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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) July 15, 1998
Transworld Healthcare, Inc.
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(Exact name of Registrant as specified in its charter)
New York
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(State or other jurisdiction of incorporation)
1-11570 13-3098275
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(Commission File Number) (I.R.S. Employer Identification No.)
555 Madison Avenue, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 750-0064
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(Former name or former address, changed since last report.)
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ITEM 5. OTHER EVENTS
On July 15, 1998, Transworld Healthcare Inc.'s ("Transworld") home
nursing subsidiary ("Seller") sold substantially all of its assets (while
retaining its liabilities) to Pediatric Services of America, Inc. ("PSA")
pursuant to an Asset Purchase Agreement dated as of June 5, 1998 between
Transworld, the Seller and PSA (the "Agreement"). The aggregate purchase price
for the assets was $5,300,000 which was paid in cash at closing. Subject to the
terms of the Agreement, $300,000 of such amount will be retained in escrow
during the one-year period following the closing to secure the Seller's
obligations under the Agreement. The net proceeds from the transaction will be
used to reduce borrowings under Transworld's senior credit facility, of which
$4,100,000 was paid on July 15, 1998.
Certain statements contained herein are forward-looking statements that
have been made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve known and
unknown risks and uncertainties which may cause the actual results in the
future periods or plans for future periods to differ materially from those
described herein as anticipated, believed or estimated.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99.1 Asset Purchase Agreement dated as of June 5, 1998 between
Transworld, the Seller and PSA.
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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.
Date: July 16, 1998
TRANSWORLD HEALTHCARE, INC.
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(Registrant)
By: /s/ Wayne A. Palladino
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Wayne A. Palladino
Senior Vice President and
Chief Financial Officer
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of the 5th day of June, 1998 (the "Effective
Date"), by and among TRANSWORLD HOME HEALTH CARE -- NURSING DIVISION, INC., a
DELAWARE corporation (the "Company"), TRANSWORLD HEALTHCARE, INC., a New York
corporation and the sole shareholder of the Company (the "SHAREHOLDER"),
PEDIATRIC SERVICES OF AMERICA, INC., a Georgia corporation ("BUYER"), and
PEDIATRIC SERVICES OF AMERICA, INC., a Delaware corporation ("PSA");
W I T N E S S E T H:
WHEREAS, the Shareholder owns all of the issued and outstanding
capital stock of the Company, which is engaged in providing home nursing
services (the "Business");
WHEREAS, upon and subject to the terms and conditions contained
herein, the Company desires to sell to Buyer, and Buyer desires to purchase
from the Company, substantially all of the assets used in the Business;
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, and upon and subject to the terms
and the conditions hereinafter set forth, the parties do hereby agree as
follows:
ARTICLE I
I. PURCHASE AND SALE OF ASSETS
1.01 Transfer of the Assets. Subject to the terms and conditions set
forth in this Agreement, as of the Effective Date, the Company agrees to sell,
convey, assign, and transfer to Buyer, and Buyer agrees to purchase, accept and
take from the Company on the Closing Date (as hereinafter defined)
substantially all of the assets, properties and rights of every kind, nature,
character and description, whether real, personal or mixed, whether tangible or
intangible, whether accrued, contingent or otherwise relating to or utilized in
the Business, directly or indirectly, in whole or in part, in existence on the
date hereof and any additions thereto on or before the Closing Date, whether or
not carried on the books and records of the Company and wherever located,
including, without limitation the assets, properties and rights set forth
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on Schedule 1.01(a) (the "Assets"), except for those assets, properties and
rights set forth on Schedule 1.01(b) (the "Excluded Assets").
1.02 Aggregate Purchase Price of the Assets. The aggregate purchase
price of the Assets (the "Purchase Price") shall be Five Million Three Hundred
Thousand Dollars and No/100 ($5,300,000). The Purchase Price shall be paid: (i)
$3,500,000 to the Company at the Closing by wire transfer or by bank or
cashier's check, and (ii) $1,800,000 of the Purchase Price shall be in the form
of shares of Common Stock of PSA (the "PSA Shares"), with a number of PSA
Shares equal to $300,000 to be held in escrow by SunTrust Bank, Atlanta, for a
period of one year (or such less period as specified in the Escrow Agreement,
as defined below) after the Closing as security for any losses of Buyer which
are to be indemnified against pursuant to Article XI hereof, pursuant to an
escrow agreement in the form of Exhibit 10.10 hereto (the "Escrow Agreement").
Of the cash portion of the Purchase Price, $1,000,000 shall be placed in Escrow
on the Effective Date, pending the Closing, at which time the cash portion of
the Purchase Price shall be delivered to the Company. The number of PSA Shares
to be paid to the Company shall be determined by dividing $1,800,000 by the
average of closing prices of the PSA Shares during the 30-day period ended five
business days prior to Closing (the "Share Price").
1.03 Share Price Protection. Within 60 days of the Closing Date, PSA
shall register the PSA Shares at its sole expense on behalf of the Company in
accordance with the provisions of Article VII. The following protections shall
be afforded the PSA Shares:
(a) $1,500,000 in PSA Shares received at Closing by the Company
(the "PSA Sale Shares") shall be sold by the Company as soon as possible after
registration of the PSA Shares, taking into account market fluctuations which
severely restrict the Company's ability to sell the PSA Shares, but in all
cases within 90 days of the effectiveness of the S-3 Registration Statement
referenced herein. The Company shall coordinate with PSA in the sale of the PSA
Sale Shares in order to effect a sale in an orderly manner and at the highest
price possible within the time constraints. If upon sale, the PSA Sale Shares
sell for less than $1,500,000, net of all reasonable selling expenses which
shall be borne by Buyer, then PSA shall reimburse the Company in cash within 15
days of the date of the last sale for the difference between $1,500,000 and the
total sales price of the PSA Sale Shares. If the PSA Sale Shares sell for a
total of $1,575,000 or greater, then the Company and PSA shall share equally in
all amounts greater than $1,575,000, and the Company shall remit PSA's portion
of the excess sales price to PSA within 30 days of the last sale of the PSA
Sale Shares.
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(b) $300,000 of the PSA Shares issued on the Closing Date shall
be held in Escrow for a period of one year after the Closing Date (the "PSA
Escrow Shares"). Following the release from Escrow of any PSA Escrow Shares,
the Company agrees to reasonably cooperate with PSA in the sale of the PSA
Escrow Shares in order to effect the highest sales price. For a period of one
(1) year following the release from Escrow of any of the PSA Escrow Shares, the
Company shall be guaranteed a sales price for the PSA Escrow Shares of the
Share Price plus 6% (the "Escrow Share Price"). If any of the PSA Escrow Shares
are released from Escrow at a time earlier or later than other PSA Escrow
Shares, the price protection shall extend to such earlier or later released PSA
Escrow Shares for a period of one year from the date that they are released.
During the one year protection period, PSA shall reimburse the Company for any
sales of PSA Escrow Shares for less than the Escrow Share Price, provided,
however, that to the extent that any PSA Escrow Shares are sold for greater
than Escrow Share Price, such sales shall be netted against any sales of PSA
Escrow Shares for less than the Escrow Share Price in determining if PSA owes
money to the Company. If there is any net gain by the Company in the sale of
the PSA Escrow Shares for an average share price of greater than the Escrow
Share Price, then the Company shall reimburse PSA for amounts previously paid
by PSA to the Company pursuant to this subsection to the extent of such net
gains. Any of the aforementioned payments shall be made within 30 days after
the end of each quarterly anniversary of the Closing Date during the protection
period.
1.04 Manner of Effecting Sale. The sale, conveyance, transfer,
assignment and delivery of the Assets by the Company to Buyer shall be effected
by such deeds, bills of sale, endorsements, assignments, transfers and other
instruments of transfer and conveyance in such form, including, without
limitation, warranties of title, as Buyer or Buyer's attorney shall reasonably
request.
In connection with the transfer of all intangible Assets, the
Company shall reasonably provide to Buyer any and all pertinent written or
recorded information in its possession concerning any such property, including,
without limitation, documents evidencing the Company's right and title to the
trademarks and trade names of the Company, the Company's sales and purchase
records, accounts and similar documentation, the Company's formulae for and
know how concerning any aspect of the Business, as well as all of the Company's
pertinent business documents and correspondence relating to the Business. To
the extent the material customer information, cost and supply data, or secret
or other formulae or know how are not at the date hereof evidenced by or
reflected in existing corporate documents, records or other sources which are
to be transferred in accordance with this Agreement, the Company shall prepare
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or cause to be prepared in such detail as Buyer may reasonably request such
additional documentation for delivery at the Closing as shall be necessary to
disclose fully and effectually such information to Buyer.
1.05 Liabilities. It is understood and agreed that Buyer shall not
assume or become liable for the payment of any debts, liabilities, losses,
accounts payable, bank indebtedness, mortgages, litigation, claims or other
obligations of the Company, whether the same are known or unknown, now existing
or hereafter arising, of whatever nature or character, whether absolute or
contingent, liquidated or disputed, except as expressly set forth in Section
6.04, below.
1.06 Closing. Subject to the satisfaction or waiver of the conditions
set forth herein, the consummation of the purchase and sale of the Assets (the
"Closing") shall take place by mail on or before two (2) months from the
Effective Date, or on such other date at such other time and place as the
parties shall agree in writing (the "Closing Date").
ARTICLE II
II. SECURITIES REPRESENTATIONS OF THE COMPANY
2.01 Investment Purpose. The agreement to issue the PSA Shares to the
Company is made in reliance upon the representations of the Company to PSA,
that the PSA Shares to be acquired by the Company will be acquired for
investment for the account of the Company, not as a nominee or agent, and not
with a view to the direct or indirect sale or distribution of any part thereof.
By executing this Agreement, the Company further represents that it has no
present intention of selling, transferring, granting any participation in, or
otherwise distributing any of the PSA Shares to any person other than the
Shareholder, and that it has no contract, undertaking, agreement, arrangement
or understanding with any person to sell, transfer, grant any participation in
or otherwise distribute any of the PSA Shares to any person other than the
Shareholder.
2.02 Domicile; Acknowledgment of Restrictions. The Company hereby
represents that it is domiciled in the State of New Jersey, having its
principal place of business in such State. The Company understands and
acknowledges that the PSA Shares being offered and sold to it pursuant to this
Agreement will not be registered under the Securities Act of 1933, as amended
(the "Securities Act"), or the New Jersey Uniform Securities Law of 1967, as
amended (the "New Jersey Act"), on the grounds that the offering and sale of
the PSA Shares are exempt from registration pursuant to, inter alia, Section
4(2) of the Securities Act and Section
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49:3-50(b)(9) of the New Jersey Act. Accordingly, the Company understands and
agrees that for a period of at least one year from the Closing Date or upon the
registration of the PSA Shares, stop-transfer instructions will be noted on the
stock transfer records of PSA and there will be maintained on the certificates
evidencing the PSA Shares, or any substitutions therefor, the restrictive
legend set forth below, except that such certificates shall not bear such
legend if, in the opinion of counsel satisfactory to PSA, such legend is not
required at any time or with regard to any proposed transfer of the PSA Shares
in order to establish compliance with any provisions of the Securities Act and
applicable state securities laws. Accordingly, the Company acknowledges that
the PSA Shares will not be freely assignable for at least one year from the
Closing Date or until the PSA Shares are registered for resale.
2.03 Investor Representations. The Company represents that it (i) has
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of such prospective investment in
the PSA Shares; (ii) has received all the information requested from the Buyer
and PSA and necessary to verify the accuracy of the information furnished by
PSA pursuant to this Agreement, and there has been made available to the
Company the opportunity to ask questions and to receive answers from
representatives of Buyer and PSA relative to its investment in the PSA Shares;
and (iii) has the ability to be able to bear the economic risks of such
prospective investment and are able, without materially impairing its financial
condition, to hold the PSA Shares for an indefinite period of time and to
suffer a complete loss on its investment.
2.04 Restrictive Legend. All certificates for the Exchange Shares
shall bear the following legend:
RESTRICTIVE LEGEND
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE NEW JERSEY UNIFORM SECURITIES LAW OF 1967,
AS AMENDED (THE "NEW JERSEY ACT"), IN RELIANCE ON THE EXEMPTIONS FROM
REGISTRATION CONTAINED IN SECTION 4(2) OF THE SECURITIES ACT, AND
SECTION 49:3-50(b)(9) OF THE NEW JERSEY ACT, AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT
THERETO UNDER THE SECURITIES ACT, THE NEW JERSEY ACT, AND ANY OTHER
APPLICABLE STATE SECURITIES LAWS OR (ii) AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO PSA THAT SUCH REGISTRATION IS NOT REQUIRED.
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ARTICLE III
III. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder represents and warrants as follows:
3.01 Power and Authority of the Shareholder. The Shareholder has the
right, power and capacity to execute, deliver and perform this Agreement and
all other agreements, documents and instruments executed by such Shareholder in
connection with the transactions contemplated hereby (the "Shareholder
Documents"), and to consummate the transactions contemplated thereby. The
execution, delivery and performance of the Shareholder Documents and the
consummation of the transactions contemplated thereby, have been duly and
validly authorized by all necessary action, corporate or otherwise, on the part
of the Shareholder. The Shareholder Documents have been duly and validly
executed and delivered by the Shareholder and constitute the Shareholder's
legal, valid and binding obligations, enforceable in accordance with their
respective terms. The execution and delivery of the Shareholder Documents by
the Shareholder, the consummation of the transactions contemplated therein by
the Shareholder, and the performance of the covenants and agreements of the
Shareholder, subject to fulfillment of the conditions set forth in Sections
8.02 and 8.03, will not, with or without the giving of notice or the lapse of
time, or both, (i) violate the provisions of any charter document or bylaws of
the Shareholder, (ii) violate, conflict with or result in a breach or default
under or cause termination of any term or condition of any mortgage, indenture,
contract, license, permit, instrument, trust document, or other agreement,
document or instrument to which the Shareholder is a party or by which the
Shareholder or any of its properties may be bound; or (iii) violate any
provision of law, statute, rule, regulation, court order, judgment or decree,
or ruling of any governmental authority, to which the Shareholder is a party or
by which the Shareholder or its properties may be bound.
ARTICLE IV
IV. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
AND THE COMPANY
The Shareholder and the Company hereby, jointly and severally,
represent and warrant to PSA and Buyer as follows (for purposes of the
following representations and warranties, the defined term "the 'Company'"
shall be deemed to include (i) any subsidiary of the Company, and (ii) any
entity that has previously been merged or otherwise consolidated with, or
acquired by, the Company regardless of the form of
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the transaction, and any matters set forth on any Schedule relating to any
subsidiary or such other entity shall specifically refer to such subsidiary or
such other entity):
4.01 Organization and Authorization.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation and has
all requisite power and authority, corporate or otherwise, to carry on and
conduct its business as it is now being conducted and to own or lease its
properties and assets, and is duly qualified and in good standing in the states
set forth on Schedule 4.01(a). The Company is duly qualified and in good
standing in every state of the United States in which the conduct of the
business of such Company or the ownership of its properties and assets requires
it to be so qualified.
(b) The Company has the right, power and capacity to execute,
deliver and perform this Agreement and all other agreements, documents and
instruments executed by such Company in connection with the transactions
contemplated hereby (the "Company Documents"), and to consummate the
transactions contemplated thereby. The execution, delivery and performance of
the Company Documents, and the consummation of the transactions contemplated
thereby, have been duly and validly authorized by all necessary action,
corporate or otherwise, on the part of the Company. The Company Documents have
been duly and validly executed and delivered by the Company and constitute the
Company's legal, valid and binding obligations, enforceable in accordance with
their respective terms.
4.02 Authorized and Outstanding Stock. All of the authorized capital
stock of the Company is owned by the Shareholder. All of the issued and
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable.
4.03 Absence of Other Claims. Except where the existence of such claim
or right will not affect the transactions contemplated by this Agreement, there
is not outstanding, nor is the Company bound by, any subscriptions, options,
preemptive rights, warrants, calls, commitments or agreements or rights of any
character requiring the Company to issue or entitling any person or entity to
acquire any additional shares of capital stock or any other equity security of
the Company, including any right of conversion or exchange under any
outstanding security or other instrument, and the Company is not obligated to
issue or transfer any shares of its capital stock for any purpose, nor are
there any outstanding obligations of the Company to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock of the Company.
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4.04 Financial Statements. Schedule 4.04(a) contains the unaudited
balance sheet of the Business as of October 31, 1997, and the related unaudited
statements of income and retained earnings for the twelve (12) month period
ended October 31, 1997, and any related notes thereto; and the unaudited
balance sheet of the Business as of February 28, 1998, and the related
unaudited statements of income and retained earnings for the four (4) month
period ended February 28, 1998 (the "1997 Financial Statements" and the
"Interim Financial Statements," respectively, and collectively the "Financial
Statements"). The 1997 Financial Statements are true, correct and complete and
present fairly the financial position of the Business as of the date thereof,
and the related results of its operations for the periods then ended. The
Interim Financial Statements are true, correct and complete and present fairly
the financial position of the Business as of the date thereof, and the related
results of its operations for the periods then ended. The 1997 Financial
Statements have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a basis consistent with past practice except as
noted on Schedule 4.04(b) hereto. The Interim Financial Statements have been
prepared on a basis consistent with past practice and with prior periods. All
adjustments, consisting of normal, recurring accruals necessary for a fair
presentation, have been made in the Interim Financial Statements. The unaudited
balance sheets as of October 31, 1997, included in the 1997 Financial
Statements are referred to herein as the "1997 Balance Sheet" and the unaudited
balance sheets as of February 28, 1998, included in the Interim Financial
Statements are referred to herein as the "Interim Balance Sheet".
4.05 No Undisclosed Liabilities. Except as and to the extent reflected
and adequately reserved against in the Interim Balance Sheet or as shown on
Schedule 4.05, as of February 28, 1998, the Business had no liability or
obligation whatsoever, whether accrued, absolute, contingent or otherwise.
Since February 28, 1998, the Business has not incurred any liability or
obligation whatsoever, except for liabilities and obligations incurred by the
Business in the ordinary course of its business consistent with past practice
or as reflected on Schedule 4.05.
4.06 No Violation of Law. Prior to the Closing Date, the Company is
not, and to the knowledge of the Company and Shareholder, has not been (by
virtue of any past or present action, omission to act, contract to which it is
a party or any occurrence or state of facts whatsoever) in violation of any
applicable local, state or federal law, ordinance, regulation, order,
injunction or decree, or any other requirement of any governmental body, agency
or authority or court binding on the Company, or relating to its property or
business which would have a material adverse effect on the Company or the
Business.
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4.07 Property.
(a) Schedule 1.01(a) sets forth a complete and accurate list and
description of the Assets, which include all the real and personal property
with a value of greater than $500, other than the Excluded Assets, that the
Company uses in the Business and owns or leases, has agreed (or has an option)
to purchase, sell or lease, or may be obligated to purchase, sell or lease.
(b) The Company (i) has good and valid title to the Assets. The
Company owns the Assets free and clear of all liens, restrictions, claims,
charges, security interests, easements or other encumbrances of any nature
whatsoever, including any mortgages, leases, chattel mortgages, conditional
sales contracts, collateral security arrangements and other title or interest
retention arrangements except as described in Schedule 4.07(b) ("Liens"). Any
Liens will be removed on or before the Closing, except any liens placed on
Assets by the primary credit facility of the Company or the Shareholder, which
liens shall be released within 30 days of Closing. Except for property leased
to customers in the ordinary course of business, all of the Assets are in the
possession or control of the Company.
(c) Except as set forth on Schedule 4.07(c), the Assets have no
known material defects, and are in good and safe operating condition and repair
and are adequate for the uses to which they are being put.
(d) The rights, properties and other assets included in the
Assets and described in Schedule 1.01(a) include all rights, properties and
other assets necessary to permit the Buyer the conduct the Business immediately
after the Closing in the same manner as the Business has been heretofore
conducted without any need for replacement, refurbishment (except in the
ordinary course) or extraordinary repair of Assets.
4.08 Intellectual Property.
(a) The Company or the Shareholder is the sole and exclusive
owner and has the sole and exclusive right to use the name "Transworld Nurses."
For a period of 60 days after the Closing Date, Buyer shall be permitted to
continue to use such name, if necessary; provided, however, Buyer shall
indemnify the Company and the Shareholder for any wrongful use of such name or
liabilities which arise from Buyer's use of such name.
(b) Computer Software and Databases. Schedule 4.08(b) accurately
identifies, and describes the functions of, all computer software and databases
owned, licensed, leased, internally developed or
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otherwise used in connection with the Business. The Company has, and believes
that, assuming Buyer buys or licenses the software described below and pays the
fees with respect thereto (upon terms and conditions which are solely between
Buyer and the vendor thereof), upon consummation of the transactions
contemplated by this Agreement, Buyer will have, all computer software and
databases that are necessary to conduct the Business as presently conducted by
the Company and all documentation relating to all such computer software and
databases. To the best knowledge of the Company and the Shareholder, the
computer software and databases perform in accordance with the documentation
related thereto or used in connection therewith and are free of defects in
programming and operation. The Company has not sold, licensed, leased or
otherwise transferred or granted any interest or rights to any of the computer
software and databases used in the Business to any third party. Except as
described on Schedule 4.08(b), the Company has the right to sell or assign the
software leased by it and used in the Business.
4.09 Litigation. Schedule 4.09(a) (i) sets forth all litigation,
claims, suits, actions, investigations, indictments, proceedings or
arbitrations, grievances or other procedures (including grand jury
investigations, actions or proceedings, and product liability and workers'
compensation suits, actions or proceedings) pending, or to the knowledge of the
Shareholder or the Company, threatened, before any court, commission,
arbitration tribunal, or judicial, governmental or administrative department,
body, agency, administrator or official, grand jury, or any other forum for the
resolution of grievances, against the Company and involving any of the Assets
or the Business, and (ii) indicates which of such matters are being defended by
an insurance carrier, and which of the matters being so defended are being
defended under a reservation of rights. Further, except as set forth in
Schedule 4.09(b), there are no judgments, orders, writs, injunctions, decrees,
indictments, grand jury subpoenas or civil investigative demands, plea
agreements, stipulations or awards (whether rendered by a court, commission,
arbitration tribunal, or judicial, governmental or administrative department,
body, agency, administrator or official, grand jury or any other forum for the
resolution of grievances) against or relating to the Company and involving any
of the Assets or the Business.
4.10 Employees. Schedule 4.10 sets forth the names and current
compensation (broken down by category, e.g., salary, bonus, commission) of all
employees and personnel of the Company used in the Business, together with the
date and amount of the last increase in compensation for each such person, as
well as the title and "essential functions" (as defined in 29 CFR ss.
1630.2(n)) of each such employee. All such personnel have been properly treated
as employees or independent contractors for purposes of withholding tax,
unemployment tax, F.I.C.A. contributions, and worker's compensation.
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4.11 Employee Benefit Plans. Except for those plans described on
Schedule 4.11 (the "Employee Benefit Plans"), the Company does not now have,
maintain or contribute to (and has not previously had, maintained or
contributed to) any employee benefit plans, as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any
specified fringe benefit plan, as defined in Section 6039D of the Internal
Revenue Code of 1986, as amended (the "Code"), nor any other type of
retirement, deferred compensation, insurance, bonus, medical, stock option or
other plan or arrangement to benefit any employees or former employees of the
Company, or the dependents of, or other individuals associated with, such
employees or former employees. Neither the Company nor any entity which,
together with the Company, would constitute a single employer under Section
414(b),(c),(m) or (o) of the Code contributes or has contributed or is
obligated to contribute to an "employee benefit pension plan" (as defined in
Section 3(2) of ERISA), or to a "multiemployer plan" (as defined in Sections
3(37) or 4001(a)(3) of ERISA). The Company warrants and represents that the
Employee Benefit Plans have been maintained in compliance with all applicable
laws and regulations (including ERISA and the Code). The Company has received
no notice that the Assets are currently subject to a lien or other process
under the Code or ERISA, and knows of no threatened or pending action related
to the Employee Benefit Plans by any employee or former employee, any plan
fiduciary or administrator, any plan participant or beneficiary, the Department
of Labor, Internal Revenue Service, the Pension Benefit Guaranty Corporation,
or any other governmental agency.
4.12 Collective Bargaining. There are no labor contracts, collective
bargaining agreements, letters of understanding or other arrangements, formal
or informal, with any union or labor organization covering any of the employees
of the Company used in the Business and none of said employees are represented
by any union or labor organization.
4.13 Labor Disputes. To the best knowledge of the Company and the
Shareholder, the Company is in compliance with all federal and state laws
respecting immigration, employment and employment practices, terms and
conditions of employment, wages and hours. To the best knowledge of the Company
and the Shareholder, the Company is not and has not been engaged in any unfair
labor practice. No unfair labor practice complaint against the Company is
pending before the National Labor Relations Board. Neither the Company nor the
Shareholder knows or has reason to know of any labor strike or other labor
trouble, other than normal day-to-day employee complaints, actually pending,
being threatened against, or affecting the Company or the Business. Relations
between management and labor are amicable and there have not been nor, to the
knowledge of the
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Company or the Shareholder, are there presently, any attempts to organize
non-union employees, nor to the knowledge of the Company or the Shareholder,
are there plans for any such attempts.
4.14 Tax Matters.
(a) Definitions. For purposes of this Agreement, the following
definitions shall apply:
(i) The term "Taxes" shall mean all taxes, however
denominated, including any interest, penalties or other additions
to tax that may become payable in respect thereof, imposed by any
federal, territorial, state, local or foreign government or any
agency or political subdivision of any such government, which
taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including, but not
limited to, federal income taxes and state income taxes), payroll
and employee withholding taxes, unemployment insurance, social
security taxes, sales and use taxes, ad valorem taxes, excise
taxes, franchise taxes, gross receipts taxes, business license
taxes, occupation taxes, real and personal property taxes, stamp
taxes, environmental taxes, transfer taxes, workers'
compensation, Pension Benefit Guaranty Corporation premiums and
other governmental charges, and other obligations of the same or
of a similar nature to any of the foregoing, which the Company is
required to pay, withhold or collect.
(ii) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns
relating to, or required to be filed in connection with, any
Taxes, including information returns or reports with respect to
backup withholding and other payments to third parties.
(b) Returns Filed and Taxes Paid. Except as otherwise disclosed
in Schedule 4.14(b): (i) all Returns required to be filed by or on behalf of
the Company have been duly filed on a timely basis (or valid extensions of time
to file such Returns have been obtained with respect thereto) and such Returns
are true, complete and correct; (ii) all Taxes shown to be payable on the
Returns or on subsequent assessments with respect thereto have been paid in
full on a timely basis, and no other Taxes are payable by the Company with
respect to items or periods covered by such Returns (whether or not shown on or
reportable on such Returns) or with respect to any period prior to the date of
this Agreement; (iii) the Company has withheld and paid over all Taxes required
to have been withheld and paid over, and complied with all
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information reporting and backup withholding requirements, including
maintenance of required records with respect thereto, in connection with
amounts paid or owing to any employee, creditor, independent contractor, or
other third party; and (iv) there are no liens on any of the Assets of the
Company with respect to Taxes, other than liens for Taxes not yet due and
payable or for Taxes that the Company is contesting in good faith through
appropriate proceedings and for which appropriate reserves have been
established, which contested Taxes are disclosed in Schedule 4.14(b).
(c) Intentionally Omitted.
(d) Shareholders Agreements. The Company is not a party to any
shareholders agreement.
(e) Returns Furnished. The Company has furnished Buyer with true
and complete copies of all federal and state income or franchise tax returns
for the Company for all periods ending on and after December 31, 1995. Except
as otherwise disclosed in Schedule 4.14(e), the Company has never been a member
of an affiliated group (as defined in Section 1504 of the Code) required to
join in the filing of consolidated returns, and the Company does not do
business in any state, local, territorial or foreign taxing jurisdiction which
would require the filing of a Return other than those for which all Returns
have been furnished to Buyer pursuant to (ii) above.
4.15 Required Licenses and Permits. The Company has all licenses,
permits or other authorizations of governmental authorities necessary for the
operation of the Business. A correct and complete list of all such material
licenses, permits and other authorizations is set forth on Schedule 4.15. The
Company has made available to Buyer true, correct, and complete copies of all
written licenses and permits listed on Schedule 4.15.
4.16 Major Suppliers. Schedule 4.16 sets forth a list of each supplier
of goods or services to the Company with respect to the operation of the
Business, to whom the Company paid or was billed in the aggregate more than
$10,000.00 during the 12-month period ended February 28, 1998, together, in
each case, with the amount paid or billed during such period. The Company is
not engaged in any dispute with any of such suppliers, and the Company does not
know or have any reason to believe that the consummation of the transactions
contemplated hereunder will have any adverse effect on the business
relationship of any such supplier with the Company.
4.17 Loans, Leases, Contracts, Etc. The loans, mortgages, pledges,
guaranties, leases, agreements, contracts or similar arrangements under
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which the Company may have liability or responsibility (contingent or
otherwise), all as listed on Schedule 4.17 (hereinafter referred to
collectively as the "Existing Agreements"), include all of the loans,
mortgages, pledges, guaranties, leases, agreements, contracts or similar
agreements to which the Company is a party or by which the Company is bound as
of the date hereof. The Company has made available to Buyer true and correct
copies of the Existing Agreements. Schedule 4.17 specifies which of the leases
shown on such Schedule, if any, are capital leases. Except as set forth on
Schedule 4.17, the Existing Agreements are all valid and subsisting agreements
and have not been modified or amended. Except as set forth on Schedule 4.17,
neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will terminate, vary, or constitute a breach
of any of the Existing Agreements. Except as set forth on Schedule 4.17, as of
the Closing Date, the Company shall have fulfilled or taken all actions
necessary to enable it to fulfill, when done, all current obligations under the
Existing Agreements. To the knowledge of the Company and the Shareholder, no
default by the Company has occurred, nor has any event occurred which, with the
lapse of time or the election of any person other than the Company, will become
a default by the Company, nor, to the knowledge of the Shareholder or the
Company, has there occurred any default by others or any event which, with the
lapse of time or the election of the Company, will become a default under any
of the Existing Agreements. Subject to obtaining consents to the assignment of
Existing Agreements, neither the Company nor the Shareholder, at the date of
this Agreement, has received a written communication from any party to an
Existing Agreement that such party will or may cancel any of the Existing
Agreements.
4.18 No Conflict. The execution and delivery of this Agreement by the
Company, the consummation of the transactions contemplated herein by the
Company, and the performance of the covenants and agreements of the Company,
subject to fulfillment of the conditions set forth in Sections 9.02 and 9.03
hereof, will not, with or without the giving of notice or the lapse of time, or
both, (a) violate or conflict with any of the provisions of any charter
document or bylaw of the Company; or (b) except as set forth in Schedule 4.18,
violate, conflict with or result in a breach or default under or cause
modification, termination or acceleration of any term or condition of any
Existing Agreement to which the Company is a party or by which the Company or
its properties may be bound; or (c) violate any provision of law, statute,
regulation, court order or ruling of any governmental authority, to which the
Company is a party or by which its properties may be bound, or (d) result in
the creation or imposition of any lien, claim, charge, restriction, security
interest or encumbrance of any kind whatsoever upon any Asset.
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4.19 Required Consents and Approvals. Except as set forth in Schedule
4.19, to the knowledge of the Company and the Shareholder, no consent or
approval is required by virtue of the execution hereof by the Company or the
consummation of any of the transactions contemplated herein by the Company to
avoid the violation or breach of, or the default under, or the creation of a
lien on the Assets pursuant to the terms of, any regulation, order, decree or
award of any court or governmental agency or any Existing Agreement to which
the Company is a party or to which the Company or the Assets is subject.
4.20 Absence of Certain Changes and Events. Except as set forth in
Schedule 4.20, since February 28, 1998, the Company has conducted the Business
only in the ordinary course, and has not:
(a) suffered any damage or destruction adversely affecting the
Assets or Business;
(b) made any transfer of assets used in the Business except in
the ordinary course of business;
(c) suffered any material adverse change in its working capital,
assets, liabilities, financial condition, business prospects, or relationships
with any suppliers listed on Schedule 4.16;
(d) except for customary increases based on term of service or
regular promotion of non-officer employees, increased (or announced any
increase in) the compensation payable or to become payable to any employee of
the Business, or increased (or announced any increase in) any bonus, insurance,
pension or other employee benefit plan, payment or arrangement for such
employees, or entered into or amended any employment, consulting, severance or
similar agreement with regard to employees of the Business;
(e) incurred, assumed or guaranteed any liability or obligation
(absolute, accrued, contingent or otherwise) other than in the ordinary course
of business consistent with past practice;
(f) paid, discharged, satisfied or renewed any claim, liability
or obligation of the Business other than payment in the ordinary course of
business and consistent with past practice;
(g) permitted any of the Assets to be subjected to any mortgage,
lien, security interest, restriction, charge or other encumbrance of any kind;
(h) waived any material claims or rights of the Business or the
Company;
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(i) made any capital expenditures or investments in the Business
or in Assets which individually exceed $10,000 or in the aggregate exceed
$25,000;
(j) managed working capital components, including cash,
receivables, other current assets, trade payables and other current liabilities
of the Business in a fashion inconsistent with past practice, including failing
to sell inventory and other property in an orderly and prudent manner or
failing to make all budgeted and other normal capital expenditures, repairs,
improvements and dispositions;
(k) paid, loaned, advanced, sold, transferred or leased any Asset
to any employee, except for normal compensation involving salary and benefits;
(l) issued or sold any of its capital stock or issued any
warrant, option or other right to purchase shares of its capital stock, or any
security convertible into its capital stock;
(m) entered into any material commitment or transaction, other
than in the ordinary course of business consistent with past practice,
affecting the operations of the Company; or
(n) agreed in writing, or otherwise, to take any action described
in this Section.
4.21 Accounts Receivable. With respect to all accounts receivable of
the Business, as listed on Schedule 4.21 as of the Closing Date:
(a) each such account is based on an actual and bona-fide
rendition of services or the provision of supplies by the Company in the course
of its business and each such account is payable by a third party obligor or a
patient or another person which the Company has identified as being financially
obligated to do so;
(b) the third party obligor, the patient and any other person
identified by the Company as being financially obligated to pay each account
are obligated to pay all amounts shown to be due on each such account without
dispute, reduction in an amount for any reason whatsoever, offset, defense or
counterclaim;
(c) except as shown in Schedule 4.21, no account has arisen based
on any contract with federal or state agencies or programs;
(d) none of the accounts represent services furnished or provided
to or on behalf of any subsidiary, parent, person, associate or any other
entity affiliated, directly or indirectly, with the Company;
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(e) the Company is in possession of all material documents
necessary to obtain payment from the third party obligor or any other person
with respect to each account, including the applicable uniform billing form;
(f) the Company has made all payments to third party obligors,
the patient or any other person necessary to prevent such third party obligors,
the patient or any other person from the offsetting, or making a demand for
repayment, of an earlier overpayment to the Company against any amount that
third party obligor, the patient or any other person owes on any account;
(g) the accounts receivable are payable only in U.S. dollars, and
the accounts receivable are fully collectible in the net amount of $1,300,000
as shown on the Interim Balance Sheet; and
(h) to the Company's and the Shareholder's knowledge, the
transfer of accounts pursuant to this agreement will not violate any federal,
state or local law, rule or regulation, or court order or governmental decree
applicable to the Company or the Business, or the terms of any contract
relating to such accounts.
Collection of accounts receivable in the amount of $1,300,000 shall satisfy the
representations contained in this Section 4.21, unless refunds are thereafter
requested by payors of such accounts receivable. If Buyer makes a claim and is
paid for a Loss (as defined in Article XI hereof) under this Section 4.21, then
Buyer shall immediately return to the Company the title to the uncollected
accounts receivable in respect of which such claim for a Loss was made.
4.22 Health Care Matters.
(a) no certificate of need is necessary for the operation of the
Business as it is operated on the Closing Date. The Company has no CON
applications pending or any approved but unimplemented CONs;
(b) to the knowledge of the Company and the Shareholder, the
facilities, equipment and operations of each location of the Business satisfy
in all material respects the applicable home health or home care licensing
requirements of each state in which the Business operates as it is operated on
the Closing Date. The Company holds all licenses, permits, registrations,
certificates, consents and approvals ("Licenses and Permits") required to be
held by it to own, occupy and lease, if applicable, its assets and to conduct
its business as heretofore listed in Scheduled 4.15. No notice from any
authority in respect of the revocation, termination, suspension or limitation
of any License or
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Permit has been received, nor is the Shareholder or the Company aware of
the proposed or threatened issuance of any such notice;
(c) the Company has current agreements with certain third party
payors in each state in which it operates, all of which third party payor
agreements (including Medicaid participation agreements) are listed in Schedule
4.22(c). True and correct copies of all third party payor agreements of the
Company have been provided to Buyer, and the Company is not in default under,
and the Company is, to the knowledge of the Company and the Shareholder,
presently in compliance with all of the terms, conditions and provisions of
each such agreement to which it is a party;
(d) the Company is qualified for participation in the Medicaid
program, and has been assigned the Medicaid provider numbers, in each case as
described in Schedule 4.22(d). To the knowledge of the Company and the
Shareholder, the Company is presently in compliance with all of the applicable
terms and conditions for participation in each such Medicaid program;
(e) to the knowledge of the Company and the Shareholder, all
billings by the Company to the Medicaid program have been made in accordance
with applicable law (including, without limitation, in accordance with all
applicable regulations and published policies and procedures) and there has
been no overbilling; nor has there been any over collecting from such program
or overpayment by such program which has not been refunded;
(f) to the knowledge of the Company and the Shareholder, all
billings by the Company to any private third party payor have been made in
accordance with applicable law and the third party payor contract, and there
has been no overbilling; nor has there been any over collecting from such payor
or overpayment by such payor which has not been refunded;
(g) the Company has previously delivered to Buyer true and
complete copies of the Company's most recent Community Health Accreditation
Program, Inc. ("CHAP") accreditation survey reports and deficiency lists, if
any, the most recent of any Statements of Deficiencies and Plans of Correction
under the Medicaid program, if any, and each of the most recent state licensing
reports and lists of deficiencies, if any;
(h) no officer, director, employee or agent of either Company (i)
has been convicted of a criminal offense as described in Section 1128(a) and
1128(b)(1)(2) or (3) of the Social Security Act; (ii) has had civil money
penalties or assessments imposed under Section 1128(a) of the
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Social Security Act; or (iii) has been excluded from participation in any of
the state health care programs; and
(i) the cost reports of the Company for Medicaid for the fiscal
years listed on Schedule 4.22(i) (if any) have been audited. All Medicaid cost
reports of the Company were filed by the required filing dates, and such
reports do not claim, and the Company has not received, reimbursement in excess
of the amount provided by law. The Company has supplied Buyer with copies of
the Medicaid cost reports, if any, filed by the Company for the past five (5)
years.
4.23 Products Liability Risks. To the best knowledge of the Company
and the Shareholder, the Company is not subject to any products liability claim
or action. Neither the Company nor the Shareholder is aware of any state of
facts that may result in any claim or action, with respect to any defect in any
product manufactured, processed, packaged, or sold, or any service rendered by
the Company.
4.24 Fraud and Abuse. The Company has not engaged in any activities
with are prohibited (a) under 42 U.S.C. ss.1320a-7b, or the regulations
promulgated thereunder, or related state or local statutes or regulations, or
(b) by Rules of Professional Conduct, or (c) by law or any third party payor
contract, including but not limited to the following: (i) knowingly and
wilfully making or causing to be made a false statement or representation of a
material fact in any application for any benefit or payment; (ii) knowingly and
willfully making or causing to be made any false statement or representation of
a material fact for use in determining rights to any benefit or payment; (iii)
failure to disclose knowledge by a claimant of the occurrence of any event
affecting the initial or continued right to any benefit of payment on its own
behalf or on behalf of another, with intent to fraudulently secure such benefit
or payment; and (iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (A) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item of service for which
payment may be made in whole or in part by Medicare or Medicaid or any third
party payor, or (B) in return for purchasing, leasing, or ordering or arranging
for or recommending purchasing, leasing, or ordering any good, facility,
service, or item for which payment may be made in whole or in part by Medicare
or Medicaid or any third party payor.
4.25 Insurance. All of the policies of insurance and binders presently
in force, with respect to the Company, including, without limitation, those
covering properties, buildings, machinery, equipment, furniture, fixtures,
operations, worker's compensation, malpractice
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liability, public liability and product's liability, are set forth in and
disclosed on Schedule 4.25. The Company has not received notice of any pending
or threatened termination or premium increase (retroactive or otherwise) with
respect thereto, and the Company is in compliance with all conditions contained
therein. There have been no lapses (whether cured or not) in the coverage
provided under the insurance policies referenced herein and as set forth on
Schedule 4.25, during the term of such policies, as extended or renewed. Except
as set forth on Schedule 4.25, (i) the Company has not filed a written
application for any insurance for the Company which has been denied by an
insurance agency or carrier, and (ii) the Company has been continuously insured
for professional malpractice claims since it began its operations. Such
insurance policies are occurrence type coverage policies (or the Company will
purchase tail coverage to provide for claims brought after Closing which arose
before Closing) with coverage of at least $1,000,000 per claim, and $3,000,000
in the aggregate, and such amounts and types of coverage are adequate to insure
fully against risks to which the Company and the Business are exposed. Schedule
4.25 also sets forth a list of all claims for any insured loss in excess of
$5,000 per occurrence. The Company is not in default with respect to any
provision contained in any such policy and has not failed to give any notice or
present any claim under any such policy in due and timely fashion.
4.26 Environmental Requirements. To the knowledge of the Company and
the Shareholder, the Company is in compliance with all applicable requirements,
restrictions, limitations, conditions, standards, prohibitions, and obligations
contained in all federal, state, and local laws relating to environmental, land
use, health, or safety matters, including any and all regulations, codes,
plans, orders, decrees, judgments, and notices issued, entered, promulgated, or
approved thereunder ("Environmental Laws"), except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect. None
of the Assets or locations of the Business are, as a result of any actions,
operations, or activities of the Company or any officer, affiliate, agent,
employee, or contractor of the Company on any federal or state "Superfund" list
or, to the knowledge of the Company or the Shareholder, has been the site of
any activity that would violate any Environmental Laws.
4.27 Disclosure. No representation, warranty, assurance or statement
by the Shareholder or the Company in this Agreement and no statement contained
in any document (including the Financial Statements and the Schedules),
certificate or other writing furnished or to be furnished by the Shareholder or
the Company (or caused to be furnished by the Shareholder or the Company) to
Buyer or any of its representatives pursuant to the provisions hereof contains
or will contain any untrue statement of material fact, or omits or will omit to
state any fact
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necessary, in light of the circumstances under which it was made (including any
reference to a qualifier of knowledge), in order to make the statements herein
or therein not misleading.
ARTICLE V
V. REPRESENTATIONS AND WARRANTIES OF BUYER AND PSA
Buyer and PSA hereby represent and warrant to the Company and the
Shareholder as follows:
5.01 Organization. (a) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia and has
all requisite power and authority, corporate or otherwise, to carry on and
conduct its business as it is now being conducted and to own or lease its
properties and assets, and is duly qualified and in good standing in every
state of the United States in which the conduct of the business of Buyer or the
ownership of its properties and assets requires it to be so qualified except
where the failure to be so qualified would not have a material adverse effect
on the operations or financial condition of Buyer.
(b) PSA is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and its capitalization is
80,000,000 shares: 78,000,000 shares of Common Stock, $0.01 par value, of which
7,139,000 are issued and outstanding immediately prior to the date of this
Agreement, and 2,000,000 shares of Preferred Stock, of which no shares are
issued and outstanding as of the date hereof. PSA has all requisite power and
authority, corporate or otherwise, to carry on and conduct its business as it
is now being conducted and to own or lease its properties and assets, and is
duly qualified and in good standing in every state of the United States in
which the conduct of the business of PSA or the ownership of its properties and
assets requires it to be so qualified except where the failure to be so
qualified would not have a material adverse effect on the operations or
financial condition of PSA.
5.02 Authorization. Each of PSA and Buyer has the right, power and
capacity to execute, deliver and perform this Agreement and all other
agreements, documents and instruments to be executed by PSA or Buyer, as
applicable, in connection with the transactions contemplated hereby (the
"Transaction Documents") and to consummate the transactions contemplated
hereby. The execution, delivery and performance of the Transaction Documents,
and the consummation of the transactions contemplated thereby, have been duly
and validly authorized by all necessary corporate action
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on the part of PSA and Buyer. The Transaction Documents have been duly and
validly executed and delivered by PSA and Buyer and constitute, as applicable,
PSA's and Buyer's legal, valid and binding obligation, enforceable against each
of them, as applicable, in accordance with their terms, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws from time
to time in effect affecting the enforcement of creditors rights generally, or
by public policy with respect to indemnification provisions hereof.
5.03 No Conflict. The execution and delivery of the Transaction
Documents by PSA and Buyer, the consummation of the transactions contemplated
therein by PSA and Buyer, and the performance of the covenants and agreements
of PSA and Buyer will not, with or without the giving of notice or the lapse of
time, or both, (a) violate or conflict with any of the provisions of any
charter document or bylaw of PSA or Buyer; (b) violate, conflict with or result
in breach or default under or cause termination of any term or condition of any
mortgage, indenture, contract, license, permit, instrument, trust document, or
other agreement, document or instrument to which PSA or Buyer is a party or by
which PSA or Buyer or any of their respective properties may be bound; or (c)
violate any provision of law, statute, rule, regulation, court order, judgment
or decree, or ruling of any governmental authority, to which PSA or Buyer is a
party or by which PSA or Buyer or their respective properties may be bound.
5.04 Current Public Information; Material Facts. Buyer and PSA have
furnished the Company with copies of the following documents pertaining to PSA:
(a) An Annual Report on Form 10-K for the year ended
September 30, 1997;
(b) an Annual Report to Shareholders (the "Annual Report") for
the year ended September 30, 1997;
(c) a proxy statement for PSA's 1998 Annual Meeting;
(d) a Quarterly Report on Form 10-Q for the quarter ended
December 31, 1997; and
(e) Quarterly Report on Form 10-Q for the quarter ended March 31,
1998, if publicly released prior to the date hereof.
(collectively, the "Disclosure Documents")
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Since the date of the last filed Disclosure Document, PSA has not filed any
current reports on Form 8-K under the Securities Exchange Act of 1934, as
amended.
This Agreement and the Disclosure Documents and any other document,
certificate or other writing furnished to the Company by or on behalf of Buyer
or PSA in connection with the transactions contemplated hereby do not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained herein or therein, in the light of
the circumstances under which they were made, not misleading.
5.05 No Violation of Law. Neither Buyer nor PSA is in material
violation of any applicable material local, state or federal law, ordinance,
regulation, order, injunction or decree, or any other requirement of any
governmental body, agency or authority or court binding on Buyer or PSA,
respectively, or material to their respective operations.
5.06 Required Consents and Approvals. Except as set forth in Schedule
5.06, no material consent or approval is required by virtue of the execution
hereof by PSA or Buyer or the consummation of any of the transactions
contemplated herein by PSA or Buyer.
5.07 S-3 Registration Statement. PSA is current in all of its required
filings with the Securities and Exchange Commission ("SEC"). Neither Buyer nor
PSA have knowledge of any state of facts regarding Buyer or PSA which would
cause the SEC to refuse to grant the effectiveness of the S-3 Registration
Statement referenced in Article VII hereof.
5.08 Disclosure. No representations, warranties, assurances or
statements by PSA or Buyer in this Agreement and no statement contained in any
Schedules hereto, certificates or other writings furnished or to be furnished
by PSA or Buyer (or caused to be furnished by PSA or Buyer) to the Company or
any of its representatives pursuant to the provisions hereof contains or will
contain any untrue statement of material fact, or omits or will omit to state
any material fact necessary, in light of the circumstances under which it was
made, in order to make the statements herein or therein not misleading.
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ARTICLE VI
VI. COVENANTS OF THE PARTIES
The Company, the Shareholder, PSA and Buyer, respectively, hereby
covenant to and agree with one another as follows:
6.01 Transfer Taxes.
(a) All New Jersey or Florida sales or transfer taxes, including
but not limited to, stock transfer taxes, document recording fees, real
property transfer taxes, and excise taxes, arising out of or in connection with
the consummation of the transactions contemplated hereby shall be paid equally
by the Company and Buyer.
(b) The Company and the Shareholder shall be responsible for the
payment of the following:
(i) all federal, state and other taxes imposed upon the
Company or the Shareholder's gross or net income from the
transactions contemplated hereunder (including without limitation
the recapture of investment tax credit);
(ii) all sales and use Taxes imposed on the purchase, sale,
use or transfer of property by the Company prior to and as a
result of the Closing; and
(iii) any penalties, interest, or similar charges with
respect to the foregoing Taxes enumerated in this Section 6.01.
6.02 Approvals of Third Parties; Satisfaction of Conditions to
Closing. The Company, the Shareholder, PSA and Buyer will use their reasonable,
good faith efforts, and will cooperate with one another, to secure all
necessary consents, approvals, authorizations and exemptions from governmental
agencies and other third parties, including, without limitation, all consents
required by Sections 9.02 and 9.03, or as are necessary to consummate the
transactions contemplated hereby. The Company and the Shareholder will use
their reasonable, good faith efforts to obtain the satisfaction of the
conditions specified in Article X. Buyer will use its reasonable, good faith
efforts to cause or obtain the satisfaction of the conditions specified in
Article IX.
6.03 Employee Benefits Plans. Buyer shall not adopt, assume or
otherwise become responsible for, either primarily or as a successor employer,
any assets or liabilities of any employee benefit plans, arrangements,
commitments or policies currently provided by the Company or by any entity
which, together with the Company, would constitute a
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single employee under Section 414(b), (c), (m) or (o) of the Code (including
but not limited to the Employee Benefit Plans identified on Schedule 4.11); if
and to the extent that Buyer is deemed by law or otherwise to be liable as a
successor employer for such purposes, and to the extent that such liability
involves a claim arising from events prior to the Closing Date, then and only
then the Company shall indemnify Buyer for the full and complete costs, fees
and other liabilities which result. Additionally, the Company agrees not to
assert that Buyer is a successor employer of the Company or any entity which,
together with the Company, would constitute a single employer under Section
414(b), (c), (m) or (o) of the Code. In particular, Buyer shall not assume
liability for any group health continuation coverage or coverage rights under
Section 4980B of the Code or Part 6 of Title I of ERISA applicable to a group
health plan maintained by the Company at any time prior to the Closing Date,
and if and to the extent that Buyer is deemed by law or otherwise to be liable
as a successor employer for such group health continuation coverage purposes,
the Company shall indemnify Buyer for the full and complete costs, fees and
other liabilities which result.
6.04 Assumption of Liabilities by Buyer. Effective upon the Closing,
Buyer shall by written instrument in the form of Exhibit 6.04 attached hereto
assume and agree to pay, perform, and discharge, and to indemnify and hold
harmless the Company and the Shareholder, their successors and assigns, against
and hold them harmless from (i) obligations and liabilities of the Company
remaining unpaid or unperformed after Closing under the agreements of the
Company set forth on Exhibit 6.04 which are assigned to the Buyer and with
respect to which the Buyer succeeds to the rights of the Company thereunder
except claims, obligations and liabilities, actual or contingent arising out of
events prior to the Closing including any claims or litigation, or arising out
of the Company's default or breach of the agreements set forth on Exhibit 6.04,
and (ii) those liabilities and obligations set forth on Schedule 6.04.
6.05 Licensure; Failure to Obtain Licensure. Buyer has made all
appropriate applications for licensure in the States of Florida and New Jersey.
Buyer shall use its best efforts to ensure that licensure occurs in a timely
manner, but in all cases within a maximum of two (2) months from the date of
this Agreement. Any time extensions shall be by mutual written agreement of the
parties to this Agreement. Termination of this Agreement because of the failure
of the Buyer to obtain licensure shall be a permissible reason for termination
of this Agreement under Article XII hereto.
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ARTICLE VII
VII. COVENANTS OF THE COMPANY AND SHAREHOLDER
7.01 Pre-Closing Operations of the Company. Shareholder and the
Company hereby covenant and agree that, except as consented to in writing by
Buyer, pending the Closing, the Company will operate and conduct its Business,
and the Shareholder shall cause the Company to conduct its Business, only in
the ordinary course in accordance with prior practice, and carry on its
Business diligently and substantially in the manner as heretofore conducted and
not make or institute any methods of purchase, sale, lease management
accounting or operation except in the ordinary course of business consistent
with past practice. Pursuant thereto and not in limitation of the foregoing:
(a) The Company shall manage its working capital, including cash,
receivables, other current assets, trade payables and other current
liabilities, in a fashion consistent with past practice, including by selling
inventory and other property in an orderly and prudent manner and paying
outstanding obligations, trade accounts and other indebtedness as they come
due.
(b) No material contract or commitment of any kind relating to
the Company shall be entered into without the prior written consent of Buyer
(for purposes hereof, the word "material" shall refer to any contract or
commitment which, if it had been entered into prior to execution of this
Agreement, would have been disclosed in the Schedules hereto). Any such
contract entered into with the knowledge and written consent of Buyer shall be
deemed to have been disclosed in the appropriate Schedule hereto.
(c) The Company shall maintain its Assets in the present state of
repair (ordinary wear and tear excepted), shall use its best efforts to keep
available the services of the employees employed at the Effective Time, and
preserve the good will of the Business and relationships with customers,
patients, suppliers, distributors and others with whom the Company has business
relations.
(d) The Company shall not take any of the following actions after
the date of this Agreement without the prior written consent of Buyer:
(i) Dispose of any Assets other than in the ordinary course
of business consistent with past practice;
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(ii) Mortgage, pledge or subject to liens or other
encumbrances any Assets except by incurring Permitted Liens;
(iii) Purchase or commit to purchase any capital asset for a
price exceeding $5,000;
(iv) Except for planned or normal increases in the ordinary
course of business consistent with past practice with respect to
non-officer or director employees, increase or announce any
increase of any salaries, wages or employee benefits or hire,
commit to hire or terminate any employee;
(v) With respect to any employee or officer or director, pay
any bonus, except consistent with past practice or in de minimus
amounts;
(vi) Amend any charter document or bylaw;
(vii) Issue, sell or repurchase any of its capital stock, or
make any change in its issued and outstanding capital stock, or
issue any warrant, option or other right to purchase shares of
its capital stock or any security convertible into its capital
stock, or redeem, purchase or otherwise acquire any shares of its
capital stock, or declare or dividends or make any other
distribution with respect to its stock;
(viii) Incur, assume or guarantee any obligation or
liability for borrowed money, or exchange, refund or renew any
outstanding indebtedness in such a manner as to reduce the
principal amount of such indebtedness and increase the interest
rate or balance outstanding;
(ix) Cancel any debts;
(x) Amend or terminate any material agreement, including any
employee benefit plan or any insurance policy in force on the
date hereof (except as otherwise contemplated by this Agreement
or any other agreement entered into between the Company and
Buyer);
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(xi) Solicit or entertain any offer for, or sell or agree to
sell, or participate in any business combination with respect to,
any of the shares of its capital stock;
(xii) Make any changes in accounting methods, principles or
practices;
(xiii) Do any act, omit to do any act or permit any act
within Shareholder's or the Company's control which will cause a
breach of any representation, warranty or obligation contained in
this Agreement or any obligations contained in any contract; or
(xiv) Issue substitute stock certificates to replace
certificates which have been lost, misplaced, destroyed, stolen
or are otherwise irretrievable, unless an adequate bond or
indemnity agreement approved by Buyer has been duly executed and
delivered to the Company.
Provided, however, that consistent with the understanding of the parties
hereto, the Company may transfer cash from its accounts, provided that the
Company shall have at least $1,000 at Closing in the Company's cash account
which is being transferred to Buyer.
7.02 Access. From the date of this Agreement through the Closing Date,
the Company shall (i) provide Buyer and its designees (officers, counsel,
accountants, actuaries, and other authorized representatives) with such
information as Buyer may from time to time reasonably request with respect to
the Company and the transactions contemplated by this Agreement; (ii) provide
Buyer and its designees access during regular business hours and upon
reasonable notice to the books, records, offices, personnel, counsel,
accountants and actuaries of the Company, as Buyer or its designees may from
time to time reasonably request; and (iii) permit Buyer and its designees to
make such inspections thereof as Buyer may reasonably request. Any
investigation shall be conducted in such a manner so as not to interfere
unreasonably with the operation of the Business. No such investigation shall
limit or modify in any way Shareholder's or the Company's obligations with
respect to any breach of their representations, warranties, covenants or
agreements contained herein.
7.03 Interim Financials. As promptly as practicable after each regular
accounting period subsequent to the date of this Agreement and prior to the
Closing Date, the Company will deliver to Buyer periodic
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financial reports in the form which it customarily prepares for its internal
purposes concerning the Company and, if available, unaudited statements of the
financial position of the Company as of the last day of each accounting period
and statements of income and changes in financial position of the Company for
the period then ended.
ARTICLE VIII
COVENANTS OF PSA AND BUYER
PSA and Buyer, respectively, hereby covenant to the Company and
Shareholder, and agree as follows:
8.01 Issuance of PSA Shares. The PSA Shares, when issued by the
Transfer Agent, Chase Mellon Shareholder Services, shall have been duly
authorized, validly issued, fully paid and nonassessable, and shall have been
listed (or application and payment therefor made by Buyer), on the NASDAQ
National Market System, and will be free and clear of any liens, encumbrances,
pledges, security agreements, costs, or other charges.
8.02 Registration of PSA Shares. PSA will
(a) as soon as reasonably possible, and as permitted by
applicable SEC rules and regulations, after the Closing Date, file with the SEC
in conformity with the requirements of the Securities Act of 1933, a
Registration Statement on SEC Form S-3 (the "Registration Statement") pursuant
to Rule 415 of the Securities Act with respect to the resale by the Company, or
any successor in interest, of the PSA Shares, and use its reasonable best
efforts to cause the Registration Statement to become effective under the
Securities Act in a prompt manner;
(b) prepare in conformity with the requirements of the Securities
Act and file with the SEC such amendments (including pre-effective and
post-effective amendments) and supplements to the Registration Statement and
the prospectus used in connection therewith as may be necessary to keep the
Registration Statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all of the PSA Shares until
the first to occur of (i) all of the PSA Shares having been sold by the
Company, or (ii) the PSA Shares being eligible for sale by the Company pursuant
to Rule 144 under the Securities Act;
(c) furnish to the Company such number of copies of the
Registration Statement and of each such amendment and supplement thereto (in
each case including all exhibits) such number of copies of the
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prospectus included in the Registration Statement (including each preliminary
prospectus and any summary prospectus), in conformity with the requirements of
the Securities Act, and such other documents as the Company may reasonably
request in order to facilitate the disposition of the PSA Shares;
(d) until all of the PSA Shares have been sold by the Company,
notify the Company of the happening of any event as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and prepare and
furnish to the Company a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing; and
(e) pay the costs and expenses incurred by PSA in connection with
the filing of the Registration Statement and any amendments or supplements
thereto, including without limitation, NASDAQ listing fees, printing, legal,
accounting, and "blue sky" fees and expenses and SEC filing fees.
8.03 Indemnification With Respect to Registration Statement. PSA shall
indemnify and hold harmless the Company, and each other person who controls the
Company within the meaning of the Securities Act (the "Company Parties"),
against and from any damages or costs, including attorneys fees and court
costs, incurred by such Company Parties which arise out of or are based upon
(i) any untrue statement of any material fact contained in the Registration
Statement or any amendment or supplement thereto, or (ii) any omission to state
therein a material fact required to be stated in the Registration Statement, or
any amendment or supplement thereto, or necessary to make the statements
therein not misleading, unless the foregoing is based upon an untrue statement
or omission of the Company Parties.
8.04 Post-Closing Cooperation. Following the Closing Date, Buyer shall
grant the Company and the Shareholder reasonable access to patient files and
other information related to the Business to the extent that such access is
necessary for the Company and/or the Shareholder to comply with laws,
regulations, court orders or other governmental mandates.
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8.05 Accounts Receivable Reports. Every 60 days from the date of
Closing, Buyer shall deliver to the Company periodic accounts receivable
collection reports relating to the accounts receivable transferred to Buyer
under this Agreement.
ARTICLE IX
IX. CONDITIONS TO OBLIGATIONS OF THE COMPANY
Each of the obligations of the Company and the Shareholder to be
performed hereunder shall be subject to the satisfaction (or waiver by the
Company) at or prior to the Closing Date of each of the following conditions:
9.01 Representations and Warranties True at Closing Date. Each of
PSA's and Buyer's representations and warranties contained in this Agreement
shall be true in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of such date, and PSA and Buyer
shall have complied in all material respects with the covenants and agreements
set forth herein to be performed or complied with by it on or before the
Closing Date.
9.02 Required Governmental Approvals. All governmental authorizations,
consents and approvals necessary for the valid consummation of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect.
9.03 Other Necessary Consents. The Shareholder and the Company shall
have obtained all consents and approvals listed on Schedule 4.19. In addition,
the proper parties shall have executed and delivered the Non-competition
Agreement, the Employment Agreement, and the Escrow Agreement referred to,
respectively, in Sections 10.08, 10.09, and 10.10 below.
9.04 No Material Change. PSA shall not have suffered any material
adverse change since the date of this Agreement in its business or financial
condition.
9.05 Litigation. No suit, investigation, action or other proceeding
shall be pending or overtly threatened against Buyer or PSA, the Shareholder or
the Company before any court or governmental agency, which has resulted in the
restraint or prohibition of any such party, or, in the reasonable opinion of
counsel for the Company, could result in the obtaining of material damages or
other relief from any such party, in connection with this Agreement or the
consummation of the transactions contemplated hereby.
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ARTICLE X
X. CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer and PSA to be performed hereunder shall be
subject to the satisfaction (or waiver by Buyer) on or before the Closing Date
of each of the following conditions:
10.01 Representations and Warranties True at Closing Date. Each of the
representations and warranties of the Shareholder and the Company contained in
this Agreement shall be true in all material respects on and as of the Closing
Date with the same force and effect as though made on and as of such date and
the Shareholder and the Company shall have performed and complied in all
material respects with the respective covenants and agreements set forth herein
to be performed or complied with by each of them on or before the Closing Date.
10.02 No Material Change. The Company shall not have suffered any
material adverse change since February 28, 1998, in its business, including in
its prospects, financial condition, working capital, Assets, liabilities
(absolute, accrued, contingent or otherwise), reserves or operations.
10.03 Litigation. No suit, investigation, action or other proceeding
shall be pending or overtly threatened against Buyer or PSA, the Shareholder or
the Company before any court or governmental agency, which has resulted in the
restraint or prohibition of any such party, or, in the reasonable opinion of
counsel for Buyer, could result in the obtaining of material damages or other
relief from any such party, in connection with this Agreement or the
consummation of the transactions contemplated hereby.
10.04 Required Governmental Approvals. All governmental
authorizations, consents and approvals necessary for the valid consummation of
the transactions contemplated hereby shall have been obtained and shall be in
full force and effect.
10.05 Other Necessary Consents. The Shareholder and the Company shall
have obtained all consents and approvals listed on Schedule 4.19. With respect
to each such consent or approval, Buyer shall have received written evidence,
reasonably satisfactory to it, that such consent or approval has been duly and
lawfully filed, given, obtained or taken and is effective, valid and
subsisting.
10.06 Intentionally Deleted.
10.07 Intentionally Deleted.
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10.08 Non-competition Agreements. The Company and the Shareholder
shall have executed and delivered to Buyer non-competition agreements in the
form of Exhibits 10.08(a)-(b) hereto.
10.09 Consulting Agreement. Kevin Buhrman shall have executed and
delivered to the Buyer a consulting agreement in the form of Exhibit 10.09
hereto.
10.10 The Escrow Agreement. The Company and the Shareholder shall have
executed and delivered to the Buyer and PSA an Escrow Agreement on the
Effective Date in the form of Exhibit 10.10 hereof.
ARTICLE XI
XI. INDEMNIFICATION
11.01 (a) Indemnification by the Company and the Shareholder. The
Company and the Shareholder shall, jointly and severally, indemnify and
reimburse Buyer and PSA for any and all claims, losses, liabilities, damages
(including special and consequential damages), costs (including court costs)
and expenses (including reasonable attorneys' and accountants' fees) incurred
by Buyer and PSA, their successors or assigns, and their respective officers,
employees, consultants and agents (the "Protected Parties"), (hereinafter
"Loss" or "Losses") suffered or incurred by Buyer or PSA as a result of, or
with respect to, (1) any breach or inaccuracy of any representation or warranty
of the Company or the Shareholder set forth in this Agreement or in any
Schedule or Exhibit hereto; (2) any breach of or noncompliance by the Company
or the Shareholder with any covenant or agreement of the Company or the
Shareholder contained in this Agreement or the Non-Competition Agreements
described at Sections 9.08; (3) any and all liabilities and obligations of the
Company which Buyer does not expressly assume at the Closing by written
instrument executed by Buyer as provided in Section 6.04; (4) any and all
liabilities and obligations arising out of any breach by the Company prior to
Closing of any agreement assumed by Buyer at the Closing by written instrument
executed by Buyer pursuant to this Agreement; (5) any and all claims asserted
by the Company's creditors, except where such claims are in connection with
liabilities or obligations expressly assumed by Buyer pursuant to a written
instrument executed by Buyer as provided in Section 6.04 (for the purposes of
this Agreement, "creditors" shall mean (aa) all persons or entities who are
known by either Company to assert claims against either Company even though
such claims are disputed as well as (bb) all general creditors, all secured
creditors, all lien creditors, and all representatives of creditors); and (6)
those matters set forth on
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Schedule 11.01 hereto [matters which, although disclosed on a Schedule, Buyer
wishes specific indemnification].
(b) By PSA and Buyer. PSA and Buyer shall, jointly and severally,
indemnify and reimburse the Company and the Shareholder for any and all claims,
losses, liabilities, damages (including special and consequential damages),
costs (including court costs) and expenses (including reasonable attorneys' and
accountants' fees) incurred by the Company and the Shareholder, their
successors or assigns, and the Company's officers, employees, consultants and
agents (the "Protected Parties"), (hereinafter "Loss" or "Losses") suffered or
incurred by the Company or the Shareholder as a result of, or with respect to,
(1) any breach or inaccuracy of any representation or warranty of PSA or Buyer
set forth in this Agreement or in any Schedule or Exhibit hereto; (2) any
breach of or noncompliance by PSA or Buyer with any covenant or agreement of
PSA or Buyer contained in this Agreement or the Escrow Agreement; (3) any and
all liabilities and obligations of PSA or Buyer that arise after Closing from
obligations expressly assumed by PSA or Buyer at the Closing by written
instrument executed by Buyer as provided in Section 6.04; (4) any and all
liabilities and obligations arising out of any breach by the Buyer after
Closing of any agreement assumed by Buyer at the Closing by written instrument
executed by Buyer pursuant to this Agreement; (5) any and all claims asserted
by the PSA's or Buyer's creditors; and (6) those matters set forth on Schedule
10.01(b) hereto.
11.02 Indemnity Claims.
(a) Survival. The representations and warranties of the parties
contained herein or in any certificate or other document delivered pursuant
hereto or in connection herewith shall not be extinguished by the Closing but
shall survive the Closing for a period of two (2) years. No investigation or
other examination by a party hereto, its designee or representatives shall
affect the term of survival of any representation or warranty contained herein
or in any certificate or other document delivered pursuant hereto or in
connection herewith, or the term of the right of the Protected Parties to seek
indemnification.
(b) Time to Assert Claims. All claims for indemnification
hereunder shall be asserted no later than two (2) years after the Closing Date.
Nothing herein shall be deemed to prevent a party from making a claim for a
Loss hereunder for potential or contingent claims or demands provided the
notice of Loss sets forth the specific basis for any such potential or
contingent claim or demand to the extent then feasible and the party making the
claim has reasonable grounds to believe that such a claim or demand may become
actual.
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(c) The Escrow Agreement. In addition to any other rights and
remedies available to Buyer and PSA to satisfy any claim for indemnification,
such claim for indemnification by Buyer or PSA under Section 11.01 for any
Losses may be satisfied by first making a claim against the PSA Shares held in
Escrow pursuant to the Escrow Agreement referred to in Section 10.10.
11.03 Notice of Claim. A party making a claim for indemnification (the
"Indemnitee") shall notify the party against whom such claim is being made (the
"Indemnitor") in writing of any claim for indemnification, specifying in
reasonable detail the nature of the Loss, and, if known, the amount, or an
estimate of the amount, of the liability arising therefrom. The Indemnitee
shall provide to the Indemnitor as promptly as practicable thereafter such
information and documentation as may be reasonably requested by the Indemnitor
to support and verify the claim asserted, so long as such disclosure would not
violate the attorney-client privilege of Indemnitee.
11.04 Defense. If the facts pertaining to a Loss arise out of the
claim of any third party, or if there is any claim against a third party
available by virtue of the circumstances of the Loss, the Indemnitor may assume
the defense or the prosecution thereof by prompt written notice to the
Indemnitee and the affected Protected Party, including the employment of
counsel or accountants, at its cost and expense. The Indemnitee and the
affected Protected Party shall have the right to employ counsel separate from
counsel employed by the Indemnitor in any such action and to participate
therein, but the fees and expenses of such counsel employed by the Indemnitee
and the affected Protected Party shall be at their expense. The Indemnitor
shall not be liable for any settlement of any such claim effected without its
prior written consent, which shall not be unreasonably withheld; provided that
if the Indemnitor does not assume the defense or prosecution of a claim as
provided above within thirty (30) days after notice thereof from the Indemnitee
or any Protected Party, the Indemnitee and the affected Protected Party may
settle such claim without the Indemnitor's consent. The Indemnitor shall not
agree to a settlement of any claim which provides for any relief other than the
payment of monetary damages or which could have a material precedential impact
or effect on the business or financial condition of any Protected Party without
the Indemnitee's and the affected Protected Party's prior written consent.
Whether or not the Indemnitor does choose to so defend or prosecute such claim,
all the parties hereto shall cooperate in the defense or prosecution thereof
and shall furnish such records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials and appeals, as may be
reasonably requested in connection therewith. The Indemnitor shall be
subrogated to all rights and remedies of any Protected Party, except to the
extent they apply against another Protected Party.
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11.05 Limitation of Liability. The liability of the parties hereunder
shall be limited to the Purchase Price.
ARTICLE XII
XII. TERMINATION PRIOR TO CLOSING
12.01 Termination of Agreement. This Agreement may be terminated at
any time prior to the Closing:
(a) By the mutual written consent of Buyer and the Company;
(b) By the Company and Shareholder in writing, without liability,
if Buyer shall (i) fail to perform in any material respect its agreements
contained herein required to be performed by it on or prior to the Closing
Date, or (ii) materially breach any of its representations, warranties or
covenants contained herein, which failure or breach is not cured within ten
(10) days after the Company or Shareholder have notified Buyer of their intent
to terminate this Agreement pursuant to this subparagraph;
(c) By Buyer in writing, without liability, if the Company or
Shareholder shall (i) fail to perform in any material respect its agreements
contained herein required to be performed by them on or prior to the Closing
Date, or (ii) materially breach any of their representations, warranties or
covenants contained herein, which failure or breach is not cured within ten
(10) days after the Buyer has notified the Company or Shareholder of its intent
to terminate this Agreement pursuant to this subparagraph;
(d) By the failure of the Buyer to obtain licensure as set forth
in Section 6.05 of this Agreement other than as a result of the breach of this
Agreement; or
(e) By either the Company, the Shareholder or Buyer in writing,
without liability, if there shall be any order, writ, injunction or decree of
any court or governmental or regulatory agency binding on the Company, the
Shareholder or Buyer, which prohibits or restrains the Company, the
Shareholder, PSA or Buyer from consummating the transactions contemplated
hereby, provided that the Company, the Shareholder, PSA and Buyer shall have
used their reasonable, good faith efforts to have any such order, writ,
injunction or decree lifted and the same shall not have been lifted within
thirty (30) days after entry, by any such court or governmental or regulatory
agency.
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(f) By either the Company and the Shareholder on the one hand and
PSA and the Buyer on the other hand if the Closing has not occurred on or
before two (2) months from the Effective Date; provided, that the parties may
agree in writing to extend the time period.
12.02 Termination of Obligations. Termination of this Agreement
pursuant to this Article XII shall terminate all of the obligations of the
parties hereunder except those obligations specifically intended or stated to
survive termination. Provided that termination pursuant to subparagraphs
(b),(c),(d) or (e) above shall not relieve a defaulting or breaching party from
any liability to the other party hereto. Upon termination, the cash portion of
the Purchase Price placed in Escrow on the Effective Date shall be returned to
Buyer.
ARTICLE XIII
XIII. ARBITRATION
13.01 Binding Arbitration. If a dispute arises under this Agreement
(other than a dispute for which equitable remedies such as injunction are
sought, in which case the party may proceed in equity) then such dispute shall,
within thirty days after notice of such dispute, be determined by arbitration
in accordance with the provisions of this Article XIII.
13.02 Selection of Arbitrator. Should the parties be able to agree
upon the selection of an arbitrator within the thirty (30) days after the
notice from one party to the other party of a dispute that cannot be resolved
by negotiation, the agreed upon arbitrator shall proceed forthwith to arbitrate
the dispute. If the parties cannot agree on an arbitrator, then each of Buyer
and the Company shall select an arbitrator, and those arbitrators shall choose
a third arbitrator, all of which arbitrators shall promptly proceed to
arbitrate such dispute in accordance with the Rules of the American Arbitration
Association and the current commercial arbitration rules thereof. All
arbitration hearings shall be conducted in Newark, New Jersey.
13.03 Arbitration Final. The award rendered by the arbitrator shall be
final and judgment upon the award rendered by the arbitrator may be entered
upon it in any court having jurisdiction thereof. The language of the award
must set forth findings of fact and conclusions of law used by the arbitrator
in reaching his or her decision. The expense of arbitration shall be borne by
the losing party unless otherwise decided or allocated by the arbitrator. This
agreement to arbitrate shall be specifically enforceable under the prevailing
arbitration law of New Jersey and during the continuance of any arbitration
proceedings,
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the parties shall continue to perform their respective obligations under this
Agreement, and the agreements executed in connection herewith.
ARTICLE XIV
XIV. MISCELLANEOUS
14.01 Entire Agreement. This Agreement (including the Schedules and
Exhibits) constitutes the sole understanding of the parties with respect to the
subject matter hereof and terminates the Letter of Intent, dated March 19,
1998; provided, however, that this provision is not intended to abrogate any
other written agreement between the parties executed with or after this
Agreement.
14.02 Amendment. No amendment, modification or alteration of the terms
or provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto.
14.03 Parties Bound by Agreement; Successors and Assigns. The terms,
conditions and obligations of this Agreement shall inure to the benefit of and
be binding upon the parties hereto and the respective successors and assigns
thereof. Without the prior written consent of Buyer, neither the Shareholder
nor the Company may assign its rights, duties or obligations hereunder or any
part thereof to any other person or entity. Buyer may assign its rights and
duties hereunder in whole or in part (before or after the Closing) to one or
more affiliated entities but if it does so, it shall remain liable for all
Buyer's obligations hereunder.
14.04 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
14.05 Headings. The headings of the Sections and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.
14.06 Modification and Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled
to the benefits thereof. No waiver of any of the provisions of this Agreement
shall be deemed to or shall constitute a waiver of any other provision hereof
(whether or not similar).
14.07 Expenses. Except as otherwise provided herein, the Company, the
Shareholder, PSA and Buyer shall each pay all costs and
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expenses incurred by each of them, or on their behalf respectively, in
connection with this Agreement and the transactions contemplated hereby,
including fees and expenses of their own financial consultants, accountants and
counsel.
14.08 Notices. Any notice, request, instruction or other document to
be given hereunder by any party hereto to any other party hereto shall be in
writing and delivered personally (including by overnight courier or express
mail service) or sent by registered or certified mail, postage or fees prepaid,
If to the Shareholder and the Company to:
Transworld Healthcare, Inc.
555 Madison Avenue, 30th Floor
New York, New York 10022
Attention: Greg Marsella, General Counsel
Telephone: (212) 750-0064
Facsimile: (212) 750-7221
if to Buyer to:
Pediatric Services of America, Inc.
3159 Campus Drive
Norcross, Georgia 30071
Attention: President
Telephone: (770) 441-1580
Facsimile: (770) 729-0316
or at such other address for a party as shall be specified by like notice. Any
notice which is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party or the office of such party. Any notice which is
addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the fourth business day
after the day it is so placed in the mail or, if earlier, the time of actual
receipt.
14.09 Brokerage. The Company has engaged a broker in connection with
the transactions contained in this Agreement. The Company acknowledges and
agrees that the brokerage fee due to the broker shall be remitted to the broker
by wire transfer of immediately available funds by Buyer out of the cash
portion of the Purchase Price at Closing. Subject to the foregoing sentence,
the Company shall indemnify and hold
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harmless Buyer from and against any and all losses, costs, damages, and
expenses (including reasonable attorneys' fees) arising or resulting, or
sustained or incurred by Buyer, by reason of any claim by any broker, agent,
finder, or other person or entity based upon any arrangement or agreement made
or alleged to have been made by the Company or the Shareholder in connection
with the transactions contemplated under this Agreement. Buyer does hereby
indemnify and agree to hold harmless the Company and the Shareholder from and
against any and all losses, costs, damages, and expenses (including reasonable
attorneys' fees) arising or resulting, or sustained or incurred by the Company
or the Shareholder, by reason of any claim by any broker, agent, finder, or
other person or entity based upon any arrangement or agreement made or alleged
to have been made by Buyer in connection with the transactions contemplated
under this Agreement.
14.10 Governing Law. This Agreement is executed by Buyer and PSA in,
and shall be construed in accordance with and governed by the laws of the State
of New Jersey without giving effect to the principles of conflicts of law
thereof.
14.11 The Shareholder's and the Company's Knowledge. As used herein,
the terms "the Shareholder's knowledge" and "to the knowledge of the
Shareholder" with respect to the Shareholder shall mean the knowledge of any
executive officers of the Shareholder, and the terms "the Companys' knowledge"
or "to the knowledge of the Company" shall mean the knowledge of any director
or officer of the Company.
14.12 No Third-Party Beneficiaries. With the exception of the parties
to this Agreement and the Protected Parties, there shall exist no right of any
person to claim a beneficial interest in this Agreement or any rights occurring
by virtue of this Agreement.
14.13 "Including". Words of inclusion shall not be construed as terms
of limitation herein, so that references to "included" matters shall be
regarded as non-exclusive, non-characterizing illustrations.
14.14 Gender and Number. Where the context requires, the use of a
pronoun of one gender or the neuter is to be deemed to include a pronoun of the
appropriate gender, singular words are to be deemed to include the plural, and
vice versa.
14.15 References. Whenever reference is made in this Agreement to any
Article, Section, Schedule or Exhibit, such reference shall be deemed to apply
to the specified Article or Section of this Agreement or the specified Schedule
or Exhibit to this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf as of the date indicated on the
first page hereof.
BUYER:
PEDIATRIC SERVICES OF AMERICA, INC.
By: /s/ Joseph D. Sansone
--------------------------------
Name: Joseph D. Sansone
Title: President
BUYER:
PEDIATRIC SERVICES OF AMERICA, INC.
By: /s/ Joseph D. Sansone
--------------------------------
Name: Joseph D. Sansone
Title: President
SHAREHOLDER:
TRANSWORLD HEALTHCARE, INC.
By: /s/ Wayne Palladino
--------------------------------
Name: Wayne Palladino
Title: Senior Vice President
THE COMPANY:
TRANSWORLD HOME HEALTH CARE --
NURSING DIVISION, INC.
By: /s/ Wayne Palladino
--------------------------------
Name: Wayne Palladino
Title: Vice President
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