2
UNITED STATES
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: November 14, 1997
INTERNATIONAL NURSING SERVICES, INC
(Exact name of registrant as specified in its charter)
Colorado 000-24768 84-1123311
State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
360 South Garfield Street, Suite 400, Denver, Colorado 80209
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 393-1515
None
(Former name or former address, if changes since last report)
Item 1. Changes in Control of Registrant. N/A.
Item 2 . Acquisition or Disposition of Assets.
On October 19, 1997, the Company entered into an agreement to
sell its Paxxon Services office and operations in Yonkers, New York, which
provides the placement of physical therapists on temporary assignments, to
National Health Enterprises ("NHE") and Olde Philadelphia Group as assignee of
NHE, both privately held companies headquartered in Plymouth Meeting,
Pennsylvania. The sale was completed and payment in full pursuant to such
agreement was made to the Company on November 14, 1997. The aggregate
purchase price for such operation was $1,275,000 in cash and a promissory note
for $192,795, with an interest rate of 5.75% simple interest per annum,
payable over one year.
Item 3. Bankruptcy or Receivership. N/A.
Item 4. Changes in Registrant's Certifying Accountant. N/A.
Item 5. Other Events. N/A
Item 6. Resignations of Registrant's Directors. N/A.
Item 7. Financial Statements and Exhibits.
List below the financial statements, pro forma financial
information and exhibits, if any, filed as part of
this report.
(a) Financial statements - None required
(b) Pro forma financial information - See attachment
(c) Exhibits
Exhibit 99.1 - Purchase and Sale Agreement,
between International Nursing Services and National Health Enterprises,
dated as of October 19, 1997.
Item 8. Change in Fiscal Year. N/A.
Item 9. Sales of Equity Securities Pursuant to Regulation S. N/A.
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.
INTERNATIONAL NURSING SERVICES, INC.
Date: November 26, 1997 By: /s/ John P. Yeros
John P. Yeros, President
and Chief Executive Officer
INTERNATIONAL NURSING SERVICES, INC.
PROFORMA STATEMENTS OF OPERATIONS
(IN 000'S)
<TABLE>
<CAPTION>
<S>
For the Nine Months For the Nine Months
Ended Sept. 28, 1997 Ended Sept. 30, 1996
Historical Adjustments(1) Proforma Historical Adjustments(1) Proforma
<C> <C> <C> <C> <C> <C>
Net revenues
$19,762 ($2,899) $16,863 $10,399 ($3,792) $6,607
Direct costs
of services
15,093 (2,296) 12,797 7,751 (3,031) 4,720
Gross Margin
4,669 (603) 4,066 2,648 (761) 1,887
Selling, general and
administrative expenses
4,207 (352) 3,855 2,374 (588) 1,786
(Gain) on Sale of
Medicare Division
(191) (191)
Net income (loss)
from operations
653 (251) 402 274 (173) 101
Interest
expense, net 699 (99) 600 391 (159) 232
Net income
(loss) (46) (152) (198) (117) (14) (131)
Net income
(loss) per
common share (0.07) 0.02 (0.09) (0.34) 0.00 (0.34)
Weighted average
shares outstanding
8,894,55 8,894,554 8,894,554 4,347,771 4,347,771 4,347,771
(1) Reflects direct revenues and direct costs of services and division selling,
general and administrative expenses of Paxxon. Proforma adjustments also
include interest expense on Paxxon asset based borrowings, and corporate
amortization of goodwill associated with the Company's original acquisition
of Paxxon.
</TABLE>
-4-
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made and entered into effective this October 19, 1997,
among NATIONAL HEALTH ENTERPRISES, INC., a Delaware corporation ("NHE"),
NATIONAL HEALTH ENTERPRISES-NY, INC., a Delaware corporation ("Purchaser"),
NATIONAL CARE RESOURCES-NEW YORK, INC., a Colorado corporation ("Seller"), and
INTERNATIONAL NURSING SERVICES, INC., a Colorado corporation ("INS").
RECITALS
Seller conducts the business of therapy staffing under the name PAXXON
(the "Business"). Purchaser desires to purchase the assets of the Business as
described in the Disclosure Schedule. Purchaser is a wholly-owned subsidiary
of NHE. Purchaser also desires to assume certain liabilities of the Business
described in the Disclosure Schedule. Seller is a wholly-owned subsidiary of
INS. INS and Seller desire to enter into these transactions with Purchaser.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and in reliance upon the representations and warranties
contained herein, the parties agree as follows:
1. DEFINITIONS
The following terms used in this Agreement shall, unless the context
requires otherwise, have the meanings designated below:
1.1 Assets means all of the assets and properties of Seller used by
it in connection with the Business other than its cash, security deposits and
accounts receivables, including, without limitation, the following:
(a) goodwill and all slogans or trade names, including the name
"Paxxon" and the other names listed in the Disclosure Schedule, and all
customer lists relating to its customers;
(b) Seller's policy and procedure manuals with respect to the
Business;
(c) all of Seller's contracts and other arrangements with its
customers in respect of the Business;
(d) client lists, client records, client files and other client
related materials and property;
(e) machinery, equipment, racking, supplies, leasehold
improvements, furniture and fixtures;
(f) employee lists, employee files, other business files,
papers, books, records, sales and advertising materials and records, sales and
purchase correspondence, correspondence with government agencies and any
correspondence with respect to threats of litigation;
(g) rights and interest in and to any licenses and commercially
practiced patents, copyrights, trademarks, trademark registration applications
(including all reissues, divisions, continuations and extensions thereof),
patent applications and patent disclosures docketed;
(h) rights and interests in and to all intellectual property
rights and proprietary expertise, including, without limitation, proprietary
information, technical and technological data, know-how, processes, invention,
conception, memoranda, manufacturing and engineering data, computer programs
and sales and advertising information;
(i) permits, business licenses, authorizations, approvals or
indicia of authority;
(j) right, title and interest of Seller in and to (A) the lease
for the premises at 1 Odell Plaza, Yonkers, New York 10701 and any leases for
personal property which are listed in the Disclosure Schedule; (B) all
purchase orders given by Seller for the purchase of products, materials,
supplies, parts and other items used in the ordinary course of business; and
(C) all purchase orders submitted to Seller by customers of Seller in the
ordinary course of business with respect to which services remain to be
rendered on or after the Closing Date; and,
(k) prepaid expenses (it being understood, however, that no
insurance policies are being assigned to Purchaser).
1.2 Closing Date has the meaning given to it in Section 13.1
1.3 Code means the Internal Revenue Code of 1986, as amended.
1.4 Disclosure Schedule means the schedule which was delivered by
Seller and INS to Purchaser on the date hereof, which was initialed by Seller
and INS, and which will be updated at Closing.
1.5 Intellectual Property means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements and all patents, patent applications and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions and reexaminations thereof, (b) all trademarks, services
marks, trade dress, logos, trade names and corporate names, together with all
translations, adaptations, derivations and combinations thereof and including
all goodwill associated therewith, and all applications, registrations and
renewals in connections therewith, (c) all copyrightable works, all copyrights
and copyright applications, registrations and renewals in connection
therewith, (d) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data,
designs, drawings, specifications, customer and supplier lists, pricing and
cost information, and business and marketing plans and proposals), (e) all
computer software (including data and related documentation) as listed on
Seller's Disclosure Schedule, (f) all other proprietary rights, and (g) all
copies and tangible embodiments thereof (in whatever form or medium).
1.6 Purchaser means National Health Enterprises-NY, Inc., a Delaware
corporation.
1.7 Tax or Taxes means any federal, state, local or foreign income,
gross receipt, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), custom duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated or other tax of any kind whatsoever,
including any interest, penalty or addition, whether disputed or not.
1.8 Tax Return means any return,delcaration, report, claim for refund
or information return or statement relating to Taxes, including any
schedule or attachment, and including any amendment thereof.
1.9 Uniform Commercial Code means the Uniform Commercial Code
applicable in the State of New York.
1.10 Other terms are as defined herein.
2. ACQUISITION OF THE ASSETS
2.1 Purchase of Assets. Subject to the terms and conditions set forth
in this Agreement, at the Closing, Purchaser shall purchase from Seller, and
Seller shall sell to Purchaser, the Assets, free and clear of all
encumbrances, liens, security interests or other claims.
2.2 Purchase Price for Assets; Allocation of Purchase Price.
(a) The aggregate purchase price for the Assets (the "Purchase
Price") is $1,720,000, payable as follows:
(i) $50,000, payable on the date hereof, as a nonrefundable
deposit, to be applied against the Purchase Price at Closing; and
(ii) a promissory note of Purchaser and NHE payable to
Seller and INS in the principal amount of $1,670,000 and in the form of
Exhibit 1 (the "Note"), which Note shall be secured, in part, by an
irrevocable letter of credit in form and substance approved by Seller and INS,
and by the Security Agreement of even date herewith.
(b) Any transfer or assignment to Purchaser by Seller of any
contract which requires the consent or approval of any third party shall be
made subject to such consent or approval being obtained. INS and Seller will
use their best efforts to obtain the consent of the other parties to any such
contract for the assignment thereof to Purchaser as Purchaser may reasonably
request. If such consent is not obtained, or if an attempted assignment
thereof would be ineffective or would adversely affect the rights of Seller
thereunder so that Purchaser would not in fact receive all such rights, INS
and Seller shall take all reasonable action (including, without limitation,
the appointment of Purchaser as attorney-in-fact for Seller) and do or cause
to be done all such things as shall in the reasonable judgment of Purchaser be
necessary or proper to assure that Purchaser obtains the benefits under any
such contracts, including subcontracting, sublicensing, or subleasing to
Purchaser, with Purchaser assuming Seller's obligations arising after the
Closing and any and all rights of Seller against a third party thereto arising
out of the breach or cancellation by such third party or otherwise.
(c) The Purchase Price shall be allocated to the Assets as set
forth in the Disclosure Schedule. The parties agree that they will not take a
position on any income tax return or before any governmental agency or in any
judicial proceeding that is inconsistent in any way with this allocation.
2.3 Liabilities.
(a) As part of the consideration for the Assets, Purchaser shall
assume and pay, perform and discharge those liabilities and obligations which
accrue after the Closing and are described as "Assumed Liabilities" in the
Disclosure Schedule with a reference to this Section (the "Assumed
Liabilities"), as they become due. Purchaser shall not be obligated to pay,
perform or discharge any such obligation owed to a third party except to the
extent that such obligation or liability constitutes a valid and legally
enforceable claim by such third party, and Purchaser may contest in good faith
any such obligation or liability. The Assumed Liabilities include, to the
extent disclosed in the Seller's Disclosure Schedule, obligations of the
Business to perform staffing services after the Closing.
(b) With the exception of the Assumed Liabilities, all
obligations of Seller and INS, whether known or unknown, liquidated or
unliquidated, absolute or contingent and whether arising out of a contract or
agreement or tort shall remain the sole liability of Seller and INS, and
Purchaser shall not have any liability of any kind or nature with respect
thereto. Without limiting the generality of the foregoing, Purchaser shall
not assume any liability or obligation for:
(i) any foreign, federal, state, country or local income,
franchise, gross receipts or value added taxes, or any interest, additions to
tax or penalties thereon, accrued for, applicable to or arising from any
period through the Closing; or
(ii) legal, accounting or other professional fees of Seller
or INS.
2.4 Collection of Receivables. The accounts receivable of the
Business are not included in the Assets and shall be retained by Seller.
Payments by customers shall be allocated between older and later invoices on a
FIFO basis unless a customer indicates otherwise on its check or other
accompanying documentation. Purchaser will designate two of its employees who
are agreeable to Seller and who were former employees of Seller through whom,
and only through whom, Seller shall be entitled orally to contact customers of
the Business to collect receivables retained by Seller. Seller shall be
entitled to institute litigation against such customers only with the prior
written consent of Purchaser, which consent shall not be unreasonably
withheld.
3. (RESERVED)
4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and INS jointly and severally represent and warrant to Purchaser
and NHE that the statements contained in this Section are true, correct and
complete as of the date of this Agreement as follows:
4.1 Organization and Qualification. Each of Seller and INS is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado, and Seller is duly qualified and authorized to
do business as a foreign corporation and is in good standing in New York.
Each of Seller and INS has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. The copies of the Certificate of Incorporation and the Bylaws of
each of Seller and INS, both as amended to date, which have been delivered to
Purchaser, are complete and correct, and neither Seller nor INS is in default
under or in violation of any provision of its Certificate of Incorporation or
Bylaws.
4.2 Authorization. This Agreement has been approved by all necessary
corporate action on behalf of Seller and INS, has been duly and validly
executed by Seller and INS, and the agreements, representations and warranties
contained herein constitute valid and binding obligations, representations and
warranties of each of Seller and INS, enforceable against each in accordance
with their terms.
4.3 Bulk Sale Law. Seller is not required to comply with the bulk
sale provisions of the Uniform Commercial Code in connection with the
transactions contemplated hereby.
4.4 No Conflicting Agreements. The execution and delivery of this
Agreement by Seller and INS does not, and consummation by Seller and INS of
the transactions contemplated hereby will not: (i) violate any existing term
or provision of any law, regulation, order, writ, judgment, injunction or
decree applicable to Seller or INS or the Assets, (ii) conflict with or result
in a breach of any of the terms, conditions or provisions of the Certificate
of Incorporation or Bylaws of Seller or INS or of any agreement or instrument
to which Seller or INS is a party, or (iii) result in the creation or
imposition of any lien, charge, security interest, encumbrance, restriction or
claim upon the Assets.
4.5 Compliance with Applicable Law. The Business has at all times
been conducted by INS only through Seller, and Seller has at all times been in
full compliance with each legal requirement that is or was applicable to the
Business or to the conduct of its operations or the ownership or use of any of
its assets. No event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result in a violation
by Seller of, or a failure on the part of Seller to comply with, any legal
requirement, or (B) may give rise to any obligation on the part of Seller to
undertake, or to bear all or any portion of the cost of, any remedial action
of any nature.
4.6 Consents and Approvals. The execution and delivery by Seller and
INS of this Agreement, and the performance by each of Seller and INS of its
obligations hereunder, does not require Seller or INS to obtain any consent,
approval, agreement, or action of, or make any filing with or give any notice
to, any corporation, person, entity, or firm or any public, governmental or
judicial authority, including, without limitation, any landlord, except such
as have been duly obtained or made.
4.7 Litigation. Except as described in the Disclosure Schedule with
a reference to this Section, there are no actions, proceedings or
investigations pending or, to Seller's or INS's knowledge, threatened, against
or affecting the Assets or the Business before any court or administrative
agency.
4.8 Schedules.
(a) Seller's Disclosure Schedule includes a separate schedule
containing an accurate and complete list and description of:
(i) All real property owned by Seller in respect of the
Business or in which Seller has a leasehold or other interest or which is used
by Seller in connection with the Business, together with a description of each
lease, sublease, license, or any other instrument under which Seller claims or
holds such leasehold or other interest or right to the use thereof or pursuant
to which Seller has assigned, sublet or granted any rights therein,
identifying the parties thereto, the rental or other payment terms, expiration
date and cancellation and renewal terms thereof.
(ii) As of a date no earlier than June 30, 1997, all of
Seller's receivables in respect of the Business (which shall include accounts
receivable, loans receivable and any advances), together with detailed
information as to each such listed receivable which has been outstanding for
more than 30 days.
(iii) All machinery, tools, equipment, motor vehicles,
rolling stock and other tangible personal property (other than inventory and
supplies), owned, leased or used by Seller in respect of the Business except
for items having a value of less than $2,500 which do not, in the aggregate,
have a total value of more than $10,000, setting forth with respect to all
such listed property a summary description of all leases, liens, claims,
encumbrances, charges, restrictions, covenants and conditions relating
thereto, identifying the parties thereto, the rental or other payment terms,
expiration date and cancellation and renewal terms thereof.
(iv) All patents, patent applications, patent licenses,
trademarks, trademark registrations, and applications therefor, service marks,
service names, trade names, copyrights and copyright registrations, and
applications therefor, wholly or partially owned or held by Seller in respect
of the Business or used in the operation of the Business.
(v) All fire, theft, casualty, liability and other
insurance policies insuring Seller or INS in respect of the Business,
specifying with respect to each such policy the name of the insurer, the risk
insured against, the limits of coverage, the deductible amount (if any), the
premium rate and the date through which coverage will continue by virtue of
premiums already paid. Except as disclosed in Seller's Disclosure Schedule,
such policies are with reputable insurers, provide adequate coverage for all
normal risks incident to Seller's assets, properties and business operations
and are in character and amount at least equivalent to that carried by persons
engaged in a business subject to the same or similar perils or hazards.
(vi) All contracts, agreements, commitments or licenses
relating to patents, trademarks, trade names, copyrights, inventions,
processes, know-how, formulae or trade secrets to which Seller or INS is a
party or by which it is bound.
(vii) All procedure and policy manuals.
(viii) All Governmental Approvals which have been issued to
Seller or INS in respect of the Business during the three year period prior to
the Closing (collectively, the "Seller Licenses"), and all reports by
government or private regulatory or administrative agencies to or concerning
the Business or the Seller;
(ix) All institutional customers with which Seller has done
business in connection with the Business since January 1, 1997.
(x) All loan agreements, indentures, mortgages, pledges,
conditional sale or title retention agreements, security agreements, equipment
obligations, guaranties, leases or lease purchase agreements to which Seller
or INS is a party or by which it is bound in respect of the Business or in any
way affecting the Business or the Assets.
(xi) All contracts, agreements, commitments or other
understandings or arrangements to which Seller or INS is a party in respect of
the Business or by which it or any of its property is bound or affected in
respect of the Business but excluding
(A) purchase and sales orders and commitments made in
the ordinary course of business involving payments or receipts by Seller of
less than $2,500 in any single case but not more than $10,000 in the
aggregate,
(B) contracts entered into in the ordinary course of
business and involving payments or receipts by Seller of less than $2,500 in
the case of any single contract but not more than $10,000 in the aggregate,
and
(C) contracts entered into in the ordinary course of
business which are terminable by Seller on less than 30 days' notice without
any penalty or consideration and involving payments or receipts by Seller of
less than $2,500 in the case of any single contract but not more than $10,000
in the aggregate.
(xii) All collective bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus plans, deferred
compensation agreements, employee pension plans or retirement plans, employee
stock options or stock purchase plans and group life, health and accident
insurance and other employee benefit plans, agreements, arrangements or
commitments, whether or not legally binding, including, without limitation,
holiday, vacation, Christmas and other bonus practices, to which Seller or INS
is a party or is bound which relate to the Business.
(xiii) All current full time employees of Seller and INS
with respect to the Business and their current annual salaries or other
methods of direct or indirect compensation, as well as a list of all temporary
or part time employees who Seller or INS placed as supplemental staff with
respect to the Business as of July 1, 1997.
(xiv) All of the contracts, agreements, leases, licenses
and commitments required to be listed on Seller's Disclosure Schedule (other
than those which have been fully performed) are valid and binding, enforceable
in accordance with their respective terms, in full force and effect and,
except as otherwise specified in the Disclosure Schedule, the enforceability
thereof will not be affected by the sale of Assets contemplated hereby, so
that, after the Closing Purchaser will continue to be entitled to the full
benefits thereof.
(xv) Except as disclosed in Seller's Disclosure Schedule,
there is not under any such contract, agreement, lease, license or commitment
any existing default, or event which, after notice or lapse of time, or both,
would constitute a default or result in a right to accelerate or loss of
rights, and none of such contracts, agreements, leases, licenses or
commitments is, either when considered singly or in the aggregate with others,
unduly burdensome, onerous or materially adverse to the Business, or its
properties, assets, earnings or prospects, or likely, either before or after
the Closing, to result in any material loss or liability. None of Seller's or
INS's existing or completed contracts in respect of the Business is subject to
renegotiating with any governmental body.
(xvi) True and complete copies of all such contracts,
agreements, leases, licenses and other documents listed on Seller's Disclosure
Schedule (together with any and all amendments thereto) have been delivered to
Purchaser and initialed by Seller's Secretary or Assistant Secretary and
identified with a reference to this Section of this Agreement.
4.9 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Seller and INS
directly with representatives of Purchaser or NHE, without the intervention of
any person on behalf of Seller or INS in such manner as to give rise to any
valid claim by any person against Purchaser or NHE for a finders fee,
brokerage commission, or similar payment.
4.10 Taxes. Seller and INS jointly and severally shall pay all sales
and transfer Taxes arising out of the transfer of the Assets and shall be
responsible for all personal property taxes for the business of Seller through
the date of the Closing. Neither Purchaser nor NHE shall be responsible for
any business, occupation, withholding or similar Tax, or any Taxes of any kind
related to the Assets or the business of Seller for any period prior to the
Closing.
4.11 Ownership; Sufficiency.
(a) Except as otherwise described in the Disclosure Schedule
with a reference to this Section, Seller is the owner, beneficially and of
record, of all of the Assets, free and clear of all liens, encumbrances,
security agreements, equities, options, claims, charges and restrictions, and
Seller will transfer the Assets to Purchaser at the Closing, free and clear of
all liens, encumbrances, security agreements, equities, options, claims,
charges and restrictions.
(b) Except for insubstantial assets which can be replaced for
not more than an aggregate of $5,000, the Assets include absolutely all fixed,
non-fixed, tangible and intangible assets which were used by Seller or INS in
connection with the Business on the date hereof and at the Closing Date. All
such assets are in working condition and repair, ordinary wear and tear
excepted, and are usable in the ordinary course of business.
(c) There are no defects in any fixed assets or other conditions
relating thereto which, in the aggregate, materially adversely affect the
operation or value of such fixed assets.
4.12 Intellectual Property. Seller's use of the name "Paxxon" and
each other trade name, servicemark or logo currently used by Seller in the
conduct of the Business does not conflict with the rights of any third party.
Seller has filed all such instruments and documents as are required for it
duly to do business in the State of New York under the name PAXXON.
4.13 JCAHO Accreditation. The Business is validly accredited by
JCAHO.
4.14 No Change in Relations with Customers. None of Seller or INS,
or any of their officers or directors, has knowledge that any customers of the
Business intend to cease doing business with the Business, or materially to
alter the amount of the business that they are presently doing with Seller,
whether as a result of the transactions contemplated hereby or otherwise.
4.15 Compliance With Environmental Laws. Neither Seller or INS owns
any real property with respect to or in connection with the Business and has
been at all times prior, and presently is, in compliance with all federal and
state environmental statutes or laws concerning environmental protection and
the use or disposal of hazardous substances at or in respect of its leased
real property. Neither Purchaser nor NHE will incur any environmental
liability as a result of actions or omissions by Seller, INS or any of their
predecessors.
4.16 Financial Statements.
(a) Seller has delivered to Purchaser copies of Seller's
unaudited financial statements with respect to the Business for the fiscal
years ended December 31, 1994, 1995 and 1996 and for the six months ended June
30, 1997 (the "Financial Statements"). The Financial Statements are based
upon the information contained in the books and records of Seller and fairly
and accurately present the financial condition of the Business as of the dates
thereof and results of operations for the periods referred to therein. The
balance sheet of the Business as of June 30, 1997 is referred to herein as the
"Balance Sheet," and June 30, 1997 is referred to herein as the "Balance Sheet
Date."
(b) The books and records of the Business are adequate to permit
the completion within 60 days of an independent audit of the Business for each
such fiscal year.
4.17 Absence of Undisclosed or Contingent Liabilities. Except as and
to the extent reflected or reserved against on the face of the Balance Sheet
(excluding the notes thereto), or as otherwise set forth in the Disclosure
Schedule, as of the Balance Sheet Date neither Seller nor INS in respect of
the Business had no debts, liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature whatsoever, including, without
limitation, any foreign or domestic tax liabilities or deferred tax
liabilities for any period prior to the close of business on the Balance Sheet
Date or any other debts, liabilities or obligations in respect of the Business
relating to or arising out of any act, transaction, circumstance or state of
facts which occurred or existed on or before the Balance Sheet Date, whether
or not then known, due or payable.
Except as set forth in the Disclosure Schedule, none of Seller's
employees, and none of INS's employees in respect of the Business, is now or,
will by the passage of time hereafter become, entitled to receive any vacation
time, vacation pay or severance pay attributable to services rendered prior to
the Balance Sheet Date except as disclosed on the face of the Balance Sheet
(excluding the notes thereto) or as otherwise set forth in the Disclosure
Schedule.
4.18 No Material Adverse Changes. Since the Balance Sheet Date and
up to and including the Closing Date, there has been and will be no change
materially adverse in the Business, or in its assets, financial condition,
gross profit, operating results, customer, employee or supplier relations,
condition or prospects, except as disclosed in writing to the Purchaser. If,
in Purchaser's reasonable opinion, a material adverse event occurred,
Purchaser, at its option, may terminate the transaction contemplated herein.
4.19 Absence of Developments. Since Seller's acquisition of the
Business, INS has conducted the Business only through Seller and only through
employees and other staffing persons which were hired and retained by Seller.
Since the date of such acquisition and as of the date hereof and as of the
Closing Date, Seller in respect of the Business has:
(a) conducted operations only in the regular and ordinary course
and in compliance with all applicable laws and regulations;
(b) maintained reasonable business insurance;
(c) committed no waste of assets;
(d) not disposed or otherwise changed the nature of any asset
other than in the ordinary course of business,
(e) not created or suffered to exist any lien, charge or
encumbrance on any Asset or incurred any indebtedness for borrowed money other
than in the ordinary course which is secured by one or more of assets;
(f) used its best efforts to maintain and preserve its business
organization intact and maintain its relationships with suppliers, employees,
customers and others;
(g) refrained from making any material capital expenditures or
commitments for additions to the property, plant or equipment or entering into
transactions which could materially alter or affect operations;
(h) not experienced any changes in reimbursement or
reimbursement policies from third-party payors as a result of changes in third
party payor policies, practices, procedures or schedules;
(i) not engaged in any unusual or novel methods of billing and
collection, purchase, sale, lease, management, equipment servicing or repair,
accounting or operation that vary from Seller's usual and customary past
practice; and
(j) not changed any aspect of its procedure for maintaining its
books of account and records.
4.20 Tax Matters.
As of the date hereof and the Closing Date:
(a) Seller and INS each has filed all Tax Returns that it was
required to file in connection with the Business. All such Tax Returns were
correct and complete in all material respects. All Taxes owed by Seller and
INS with respect to the Business (whether or not shown on any Tax Return) have
been paid. Neither Seller nor INS is currently the beneficiary of any
extension of time within which to file any such Tax Return. No claim has ever
been made by an authority in a jurisdiction where Seller or INS does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction.
There are no encumbrances on any of the Assets that arose in connection with
any failure (or alleged failure) to pay any Taxes.
(b) Each of Seller and INS has withheld and paid all Taxes
required to have been withheld and paid by it in connection with amounts paid
or owing to any employee, independent contractor, creditor, shareholder or
other third party.
(c) There is no dispute or claim concerning any liability for
Taxes of Seller or INS in connection with the Business (i) claimed or raised
by any authority in writing or orally with any directors or officers of Seller
or INS, or (ii) as to which any such person has knowledge based upon personal
contact with any agent of such authority. The Disclosure Schedule lists all
federal, state, local and foreign income Tax Returns filed by INS or Seller or
its predecessor with respect to the Business for taxable periods ended on or
after December 31, 1992, indicates those Tax Returns that have been audited,
and indicates those Tax Returns that currently are the subject of audit. The
Seller has delivered to the Purchaser correct and complete copies of all
federal income Tax Returns, examination reports, and statements of
deficiencies filed, assessed against or agreed with respect to the Business by
INS or Seller or its predecessor since December 31, 1991.
4.21 Employees.
(a) Except as disclosed in the Disclosure Schedule, no employee
of Seller or INS in respect of the Business has notified Seller or INS that he
or she will not, and neither Seller nor INS has any knowledge that any such
employee will not, accept employment with Purchaser following the Closing;
(b) Each of Seller and INS has in respect of the Business
complied in all material respects with all employment contracts and all laws
relating to the employment of labor, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining and the payment of
social security and other taxes;
(c) Neither Seller nor INS has any material labor relations
problem pending and its labor relations are satisfactory;
(d) There has been no union organizing activity in respect of
the Business, and Seller is not aware of any contemplated effort in this
regard;
(e) there are no worker's compensation, sexual harassment,
discrimination or other claims pending against Seller or INS in respect of the
Business nor is Seller or INS aware of any facts that would give rise to such
claims;
(f) except as disclosed in the Disclosure Schedule with a
reference to this Section, no employee of Seller or INS is subject to any
secrecy or non-competition agreement or any other agreement or restriction of
any kind that would impede in any way the ability of such employee to carry
out fully all activities of such employee in furtherance of the business of
Purchaser following the Closing; and
(g) no employee or former employee of Seller or INS has any
claim with respect to any intellectual property rights of Seller.
4.22 Gifts.
(a) Except as described in the Disclosure Schedule with a
reference to this Section, neither Seller nor INS nor any of their officers,
directors or shareholders has made or agreed to make gifts of money, other
property or similar benefits (other than incidental gifts of articles of
nominal value) to any actual or potential customer, supplier, governmental
employee, political party, candidate for office, governmental agency or
instrumentality or any other person in a position to assist or hinder Seller
or INS in connection with any actual or proposed business transaction.
(b) Neither Seller nor INS nor any of their officers, directors,
employees or agents has directly or indirectly paid or delivered any fee,
occasion, or other money or property, however characterized, to any physician
or any other party that is in any manner remuneration for the referral of
patients to or that is in any manner remuneration for purchasing any item or
service from Seller or INS.
4.23 Medicaid, Etc.
(a) Seller in respect of the Business is a participating
provider, in good standing, in the Medicaid program and in federal, state and
local Department of Health, Department of Education, workers compensation and
Blue Cross Blue Shield programs and in the health maintenance organizations,
preferred provider organizations, health benefit plans, health insurance
plans, and other third party reimbursement and payment programs listed in the
Disclosure Schedule (the "Payment Programs").
(b) There is no investigation or civil, administrative, or
criminal proceeding, threatened or pending, relating to INS's or Seller's
participation in any of the Payment Programs in respect of the Business.
Neither Seller nor INS is in respect of the Business subject to utilization
review by any Payment Program other than the ordinary and customary
utilization review of all providers participating in such Payment Program.
(c) No Payment Program has requested or threatened any
recoupment, refund, adjustment or set-off from Seller or INS in respect of the
Business.
(d) No Payment Program has imposed any fine, penalty or other
sanction on Seller or INS in respect of the Business, nor has Seller or INS in
respect of the Business been excluded from participation in any Payment
Program nor is Seller or INS now threatened with such exclusion.
(e) Neither Seller nor INS has submitted to any Payment Program
any false or fraudulent claim for payment, nor has Seller or INS at any time
violated any condition for participation, or any rule, regulation, policy or
standard of any Payment Program. Neither Seller nor INS has at any time
violated any law prohibiting Payment Program fraud or abuse.
(f) Seller and INS will in a timely manner, after consultation
with and approval by Purchaser, give notice of the transactions contemplated
by this Agreement to Payment Programs to the extent required by law or the
rules, regulations or policies of the Payment Programs and in accordance with
Seller's provider agreements with the Payment Programs.
4.24 Seller Licenses. Each of Seller Licenses is valid and in full
force and effect as of the date hereof and as of the Closing Date, and except
as expressly set forth in the Disclosure Schedule, no Seller's License is
subject to any limitation, restriction, probation or other qualification.
Each of Seller and INS has operated within the scope of the provisions of all
Seller Licenses. There is not pending, or threatened, any investigation or
proceeding which could result in the termination, revocation, limitation,
suspension, restriction or impairment of any of Seller Licenses or the
imposition of any fine, penalty or other sanctions for violation of any
requirements of any of Seller Licenses. Seller now has and has had at all
relevant times all Governmental Approvals as are necessary in respect of the
Business in order to enable Seller to own and conduct the Business and to
occupy and lease its real property, each such currently effective item being
listed in the Disclosure Schedule.
4.25 Material Misstatements or Omissions. Neither this Agreement nor
any other document, certificate or statement furnished to Purchaser by or on
behalf of Seller or INS in connection with this Agreement or the transactions
contemplated hereby contains any untrue statement of a material fact, or omits
any material fact necessary to make the statements contained herein or therein
not misleading in light of the context in which they were made.
4.26 No Known Adverse Effects. As of the date hereof and as of the
Closing Date, except for general economic conditions and public information
concerning health care regulatory and funding matters and the health care
industry generally, there are no facts known to Seller or INS or to their
officers, directors or employees which have not been set forth in writing in
this Agreement or disclosed in the other documents, certificates or written
statements furnished to Purchaser by or on behalf of Seller or INS in
connection herewith or the transactions contemplated hereby, and which
materially and adversely affect or may in the future materially and adversely
affect, the Assets in the hands of Purchaser or which would or may in the
future materially and adversely affect the Purchaser's ability to operate the
Business.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller and INS (which
representations and warranties are unconditionally guaranteed and warranted by
NHE) that the statements contained in this Section are true, correct and
complete as of the date of this Agreement and, except as otherwise expressly
provided in this Agreement, shall be true, correct and complete on the Closing
Date as though made on the Closing Date as follows:
5.1 Organization and Qualification of Purchaser. Purchaser is a
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has the full corporate power and authority
to own and operate its properties and to carry on its business. The nature of
the business conducted by Purchaser and the properties owned, leased or
operated by Purchaser do not require Purchaser to qualify as a foreign
corporation in any jurisdiction.
5.2 Authorization. This Agreement has been approved by all necessary
corporate action on behalf of Purchaser, has been duly and validly executed by
Purchaser, and the agreements, representations, and warranties contained
herein constitute valid and binding obligations, representations, and
warranties of Purchaser, enforceable in accordance with its terms.
5.3 No Conflicting Agreements. Except as set forth in the Disclosure
Schedule with a reference to this Section, the execution and delivery of this
Agreement by Purchaser does not, and consummation by Purchaser of the
transactions contemplated hereby will not: (i) violate any existing term or
provision of any law, regulation, order, writ, judgment, injunction or decree
applicable to Purchaser, (ii) conflict with or result in a breach of any of
the terms, conditions or provisions of the Certificate of Incorporation or
Bylaws of Purchaser or of any agreement or instrument to which Purchaser is a
party, or (iii) result in the creation or imposition of any lien, charge,
security interest, encumbrance, restriction or claim upon Purchaser or any of
its assets.
5.4 Compliance with Applicable Law. None of Purchaser or any of its
officers, directors or employees knows of any facts which would result in, nor
has any of them received any notice or information of, any violation, probable
violation or default by Purchaser under any applicable law, regulation or
order of any governmental department, commission, board or agency or
instrumentality, domestic or foreign, having jurisdiction over Purchaser's
operations which could materially adversely affect the business, operations,
financial condition, properties or assets of Purchaser or its ability to
consummate the transaction contemplated hereby.
5.5 Litigation. There are no actions, proceedings or investigations
pending, or to the knowledge of Purchaser, threatened, against Purchaser or
any of its officers or directors, before any court or administrative agency or
administrative officer.
5.6 Material Misstatements or Omissions. Neither this Agreement nor
any other document, certificate or statement furnished to Seller or INS by or
on behalf of Purchaser in connection with this Agreement contains any untrue
statement of a material fact, or omits to state any material fact necessary to
make the statements contained herein and therein not misleading in light of
the context in which they were made.
5.7 Consents and Approvals. The execution and delivery by Purchaser
of this Agreement, and the performance by Purchaser of its obligations
hereunder, do not require Purchaser to obtain any consent, approval or action
of, or make any filing with or give any notice to, any corporation, person or
firm or any public, governmental or judicial authority except (i) such as have
been duly obtained or made, as the case may be, (ii) those consents and
approvals described in the Disclosure Schedule with a reference to this
Section and for which application has been made, and (iii) those which the
failure to obtain would not have a material adverse effect on the transactions
contemplated hereby.
5.8 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by representatives of
Purchaser directly with Seller and INS, without the intervention of any person
on behalf of Purchaser in such manner as to give rise to any valid claim by
any person retained by Purchaser against Seller or INS for a finder's fee,
brokerage commission or similar payment.
6. PRE-CLOSING COVENANTS OF SELLER AND INS.
Each of Seller and INS hereby covenants and agrees that, between the date
hereof and the Closing, it will comply with the provisions of this Section,
except to the extent Purchaser may otherwise consent in writing.
6.1 Inspection of Properties and Books.
(a) Seller and INS shall, at reasonable times acceptable to both
parties, assist any individual or individuals designated by Purchaser with
reasonable prior notice to visit or inspect any property of Seller or INS with
respect to the Business, including books of accounts and records with respect
to the Business, to make extracts or copies of such books and records and to
discuss the affairs, finances and accounts of Seller with its officers, and
shall use its best efforts to obtain access for Purchaser to accountants' work
papers. Purchaser agrees to treat all such material (the "Evaluation
Material") confidentially, and shall not disclose any Evaluation Material or
any information contained therein to any party, except as otherwise set forth
herein; provided, however, that Purchaser is authorized to disclose the
Evaluation Material to its investment bankers, financial advisors and legal
counsel. Purchaser shall instruct its investment bankers, financial advisors,
legal counsel, officers, directors, employees, agents or representatives of
the confidential nature of the Evaluation Material and shall be responsible
for insuring that the Evaluation Material is kept confidential by such
persons.
(b) In the event the Closing is not consummated, all Evaluation
Material shall be returned to Seller within ten days of a request therefor,
with the understanding that Purchaser shall retain no copies of the Evaluation
Material and shall not disclose to any other party the Evaluation Material or
information contained therein, with the exception of (i) information which
becomes generally available to the public other than as a result of disclosure
by Purchaser, (ii) information included in the Evaluation Material which is
first disclosed by a third party not bound by a confidentiality agreement with
Seller or (iii) information required to be disclosed in any registration
statement or periodic report under the disclosure requirements of applicable
federal and state securities laws, it being agreed that prior to making any
disclosure pursuant to this clause (iii), Purchaser shall first provide Seller
with reasonable (under the circumstances) advance notice of the disclosure,
and if Seller does not consent to the disclosure, Purchaser may make the
disclosure only after providing Seller with an opinion of counsel explaining
the basis for the disclosure and the legal requirements therefor.
6.2 Other Contracts. Except in the ordinary course of business,
neither Seller nor INS shall enter into or become subject to any agreement,
transaction, or commitment which would restrict or impair the obligation or
ability of Seller and INS to comply with all of the terms of this Agreement.
6.3 Ongoing Operation. Seller shall carry on its business diligently
and substantially in the same manner as heretofore conducted. The Business
shall be conducted only in the ordinary course and neither Seller nor INS
shall take any action except in the ordinary course of the Business, on an
arm-length basis and in accordance in all material respects with all
applicable laws, rules and regulations and Seller's past custom and industry
practice.
6.4 Indebtedness. Seller will not create, incur, assume, guarantee
or otherwise become liable with respect to any indebtedness related or
connected with, or secured by, the Assets or the Business, except in the
ordinary course of its business, and in no event greater than an aggregate of
$1,000. without the written consent of Purchaser.
6.5 Records; Monthly Financial Statements. Seller shall maintain its
books, accounts and records in the usual, regular and ordinary manner, and
shall, upon Purchaser's request, promptly provide Purchaser with monthly
financial statements for such month prepared on a basis consistent with the
Financial Statements.
6.6 Notice of Breach. Promptly after becoming aware of the
occurrence or threatened occurrence of any event which would cause or
constitute a breach of any warranty, representation, covenant or agreement of
Seller or INS contained herein, Seller shall give notice in writing of such
event or threatened event to Purchaser and use all reasonable efforts to
prevent or promptly remedy such breach or threatened breach.
6.7 Employment Matters. With respect to the Business, neither Seller
nor INS shall, directly or indirectly, without the written consent of
Purchaser, or as otherwise agreed to herein, (i) enter into or modify any
employment, severance or similar agreements or arrangements with, or grant any
bonuses, salary increases, severance or termination paid to, any officers or
directors or executive employees who are not shareholders or (ii) except in
the ordinary course of business, take any action with respect to the grant of
any bonuses, salary increases, severance or termination pay or with respect to
any increase of benefits payable in effect on the date hereof for any of its
employees who are not officers, directors or executive employees. With
respect to the Business, Seller and INS shall not adopt or amend any bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, trust, fund or group
arrangement for, the benefit or welfare of any employees of Seller or the
Business.
6.8 Insurance. Prior to Closing, neither Seller nor INS shall cancel
or terminate its current insurance policies or cause any of the coverage
thereunder to lapse, unless simultaneously with such termination, cancellation
or lapse, replacement policies providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies for substantially
similar premiums are in full force and effect.
6.9 Preservation of Business. Each of Seller and INS shall with
respect to the Business (i) use its best efforts in good faith to preserve
intact the business organization and goodwill, keep available the services of
Seller's officers and employees as a group and maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with Seller, (ii) upon request, confer on a regular
basis with representatives of Purchaser to report operational matters and the
general status of ongoing operations, (iii) not intentionally take any action
which would render, or which reasonably may be expected to render, any
representation or warranty made by Seller or INS in the Agreement untrue at
the Closing, (iv) notify Purchaser of any emergency or other change in the
normal course of Seller's business or in the operation of Seller's properties
and of any governmental or third party complaints, investigations or hearings
(or communications indicating that the same may be contemplated), and (v)
promptly notify Purchaser in writing if Seller or INS or its representatives
shall discover that any representation or warranty made by Seller or INS in
this Agreement was when made, or has subsequently become up to including the
Closing Date untrue in any respect.
6.10 [RESERVED]
6.11 Best Efforts. Each of Seller and INS agrees to use its best
efforts in good faith to satisfy the various conditions to Closing and to
consummate the transactions provided for herein as expeditiously as possible.
Neither Seller nor INS will take or permit to be taken any action that would
be in breach of the terms or provisions of this Agreement or that would cause
any of its representations and warranties contained herein to be or become
untrue.
6.12 Additional Disclosure. From the date of this Agreement to and
including the Closing Date, Seller and INS will advise Purchaser of each event
subsequent to the date hereof which would have had to be disclosed on any
schedule or exhibit to this Agreement had it occurred prior to the date
hereof. Seller and INS will provide a certificate to the Purchaser at Closing
regarding no change to, and a reaffirmation of, their representations and
warranties contained herein.
7. PRE-CLOSING COVENANTS OF PURCHASER
Purchaser hereby covenants and agrees that, between the date hereof and
the Closing, it will comply with the provisions of this Section, except to the
extent Seller may otherwise consent in writing.
7.1 Other Contracts. Except in the ordinary course of business,
Purchaser shall not enter into or become subject to any agreement, transaction
or commitment which would restrict or impair the obligation or ability of
Purchaser to comply with all of the terms of this Agreement.
7.2 Best Efforts. Purchaser agrees to use its best efforts in good
faith to satisfy the various conditions to Closing and to consummate the
transactions provided for herein as expeditiously as possible. Purchaser will
not take or knowingly permit to be taken any action that would be in breach of
the terms or provisions of this Agreement or that would cause any of its
representation and warranties contained herein to be or become untrue.
7.3 Additional Disclosure. From the date of this Agreement to and
including the Closing Date, Purchaser will advise Seller of each event
subsequent to the date hereof which would have had to be disclosed on any
schedule or exhibit to this Agreement had it occurred prior to the date
hereof.
8. POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following the
Closing:
8.1 Further Assurances. If at any time after the Closing, any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
party reasonably may request, all at the sole cost and expense of the
requesting party unless the requesting party is entitled to indemnification
therefor under this Agreement.
8.2 Litigation Support. If and for so long as any party is actively
contesting or defending against any action, suit, proceedings, hearing,
investigation, charge, complaint, claim or demand in connection with (a) any
transaction contemplated by this Agreement, or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to the Closing
Date involving the Seller or INS, the other party will cooperate with it and
its counsel in the contest or defense, make available their personnel, and
provide such testimony and access to their books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending party unless the contesting or
defending party is entitled to indemnification therefor under Section 11,
below; provided, however, that neither party shall charge the other for its
internal personnel costs.
8.3 Non-Competition. During the two-year period beginning with the
Closing, none of Seller, INS or John Yeros will directly or indirectly:
(a) engage in any aspect of any health or therapy related
business within the Westchester County, Nassau County, New York City, or
within any area which is within 75 miles of any portion of such county or any
such city; or
(b) hire or otherwise retain any person who was an employee or
consultant to Seller or Purchaser, or (as to the Business) INS, at any time
during the one-year immediately prior to such hiring or other retainer.
8.4 Access to Records. During the three-year period after the
Closing, Purchaser will give to Seller reasonable access to the books and
records of the Business for periods prior to the Closing, including records
prepared by Health Care Partners and made routinely available to Seller.
9. CONDITIONS PRECEDENT TO CLOSING
9.1 Conditions Precedent to Obligation of Seller and INS. The
obligations of Seller and INS to consummate and effect this Agreement are
subject to the satisfaction in all material respects, on or before the Closing
Date, of the following conditions (unless waived by Seller in writing in the
manner provided in this Agreement):
(a) The representations and warranties of Purchaser set forth in
this Agreement shall be accurate in all material respects on and as of the
Closing as though made on and as of the Closing (except where stated to be as
of an earlier date), except for any changes resulting from activities or
transactions which may have taken place after the date hereof which are
expressly permitted by this Agreement;
(b) Purchaser shall have performed all obligations and complied
with all covenants required to be performed or to be complied with by
Purchaser under this Agreement prior to or at the Closing Date including
payment of the Purchase Price and the delivery of all documents required at
the Closing; and
(c) Seller shall have received a certificate dated the Closing
Date and signed by the President of Purchaser to the effect that the
representations and warranties made by Purchaser in this Agreement are true
and accurate in all material respects as of the Closing, which certificate
shall be in the form of Exhibit 9.1(c) to this Agreement.
(d) All action necessary to authorize the execution, delivery
and performance of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by
Purchaser.
(e) Purchaser shall have furnished Seller with copies of all
consents or resolutions adopted or executed by Purchaser in connection with
such actions, certified by the Secretary of Purchaser.
(f) All material governmental filings, authorizations and
approvals that are required for the consummation of the transactions
contemplated hereby shall have been duly made and obtained by Purchaser
(excepting filings required by Purchaser pursuant to applicable securities
laws).
(g) Seller shall have received from counsel to Purchaser an
opinion dated the Closing, to the following effect:
(i) Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(ii) Execution and delivery of this Agreement and the Note,
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action by
Purchaser and this Agreement and the Note are the valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with
their respective terms except as enforcement can be limited by general
equitable principles or bankruptcy, insolvency or similar laws affecting
creditor's rights generally.
(iii) The execution and delivery of this Agreement and the
Note will not violate or conflict with the Certificate of Incorporation or
Bylaws of Purchaser or any agreement known to such counsel to which Purchaser
is a party or by which Purchaser or its assets are bound.
(iv) [Reserved]
(v) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or any court is
required to be obtained or made by Purchaser pursuant to this Agreement except
such as has been obtained or made.
(vi) After due inquiry, such counsel is not aware of any
pending or threatened action, proceeding or investigation against Purchaser
before any court or administrative agency which would result in any materially
adverse change in the operations or financial condition of Purchaser.
9.2 Waiver of Conditions Precedent. Seller may waive any or all of
the conditions precedent set forth in this Section, either prospectively or
retroactively, by giving written notice of such waiver to Purchaser. No
waiver of any condition precedent pursuant to this Section shall, unless
otherwise expressly stated in such written notice of waiver, extend to any
covenant or agreement contained herein or to any other condition precedent.
10. Conditions Precedent to Obligation of Purchaser.
The obligation of Purchaser to consummate and effect this Agreement are
subject to the satisfaction in all material respects, on or before the Closing
Date, of the following conditions (unless waived by Purchaser in writing in
the manner provided in this Agreement):
10.1 Representations and Warranties of Seller and INS; Performance by
Seller and INS.
(a) The representations and warranties of Seller and INS set
forth in this Agreement shall be accurate in all material respects on and as
of the Closing as though made on and as of the Closing (except where stated to
be as of an earlier date), except for any changes resulting from activities or
transactions which may have taken place after the date hereof which are
expressly permitted by this Agreement;
(b) Seller and INS shall each have performed all obligations and
complied with all covenants required to be performed or to be complied with by
it under this Agreement prior to the Closing;
(c) Purchaser shall have received a certificate dated as of the
Closing and signed by the President of Seller and INS to the effect that the
representations and warranties made by Seller and INS in this Agreement are
true and accurate in all material respects as of the Closing in the form
attached as Exhibit 10.1(c);
(d) All action necessary to authorize the execution, delivery
and performance of this Agreement by Seller and INS and the consummation of
the transactions contemplated hereby shall have been duly and validly taken by
Seller and INS.
(e) Seller and INS shall have furnished Purchaser with copies of
all consents or resolutions adopted or executed by Seller and INS in
connection with such actions, certified by the Secretary of Seller and INS.
(f) There shall have been no event or change occurring between
the execution of this Agreement and the Closing which in the aggregate may be
deemed to have an adverse effect on the business, operations, financial
condition or properties of the Business which is material to Purchaser as
purchaser of the Assets.
(g) Except as described in the Disclosure Schedule with a
reference to this Section, there shall be no actions, proceedings or
investigations pending, or threatened against Seller or INS or its officers or
directors before any court, any administrative agency or administrative
officer or executive.
(h) Except as set forth in this Agreement, Seller shall have
obtained, or caused to be obtained, each consent and approval necessary in
order that the transactions contemplated herein not constitute a breach or
violation of, or result in a right of termination or acceleration of, or
creation of any encumbrance on any of the Assets, pursuant to the provisions
of any agreement, arrangement or undertaking of or affecting Seller or INS or
any license, franchise or permit of or affecting Seller or INS.
(i) All material governmental filings, authorizations and
approvals that are required for the consummation of the transactions
contemplated hereby shall have been duly made and obtained by Seller and INS
(excepting filings required by Purchaser pursuant to applicable securities
laws).
(j) Purchaser shall not have discovered any fact or circumstance
existing as of the date of this Agreement or as of the Closing Date which has
not been disclosed to Purchaser as of the date of this Agreement (or as of the
Closing Date) regarding the business, assets, liabilities, properties,
condition (financial or otherwise), results of operations or prospects of
Seller which is, individually or in the aggregate with other such facts and
circumstances, materially adverse to Seller or the value of the Assets.
(k) There shall have been no damage, destruction or loss of or
to any of the Assets, whether or not covered by insurance which, in the
aggregate, has or would be reasonably likely to have, a material adverse
effect on Seller.
(l) Purchaser shall have received from counsel to Seller and
INS, an opinion dated the Closing, to the following effect:
(i) Each of Seller and INS is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado,
and Seller is duly qualified and in good standing in the State of New York;
(ii) Execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action, corporate or otherwise, by Seller
and INS and this Agreement is a valid and binding obligation of Seller and
INS, enforceable against Seller and INS in accordance with its terms except as
enforcement can be limited by general equitable principles or bankruptcy,
insolvency or similar laws affecting creditor's rights generally;
(iii) The execution and delivery of this Agreement and the
sale of the Assets by Seller will not violate or conflict with the Certificate
of Incorporation or Bylaws of Seller or INS or any agreement known to such
counsel upon investigation to which Seller or INS is a party or by which
Seller or INS or its assets are bound (except that no opinion need be given as
to the assignability of any contract or agreement included in the Assets);
(iv) No consent, approval, authorization or order of, and
no notice to or filing with, any governmental agency or body or any court is
required to be obtained or made by Seller or INS for the sale of the Assets or
the operation of the Business by Purchaser pursuant to this Agreement, except
such as have been obtained or made;
(v) Except as disclosed in this Agreement or the Exhibits
or Schedules, after due inquiry such counsel is not aware of any pending or
threatened action, proceeding or investigation before any court or
administrative agency respecting the Assets, the Business or the operation of
the Business by Seller and INS.
10.2 Waiver of Conditions Precedent. Purchaser may waive any or all
of the conditions precedent set forth in this Section, either prospectively or
retroactively, by giving written notice of such waiver to Seller. No waiver
of any condition precedent pursuant to this Section shall, unless otherwise
expressly stated in such written notice of waiver, extend to any other
covenant or agreement contained herein or to any other condition precedent.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
11.1 The representations, warranties, covenants and agreements made
by the respective parties in this Agreement or in any certificate executed and
delivered in connection with the transactions contemplated hereby shall
survive the Closing for a period of two (2) years following the Closing,
except that representations as to Taxes shall survive without limit as to
time. All covenants, agreements, representations and warranties made herein
or pursuant shall be deemed to be material and to have been relied upon by the
parties, notwithstanding any investigation heretofore or hereafter made by or
on behalf of the parties prior to the Closing or any knowledge of any breach
or other event which is obtained or learned prior to the Closing.
12. INDEMNIFICATION
12.1 Indemnification.
(a) Seller and INS jointly and severally agree to indemnify in
respect of, and hold Purchaser harmless against, any and all damages, claims,
deficiencies, losses, and expenses (including, without limitation, legal and
investigatory and other fees in attempting to avoid the same or defending
against the same) (collectively "Damages") resulting from:
(i) any misrepresentation, breach of warranty, or
non-fulfillment or failure to perform any covenant or agreement on the part of
Seller or INS made as a part of or contained in this Agreement or in any
certificate executed and delivered pursuant to this Agreement or in connection
with the transactions contemplated hereby,
(ii) any liabilities not expressly assumed by Purchaser
hereunder; and
(iii) Seller's operation of the Business prior to the
Closing.
(b) Purchaser and NHE agree to indemnify in respect of, and hold
Seller and INS harmless against, any and all Damages resulting from:
(i) any misrepresentation, breach of warranty, or
non-fulfillment or failure to perform any covenant or agreement on the part of
Purchaser made as a part of or contained in this Agreement or in any
certificate executed and delivered pursuant to this Agreement or in connection
with the transactions contemplated hereby,
(ii) the Assumed Liabilities, and
(iii) Purchaser's operation of the Business after the
Closing.
(c) NHE will indemnify and hold harmless Seller and INS from any
and all damages resulting from any breach by NHE-NY of any of its
representations, warranties and covenants in this Agreement.
(d) The party claiming indemnification hereunder is hereinafter
referred to as the "Indemnified Party" and the party against whom such claims
are asserted hereunder is hereinafter referred to as the "Indemnifying Party."
12.2 Limitation of Liability. Neither party shall be liable to the
other party to this Agreement except to the extent that the aggregate amount
of Damages for which they would otherwise (but for this provision) be liable
under this Section, net of any insurance payments, exceeds in the aggregate
the sum of $5,000.00 and then only to the extent of such excess. Nothing in
this Section limits the liability of Purchaser under the Note, or the right of
the Seller or other holder of the Note to enforce the Note.
12.3 Other Rights and Remedies Not Affected. The indemnification
rights of the parties under this Section are independent of and in addition to
such rights and remedies as the parties may have at law or in equity or
otherwise for any misrepresentation, breach of warranty or failure to fulfill
any agreement or covenant hereunder on the part of any party including
without limitation the right to seek specific performance, rescission or
restitution, none of which rights or remedies shall be affected or diminished
hereby.
13. CLOSING
13.1 Closing. The closing of this Agreement (the "Closing") shall
take place at the Philadelphia offices of counsel to the Purchaser at 10:00
a.m. on September __, 1997, unless a later time and date is mutually agreed
upon by the parties (the "Closing Date").
13.2 Seller's and INS's Deliveries at Closing. At the Closing,
Seller and INS will deliver the following documents to the Purchaser, all of
which shall be reasonably satisfactory in form and substance to the Purchaser
and its counsel:
(a) Bill of Sale for the Assets in the form attached as Exhibit
13.2(a).
(b) An opinion from Joseph A. Newcomb, Esq., counsel to Seller
and INS, dated the Closing Date, in the form attached as Exhibit 13.2(b).
(c) All consents, approvals and authorizations, all notices and
all registrations and filings required to be obtained, given or made under any
law, statute, rule, regulation, judgment, order, injunction, contract,
agreement or other instrument to which Seller or INS is subject, bound or a
party, or by which Seller or INS or any of its properties is bound or subject,
in each case which is required to permit the consummation of the transactions
contemplated by the Agreement without contravention, violation or breach by
Seller or INS of any of the terms thereof.
(d) Certificates of good standing for Seller and INS from the
Secretary of the State of Colorado and, with respect to Seller, the Secretary
of State of New York, dated as of a date reasonably prior to the Closing Date.
(e) Certified copy of resolutions of the Board of Directors and
the shareholders of Seller and INS authorizing, inter alia, the execution and
delivery of this Agreement, the sale of the Assets and the Business and the
other transactions contemplated under this Agreement.
(f) At Seller's office, such business records related to the
Assets and the Business as may be reasonably requested by the Purchaser,
including, without limitation, employee and personnel folders and
applications, payroll, tax related records and financial data.
(g) Officer's Certificate in the form described elsewhere in
this Agreement.
(h) Such other documents, instruments, certificates and
agreements, including assignment of space lease to Purchaser, as Purchaser and
its counsel may reasonably request.
13.3 Purchaser's Deliveries at Closing. At the Closing, Purchaser
and NHE shall deliver the following documents to Seller, all of which shall be
in a form reasonably acceptable to Seller and their counsel:
(a) Satisfaction of Purchaser's purchase price obligations by
payment of the cash portion of the Purchase Price, and the issuance of the
Note portion of the Purchase Price.
(b) All consents, approvals and authorizations, all notices and
all registrations and filings required to be obtained, given or made under any
law, statute, rule, regulation, judgment, order, injunction, contract,
agreement or other instrument to which the Purchaser or NHE is a party, or by
which either of them or any of their respective properties is bound or
subject, in each case which is required to permit the consummation of the
transactions contemplated by this Agreement without contravention, violation
or breach by the Purchaser or NHE of any of the terms thereof.
(c) An opinion from counsel to the Purchaser and NHE, dated the
Closing Date, in the form attached as Exhibit 13.3(c).
(d) Certificates of good standing, dated as of a date reasonably
prior to the date of Closing, from the Secretary of State of the State of
Delaware as to the good standing of the Purchaser and NHE.
(e) An assumption agreement pursuant to what the Purchaser
assumes the Assumed Liabilities.
(f) Certified copy of resolutions of the Board of Directors of
Purchaser and NHE authorizing, inter alia, the execution and delivery of this
Agreement and the Note, the purchase of the Assets, and the other transactions
contemplated hereby.
(g) Officer's Certificate in the form attached as Exhibit
13.3(g) of this Agreement.
(h) Such other documents, instruments, certificates and
agreements including without limitation, if assumed, the assumption of the
lease, as Seller and its counsel may reasonably request.
14. MISCELLANEOUS
14.1 Notice. All notices and communications required or permitted to
be given hereunder shall be in writing, signed by the sender, and delivered by
personal delivery overnight courier service or by registered mail to:
If to Seller or INS:
John P. Yeros
International Nursing Services, Inc.
S. Garfield Street, Suite 660
Denver, Colorado 80209
If to Purchaser :
c/o National Health Enterprises, Inc.
Germantown Pike
Plymouth Meeting, PA 19008
With a copy to:
Christopher P. Flannery, Esq.
Spector, Gadon & Rosen, P.C.
1635 Market Street
Philadelphia, PA 19103
or such other address as shall have been furnished in writing.
Receipt by, or filing with, the respective parties of any communications shall
be deemed to have occurred for the purpose of this Agreement, when personally
delivered, or next business day if sent by overnight courier, or two days
after deposit thereof, postage prepaid, properly addressed, in the United
States mail.
14.2 Entire and Sole Agreement. This Agreement, including all
Exhibits and Schedules (which by this reference shall incorporate herein all
such Exhibits and Schedules as if more fully set forth herein), constitutes
the entire agreement between the parties and as of Closing supersedes all
agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. After Closing neither party shall be bound by or charged with any
oral or written agreements, representations, warranties, statements, promises
or understandings not specifically set forth in this Agreement or in the
certificates or documents delivered in connection herewith.
14.3 Successors and Assigns. Except as otherwise provided in this
Agreement, all covenants and agreements of the parties contained in this
Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the parties and the heirs, personal
representatives, executors and assigns of Seller and INS. This Agreement may
not be assigned by any party without the prior express written consent of the
other parties.
14.4 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, each party shall be solely responsible for payment of
all expenses incurred by it in connection with the consummation of this
Agreement and the transactions contemplated hereunder, except as otherwise
provided herein. None of Seller's or INS's expenses with respect to this
transaction shall be charged to the Business or shall otherwise reduce the
Assets.
14.5 Sales Taxes. Seller and INS jointly and severally shall at the
Closing pay all New York and other state or local taxes in connection with
this transaction.
14.6 Severability. Should any one or more of the provisions of this
Agreement be determined to be illegal or unenforceable, all other provisions
of this Agreement shall be given effect separately, from the provision or
provisions determined to be illegal or unenforceable and shall not be affected
thereby.
14.7 Governing Law. This Agreement shall be construed and enforced
in accordance with and governed by the laws of the State of New York without
regard to conflicts of laws principles.
14.8 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be an original, but all of which
together shall constitute one and the same Agreement.
14.9 Amendments. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing.
14.10 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of the parties , and it is not
the intention of the parties to confer third-party beneficiary rights upon any
other person or entity.
14.11 Headings. The headings in this Agreement are for purposes of
convenience and easy reference only and shall not limit or otherwise affect
the meaning hereof.
14.12 Disputes. In the event of any dispute which arises between the
parties and which relates to the subject matter of this Agreement, the parties
acknowledge and agree that any such dispute shall be submitted for binding
arbitration in Philadelphia, PA in accordance with the Arbitration Commercial
Rules procedures established by the American Arbitration Association or, if
such association is not then in existence, an independent association of
arbitrators which may be designated by, agreement of the parties. In the
event the parties are unable to agree on an independent association of
arbitrators from which arbitrators may be drawn, either party may apply to a
court of competent jurisdiction for appointment of arbitrators, however, such
application will only be made in the event the American Arbitration
Association is not then in existence. The arbitrator(s) shall make detailed
written findings to support their award. The prevailing party in any such
arbitration proceeding shall be awarded such costs and expenses (including
reasonable attorney's fees and expert witness fees) as were incurred by the
prevailing party as a result of the institution and prosecution of the
arbitration proceeding including all costs and expenses (including reasonable
attorney's fees and expert witness fees) to enter judgment upon or enforce any
such award including all appellate proceedings.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
NATIONAL HEALTH ENTERPRISES, INC.
By:________________________________
Its: President
NATIONAL HEALTH ENTERPRISES-NY, INC.
By:________________________________
Its: President
INTERNATIONAL NURSING SERVICES, INC.
By:________________________________
Its: President
NATIONAL CARE RESOURCES-NEW YORK, INC.
By:________________________________
Its: President
Confirmed as to Section 8.3
____________________
John Yeros
