Profits as reflected in OH+R's
annual audited financial statements are less than those calculated to make the
quarterly Earn-Out Payments, Seller shall be obligated to repay to OH+R any
amounts received in excess of amounts Seller was due hereunder; provided that
OH+R may offset against the next Earn-Out Payment such excess that has not been
repaid. If the Pre-Tax Profits as reflected in OH+R's annual audited financial
statements are greater than those calculated to make the quarterly Earn-Out
Payments, OH+R shall pay to Seller
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an amount equal to the shortage with the next quarterly Earn-Out Payment or, if
none, within 30 days of the determination of the shortage.
(d) $50,000 cash to be paid within 60 days subsequent to the first
anniversary of the Closing Date if the Partnership's Pre-Tax Profits for the 12
months following the Closing Date exceeds $600,000.
2.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets in accordance with the provisions of Schedule 2.2.
Each party agrees that it shall not take any position that varies from or is
inconsistent with such allocation in any filing made by such party with the
Internal Revenue Service ("IRS") or any other governmental or regulatory
authority, except to the extent an adjustment to the allocations arrived at by
applying the principles set forth in Schedule 2.2 is required by the IRS
subsequent to an IRS audit. None of the parties shall claim in any such filing
that the acquisition of the Purchased Assets is or was a tax-free organization.
2.3 TAXES. Seller shall pay all sales, use, transfer, conveyance,
registration, stamp, and VAT or other similar taxes or duties (collectively
"Transfer Taxes") arising out of or incurred in connection with the transfer of
the Purchased Assets pursuant to this Agreement.
2.4 PRORATION OF CERTAIN PAYMENTS. Lease payments under any leases
being assigned by Seller to OH+R and listed on Schedule 1.1(c), and then
assigned by OH+R and Seller to the Partnership, shall be pro-rated as of the
Closing Date as set forth on Schedule 2.4, such that Seller shall be responsible
for lease payments through and including the date immediately preceding the
Closing Date, and the Partnership shall be responsible for such payments
thereafter.
ARTICLE 3
PRE-CLOSING COVENANTS
3.1 CONDUCT OF BUSINESS. During the period from the date of this
Agreement and continuing until the Closing, Seller agrees (except as expressly
provided in this Agreement or the Schedules hereto or to the extent that OH+R
shall otherwise consent in writing) that:
(a) Seller shall carry on the Business in the ordinary course in
substantially the same manner as presently conducted, maintain the Records in
substantially the same manner as presently maintained, and preserve the
relationships of the Business with customers, suppliers and others. "Records"
for purposes of this paragraph shall mean all books of account, general,
financial and accounting records, files, patient records, invoices, payment
authorizations, certificates of medical need, correspondence to and from
customers,
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suppliers and payors, Medicare intermediary and State Medicaid policies,
procedures, bulletins and notices, and other data and information owned by
Seller on the Closing Date, which relate to the Business, Purchased Assets or
Assumed Liabilities.
(b) Unless OH+R has consented, Seller shall not and shall not agree to
(i) sell, lease or otherwise dispose of any of the Purchased Assets, except for
fair value in the ordinary course of business consistent with past practice, or
(ii) acquire any material capital asset for use in the operation of the
Business. "Material" for purposes of this paragraph shall mean any capital asset
whose acquisition price or fair market value is in excess of $2,500.
(c) Seller shall not enter into or assume any pledge or other title
retention agreement or permit any Lien to attach upon any of the Purchased
Assets.
(d) Seller shall maintain and keep in good order and repair in a manner
consistent with Seller's existing practice, subject to reasonable wear and tear,
all of the Purchased Assets.
(e) Seller shall not solicit or accept advance payments from customers
for services or goods which are to be performed or delivered by the Partnership
or OH+R subsequent to the Closing Date.
(f) Seller shall not enter into any contract, commitment or agreement
which either individually or in the aggregate would have a Material Adverse
Effect upon the Business or the Purchased Assets. "Material Adverse Effect" for
purposes of this paragraph shall mean a material adverse effect on the business,
results of operations, financial condition or prospects of the Business.
(g) Seller shall not incur any additional indebtedness for borrowed
money, except in the ordinary course of business.
(h) Seller shall take no action that would or might result in any of
its representations and warranties set forth in this Agreement becoming untrue
(including the accuracy of the Schedules), in any of the conditions to Closing
set forth in Article 6 not being satisfied, or in any of the Purchased Assets
becoming materially less valuable.
(i) Seller shall comply with all laws, rules and regulations of any
governmental entity applicable to the Purchased Assets or the conduct of the
Business and shall maintain its good standing under all permits and licenses
necessary to conduct the Business.
(j) Seller shall promptly advise OH+R in writing of the occurrence of
any matter or event that is material to the Business, the Purchased Assets, or
to the Closing conditions or the representations and warranties in this
Agreement.
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3.2 CONFIDENTIALITY; NO DISCLOSURE. Seller shall hold in confidence and
shall not divulge any data or information that Seller has obtained regarding
OH+R. Seller shall not make any public announcement of the negotiations between
the parties related to this Agreement, or the transactions contemplated herein,
without the prior written consent of OH+R, except as may be required by law. The
parties agree that, to the extent feasible, they will advise and confer with
each other prior to the issuance of any reports, statements or releases
pertaining to this understanding or the transactions contemplated herein.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to OH+R as follows and agrees
with OH+R that the following representations and warranties are true and correct
as of the date hereof and shall be true and correct on the Closing Date:
4.1 ORGANIZATION. Seller is a limited partnership duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania and is duly licensed and qualified and in good standing in all
other jurisdictions where the failure to be so licensed or qualified would have
a material adverse effect on the Business, which jurisdictions are listed in
Schedule 4.1. Seller has the power to carry on its business as now conducted and
holds all permits, licenses, certificates of need, orders and approvals of all
federal, state and local governmental or regulatory bodies necessary and
required therefor, and Seller has full power and authority under such laws to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby.
4.2 LIMITED PARTNERSHIP AND LEGAL AUTHORITY. All limited partnership
actions have been taken by Seller that are necessary for the due authorization,
execution and delivery of this Agreement, the Bill of Sale in substantially the
form set forth in Exhibit B attached hereto (the "Bill of Sale") and the other
documents, agreements and instruments contemplated hereby and the performance of
the acts to be performed by Seller hereunder and thereunder. Each of this
Agreement, the Bill of Sale, and such other documents, agreements and
instruments constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally from time to time in effect, and subject to any equitable principles
limiting the right to obtain specific performance of certain obligations of
Seller hereunder and thereunder. The entering into of this Agreement, the Bill
of Sale, and such other documents, agreements and instruments, the consummation
of the transactions contemplated hereby and thereby and the performance of the
obligations hereunder and thereunder do not and will not violate any law,
regulation, rule, injunction or court order, or any provision of Seller's
Certificate of Limited Partnership or partnership agreement, or of any note,
indenture, mortgage, lease, license agreement or other agreement or instrument
to which Seller is a party or by which Seller is bound or of which Seller is
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maker, or result in the creation of any lien, charge or encumbrance upon the
Purchased Assets or the Business to be sold hereunder.
4.3 AUTHORIZATION. Except as provided in Schedule 4.3, no consent,
approval, waiver, license, authorization or declaration of, or filing or
registration with, any person, firm, corporation or other entity, including,
without limitation, any lender, mortgagee, governmental authority, bureau or
agency is required in connection with the execution, delivery and performance by
Seller of this Agreement, the Bill of Sale, or the consummation of the
transactions contemplated hereby and thereby.
4.4 TITLE TO PURCHASED ASSETS. Seller has good and marketable title to
all of the Purchased Assets, free and clear of any and all Liens and, except as
set forth in Schedule 4.4, is free to transfer and assign the Purchased Assets
to OH+R without obtaining the consent or approval of any person or entity.
4.5 CONDITION OF PURCHASED ASSETS UPON TRANSFER. All of the Purchased
Assets, including, but not limited to, tangible personal property, and
improvements, fixtures and appurtenances on or to any real property leased by
Seller and included in the Purchased Assets are in good operating condition,
order and repair, ordinary wear and tear excepted, are suitable for the purposes
for which they are presently being used, and perform in all material respects in
accordance with the specifications and purposes for which they were designed to
be used. All the Purchased Assets are located at the offices of Seller except as
set forth in Schedule 4.5, and all are and have been operated and maintained in
conformity with all applicable laws, ordinances, regulations, warranties, orders
and other legal and safety requirements relating thereto. The Purchased Assets
have no known material defects, or needed material repairs, and are usable in
the ordinary course of the Business.
4.6 FINANCIAL STATEMENTS. Attached as Schedule 4.6 are unaudited
financial statements for Seller and the Business for the fiscal year ended
December 31, 1995 and the six month period ended on June 30, 1996. The foregoing
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied, and fairly and accurately present
the financial condition and results of the operation of Seller as of the dates
and for the periods indicated.
4.7 ABSENCE OF CERTAIN CHANGES. Other than as set forth in Schedule
4.7, since June 30, 1996, there has not been:
(a) any material adverse change in the financial condition, assets or
liabilities, results of operations, or prospects of the Business other than
changes in the ordinary course of business, which changes have not in the
aggregate been, and do not, to Seller's best knowledge, threaten to become
materially adverse;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting any of the Purchased Assets;
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(c) any obligation or liability undertaken or incurred (whether
absolute, accrued, contingent or otherwise and whether due or to become due), or
any transaction, contract or commitment entered into by Seller relating to, or
which could have an impact on, the Business other than items incurred or entered
into in the ordinary course of business and consistent with past practices of
Seller;
(d) any payment, discharge or satisfaction of any claim, lien,
encumbrance or liability of Seller outside the ordinary course of business;
(e) any sale, transfer, conveyance, assignment, lease, license, pledge,
mortgage or other disposition or encumbrance of any assets of Seller related to
the Business having a value of $1,000 individually and $5,000 in the aggregate,
or more, except in the ordinary course of business and consistent with past
practices of Seller;
(f) any write-down or write-up of the value of any Inventory or any
write-down, cancellation or forgiveness of any Account Receivable of Seller,
except in the ordinary course of business consistent with past practices of
Seller in amounts not greater than $200 individually and $1,000 in the
aggregate;
(g) any modification, amendment, cancellation, termination, revocation,
rescission, or waiver of any rights with value to Seller in excess of $1,000
pursuant to any contract, agreement, license or other obligation related to the
Business;
(h) any single capital expenditure or commitment therefor by Seller
with respect to the Purchased Assets or the Business in excess of $1,000;
(i) any change in the accounting methods or practices followed by
Seller or any change in the depreciation or amortization policies or rates
theretofore adopted and applied;
(j) any material adverse change in Seller's relationship with any of
its suppliers, distributors, patients or customers relating to the Business; or
(k) any agreement or understanding entered into by Seller, whether in
writing or otherwise, for Seller to take any of the actions specified in this
Section 4.7.
4.8 LITIGATION. Except as disclosed in Schedule 4.8, there is no
action, suit or proceeding pending or, to the best of Seller's knowledge,
threatened against Seller relating to or affecting the Business or the Purchased
Assets, at law, in equity, by way of arbitration or before any governmental
department, commission, board or agency. Except as set forth in Schedule 4.8, to
the best of Seller's knowledge, there are no existing facts or conditions which
might give rise to any charge, claim, litigation, proceeding, or investigation
by any third party which is likely to materially adversely affect the Business,
nor are there any facts or conditions which might give rise to any order of
condemnation, appropriation or other
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taking of any of the Purchased Assets or any order or ruling which adversely
could affect the condition of the Business.
4.9 INVENTORY. The Inventory consists of items of a quality and
quantity currently usable and salable as new in the ordinary course of the
Business and contains no damaged or defective goods.
4.10 CONTRACTS AND COMMITMENTS. Each Assigned Contract is valid and in
effect and, to the best of Seller's knowledge, no other party thereto is in
default. Seller is not in default of any such Assigned Contract, has received no
notice of default thereunder, and no event has occurred or is expected to occur
which (after notice and lapse of time or both) would become a breach or default
under, or otherwise permit modification, cancellation, acceleration or
termination of, any such Assigned Contract. Seller has delivered to OH+R a true,
complete and correct copy of each written Assigned Contract to which it is a
party and any amendments thereto and an accurate, detailed description of every
oral Assigned Contract to which it is a party.
4.11 INTELLECTUAL PROPERTY. Except as disclosed in Schedule 4.11, none
of the owners or the past or present employees, officers, directors or
consultants of Seller has any rights in any of the Intellectual Property. Except
as disclosed in Schedule 4.11, Seller has not granted any outstanding licenses
or other rights to Intellectual Property, and Seller is not liable, nor has it
made any contract or arrangement whereby it may become liable, to any person for
any royalty or other compensation for the use of any Intellectual Property.
Except as disclosed in Schedule 4.11, none of the rights of Seller in, to or
under any Intellectual Property will be adversely affected by the consummation
of the transactions contemplated hereby. Use of the Intellectual Property in the
Business in the manner conducted by Seller prior to the Closing will not
infringe any patent or copyright of any third party, nor constitute a
misappropriation of the trade secrets or other proprietary rights of any third
party.
4.12 BROKERAGE AND FINDER'S FEES. Neither Seller nor any of its
officers, employees or agents has employed any broker, finder or agent, or
agreed to pay or incurred any brokerage fee, finder's fee or commission with
respect to the transactions contemplated by this Agreement, or dealt with anyone
purporting to act in the capacity of a broker, finder or agent with respect
thereto as a result of which any claim for a fee can be asserted against OH+R.
4.13 COMPLIANCE WITH LAWS. Seller has complied in all material respects
with all applicable laws, rules, regulations and orders of federal, state, local
and foreign governments, except where the failure to comply would not have a
materially adverse effect on the Business or the Purchased Assets, and Seller is
not in default with respect to any order, judgment, writ, injunction, decree,
award, rule or regulation of any court, governmental or regulatory body or
arbitrator which restrains or limits the operations of the Business or the use
of the Purchased Assets, except where such default would not have a
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materially adverse effect on the Business or the Purchased Assets, and no event
has occurred which with notice or the passage of time or both would constitute
such a default.
4.14 LABOR AND EMPLOYEE RELATIONS. As of the Closing Date, Seller is
not a party to any collective bargaining agreement nor are its employees members
of a collective bargaining unit or union, nor has there been any recent
unionization activity, and Seller has complied in all material respects with all
laws relating to the employment of labor, including provisions relating to
wages, hours, collective bargaining, health and safety, and the payment of
social security, withholding and similar taxes, and is not liable for any
arrears of wages or any taxes or penalties for failure to comply with such laws,
where, in any such case, the violation of which or liability for which would
have a material adverse effect on the Business. Seller has complied in all
material respects with all applicable laws for each of its employee benefit
plans, including the provisions of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), if and to the extent applicable. Except as
described in Schedule 4.14, no employee of the Business has given any notice or
made any threat, or otherwise revealed an intent, to cancel or otherwise
terminate his or her relationship with Seller.
4.15 INSURANCE. Seller has in full force and effect fire, general
casualty, and liability insurance covering the Business and Purchased Assets, in
such amounts, and against such losses and risks, as are generally maintained for
comparable businesses and properties, and Seller shall maintain such insurance
in full force and effect through the Closing Date. Seller is not in default with
respect to payment of any premiums of any such insurance policy and no claim is
pending under any such policy. Seller has not been refused insurance with
respect to the assets or the conduct of the Business, and coverage has not been
limited by any insurance carrier to which Seller has applied for any such
insurance.
4.16 JOINT VENTURES. Except as disclosed in Schedule 4.16, Seller has
neither an equity interest in, nor the right or option to acquire an equity
interest in, any other entity (except equity of a publicly traded corporation or
partnership equal to less than one percent (1%) of the equity interests therein
and held by Seller merely as a passive investor), and Seller is not a
participant, as a partner or otherwise, in any joint venture or common or pooled
risk business enterprise.
4.17 INDEBTEDNESS. Except as set forth in Schedule 4.17, Seller does
not have (i) any obligations, secured by any or all of the Purchased Assets, for
money borrowed or under any guarantee, (ii) any agreements or arrangements to
borrow money or to enter into any such guarantee, or (iii) as of the Closing
Date, any agreements or commitments to enter into any of the foregoing
agreements or guarantees.
4.18 TAXES.
(a) All returns, reports and other forms related to Taxes (as defined
herein) required to be filed on or before the Closing Date with respect to the
Business, or the
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Purchased Assets, have been filed, or will be filed on or before the Closing
Date, in accordance with all applicable laws (after taking into account
extensions duly obtained), and no penalties or other charges are due or will
become due with respect to the late filing of any such return, report or form.
All such returns, reports and other forms are or will be accurate and complete
in all respects and properly reflect the Taxes due for the periods covered
thereby. Without limiting Seller's obligation pursuant to Section 10.3 of this
Agreement, all Taxes due and payable, whether or not called for by such returns,
reports and other forms, and all Taxes properly allocable to periods ending on
or before the Closing Date have been paid, adequately provided for in reserves,
or properly protested or will be so paid, reserved for or protested by Seller by
the Closing Date. All Taxes required to be withheld or collected by Seller have
been duly withheld or collected and have been paid over to the appropriate
governmental authorities, or are held in separate bank accounts established
exclusively for such purpose. Except as set forth in Schedule 4.18, no audit of
any such return, report or form is pending or, to the best of Seller's
knowledge, threatened. Seller is not a party to any pending action or proceeding
by any governmental authority for assessment or collection of Taxes, and no
claim for assessment or collection of Taxes has been asserted or threatened
against Seller. There are no tax liens upon any of the Purchased Assets. Seller
has delivered to OH+R prior to the Closing copies of any filings made in the
last two (2) years in connection with the state and local taxation of the
Business or the Purchased Assets.
(b) As used in this Agreement, "Taxes" (or "Tax" where the context
requires) shall mean all federal, state, county, local, foreign and other taxes
(including, without limitation, income, profits, premium, estimated, excise,
value added, sales, use, occupancy, gross receipts, franchise, ad valorem,
severance, capital levy, production, transfer, withholding, employment,
unemployment compensation, payroll-related and property taxes, import duties and
other governmental charges and assessments), whether or not measured in whole or
in part by net income, and including deficiencies, interest, additions to tax or
interest or penalties with respect thereto.
4.19 BOOKS AND RECORDS. The books of account and other financial and
corporate records relating to the Business are complete and correct and are
maintained in accordance with good business practices and generally accepted
accounting principles, consistently applied.
4.20 POWERS OF ATTORNEY. No person has any power of attorney to act on
behalf of Seller in connection with any of the Purchased Assets or the Business
other than such powers to so act as normally pertain to the officers of such
entity.
4.21 ENVIRONMENTAL MATTERS; HEALTH AND SAFETY.
(a) There are no outstanding or threatened actions, claims,
proceedings, determinations or judgments by any party, including but not limited
to any governmental authority, federal, state, or local or any agency thereof,
against or involving any of Seller, or
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to Seller's best knowledge, against or involving any of Seller's predecessors in
interest in any manner arising under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.
("CERCLA") or any other federal, state, local or other environmental, health or
safety law, regulation, order or requirement or requiring the remediation or
removal of an existing condition or substance. Seller has neither received any
notice of, nor is aware of, any outstanding or threatened orders, determinations
or notices of violation issued by any federal, state, local or other
governmental authority administering environmental or health and safety laws in
connection with the operation of Seller or the Business or by any of its
predecessors in interest which have not been complied with or resolved to the
satisfaction of such governmental authority. Schedule 4.21 is a list of all such
orders or determinations issued within the past ten (10) years by any
governmental authority against Seller and, to the best of Seller's knowledge,
against any of Seller's predecessors in interest.
(b) Seller and the Business are and have been operated in compliance
with all applicable federal, state, and local environmental and health and
safety laws, regulations and ordinances governing Seller and the Business with
respect to all discharges into the ground or surface water, emissions into the
ambient air, and generation, accumulation, labeling, transportation, handling,
treatment, storage and disposal of waste material or process by-products
(including hazardous, toxic or biomedical waste or substances, if any) or
removal of any existing condition or substance. Seller and, to Seller's best
knowledge, Seller's predecessors in interest have complied with all notice,
recordkeeping and reporting requirements imposed by any governmental authority
and any informational requests or demands arising under any federal, state,
local or other environmental or health and safety laws. To Seller's best
knowledge, none of Seller's predecessors in interest is liable for any
penalties, fines, or forfeitures or is subject to any restrictions on the
conduct of the Business for failure to comply with any of the foregoing.
4.22 CUSTOMERS AND PATIENTS. Schedule 4.22 sets forth a list of all of
the customers and patients who have received services from Seller or its
predecessors in the course of conducting the Business as of July 31, 1996, not
including customers or patients who have not received any services from Seller
or its predecessors during the past two (2) years.
4.23 INVESTMENT REPRESENTATIONS. Seller is experienced in evaluating
and investing in companies such as OH+R. Seller is acquiring the Shares for
investment for its own account and not with the view to, or for resale in
connection with, any distribution thereof. Seller understands that the Shares
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), by reason of an exemption from the registration provisions of
the Securities Act which depends upon, among other things, the bona fide nature
of its investment intent as expressed herein. Seller acknowledges that the
Shares must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available. Seller
has been advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permit limited
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resale of shares purchased in a private placement subject to the satisfaction of
certain conditions (which conditions cannot presently be satisfied). Seller has
had an opportunity to discuss OH+R's business, management and financial affairs
with OH+R's management, and it has been furnished with copies of documents which
it has requested, including any filings made by OH+R with the Securities and
Exchange Commission. Seller acknowledges receipt of the Offering Memorandum and
Proxy Statement of Telor Ophthalmic Pharmaceuticals, Inc. dated May 15, 1996 and
OH+R's Form 10-Q for the quarter ended June 30, 1996. Seller is an "accredited
investor" within the meaning of Regulation D promulgated by the Securities and
Exchange Commission pursuant to the Securities Act.
4.24 OH+R STOCK OWNERSHIP. Seller owns no shares of OH+R capital stock
and has no warrants, options or other rights to purchase or otherwise acquire or
convert any obligations into shares of OH+R capital stock.
4.25 MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or warranty
by Seller in this Agreement, the other agreements contemplated hereby or any
document, statement, certificate or schedule furnished or to be furnished to
OH+R by, or on behalf of, Seller pursuant hereto or thereto contains, or will
when furnished contain, any untrue statement of a material fact, or omits, or
will then omit, to state, a material fact necessary to make the statement of
facts contained therein not materially misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF OH+R
5.1 ORGANIZATION. OH+R is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and is
duly licensed and qualified and in good standing in all other jurisdictions
where the failure to be so licensed or qualified would have a material adverse
effect on its business.
5.2 CORPORATE AUTHORITY. All corporate actions have been taken by OH+R
that are necessary for the due authorization, execution and delivery of this
Agreement, the Bill of Sale and the other documents, agreements and instruments
contemplated hereby and the performance of the acts to be performed by OH+R
hereunder and thereunder. Each of this Agreement, the Bill of Sale and such
other documents, agreements and instruments constitutes the legal, valid and
binding obligation of OH+R, enforceable against OH+R in accordance with its
terms subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally from time to time in effect, and
subject to any equitable principles limiting the right to obtain specific
performance of certain obligations of OH+R hereunder and thereunder. The
entering into of this Agreement, the Bill of Sale and such other documents,
agreements and instruments and the consummation of the transactions contemplated
hereby and thereby and the performance of the obligations hereunder and
thereunder do not and will not violate any law, regulation, rule, injunction or
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court order, or the provisions of OH+R's Certificate of Incorporation, as
amended, or By-Laws, or of any note, indenture, mortgage, lease, license
agreement or other agreement or instrument to which OH+R is a party or by which
OH+R is bound or of which OH+R is maker, or result in the creation of any lien,
charge or encumbrance upon the Purchased Assets or the Business to be sold
hereunder.
5.3 AUTHORIZATION. No consent, approval, waiver, license, authorization
or declaration of, or filing or registration with, any person, firm, corporation
or other entity, including, without limitation, any lender, mortgagee,
governmental authority, bureau or agency is required in connection with the
execution, delivery and performance by OH+R of this Agreement, the Bill of Sale
or the consummation of the transactions contemplated hereby and thereby, except
as may be required by applicable securities laws.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 CONDITIONS TO OH+R'S OBLIGATIONS. The obligations of OH+R hereunder
shall be subject to the following conditions, except as OH+R may waive the same
in writing:
(a) Representations and Warranties. The representations and warranties
made by Seller in Section 4 hereof shall be true and correct in all material
respects when made and shall be true and correct in all material respects on the
Closing Date with the same force and effect as if they had been made on and as
of the Closing Date.
(b) Compliance. As of the Closing Date, Seller shall have fully
complied with, and shall have fully performed the terms, conditions, covenants
and obligations of this Agreement and the other agreements contemplated hereby
to be performed or complied with at, or prior to, the Closing Date.
(c) Proceedings. On or before the Closing Date, all actions,
proceedings, instruments and documents required by, or on behalf of, Seller to
execute, deliver and carry out this Agreement, and all agreements incidental
thereto, and all other related legal matters, shall be reasonably satisfactory
to OH+R and its counsel.
(d) Opinion of Counsel. OH+R shall have received an opinion of counsel
for Seller, dated the Closing Date, to the effect and in the form as set forth
in Exhibit C.
(e) Delivery of Closing Documents. OH+R shall have received the
documents described in Section 7.1.
(f) Intellectual Property License Agreement. Seller and the Partnership
shall have entered into the Intellectual Property License Agreement.
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(g) Necessary Consents. Seller shall have obtained the consent in
writing of all necessary persons to the transactions contemplated by this
Agreement, including without limitation the Bill of Sale and/or such amendments
or modifications of such documents as may be required in order that the purchase
of the Purchased Assets hereunder will not result in the termination of, or any
default under, any contracts, agreements, obligations, leases, permits or
licenses transferred to OH+R pursuant to this Agreement.
(h) Partnership Documents. On or before the Closing Date, the parties
shall have executed and delivered the Partnership Agreement between the parties
and a Management Agreement between Seller and the Partnership (the "Partnership
Documents").
(i) Subleases. The Partnership shall have entered into an acceptable
lease or sublease for the premises used for the York, Pennsylvania regional
office and/or such other premises as Seller and OH+R shall mutually agree.
(j) Investigation Satisfactory. OH+R shall be satisfied in all respects
with the results of its investigation of the Business and Purchase Assets of
Seller.
6.2 CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of Seller
hereunder shall be subject to the following conditions, except as Seller may
waive the same in writing:
(a) Representations and Warranties. The representations and warranties
made by OH+R in Section 5 hereof shall be true and correct in all material
respects when made and shall be true and correct in all material respects on the
Closing Date with the same force and effect as if they had been made on and as
of the Closing Date.
(b) Compliance. As of the Closing Date, OH+R shall have fully complied
with, and shall have fully performed the terms, conditions, covenants and
obligations of, this Agreement and the other agreements contemplated hereby to
be performed or complied with at, or prior to, the Closing Date.
(c) Proceedings. On or before the Closing Date, all actions,
proceedings, instruments and documents required by, or on behalf of, OH+R to
execute, deliver and carry out this Agreement and all agreements incidental
hereto, and all other related legal matters, shall be reasonably satisfactory to
Seller and its counsel.
(d) Delivery of Closing Documents. Seller shall have received the
documents described in Section 7.2.
(e) Partnership Documents. On or before the Closing Date, the parties
shall have executed and delivered the Partnership Documents.
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(f) Registration Rights Agreement OH+R shall have entered into a
registration rights agreement with Seller (the "Registration Rights Agreement")
substantially in the form and to the effect of Exhibit D.
ARTICLE 7
CLOSING DOCUMENTS
7.1 SELLER'S CLOSING OBLIGATIONS. At the Closing, Seller shall deliver
to OH+R the following:
(a) A good standing certificate or certificate of existence of recent
date of Seller for each jurisdiction where Seller is qualified to do business.
(b) An incumbency certificate of the general partner of Seller.
(c) A certified copy of the resolutions adopted by Seller and, if
applicable, its partners authorizing the execution and delivery by Seller of
this Agreement and all related agreements and the consummation of the other
transactions contemplated hereby.
(d) A certificate signed by an authorized officer of the general
partner of Seller, on behalf of Seller, to the effect that the representations
and warranties of Seller made herein are true and correct as of the Closing Date
and that Seller has fully performed all of its pre-closing commitments
hereunder.
(e) The Bill of Sale conveying the Purchased Assets to OH+R.
(f) Such other specific assignments and other instruments of conveyance
as OH+R and/or OH+R's counsel may reasonably request.
(g) All consents obtained by Seller pursuant to Section 6.1(g).
(h) A written opinion addressed to OH+R and dated the Closing Date from
Seller's counsel in the form of Exhibit C.
(i) The Partnership Documents.
(j) The Intellectual Property License Agreement.
7.2 OH+R'S CLOSING OBLIGATIONS. At the Closing, OH+R shall deliver to
Seller the following:
(a) A good standing certificate of recent date of OH+R from the State
of Delaware.
(b) An incumbency certificate of OH+R.
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(c) A certified copy of the resolutions of the Board of Directors of
OH+R authorizing the execution and delivery by OH+R of this Agreement and all
related agreements and the consummation of the transactions contemplated hereby.
(d) A certificate signed by an authorized officer of OH+R, on behalf of
OH+R, to the effect that the representations and warranties of OH+R made herein
are true and correct as of the Closing Date and that OH+R has fully performed
all of its pre-closing commitments hereunder.
(e) A countersigned Bill of Sale.
(f) The Partnership Documents.
(g) The Registration Rights Agreement.
ARTICLE 8
CLOSING
The consummation of the purchase and sale contemplated hereby will take
place at a closing (the "Closing") at the offices of Shipman & Goodwin LLP, One
American Row, Hartford, Connecticut 06103 on or before September 11, 1996 (the
"Closing Date"), or at such other place, time or date as may be agreed to by the
parties hereto in writing. All documents to be delivered at the Closing and acts
to be performed thereat shall be deemed to have been taken simultaneously. As
used herein, the terms "Closing" and "Closing Date" are interchangeable and
shall have the same substantive meaning for all purposes of this Agreement.
ARTICLE 9
POST-CLOSING COVENANTS
9.1 ADDITIONAL DOCUMENTATION. At any time and from time to time after
the Closing Date, at OH+R's reasonable request and without further
consideration, Seller will execute and deliver such other instruments of
conveyance and transfer as OH+R reasonably may require more effectively to
convey to, transfer to, and vest in OH+R, or to put OH+R in possession of, any
or all of the Purchased Assets.
9.2 CONSENTS TO ASSIGNMENTS. To the extent that any of the Assigned
Contracts are not assignable without the consent of another party, Seller and
OH+R each agrees to use best efforts to obtain such consent to the assignment
thereof to OH+R and the Partnership. If such consent shall not be obtained for
any such commitments, leases, purchase orders or contracts, Seller and OH+R
shall make suitable arrangements, without cost to OH+R,
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whereby OH+R may nevertheless enjoy the benefits and rights of Seller and
perform the obligations of Seller thereunder, and Seller specifically agrees to
and shall assign all revenues related to such Assigned Contracts to the
Partnership until the necessary consents to assignments are obtained.
9.3 ACCESS TO INFORMATION. After the Closing Date, Seller shall afford
to representatives of OH+R, including its counsel and auditors, during normal
business hours, access to any and all information and written materials relating
to the Business not in the possession of OH+R.
9.4 PROHIBITION ON TRANSFER. Until after January 6, 1998, Seller agrees
that it shall not sell or otherwise transfer the Shares, except as otherwise
permitted by the laws of the Commonwealth of Pennsylvania and by other
applicable state and federal securities laws.
9.5 MAIL AND COMMUNICATIONS. After the Closing, Seller will promptly
deliver to OH+R the original of any mail or other communication received by
Seller pertaining to the Purchased Assets or the Business.
9.6 TAIL LIABILITY INSURANCE. For the three-year period commencing with
the Closing Date, Seller shall maintain professional liability insurance,
comparable to the coverage purchased by Seller prior to the Closing Date, or
obtain a satisfactory discovery period, to cover any claims for acts or
omissions occurring during all periods before the Closing Date.
9.7 CONFIDENTIALITY; PUBLICITY.
(a) Confidentiality. All data and information that Seller has obtained
regarding OH+R and/or the Business, including the customer list, information
relating to the requirements of customers on the customer list and all other
information regarding the affairs of OH+R and/or the Business, shall be held in
confidence by Seller, and Seller shall not divulge any of such information to
anyone except OH+R or its representatives.
(b) Publicity. Seller shall not make any public announcement of the
negotiations between the parties related to this Agreement, or the transactions
contemplated herein, without the prior written consent of OH+R, except as may be
required by law. The parties agree that, to the extent feasible, they will
advise and confer with each other prior to the issuance of any reports,
statements or releases pertaining to this understanding or the transactions
contemplated herein.
(c) Injunctive Relief. Seller acknowledges that any violation of any
provision of this Section 9.7 will cause irreparable harm to OH+R, that damages
for such harm will be incapable of precise measurement and that, as a result,
OH+R will not have an adequate remedy at law to redress the harm caused by such
violations. Therefore, in the event of a violation of Section 9.7 in addition to
its other remedies, OH+R shall be entitled, without the necessity of proof of
actual damage, to injunctive relief, including but not limited to
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temporary restraining orders and/or preliminary or permanent injunctions to
restrain or enjoin any such violation. Seller agrees to and hereby does submit
to jurisdiction before any state or federal court of record in the state and
county in which such violation may occur, at OH+R's election, for that purpose,
and Seller hereby waives any right to raise the question of jurisdiction and
venue in any action that OH+R may bring in any such court against Seller.
In addition to other relief to which it shall be entitled, OH+R shall
be entitled to recover from Seller the costs and reasonable attorneys' fees
incurred by OH+R in seeking (i) enforcement of this Section 9.7 and (ii) relief
from any violation of any restriction contained in this Section 9.7.
(d) Severability. Should any clause, portion or paragraph of this
Section 9.7 be unenforceable or invalid for any reason, such unenforceability or
invalidity shall not affect the enforceability or validity of the remainder of
this Section 9.7. Should any particular covenant or restriction, including but
not limited to the covenants and restrictions of Section 9.7(a) and 9.7(b), be
held to be unreasonable or unenforceable for any reason, including without
limitation the time period, geographical area and scope of activity covered by
such covenant, then such covenant or restriction shall be given effect and
enforced to the greatest extent that would be reasonable and enforceable.
(e) The provisions of this Section 9.7 shall survive the Closing.
9.8 RESTRICTIVE LEGEND. Each certificate representing the Shares, or
any other securities issued in respect of the Shares upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event shall (unless
otherwise permitted or unless the securities evidenced by such certificate shall
have been registered under the Securities Act) be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to any legend
required under applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
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ARTICLE 10
INDEMNIFICATION
10.1 SURVIVAL OF WARRANTIES. All representations, warranties and
covenants made by Seller and OH+R herein, or in any certificate, schedule or
exhibit delivered pursuant hereto, shall be deemed to have been relied upon by
the respective party to whom they are addressed notwithstanding any
investigation heretofore made or omitted by such party and shall survive the
Closing for a period equal to the later of (i) the statute of limitations under
applicable law, and (ii) three (3) years after the Closing Date.
10.2 INDEMNIFIED LOSSES. For the purpose of this Section 10 and when
used elsewhere in this Agreement, "Losses" shall mean and include any and all
liability, loss, damage, claim, expense, cost, obligation or injury including
those resulting from any and all actions, suits, proceedings, demands,
assessments and judgments, together with reasonable costs and expenses including
the attorneys' fees and other legal costs and expenses relating thereto.
10.3 INDEMNIFICATION BY SELLER. Seller agrees to indemnify and hold
harmless OH+R, the Partnership and any professional corporation for which OH+R
or the Partnership performs services related to the Business (the "Professional
Corporation") and their respective directors, officers, employees, partners and
agents against and in respect of any Losses which arise out of or result from:
(a) any inaccuracy in or breach or non-performance of any covenant,
representation, warranty or agreement made by Seller herein, or in any
certificate, schedule or exhibit delivered pursuant hereto;
(b) Any of the Excluded Liabilities;
(c) Taxes, assessments and other governmental charges of any kind or
nature whatsoever, including without limitation withholding, social security or
unemployment levies arising out of, or payable with respect to, Seller's
operation of the Business through the Closing Date and/or the transfer of the
Purchased Assets to OH+R hereunder;
(d) bulk sales liability under Section 10.10 of this Agreement; and
(e) as provided in Section 10.5 hereof.
In the event Seller shall have failed to indemnify OH+R, the Partnership or the
Professional Corporation pursuant to this Section 10.3, OH+R shall have the
right to offset such amount against amounts due and payable as an Earn-Out
Payment.
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<PAGE> 25
10.4 INDEMNIFICATION BY OH+R. OH+R agrees to indemnify and hold
harmless Seller and its partners and their respective directors, officers,
employees and agents against and in respect of any Losses which arise out of or
result from:
(a) any inaccuracy in or breach or non-performance of any covenant,
representation, warranty or agreement made by OH+R herein, or in any
certificate, schedule or exhibit delivered pursuant hereto; and
(b) as provided in Section 10.6 hereof.
10.5 THIRD PARTY CLAIMS AGAINST OH+R, THE PARTNERSHIP AND THE
PROFESSIONAL CORPORATION. Seller further agrees to and does hereby indemnify and
hold OH+R, the Partnership and the Professional Corporation and their respective
directors, officers, employees, partners and agents harmless from and against
any and all Losses resulting from causes of action or claims of any kind
asserted by unrelated third parties arising from any liability of any nature
incurred in connection with any action, suit, proceeding, claim or demand by any
person or entity where any of the alleged or actual breach, default, act,
omission or other grounds therefor is attributable to events occurring on or
prior to the Closing Date, including, without limitation, any and all Losses
attributable to services rendered on behalf of or by Seller prior to the Closing
Date, whether or not such litigation, proceeding or claim is pending,
threatened, or asserted before, on or after the Closing Date. In the event
Seller shall have failed to indemnify OH+R, the Partnership or the Professional
Corporation pursuant to this Section 10.5, OH+R shall have the right to offset
such amount against amounts due and payable as an Earn-Out Payment.
10.6 THIRD PARTY CLAIMS AGAINST SELLER. OH+R further agrees to and does
hereby indemnify and hold Seller and its partners and their respective
directors, officers, employees and agents harmless from and against any and all
Losses resulting from causes of action or claims of any kind asserted by
unrelated third parties arising from any liability of any nature incurred in
connection with any action, suit, proceeding, claim or demand by any person or
entity where any of the alleged or actual breach, default, act, omission or
other grounds therefor is attributable to events occurring after the Closing
Date, including, without limitation, any and all Losses attributable to services
rendered on behalf of or by OH+R after the Closing Date, whether or not such
litigation, proceeding or claim is pending, threatened, or asserted before, on
or after the Closing Date.
10.7 PROCEDURES FOR THIRD PARTY INDEMNIFICATION. If any action, suit or
proceeding shall be commenced against, or any claim or demand be asserted
against, Seller or its partners or their respective directors, officers,
employees and agents, on the one hand, or OH+R, the Partnership or the
Professional Corporation or their respective directors, officers, employees,
partners and agents, on the other hand, as the case may be, in respect of which
such party proposes to demand indemnification under Section 10.5 or 10.6, as a
condition precedent thereto, the party seeking indemnification ("Indemnitee")
shall promptly notify the other party ("Indemnitor") in writing to that effect,
and with reasonable
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<PAGE> 26
particularity and containing a reference to the provisions of this Agreement.
The Indemnitor shall have the right to assume the entire control of, including
the selection of counsel, subject to the right of the Indemnitee to participate
in (at its expense and with counsel of its choice) the defense, compromise or
settlement thereof, and in connection therewith, the Indemnitee shall cooperate
fully in all respects with the Indemnitor in any such defense, compromise or
settlement thereof, including, without limitation, the selection of counsel, and
the Indemnitee shall make available to the Indemnitor all pertinent information
and documents under the control of the Indemnitee. The Indemnitor will not
compromise or settle any such action, suit, proceeding, claim or demand without
the prior written consent of the Indemnitee, which consent will not be
unreasonably withheld or delayed. So long as the Indemnitor is defending in good
faith any such claim or demand asserted by a third party against the Indemnitee,
the Indemnitee shall not settle or compromise such claim or demand without the
prior written consent of the Indemnitor, which consent will not be unreasonably
withheld or delayed. The Indemnitee shall make available to the Indemnitor or
its agents all records and other materials in the Indemnitee's possession
reasonably required by it for its use in contesting any third party claim or
demand. If the Indemnitor shall fail to defend any such action, suit,
proceeding, claim or demand, then the Indemnitee may defend, through counsel of
its own choosing, such action, suit, proceeding, claim or demand and (so long as
Indemnitee gives the Indemnitor at least fifteen (15) days' notice of the terms
of the proposed settlement thereof and permits the Indemnitor to then undertake
the defense thereof if Indemnitor objects to the proposed settlement) to settle
such action, suit, proceeding, claim or demand and to recover from the
Indemnitor the amount of such Losses.
10.8 NOTICE OF CLAIMS. Upon discovery of any breach of the covenants,
representatives and warranties of Seller or OH+R herein contained (other than as
a result of the bringing of any action, suit or proceeding or the assertion of
any claim or demand referred to in Section 10.7), Seller or OH+R, as the case
may be, shall give written notice to the other promptly after the discovery of
such breach.
10.9 PERIOD FOR MAKING CLAIMS. No claim for indemnification under this
Agreement shall be brought after the end of the applicable period set forth in
Section 10.1 hereof and, at the end of each said period, all liabilities of any
nature of the parties pertaining to claims hereunder shall terminate and cease
to exist except as to any liability asserted prior thereto in a written notice
containing sufficient detail to identify the nature and scope of said liability
which is received within said period by the proper recipient.
10.10 BULK SALES INDEMNIFICATION. Without admitting that the bulk sales
law of any state is applicable to the transactions contemplated by this
Agreement, the parties waive and agree not to comply with the bulk sales law of
any state, and Seller agrees to indemnify and hold harmless OH+R, its
shareholders, officers, directors, employees and agents from and against any and
all liabilities arising by reason of such noncompliance in connection with the
sale of the Purchased Assets to OH+R.
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<PAGE> 27
ARTICLE 11
MISCELLANEOUS
11.1 EXPENSES. Each of the parties hereto shall bear its own expenses
in connection with the negotiation and consummation of the transactions
contemplated hereby.
11.2 RISK OF LOSS. The risk of loss, damage or destruction to any of
the Purchased Assets from fire or other casualty or cause shall be borne by
Seller at all times prior to the Closing Date. In the event of any such loss,
damage or destruction, the proceeds of any claim for any loss payable under any
insurance policy covering such loss shall be payable to Seller. In the event of
any such material loss or damage, Seller shall specify in writing to OH+R with
particularity the loss or damage incurred, the cause thereof, if known or
reasonably ascertainable, and the extent to which restoration, replacement and
repair of the Purchased Assets lost or destroyed will be reimbursed under any
insurance policy with respect thereto. In the event such insurance proceeds are
not sufficient to restore, replace or repair the lost or destroyed Purchased
Assets, Seller shall make any additional payments required to restore, replace
or repair the lost or destroyed Purchased Assets. If any material loss or
destruction shall occur within thirty (30) days of the Closing Date, Seller
shall have the right, upon written notice, to postpone the Closing until such
time as the property has been completely restored, replaced or repaired unless
the same cannot be reasonably effected within thirty (30) days of the original
Closing Date. If such restoration, replacement or repair cannot be effected
within such period, OH+R shall have the option to elect in writing to either:
(i) terminate this Agreement and thereafter all obligations of the parties shall
cease without further liability to conclude the sale; or (ii) elect to
consummate the Closing and accept the property in its "then" condition, in which
event Seller shall assign to OH+R all rights under any insurance claim covering
the loss and pay over any insurance proceeds received by Seller in connection
therewith, and Seller shall pay to OH+R an amount equal to any additional amount
required to restore, replace or repair such property.
11.3 NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be delivered personally or sent by
certified or registered United States mail, postage prepaid, return receipt
requested and addressed as follows:
(a) If to Seller:
Argosy Health, L.P.
120 Gibraltar Road, Suite 310
Horsham, PA 19044
Attention: G. Linton Sheppard, President
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<PAGE> 28
with a copy to:
Barry E. Sweet, Esq.
Blank, Rome, Comisky & McCauley
1200 Four Penn Center Plaza
Philadelphia, PA 19103
(b) If to OH+R:
Occupational Health + Rehabilitation Inc
175 Derby Street, Suite 36
Hingham, MA 02043-4058
Attention: John C. Garbarino, President and Chief
Executive Officer
with a copy to:
Donna L. Brooks, Esq.
Shipman & Goodwin LLP
One American Row
Hartford, CT 06103-2819
11.4 ENTIRE AGREEMENT. This Agreement and the ancillary written
agreements contemplated hereby, constitute the entire agreement between the
parties, and there are no agreements or commitments with respect to the
transactions contemplated herein except as set forth in this Agreement and said
ancillary written agreements. This Agreement supersedes any prior offer,
agreement or understanding between the parties with respect to the transactions
contemplated herein. Nothing expressed or implied in this Agreement is intended,
or shall be construed, to confer upon or give any person, firm or corporation
other than the parties hereto any rights or remedies under or by reason of this
Agreement. The captions in this Agreement are for convenience only and shall not
be considered a part of or affect the construction or interpretation of any
provision of this Agreement.
11.5 EXECUTION OF COUNTERPARTS. For the convenience of the parties,
this Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same document.
11.6 ASSIGNMENT. This Agreement may not be assigned by Seller without
the express written consent of OH+R. This Agreement may be assigned by OH+R to
an affiliated entity designated by it.
11.7 BENEFIT AND BURDEN. This Agreement shall be binding upon, and
shall inure to the benefit of, and be enforceable by, the parties hereto and
their respective successors, heirs, executors, administrators and permitted
assigns.
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<PAGE> 29
11.8 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts (excluding
application of any choice of law doctrines that would make applicable the law of
any other state) and, where appropriate, applicable federal law.
11.9 MODIFICATION/WAIVER. This Agreement may be amended only by the
parties hereto by an instrument in writing signed by or on behalf of each of the
parties hereto. Any term or provision of this Agreement may be waived only in
writing by the party or parties who are entitled to the benefits being waived.
[Signature Page Follows]
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<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have caused their respective
names to be hereunto subscribed as of the date and year first above written.
ARGOSY HEALTH, L.P.
BY: GWYNEDD PARTNERS, INC.
By: /s/ G. Linton Sheppard
-------------------------------------------
Name: G. Linton Sheppard
Title: President
OCCUPATIONAL HEALTH + REHABILITATION INC
By: /s/ John C. Garbarino
-------------------------------------------
John C. Garbarino
Its President and Chief Executive Officer
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<PAGE> 31
GLOSSARY OF TERMS
"Accounts Receivable" - as defined in Section 1.4(c).
"Assigned Contracts" - as defined in Section 1.1(c).
"Assumed Liabilities" - as defined in Section 1.5(a).
"Bill of Sale" - as defined in Section 4.2.
"Business" - as defined in the Recitals.
"CERCLA" - as defined in Section 4.21(a).
"Closing" - as defined in Article 8.
"Closing Date" - as defined in Article 8.
"Earn-Out Payments" - as defined in Section 2.1.
"Equipment" - as defined in Section 1.1(a).
"ERISA" - as defined in Section 4.14.
"Excluded Assets" - as defined in Section 1.4.
"Excluded Liabilities" - as defined in Section 1.5(b).
"Indemnitee" - as defined in Section 10.7.
"Indemnitor" - as defined in Section 10.7.
"Intellectual Property" - as defined in Section 1.4(d).
"Intellectual Property License Agreement" - as defined in Section 1.3.
"Inventory" - as defined in Section 1.1(b).
"IRS" - as defined in Section 2.2.
"Liens" - as defined in Section 1.2.
"Losses" - as defined in Section 10.2.
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<PAGE> 32
"OH+R" - Occupational Health + Rehabilitation Inc
"Partnership" - Argosy Health Northeast.
"Partnership Documents" - as defined in Section 6.1(h).
"Pre-Tax Profits" - as defined in Section 2.1.
"Professional Corporation" - as defined in Section 10.3.
"Purchased Assets" - as defined in Section 1.1.
"Purchase Price" - as defined in Section 2.1.
"Registration Rights Agreement" - as defined in Section 6.2(f)
"Securities Act" - as defined in Section 4.23.
"Seller" - Argosy Health, L.P.
"Shares" - as defined in Section 2.1(b).
"Tax(es)" - as defined in Section 4.18(b).
"Transfer Taxes" - as defined in Section 2.3.
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<PAGE> 33
None of the following schedules and exhibits referenced in the Asset
Purchase Agreement is contained in the attached copy.
Schedule 1.1(a) Equipment
Schedule 1.1(b) Inventory
Schedule 1.1(c) Assigned Contracts
Schedule 1.1(f) Licenses, Etc.
Schedule 1.4(c) Accounts Receivable
Schedule 1.4(d) Intellectual Property
Schedule 1.4(e) Additional Excluded Assets
Schedule 1.5(a) Assumed Liabilities
Schedule 2.2 Purchase Price Allocation
Schedule 2.4 Proration
Schedule 4.1 Other Jurisdictions
Schedule 4.3 Consents
Schedule 4.4 Liens
Schedule 4.5 Other Locations of Purchased Assets
Schedule 4.6 Financial Statements
Schedule 4.7 Changes
Schedule 4.8 Litigation
Schedule 4.11 Intellectual Property
Schedule 4.14 Employee Notices
Schedule 4.16 Joint Ventures
Schedule 4.17 Indebtedness
Schedule 4.18 Taxes
Schedule 4.21 Governmental Orders
Schedule 4.22 Customers and Patients
Exhibit A Form of Intellectual Property License Agreement
Exhibit B Form of Bill of Sale, Assignment and Conveyance
Exhibit C Form of Opinion of Counsel
Exhibit D Form of Registration Rights Agreement
The registrant agrees to furnish supplementally a copy of any omitted
schedule or exhibit to the Securities and Exchange Commission upon request.
