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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
Date of Report (Date of earliest event reported) October 28, 1996
Transworld Home HealthCare, Inc.
______________________________________________________
(Exact name of Registrant as specified in its charter)
New York
______________________________________________
(State or other jurisdiction of incorporation)
1-11570 13-3098275
________________________ ____________________________________
(Commission File Number) (I.R.S. Employer Identification No.)
11 Skyline Drive, Hawthorne, New York 10532
________________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 345-8880
Not Applicable
__________________________________________________________________
(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On October 28, 1996, Respiflow, Inc. ("Respiflow"), a wholly
owned subsidiary of Transworld Home HealthCare Inc. (the
"Company") acquired certain of the assets and liabilities of
Health Meds, Inc., a Florida corporation ("Health Meds").
Health Meds operates a respiratory mail order pharmacy in
Florida. The aggregate consideration paid in connection with
the acquisition was $1,400,000 of which $480,000 was placed
into escrow. Thirty thousand dollars of the escrowed funds are
to be released after 180 days, depending upon collection of
certain account receivables outstanding as of the closing date
and $450,000 of the escrowed funds are to be released
depending upon satisfaction of certain post closing
conditions. The purchase price was paid through funds on hand
and available under the Company's senior secured revolving
credit facility. Health Med's principal stockholder, O.W.
Edwards, also entered into a three year employment agreement
with Respiflow as a sales representative which includes a base
salary and an incentive payment.
(b) On November 1, 1996, The PromptCare Companies, Inc., a
wholly-owned subsidiary of the Company completed the
acquisition of certain of the assets and liabilities of U.S.
HomeCare Infusion Therapy Services Corporation of New Jersey
("USNJ"), a subsidiary of U.S. HomeCare Corporation. USNJ
provides infusion therapy products, skilled nursing and other
related services to patients in their homes in the New York
metropolitan area. The aggregate consideration paid in
connection with such acquisition was $2,000,000, subject to
adjustment as provided in the purchase agreement. The purchase
price was paid through funds available under the Company's
senior secured revolving credit facility.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Audited Financial Statements are currently unavailable.
However, it is anticipated that pursuant to revisions to Rule
3-05 of Regulation S-X which become effective on November 18,
1996, no financial statements will be required to be filed by
the Company in connection with the acquisitions referred to
above in Item 2.
(b) Pro Forma Financial Information.
It is anticipated that pursuant to revisions to Rule 3-05 of
Regulation S-X which become effective on November 18, 1996, no
pro forma financial information will be required to be filed
by the Company in connection with the acquisitions referred
to above in Item 2.
(c) Exhibits
A. Asset Purchase Agreement between Respiflow, Inc.,
Health Meds, Inc., O.W. Edwards and Rick Hedrick,
dated as of October 14, 1996.
B. Asset Purchase Agreement between Transworld
Acquisition Corp., the Company, U.S. HomeCare
Infusion Therapy Services Corporation of New Jersey
and U.S. HomeCare Corporation, dated as of
October 31, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Transworld Home HealthCare, Inc.
--------------------------------
(Registrant)
Date: November 12, 1996 By: /s/ WAYNE A. PALLADINO
------------------------------
Wayne A. Palladino
Senior Vice President and
Chief Financial Officer
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EXhibit No. Description
99.A Asset Purchase Agreement between Respiflow, Inc.,
Health Meds, Inc., O.W. Edwards and Rick Hedrick,
dated as of October 14, 1996.
99.B Asset Purchase Agreement between Transworld
Acquisition Corp., the Company, U.S. HomeCare
Infusion Therapy Services Corporation of New Jersey
and U.S. HomeCare Corporation, dated as of
October 31, 1996.
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ASSET PURCHASE AGREEMENT
BETWEEN
RESPIFLOW, INC.
(AS BUYER)
AND
HEALTH MEDS, INC.
(AS SELLER)
O.W. EDWARDS AND RICK HEDRICK
(AS THE SHAREHOLDERS OF SELLER)
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TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE AND SALE OF ASSETS................................1
1.1. Certain Definitions........................................1
1.2. Purchase and Sale of Assets................................5
1.3. Consideration..............................................6
1.4. The Closing................................................7
1.5. Liabilities and Other Adjustments..........................7
ARTICLE II REPRESENTATIONS AND WARRANTIES
OF SELLER AND THE SHAREHOLDERS ............................8
2.1. Corporate Status of the Company............................8
2.2. Capitalization of the Company; Stock Ownership.............8
2.3. Authority..................................................9
2.4. No Violation...............................................9
2.5. Financial Statements.......................................9
2.6. Interim Operations........................................10
2.7. Real Property; Contracts and Other Instruments............10
2.8. Tangible Property.........................................11
2.9. Title to Properties, Encumbrances.........................12
2.10. Taxes.....................................................12
2.11. Litigation................................................12
2.12. Consents and Approvals....................................12
2.13. Compliance with Law.......................................13
2.14. Employees; Employee Agreements and Plans..................14
2.15. Brokers and Finders.......................................15
2.16. Labor Unions..............................................15
2.17. Disclosure................................................15
2.18. Charter and ByLaws........................................15
2.19. Officers and Directors....................................15
2.20. Insurance and Bonds.......................................15
2.21. Relationships With Affiliates.............................16
2.22. Intellectual Property.....................................16
2.23. Accounts Receivable.......................................16
2.24. Regulatory Reports........................................16
2.25. Acknowledgment............................................16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER...................17
3.1. Status of Buyer...........................................17
3.2. Authorization.............................................17
3.3. No Violation..............................................18
(i)
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3.4. Brokers and Finders.......................................18
3.5. Disclosure................................................18
3.6. Consents and Approvals....................................18
3.7. Litigation................................................18
ARTICLE IV COVENANTS OF SELLER AND SHAREHOLDERS......................18
4.1. Confidentiality...........................................18
4.2. Full Access...............................................19
4.3. Covenant to Satisfy Conditions............................19
4.4. Future Assistance Regarding Taxes.........................19
4.5. Notice of Litigation......................................19
4.6. Government and Other Consents.............................19
4.7. Termination of Plans......................................20
4.8. Updated Financial Statements..............................20
4.9. Additional Financial Statements...........................20
4.10. Bulk Sales................................................20
4.11. Name Change of Seller.....................................20
ARTICLE V COVENANTS OF BUYER........................................21
5.1. Confidentiality...........................................21
5.2. Cooperation...............................................21
5.3. Covenant to Satisfy Conditions............................21
5.4. INTENTIONALLY OMITTED.....................................21
5.5. Non-Refundable Deposit....................................21
ARTICLE VI CONDITIONS TO OBLIGATIONS OF SELLER.......................22
6.1. Performance...............................................22
6.2. Representations and Warranties True.......................22
6.3. No Governmental Proceeding or Litigation..................22
6.4. No Injunction.............................................22
6.5. INTENTIONALLY OMITTED.....................................22
6.6. Consideration.............................................22
6.7. Documentation.............................................23
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER........................24
7.1. Performance...............................................24
7.2. Representations and Warranties True.......................24
7.3. No Governmental Proceeding or Litigation..................24
7.4. No Injunction.............................................24
7.5. Contracts; Consents.......................................24
7.6. Documentation.............................................24
7.7. No Material Adverse Change................................26
7.8. Approvals.................................................26
(ii)
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ARTICLE VIII CONDUCT OF OPERATIONS.....................................26
8.1. Course of Business Through Closing........................26
8.2. Access to Books and Records...............................28
ARTICLE IX INDEMNITY.................................................28
9.1. Indemnity of Seller and Shareholders......................28
9.2. Indemnity of Buyer........................................29
9.3. Claims Procedure..........................................30
9.4. Survival..................................................30
9.5. Limitation................................................31
ARTICLE X TERMINATION AND ABANDONMENT...............................31
10.1. Methods of Termination....................................31
10.2. Procedure upon Termination................................32
ARTICLE XI MISCELLANEOUS PROVISIONS..................................32
11.1. Amendment and Modification................................32
11.2. Waiver of Compliance......................................32
11.3. Expenses..................................................33
11.4. Notices...................................................33
11.5. Assignment................................................34
11.6. Publicity.................................................34
11.7. Governing Law.............................................34
11.8. Counterparts..............................................35
11.9. Interpretation............................................35
11.10. Entire Agreement..........................................35
11.11. Third Parties.............................................35
11.12. No Solicitation...........................................35
11.13. Additional Agreements.....................................36
11.14. Knowledge.................................................36
(iii)
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INDEX TO SCHEDULES
HEADING
SCHEDULES DESCRIPTION
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1.3(c) PS Arrangements and Average Monthly Revenue
2.1 Qualification
2.2 Capitalization and Stock Ownership
2.4 No Violation
2.5 Unaudited Financial Statements
2.6 Interim Operations
2.7 Real Property; Contracts and Other Instruments
2.7A Licenses
2.8 Tangible Property
2.9 Encumbrances
2.10 Taxes
2.11 Litigation
2.12 Consents and Approvals
2.13 Compliance with Law
2.14 Employee Agreements and Plans
2.19 Officers and Directors
2.20 Insurance and Bonds
2.21 Relationship with Affiliates
2.22 Intellectual Property
2.23 Accounts Receivable
3.3 No Violation by Buyer
7.6(b) List of Key Employees to execute Non-Compete Agreement
EXHIBITS
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1.3(a) Form of Escrow Agreement
6.7(g) Form of Employment Agreement
6.7(h) Form of Opinion of Buyer's Counsel
7.6(a) Form of Bill of Sale
7.6(b) Form of Non-Compete Agreement
7.6(h) Form of Opinion of Seller's Counsel
(iv)
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of October 14, 1996 between
RESPIFLOW, INC., a Florida corporation ("Buyer"); HEALTH MEDS, INC., a Florida
corporation ("Seller" or the "Company"); and O.W. EDWARDS ("Edwards") and RICK
HEDRICK ("Hedrick") (Edwards and Hedrick are collectively the "Shareholders" and
individually a "Shareholder").
In consideration of the mutual covenants and agreements contained
herein, and intending to be legally bound hereby, Buyer and Sellers hereby
covenant and agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1. Certain Definitions.
(a) For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
"Accounts Receivable" means all of the rights to payment for
services performed or products delivered as reflected on the billing
records.
"Affiliate" has the meaning prescribed by Rule 12b-2 of the
regulations promulgated pursuant to the Securities Exchange Act.
"Agreement" means this Asset Purchase Agreement, and the
Schedules, as the same may hereafter be amended or supplemented from
time to time.
"Assets" all of Seller's right, title and interest in and to
the following: (i) the Seller's customer lists, records, account
histories and other pertinent information; (ii) the exclusive right to
the name "Health Meds" and any and all variations thereof, other than
the names "Health Meds of Puerto Rico" and "Health Meds of Puerto Rico,
Inc." which were previously assigned by Seller to a former shareholder
of Seller; (iii) the Seller's Contracts and all contract rights,
claims, goodwill and receivables relating thereto (subject, however, to
the provisions of Section 1.5(b) below) except for Accounts Receivable
earned prior to April 1, 1996; (iv) Seller's equipment as listed on
Schedule 2.8 annexed hereto; and (v) Seller's interest in the Existing
JV and the Existing JV's assets and operations and any and all other
marketing interests or arrangements, except that the Assets shall not
include the Seller's right to participate in profits from the Existing
JV which were earned through
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June 30, 1996, it being understood that all profits of the Existing JV
after June 30, 1996 are included in the Assets being sold to Buyer
hereunder.
"Balance Sheet" means the balance sheet of the Company
referred to in Section 2.5(a) of this Agreement.
"Buyer" means RespiFlow, Inc., a Florida corporation which is
an wholly-owned subsidiary of Transworld and/or any Affiliate(s) of
Transworld used to consummate the transactions contemplated hereby.
"Closing" means the closing of the transactions contemplated
by this Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Health Meds, Inc., a Florida corporation
(which is sometimes referred to herein as the "Seller").
"Contracts" means the employment, representation, pharmacy
support and other contracts, agreements, leases and other instruments
(together with any amendments thereto or modifications thereof) to
which the Company is a party, including without limitation "Pharmacy
Support Arrangements" and those listed or otherwise referenced in
Schedules 2.7 and 1.3(c).
"Environmental Law" means those laws pertaining to land use,
air, soil, surface water, groundwater (including the protection,
cleanup, removal, remediation or damage thereof), public or employee
health or safety or any other environmental matter, including, without
limitation, the following laws as the same may be amended from time to
time: (a) Clean Air Act (42 U.S.C. Section 7401, et seq.); (b) Clean
Water Act (33 U.S.C. Section 1251, et seq.); (c) Resource Conservation
Act (33 U.S.C. Section 6901, et seq.); (d) Comprehensive Environmental
Response Compensation and Liability Act (42 U.S.C. Section 9601, et
seq); (e) Safe Drinking Water Act (42 U.S.C. Section 300f et seq.); (f)
Toxic Substance Control Act (15 U.S.C. Section 2601, et seq.); (g)
Rivers and Harbors Act (33 U.S.C. Section 401, et seq.); (h) Endangered
Species Act (16 U.S.C. Section 1531, et seq.); and (i) Occupational
Safety and Health Act (29 U.S.C. Section 651, et seq.); together with
any other applicable federal, state, or local laws relating to
emissions, discharges, releases, or threatened releases of any
Hazardous Substance into ambient air, land, surface water, ground
water, personal property or structures, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, discharge or handling of any Hazardous Substance
or medical waste.
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"Existing JV" means the existing joint venture established by
Seller and Transworld which commenced April 1, 1996 pursuant to an
agreement dated March 27, 1996.
"Governmental Consent" means any consent (or waiver) that
either Seller or Buyer is required to obtain from any federal, state or
local governmental authority for Seller's transfer of the ownership of
the Assets and business of the Company and/or control of such Assets
and business, to Buyer.
"GAAP" means generally accepted accounting principles
consistently applied.
"Hazardous Substance" means any pollutant, contaminant,
hazardous or toxic substance, material, material waste, constituent or
waste or any pollutant that is labelled or regulated as such terms are
defined in any Environmental Law or that is labelled or regulated as
such by any governmental authority and includes, without limitation,
asbestos and asbestos-containing materials and any material or
substance that is: (a) designated as a "hazardous substance" pursuant
to section 307 of the Federal Water Pollution Control Act, 33 U.S.C.
section 1251, et seq. (33 U.S.C. Section 1317); (b) defined as a
"hazardous waste" pursuant to section 1004 of the Federal Solid Waste
Disposal Act, 42 U.S.C. section 6901, et seq. (42 U.S.C. Section 6903);
(c) defined as a "hazardous substance" pursuant to section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. section 9601, et seq. (42 U.S.C. Section 9601); or (d) is so
designated or defined under any other applicable requirements of law.
"HM Business" means the respiratory medications pharmacy
business as carried on by the Company as of June 30, 1996, which the
Company represents and warrants has been carried on only through the
Existing JV since April 1, 1996, exclusive of accounts receivable,
collections and payments not related to the existing joint venture.
"Licenses" means the licenses, permits, authorizations,
certifications or other grants of any governmental authority required
for the lawful conduct of the Operations, all of which are set forth in
Schedule 2.7A, including without limitation certifications needed to
receive Medicare and Medicaid payments.
"Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in
respect to such asset.
"Material Adverse Effect" shall mean a material adverse effect
on the financial condition, business, assets or results of operations
of the Company, taken as a whole.
"Operations" means all business and operations of the Company,
as presently conducted as more particularly described on Schedule 1.1
annexed hereto.
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"Person" or "person" means any corporation, general
partnership, limited partnership, limited liability company, joint
venture, association, individual or other entity.
"Reporting Period" shall mean any taxable year (or other
applicable reporting period).
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Seller" shall mean Health Meds, Inc. a Florida corporation
which is sometimes referred to as the "Company"
"Shareholders" means collectively O.W. Edwards, and Rick
Hedrick.
"Tax(es)" shall mean all federal, state, local and foreign
income, franchise, sales, use, occupation, property, excise,
alternative or add-on minimum, social security, employees' withholding,
unemployment, disability, transfer, capital stock and other taxes
(including, without limitation, any estimated taxes, and any interest
and penalties), and "Tax" means any one of such Taxes.
"Tax Return(s)" shall mean all federal, state, local and
foreign income franchise, sales, use, occupation, property, excise,
alternative or add-on minimum, social security, employees' withholding,
unemployment, disability, transfer, capital stock, estimated and other
tax returns, and "Tax Return" means any one of the such Tax Returns.
"Transaction Documents" shall mean collectively, this
Agreement, the Edwards Employment Agreement, the Non-Compete
Agreements, the Escrow Agreement, the Bill of Sale and the other
agreements and instruments to be executed and delivered by or to some
or all of the parties hereto or otherwise referred to herein or therein
in connection with the consummation of the transactions contemplated
hereby or thereby.
"Transworld" shall mean Transworld Home HealthCare, Inc. a New
York corporation.
"Walkaway Date" shall mean fifteen (15) days from the date of
this Agreement;
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(b) The following terms, as used herein, shall have
the meanings ascribed to them in the following sections of this Agreement.
Term Section
- ---- -------
Average Monthly Revenue 1.3(c)(ii)
Earnout 1.3(e)
ERISA 2.14
Excess Gross Profit 1.3(e)
Existing JV Financials 2.5(a)
Indemnified Party 9.3(a)
Indemnifying Party 9.3(a)
Laws 2.4
Offset Notice 9.6
Plans 2.14
PS Arrangements 1.3(c)
Subsequent Financial Statement 4.9(a)
Successfully Converted 1.3(c)(i)
(c) The plural of any term defined in the singular,
and the singular of any term defined in the plural, shall have a meaning
correlative to such defined term.
(d) Unless the context otherwise requires, the terms
defined in Section 1.1 shall have the meanings herein specified for all purposes
of this Agreement, applicable to both the singular and plural forms of any of
the terms defined herein. All accounting terms defined in this Section 1.1, and
those accounting terms used in this Agreement not defined in Section 1.1, except
as otherwise expressly provided herein, shall have the meanings customarily
given thereto in accordance with GAAP. Except as otherwise expressly provided
herein all terms used in conjunction with description of securities have the
meanings given to those terms under the Securities Exchange Act. When a
reference is made in this Agreement to Sections , such reference shall be to a
Section of this Agreement unless otherwise indicated. 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. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The use of the neuter gender herein
shall be deemed to include the masculine and feminine genders wherever necessary
or appropriate, the use of the masculine gender shall be deemed to include the
neuter and feminine genders and the use of the feminine gender shall be deemed
to include the neuter and masculine genders wherever necessary or appropriate.
1.2. Purchase and Sale of Assets. Subject to the terms and
conditions of this Agreement and on the basis of the representations and
warranties set forth herein, at the Closing, the Company shall sell, transfer,
assign and deliver to Buyer, and Buyer shall purchase, acquire and accept from
the Company, all of the Seller's right, title and interest in
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and the Assets of the Company free and clear of all Liens, except that the
Oldsmobile Cutlass which is owned by the Existing JV is subject to a lien as
noted on the certificate of title therefor, a true copy of which has previously
been delivered to Buyer.
1.3. Consideration. (a) Subject to the terms and conditions of
this Agreement at the Closing, Buyer shall deliver in cash, by wire transfer,
the aggregate amount of $1,400,000 less the deposit referred to in Section 5.5
below payable as follows: (i) $820,000 to the Seller and (ii) $30,000 and
$450,000 for an aggregate of $480,000 to the escrow agent pursuant to the terms
and provisions of the escrow agreement annexed hereto as Exhibit 1.3(a).
(b) (i) The escrow period with respect to the $30,000
shall end at the close of business on that day which is the 180th day from (but
excluding) the date hereof (the "Escrow Release Date") and monies shall be
released from the escrow account as follows: within fifteen (15) days after the
Escrow Release Date, the Buyer shall send to the escrow agent and the Seller a
list of all Accounts Receivable of the Existing JV still outstanding for any
reason as of the Escrow Release Date and a calculation of the Buyer's claim
which shall be an amount equal to 50% of such outstanding receivables. If the
escrow agent has not received a written objection to such claim from the Seller
within thirty (30) days after the Escrow Release Date, then the escrow agent
shall release an amount equal to the outstanding receivables on such list (or
the principal amount in the account, if less) to the Buyer and the balance, if
any to the Seller. If the Seller does send a written objection to such claim to
the escrow agent and the Buyer within said thirty (30) day period, (which
objection must be in reasonable detail as to each item on the list) then the
escrow agent shall release an amount equal to the undisputed amount of the claim
to the Buyer and shall retain the balance.
(ii) Until the Escrow Release Date, the Buyer, shall
use good faith and reasonable efforts to diligently collect all accounts
receivable of the Existing JV outstanding as of the Closing and will allow
Edwards access to its books and records and to assets and participate in such
collection efforts, subject to the Buyer's usual policies and the reasonable
direction of the Buyer's officers and employees. Edwards also agrees to use good
faith and reasonable efforts to diligently assist the Buyer in the collection of
all such receivables.
(iii) Seller agrees, and the Shareholders agree to
cause Seller, to immediately turnover to the Buyer (or pursuant to Buyer's
direction), in kind, any payments it may at any time receive with respect to the
Accounts Receivable of the Existing JV.
(iv) Buyer's claims with respect to the accounts
receivable of Seller and the Existing JV outstanding as of the Closing shall be
limited to the sum of $120,000.
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(c) The $450,000 to be deposited into escrow pursuant to
Section 1.3(a) above shall be released from escrow on a monthly basis until the
earlier of the release of the entire deposit or the first anniversary of the
Closing; releases shall be based on the "Average Monthly Revenue" from those
existing pharmacy support arrangements of Seller whether oral or written ("PS
Arrangements") which are "Successfully Converted" at or after the Closing. If
the Seller Successfully Converts PS Arrangements representing $100,000 or more
in Average Monthly Revenue, then the entire $450,000 would be released; if PS
Arrangements representing revenues less than $100,000 in Average Monthly Revenue
are Successfully Converted, then a pro-rata portion of the $450,000 shall be
released.
(i) For purposes hereof, "Successfully Converted"
shall mean when a customer under any of the PS Arrangements becomes a customer
of Buyer's respiratory pharmacy development and acquisition program pursuant to
a written agreement in the form customarily used for such program and otherwise
in form and substance reasonably acceptable to Buyer.
(ii) For purposes hereof, "Average Monthly Revenue"
shall mean the collected revenues attributable to the applicable PS Arrangements
during the months of July and August, 1996 divided by two (2).
(iii) Annexed hereto as Schedule 1.3(c) is a list
setting forth all of the PS Arrangements and the Average Monthly Revenue for
each.
(d) Interest accrued on the monies held in escrow shall be
distributed pro rata, according to how the principal amount is distributed.
1.4. The Closing. The closing (the "Closing") shall take place
at the offices of Presser, Lehnan, Edelman, at Jacksonville, Florida at 10:00
a.m. local time on the Wallaway Date, subject to the satisfaction or waiver of
the conditions set forth in Articles VI and VII hereof (the "Closing Date") or
such other date and place as the Buyer and Seller shall agree upon.
1.5. Liabilities and Other Adjustments.
(a) Neither Buyer, nor any of its Affiliates is
directly or indirectly assuming (and will not assume, pay or be responsible for
the payment of) any of the debts, obligations or liabilities of Seller (whether
now existing or hereinafter incurred) except that Buyer is assuming (i) those
obligations under any Contracts that are assigned to Buyer in accordance with
the terms hereof which arise after the date of such assignment and (ii) all
liabilities and obligations of the Existing JV reflected on the "Existing JV
Financials", as defined in Section 2.5(a) below and those obligations of the
Existing JV incurred since then in the ordinary course.
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(b) Notwithstanding the foregoing or any other provision of
this Agreement, Buyer may, in its discretion, determine not to assume one or all
of the Contracts with sales representatives or sales people and instead enter
into a new contract directly with such sales representative(s) in accordance
with Buyer's policies and Seller and Shareholders hereby agree to hold the Buyer
harmless from any and all claims and liabilities relating to the old Contracts
which are being so replaced and terminated.
(c) Except for their willful misconduct, gross negligence or
as otherwise expressly provided for in the Transaction Documents, neither Seller
nor the Shareholders will be, directly or indirectly, responsible for the
payment of any debts, obligations or liabilities of Buyer or the HM Business
incurred by Buyer after the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF SELLER AND THE SHAREHOLDERS
Seller and each of the Shareholders hereby jointly and severally
represent and warrant to Buyer as follows:
2.1. Corporate Status of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and is duly qualified to do business in the jurisdictions listed on
Schedule 2.1, which are all jurisdictions in which the nature of the business
transacted by it, or the character of its properties makes such qualification
necessary, except where the failure to so qualify would not have a Material
Adverse Effect. The Company has all requisite corporate power and authority to
own its property and assets and to carry on its business as now conducted. The
Company has no ownership interest directly or indirectly in any other person or
entity.
2.2. Capitalization of the Company; Stock Ownership.
(a) The authorized capital stock of the Company is set forth
on Schedule 2.2. The issued and outstanding shares of the Company's common stock
are validly issued, fully paid, nonassessable and have not been issued in
violation of any applicable state or federal laws, including without limitation,
securities laws. None of the capital stock of the Company is subject to
preemptive rights. Except as described in Schedule 2.2, there is no existing
option, warrant, call, commitment or other agreement requiring or relating to,
and there are no convertible or exchangeable securities outstanding which upon
conversion or exchange would require the issuance of any additional shares of
the capital stock of the Company or any other securities convertible into or
exchangeable for shares of the capital stock of the Company or any other equity
security of the Company. Except as described in Schedule 2.2, there are no
voting agreements, voting trust agreements, shareholder agreements or other
agreements relating to the capital stock of the
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Company. The Company does not own or hold any record or beneficial interest in
(i) the capital stock of any corporation, (ii) any partnership, or (iii) any
other entity.
(b) Each Shareholder is the exclusive record and
beneficial owner of those respective shares of the capital stock of the Company
as are set forth opposite his name on Schedule 2.2 hereto, and has good and
valid title to such shares of stock, free and clear of any and all Liens, other
than as set forth on Schedule 1.2.
(c) The Shareholders own, beneficially and of record,
all of the issued and outstanding shares of the capital stock of the Company.
2.3. Authority. Each Shareholder and Seller has all requisite
power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby to be performed by such party. Each such party
has duly taken all action required to be taken by him or it to authorize his or
its execution and delivery of this Agreement and all other agreements to be
executed and/or delivered by such party in connection herewith and the
consummation of the transactions contemplated hereby to be performed by him or
it under this Agreement or any other Transaction Document, and this Agreement is
and when executed, such other agreements will be, a valid and binding agreement
of such party enforceable against such party in accordance with its terms,
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
2.4. No Violation. Neither the execution and delivery of this
Agreement nor the agreements to be executed in connection herewith nor the
consummation of the transactions contemplated hereby will violate any provision
of the Company's articles of incorporation or by-laws, or, except as specified
in Schedule 2.4, violate, or be in conflict with, or constitute a default under,
or (i) result in the termination of, or accelerate the performance required by,
any Contract, or (ii) cause the acceleration of the maturity of any debt or
obligation pursuant to any agreement or commitment to which the Company is a
party or by which the Company is bound, or (iii) violate any statute or law or
any judgment, decree, order, regulation or rule of any court or governmental
authority (collectively, the "Laws").
2.5. Financial Statements. Seller has delivered to Buyer,
together with supporting schedules, copies of the following financial statements
of the Company:
(a) Unaudited financial statements of the Company
consisting of balance sheets and statements of operations, as at and for the
Company's fiscal years ended December 31, 1993, December 31, 1994 and December
31, 1995 and as at and for the six months ended June 30, 1996 and unaudited
financial statements for the Existing JV (the
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"Existing JV Financials") consisting of balance sheets and statements of
operations as at and for the period April 1 through June 30, 1996. The financial
statements referred to in this Section 2.5 present fairly the financial position
and results of operations of the Company as at and for the periods indicated, in
conformity with GAAP consistently applied during such period, and the financial
statements for the period ended December 31, 1995 reflect pre-tax income less
than $70,000; and
(b) Except as set forth in the financial statements
referred to in this Section 2.5 or as set forth in Schedule 2.5 or in any other
Schedule to this Agreement, or which were incurred in the ordinary course of
business and which do not in the aggregate exceed $15,000, the Company has no
liabilities, obligations or commitments of any nature, matured or unmatured,
fixed or contingent or otherwise. Company shall not have any liabilities
outstanding to any banks or financial institutions, or the Shareholders or
employees of the Company.
2.6. Interim Operations. Since April 1, 1996, except as set
forth on Schedule 2.6; (i) the Operations have been conducted in the ordinary
and usual course consistent with past practice; (ii) the Company has not entered
into or otherwise become a party to any agreement to take any action which
would, if taken prior to the Closing, breach any representation, warranty,
covenant contained in Articles II, III, IV or VIII; (iii) the Company has not
incurred any obligations or liabilities except in the ordinary course of
business; (iv) the Company has not sold, transferred or leased to others or
otherwise disposed of any of its assets except for the disposition of obsolete
or worn-out equipment or any disposition with respect to which such assets have
been replaced with assets of at least equal value; (v) the Company has not
suffered any material damage or destruction (whether or not covered by
insurance) to any of its assets which assets have not been repaired or replaced;
and (vi) the Operations have been conducted solely through the Existing JV and
the Company does not have any business or operations other than its interest in
the Existing JV and the business conducted thereby.
2.7. Real Property; Contracts and Other Instruments. (a)
Schedule 2.7 sets forth a list and summary description of (i) all real property
owned by the Company and all buildings and other structures located on such real
property; (ii) all leases, subleases or other agreements under which the Company
is lessor or lessee of any real property (it being understood and agreed that
Buyer is not assuming and Seller is not assigning any interest or obligation
relating to Seller's lease of premises in Quincy, Gadsden County, Florida or
otherwise); (iii) all options held by the Company or contractual obligations on
its part to purchase or acquire any interest in real property; and (iv) all
options granted by the Company or contractual obligations on its part to sell or
dispose of any interest in real property. Such leases, subleases and other
agreements are in full force and effect; with respect to the performance of the
Company, there is no material default or event of default or event which with
notice or lapse of time or both would constitute a material default thereunder;
and the Company has not received any notice of any default thereunder.
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<PAGE> 16
(b) All contracts, guaranties, powers of attorney,
commitments, Licenses, leases or other agreements including the Contracts to
which the Company is a party or by which it is bound are listed on Schedule 2.7.
(c) All Licenses which the Company is required to
obtain and maintain in order to carry on the HM Business substantially as
previously conducted are listed on Schedule 2.7A.
(d) All of the Licenses and Contracts listed in
Schedule 2.7 are valid and binding, enforceable in accordance with their
respective terms (except as such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws, now or hereafter in
effect, relating to the enforcement of creditors' rights generally and except
that the remedy of specific performance and other equitable remedies are subject
to judicial discretion), and are in full force and effect. There is not under
any Contract or License any default by the Company or, to any Seller's
knowledge, by any party thereto, or event which, after notice or lapse of time,
or both, would constitute such a default as a result of which any party has the
right to terminate such Contract or License. Except as set forth in Schedule
2.7, to the knowledge of Seller no party to any Contract or License has
indicated any intention or is required by law (1) to terminate or amend the
terms thereof, (2) to refuse to renew the same upon expiration of its term, or
(3) to renew the same upon expiration only on terms and conditions which are
more onerous than those pertaining to the existing Contract or License. True and
complete copies of all such Licenses and Contracts (together with any and all
amendments thereto) have been delivered to Buyer. Other than the Contracts and
Licenses, the Company requires no contract, agreement, license, franchise or
permit to enable it to carry on its business substantially as presently
conducted. None of the Contracts or Licenses would be breached by virtue of the
transactions contemplated hereby, provided the consents listed in Schedule 2.12
are obtained.
2.8. Tangible Property. Schedule 2.8 sets forth a complete and
correct list of all interests owned or claimed by the Company (including,
without limitation, options) in or to the equipment, furniture, leasehold
improvements, fixtures, vehicles, structures, any related capitalized items and
other tangible property material as to the business of the Company which has not
been sold or disposed of in the ordinary course of business since April 1, 1996.
All leases, conditional sale contracts, franchises or licenses pursuant to which
the Company may hold or use any interest owned or claimed by the Company
(including, without limitation, options) in or to tangible property are in full
force and effect and, with respect to the performance of the Company, there is
no default or event of default or event which with notice or lapse of time or
both would constitute a default. The tangible property of the Company is in good
operating condition and repair as of the date hereof so as to permit the Company
to conduct its business consistent with its normal operating procedures. To
Seller's knowledge the Company has received no notice that any of its tangible
property is in violation of any existing law or any building, zoning, health,
safety or other ordinance, code or regulation where the violation of which would
have a Material Adverse Effect.
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During the past three years there has not been any significant interruption of
the operations of the Company due to inadequate maintenance of the tangible
property.
2.9. Title to Properties, Encumbrances. The Company has good
title to or where applicable, valid contract interests in its respective Assets,
free and clear of all defects, liens, claims, charges, security interests or
other encumbrances of any nature except (i) matters specified in Schedule 2.9;
(ii) materialmen's, mechanics', carriers', workmen's, warehousemen's,
repairmen's or other like liens arising in the ordinary course of business, or
deposits to obtain the release of such liens; (iii) other liens, imperfections
in title, charges, easements, restrictions and encumbrances which, individually
and in the aggregate, do not detract from the value, or interfere with the
present use, of the property subject thereto or affected thereby, other than in
any de minimis respect; (iv) liens for current taxes not yet due; and (v) the
lien referred to in Section 1.2 above.
2.10. Taxes. (a) The Company has filed or caused to be filed,
or will file on a timely basis for periods for which returns are not yet due,
all United States federal income Tax Returns and all other federal, state and
local Tax Returns required to be filed by it in the United States or elsewhere
to reflect the operations of the Company, and all taxes shown as due on such Tax
Returns have been paid. Except as set forth in Schedule 2.10, the Company has
not executed any waiver or extensions of any statute of limitations on the
assessment or collection of any Tax or with respect to any liability arising
therefrom. Except as set forth in Schedule 2.10, none of the federal, state or
local income Tax Returns for the Company has been audited by any taxing
authority including without limitation, the United States Internal Revenue
Service. True and correct copies of the United States corporation income Tax
Returns for the Company for the years 1993, 1994 and 1995 and extensions with
respect to 1995 have been delivered to Buyer. The Company has not filed any
consent or election under the Code, other than such consents and elections, if
any, reflected in such income Tax Returns.
(b) As of the date hereof and as of the day preceding
the Closing Date, the Company files and shall file, for federal income tax
purposes, Tax Returns on the basis of a calendar year.
(c) The Company is not a party to any tax-sharing or
tax allocation agreement.
2.11. Litigation. Except as set forth in Schedule 2.11, there
is no action, suit, or proceeding before any court or governmental or other
regulatory or administrative agency or commission pending and, to the knowledge
of Seller, there is no such investigation or action threatened against the
Company.
2.12. Consents and Approvals. Except as set forth in Schedules
2.12 and 1.3(c), no consent, approval, license or authorization of any
governmental or regulatory authority or other person is required by Shareholders
or the Company in connection with the
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<PAGE> 18
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby or to enable Buyer to carry on the HM Business
substantially as presently conducted, except as disclosed in Section 4.6. Except
as set forth in the preceding sentence or in Schedules 2.12 and 1.3(c), no
consent, approval, authorization, notice to, or filing with any other person is
necessary pursuant to any Contract, License or otherwise to permit the
consummation of the transactions contemplated hereby. To the best knowledge of
Seller and Shareholders, the consummation of the transactions contemplated by
this Agreement will not give rise to the termination of any of the Contracts nor
will any third party whose consent is required refuse to give such consent.
Buyer acknowledges that "best knowledge of Seller and Shareholders" for purposes
of the foregoing is not based on direct inquiry of any such third party.
2.13. Compliance with Law. (a) Except as set forth in Schedule
2.13, the Operations are not in violation of any applicable laws, regulations
and other requirements of all federal governmental authorities (including
Environmental Laws), and of all states, municipalities and other political
subdivisions and agencies thereof having jurisdiction over the Company,
including but not limited to all federal and state laws and regulations relating
to Medicare and Medicaid.
(b) Without limiting the generality of the foregoing,
the Company has been and is in compliance with The False Statement Statute (18
U.S.C. Section 1001), The Criminal False Claims Statute (18 U.S.C. Section 287),
The Civil False Claims Act (31 U.S.C. Sections 3729), The Medicare and
Medicaid Civil Monetary Penalties Act (42 U.S.C. Sections 1320a- 7a), The
Medicare and Medicaid Criminal Penalties Act (42 U.S.C. Section 1320a-7b), The
Stark Law (42 U.S.C. Section 1395nn), The Medicare and Medicaid Anti-Kickback
law (42 U.S.C. Section 1320a-7b(b)) and all similar state statutes in all of the
states in which the Company operates or provides services.
(c) No third-party payor (including, without
limitation, Medicare or Medicaid) has asserted any liability against any of the
Company in respect of any period through the date hereof which has not been
settled or paid; to the best knowledge of each of the Sellers, there is no
pending audit or any pending or threatened audit assessment or retroactive rate
adjustment against the Company, and no basis therefor, for any period through
the date hereof; and, if any such audit assessment or retroactive rate
adjustment is so asserted, it will be promptly paid or otherwise satisfied by
the Company and will have no material effect upon any of their rates, operations
or financial performance.
(d) Schedule 2.13 hereto also contains a complete and
correct list of all agreements, arrangements and other relationships of the
Company currently in effect, or in effect at any time since April 1, 1996, with
individuals and entities who refer or have referred to or otherwise generate or
have generated business for the Company (including without limitation, sales
representatives and referring health care providers).
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<PAGE> 19
(e) The Seller has no actual knowledge that any
referring physician, chiropractor, podiatrist, dentist, nurse or other licensed
health professional currently has, or has had at any time after April 1, 1996,
an ownership interest in or otherwise have or had a financial relationship with
the Company.
2.14. Employees; Employee Agreements and Plans. (a) Schedule
2.14 contains a complete list of all employee benefit plans, as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"),
and all agreements, including employment agreements, incentive compensation or
bonus agreements or other such arrangements, severance agreements and
indemnification agreements and arrangements, to which the Company is a party as
of the date of this Agreement and/or pursuant to which the Company provides
benefits to its current or former employees (the "Plans"). Except as set forth
on Schedule 2.14, the Company is not a party to an employment agreement which,
subject to applicable law, is not terminable at will by the Company. The Company
is subject to written employment agreements set forth in Schedule 2.14 hereof.
Copies of all of the written Plans and descriptions of any unwritten Plan have
been delivered or made available to Buyer. Except as disclosed in Schedule 2.14,
the Company is not a party to, has in effect or to become effective after the
date of this Agreement, any employee benefit plan as defined in 3(3) of ERISA,
and there are no commitments to amend any of the Plans except as contemplated
hereby. Schedule 2.14 lists all employees of the Company, together with each
such employee's respective date of initial employment, present title and present
annual salary.
(b) Each Plan is in compliance with all material
terms of ERISA, the Code and other applicable laws. Each Plan has substantially
complied on a timely basis with all applicable material reporting and disclosure
requirements under ERISA and the Code. Except as provided in Schedule 2.14 no
Plan provides post-retirement medical or death benefits to former employees of
the Company. None of the Company or the Shareholders is aware of the existence
of any governmental audit or examination of a Plan. There exists no action, suit
or claim (other than a routine claim for benefits) with respect to any Plan
pending, or to the knowledge of any Sellers, threatened against any Plan or
trustees or administrators thereof.
(c) With respect to each Plan (i) that is intended to
be tax-qualified, and each amendment thereto, it is the subject of a favorable
determination letter except as described in Schedule 2.14, and no Plan amendment
that is not the subject of a favorable determination letter would affect the
validity of a Plan's letter; (ii) no material liability to the Pension Benefit
Guaranty Corporation has been or is expected by the Company (or any trade or
business affiliated with the Company within the meaning of Section 414 of the
Code) to be incurred with respect to any Plan, and there has been no event or
condition which presents a risk of termination thereof; (iii) no Plan is subject
to Title IV of ERISA; (iv) no prohibited transaction, within the definition of
section 4975 of the Code or Title 1, Part 4 of ERISA, has occurred which would
subject the Company to any liability; and (v) all contributions, premiums or
payments accrued, in whole or in part, under each Plan or with respect thereto
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<PAGE> 20
as of the Closing will be paid prior to the Closing, including, but not limited
to, contributions thereto with respect to the plan year ending immediately prior
to the Closing.
(d) Annexed hereto as Schedule 2.14 is a listing of
the Company's active employees, date of hire, entry date under any retirement
plan, the current compensation arrangements for such employees, and whether or
not any such employee is the subject of a written employment agreement or whose
employment is not terminable at will by the Company.
2.15. Brokers and Finders. Neither Seller nor Shareholders
have employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
2.16. Labor Unions. The Company is not a party to any
collective bargaining agreement. As of the date of this Agreement (i) none of
the employees of the Company is presently a member of any collective bargaining
unit related to his or her employment, and (ii) no collective bargaining unit
has filed a petition for representation of any of the employees of the Company.
2.17. Disclosure. No representation or warranty of Seller made
in this Agreement or in connection herewith or in any document furnished
pursuant hereto (i) contains any statement which is untrue or incorrect in any
material respect or (ii) omits any statement of material fact required to make
the statements herein or therein not misleading.
2.18. Charter and By-Laws. The Seller has heretofore delivered
to Buyer a true and complete copy of the charter (certified by the Secretary of
State or other appropriate official of its jurisdiction of incorporation) and
the By-Laws or comparable instrument (certified by the Secretary thereof) of the
Company as in effect on the date hereof. The minute book of the Company contains
true and complete records of all meetings and consents in lieu of meeting of the
Boards of Directors (and any committees thereof) and of its stockholders since
the time of its incorporation and accurately reflects all transactions referred
to in such minutes and consents in lieu of meeting. The stock books of the
Company are true and complete.
2.19. Officers and Directors. Schedule 2.19 contains the name
and position of each officer and director of the Company.
2.20. Insurance and Bonds. Schedule 2.20 sets forth a list of
all policies of property, fire and casualty, product liability, workers'
compensation and other forms of insurance owned or held by the Company. True,
complete and correct copies of all the insurance policies set forth on Schedule
2.20 have been furnished to Buyer. Schedule 2.20 also sets forth a list of all
surety bonds to which the Company is a party.
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<PAGE> 21
2.21. Relationships With Affiliates. Except as set forth in
Schedule 2.21, during the period beginning April 1, 1996, neither the officers,
directors or Shareholders of the Company nor any Affiliate of the Company,
individually or collectively, owns or has owned of record or as a beneficial
owner, an equity interest or any other financial or profit interest in any firm,
corporation or any other entity or person which (a) has had business dealings or
a financial interest in any transaction with the Company other than business
dealings or transactions which are conducted in the ordinary course of business
with the Company or (b) which is in competition with the Company with respect to
any services of the Company in any market presently served by the Company except
for less than one percent (1%) of the outstanding capital stock of any such
competing business which is publicly traded on any recognized exchange or in the
over-the-counter market. Except as described in Schedule 2.21, no officer,
director, shareholder, or Affiliate of the Company has any right or claim
against the Company. Except as set forth in Schedule 2.21, the Company has not
made any sales, transfers or conveyances of any kind of any inventory or other
assets of the Company to an Affiliate of any Seller other than those for which
the Company has received fair market value.
2.22. Intellectual Property. Schedule 2.22 contains a complete
and accurate list of all of the Company's intellectual property assets
including, but not limited to, all fictitious business names, trade names,
registered and unregistered trademarks, service marks and applications and all
material software owned, used or licensed by the Company.
2.23. Accounts Receivable. Except as set forth on Schedule
2.23 hereto, all accounts receivable of the Existing JV including those
generated in July and August 1996 arose from sales in the ordinary course of
business, are collectible in the ordinary course of business (subject to normal
and customary business disputes and reserves for bad debt not in excess of those
historically experienced) and the Seller is not aware of any disputes with
respect to any accounts receivable which involve in the aggregate any material
amount.
2.24. Regulatory Reports. Without limiting the generality of
Section 2.13 above, the Company has since January 1, 1995 timely filed all
reports (other than tax returns which are the subject of Section 2.10) required
to be filed by it with the appropriate federal, state and local governmental or
quasi governmental authorities or agencies. The Company has not been audited by
Medicare or Medicaid or any other state or local governmental or quasi
governmental authority or agency, other than for occasional ordinary
overpayments and explanation of payment requests made by said payor, all of
which overpayments and requests are immaterial in the aggregate.
2.25. Acknowledgment. It is recognized by Buyer and Seller
that the Medicare and Medicaid programs' rules, regulations and policies
regarding the coverage of supplies provided to Medicare beneficiaries or
Medicaid recipients and the appropriate amount of program payments for such
items, and regarding the practice providers employ in marketing, selling and
servicing said beneficiaries are often complex and replete with imprecise,
uncertain or otherwise vague concepts and applications. As a result, the
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<PAGE> 22
programs, in an attempt to clarify their policies, frequently revise their
policies and guidelines and often attempt to apply such revisions retroactively.
Consequently, Buyer and Seller recognize that Seller can make no covenant,
warranty or representation that such a clarification or revision will not occur
with respect to the Company or its operations.
2.26. No Conflicts. Neither the Seller nor any Shareholder
associated with Seller is a party to or bound by any agreement, arrangement or
other commitment which would preclude it from marketing or servicing any
customers or patients of the HM Business in the United States or Puerto Rico,
except that Buyer acknowledges that Seller is unable to use the name "Health
Meds of Puerto Rico, Inc." or Health Meds of Puerto Rico anywhere in the world
although to the best knowledge and belief of Seller and the Shareholders, the
name "Health Meds" can be used anywhere in the world including Puerto Rico.
Seller and Shareholders represent and warrant that to their best knowledge and
belief there is no prohibition as to the use of the name "Health Meds, Inc." or
any variation thereof in any jurisdiction.
2.27. Business Assets. The Assets being sold hereunder
constitute all rights and properties necessary to conduct the HM Business as
currently conducted and there are no assets or rights currently used in the
conduct of the HM Business which are not included in the Assets being sold
hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
3.1. Status of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida and
has all requisite power and authority under its articles of incorporation and
by-laws to carry on its business as it is now being conducted and to own the
properties and assets it now owns.
3.2. Authorization. Buyer has all requisite corporate power
and authority to enter into this Agreement and to carry out the transactions
contemplated hereby. Subject to Section 7.8, the Buyer has taken all action
required by law, its articles of incorporation and by-laws to be taken by it to
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and this Agreement is a valid and binding
agreement of Buyer enforceable in accordance with its terms except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
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<PAGE> 23
3.3. No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby and
thereby will violate any provisions of the articles of incorporation or by-laws
of Buyer, or provided all consents and approvals listed in Schedule 2.12 annexed
hereto are obtained and subject to Section 7.8, violate, or be in conflict with,
or constitute a default under, or result in the termination of, or accelerate
the performance required by, or cause the acceleration of the maturity of any
debt or obligation pursuant to, any agreement or commitment to which Buyer is a
party or by which Buyer is bound, or violate any statute or law or any judgment,
decree, order, regulation or rule of any court or governmental authority.
3.4. Brokers and Finders. Buyer has not employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finders'
fees in connection with the transactions contemplated by this Agreement.
3.5. Disclosure. No representation or warranty of Buyer made
in this Agreement or in connection herewith or in any document furnished
pursuant hereto contains any statement which is untrue or incorrect in any
material respect or omits any statement of material fact required to make the
statements herein or therein not misleading.
3.6. Consents and Approvals. Except as set forth in Schedule
2.12 (assuming the accuracy of Seller's representations in Section 2.12) and
subject to Section 7.8, no consent, approval, license or authorization of any
governmental or regulatory authority or other person is required by Buyer in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, except that Buyer may have
to secure in its own name the some of the Licenses before it can conduct the HM
Business if it does not already have such licenses.
3.7. Litigation. There is no action, suit, or proceeding
before any court or governmental or other regulatory or administrative agency or
commission pending or, to the knowledge of Buyer, threatened against Buyer with
respect to Buyer's execution, delivery and performance of this Agreement.
ARTICLE IV
COVENANTS OF SELLER AND SHAREHOLDERS
Seller and each Shareholder jointly and severally hereby
covenant and agree with Buyer as follows:
4.1. Confidentiality. Seller agrees to keep confidential, and
to cause its employees, counsel, accountants and other representatives to keep
confidential, the terms and provisions of this Agreement as well as all
documents and other information and data, whether written or oral, relating to
Buyer, furnished by Buyer and its representatives, subject
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<PAGE> 24
in all respects to any exercise by Seller of any of their rights or remedies
hereunder. Nothing contained herein shall prevent Sellers from disclosing the
terms and provisions of this Agreement or delivering any documents, or
disclosing other information or data relating to Buyer (a) in connection with
any legal proceedings to which it is a party (or otherwise pursuant to a valid
subpoena) or pursuant to the valid request of a government agency or otherwise
to the extent required by law or (b) to Seller's consultants, advisors, counsel
and accountants provided that Sellers shall take appropriate precautions to
assure that any such documents, information and data shall be and remain subject
to the provisions of this Section 4.1.
4.2. Full Access. The Company to shall afford to Buyer, its
counsel, accountants and other representatives full access during normal
business hours to the plants, offices, warehouses, properties, customers,
suppliers, books and records of the Company in order that Buyer may have the
opportunity to inspect the affairs of the Company provided that any such
inspection shall be conducted only after reasonable prior notice and then only
in such a manner as not to unduly interfere with the operation of the business
of the Company. Seller shall also cause the officers, and accountants of the
Company to furnish such additional financial and operating data and other
information relating to the Company as Buyer may from time to time reasonably
request.
4.3. Covenant to Satisfy Conditions. Seller shall use its best
efforts to insure that each of the conditions set forth in Article VII hereof to
be satisfied by Seller is satisfied, insofar as such matters are within the
reasonable control of Seller.
4.4. Future Assistance Regarding Taxes. Buyer and Seller will
provide each other with such assistance as may reasonably be requested by either
of them in connection with the preparation of any Tax Return, any audit or other
examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for Taxes, and each will retain and provide
the other, at all reasonable times, with any work papers, records or other
information which may be relevant to such return, audit or tax examination,
proceedings or determination. The party requesting assistance hereunder shall
reimburse the other party for reasonable expenses incurred in providing such
assistance.
4.5. Notice of Litigation. Seller will promptly notify Buyer
in writing of any litigation commenced or threatened against the Company or the
transactions contemplated hereby.
4.6. Government and Other Consents. (a) Promptly following the
execution of this Agreement, the Company shall prepare all filings necessary or
appropriate for it to file under applicable state or federal law with respect to
the transactions contemplated by this Agreement. Drafts of such documents shall
be delivered to the Buyer and its counsel for review not less than five business
days prior to the Closing and the final documents, reflecting any reasonable
comments by Buyer and its counsel, shall be filed prior to the Closing if
required by applicable law and evidence thereof shall be provided at closing
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or, if not required by applicable law to be filed prior to Closing, then shall
be delivered at Closing fully executed by Seller with all related items required
for filing.
(b) Promptly following the execution of this
Agreement, the Company shall diligently use its best efforts to obtain all
consents from third parties necessary for the consummation of the transactions
contemplated hereunder, all of which are listed on Schedule 2.12 hereto,
including, without limitation, any required consents under the Contracts.
(c) Promptly following the execution of this
Agreement, the Company shall assist Buyer in preparing and applying for any
Licenses which are necessary or desirable for Buyer's operation of the HM
Business which the Buyer does not already have, if any and shall further assist
the Buyer, post-Closing, in obtaining such Licenses.
4.7. Termination of Plans. The Seller shall file all necessary
papers to terminate all Plans as promptly as possible after the Closing, without
any liability to Buyer as a result of such termination.
4.8. Updated Financial Statements. The Company shall, subject
to timely receipt of any required financial information from Transworld, furnish
Buyer with monthly unaudited balance sheets and income statements for the
Company and the Existing JV within 15 days after the close of each calendar
month commencing with the month of August, 1996 until Closing.
4.9. Additional Financial Statements. Seller shall, within a
reasonable time period after the Closing, deliver to Buyer such audited and
unaudited financial statements of the Company as shall be necessary in Buyer's
opinion for inclusion in the Buyer's periodic filings under the Securities
Exchange Act (the "Subsequent Financial Statements"). An accounting firm
selected by Buyer shall have the right to review the Subsequent Financial
Statements and to comment thereon. The Subsequent Financial Statements shall be
prepared in accordance with (i) GAAP and present fairly the financial position
and results of operations of the Company as at and for the periods then ended;
and (ii) Regulation S-X under the Securities Act and shall be in proper form and
content for inclusion without modification in the periodic filings of the Buyer
to be made under the Securities Exchange Act. All costs of the foregoing shall
be borne by the Buyer.
4.10. Bulk Sales. The parties waive any requirement for
compliance with the procedures of any applicable "bulk sales" law. Seller agrees
to pay all of its obligations as and when they become due.
4.11. Name Change of Seller. Promptly after the Closing,
Seller shall make such filings in its state of incorporation and in each state
in which it is qualified to do business to change Seller's name to a name which
is totally dissimilar to and cannot be confused with Seller's existing name.
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ARTICLE V
COVENANTS OF BUYER
Buyer hereby covenants and agrees with Sellers as follows:
5.1. Confidentiality. Buyer agrees to keep confidential, and
to cause its employees, counsel, accountants and other representatives to keep
confidential, the terms and provisions of this Agreement as well as all
documents and other information and data, whether written or oral, relating to
the Company furnished by Seller or its representatives, subject in all respects
to any exercise by Buyer of any of its rights or remedies hereunder. If the sale
transaction contemplated hereby is not consummated, for any reason whatsoever,
then Buyer shall return to Seller all documents and other information and data
obtained from the Company by Buyer, Buyer's employees, counsel, accountants or
other representatives, and Buyer shall destroy all summaries, notations,
analyses and other reports prepared by or for Buyer which incorporate or are
based upon any of such documents, information or data. Nothing contained herein
shall prevent Buyer from disclosing any such information or delivering any
documents, or disclosing information or data relating to any Seller, the Company
or this Agreement (a) as required in connection with any legal proceedings to
which it is a party (or otherwise pursuant to a subpoena) or pursuant to the
request of a government agency or to the extent required by law, (b) to Buyer's
consultants, advisors, counsel, accountants, lenders and its direct or indirect
investors, provided that Buyer shall take appropriate precautions to assure that
any such documents, information and data shall be and remain subject to the
provisions of this Section 5.1, or (c) the SEC or any other regulatory authority
having jurisdiction over the Buyer or the transaction contemplated hereby,
including the filing of this Agreement or any portion thereof in connection with
Buyer's periodic filing requirements under the Securities Act or the Securities
Exchange Act.
5.2. Cooperation. Whenever requested by Seller, Buyer shall
reasonably cooperate with Seller in Seller's efforts to obtain the consents
referred to in Section 4.6 hereof. Such cooperation shall include, but shall not
be limited to, the preparation and delivery of such documentation and/or
information as any governmental authority or third party may reasonably request.
5.3. Covenant to Satisfy Conditions. Buyer shall use its best
efforts to insure that each of the conditions set forth in Article VI hereof to
be satisfied by Buyer is satisfied, insofar as such matters are within the
control of Buyer and subject to the other terms and conditions of this
Agreement.
5.4. INTENTIONALLY OMITTED.
5.5. Non-Refundable Deposit. Upon the execution of this
Agreement, Buyer shall pay to Seller a deposit of $100,000, which deposit shall
be applied against the
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purchase price in the event of the closing of this transaction and of which
$50,000 shall be non-refundable under any circumstances. If for any reason this
transaction does not close (other than Seller's failure to comply with the terms
and provisions hereof), the deposit shall be and remain the property of the
Seller as liquidated damages.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SELLER
Each and every obligation of Seller under this Agreement to be
performed at or before the Closing shall be subject to the satisfaction, at or
before the Closing, of each of the following conditions, unless waived in
writing by Seller:
6.1. Performance. Buyer shall have performed and complied in
all material respects with all agreements, obligations and covenants required by
this Agreement to be performed or complied with by Buyer at or prior to the
Closing and Buyer shall have delivered to Seller a certificate executed by its
President or any Vice-President dated the Closing Date to such effect.
6.2. Representations and Warranties True. The representations
and warranties of Buyer contained herein shall be true and accurate in all
material respects (i) on and as of the date of this Agreement and (ii) on and as
of the Closing Date as though such representations and warranties were made on
and as of the Closing Date, except for changes expressly permitted by the terms
hereof, and Buyer shall have delivered to Seller a certificate of Buyer,
executed by its President or any Vice-President, dated the Closing Date, to such
effect.
6.3. No Governmental Proceeding or Litigation. No suit,
action, or other legal or administrative proceeding by any governmental body or
other person shall have been instituted against the Company or Buyer which
questions the validity or legality of the transactions contemplated hereby.
6.4. No Injunction. On the Closing Date there shall be no
effective injunction, writ, temporary restraining order or any other order of
any nature issued by a court of competent jurisdiction directing that the
transactions provided for herein or any of them not be consummated as so
provided and there shall be no proceeding seeking the same pending.
6.5. INTENTIONALLY OMITTED
6.6. Consideration. Buyer shall have delivered to the Seller
the purchase price as described in Section 1.3(a) above.
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6.7. Documentation. Buyer shall have delivered to Seller the
following:
(a) a copy of the articles of incorporation
(including any amendments thereto) of Buyer certified as of any date within 30
days of the Closing Date by the Secretary of State of the state of its
incorporation as being true and correct and in full force and effect;
(b) a certificate of the Secretary of Buyer, dated
the Closing Date, certifying that attached thereto is a true and correct copy of
the by-laws of Buyer as in full force and effect at the Closing Date;
(c) a certificate of existence (or equivalent such
certificate) for Buyer, dated within 30 days of the Closing Date, issued by the
Secretary of State of the state of incorporation of Buyer;
(d) an incumbency and specimen signature certificate
of Secretary of the Buyer, dated the Closing Date, with respect to the officers
of Buyer executing this Agreement and any other document executed, filed or
delivered hereunder by Buyer at or prior to the Closing;
(e) a certificate of the Secretary or an Assistant
Secretary of the Buyer, dated the Closing Date, certifying that the corporate
minutes of Buyer relating to this Agreement and the transactions contemplated
hereby (which corporate minutes shall be annexed to such certificate and shall
evidence Buyer's authorization and approval of Buyer's execution, delivery and
performance of this Agreement, and the execution and delivery of any document or
instrument to be executed, filed or delivered hereunder by or on behalf of Buyer
and the performance of the obligations of Buyer hereunder and thereunder), are
in full force and effect on and as of the Closing Date;
(f) the certificate of Buyer referenced in Sections
6.1 and 6.2 above; and
(g) a form of employment agreement between Buyer and
O.W. Edwards, in substantially the Form of Exhibit 6.7(g) annexed hereto.
(h) a signed opinion of Buyer's counsel, dated the
Closing Date and addressed to Seller, in substantially the form of Exhibit
6.7(h) annexed hereto.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
Each and every obligation of Buyer under this Agreement to be
performed at or before the Closing shall be subject to the satisfaction, at or
before the Closing, of each of the following conditions, unless waived in
writing by Buyer:
7.1. Performance. Seller shall have performed and complied in
all material respects with all agreements, obligations and covenants required by
this Agreement to be performed or complied with by Seller at or prior to the
Closing and Seller shall have delivered to Buyer a certificate dated the Closing
Date to such effect.
7.2. Representations and Warranties True. The representations
and warranties of Seller and Shareholders contained herein shall be true and
accurate in all material respects (i) on and as of the date of this Agreement,
and (ii) on and as of the Closing Date as though such representations and
warranties were made on and as of the Closing Date, except for changes expressly
permitted by the terms hereof, and Seller and Shareholders shall have delivered
to Buyer a certificate of Seller and Shareholders dated the Closing Date, to
such effect.
7.3. No Governmental Proceeding or Litigation. No suit,
action, or other legal or administrative proceeding by any governmental body or
other person shall have been instituted which questions the validity or legality
of the transactions contemplated hereby.
7.4. No Injunction. On the Closing Date there shall be no
effective injunction, writ, temporary restraining order or any other order of
any nature issued by a court of competent jurisdiction directing that the
transactions provided for herein or any of them not be consummated as so
provided and there shall be no proceeding seeking the same pending.
7.5. Contracts; Consents. Seller shall use its best efforts to
transfer to Buyer at Closing all of the Contracts with all necessary consents.
7.6. Documentation. Seller shall have delivered to Buyer the
following:
(a) a Bill of Sale of Seller, duly executed by Seller
in the form of Exhibit 7.6(a) annexed hereto;
(b) a Non-Compete Agreement, duly executed by each
key employee of the Company listed on Schedule 7.6(b) annexed hereto and each
Shareholder in the form of Exhibit 7.6(b) annexed hereto;
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(c) a copy of the articles of incorporation
(including any amendments thereto) of the Company certified as of any date
within 30 days of the Closing Date by the Secretary of State of the state of its
incorporation as being true and correct and in full force and effect;
(d) a certificate of the Secretary of the Company,
dated the Closing Date, certifying that (i) the articles of incorporation
referenced in subsection (d) above have not been amended or modified in any
respect on or subsequent to the effective date of the Secretary of State's
certificate referenced in subsection (d) above and (ii) attached thereto is a
true and correct copy of the by-laws of the Company as in full force and effect
at the Closing Date;
(e) a certificate of existence (or equivalent good
standing certificate) for the Company, dated within 30 days of the Closing Date,
issued by the Secretary of State of the state of incorporation of the Company
updated at Closing;
(f) a specimen signature certificate, dated the
Closing Date, of each Seller, executing this Agreement and any other document or
instrument required to be executed, filed or delivered hereunder by or on behalf
of any such Seller at or prior to Closing;
(g) the certificate of Seller referenced in Sections
7.1 and 7.2 above;
(h) a signed opinion(s) of Seller's counsel, dated
the Closing Date and addressed to Buyer (and if requested, to Bankers Trust
Company and the other senior lenders to Transworld and Transworld's Affiliates),
in substantially the form of Schedule 7.6(h) hereto;
(i) Subject to receipt of necessary information from
Transworld, Seller deliver to Buyer in form and substance satisfactory to Buyer
the unaudited balance sheet, income statement and cash flow statement for the
months of July and August 1996, which financial statements shall have been
prepared in accordance with generally accepted accounting principles
consistently applied and the financial statements required pursuant to Section
4.9 above;
(j) certificates of amendment in form suitable for
filing (which Buyer shall file or cause to be filed at Seller's expense)
changing Seller's name in its state of incorporation and in all states where
Seller is qualified to conduct business to a name which is not similar to and
cannot be confused with "HealthMeds" or any other name used by Buyer or any of
its Affiliates; and
(k) releases in recordable form of all liens, claims
and encumbrances on any of the Assets.
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7.7. No Material Adverse Change. Between the date of this
Agreement and the Closing Date there shall have been no material adverse change
in the financial condition, business or operations of the Company.
7.8. Approvals. At or prior to the Closing Date, Transworld's
senior lenders, and the boards of directors of Buyer and Transworld shall each
have approved the execution, delivery and performance of this Agreement and the
other Transaction Documents, and Buyer shall have satisfactorily completed its
review and due diligence with respect to the business of the Company.
ARTICLE VIII
CONDUCT OF OPERATIONS
8.1. Course of Business Through Closing. From the date hereof
through the Closing, and except as otherwise expressly consented to or approved
by Buyer in writing or as specifically otherwise provided for herein, Seller
shall:
(a) carry on the Operations in substantially the same
manner as heretofore conducted and only in the ordinary course;
(b) without limiting the generality of Section 8.1:
(i) use its best efforts to preserve intact its
businesses and organization and to preserve the goodwill of its licensors,
suppliers and customers and others having business relations with it and to
retain the services of those employees designated by Buyer prior to the Closing;
(ii) take all reasonable steps to keep all
material Contracts in full force and effect;
(iii) cause the Company to conduct its
marketing, promotional, billing and collection practices consistent with past
practices;
(iv) to the extent within its reasonable
control, not permit any increase or decrease in rates charged by the Company for
services or products, unless agreed to by the Buyer in writing.
(c) not permit or allow any of the property or assets
(real, personal or mixed, tangible or intangible) of the Company to be subjected
to any mortgage, pledge, lien or encumbrance, except for those of a kind
permitted under Section 2.9 hereof;
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(d) not permit to the Company to grant any increase
in the compensation of officers or employees (including any such increase
pursuant to any bonus, pension, profit sharing or other plan or commitment) or
any increase in the compensation payable or to become payable to any officer or
employee engaged in the operation of to the Company, except in the ordinary
course of business and consistent with past practice but in no event exceeding
10% of any such officers' or employees' salaries;
(e) not permit the Company to cancel, modify or amend
any material contract or enter into any new material contract.
(f) not permit the Company to sell, assign, transfer
or otherwise dispose of any of its assets, except for (i) dispositions with
respect to which such assets are replaced with assets of at least equal value or
(ii) the value of the assets disposed of without such replacement does not
exceed $10,000 in the aggregate;
(g) not:
(i) amend its Articles of Incorporation
or By-laws;
(ii) issue or commit to issue any
additional shares of capital stock, or any other securities;
(iii) issue, sell or grant any option,
warrant or right to acquire or otherwise dispose of any of its authorized but
unissued capital stock, or other securities (or commit to do any of the
foregoing);
(iv) repurchase or redeem any shares of
capital stock or commit to do so or make any distributions in respect of its
capital stock or any other securities;
(v) split, combine or reclassify its
capital stock or declare, set aside or pay any dividend, payable in stock or
property with respect to any of its capital stock or make any other
distribution;
(vi) merge or consolidate with any
other entity whether or not the Company is the surviving corporation or
liquidate or sell all or substantially all of its assets;
(vii) incur any indebtedness other than
as agreed pursuant to the terms of this Agreement; or
(viii) fail to comply in all material
respects with all Laws applicable to the HM Business.
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8.2. Access to Books and Records.
(a) From and after the date hereof to and including
the Closing Date, Seller shall permit Buyer and its auditors, through their
authorized representatives, during normal business hours, to have reasonable
access to and to examine all books and records of the Company, at Buyer's
expense and without interference with normal business operations.
(b) Seller and Buyer shall each direct their
respective representatives to render any assistance which the other party may
reasonably request in examining or utilizing records referred to in this Section
8.2. Buyer agrees to preserve all files and records which are subject to this
Section 8.2 for a period of three years after the Closing Date, unless required
by law to preserve same to a later date, provided that Buyer may destroy any
such records during such three-year period after first giving reasonable notice
thereof to Seller, and within 30 days of receipt of such notice, Seller may
elect (upon notice to Buyer) to cause Buyer to deliver to them the records
intended to be destroyed, at Seller's expense.
ARTICLE IX
INDEMNITY
9.1. Indemnity of Seller and Shareholders. Seller and each of
the Shareholders hereby jointly and severally agree to defend, indemnify and
hold Buyer (and its officers, directors, agents, employees, Affiliates,
successors and assigns) harmless from, against and in respect of, any and all
losses, liabilities, expenses or damages (including reasonable counsel fees)
based upon, arising out of or otherwise in respect of:
(a) any untrue representation, breach of warranty or
nonfulfillment of any covenant or agreement by Seller contained herein or in any
other Transaction Document or in any certificate, document or instrument
delivered to Buyer hereunder or in connection herewith;
(b) any and all liabilities relating to the Assets or
Operations whether accrued, absolute or contingent arising out of or relating to
events or circumstances which occurred prior to the Closing Date;
(c) any actual or threatened litigation, whether or
not the same is described in the books and records and financial statements of
the Company or any Schedule hereto relating to the business or Operations of the
Company and with respect to events prior to the Closing Date;
(d) any and all losses, liabilities, expenses or
damages arising out of any of the Plans of Seller or their termination;
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(e) any claim by any employee or former employee of
the Company arising out of his or her employment or the termination thereof,
including but not limited to claims under OSHA, WARN, the Fair Labor Standards
Act, the Family Medical Leave Act, the Americans with Disabilities Act and the
Age Discrimination and Employment Act; and
(f) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, incident to any of the
foregoing or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
Notwithstanding anything herein to the contrary, Seller's and
Shareholders' total liability under any indemnification obligation as may be set
forth in this Agreement absent fraud, shall not exceed the total consideration
paid or to be paid by Buyer to Seller pursuant to this Agreement.
9.2. Indemnity of Buyer. Buyer hereby agrees to defend,
indemnify and hold Seller (and its officers, directors, agents, employees,
Affiliates, successors and assigns) harmless from, against and in respect of any
and all losses, liabilities, expenses or damages (including reasonable counsel
fees) based upon, arising out of or otherwise is respect of:
(a) any untrue representation, breach of warranty or
nonfulfillment of any covenant or agreement by Buyer contained herein or in any
other Transaction Document or in any certificate, document or instrument
delivered to Seller hereunder or in connection herewith;
(b) any and all liabilities whether accrued, absolute
or contingent arising out of or relating to the Assets or the Operations which
event or circumstances occurred on or after the Closing Date;
(c) any actual or threatened litigation relating to
the business or Operations of the Buyer with respect to events occurring on or
after the Closing Date;
(d) any and all losses, liabilities, expenses or
damages arising out of any Plans of Buyer or their termination;
(e) any claim by any employee or former employee of
the Buyer arising out of his or her employment or the termination thereof; and
(f) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses incident to any of the
foregoing or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
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9.3. Claims Procedure. The following procedure shall govern
any claims which may be brought pursuant to the indemnification provisions of
this Agreement.
(a) The party seeking indemnification (the
"Indemnified Party") shall immediately, after having been given any indication
of a threatened or actual claim give written notice to the party against whom
indemnification is sought (the "Indemnifying Party") of all claims, whether
between the parties or raised by a third party, that could constitute a claim
for indemnification. The written notice shall specify to the extent known by the
Indemnified Party (i) the factual basis for such claim and (ii) the amount of
the claim.
(b) With respect to claims between the parties,
following receipt of notice from the Indemnified Party of a claim, the
Indemnifying Party shall have 30 days to make such investigation of the claim as
the Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Indemnified Party agrees to make available to the
Indemnifying Party and/or its authorized representative(s) the information
relied upon by the Indemnified Party to substantiate the claim. If the
Indemnified Party and the Indemnifying Party agree at or prior to the expiration
of said 30 days period (or any mutually agreed upon extension thereof) to the
validity and amount of such claim, the Indemnifying Party shall immediately pay
to the Indemnified Party the full amount of the claim. If the Indemnified Party
and the Indemnifying Party do not agree within said 30 day period (or any
mutually agreed upon extension thereof), the Indemnified Party may seek any
appropriate remedy hereunder or otherwise.
(c) With respect to any claim by a third party as to
which the Indemnified Party is entitled to indemnification hereunder, the
Indemnifying Party must be notified immediately and shall have the right at its
own expense, to assume control of the defense of such claim, and the Indemnified
Party shall cooperate fully with the Indemnifying Party, subject to
reimbursement for actual out-of-pocket expenses incurred by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third party claim, the Indemnified Party shall not have the right to participate
in the defense of such claim. Notwithstanding anything herein to the contrary,
neither party shall agree, without the consent of the other party, such consent
not to be unreasonably withheld, to any claim, determination or decision
relating to either Company's liability for taxes for any period ending on or
prior to the Closing Date which will materially adversely affect or legally bind
the other party or either Company for any period after the Closing Date.
(d) If the Indemnifying Party does not elect to
assume control of the defense of any third party claim by written notice thereof
to the Indemnified Party, it shall be bound by the results obtained by the
Indemnified Party with respect to such claim.
9.4. Survival. All statements made by Seller in this Agreement
or in any other Transaction Document or in any certificate, instrument or
agreement delivered by or on behalf of Seller pursuant to this Agreement shall
be deemed representations and warranties of Seller, and all statements made by
Buyer in this Agreement or in any other Transaction
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Document or contained in any certificate, instrument or agreement delivered by
or on behalf of Buyer pursuant hereto shall be deemed representations and
warranties of Buyer. All the representations and warranties made by Seller and
Buyer and all indemnities, covenants and agreements of Buyer and Seller
hereunder or pursuant thereto shall survive the Closing regardless of any
investigation made at any time by or on behalf of Buyer or Seller or any
information Buyer or Seller may have.
9.5. Limitation. The foregoing obligations described in
Sections 9.1 and 9.2 above shall be subject to the following limitations as well
as the limitation in the last paragraph of Section 9.1. Seller shall not be
responsible to indemnify Buyer under Section 9.1 above and Buyer shall not be
responsible to indemnify Seller under Section 9.2 above, unless the aggregate of
all such indemnifiable damages suffered by such party exceeds $25,000 except
that such minimum shall not be applicable to Buyer's claims with respect to the
Accounts Receivable of the Existing JV outstanding as of the Closing, which
claims shall be handled as set forth in Section 1.3(b); subject to the preceding
exception, when a party's indemnifiable claims total $25,000, such party shall
be entitled to indemnification for the amount of all such claims, not just those
in excess of such $25,000 threshold.
9.6. Offset. In addition to, and not in limitation of any
other remedies available to Buyer, the amount of any indemnification obligation
of Seller or any Shareholder under this Agreement or any other Transaction
Documents, may be satisfied by the offset and deduction by Buyer of such amount
from and against any amounts which are otherwise payable by Buyer to Seller
under this Agreement or any of the other Transaction Documents. Buyer shall
provide Seller with written notice of such offset (the "Offset Notice") and
Seller shall retain and reserve the right to dispute the validity or propriety
of any such offset by sending written notice of such dispute to Buyer within
thirty (30) days of its receipt of the Offset Notice. Any amounts not paid by
Buyer as a result of Buyer's assertion of a right to offset hereunder shall be
paid into an interest bearing escrow account held by a mutually and reasonably
acceptable escrow agent; Buyer and Seller agree that their respective counsel
shall be an acceptable escrow agent, that they will, if requested execute and
deliver a written escrow agreement in form and substance reasonably acceptable
to them and that the costs and expenses of the escrow agent, if any, shall be
shared equally by them.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. Methods of Termination. This Agreement and the
transactions contemplated herein may be terminated and abandoned at any time
prior to, but not after, the occurrence of the Closing, as follows:
(a) By the mutual written consent of Buyer and
Seller;
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(b) By Buyer on or after the Walkaway Date if any of
the conditions provided for in Article VII of this Agreement shall not have been
satisfied by Seller or waived in writing by Buyer prior to the date of
termination;
(c) By Seller on or after the Walkaway Date if any of
the conditions provided for in Article VI of this Agreement shall not have been
satisfied by Buyer or waived in writing by Seller prior to the date of
termination.
10.2. Procedure upon Termination. Without limiting any other
provisions of this Section 10.2, in the event of the termination by Buyer or by
Seller, or both, pursuant to Section 10.1 hereof, written notice thereof shall
forthwith be given to the other party and the transactions contemplated by this
Agreement shall be terminated, without further action by Buyer or Seller. If the
transactions contemplated by this Agreement are terminated as provided herein:
(a) Each party shall redeliver all documents, work
papers and other material of the other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
to the party furnishing the same;
(b) All confidential information received by either
party hereto with respect to the business of the other party or any of its
Affiliates shall be treated in accordance with the terms hereof; and
(c) Neither party hereto shall have any liability or
further obligation to the other party to this Agreement except as stated in
subparagraphs (a) and (b) of this Section 10.2 and except as set forth in
Section 5.5 or as the result of the breach of Section 11.12.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Amendment and Modification. This Agreement may be
amended or modified only by written agreement executed by the President or any
Vice-President of Buyer and by the Seller.
11.2. Waiver of Compliance. Any breach by Seller, on the one
hand, or by Buyer, on the other, of any obligation, covenant, agreement or
condition herein may be waived only in writing and then only if such writing is
signed by the President or any Vice President of Buyer and by the Seller, but
such waiver of, or any failure to insist upon strict compliance with, any
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other breach.
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<PAGE> 38
11.3. Expenses. Whether or not the transactions contemplated
by this Agreement shall be consummated, except as otherwise contemplated hereby,
Seller agree that all fees and expenses incurred by them in connection with this
Agreement shall be borne by Seller and Buyer agrees that all fees and expenses
incurred by it in connection with this Agreement shall be borne by it,
including, without limitation as to Seller or Buyer, all fees of their
respective financial advisors, counsel and accountants. In addition to any other
provision hereof with respect thereto, in the event that any party is required
to institute litigation to protect or enforce its rights or remedies, the party
prevailing in any such proceeding shall be entitled to its reasonable legal fees
and expenses actually incurred.
11.4. Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given, if delivered by hand, on the date so delivered,
and if given by mail, on the fifth business day after the date so mailed (with
postage prepaid), by registered or certified mail, return receipt requested:
(a) if to Seller or the Shareholders, to:
O.W. Edwards
916 W. Jefferson Street
Quincy, Florida 32351
with a copy to:
Michael Bist, Esq.
Gardner, Shelfer, Duggar & Bist
1300 Thomaswood Drive
Tallahassee, Florida 32312
or to such other person or address as Seller or any Shareholder shall furnish to
Buyer in writing; and
(b) if to Buyer or Transworld, to:
Robert W. Fine, President
Transworld Home HealthCare, Inc.
75 Terminal Avenue
Clark, New Jersey 07066
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<PAGE> 39
with a copy to:
Leslie J. Levinson, Esq.
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
or to such other person or address as Buyer shall furnish to Seller in writing.
For purposes of this Section 11.4, delivery by overnight
courier (e.g., Federal Express) shall be deemed to be delivery by hand.
11.5. Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but no party to this
Agreement shall have any right to assign or otherwise transfer (in whole or in
part) any of its rights, interests, duties or obligations hereunder without the
prior written consent of the other party hereto; notwithstanding the foregoing,
Buyer shall have the right to assign this Agreement to an Affiliate of Buyer. In
the event of such assignment, the term Buyer as used herein shall also be deemed
to mean any such Affiliate, provided however that in the event of any assignment
by Buyer, including without limitation an assignment, to an Affiliate of Buyer,
neither Buyer nor Transworld shall be released from its obligations, duties and
liabilities, as provided in this Agreement.
11.6. Publicity. Neither Seller nor Buyer shall make or issue,
or cause to be made or issued, any announcement or statement (whether written or
oral) concerning this Agreement or the transactions contemplated hereby for
dissemination to the general public without the prior written consent of the
other party. This provision shall not apply, however, to any announcement or
statement required in the reasonable opinion of Buyer or Seller, to be made by
law or the regulations of any federal or state governmental agency or any stock
exchange, except that the party required to make such announcement or statement
shall provide a draft copy thereof to the other party hereto, and consult with
such other party concerning the timing and content thereof, before making or
releasing same.
11.7. Governing Law. This Agreement and the interpretation and
enforcement thereof shall be governed by and construed in accordance with the
laws of the State of Florida, without giving effect to any conflict of laws. Any
provision of this Agreement prohibited by the laws of the State of Florida shall
be ineffective to the extent of such prohibition without invalidating the
remaining provisions of this Agreement. Each of the parties hereto irrevocably
consents and agrees that any legal or equitable action or proceeding arising
under or in connection with this Agreement shall be brought in the United States
District Court for the Northern District of Florida, Tallahassee Division, or
the Circuit Court of the Second Judicial Circuit, Gadsden County, Florida, and
by execution and delivery of this Agreement each party hereto irrevocably
submits to and accepts, with respect to any such action or proceeding, generally
and unconditionally the jurisdiction of the
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aforesaid courts and irrevocably waives any and all rights such party may have
to object to such jurisdiction.
11.8. Counterparts. 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 instrument. This Agreement shall not
be deemed a binding agreement between Buyer and any Seller until the same duly
has been executed and delivered by the Buyer and Seller.
11.9. Interpretation. The headings of the Sections and
Articles of this Agreement are inserted for convenience only and shall not
constitute a part hereof or affect in any way the meaning or interpretation of
this Agreement. Each of Seller and Buyer acknowledges that it has actively
participated in the preparation, drafting and review of this Agreement, and each
party hereby waives any claim that this Agreement or any provision hereof is to
be construed against the other party hereto as the draftsperson thereof.
11.10. Entire Agreement. This Agreement, including the other
documents and certificates delivered on or after the date hereof by or on behalf
of either party hereto to the other party hereto referring to this Agreement or
pursuant to the terms hereof, set forth the entire agreement and understanding
of the parties hereto in respect of the subject matter hereof, and supersede all
prior documents, agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by or on behalf of
either party hereto or any officer, employee, representative or agent of either
party hereto.
11.11. Third Parties. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or other entity other than the
parties hereto and their permitted successors or assigns, any rights or remedies
under or by reason of this Agreement.
11.12. No Solicitation. Unless this Agreement is sooner
terminated, Seller agrees, and shall use its best efforts to cause its
respective officers, directors, employees and agents and stockholders, not to
solicit or encourage, directly or indirectly, in any manner any discussion with,
or furnish or cause to be furnished any information to, any person other than
Buyer in connection with, or negotiate for or otherwise pursue, the sale of the
Assets, stock and/or business of the Company, or any portion or all of its
businesses, or any business combination or merger of the Company with any other
party. Seller shall promptly inform Buyer of any inquiries or proposals with
respect to the foregoing. In the event that the agreements in this Section 11.12
are violated by the Seller, the Company, or its officers, directors, employees,
agents or stockholders, and the transactions contemplated hereby are not
consummated as a result, then, in addition to the remedies available to Buyer
hereunder, at law or equity or otherwise, Buyer shall be entitled to receive
from the Seller all out-of-pocket expenses (including reasonable attorneys' fees
and expenses relating to the subject matter hereof), which Buyer has incurred.
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<PAGE> 41
11.13. Additional Agreements. At and after the Closing Date,
the Seller will without further consideration, execute and deliver such further
instruments and documents and do such other acts and things as the Buyer may
reasonably request in order to effect or confirm the transactions contemplated
by this Agreement or any of the terms and provisions hereof.
11.14. Knowledge. As used herein, "to Seller's knowledge" or
phrases of t 18 similar import means (i) the actual knowledge of any Seller or
the executive officers or directors of the Company and (ii) the knowledge that
such persons could obtain by making reasonable inquiry under the circumstances.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
HEALTH MEDS, INC.
/s/ O.W. EDWARDS
By: _____________________________
Name: O.W. Edwards
Title: President
/s/ O.W. EDWARDS
_________________________________
O.W. EDWARDS
/s/ RICK HEDRICK
_________________________________
RICK HEDRICK
RESPIFLOW, INC.
/s/ ROBERT FINE
By: _____________________________
Name: Robert Fine
Title: President
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<PAGE> 1
ASSET PURCHASE AGREEMENT
AMONG
TRANSWORLD ACQUISITION CORP.,
AS BUYER,
TRANSWORLD HOME HEALTHCARE, INC.,
THE SOLE STOCKHOLDER OF BUYER,
U.S. HOMECARE INFUSION THERAPY SERVICES
CORPORATION OF NEW JERSEY,
AS SELLER,
AND
U.S. HOMECARE CORPORATION
THE SOLE STOCKHOLDER OF SELLER
-----------------------------------------------------------------------
DATED AS OF OCTOBER 31, 1996
-----------------------------------------------------------------------
<PAGE> 2
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I DEFINITIONS................................................................1
SECTION 1.1 Definitions................................................................1
SECTION 1.2 Interpretation.............................................................6
ARTICLE II PURCHASE AND SALE; CLOSING.................................................6
SECTION 2.1 Purchase and Sale of Purchased Assets......................................6
SECTION 2.2 Transfer, Assignment and Conveyance of Purchased Assets....................8
SECTION 2.3 Excluded Assets............................................................9
SECTION 2.4 Purchase Price.............................................................9
SECTION 2.5 Assumption of Liabilities..................................................9
SECTION 2.6 Closing...................................................................10
SECTION 2.7 Purchase of Additional Assets.............................................10
SECTION 2.8 Collection of Existing A/R................................................10
SECTION 2.9 Certain Employees; Use of Facilities......................................11
SECTION 2.10 Certain Nursing Services.................................................12
SECTION 2.11 Effective Date...........................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF SELLER AND THE STOCKHOLDER............................................14
SECTION 3.1 Authority Relative to this Agreement......................................14
SECTION 3.2 No Conflicts; Consents....................................................15
SECTION 3.3 Corporate Existence and Power.............................................15
SECTION 3.4 Subsidiaries..............................................................15
SECTION 3.5 Charter Documents and Corporate Records...................................16
SECTION 3.6 Financial Statements......................................................16
SECTION 3.7 Absence of Certain Changes................................................17
SECTION 3.8 Properties................................................................19
SECTION 3.9 Contracts.................................................................19
SECTION 3.10 Intangible Property......................................................22
SECTION 3.11 Claims and Proceedings...................................................23
SECTION 3.12 Restrictions on Business Activities......................................23
SECTION 3.13 Taxes....................................................................23
SECTION 3.14 Employee Benefits Plans..................................................24
SECTION 3.15 Officers, Directors and Key Employees....................................26
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 3.16 Employment Related Matters...............................................26
SECTION 3.17 Potential Conflicts of Interest..........................................27
SECTION 3.18 Insurance................................................................27
SECTION 3.19 Suppliers, Customers and Contractors.....................................28
SECTION 3.20 Compliance with Laws.....................................................28
SECTION 3.21 Permits..................................................................29
SECTION 3.22 Finders; Fees............................................................29
SECTION 3.23 Depositaries.............................................................29
SECTION 3.24 Disclosure...............................................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...................................30
SECTION 4.1 Corporate Existence and Power.............................................30
SECTION 4.2 Authority Relative to This Agreement......................................30
SECTION 4.3 No Conflicts; Consents....................................................30
SECTION 4.4 Litigation................................................................31
SECTION 4.5 Finders; Fees.............................................................31
SECTION 4.6 Disclosure................................................................31
ARTICLE V COVENANTS AND AGREEMENTS..................................................31
SECTION 5.1 Conduct of Business.......................................................31
SECTION 5.2 Corporate Examinations and Investigations.................................33
SECTION 5.3 Additional Financial Statements...........................................33
SECTION 5.4 Filings and Authorizations................................................34
SECTION 5.5 Efforts to Consummate.....................................................34
SECTION 5.6 Negotiations With Others..................................................35
SECTION 5.7 Notices of Certain Events.................................................35
SECTION 5.8 Public Announcements......................................................36
SECTION 5.9 Confidentiality...........................................................36
SECTION 5.10 Bulk Sales...............................................................37
SECTION 5.11 Use of Name..............................................................37
SECTION 5.12 Certain Expenses.........................................................37
SECTION 5.13 Tax Matters..............................................................37
ARTICLE VI CONDITIONS TO CLOSING.....................................................38
SECTION 6.1 Conditions to the Obligations of Seller and Buyer.........................38
SECTION 6.2 Conditions to the Obligations of Seller...................................39
SECTION 6.3 Conditions to the Obligations of Buyer....................................40
</TABLE>
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<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE VII INDEMNIFICATION...........................................................41
SECTION 7.1 Survival of Representations and Warranties................................41
SECTION 7.2 Obligation of Seller to Indemnify.........................................42
SECTION 7.3 Obligation of Buyer to Indemnify..........................................42
SECTION 7.4 Notice and Opportunity to Defend Third Party Claims.......................43
SECTION 7.5 Limits on Indemnification.................................................43
ARTICLE VIII TERMINATION...............................................................44
SECTION 8.1 Termination...............................................................44
SECTION 8.2 Effect of Termination; Right to Proceed...................................44
ARTICLE IX LIQUIDATED DAMAGES........................................................45
ARTICLE X MISCELLANEOUS.............................................................45
SECTION 10.1 Notices..................................................................45
SECTION 10.2 Entire Agreement.........................................................46
SECTION 10.3 Waivers and Amendments; NonContractual Remedies; Preservation
of Remedies............................................................................46
SECTION 10.4 Governing Law............................................................47
SECTION 10.5 Consent to Jurisdiction and Service of Process...........................47
SECTION 10.6 Designated Buyer.........................................................47
SECTION 10.7 Binding Effect; No Assignment............................................47
SECTION 10.8 Severability.............................................................48
SECTION 10.9 Counterparts.............................................................48
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
Schedule 2 Bill of Sale
Schedule 2.3 Excluded Assets
Schedule 2.4(b) Allocation of Purchase Price
Schedule 2.5 Assumption Agreement
Schedule 2.5(a) Assumed Liabilities
Schedule 2.9(a) Retained Employees
Schedule 2.9(d) Exceptions to Transition Costs
Schedule 2.11 October Expenses
Schedule 3.2 Required Consents
Schedule 3.5 Exception to Records
Schedule 3.6(b) Other Liabilities
Schedule 3.6(d) Debt
Schedule 3.7 Recent Developments
Schedule 3.8(a) Real Property
Schedule 3.8(b) Tangible Property
Schedule 3.8(c) Other Personal Property
Schedule 3.9 Contracts
Schedule 3.10 Intangible Property
Schedule 3.11 Claims and Proceedings
Schedule 3.13 Tax Matters
Schedule 3.14(a) Employee Benefit Plans
Schedule 3.14(e) Multiemployer Plans
Schedule 3.15 Officers, Directors and Key Employees
Schedule 3.16 Employment-Related Matters
Schedule 3.17 Potential Conflicts of Interest
Schedule 3.18 Insurance Policies, Fidelity, and Surety Bonds
Schedule 3.19 Suppliers and Customers
Schedule 3.20 Cost Reports
Schedule 3.21 Permits
Schedule 3.22 Finders Fees
Schedule 3.23 Depositories
Schedule 4.3 Buyer's Consents
Schedule 6.2(d)(iv) Form of Buyer's Opinion
Schedule 6.3(e)(iv) Form of Sellers' Opinion
Schedule 6.3(f) Form of Covenant Not to Compete
</TABLE>
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<PAGE> 6
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of October 31, 1996 among Transworld
Acquisition Corp., a Delaware corporation ("Buyer"), Transworld Home HealthCare,
Inc., a New York corporation ("Transworld"), U.S. HomeCare Infusion Therapy
Services Corporation of New Jersey, a New Jersey corporation ("Seller,") and
U.S. HomeCare Corporation, a New York corporation, the sole security holder of
Seller (the "Stockholder").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of providing infusion
therapy products and related skilled nursing and other related services to
patients in the home (the "Business"); and
WHEREAS, Buyer wishes to purchase from Seller and Seller wishes to sell
to Buyer, in accordance with the terms and subject to the conditions of this
Agreement, certain of the assets, properties and rights belonging to Seller that
are used in or pertain to the Business.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
other agreements contained herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. (a) The following terms, as used herein, have
the following meanings:
"Acquisition Proposal" shall mean any proposal for the acquisition of,
or merger or other business combination involving, Seller or the sale of any
equity interest in, or a substantial portion of the assets of, Seller other than
the transactions by Buyer as contemplated by this Agreement.
"Affiliate" of any person means any other person directly or indirectly
through one or more intermediary persons, controlling, controlled by or under
common control with such person.
<PAGE> 7
"Agreement" or "this Agreement" shall mean, and the words "herein",
"hereof" and "hereunder" and words of similar import shall refer to, this
agreement, and the Schedules and Exhibits hereto, as the same from time to time
may be amended.
"Assumption Agreement" shall mean the Assumption Agreement in the form
of Schedule 2.5 between Seller and Buyer.
"Audit" or "audited" when used in regard to financial statements shall
mean an examination of the financial statements by a firm of independent public
accountants in accordance with GAAP consistently applied for the purpose of
expressing an opinion thereon.
"Balance Sheet" shall mean the balance sheet of Seller included in
their unaudited financial statements as at and for the year ended December 31,
1995.
"Balance Sheet Date" shall mean December 31, 1995.
"Bill of Sale" shall mean the Bill of Sale in the form of Schedule 2
hereto.
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the Borough of
Manhattan, the City of New York, are authorized or obligated by law or executive
order to close.
"Business Employees" shall mean the employees of Seller.
"Buyer's Accountants" shall mean Coopers & Lybrand LLP or such other
firm of independent auditors selected by Buyer.
"Certificate of Incorporation" shall mean the certificate of
incorporation, articles of incorporation or charter of a corporation howsoever
denominated under the laws of the jurisdiction of its organization.
"Close of Business" on any given date shall mean 5:00 p.m., New York
time, on such date; provided, however, that if such date is not a Business Day,
"Close of Business" shall mean 5:00 p.m., New York time, on the next succeeding
Business Day.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
The term "control", with respect to any person, shall mean the power to
direct the management and policies of such person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
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<PAGE> 8
"Escrow Agent" shall mean Brobeck, Phleger & Harrison LLP and each
successor Escrow Agent appointed in accordance with the provisions of the Escrow
Agreement.
"Escrow Agreement" shall mean the Escrow Agreement dated October 9,
1996 hereto among Transworld, Seller, Stockholder, Escrow Agent and Sanders
Morris Mundy Inc.
"Existing A/R" shall mean the accounts receivable of Seller pertaining
to goods sold and services performed on or prior to the Closing Date, whether or
not an invoice has been submitted for such goods and services as of the Closing
Date.
"GAAP" shall mean generally accepted accounting principles in effect on
the date hereof as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or as may be generally accepted by the accounting profession of
the United States.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"IRS" shall mean the Internal Revenue Service.
"Liability" shall mean any direct or indirect indebtedness, liability,
claim, loss, damage, deficiency, obligation or responsibility, fixed or unfixed,
choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued,
absolute, contingent or otherwise.
"Lien" shall mean any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended,
and all rules and regulations promulgated thereunder.
"1933 Act" shall mean the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.
"Net Book Value" shall mean with respect to any asset, the depreciated
book value of such asset as of the Effective Date, determined in accordance with
GAAP.
"October Net Revenues" shall mean the gross revenues generated by the
Business (net of normal and other contractual allowances determined on a basis
consistent with prior periods) and exclusive of extraordinary items and charges
or credits relating to other periods during the period from October 1, 1996
through Closing.
"October Expenses" shall mean the sum of (i) the direct cost of goods
sold and related direct packaging costs incurred in generating the October Net
Revenue on a basis
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<PAGE> 9
consistent with prior periods exclusive of extraordinary items and charges or
credits relating to other periods, net of the applicable portion of the product
discount related to Humatrope (which discount is equal to 4% of the cost of
Humatrope and any other applicable discounts or credits, and (ii) those specific
identifiable costs which would have been incurred by Buyer had it operated the
Business during such period on a fully integrated basis, all as more fully
described on Schedule 2.11 hereto.
The term "person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
"Seller's Accountants" shall mean Deloitte & Touche, independent
certified public accountants, or such other accounting firm selected by Seller
that is acceptable to Buyer.
"Subsidiary" as to any person shall mean any entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are owned
directly or indirectly through one or more intermediaries, or both, by such
person.
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") shall mean: (i) any net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property or windfall
profits tax, alternative or add-on minimum tax, customs duty or other tax, fee,
assessment or charge of any kind whatsoever, together with any interest and any
penalty, addition to tax or additional amount imposed by any governmental
authority (domestic or foreign) responsible for the imposition of any such tax
(a "Taxing Authority"), with respect to Seller; (ii) any liability for the
payment of any amount of the type described in the immediately preceding clause
(i) as a result of Seller being a member of an affiliated or combined group with
any other corporation at any time on or prior to the Closing Date; and (iii) any
liability of Sellers for the payment of any amounts of the type described in the
immediately preceding clause (i) as a result of a contractual obligation to
indemnify any other person (other than Buyer).
"Taxable Year" shall mean, with respect to any Tax of Seller, the
calendar or fiscal year, or shorter period, for which the Tax is computed and
the Return for such Tax is made.
"Transaction Documents" shall mean, collectively, this Agreement, the
Escrow Agreement, the Non-Compete Agreements, the Assumption Agreement, the Bill
of Sale and each of the other agreements and instruments to be executed and
delivered by all or some of the parties hereto in connection with the
consummation of the transactions contemplated hereby.
The term "voting power" when used with reference to the capital stock
of, or units of equity interests in, any person shall mean the power under
ordinary circumstances (and not merely upon the happening of a contingency) to
vote in the election of directors of such
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<PAGE> 10
person (if such person is a corporation) or to participate in the management and
control of such person (if such person is not a corporation).
(b) The following terms are defined in the following sections
of this Agreement:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Asserted Liability 7.4(a)
Assumed Liabilities 2.5(a)
Business Recital
Claims 3.11
Claims Notice 7.4(a)
Closing 2.6
Closing Date 2.6
Condition of the Business 3.3
Contemplated Transactions 3.1
Contracts 3.2
Debt 3.6(d)
Deposit 2.4
Effective Date 2.11
Environmental Laws 3.21(a)
Environmental Matters 3.21(a)
Environmental Permits 3.21(e)
ERISA 3.14(a)
Excluded Assets 2.3
Excluded Obligations 2.5(b)
Existing Accounts 2.1(f)
Financial Statements 3.6(a)
Governmental Bodies 3.20
Group 3.14(a)
Group Plans 3.14(a)
Hazardous Materials 3.21(a)
Indemnifying Party 7.4(a)
Indemnitee 7.4(a)
Intellectual Property Rights 3.10
Laws 3.20
Liabilities Definitions
Losses 7.2
Marketed Accounts 2.10
Orders 3.20
Permits 3.22
Plan 3.14(b)
Products 3.11
Proposed Contracts 3.9(a)(xxi)
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Purchased Assets 2.1
Real Property Leases 3.8
Receivables 3.6(c)
Representatives 5.2
Required Consents 3.2
Retained Employees 2.9
Returns 3.13(a)
Selected Employees 2.9
Settlement Account 2.11(b)
Tangible Property 3.8(b)
Transition Expenses 2.9
Transition Period 2.9
</TABLE>
SECTION 1.2 Interpretation. Unless the context otherwise requires, the
terms defined in Section 1.1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. All accounting terms defined in this Article I,
and those accounting terms used in this Agreement not defined in Section 1.1,
except as otherwise expressly provided herein, shall have the meanings
customarily given thereto in accordance with GAAP. Except as otherwise expressly
provided herein, all terms used in conjunction with a description of securities
shall have the meanings given to those terms under the 1934 Act. When a
reference is made in this Agreement to Sections, such reference shall be to a
Section of this Agreement unless otherwise indicated. 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. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The use of the neuter gender herein
shall be deemed to include the masculine and feminine genders wherever necessary
or appropriate, the use of the masculine gender shall be deemed to include the
neuter and feminine genders and the use of the feminine gender shall be deemed
to include the neuter and masculine genders wherever necessary or appropriate.
ARTICLE II
PURCHASE AND SALE; CLOSING; OTHER MATTERS
SECTION 2.1 Purchase and Sale of Purchased Assets. Except as otherwise
provided in Section 2.3, at the Closing, Seller shall sell, assign, transfer,
convey and deliver to Buyer, and Buyer shall acquire and purchase from Seller,
all the Purchased Assets, free and clear of all Liens. As used in this
Agreement, the term "Purchased Assets" shall mean all of the properties, rights,
goodwill, franchises, interests and assets of every kind, real, personal or
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<PAGE> 12
mixed, tangible or intangible, and wheresoever situated, belonging to Seller
whether or not reflected on the books and records of Seller, other than the
Excluded Assets, including, but not limited to:
(a) Those fixed assets, and certain inventory which are
purchased pursuant to Section 2.7 hereof which if, and only if, so purchased
shall be deemed to be a Purchased Asset;
(b) All claims, rights and choses in action of Seller against
third parties, including but not limited to those in respect of unliquidated
rights, under manufacturers' and vendors' warranties, guarantees or similar
obligations, other than Existing A/R and product credits and product
replacements from any supplier earned through the Effective Date;
(c) All trademarks, trade names, service marks, logos
(excluding the U.S. HomeCare Corporation logo), designs and other intangible
property (including all Federal, state and foreign registrations and
applications for registration of such trademarks, trade names, service marks,
logos or designs) owned by Seller or used in the Business;
(d) All rights, titles and interests of Seller in, to and
under all Contracts (other than Real Property Leases and any contract included
within the Excluded Assets);
(e) All prepaid expenses, claims and other prepayments,
including prepaid supplies, and deferred charges attributable to the Contracts
of Seller that are to be assigned to Buyer under this Agreement;
(f) All patient and customer lists, copies of files and
computer system files and data files relating to existing patients and any
inactive patient, (i.e. a patient not currently on service, but who is expected
to or could resume service in the future) (collectively, the "Existing
Accounts"), credit policies and credit information with respect to all patients
and customers of, and all cost and pricing data for, the Business;
(g) All supplier lists, product specifications, bills of
materials and all other production information;
(h) All employee records of the Business with respect to
Selected Employees;
(i) All existing business plans, advertising and promotional
plans, product development plans, forecasts, market research reports and
competitor information;
(j) All existing formulae, technology, trade secrets, and
know-how used by Seller in connection with the Business, and other similar data;
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(k) All rights under permits, licenses, franchises and similar
authorizations of Seller (including all rights of Sellers to obtain renewals and
extensions thereof), to the extent transferable;
(l) All patents, patent applications, copyrights and copyright
applications of Seller (including all rights of Seller to obtain renewals and
extensions thereof); and
(m) All existing referral sources to and of the Business.
SECTION 2.2 Transfer, Assignment and Conveyance of Purchased Assets.
(a) Instruments of Transfer, Assignment, Conveyance and
Assumption, Etc. At the Closing, Seller will deliver to Buyer the Bill of Sale,
Assumption Agreement, instruments of transfer of Intellectual Property Rights,
and any other instruments of transfer, conveyance and assignment deemed
necessary or desirable by Buyer to transfer all the Purchased Assets, all as
provided in Section 2.1. Simultaneously therewith, Seller shall take all steps
as may be reasonably necessary or desirable to put Buyer in possession or
control of all the Purchased Assets. At the Closing, Buyer will deliver to
Seller the Assumption Agreement and any other instruments of assumption
necessary to evidence the assumption by Buyer of the Assumed Liabilities, all as
provided in Section 2.5.
(b) Power of Attorney; Right of Endorsement. Effective upon
the Closing Date, Seller hereby constitutes and appoints Buyer, and any
successors and assigns, as the true and lawful attorney of Seller with full
power of substitution, in the name of Buyer, or the name of Seller, on behalf of
and for the benefit of Buyer, to (i) institute and prosecute, in the name of
Seller or otherwise, all proceedings which Buyer may deem proper in order to
assert or enforce any right or title of any kind in or to the Purchased Assets
to be transferred, conveyed and assigned as provided herein, (ii) with notice to
Seller as provided herein, defend and compromise any and all actions, suits or
proceedings in respect of any of the Purchased Assets, and (iii) do all such
acts and things in relation thereto as Buyer may deem advisable. Seller agrees
that the foregoing powers are coupled with an interest and shall not be
revocable by the dissolution of Seller or in any other manner or for any reason.
(c) Further Assurances. At any time and from time to time
after the Closing Date, upon the request of Buyer, Seller and the Stockholder,
without further consideration, will do, execute, acknowledge and deliver, or
cause to be done, executed, acknowledged or delivered, all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney or assurances
(including obtaining any Required Consent not delivered at Closing with the
approval of Buyer) as may be reasonably required for the better transferring,
assigning, conveying, granting, assuring and confirming to Buyer, or for aiding
and assisting in the collection of or reducing to possession by Buyer, any of
the Purchased Assets to be transferred, conveyed and assigned hereunder or to
vest in Buyer all of Seller's right, title and interest in and to the Purchased
Assets being conveyed hereunder.
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(d) Access by Buyer and Seller. Those books and records the
possession of which is not being transferred to Buyer pursuant to this Agreement
which relate to the Purchased Assets shall be preserved and maintained by Seller
for seven years from the Closing Date. Seller and Stockholder shall give to
Buyer and its authorized Representatives, during normal business hours, such
access to such books and records retained by Seller and Stockholder as may be
reasonably required by Buyer. Buyer shall be entitled, at its own expense, to
make extracts and copies thereof and Seller and Stockholder shall cooperate with
Buyer in connection with accomplishing the same. Seller and Stockholder shall
deliver to Buyer at Closing (and thereafter as the case may be) the originals of
all documents, records, instruments and files as Buyer shall require or request
to operate the Business as of and after the Closing or to satisfy any obligation
to Seller hereunder. Those books and records relating to the Purchased Assets
being transferred to Buyer shall be preserved and maintained by Buyer for seven
years from the Closing Date and shall be made available to Seller at its expense
for copying at reasonable times, upon reasonable notice.
SECTION 2.3 Excluded Assets. Anything in Section 2.1 to the contrary
notwithstanding, there shall be excluded from the assets, properties, rights and
businesses to be transferred to Buyer hereunder those items listed on Schedule
2.3 attached hereto. Such assets, properties and rights not being purchased by
Buyer as aforesaid are hereinafter collectively called the "Excluded Assets".
SECTION 2.4 Purchase Price. Subject to the terms and conditions of this
Agreement:
(a) The purchase price (the "Purchase Price") payable by Buyer
for the Purchased Assets shall, subject to adjustment as provided in Sections
2.7 and 2.11 hereof, equal the sum of $2,000,000 plus interest from October 1,
1996 to the Closing Date at the per annum rate equal to Transworld's effective
borrowing rate as of the Closing Date, which Purchase Price includes the sum of
$350,000 (the "Deposit"), which sum has been placed in escrow with the Escrow
Agent and which shall be released as provided in the Escrow Agreement. The
balance of the Purchase Price, as adjusted, shall be payable by wire transfer to
Seller at Closing.
(b) The Purchase Price shall be allocated among the Purchased
Assets in the manner set forth on Schedule 2.4(b). Seller and Buyer agree that
such allocations shall be utilized by the parties for all purposes.
SECTION 2.5 Assumption of Liabilities.
(a) Liabilities Assumed by Buyer. In addition to payment of
the Purchase Price, except for the Excluded Obligations (as defined below),
Buyer shall assume, as of the
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Closing Date, the Liabilities of Seller relating to the Business listed on
Schedule 2.5(a) attached hereto. Such obligations and liabilities to be assumed
by Buyer pursuant to this Agreement are sometimes collectively referred to
herein as the "Assumed Liabilities."
(b) Liabilities Not Assumed by Buyer. Anything in this
Agreement to the contrary notwithstanding, Buyer shall not assume, or in any way
be liable or responsible for any liability or obligation of Seller or any other
person relating to the Business which, is not listed on Schedule 2.5(a),
including but not limited to all accounts and trade payables incurred prior to
Closing and all amounts owed to Seller's Humatrope supplier. Such obligations
and liabilities of Seller not being assumed by Buyer are referred to herein
collectively, as "Excluded Obligations". Seller and the Stockholder shall take
any and all action which may be necessary to prevent any person from having
recourse against any of the Purchased Assets or against Buyer as transferee
thereof with respect to any Excluded Obligations and shall indemnify Buyer and
hold it harmless therefrom.
SECTION 2.6 Closing. The closing (the "Closing") of the purchase and
sale of the Purchased Assets hereunder shall take place at the offices of Baer
Marks & Upham LLP, 805 Third Avenue, New York, New York at 10:00 a.m., local
time, on October 31, 1996, provided that all applicable conditions to Closing
specified in Article VI have been satisfied, or at such other time and place
upon which Seller and Buyer may agree (the time and date of the Closing being
hereinafter called the "Closing Date"). All transactions consummated at the
Closing shall be deemed to have taken place simultaneously and shall be deemed
to be effective as of the Close of Business of Seller on the Closing Date.
SECTION 2.7 Purchase of Additional Assets. (a) At Closing, Buyer shall
have the right to purchase those fixed assets of Seller (other than Excluded
Assets) as it shall have notified Seller of at or prior to Closing, at a
purchase price equal to 40% of the Net Book Value of such assets.
(b) At Closing, Buyer shall purchase Seller's usable inventory
(as reasonably determined by Buyer) on hand as of the Closing Date at the lesser
of Seller's acquisition cost or, if a material difference exists, the cost that
such inventory is customarily acquired at by Transworld and Seller's inventory
of usable pumps (as reasonably determined by Buyer) on hand as of the Closing
Date at the fair market value thereof as determined by one or more third party
vendors mutually acceptable to Buyer and Seller. The Buyer and Seller shall make
a mutual good faith estimate of the purchase price of the inventory and pumps so
purchased which amount shall also be paid at Closing. The calculation of the
final purchase price for the inventory and pumps shall be made by Buyer and
Seller or the third party vendors, respectively, within the ninety (90) day
period following Closing and any adjustment shall, subject to Section 2.11, be
paid to Seller or Buyer, as the case may be, by certified check or wire transfer
within five (5) Business Days thereafter.
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SECTION 2.8 Collection of Existing A/R. (a) Following the Closing,
Seller will continue to collect the Existing A/R. Commencing on the ninety-first
day following the Closing Date and for a period of 180 days thereafter, to the
extent requested by Seller, Buyer will use commercially reasonable efforts
(which, it being specifically understood and agreed, shall not include the
institution of litigation or other extraordinary actions) to assist Seller in
the collection of the Existing A/R. In consideration thereof, Seller shall
reimburse Buyer for all of its actual costs of personnel who are involved in the
collection of such Existing A/R and all other costs directly related to the
collection by Buyer of the Existing A/R (such as telephone and postage) but not
including overhead costs, which reimbursable costs and time records Buyer will
document for Seller in reasonable detail. Such reimbursement shall be made
within five (5) Business Days following receipt of Buyer's records. Proceeds of
collection of the Existing A/R shall continue to be deposited into Seller's
lender lockbox without any right of offset by Buyer. Seller and Stockholder
jointly and severally agree to remit to Buyer weekly, any funds that have been
received in the lockbox which pertain to goods sold or services performed after
the Closing Date. Following the expiration of the 180 day period, the parties
will re-evaluate any further collection arrangements with respect to collection
of Existing A/R. The parties acknowledge and agree that Buyer does not guarantee
the collection or collectibility of any Existing A/R either during or after the
expiration of any collection period.
(b) The parties shall each have the right to review the
collection status of all accounts monthly and Seller shall have the right to
continue to actively seek collection of the Existing A/R. Clinical and
reimbursement documentation with respect to Existing A/R will remain the
property of Seller; provided however, that if Seller elects to have Buyer assist
in its collection efforts, it shall deliver to Buyer, at the time of such
request, copies of all records necessary to enable Buyer to provide such
assistance; and provided further, that Buyer will retain such documentation with
respect to the Existing A/R as shall be necessary to manage its ongoing
operations, and will give Seller reasonable access to such documentation during
any collection period.
SECTION 2.9 Certain Employees; Use of Facilities. (a) Buyer shall have
the right to designate at Closing and through the period ending December 1, 1996
(or such later date, which shall not be more than 60 days following Closing, as
Buyer shall advise Seller of by November 25, 1996, such period being referred to
as the "Transition Period") by notice to Seller, those employees of Seller
(other than the employees listed on Schedule 2.9, who shall remain employees of
Seller (the "Retained Employees")) it desires to employ and Seller and
Stockholder shall use their respective best efforts to assist Buyer in the
hiring of and retention of such employees (herein, the "Selected Employees"),
and Buyer shall be responsible for all costs after Closing associated with such
Selected Employees. Buyer shall have no obligation, however, to offer employment
to any of Seller's or Stockholder's employees and shall have no obligation or
liability with respect to any employees, except as expressly provided in this
Agreement. Buyer and Transworld agree not to solicit the Retained Employees for
employment by either of them or any of their Affiliates for a period
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of one (1) year from the Closing Date to the extent that they remain employees
of Seller or Stockholder during such period.
(b) Seller and Stockholder shall pay all accrued salary,
taxes, benefits and other costs for its existing employees including the
Selected Employees through the end of the Transition Period. Commencing on the
date immediately following the end of the Transition Period, Buyer shall be
responsible for all salary, taxes, benefits and other costs of the Selected
Employees.
(c) Consistent with pharmacy and homecare licensing and
regulatory requirements, Seller and Stockholder agree that Buyer and Transworld
shall have the right to use, without cost to Buyer or Transworld, Seller's
existing facilities during the Transition Period, in order to ensure an orderly
transition of the Purchased Assets to Buyer. Buyer acknowledges that Seller will
also be using such facilities for its ongoing operations and shall cooperate
with Seller in seeking to minimize any interference with such operations. In
order to ensure an orderly transition of care for those patients for whom Seller
has provided home infusion therapy products or services prior to the Closing,
Seller and Stockholder agree that during the Transition Period, Seller shall
dispense on behalf of Buyer and Transworld such pharmaceutical products for such
patients as Buyer or Transworld requests. Seller shall deliver such
pharmaceutical products in the manner and to the locations as Buyer or
Transworld shall from time to time direct. For any such pharmaceutical products
sold by Seller, Buyer shall pay Seller or Stockholder an amount equal to
Seller's or Stockholder's direct costs (which shall mean the cost of drugs,
direct labor costs, packaging and delivery) for such pharmaceutical products.
Seller and Stockholder agree that Seller shall maintain all necessary licenses
and permits to permit them to perform their obligations hereunder. Seller,
Stockholder, Buyer and Transworld shall cooperate with each other as necessary
to facilitate the proper billing by Buyer and reimbursement from third party
payors for such pharmaceutical products.
(d) During the Transition Period, in order to assist in the
transition of the Business to Buyer, Buyer shall have the right to request that
Seller use its reasonable best efforts to retain its existing employees and
existing business functions of the Business, and Buyer shall be responsible for
paying all costs incurred by Seller directly related to such employees and
business functions, other than as set forth on Schedule 2.9(d), (the "Transition
Costs"). All Transition Costs shall be settled from the Settlement Account
pursuant to Section 2.11 hereof.
SECTION 2.10 Certain Nursing Services. (a) In order to assist in
providing continuity of care to patients who are included within the Existing
Accounts and any accounts which are referred to Transworld or an Affiliate by
Seller or Stockholder (the "Marketed Accounts") during the ninety (90) day
period after the Closing, Buyer will utilize Stockholder's skilled nurses at a
rate of $90 per visit in cases where skilled nursing services are required in
connection with infusion therapy services or products. With respect to visits
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which are longer than two (2) hours, Seller and Stockholder will bill Buyer at
the rate of $45 per hour for each additional hour, in addition to the base rate
of $90 per visit; provided however, that where a CHHA will reimburse Buyer in
connection with nursing services related to the provision of gamma globulin,
Seller and Stockholder will bill Buyer the same amount as Buyer will be
reimbursed by the CHHA. Buyer and Transworld agree that, during such 90-day
period, neither they nor their Affiliates will solicit such nurses for
employment, except to the extent that such nurses are included within the
Selected Employees. Seller, Stockholder and Transworld's Steri-Pharm, Inc.
subsidiary will enter into such nursing services agreements as Buyer, Transworld
and Seller may request, which agreements shall contain terms consistent with the
foregoing and such other terms as are normal, customary and appropriate for
nursing services agreements. If after such 90 day period, Buyer requests Seller
or Stockholder to continue to provide such skilled nursing services, Seller and
Stockholder shall continue to provide such skilled nursing services and Buyer or
Transworld shall reimburse Seller or Stockholder at the greater of (i) the rates
set forth above or (ii) Seller's or Stockholder's direct costs incurred in
providing such skilled nursing services.
(b) Transworld agrees that after the Closing, and until the
second anniversary thereof, Stockholder shall be given a preferential
opportunity to provide skilled nursing services to Transworld at service rates
no higher than can be obtained by Transworld from other sources, in those
markets where Stockholder now or hereafter provides such skilled nursing
services, except that Stockholder shall not be entitled to any such preference
in any markets where (i) Transworld or any Affiliate thereof now or hereafter
provides such skilled nursing services, (ii) Transworld or any Affiliate thereof
is committed to utilize nursing services from another provider, or (iii)
Transworld or any Affiliate thereof has been directed by a referral source to
use a particular provider (which may include Transworld or its Affiliates).
(c) The parties acknowledge and agree that in furtherance of
the provisions of Section 2.9 hereof, and in order to provide continuity of
care, the parties contemplate that (and Seller and Stockholder shall use their
reasonable best efforts to cause) as of and after Closing (i) the two (2) CHHA
nurses of Seller based in Queens, New York will remain employees of Stockholder
or its subsidiaries and will be cross-charged to Buyer under a nursing services
agreement which will provide for their full salary, benefits and on-call
expenses and (ii) the two (2) CHHA nurses of Stockholder or its subsidiaries
based in Scarsdale, New York will become employees of Transworld's Steri-Pharm,
Inc. subsidiary.
SECTION 2.11 Effective Date. (a) To the extent permitted by applicable
law and, in the manner provided in this Section 2.11, and provided that the
Closing has occurred, the parties intend that all of the Purchased Assets shall
be deemed vested in and with the Buyer, effective as of the commencement of
business on October 1, 1996 (the "Effective Date").
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(b) The parties acknowledge and agree that the October Net
Revenues, subject to the October Expenses, shall be for the benefit of the
Buyer. As of the Closing Date the parties shall jointly prepare a good faith
estimate of the October Net Revenues and the October Expenses. At Closing, an
amount equal to 20% of the October Net Revenues (as so estimated) shall be paid
to Buyer in cash, and an amount equal to the October Net Revenues less the
October Expenses less such 20% payment shall be recorded on the books and
records of the Seller as an account payable to Buyer (the "Settlement Account").
Within the sixty (60) day period following Closing, Buyer and Seller shall
endeavor to finalize the October Net Revenues and Expenses, and on the ninetieth
day following Closing, Seller shall pay to Buyer the Settlement Account as
adjusted for any post-Closing adjustments to be made pursuant to Section 2.7
hereof and any amounts due to Seller pursuant to Section 2.9(d); provided,
however that Seller may retain an amount equal to 3% of October Net Revenues
from the payment of the Settlement Account as an offset against actual bad debt
in excess of 7% of October Net Revenues, with any unused portion of said 3% to
be paid to Buyer on the 180th day following Closing. In the event that the
parties are unable to agree as to such amounts, they shall, within fifteen (15)
days following the expiration of the sixty (60) day period jointly appoint an
independent public accounting firm who shall, within fifteen (15) days after
such appointment, issue its calculation of the amount of the final Settlement
Account amounts, which calculation, absent manifest error, shall be binding upon
the parties. The cost of any independent accounting firm so appointed shall be
shared equally between Buyer and Seller. In furtherance of Section 3.7 and 5.1,
Seller represents and warrants to Buyer that it has and will operate the
Business only in the ordinary course between October 1, 1996 and Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER AND THE STOCKHOLDER
Seller and the Stockholder hereby jointly and severally represent and
warrant to Buyer that:
SECTION 3.1 Authority Relative to this Agreement. Seller and the
Stockholder have full power, capacity and authority to execute and deliver this
Agreement and each other Transaction Document to which it is a party and to
consummate the transactions contemplated hereby (the "Contemplated
Transactions"). The execution and delivery of this Agreement and the
consummation of the Contemplated Transactions have been duly and validly
authorized by Seller and the Stockholder and no other proceedings on the part of
Seller or the Stockholder (or any other person) is necessary to authorize the
execution and delivery by Seller and the Stockholder of this Agreement or the
consummation of the Contemplated Transactions. The consideration to be received
by Seller represents the fair value of the Purchased Assets to be transferred to
Buyer. This Agreement has been duly and validly executed and delivered by Seller
and the Stockholder, and (assuming the valid
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execution and delivery of this Agreement by the other parties hereto)
constitutes the legal, valid and binding agreement of such party enforceable
against such party in accordance with its terms except as such obligations and
their enforceability may be limited by bankruptcy, insolvency reorganization,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought (whether at law or in equity).
SECTION 3.2 No Conflicts; Consents. The execution, delivery and
performance by Seller and the Stockholder of this Agreement and each other
Transaction Document to which it is a party and the consummation of the
Contemplated Transactions will not (i) violate any provision of the Certificate
of Incorporation or By-laws (or comparable instruments) of Seller; (ii) require
Seller or the Stockholder to obtain any consent, approval or action of, or make
any filing with or give any notice to, any Governmental Body or any other
person, except as set forth on Schedule 3.2 (the "Required Consents"); (iii) if
the Required Consents are obtained, violate, conflict with or result in the
breach of any of the terms of, result in a modification of the effect of, or
otherwise cause the termination of or give any other contracting party to a
contract the right to terminate, or constitute (or with notice or lapse of time
or both constitute) a default (by way of substitution, novation or otherwise)
under any contract, agreement, indenture, note, bond, loan, instrument, lease,
conditional sale contract, purchase order, sales order, agreement with customer,
agreement with supplier, union contract, collective bargaining agreement,
mortgage, license, permit, franchise, commitment or other binding arrangement,
whether written, oral, express or implied, (the "Contracts") to which Seller is
a party or by or to which Seller or any of its properties may be bound or
subject, or result in the creation of any Lien upon the Purchased Assets or upon
the properties of Seller pursuant to the terms of any such Contract; (iv) if the
Required Consents are obtained, violate any Order of any Governmental Body
against, or binding upon, Seller or upon its respective securities, properties
or business; (v) if the Required Consents are obtained, violate any Law of any
Governmental Body, or (vi) if the Required Consents are obtained, violate or
result in the revocation or suspension of any Permit.
SECTION 3.3 Corporate Existence and Power. Seller is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, and has all requisite powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted. Seller is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a material adverse effect on
the business, properties, financial condition or the results of operations of
Seller and its Affiliates, individually or taken as a whole (the "Condition of
the Business"). Seller is not qualified to do business as a foreign corporation
in any other jurisdiction.
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SECTION 3.4 Subsidiaries. Seller does not own, directly or indirectly,
any equity or other interest in any other person and has no Subsidiaries.
SECTION 3.5 Charter Documents and Corporate Records. (a) Seller has
heretofore delivered to Buyer true and complete copies of the Certificate of
Incorporation (certified by the Secretaries of State or other appropriate
official of its jurisdictions of incorporation) and By-laws (certified by
Seller's secretary or an assistant secretary), or comparable instruments, of
Seller as in effect on the date hereof. The stock books of Seller which have
been made available to Buyer for its inspection are true and complete. The
Stockholder is the sole record and beneficial owner of all of the outstanding
capital stock of Seller and there are no options, warrants or other agreements
of any kind outstanding or proposed to be issued with respect to the capital
stock of Seller.
(b) All financial, business and accounting books, ledgers,
accounts and other records relating to Seller have been properly and accurately
kept and completed in all material respects except as set forth on Schedule
3.5(b) hereto.
SECTION 3.6 Financial Statements. (a) Seller has delivered to Buyer
unaudited financial statements of Seller consisting of a statement of net assets
being sold and statement of income as at and for the six-month period ended June
30, 1996, and unaudited financial statements of Seller consisting of statement
of net assets being sold and statement of income as at and for Seller's fiscal
year ended December 31, 1995. Such financial statements (collectively, the
"Financial Statements") present fairly the financial position of Seller and the
results of its operations and changes in financial position as of the dates and
for the periods indicated, in conformity with GAAP consistently applied during
each of such periods.
(b) Except as set forth on Schedule 3.6(b): (i) As at the
Balance Sheet Date, Seller did not have any Liabilities that were not fully and
adequately reflected or reserved against on the balance sheet contained in, or
in the notes to, the December 31, 1995 Financial Statements; (ii) Seller has
not, except in the ordinary course of business consistent with past practice and
except for customary expenses incurred in connection with the Contemplated
Transactions, incurred any Liabilities since the Balance Sheet Date; and (iii)
neither Seller nor the Stockholder has any knowledge of any circumstance,
condition, event or arrangement that they reasonably anticipate would hereafter
give rise to any Liabilities of Seller or any successor to its businesses except
Liabilities arising in the ordinary course of business consistent with past
practice and customary expenses incurred in connection with the Contemplated
Transactions. Seller and Stockholder represent and warrant that they know of no
reason why the Financial Statements cannot be audited in accordance with the
requirements of Section 5.3 hereof.
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(c) The accounts receivable of Seller with respect to patients
who have been on service since June 1, 1996 (the "Receivables") (except such
Receivables as have been collected since such date) constitute bona fide
Receivables resulting from the sale of goods and services in the ordinary course
of business in conformity with applicable purchase orders and agreements. Except
as otherwise disclosed by Seller to Buyer, such Receivables are subject to no
valid defense, offsets, returns, allowances or credits of any kind other than
defenses, offsets, returns, allowances and credits arising in the ordinary
course of business, it being understood that nothing herein shall be interpreted
as a guarantee of the collectibility of such Receivables.
(d) Insofar as it relates to or affects the Purchased Assets,
Schedule 3.6(d) sets forth a brief description of all Liabilities of Seller in
respect of (i) money borrowed from and owed to any bank, financial institution
or other person and (ii) any indebtedness or potential indebtedness under any
guaranty, letter of credit or performance credit (collectively, "Debt"). Except
as set forth on Schedule 3.6(d), all Debt may be repaid or prepaid upon no more
than 30 days' notice without premium or penalty.
SECTION 3.7 Absence of Certain Changes. Since the Balance Sheet Date,
except as contemplated by this Agreement or disclosed in Schedule 3.7, Seller
has conducted its business in the ordinary course consistent with past practices
and there has not been:
(a) Any event (other than those events affecting the infusion
therapy industry generally) that has had or would reasonably be expected to have
a material adverse effect on the operations of Seller, individually or in the
aggregate;
(b) Any amendment to the Certificate of Incorporation or
By-laws of Seller or any amendment to any term of any outstanding security of
Seller;
(c) Insofar as it relates to or affects the Purchased Assets,
any (i) incurrence, assumption or guarantee by Seller of any debt other than in
the ordinary course of business in amounts and on terms consistent with past
practices, (ii) issuance or sale of any securities convertible into or
exchangeable for debt securities of Seller, or (iii) issuance or sale of options
or other rights to acquire from Seller, directly or indirectly, debt securities
of Seller or any securities convertible into or exchangeable for any such debt
securities;
(d) Insofar as it relates to or affects the Purchased Assets,
any creation, incurrence or assumption by Seller of any lien on any asset other
than (i) liens for Taxes not yet due or being contested in good faith (and for
which adequate reserves have been established); (ii) liens which do not
materially detract from the value of such asset as now used, or materially
interfere with any present or intended use of such asset; or (iii)
warehousemen's, mechanics', carriers', landlords', repairmen's or other similar
liens arising in the ordinary course of business;
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(e) Insofar as it relates to or affects the Purchased Assets,
any making or forgiving of any loan, advance or capital contribution to or
investment in any person other than loans, advances or capital contributions to
or investments in wholly-owned subsidiaries made in the ordinary course of
business consistent with past practices;
(f) Any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of Seller which,
individually or in the aggregate, has had or will reasonably be expected to have
a material adverse effect on its operations;
(g) Except in the ordinary course of business, any transaction
or commitment made, or any Contract entered into, by Seller relating to its
assets or business (including the acquisition or disposition of any substantial
assets) or any relinquishment by Seller or other party of any Contract or other
right;
(h) Any change in any method of accounting or accounting
practice by Seller or its marketing practices;
(i) Any assumption or guarantee of the obligations of any
person;
(j) Insofar as it may affect or relate to any Selected
Employee, any grant of any severance or termination pay to any employee of
Seller, any entering into of any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
employee of Seller or any increase in benefits payable under any existing
severance or termination pay policies or employment agreements, or any increase
in compensation, bonus or other benefits payable to any employee of Seller,
other than routine increases for employees in the ordinary course of business or
disclosed to Buyer in writing prior to the date hereof or on any Schedule;
(k) Any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of Seller, which employees were not subject to
a collective bargaining agreement at the Balance Sheet Date, or any lockouts,
strikes, slowdowns, work stoppages or, to the knowledge of Seller, threats
thereof by or with respect to such employees;
(l) Any intentional waiver of any material right under any
Contract of the type required to be set forth on any Schedule;
(m) Except for any changes made in the ordinary course of
business, any material change in any business policies of Seller, including
pricing, purchasing, production, personnel, sales or product acquisition/return
policies;
(n) Except in the ordinary course of business, any payment,
directly or indirectly, of any Liability before the same became due in
accordance with its terms;
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(o) Any termination or failure to renew, or the receipt of any
written threat (that was not subsequently withdrawn) to terminate or fail to
renew, any Contract that is or was material to the operation; or
(p) Any agreement or arrangement made by Seller to take any
action which, if taken prior to the date hereof, would have made any
representation or warranty in this Section untrue or incorrect in any material
respect.
SECTION 3.8 Properties. (a) Schedule 3.8(a) sets forth a brief
description (including the address) of all real property leased by Seller ("Real
Property Leases"); the date of the lease and any amendments thereto, the term
thereof, the term of any renewal options and the aggregate monthly rental
payable thereunder. Seller owns no real property.
(b) Schedule 3.8(b) sets forth a complete and correct list and
description of all tangible property (the "Tangible Property"), owned or used by
Seller or which Seller holds an option to acquire having a book value
individually of $5,000 or more or $10,000 or more in the aggregate in case of
any group of similar items of Tangible Property, including, without limitation,
all machinery, equipment, furniture, furnishings, leasehold improvements,
fixtures, vehicles and structures. All Tangible Property selected by Buyer
pursuant to Section 2.7 shall be in a state of working order except for a
nonmaterial portion of such Tangible Property that may be undergoing repairs or
maintenance in the ordinary course.
(c) Except as set out in Schedule 3.8(c) and insofar as it may
affect or relate to the Purchased Assets, Seller has good title to, or in the
case of leased property have valid leasehold interests in, all properties and
assets (whether real, personal, tangible or intangible) reflected on the Balance
Sheet or acquired after the Balance Sheet Date except for properties and assets
sold or disposed of since the Balance Sheet Date in the ordinary course of
business consistent with past practice. Except as set forth on Schedule 3.8(c),
none of such properties or assets is subject to any Liens, except:
(i) Liens disclosed on the Balance Sheet or the notes
thereto;
(ii) Liens for taxes not yet due or being contested in
good faith (and for which adequate reserves have been established on the Balance
Sheet);
(iii) Liens which do not materially detract from the
value of such property or assets as now used, or materially interfere with any
present or intended use of such property or assets; or
(iv) Warehousemen's, mechanics', carriers', landlords',
repairmen's or other similar Liens arising in the ordinary course of business.
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SECTION 3.9 Contracts. (a) Except for (i) purchase orders with
suppliers or sales orders from patients or customers arising in the ordinary
course of business and (ii) Contracts pursuant to the terms of which Seller is
to make or receive payments not in excess of $10,000, in the aggregate,
throughout the term thereof, Schedule 3.9 sets forth as of the date hereof a
complete and accurate list and description of all Contracts to which Seller is a
party or by or to which it or its assets or properties are bound or subject,
including, without limitation:
(i) Contracts with any current or former shareholder,
officer, director, employee, independent contractor, consultant, agent or other
representative or with any Affiliate of any of the foregoing;
(ii) Contracts with any labor union or association
representing any employee;
(iii) Contracts for the purchase of materials, supplies,
equipment, merchandise or services in excess of $10,000 for any one individual
item;
(iv) Other than in the ordinary course of business: (A)
Contracts for the sale of any of its assets or properties or business or (B)
Contracts for the grant to any person of any preferential rights to purchase any
of its assets or properties;
(v) Partnership or joint venture Contracts;
(vi) Contracts under which Seller agrees to indemnify
any party;
(vii) Contracts under which Seller agrees to share Tax
liability of or with any party;
(viii) Contracts that cannot be cancelled without
liability, premium or penalty;
(ix) Contracts that can be cancelled only on 60 days' or
more notice;
(x) Any special financial arrangements with the largest
(in terms of sales volume) 25 customers, referral sources or third party payors
of Seller that is outside of Seller's published policies including, but not
limited to, any arrangements relating to chargebacks, allowances and payment
terms;
(xi) Contracts with any person to advertise or market
Seller's products or services other than in the ordinary course of business;
(xii) Contracts containing covenants not to compete in
any line of business or with any person in any geographical area (or not to
solicit or accept any
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business) or covenants of any other person not to compete in any line of
business or in any geographical area (or not to solicit or accept any business);
(xiii) Contracts relating to the acquisition of any
operating business or the capital shares of any other person;
(xiv) Options for the purchase or sale of any asset,
tangible or intangible;
(xv) Contracts requiring the payment to any person of an
override or similar commission or fee;
(xvi) Contracts relating to all Debt, insofar as it
affects or relates to the Purchased Assets;
(xvii) Contracts with customers, referral sources, third
party payors, independent suppliers, contractors and manufacturers other than in
the ordinary course of business;
(xviii) Sales agency, licensing, representative,
provider, managed care or distributorship Contracts;
(xix) Contracts for the payment of fees or other
consideration to any officer or director of Seller or to any other entity in
which any of the foregoing has an interest;
(xx) management Contracts and other similar agreements
with any person;
(xxi) Any other Contracts not made in the ordinary
course of business or pursuant to the terms of which there is either a current
or future obligation or right of Seller to make payments or receive payments in
excess (individually or, in the case of any group of similar items, in the
aggregate) of $10,000 throughout the term thereof. Schedule 3.9 also lists and
describes the status of all Contracts currently in negotiation or proposed by
Seller as to which there exists a draft agreement, letter of intent or similar
instrument and which is of a type which if entered into by Seller would be
required to be listed on Schedule 3.9 or on any other Schedule (the "Proposed
Contracts").
(b) There are no Contracts, other than those set forth on
Schedule 3.9, and on any other Schedule hereto, that are required to be
disclosed hereunder. Except as set forth on Schedule 3.9, all such Contracts and
all Contracts reflected on any other Schedule hereto are valid, subsisting, in
full force and effect and binding upon Seller, and, to the best knowledge of
Seller, on the other parties thereto in accordance with their terms, and the
Seller has paid in all respects or accrued all amounts due thereunder and has
satisfied in all
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respects or provided for all of its liabilities and obligations thereunder to be
satisfied or provided for through the date hereof, and is not in default under
any of them in any material respect, nor, to the best knowledge of Seller, is
any other party to any such Contract in default thereunder in any respect, nor,
to the best knowledge of Seller, does any condition exist that with notice or
lapse of time or both would constitute a default thereunder. Seller and
Stockholder further represent and warrant that notwithstanding that any Contract
may be in the name of another U.S. HomeCare Corporation entity, no such entity
other than Seller has an interest in any such Contracts, and at Closing and
thereafter as provided herein, Seller and Stockholder shall take any further
corrective action to ensure the transfer of such Contract to Buyer (subject to
any Required Consents) as is reasonably requested by Buyer. Except as separately
identified on Schedule 3.9 hereto or on any other Schedule, no approval or
consent of any person is needed in order that the Contracts set forth on
Schedule 3.9 or on any other Schedule continue in full force and effect
following the consummation of the Contemplated Transactions.
(c) There have been delivered to Buyer, true and complete
copies of (i) all of the Contracts required to be set forth on Schedule 3.9 or
on any other Schedule and (ii) the most recent draft, letter of intent or term
sheet of all of the Proposed Contracts required by the provisions of Section
3.9(a)(xxi) to be set forth on Schedule 3.9.
SECTION 3.10 Intangible Property. (a) Schedule 3.10 sets forth all
patents, trademarks, copyrights, service marks and trade names owned or used by
Seller relating to the Business, all applications for any of the foregoing, and
all permits, grants and licenses or other rights running to or from Seller
relating to any of the foregoing (the "Intellectual Property Rights"), and there
are no other patents, trademarks, copyrights, service marks and trade names that
are material to the Business. To the best of Seller's knowledge: (i) with
respect to trademarks material to the Business as presently conducted (and only
in such jurisdictions where such trademarks are material to the Business as
presently conducted), all renewals of the registrations set forth in Schedule
3.10 for such trademarks have been appropriately filed; (ii) Seller has
exercised its best efforts to ensure compliance with all registration
requirements, and have paid all necessary government fees; and (iii) the
trademark registrations material to the Business as presently conducted are
valid with respect to Products that are covered by the registrations. The
trademarks of Seller that are material to the Business are identified on
Schedule 3.10 by means of an asterisk.
(b) Except as set forth on Schedule 3.10, no Intellectual
Property Rights or any other such right is subject to any security interest or
outstanding order, judgment, decree, stipulation or agreement restricting the
use or licensing thereof. Except as set forth on Schedule 3.10, (i) Seller,
during the three years preceding the date hereof, has not been sued or charged
in writing with or been a defendant in any claim, suit, action or proceeding
relating to the Business which has not been terminated prior to the date hereof
and which involves a claim of infringement of any Intellectual Property Rights;
and (ii) the Stockholder
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and Seller have no knowledge of any such charge or claim of any infringement
during the three years preceding the date hereof by any other person of any
Intellectual Property Rights.
SECTION 3.11 Claims and Proceedings. Except as set forth on Schedule
3.11, there are no outstanding Orders of any Governmental Body against or
involving Seller other than Orders affecting the home health care industry
generally. Except as set forth on Schedule 3.11, there are no actions, suits,
claims or counterclaims or legal, administrative or arbitral proceedings or
investigations (collectively, "Claims") (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance), pending or threatened
in writing, against or involving Seller, the Business, the Purchased Assets or
Seller's properties which (i) involve a claim for the payment of money damages
of $25,000 or more; (ii) relate to employment, regardless of amount; (iii)
involve a claim from any prior or present patient, payor or referral source or
involve any alleged violation of laws relating to health regulation (including
state certificate of need and licensure laws and federal and state controlled
substances laws) or the Medicare or Medicaid programs; or (iv) individually or
in the aggregate, would have a material adverse effect upon the Contemplated
Transactions or upon the Condition of the Business other than Claims affecting
the home health care industry generally. Except as set forth on Schedule 3.11,
to the best knowledge of Seller, there is no fact, event or circumstances that
would give rise to any Claim that would be required to be set forth on Schedule
3.11 if currently pending or threatened. All notices required to have been given
to any insurance company listed as insuring against any Claim set forth on
Schedule 3.11 have been timely and duly given and, except as set forth on
Schedule 3.11, no insurance company has asserted in writing that such Claim is
not covered by the applicable policy relating to such Claim. Except as set forth
on Schedule 3.11 there are no product liability Claims against or involving
Seller or, to the best knowledge of Seller, any product marketed or distributed
by Seller ("Products").
SECTION 3.12 Restrictions on Business Activities. There is no
agreement, judgment, injunction, order, decree or other instrument binding upon
Seller which has or would reasonably be expected to have the effect of
prohibiting (i) competition by Seller, (ii) any business practice of Seller,
(iii) any acquisition of property by Seller, or (iv) to the knowledge of Seller
or the Stockholder, the conduct of the Business.
SECTION 3.13 Taxes. (a) Except as set forth on Schedule 3.13, (i) all
Tax returns, statements, reports and forms required to be filed with any Taxing
Authority by or on behalf of Seller (collectively, the "Returns") have been
timely filed through the date hereof or will be filed when due (taking into
account any extension granted by the appropriate Taxing Authority), in
accordance with all applicable Laws; (ii) as of the time of filing, the Returns
correctly reflected (and, as to any Returns not filed as of the date hereof,
will correctly reflect) the income and expenses of Seller and any other
information required to be shown therein; (iii) Seller has timely paid (or is
contesting in good faith and has reserved adequate
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amounts therefor) all Taxes that have been shown as due and payable on the
Returns that have been filed; (iv) Seller is not delinquent in the payment of
any Tax and has not requested any extension of time within which to file or send
any Return, which Return has not since been filed or sent; (v) no deficiency for
any Tax or claim for additional Taxes by any Taxing Authority has been proposed,
asserted or assessed in writing against Seller (or any member of any affiliated
or combined group of which Seller is or have been a member); (vi) Seller (or any
member of any affiliated or combined group of which Seller is or has been a
member) have not granted any extension or waiver of the limitation period
applicable to any Returns; (vii) Seller has not filed any consent or election
under the Code, other than such consents and elections, if any, reflected in the
Returns; (viii) there is no claim, audit, action, suit, proceeding or
investigation now pending against or with respect to Seller in respect of any
Tax or assessment; (ix) there are no Liens for Taxes upon the assets of Seller;
(x) Seller has not been a member of an affiliated group other than one of which
Stockholder was the common parent, or filed or been included in a combined,
consolidated or unitary Return together other than one filed by Stockholder;
(xi) Seller has complied with all Laws relating to Tax withholding; and (xii)
Seller is not currently under any contractual obligation to indemnify any other
person with respect to Taxes.
(b) True and correct copies of the Returns for the years 1995,
1994 and 1993 have been delivered to Buyer.
(c) Neither Buyer nor Seller shall be required to pay any
amount to anyone else pursuant to any tax-sharing or tax allocation agreement to
which Seller is a party.
(d) Seller does not hold and has not held a permit,
registration, certificate or like instrument as a "dealer" or other collecting
agent from a state Taxing Authority under which it collects sales tax from their
business operations and remits such tax to such Taxing Authority.
SECTION 3.14 Employee Benefits Plans. (a) Schedule 3.14(a) contains a
true and complete list of (i) all employee benefit plans described in Section
3(3) of ERISA of Seller, and of any other companies or entities which constitute
a "controlled group" with Seller (within the meaning of Sections 4001(a)(14) and
(b) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
and/or Sections 414(b)-(o) of the Code (hereinafter referred to collectively as
the "Group"), which are presently in effect or which may give rise to liability,
and are for the benefit of the Business Employees, and (ii) any other pension,
profit sharing, retirement, deferred compensation, stock purchase, stock option,
incentive, bonus, sabbatical leave, vacation, severance (including, without
limitation, arrangements providing for benefits in the event of a change of
ownership in whole or in part of Seller), disability, hospitalization, medical
insurance, relocation, child care, educational assistance or other employee
benefit plan or program which any member of the Group maintains or to which any
member of the Group has any present or future obligation to contribute for the
benefit of the Business Employees. (The plans or programs described in
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clauses (i) and (ii) are herein collectively referred to as the "Group Plans".)
Seller has delivered or made available to Buyer true and complete copies of all
documents (including plan documents and related trust agreements), as they may
have been amended to the date of delivery or availability, embodying the Group
Plans. Since such date of delivery or availability, the Group Plans have not
been amended to materially change the terms thereof. Seller has also delivered
to Buyer true and complete copies of all annual reports, summary annual reports,
summary plan descriptions and a summary of material modifications with respect
to each Group Plan for the preceding three years.
(b) Except for Seller's 401(k) Plan (the "Plan") and the U.S.
HomeCare Corporation Employee Stock Ownership Plan (the "ESOP"), the Group
maintains no tax qualified "employee pension benefit plan" as defined in Section
401 of the Code or Section 3(2) of ERISA for the benefit of employees of the
Seller, nor has the Group ever maintained any other employee pension benefit
plan for the benefit of employees of the Seller, except for multiemployer plans
as defined in Section 3(37) of ERISA.
(c) The IRS has issued a favorable determination letter to the
effect that the Plan qualifies under Section 401(a) of the Code and that the
related trust is exempt from taxation under Section 501(a) of the Code and such
determination letter remains in effect and has not been revoked. To Seller's
best knowledge, nothing has occurred (or, if occurred, has not been corrected in
a manner acceptable to the IRS as expressly applied to the Plan) or is expected
to occur that would adversely affect the qualified status of the Plan or any
related trust subsequent to the issuance of such determination letter.
(d) Except for the ESOP each member of the Group is in
material compliance with the requirements prescribed by any and all statutes,
orders, governmental rules or regulations applicable to the Group Plans and all
reports and disclosures relating to the Group Plans required to be filed with or
furnished to governmental agencies, participants or beneficiaries prior to the
Closing Date have been or will be filed or furnished in a timely manner and in
accordance with applicable law.
(e) Except as provided in Schedule 3.14(e), no member of the
Group currently has any obligation to contribute to any multiemployer plan as
defined in Section 3(37) of ERISA. With respect to each such multiemployer plan
listed on Scheduled 3.14(e), the Group has not incurred withdrawal liability
within the meaning of the Multiemployer Pension Plan Amendments Act of 1980.
(f) To Seller's best knowledge, no member of the Group nor any
other "disqualified person" or "party in interest" (as defined in Section 4975
of the Code and Section 3 of ERISA, respectively) has engaged in any "prohibited
transaction," as such term is defined in Section 4975 of the Code or Section 406
of ERISA with respect to a Group Plan, which could subject any of the Group
Plans (or their related trusts), any officer, director or employee of any entity
within the Group or any trustee, administrator or any
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other fiduciary of any of the Group Plans to a material tax or penalty imposed
under Section 4975 of the Code or Section 502(i) of ERISA.
(g) There are no actions, audits, suits or claims pending
(other than routine claims for benefits) or, to the knowledge of Seller,
threatened against any of the Group Plans or any fiduciary of any of the Group
Plans or against the assets of any of the Group Plans.
(h) The consummation of the Contemplated Transactions will not
accelerate any liability under any of the Group Plans because of an acceleration
of any rights or benefits to which employees may be entitled thereunder.
(i) The consummation of the Contemplated Transactions will not
provide a basis for a participant in any Group Plan to claim an involuntary
termination of his employment with any member of the Group and become entitled
thereby to payments under such Group Plan.
(j) With respect to any Group Plan that is an employee welfare
benefit plan within the meaning of Section 3(1) of ERISA (a "Welfare Plan"), (i)
each such Welfare Plan, the contributions to which are claimed as a deduction
under any provision of the Code, is in substantial compliance with all
applicable requirements pertaining to such deduction, (ii) to Sellers' best
knowledge, any Welfare Plan which is a group health plan within the meaning of
Section 5000(b) of the Code satisfies in all material respects all of the
requirements of Section 4980B of the Code, and (iii) all employer contributions
due have been fully and timely paid or accrued on the books of Seller.
(k) Other than as required by law, Seller has no obligation to
or on behalf of any retired or former employee with regard to any disability
(long or short term), hospitalization, medical, dental or life insurance plans
(whether insured or self-insured) or other Welfare Plan as defined in Section
3(1) of ERISA maintained by Sellers.
SECTION 3.15 Officers, Directors and Key Employees. Schedule 3.15 sets
forth (a) the name and total direct compensation of each employee, consultant,
agent or other representative of Seller whose current or committed annual rate
of compensation (including bonuses and commissions) exceeds $25,000, (b) all
wage and salary increases, bonuses and increases in any other direct
compensation received by or accrued to such persons since December 31, 1995, (c)
any payments or commitments to pay any severance or termination pay to any such
persons or to any other person, and (d) any accrual for, or any commitment or
agreement by Seller to pay, such increases, bonuses or pay. Except as set forth
on Schedule 3.15, the employment of all persons presently employed by Seller are
terminable at will.
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SECTION 3.16 Employment-Related Matters. Except as set forth in
Schedule 3.16, (a) Seller is not a party to any contract or agreement with any
labor organization or other representative of its employees; (b) there is no
unfair labor practice charge or complaint pending or, to Seller's best
knowledge, threatened against Seller; (c) there is no labor strike, slowdown,
work stoppage or other labor controversy in effect or, to Seller's best
knowledge, threatened against or otherwise affecting Seller; (d) Seller has not
experienced any labor strike, slowdown, work stoppage or similar labor
controversy within the past three years; (e) no representation question has been
raised respecting any employees of Seller working within the past three years,
nor, to the best knowledge of Seller, are there any campaigns being conducted to
solicit authorization from any employees of Seller to be represented by any
labor organization; (f) no collective bargaining agreement relating to any
employees of Seller is being negotiated other than extensions or renewals of
existing agreements set forth in Schedule 3.16; (g) no action, suit, complaint,
charge, arbitration, inquiry, proceeding or investigation by or before any
court, governmental agency, administrative agency or commission brought by or on
behalf of any employee, prospective employee, former employee, retiree, labor
organization or other representative of Seller's employees, is pending or, to
Seller's best knowledge, threatened against Seller; (h) Seller is not a party
to, or otherwise bound by, any consent decree with, citation or order by, any
Governmental Body relating to their employees or employment practices relating
to the employees; (i) Seller is in compliance in all material respects with all
applicable laws, policies, procedures, agreements and contracts, relating to
employment, employment practices, wages, hours, and terms and conditions of
employment; (j) Seller has paid in full to all of its employees all wages,
salaries, commissions, bonuses, benefits and other compensation due and payable
to such employees on or prior to the date hereof.
SECTION 3.17 Potential Conflicts of Interest. Except for the Excluded
Assets, neither the Stockholder nor any officer, director or Affiliate of
Seller, or any spouse of any such officer, director or Affiliate, and no entity
controlled by one or more of the foregoing:
(a) owns, directly or indirectly, any interest in (excepting
less than 1% stock holdings for investment purposes in securities of publicly
held and traded companies), or is an officer, director, employee or consultant
of, any person which is, or is engaged in business as, a competitor, lessor,
lessee, supplier, distributor, sales agent or customer of Seller;
(b) owns, directly or indirectly, in whole or in part, any
material property that Seller uses in the conduct of their business; or
(c) has any material cause of action or other claim whatsoever
against, or owes any amount to, Seller, except for claims in the ordinary course
of business such as for accrued vacation pay and accrued benefits under employee
benefit plans.
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SECTION 3.18 Insurance. Seller has provided to Buyer a list of all
insurance policies and fidelity and surety bonds covering the assets, business,
equipment, properties, operations, employees, officers and directors of Seller
and true and complete copies of all such policies and bonds have been made
available to Buyer and such policies and bonds are in full force and effect.
SECTION 3.19 Suppliers, Customers and Contractors. Schedule 3.19 lists,
by dollar volume paid or revenues generated, as the case may be, for the month
ended September 30, 1996, the 15 largest suppliers and the 25 largest customers,
referral sources and third party payors of Seller. Except as otherwise disclosed
to Buyer in Schedule 3.7 hereof with respect to the gamma globulin and growth
hormone components of the Business, during the last six months (i) no supplier
to the Business has refused to ship products or supplies to the Seller; and (ii)
the Seller has not suffered the loss of any significant referral source or
patient group.
SECTION 3.20 Compliance with Laws. (a) Seller is not in violation of
any applicable order, judgment, injunction, award, decree or writ (collectively,
"Orders"), or any applicable law, statute, code, ordinance, rule, regulation or
other requirement (collectively, "Laws"), of any government or political
subdivision thereof, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision, or any court or
arbitrator (collectively, "Governmental Bodies") affecting its property, affairs
or business, where the effect of any such violation, individually or in the
aggregate, would have a material adverse effect on the Condition of the
Business, including any environmental law, rule or regulation. Seller has not
made any illegal payment to officers or employees of any Governmental Body, or
made any illegal payment to customers for the sharing of fees or to customers or
suppliers for rebating of charges, or engaged in any other illegal reciprocal
practice, or made any illegal payment or given any other illegal consideration
to purchasing agents or other representatives of customers in respect of sales
made or to be made by Seller.
(b) Without limiting the generality of the foregoing, Seller
has been and is in compliance in all material respects with The False Statement
Statute (18 U.S.C. Section 1001), The Criminal False Claims Statute (18 U.S.C.
Section 287), The Civil False Claims Act (31 U.S.C. SectionSection 3729), The
Medicare and Medicaid Civil Monetary Penalties Act (42 U.S.C. SectionSection
1320a-7a), The Medicare and Medicaid Criminal Penalties Act (42 U.S.C. Section
1320a-7b), The Stark Law (42 U.S.C. Section 1395nn), The Medicare and Medicaid
Anti-Kickback law (42 U.S.C. Section 1320a-7b(b)) and all similar state statutes
in all of the states in which Seller operates or provides services.
(c) Schedule 3.20 hereto lists the required cost reports and
other submissions and filings (other than claims for payments) with respect to
Medicaid and Medicare or other third party payments to Seller, and the last year
for which such cost report or other submissions or filings or payments to Seller
have been audited by any Governmental Body or other third party payor (and all
disallowances and retroactive rate adjustments
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thereon settled, paid or otherwise recouped). All such cost reports and other
submissions and filings were complete and accurate in all material respects, and
were prepared in accordance with the requirements of the Medicaid program, the
Medicare program or the other third party payors, as applicable.
(d) No third-party payor (including, without limitation,
Medicare or Medicaid) has asserted any liability against Seller in respect of
any period through the date hereof which has not been settled or paid; to the
best knowledge of the Seller and Stockholder, there is no pending audit or any
pending or threatened audit assessment or retroactive rate adjustment against
Seller, for any period through the date hereof; and, if any such audit
assessment or retroactive rate adjustment is so asserted, it will be promptly
paid or otherwise satisfied by Seller and will have no material effect upon any
of its rates, operations or financial performance.
(e) Schedule 3.20 hereto also contains a complete and correct
list of all agreements, arrangements and other relationships of Seller currently
in effect, or in effect at any time since January 1, 1995, with individuals and
entities who refer or have referred to or otherwise generate or have generated
business for Seller (including, without limitation, sales representatives and
referring health care providers).
(f) Neither Seller nor Stockholder has any actual knowledge
that any referring physician, chiropractor, podiatrist, dentist, nurse or other
licensed health professional currently has, or has had at any time after January
1, 1995, an ownership interest in or otherwise have or had a financial
relationship with Seller.
SECTION 3.21 Permits. Seller has all licenses, permits, orders or
approvals of, and has made all required registrations with, any Governmental
Body that are necessary to the conduct of the Business and participation in the
Medicare or Medicaid programs (collectively, "Permits"), except for such Permits
which, if not in the possession of Seller, would not have a materially adverse
effect on the Condition of the Business. All Permits are listed on Schedule 3.21
and are in full force and effect; no material violations are or have been
recorded in respect of any Permit; and no proceeding is pending or threatened to
revoke or limit any Permit.
SECTION 3.22 Finders; Fees. Except for Sanders Morris Mundy Inc., there
is no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Seller or the Stockholder who
might be entitled to any fee or commission upon consummation of the Contemplated
Transactions, and Seller and Stockholder agree to satisfy any obligations to
them at Closing.
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SECTION 3.23 Depositaries. Schedule 3.23 sets forth the name of each
bank or similar entity in which Seller has an account, lock box or safe deposit
box and the names of all persons authorized to draw thereon or to have access
thereto.
SECTION 3.24 Disclosure. Neither this Agreement, the Schedules hereto,
the Financial Statements nor any other audited or unaudited financial
statements, documents or certificates furnished or to be furnished to Buyer by
or on behalf of Seller or the Stockholder pursuant to this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. There are no facts which would materially adversely affect the
Condition of the Business which have not been set forth herein, or in any
Schedule hereto, or in any certificate or statement furnished or to be furnished
to Buyer by Seller or the Stockholder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND TRANSWORLD
Buyer and Transworld represent and warrant to Seller that:
SECTION 4.1 Corporate Existence and Power Buyer is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION 4.2 Authority Relative to This Agreement. Buyer has full
corporate power and authority to execute and deliver this Agreement and each
other Transaction Document to which it is a party and to consummate the
Contemplated Transactions. The execution and delivery of this Agreement and the
consummation of the Contemplated Transactions have been duly and validly
authorized and approved by the Board of Directors of Buyer and no other
corporate proceedings on the part of Buyer (or any other person) are necessary
to authorize the execution and delivery by Buyer of this Agreement or the
Contemplated Transactions. This Agreement has been duly and validly executed and
delivered by Buyer and (assuming the valid execution and delivery of this
Agreement by the other parties hereto) constitutes the legal, valid and binding
agreement of Buyer, enforceable against Buyer in accordance with its terms,
except as such obligations and their enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceeding therefor may be brought (whether in law
or at equity).
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SECTION 4.3 No Conflicts; Consents. The execution, delivery and
performance by Buyer of this Agreement and each other Transaction Document to
which it is a party and the consummation by Buyer of the Contemplated
Transactions will not (i) violate any provision of the Certificate of
Incorporation or By-laws of Buyer; (ii) require Buyer to obtain any consent,
approval or action of, or make any filing with or give any notice to, any
Governmental Body or any other person, except for obtaining the consents listed
on Schedule 3.9 and Schedule 4.3; (iii) violate, conflict with or result in the
breach of any of the terms of, result in a material modification of the effect
of, or otherwise cause the termination of or give any other contracting party to
a contract the right to terminate, or constitute (or with notice or lapse of
time or both constitute) a default (by way of substitution, novation or
otherwise) under any Contract to which Buyer is a party or by or to which it or
any of its properties may be bound or subject, or result in the creation of any
Lien upon the properties of Buyer; (iv) subject to obtaining the consents listed
on Schedule 3.9 and 4.3, violate any Order of any Governmental Body against, or
binding upon, Buyer or upon Buyer's securities, properties or business; (v)
subject to obtaining the consents listed on Schedule 3.9 and 4.3, violate any
Law of any Governmental Body; or (vi) violate or result in the revocation or
suspension of any Permit.
SECTION 4.4 Litigation. There are no Claims (whether or not the defense
thereof or liability in respect thereof are covered by insurance) pending or
threatened in writing against or involving Buyer which individually or in the
aggregate would have a material adverse effect upon the business, properties,
financial condition or results of operations of Buyer taken as a whole. No suit,
action or proceeding before any court or any Governmental Body has been
commenced or is pending or, to the knowledge of Buyer, threatened against Buyer,
which suit, action or proceeding seeks to restrain, prevent, change or delay in
any material respect the Contemplated Transactions.
SECTION 4.5 Finders; Fees. There is no investment banker, broker,
finder or other intermediary retained by or authorized to act on behalf of Buyer
who might be entitled to any fee or commission from Buyer upon consummation of
the Contemplated Transactions.
SECTION 4.6 Disclosure. Neither this Agreement, the Schedules hereto,
nor any other audited or unaudited financial statements, documents or
certificates furnished or to be furnished to Seller by or on behalf of Buyer
pursuant to this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
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ARTICLE V
COVENANTS AND AGREEMENTS
SECTION 5.1 Conduct of Business. (a) From the date hereof through the
Closing Date, Seller agrees (and the Stockholder will cause Seller):
(i) To conduct its operations according to its ordinary
and usual course of business consistent with past practice, to use reasonable
efforts to preserve intact its present business operations and organization, to
use reasonable efforts to keep available the services of its present officers
and employees, and to use reasonable efforts to preserve its relationships with
customers, suppliers, contractors and others having business dealings with it.
(ii) To maintain in the ordinary course of business
consistent with past practice all their material structures, equipment and other
Tangible Property in its present repair, order and condition, except for
depletion, depreciation and ordinary wear and tear.
(iii) To keep in full force and effect insurance
comparable in amount and scope of coverage to insurance now carried by it.
(iv) To perform all of its obligations under the
Contracts.
(v) To maintain its books of account and records in the
usual, regular and ordinary manner.
(vi) To comply in all material respects with all Laws
applicable to it.
(vii) To use its best good faith efforts, upon the
request of Buyer, to assist Buyer in obtaining the continued services of the
Selected Employees.
(viii) To take all reasonable steps to keep all material
Contracts in full force and effect.
(ix) To conduct its marketing, promotional, billing and
collection practices consistent with past practices.
(x) To not cause any increase or decrease in rates
charged for services or products, or in its purchasing practices, unless
previously agreed to by Buyer in writing, and Seller shall give Buyer prompt
written notice of any changes in any Medicare or Medicaid reimbursement rates.
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(b) From the date hereof through the Closing Date, except with
the prior written consent of Buyer, Seller agrees (and the Stockholder will
cause Seller to):
(i) Except with respect to transactions with customers
and suppliers in the ordinary course of business, not to incur any material
Liability nor to enter into any Contract with a value in excess of $5,000.
(ii) Not to undertake (nor permit to be undertaken) any
of the actions specified in Section 3.7 which are within the control of Seller.
(iii) With respect to all employees, except as provided
or disclosed in Schedule 3.14 or 3.15, not to: (A) make, institute, agree to or
change any bonus, profit sharing, pension, retirement, severance, termination,
"parachute" or other similar arrangement or plan for employees; and (B)
otherwise than in accordance with past practices: (1) increase the compensation
payable or to become payable to any employee, and (2) accrue any bonus,
percentage of compensation or other like benefit to or for the credit of any
employee.
(iv) Not to authorize or make any capital expenditures
involving the payment or liability of $25,000 or more in the aggregate.
(c) From the date hereof through the Closing Date, the
Stockholder agrees to use reasonable best efforts to cause the affairs of Seller
to be conducted in such a manner so that the representations and warranties of
the Stockholder and Seller contained herein shall continue to be true and
correct on and as of the Closing Date as if made on and as of the Closing Date.
SECTION 5.2 Corporate Examinations and Investigations. Prior to the
Closing Date, Seller and Stockholder agree that Buyer shall be entitled, through
its directors, officers, employees, attorneys, accountants, representatives,
consultants and other agents (collectively, "Representatives"), to make such
investigation of the properties, businesses and operations of Seller and
Stockholder, and such examination of the books, records and financial condition
of Seller and Stockholder, as Buyer reasonably deems necessary. Any such
investigation and examination shall be conducted at reasonable times, under
reasonable circumstances and upon reasonable notice, and the Stockholder shall,
and shall cause Seller to, cooperate fully therein. No investigation by Buyer
shall diminish or obviate any of the representations, warranties, covenants or
agreements of Seller or the Stockholder contained in this Agreement. In order
that Buyer may have full opportunity to make such physical, business, accounting
and legal review, examination or investigation as it may reasonably deem
necessary of the affairs of Seller, Seller shall make available and the
Stockholder shall cause Seller to make available to the Representatives of Buyer
during such period, without however causing any unreasonable interruption in the
operations of Seller, all such information and copies of such documents and
records concerning the affairs of Seller as
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such Representatives may reasonably request, shall permit the Representatives of
Buyer access to the properties of Seller and all parts thereof and to their
respective customers, suppliers, contractors and others, and shall cause Seller
and the Seller's Representatives to cooperate fully in connection with such
review and examination.
SECTION 5.3 Additional Financial Statements. (a) Prior to Closing, if
requested by Buyer, Seller shall provide Buyer with daily summaries of net
revenues and cost of goods sold, in such form as Buyer may reasonably request.
Within ten (10) Business Days after Closing, Seller shall furnish Buyer with a
statement of net assets being sold and statement of income for the nine (9)
month period ended September 30, 1996 on a basis consistent with those financial
statements delivered pursuant to Section 3.6(a). If requested by Buyer, as soon
as available and in any event within twenty (20) Business Days after the end of
each monthly accounting period of Seller after September 30, 1996, Seller shall
furnish Buyer unaudited financial statements for such period in such detail as
such financial statements have been prepared consistent with past practice.
(b) If requested by Buyer in order to comply with its
reporting requirements under the 1934 Act, as promptly as practicable (and in
any event by no later than twenty (20) days after such request (or such later
date as the Buyer and Seller shall agree upon) in the case of calendar years
1995, 1994 and 1993, Seller and the Stockholder shall cause the Seller's
Accountants to conduct and complete an audit of the financial statements of the
Seller and to issue certified financial statements with respect thereto for the
year ended December 31, 1995, 1994 and 1993 (the "Subsequent Audited Financial
Statements"). An accounting firm selected by Buyer shall have the right to
review the work of the Seller's Accountants and to comment thereon. The
Subsequent Audited Financial Statements shall be prepared in accordance with (i)
GAAP and present fairly the financial position and results of operations of
Seller as at and for the periods then ended; and (ii) Regulation S-X under the
1933 Act. The Subsequent Audited Financial Statements shall not vary in any
material respect from the applicable unaudited Financial Statements delivered to
Buyer pursuant to Section 3.6(a) hereof.
SECTION 5.4 Filings and Authorizations. (a) Concurrent with the
execution of this Agreement, Seller shall file all required applications with
all relevant Governmental Bodies and other parties in connection with the
Required Consents and Seller shall thereafter prosecute such applications with
all reasonable diligence in order to obtain the approval of such applications as
expeditiously as practicable.
(b) The consummation of the Contemplated Transactions is
expressly conditioned upon (i) the grant of Governmental Bodies' and other
parties' consent in connection with the Required Consents, and (ii) the
Governmental Bodies' and other parties' consents having become final orders or
approvals, as the case may be, without any condition which would have a material
adverse effect upon Buyer's ability to continue to operate the
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Business in the normal course, which grants and consents are no longer subject
to administrative, judicial or other review.
(c) With respect to each Permit which may expire prior to the
Closing Date and during the Transition Period, Seller shall (i) timely file with
the appropriate Governmental Bodies applications for renewal of each such Permit
(the "Applications"), (ii) deliver to Buyer true and complete copies of such
Applications, (iii) diligently prosecute such Applications to conclusion, and
(iv) cooperate fully with all Governmental Bodies in the processing of such
Applications.
SECTION 5.5 Efforts to Consummate. (a) Subject to the terms and
conditions herein provided, each party hereto without payment or further
consideration shall use its reasonable, good faith efforts to take or cause to
be taken all action and to do or cause to be done all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective, as soon as reasonably practicable, the Contemplated Transactions,
including, but not limited to, obtaining all consents, authorizations, orders
and approvals of any third party, whether private or governmental, required in
connection with such party's performance of such transactions and each party
hereto shall cooperate with the other in all of the foregoing. Notwithstanding
anything to the contrary contained in this Agreement, Buyer shall not be
required to undertake any measures which in the reasonable opinion of Buyer are
extraordinary to obtain any such approvals or consents, including, without
limitation, under no circumstances shall Buyer be required to (a) make any
payments to any person or party from whom such consents or approvals are sought,
as consideration therefor; or (b) except as Buyer may otherwise agree in writing
(and Buyer shall have no obligation to so agree), accept any changes in the
terms of the document or instrument for which a consent, approval or waiver is
sought or (c) alter or modify its capital or debt structure or any term or
provision contained in any agreement relating thereto.
(b) Whenever this Agreement requires Seller to take any action
(or to use any effort to take such action) or refrain from taking any action,
such requirement shall be deemed to include an undertaking on the part of the
Stockholder to cause Seller to take or refrain from taking such action.
SECTION 5.6 Negotiations With Others. From and after the date hereof
unless and until this Agreement shall have terminated in accordance with its
terms, the Stockholder will not, and will not permit Seller or any officer,
director, employee or other Representative of Seller to, directly or indirectly
(a) solicit, engage in discussions or engage in negotiations with any person
(other than Buyer or any of its Affiliates) with respect to an Acquisition
Proposal; (b) provide information to any person (other than Buyer or any of its
Affiliates) in connection with an Acquisition Proposal; or (c) enter into any
transaction with any person (other than Buyer or any of its Affiliates) with
respect to an Acquisition Proposal. If the Stockholder, Seller or Representative
receives any offer or proposal to enter into discussions
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or negotiations relating to any of the above, Seller or the Stockholder will
immediately notify Buyer in writing as to the identity of the offeror or the
party making any such proposal and the specific terms of such offer or proposal.
SECTION 5.7 Notices of Certain Events. Seller shall advise Buyer within
three (3) Business Days (or one (1) Business Day in the case of any Selected
Employee) of learning, after the date hereof, of any employee of Seller who
intends to cancel or otherwise terminate his or her relationship with Seller. In
addition, Seller and Buyer shall promptly notify the other of:
(a) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with the
Contemplated Transactions;
(b) any notice or other communication from any Governmental
Body in connection with the Contemplated Transactions; and
(c) any event, condition or circumstance occurring from the
date hereof through the Closing Date that would constitute a violation or breach
of any representation or warranty, whether made as of the date hereof or as of
the Closing Date, or that would constitute a violation or breach of any covenant
of any party contained in this Agreement.
SECTION 5.8 Public Announcements. Neither Seller, Stockholder nor Buyer
shall make or issue, or cause to be made or issued, any announcement or
statement (whether written or oral) concerning this Agreement or the
transactions contemplated hereby for dissemination to the general public without
the prior written consent of the other party. This provision shall not apply,
however, to any announcement or statement required in the reasonable opinion of
Buyer, Stockholder or Seller, to be made by law or the regulations of any
federal or state governmental agency or any stock exchange.
SECTION 5.9 Confidentiality. (a) Buyer, on the one hand, and the
Stockholder and Seller, on the other hand, each shall hold in strict confidence,
and shall use its best efforts to cause all its Representatives to hold in
strict confidence, unless compelled to disclose by judicial or administrative
process, or by other requirements of law, all information concerning the
Stockholder and Seller (in the case of Buyer) and Buyer (in the case of the
Stockholder and Seller) which is created or obtained prior to, on or after the
dates hereof in connection with the Contemplated Transactions, and Buyer and the
Stockholder and Seller shall not use or disclose to others, or permit the use of
or disclosure of, any such information created or obtained except to the extent
that such information can be shown to have been (i) previously known by Buyer or
the Stockholder or Seller as the case may be (ii) in the public domain through
no fault of Buyer or the Stockholder or Seller, as the case may
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be, or any of their respective Representatives, and will not release or disclose
such information to any other person, except its officers, directors, employees,
Representatives, investors and lending institutions who need to know such
information in connection with this Agreement.
(b) If the Contemplated Transactions are not consummated, such
confidence shall be maintained for five (5) years except (i) as required by law
or (b) to the extent such information comes into the public domain through no
fault of Buyer or Seller or the Stockholder, as the case may be, or any of their
respective Representatives. If the Contemplated Transactions are not consummated
and if requested by Seller or Buyer, as the case may be, Buyer shall return to
Seller all tangible evidence of such information regarding Seller and Seller
shall return to Buyer all tangible evidence of such information regarding Buyer.
SECTION 5.10 Bulk Sales. Seller and Buyer each waives any requirement
for compliance with the procedures of any applicable "bulk sales law",
including, without limitation, the bulk transfer provisions of any applicable
Uniform Commercial Code; provided, however, that Seller and the Stockholder
shall jointly and severally indemnify Buyer from any liability arising
therefrom.
SECTION 5.11 Use of Name. From and after the Closing, Seller shall, and
the Stockholder shall cause Seller to, cease any use of the tradename "U.S.
HomeCare Infusion Therapy Services," other than in connection with Seller's
billing and collection activities with respect to the Existing A/R. From and
after the Closing Date, Seller shall discontinue using and dispose of any assets
in its possession including, without limitation, stationery, business cards and
literature, bearing the tradename "U.S. HomeCare Infusion Therapy Services" or
any derivation thereof. During the six (6) month period following the Closing
Date, Buyer shall have the right to use, for transition purposes, the name U.S.
HomeCare Infusion Therapy Services. Thereafter, Buyer shall have the right to
use such name to the extent necessary to conduct joint marketing activities with
Seller or Stockholder or in connection with any referrals made to Buyer by
Seller or Stockholder. As of and after the Closing Date, the Seller and
Stockholder shall promptly forward any inquiry or referral for infusion therapy
services to Buyer indicating to such referrer or inquiring party that Buyer has
purchased the Business and is providing service with respect thereto.
SECTION 5.12 Certain Expenses.
(a) Any and all sales, use, transfer and documentary taxes and
recording and filing fees applicable to the transfer of the Purchased Assets to
Buyer shall be borne equally by Buyer and Seller.
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(b) Except as otherwise specifically provided herein, Buyer
and Seller shall bear their respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the Contemplated
Transactions, including, without limitation, all fees and expenses of agents,
representatives, counsel and accountants.
(c) Whether or not the Contemplated Transaction is
consummated, Buyer shall reimburse Seller, upon presentation of appropriate
invoices therefor, for its reasonable auditing expenses incurred with respect to
each year for which audited financial statements are required under Section 5.3
of this Agreement to be delivered by Seller to Buyer in connection with the
Contemplated Transactions.
SECTION 5.13 Tax Matters. (a) After the Closing, Buyer and Seller will
provide each other such assistance as may be reasonably requested by either of
them in connection with the preparation of any Return, any audit or other
examination by any Taxing Authority, or any judicial or administrative
proceedings relating to liability for Taxes, and each will retain and provide
the other with, at all reasonable times, any work papers, records or other
information which may be relevant to such return, audit or tax examination
proceedings or determinations.
(b) Seller shall provide Buyer with a clearance certificate or
similar document(s) that may be required by the taxing authority of any
jurisdiction in order to relieve Buyer of any obligation to withhold or escrow
any portion of the Purchase Price.
(c) Prior to Seller's filing of any Return for its Taxable
Year ended December 31, 1996, Seller shall provide Buyer with a copy of such
Return at least ten business days prior to the date on which Seller gives notice
to Buyer that Seller will file such Return. Seller will prepare such Returns and
compute the amount of their income and the Tax liability owed, if any, in
accordance and consistent with the past custom and practice of Seller in filing
its Returns.
(d) Seller shall timely pay all Taxes (including payments of
estimated Taxes) that are shown as due and payable on Returns that are due
(taking into account any valid extensions of time to file or any amounts
contested in good faith for which adequate amounts have been reserved) in
connection with the period ended December 31, 1996.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 Conditions to the Obligations of Seller and Buyer. The
obligations of Buyer and Seller to consummate the Contemplated Transactions by
this Agreement are subject to the satisfaction of the following conditions:
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(a) No Injunction. No provision of any applicable Law and no
judgment, injunction, order or decree of any Governmental Body shall prohibit
the consummation of the Contemplated Transactions including any provisions of
the HSR Act.
(b) No Proceeding or Litigation. No suit, action or proceeding
before any Governmental Body instituted by any person shall have been commenced
or be pending or threatened against Seller, Buyer or the Stockholder or any of
their respective Affiliates, associates, officers or directors, which suit,
action or proceeding shall have a reasonable likelihood of success and which
suit, action or proceeding seeks to restrain, prevent, change or delay in any
material respect the Contemplated Transactions or seeks to challenge any of the
terms or provisions of this Agreement or seeks material damages in connection
with any of such transactions or seeks to restrain or prevent the ownership and
operations by Buyer after the Closing Date of the assets and business of Seller.
(c) Consents. All Required Consents shall have been obtained
in form and substance consistent with the provisions of this Agreement or as
otherwise agreed to in writing by Buyer and shall have become effective, no
longer subject to any statutory, administrative or judicial waiting, appeal,
reconsideration or appeal periods, without any condition which is adverse to
Buyer.
SECTION 6.2 Conditions to the Obligations of Seller. All obligations of
Seller hereunder are subject, at the option of Seller, to the fulfillment prior
to or at the Closing of each of the following further conditions:
(a) Performance. Buyer shall have performed in all material
respects with all of its agreements, obligations and covenants hereunder
required to be performed by it at or prior to the Closing Date.
(b) Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement and in any certificate or other
writing delivered by Buyer pursuant hereto shall be true in all material
respects at and as of the Closing Date as if made at and as of such time.
(c) Purchase Price. Buyer shall have paid to Seller the
Purchase Price (less the Deposit) by wire transfer of immediately available
funds.
(d) Documentation. There shall have been delivered to Seller
the following:
(i) One or more duly executed originals of the
Assumption Agreement signed by Buyer, and such other instruments of assumption
as are reasonably necessary or desirable to effect the assumption by Buyer of
the Assumed Liabilities.
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(ii) A certificate, dated the Closing Date, of the
President or a Vice-President of Buyer and Transworld confirming the matters set
forth in Section 6.2(a) and (b) hereof.
(iii) A certificate, dated the Closing Date, of the
Secretary or Assistant Secretary of Buyer and Transworld certifying, among other
things, that attached or appended to such certificate (A) is a true and correct
copy of its Certificate of Incorporation and all amendments if any thereto as of
the date thereof; (B) is a true and correct copy of its By-laws; (C) is a true
copy of all corporate resolutions of its board of directors authorizing the
execution, delivery and performance of this Agreement, and each other document
to be delivered by Buyer pursuant hereto; and (D) are the names and signatures
of its duly elected or appointed officers who are authorized to execute and
deliver this Agreement and any certificate, document or other instrument in
connection herewith.
(iv) A signed opinion of Buyer's counsel, dated the
Closing Date and addressed to Seller, substantially in the form of opinion
annexed as Schedule 6.2(d)(iv) hereto.
(e) Lender's Consent. The Seller's senior secured lenders
shall have consented to the execution, delivery and performance of this
Agreement and the Contemplated Transactions.
SECTION 6.3 Conditions to the Obligations of Buyer. All obligations of
Buyer hereunder are subject, at its option, to the fulfillment prior to or at
the Closing of each of the following further conditions:
(a) Performance. Seller and the Stockholder shall have
performed and complied in all material respects with all agreements, obligations
and covenants required by this Agreement to be performed or complied with by
them at or prior to the Closing Date.
(b) Representations and Warranties. The representations and
warranties of Seller and the Stockholder contained in this Agreement and in any
certificate or other writing delivered by the Stockholder or Seller pursuant
hereto shall be true in all material respects at and as of the Closing Date as
if made at and as of such time.
(c) No Adverse Change. During the period from the date hereof
to the Closing Date, there shall not have been (i) any material adverse change
in the Condition of the Business; (ii) any damage to the Purchased Assets by
fire, flood, casualty, act of God or other cause, which has a material adverse
effect on the Purchased Assets or the Business; or (iii) any lawsuits, claims or
proceedings filed, or to the knowledge of Seller or the Stockholder threatened,
against or affecting Seller which, if adversely determined, is reasonably likely
to have a material adverse effect on the Condition of the Business.
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(d) Documentation. There shall have been delivered to Buyer
the following:
(i) one or more duly executed originals of the Bill of
Sale and such other instruments as are necessary or desirable to effect the
transfers, conveyances and assignments to Buyer of the Purchased Assets, and to
perform Seller's and Stockholder's obligations hereunder.
(ii) A certificate dated the Closing Date, of the
President of Seller and Stockholder, confirming the matters set forth in Section
6.3(a) and (b) hereof.
(iii) A certificate, dated the Closing Date, of the
Secretary or Assistant Secretary of Seller and Stockholder certifying, among
other things, that attached or appended to such certificate (A) is a true and
correct copy of the Certificate of Incorporation and By-laws (or comparable
instruments) of Seller and Stockholder, and all amendments if any thereto as of
the date thereof; (B) is a true copy of all corporate actions taken by it,
including resolutions of its board of directors, authorizing the execution,
delivery and performance of this Agreement, and each other document to be
delivered by Seller and Stockholder pursuant hereto; and (C) are the names and
signatures of its duly elected or appointed officers who are authorized to
execute and deliver this Agreement and any certificate, document or other
instrument in connection herewith.
(iv) A signed opinion(s) of Seller's counsel, dated the
Closing Date, addressed to Buyer, substantially in the form of opinion annexed
as Schedule 6.3(e)(iv) hereto.
(v) Releases of all Liens on the Purchased Assets,
together with copies of UCC, tax and judgment searches with respect to Seller
and the appropriate tax certificates evidencing the payment of all taxes owed by
Seller, each dated as of a date within five (5) Business Days of the Closing
Date.
(e) Lender's Consent. The Buyer's lenders shall have consented
to the execution, delivery and performance of this Agreement and the
Contemplated Transactions.
(f) Covenants Not to Compete. The Seller and the Stockholder
shall have executed and delivered a Covenant Not to Compete in the form of
Schedule 6.3(f) annexed hereto.
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ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Survival of Representations and Warranties. Notwithstanding
any right of Buyer or Seller fully to investigate the affairs of Buyer or
Seller, and notwithstanding any knowledge of facts determined or determinable by
Buyer or Seller pursuant to such investigation or right of investigation, Buyer
and Seller have the right to rely fully upon the representations, warranties,
covenants and agreements of Seller, the Stockholder and Buyer contained in this
Agreement, or listed or disclosed on any Schedule hereto or in any instrument or
document delivered in connection with or pursuant to any of the foregoing. All
such representations, warranties, covenants and agreements shall survive the
execution and delivery of this Agreement and the Closing hereunder for a period
of two (2) years after the Closing Date, except that (a) any representation,
warranty, covenant or agreement contained in Sections 3.1 and 4.2 hereof shall
survive the execution and delivery of this Agreement and the Closing hereunder
without limitation, (b) any representation, warranty, covenant or agreement
related to Taxes shall survive the execution and delivery of this Agreement and
the Closing hereunder until the expiration of the applicable statute of
limitations, (c) any non-compete agreement delivered pursuant hereto shall
survive the Closing until the expiration of the duration of such covenant not to
compete, and (d) any representation, warranty, covenant or agreement contained
herein and any Liabilities of Seller with respect thereto relating to Medicare,
Medicaid or third party payors shall survive until the later of the third
anniversary of the Closing Date or the conclusion of any audit or review
commenced within such three-year period.
SECTION 7.2 Obligation of Seller to Indemnify. The Stockholder and
Seller, jointly and severally, agree to indemnify, defend and hold harmless
Buyer (and its directors, officers, employees, Affiliates, successors and
assigns and Representatives) from and against all claims, losses, liabilities,
damages, deficiencies, judgments, settlements, costs of investigation or other
expenses (including interest, penalties and reasonable attorneys' fees and
disbursements (collectively, the "Losses")) based upon, arising out of or
otherwise in respect of:
(a) any inaccuracy in or any breach of any representation,
warranty, covenant or agreement of Seller or the Stockholder contained in this
Agreement or in any Schedules, instrument or documents delivered pursuant to
this Agreement;
(b) any obligation or liability arising in connection with the
Business from or in respect of any event or circumstance occurring prior to the
Closing Date;
(c) any and all Losses resulting from any adjustment to any
accounts receivable or prior billings of Seller for the period from October 1,
1996 through Closing,
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other than those contained in allowances for doubtful accounts as set forth in
the books and records of Seller as of the date hereof; and
(d) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including without limitation,
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
SECTION 7.3 Obligation of Buyer to Indemnify. Buyer agrees to perform
and discharge all of the Assumed Liabilities and agrees to indemnify, defend and
hold harmless Sellers and the Stockholder from and against any Losses based upon
Buyer's failure to do so or arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
of Buyer contained in this Agreement or in any instrument or document delivered
pursuant to this Agreement and any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including without
limitation, reasonable legal fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.
SECTION 7.4 Notice and Opportunity to Defend Third Party Claims. (a)
Promptly after receipt by any party hereto (the "Indemnitee") of notice of any
demand, claim or circumstance which would or might give rise to a claim or the
commencement (or threatened commencement) of any action, proceeding or
investigation (an "Asserted Liability") that may result in a Loss, the
Indemnitee shall give written notice thereof (the "Claims Notice") to the party
obligated to provide indemnification pursuant to Section 7.2 or 7.3 hereof (the
"Indemnifying Party"). The Claims Notice shall describe the Asserted Liability
in reasonable detail and shall indicate the amount (estimated, if necessary, and
to the extent feasible) of the Loss that has been or may be suffered by the
Indemnitee.
(b) The Indemnifying Party may elect to compromise or defend,
at its own expense and by its own counsel, any Asserted Liability. If the
Indemnifying Party elects to compromise or defend such Asserted Liability, it
shall within thirty days (or sooner, if the nature of the Asserted Liability so
requires) notify the Indemnitee in writing of its intent to do so, and the
Indemnitee shall cooperate, at the expense of the Indemnifying Party, in the
compromise of, or defense against, such Asserted Liability. If the Indemnifying
Party elects not to compromise or defend the Asserted Liability, fails to notify
the Indemnitee of its election as herein provided or contests its obligation to
indemnify under this Agreement, the Indemnitee may pay, compromise or defend
such Asserted Liability. Notwithstanding the foregoing, neither the Indemnifying
Party nor the Indemnitee may settle or compromise any claim over the objection
of the other; provided, however, that consent to settlement or compromise shall
not be unreasonably withheld or delayed. In any event, the Indemnitee and the
Indemnifying Party may participate, at their own expense, in the defense or
compromise
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of such Asserted Liability. If the Indemnifying Party chooses to defend any
claim, the Indemnitee shall cooperate with and make available to the
Indemnifying Party any books, records or other documents within its control that
are necessary or appropriate for such defense.
SECTION 7.5 Limits on Indemnification. Notwithstanding anything
contained in this Article VII to the contrary, Seller and the Stockholder shall
not have an obligation to indemnify Buyer pursuant to Section 7.2 hereof with
respect to any Losses unless and until Buyer shall have incurred Losses in an
aggregate in excess of $50,000 (the "Stipulated Amount"), in which event Buyers
shall be entitled to be indemnified by such parties for all of its Losses
commencing at $1.00.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination. This Agreement may be terminated and the
Contemplated Transactions may be abandoned at any time prior to the Closing:
(a) By mutual written consent of Seller and the Stockholder,
on the one hand, and Buyer on the other;
(b) By Seller and the Stockholder, if (i) there has been a
material misrepresentation or breach of warranty on the part of Buyer in the
representations and warranties contained herein or in any Schedule, document or
instrument delivered in connection with or pursuant hereto and such material
misrepresentation or breach of warranty, if curable, is not cured within 15 days
of written notice thereof from Seller; (ii) Buyer has committed a material
breach of any covenant or agreement imposed upon it hereunder and fails to cure
such breach within 15 days of written notice thereof from Seller; or (iii) any
condition to Seller's or the Stockholder's obligations hereunder becomes
incapable of fulfillment through no fault of such parties and is not waived by
such parties;
(c) By Buyer, if (i) there has been a material
misrepresentation or breach of warranty on the part of Seller or the Stockholder
in the representations and warranties contained herein or in any Schedule,
document or instrument delivered in connection with or pursuant hereto and such
material misrepresentation or breach of warranty, if curable, is not cured
within 15 days of written notice thereof from Buyer to Seller; (ii) Seller or
the Stockholder has committed a material breach of any covenant imposed upon it
hereunder and fails to cure such breach within 15 days of written notice thereof
from Buyer to Seller; or (iii) any condition to Buyer's obligations hereunder
becomes incapable of fulfillment through no fault of Buyer and is not waived by
Buyer;
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(d) By Seller and the Stockholder on the one hand, or Buyer on
the other, if the Closing shall not have occurred on or before October 31, 1996;
provided that if the Closing has not occurred by such date because a Required
Consent has not been obtained, such date shall be extended until the second
Business Day following the date such Consent(s) have been obtained or denied;
and provided further that no party may terminate this Agreement pursuant to this
clause if such party's failure to fulfill any of its obligations under this
Agreement is the reason that the Closing shall not have occurred on or before
said date.
SECTION 8.2 Effect of Termination; Right to Proceed. In the event that
this Agreement shall be terminated pursuant to Section 8.1, all further
obligations of the parties under the Agreement shall terminate without further
liability of any party hereunder except: (i) in the case of Buyer, to the extent
provided in Article IX; (ii) (A) to the extent that Seller and/or Stockholder
has made a material misrepresentation hereunder or committed a material breach
of the covenants and agreements imposed upon it hereunder; or (B) to the extent
that any condition to Buyer's obligations hereunder became incapable of
fulfillment because of the breach by Seller and/or Stockholder of its
obligations hereunder, in either of such event, Buyer shall have all of its
rights and remedies at law or in equity. Notwithstanding the foregoing, the
agreements contained in Sections 5.8 and 5.9 shall survive the termination
hereof. In the event that a condition precedent to its obligation is not met,
nothing contained herein shall be deemed to require any party to terminate this
Agreement, rather than to waive such condition precedent and proceed with the
Contemplated Transactions.
ARTICLE IX
LIQUIDATED DAMAGES
Notwithstanding anything to the contrary contained in this Agreement,
if the Contemplated Transactions are not consummated because of a material
default by Buyer of its obligations hereunder and provided Seller and
Stockholder are not in material default of their obligations hereunder and
Seller and Stockholder have terminated this Agreement pursuant to Section
8.1(b), then the Deposit shall be paid to Seller and Stockholder as liquidated
damages and as Seller's and Stockholder's sole and exclusive remedy, it being
agreed that the Deposit shall constitute full payment for any and all damages
suffered by Seller and Stockholder by reason of Buyer's failure to close this
Agreement. Buyer, Seller and Stockholder agree in advance that the Deposit is a
fair and equitable amount to reimburse Seller and Stockholder for damages
sustained due to Buyer's failure to consummate this Agreement.
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ARTICLE X
MISCELLANEOUS
SECTION 10.1 Notices. (a) Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally by
hand, telecopied or mailed (by overnight courier or registered or certified
mail, postage prepaid) as follows:
(i) if to Buyer, one copy to:
Mr. Vincent J. Caruso
Executive Vice President and Chief
Administrative Officer
Transworld Home HealthCare, Inc.
75 Terminal Avenue
Clark, New Jersey 07066
Telecopier: (908) 340-9170
with a copy to:
Leslie J. Levinson, Esq.
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Telecopier: (212) 702-5941
(ii) if to Seller or the Stockholder, one copy to:
Mr. Gerald J. Boisvert, Jr.
U.S. HomeCare Corporation
750 Main Street, 12th Floor
Hartford, Connecticut
with a copy to:
Ellen B. Corenswet, Esq.
Brobeck, Phleger & Harrison LLP
1301 Avenue of the Americas
New York, New York 10019
Telecopier: (212) 586-7878
(b) Each such notice or other communication shall be effective
(i) if given by telecopier, when such telecopy is transmitted to the telecopier
number specified in Section 9.1(a) (with confirmation of transmission) or (ii)
if given by any other means, when
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delivered at the address specified in Section 9.1(a). Any party by notice given
in accordance with this Section 9.1 to the other party may designate another
address (or telecopier number) or person for receipt of notices hereunder.
SECTION 10.2 Entire Agreement. This Agreement (including the Schedules
and Exhibits hereto) and the other Transaction Documents executed in connection
with the consummation of the Contemplated Transactions contain the entire
agreement between the parties with respect to the subject matter hereof and
related transactions and supersede all prior agreements, written or oral, with
respect thereto.
SECTION 10.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended, superseded, cancelled,
renewed or extended, and the terms hereof may be waived, only by a written
instrument signed by the parties hereto or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof. Nor shall
any waiver on the part of any party of any such right, power or privilege, nor
any single or partial exercise of any such right, power or privilege, preclude
any further exercise thereof or the exercise of any other such right, power or
privilege. Except as otherwise provided herein, the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that any
party may otherwise have at law or in equity. The rights and remedies of any
party based upon, arising out of or otherwise in respect of any inaccuracy in or
breach of any representation, warranty, covenant or agreement contained in, this
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is no inaccuracy or breach.
SECTION 10.4 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflict of laws rules thereof.
SECTION 10.5 Consent to Jurisdiction and Service of Process. The
parties hereto irrevocably: (a) agree that any suit, action or other legal
proceeding arising out of this Agreement may be brought in the courts of the
State of New York or the courts of the United States located in New York County,
New York, (b) consent to the jurisdiction of each court in any such suit, action
or proceeding, (c) waive any objection which they, or any of them, may have to
the laying of venue of any such suit, action or proceeding in any of such
courts, and (d) waive the right to a trial by jury in any such suit, action or
other legal proceeding.
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SECTION 10.6 Designated Buyer. It is understood and agreed between the
parties that Buyer may cause one or more Affiliates, direct or indirect
Subsidiaries or other entities designated by it (the "Designated Buyer") to
carry out all or part of the Contemplated Transactions to be carried out by
Buyer.
SECTION 10.7 Binding Effect; No Assignment. This Agreement and all of
its provisions, rights and obligations shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors, heirs and
legal representatives. Except as otherwise provided in Section 10.6, this
Agreement may not be assigned by a party without the express written consent of
the others and any purported assignment, unless so consented to, shall be void
and without effect. Nothing herein express or implied is intended or shall be
construed to confer upon or to give anyone other than the parties hereto and
their respective heirs, legal representatives and successors any rights or
benefits under or by reason of this Agreement. Accordingly, no party that has
not executed this Agreement shall have any right to enforce any of the
provisions of this Agreement.
SECTION 10.8 Severability. If any provisions of this Agreement for any
reason shall be held to be illegal, invalid or unenforceable, such illegality
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such illegal, invalid or unenforceable provision had never
been included herein.
SECTION 10.9 Counterparts. The Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.
U.S. HomeCare Infusion Therapy
Services Corporation of New Jersey
/s/ GERALD J. BOISVERT, JR.
By:_____________________________________
Name: Gerald J. Boisvert, Jr.
Title: Vice President
U.S. HomeCare Corporation
/s/ GERALD J. BOISVERT, JR.
By:_____________________________________
Name: Gerald J. Boisvert, Jr.
Title: Vice President
Transworld Acquisition Corp.
/s/ WAYNE A. PALLADINO
By:_____________________________________
Name: Wayne A. Palladino
Title: Vice President
Transworld Home HealthCare, Inc.
/s/ WAYNE A. PALLADINO
By:_____________________________________
Name: Wayne A. Palladino
Title: Vice President
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