<PAGE>
U.S. 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): November 2, 1998
AMEDISYS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
0-24260 11-3131700
(Commission File Number) (I.R.S. Employer Identification No.)
3029 S. Sherwood Forest Blvd., Ste. 300 Baton Rouge, LA 70816
(Address of principal executive offices including zip code)
(225) 292-2031
(Registrant's telephone number, including area code)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Inapplicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Disposition
On November 3, 1998, Amedisys, Inc. (the "Company") and CPII Acquisition
Corp. ("CPII") entered into an Asset Purchase Agreement whereby the Company sold
certain of the assets, subject to the assumption of certain liabilities, of its
proprietary software system (Analytical Medical Systems) and home health care
management division (Amedisys Resource Management) to CPII in exchange for
$11,000,000 cash consideration. The assets being sold consist primarily of
proprietary rights with respect to the home health information system developed
and used by the Company and its subsidiaries; deposits, prepayments or prepaid
expenses relating to the business; contracts; fixtures and equipment; books and
records; rights under warranties; and claims, causes of action, chooses in
action, rights of recovery and rights to set-off. The liabilities being assumed
are those associated with the assumed contracts. The Company has also agreed to
provide limited support services to CPII for the period of one year from the
date of the agreement. This disposition has been deemed "significant."
Accordingly, pro forma financial information illustrating the effect of the sale
are filed herewith.
Acquisition
On November 2, 1998, Amedisys, Inc. signed a definitive agreement to
purchase certain assets, subject to the assumption of certain liabilities, of 83
home care offices including 35 provider numbers of Columbia/HCA Healthcare
Corporation located in Alabama, Georgia, Louisiana, North Carolina, Oklahoma and
Tennessee. The Company had no material relationship with Columbia/HCA Healthcare
Corporation prior to this transaction. The purchase price of $24,000,000 was
calculated using various factors consistent with industry practice, including
but not limited to: (i) a dollar figure per home care visit, (ii) number of
patients, and (iii) state certificate of need requirements. A portion of the
consideration, $10,000,000, less certain liabilities, was payable November 3,
1998 with the balance of $14,000,000 payable pursuant to a one-year promissory
note at the prime rate of Union Planter's Bank of Louisiana plus 0.75%. The
source for the cash portion of the consideration was from the sale of certain
assets. The assets being purchased consist primarily of furniture, fixtures, and
equipment; prepaid expenses; advances and deposits; inventory; office supplies;
records and files; transferable governmental licenses and permits
authorizations; and rights in, to and under specified licenses, contracts,
leases, and agreements. The liabilities being assumed are the paid-time-off
balances of the Columbia/HCA employees and obligations arising on or subsequent
to the closing dates under the assumed contracts. The closing of the transaction
will occur in two stages. Assets located in Louisiana and Oklahoma will be
acquired November 16, 1998, and the remaining assets will be acquired November
30, 1998. Columbia/HCA has agreed that for a period of two years from the date
of closing it will not compete with the Company in the business of providing
skilled intermittent home care services in the counties/parishes currently
served by the acquired offices. Such covenant does not apply to a home health
agency that is acquired as part of an acquisition of a general acute care
hospital, skilled nursing facility, ambulatory surgical facility, physician
practice management company or assisted living facility. This acquisition is
being accounted for as a purchase. The acquisition has been deemed
"significant."
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Inapplicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Inapplicable.
2
<PAGE>
ITEM 5. OTHER EVENTS
On November 2, 1998, the Company and CareSouth Home Health Services, Inc.
("CareSouth"), an affiliate of CPII Acquisition Corp., entered into a Master
Corporate Guaranty of Service Agreement whereby the Company agreed to act as
guarantor for each Agency Service Agreement between CareSouth and home health
agencies which are owned or managed by the Company. Under the Agency Service
Agreements, CareSouth has agreed to provide payroll processing, billing
services, collection services, cost reporting services and software maintenance
and support for the home health agencies. The Master Corporate Guaranty of
Service Agreement consolidates the fee structure for the Agency Service
Agreements. Under the consolidated fee structure, provided service fees are
collected on a per visit basis, which may be adjusted depending on the
cumulative number of annual visits.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
Inapplicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
The appropriate financial statements will be filed with the Securities
and Exchange Commission no later than 75 days after the consummation
of the acquisition.
(b) Pro Forma Financial Information.
The appropriate pro forma financial information relating to the
acquisition will be filed with the Securities and Exchange Commission
no later than 75 days after the consummation of the acquisition.
The pro forma financial information relating to the disposition
required pursuant to Article 11 of Regulation S-X is attached hereto
as Annex A.
ITEM 8. CHANGE IN FISCAL YEAR
Inapplicable.
3
<PAGE>
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.
AMEDISYS, INC.
By: /s/ Mitchel G. Morel
-----------------------------
Mitchel G. Morel
Chief Financial Officer, Principal
Financial and Accounting Officer
DATE: November 10, 1998
4
<PAGE>
<TABLE>
<CAPTION>
ANNEX A
AMEDISYS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998
(In 000's, except per share amounts)
Effect of
Staffing Effect
Historical Sale of sale (1) Pro Forma
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 471 $ 5,075 $ 861 $ 6,407
Accounts Receivable, Net of Allowance for Doubtful Accounts 4,292 (1,946) (586) 1,760
Prepaid Expenses 891 (28) (6) 857
Other Current Assets 4,004 586 0 4,590
--------- --------- --------- ---------
Total Current Assets 9,658 3,687 268 13,613
Notes Receivable from Related Parties 224 0 0 224
Property, Plant and Equipment, Net 6,056 (71) (40) 5,945
Other Assets, Net 12,374 (46) 23,993 36,321
--------- --------- --------- ---------
Total Assets $ 28,312 $ 3,570 $ 24,221 $ 56,103
========= ========= ========= =========
LIABILITIES
Current Liabilities:
Notes Payable $ 6,090 $ (1,405) $ (139) $ 4,546
Short-Term Debt 0 0 14,000 14,000
Current Portion of Long-Term Debt 927 (45) 0 882
Accounts Payable 2,486 (346) (11) 2,129
Accrued Expenses:
Payroll and Payroll Taxes 1,541 (145) (52) 1,344
Insurance 1,020 (233) (7) 780
Income Taxes 0 0 0 0
Other 1,398 (35) 3 1,366
--------- --------- --------- ---------
Total Current Liabilities 13,462 (2,209) 13,793 25,046
Long-Term Debt 4,948 (4) 0 4,944
Other Long-Term Liabilities 1,136 0 0 1,136
--------- --------- --------- ---------
Total Liabilities 19,546 (2,213) 13,793 31,126
--------- --------- --------- ---------
Minority Interest 3 0 0 3
--------- --------- --------- ---------
STOCKHOLDERS' EQUITY
Common Stock 3 0 0 3
Preferred Stock 1 0 0 1
Additional paid-in capital 12,006 0 0 12,006
Treasury Stock (25) 0 0 (25)
Stock Subscriptions Receivable (1) 0 0 (1)
Retained Earnings (deficit) (3,221) 5,783 10,428 12,990
--------- --------- --------- ---------
Total Stockholders' Equity 8,763 5,783 10,428 24,974
--------- --------- --------- ---------
Total Liabilities and Stockholders' Equity $ 28,312 $ 3,570 $ 24,221 $ 56,103
========= ========= ========= =========
</TABLE>
<PAGE>
AMEDISYS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(In 000's, except per share amounts)
<TABLE>
<CAPTION>
Effect of
Staffing
Historical Sale Effect of sale(2) Pro Forma
----------- ------------ ----------------- -----------
<S> <C> <C> <C> <C>
Income:
Service Revenue $ 24,475 $ (8,795) $ (667) $ 15,013
Cost of Service Revenue 14,319 (5,933) (147) 8,239
----------- ------------- ------------- ----------
Gross Margin 10,156 (2,862) (520) 6,774
----------- ------------- ------------- ----------
General and Administrative Expenses:
Salaries and benefits 9,389 (1,309) (192) 7,888
Other 7,098 (647) (252) 6,199
----------- ------------- ------------- ----------
Total General and Administrative Expenses 16,487 (1,956) (444) 14,087
----------- ------------- ------------- ----------
Operating Income (loss) (6,331) (906) (76) (7,313)
----------- ------------- ------------- ----------
Other Income and Expense:
Interest income 21 0 0 21
Interest expense (418) 51 13 (354)
Miscellaneous 25 (2) 0 23
----------- ------------- ------------- ----------
Total Other Income and Expense (372) 49 13 (310)
----------- ------------- ------------- ----------
Income (loss) before income taxes, minority interest,
and cumulative effect of change in accounting
principle (6,703) (857) (63) (7,623)
Provision (benefit) for Estimated Income Taxes (2,279) (343) (25) (2,647)
----------- ------------- ------------- ----------
Income (loss) before Minority Interest (4,424) (514) (38) (4,976)
Minority Interest in Consolidated Subsidiary 0 0 0 0
----------- ------------- ------------- ----------
Net Income (loss) before cumulative effect of
change in accounting principle $ (4,424) $ (514) $ (38) $ (4,976)
=========== ============= ============= ==========
Weighted Average Common Shares Outstanding 3,057 --- --- 3,057
Income (loss) per shared before cumulative effect of
change in accounting principle $ (1.45) N/A N/A $ (1.63)
</TABLE>
<PAGE>
AMEDISYS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(In 000's, except per share amounts)
<TABLE>
<CAPTION>
Effect of
Staffing
Historical Sale Effect of sale(3) Pro Forma
----------- ----------- ---------------- -----------
<S> <C> <C> <C> <C>
Income:
Service Revenue $ 54,496 $ (17,292) $ (2,992) $ 34,212
Cost of Service Revenue 30,641 (11,545) (310) 18,786
-------- -------- ----------- --------
Gross Margin 23,855 (5,747) (2,683) 15,425
-------- -------- ----------- --------
General and Administrative Expenses:
Salaries and benefits 12,651 (1,622) (359) 10,670
Other 11,792 (763) (595) 10,434
-------- -------- ----------- --------
Total General and Administrative Expenses 24,443 (2,385) (953) 21,105
-------- -------- ----------- --------
Operating Income (loss) (588) (3,362) (1,729) (5,679)
-------- -------- ----------- --------
Other Income and Expense:
Interest income 31 0 0 31
Interest expense (870) 136 40 (694)
Miscellaneous (123) (7) (6) (136)
-------- -------- ----------- --------
Total Other Income and Expense (962) 129 33 (800)
-------- -------- ----------- --------
Income (loss) before income taxes, minority interest, and
cumulative effect of change in accounting principle (1,550) (3,233) (1,696) (6,479)
Provision (benefit) for Estimated Income Taxes (382) (1,293) (678) (2,353)
-------- -------- ----------- --------
Income (loss) before Minority Interest (1,168) (1,940) (1,018) (4,126)
Minority Interest in Consolidated Subsidiary 209 0 0 209
-------- -------- ----------- --------
Net Income (loss) before cumulative effect of
change in accounting principle $ (959) $ (1,940) $ (1,018) $ (3,917)
======== ======== =========== ========
Weighted Average Common Shares Outstanding 2,735 --- 2,735
Income (loss) per shared before cumulative effect of
change in accounting principle $ (0.35) N/A N/A $ (1.43)
</TABLE>
<PAGE>
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation
On November 3, 1998, the Company sold certain assets, subject to the
assumption of certain liabilities, of its proprietary software system
(Analytical Medical Systems) and home health care management division (Amedisys
Resource Management) to CPII Acquisition Corp.
The accompanying pro forma condensed consolidated balance sheet has been
prepared by applying certain pro forma adjustments to historical financial
information, assuming the disposition occurred on June 30, 1998. Also reflected
in the pro forma condensed consolidated balance sheet are certain adjustments
relating to the Columbia/HCA acquisition. These adjustments have been included
in the proforma balance sheet in order to provide a more accurate representation
of the financial position of the Company.
The pro forma condensed consolidated statement of operations for the year
ended December 31, 1997 and the six-month period ended June 30, 1998 has been
prepared based upon certain pro forma adjustments to historical financial
information, assuming the disposition occurred on January 1, 1997.
The pro forma data is not necessarily indicative of the operating results
or financial position that would have occurred had the transaction described
above been consummated at the dates indicated, nor necessarily indicative of
future operating results or financial position.
Basic net income (loss) per share of common stock is calculated by dividing
net income (loss) applicable to common stock by the weighted average number of
common shares outstanding during the year. Diluted net income (loss) per share
is not presented because stock options and convertible securities outstanding
during the periods presented were not dilutive.
B. Staffing Division Effect of Sale
On September 21, 1998, the Company sold certain assets, subject to the
assumption of certain liabilities, of its wholly-owned subsidiaries of Amedisys
Staffing Services, Amedisys Nursing Services, and Amedisys Home Health, Inc. to
Nursefinders, Inc. The Company filed a Current Report on Form 8-K with the SEC
on October 5, 1998.
C. Software and Home Health Care Management Division Effect of Sale
(1) Reflects the Software and Home Health Care Management Division
financial position as of June 30, 1998 in the balance sheet in addition to
the following adjustments:
a. Increase to Cash of $11,000,000 to reflect the portion of the
purchase price payable upon closing.
<PAGE>
b. Balance sheet adjustments relating to Columbia/HCA
acquisition:
i) Decrease to Cash of $10,000,000 to reflect portion of
purchase price paid at closing.
ii) Increase to Short-Term Debt of $14,000,000 to reflect
portion of purchase price payable pursuant to a promissory
note.
iii) Increase to Other Assets to reflect assets, both
tangible and intangible, purchased in the transaction.
c. Decrease to both Cash and Notes Payable of $139,000 to
reflect the pay-down on the line of credit which is secured by
accounts receivable.
(2) Reflects the Software and Home Health Care Management Division
operating results and direct overhead operating costs for the six month
period ending June 30, 1998 in the statement of operations, with an
adjustment to the Company's income tax expense assuming an effective tax
rate of 40%.
(3) Reflects the Software and Home Health Care Management Division
operating results and direct overhead operating costs for the fiscal year
ended December 31, 1997 in the statement of operations, with an adjustment
to the Company's income tax expense assuming an effective tax rate of 40%.
<PAGE>
EXHIBITS
Exhibit
No. Page
2.1 Asset Purchase Agreement by and between CPII
Acquisition Corp. and Amedisys, Inc....................... A-1
2.2 Asset Purchase Agreement by and between Columbia/HCA
Healthcare Corporation and Amedisys, Inc.................. B-1
<PAGE>
___________________________________________
ASSET PURCHASE AGREEMENT
BY AND AMONG
CPII ACQUISITION CORP.
AND
AMEDISYS, INC.
NOVEMBER 3, 1998
___________________________________________
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS........................................................ 2
1.1. Defined Terms....................................................... 2
ARTICLE II. PURCHASE AND SALE OF ASSETS....................................... 6
2.1. Transfer of Assets.................................................. 6
2.2. Assumption of Liabilities........................................... 7
2.3. Purchase Price...................................................... 8
2.4. Allocation of Purchase Price........................................ 8
2.5. Prorations and Adjustments.......................................... 9
2.6. Closing Costs; Transfer Taxes and Fees.............................. 9
ARTICLE III. CLOSING.......................................................... 9
3.1. Closing.............................................................10
3.2. Conveyances at Closing..............................................10
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER..........................11
4.1. Organization of Seller..............................................11
4.2. Authorization.......................................................11
4.3. Absence of Certain Changes or Events................................12
4.4. Assets..............................................................13
4.5. Real Property.......................................................13
4.6. Contracts and Commitments...........................................13
4.7. Permits.............................................................15
4.8. No Conflict or Violation............................................15
4.9. Consents and Approvals..............................................16
4.10. Financial Statements...............................................16
4.11. Books and Records..................................................17
4.12. Litigation.........................................................17
4.13. Compliance with Law................................................17
4.14. Fixtures and Equipment and Other Tangible Property.................20
4.15. No Brokers.........................................................20
4.16. No Other Agreements to Sell the Assets.............................20
4.17. Proprietary Rights.................................................20
4.18. Customers..........................................................21
4.19. Environmental Matters..............................................21
4.20. Affiliate Transaction..............................................22
4.21. Taxes..............................................................22
4.22. Loss Contracts.....................................................22
4.23. Year 2000..........................................................22
<PAGE>
4.24. Windows Operating System Compatibility.............................23
4.25. Full Disclosure....................................................23
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER............................24
5.1. Organization of Buyer...............................................24
5.2. Authorization.......................................................24
5.3. No Conflict or Violation............................................24
5.4. Consents and Approvals..............................................25
5.5. Broker and Finders..................................................25
5.6. Litigation and Proceedings..........................................25
5.7. Full Disclosure.....................................................25
ARTICLE VI. COVENANTS OF SELLER AND BUYER.....................................25
6.1. Further Assurances..................................................26
6.2. [Intentionally Omitted.]............................................26
6.3. [Intentionally Omitted.]............................................26
6.4. [Intentionally Omitted.]............................................26
6.5. [Intentionally Omitted.]............................................26
6.6. Employee Matters....................................................26
6.7. Transitional Services...............................................26
ARTICLE VII. CONDITIONS TO SELLER'S OBLIGATIONS...............................27
7.1. Representations, Warranties and Covenants...........................27
7.2. No Proceedings, Litigation or Laws..................................28
7.3. Certificates........................................................28
7.4. Corporate Documents.................................................28
7.5. Consents............................................................28
ARTICLE VIII. CONDITIONS TO BUYER'S OBLIGATIONS...............................28
8.1. Representations, Warranties and Covenants...........................28
8.2. Consents............................................................29
8.3. No Proceedings or Litigation........................................29
8.4. Opinion of Counsel..................................................29
8.5. Certificates........................................................29
8.6. Corporate Documents.................................................29
8.7. Ancillary Agreements................................................29
8.8. [Intentionally Omitted.]............................................28
8.9. [Intentionally Omitted.]............................................29
8.10. Key Employees......................................................29
8.11. [Intentionally Omitted.]...........................................30
8.12. Release of Encumbrances............................................30
ARTICLE IX. RISK OF LOSS......................................................30
ii
<PAGE>
9.1. Risk of Loss........................................................30
ARTICLE X. ACTIONS BY BUYER AND SELLER AFTER THE CLOSING......................31
10.1. Further Actions....................................................31
10.2. Survival of Representations, Etc...................................31
10.3. Books and Records..................................................32
10.4. Indemnification....................................................32
10.5. Covenant Not To Compete............................................35
10.6. Confidentiality....................................................36
ARTICLE XI. MISCELLANEOUS.....................................................36
11.1. Termination........................................................36
11.2. Assignment.........................................................37
11.3. Notices............................................................38
11.4. Choice of Law......................................................39
11.5. Entire Agreement; Amendments and Waivers...........................39
11.6. Multiple Counterparts..............................................39
11.7. Expenses...........................................................39
11.8. Invalidity.........................................................39
11.9. Titles.............................................................40
11.10. Publicity.........................................................40
11.11. Limitation of Liability...........................................40
iii
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of
November __, 1998, is entered into by and between CPII ACQUISITION CORP., a
Delaware corporation ("Buyer"), and AMEDISYS, INC., a Delaware corporation
("Seller").
RECITALS:
---------
A. Seller is a leading provider of out-patient health care services
offering a portfolio of services, including home health care, alternate site
infusion therapy, out-patient surgery, management and information technology,
management services for physicians and temporary medical staffing.
B. Buyer desires to purchase from Seller, and Seller desires to sell and
transfer to Buyer, all of the assets of Seller and its Subsidiaries (as defined
herein) used or held for use in providing home health care management services,
information systems and support (including Analytical Medical Systems (as
defined below)) and consulting services related to the foregoing (together, the
"Business"), all as more specifically set forth in this Agreement, upon the
terms and subject to the conditions of this Agreement.
AGREEMENT:
----------
NOW THEREFORE, in consideration of the premises and mutual covenants
and promises contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
A-1
<PAGE>
ARTICLE I.
DEFINITIONS
-----------
1.1 Defined Terms.
As used herein, the terms below shall have the following meanings:
"Affiliate" means, with respect to any entity, any other entity or
Person which directly or indirectly controls, is controlled by, or is under
common control with such entity, where the term "control" means the ownership,
directly or indirectly, of more than fifty percent (50%) of the equity capital
or the right or power in fact to direct the management of such entity.
"Analytical Medical Systems" shall mean those certain home health
information systems created, modified, enhanced or developed by Seller and its
Subsidiaries, including the existing character-based products, as well as the
"windows" products, known commonly as Analytical Medical Systems "AMS", the
functions of which are described on Schedule 4.24.
"Ancillary Agreements" shall mean any agreements or instruments (other
than this Agreement) entered into in connection with the transactions
contemplated hereby.
"Books and Records" shall mean (a) all records and lists of Seller and
its Subsidiaries pertaining to the Assets, (b) all records and lists of Seller
and its Subsidiaries pertaining to the Business or the customers or suppliers of
the Business, (c) all product, business and marketing plans of Seller and its
Subsidiaries pertaining to the Business and (d) all books, ledgers, files,
reports, plans, drawings and operating records of every kind maintained by
Seller and its Subsidiaries pertaining to the Business.
"Business" shall have the meaning set forth in the Recitals hereto.
"Buyer" shall have the meaning set forth in the preamble.
"Closing Date" shall mean the date hereof.
A-2
<PAGE>
"Contracts" shall mean all contracts, leases, licenses, commitments,
understandings and agreements relating to, or used in, the Business to which
Seller or any of its Subsidiaries are a party or are bound, whether oral or
written.
"Disclosure Schedule" shall mean the schedule attached hereto which
sets forth certain exceptions to the representations and warranties contained in
Article IV hereof and certain other information called for by this Agreement.
Unless otherwise specified, each reference in this Agreement to any numbered
schedule is a reference to that numbered schedule which is included in the
Disclosure Schedule.
"Encumbrance" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
"Environmental Laws" shall mean all federal, state, local or foreign
laws, statutes, ordinances, regulations, rules, judgments or orders which (i)
regulate or relate to the protection or clean-up of the environment, the
handling or disposition of hazardous substances, the preservation or protection
of waterways, groundwater, drinking water, air, wildlife, plants or other
natural resources, or the health and safety of Persons or property, including,
without limitation, protection of the health and safety of employees or (ii)
impose liability with respect to any of the foregoing, including, without
limitation, the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.),
Resource Conservation & Recovery Act (42 U.S.C. (S) 6901 et seq.) ("RCRA"), Safe
Drinking Water Act (21 U.S.C.(S) 349, 42 U.S.C.(S)(S) 201, 300f), Toxic
Substances
A-3
<PAGE>
Control Act (15 U.S.C.(S) 2601 et seq.), Clean Air Act (42 U.S.C.(S)
7401 et seq.), Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C.(S) 9601 et seq.) ("CERCLA"), California Health & Safety Code ((S)
25100 et seq., (S) 39000 et seq.) and California Water Code ((S) 13000 et seq.),
or any other similar federal, state or local law of similar effect, each as
amended.
"Excluded Assets" shall mean the following assets of Seller or any
Subsidiary or Seller:
(a) all cash and cash equivalents;
(b) any interest in real property;
(c) any direct or indirect interest of Seller in any Subsidiary
or other Person;
(d) all policies of insurance and prepaid insurance premiums;
and
(e) claims, causes of action, chooses in action, accounts
receivable, rights of recovery and rights of set-off of any kind against any
Person relating to the Assets or the Assumed Liabilities arising prior to the
Closing Date.
"Excluded Liabilities" shall mean any and all liabilities and
obligations of Seller and its Subsidiaries and Affiliates (whether or not
related to the Business) other than the Assumed Liabilities.
"Fixtures and Equipment" shall mean all of the furniture, fixtures,
furnishings, machinery, spare parts, supplies, equipment and other tangible
personal property owned by Seller and its Subsidiaries and used or held for use
in the Business.
"Inventory" shall mean all of Seller's and its Subsidiaries' inventory
held for resale in connection with the Business.
A-4
<PAGE>
"Material Adverse Change" shall mean any significant and substantial
adverse change in (i) the Assets, (ii) the Assumed Liabilities, (iii) the
results of operations, condition (financial or otherwise) or prospects of the
Business, (iv) the results of operations, condition (financial or otherwise) or
prospects of Seller and its Subsidiaries, taken as a whole, or (v) the ability
of Seller to consummate the transactions contemplated hereby. A "Material
Adverse Change" shall also include any event or condition which would, with the
passage of time, constitute such a "material adverse change."
"Material Adverse Effect" shall mean any significant and substantial
adverse effect on (i) the Assets, (ii) the Assumed Liabilities, (iii) the
results of operations, condition (financial or otherwise) or prospects of the
Business, (iv) the results of operations, condition (financial or otherwise) or
prospects of Seller and its Subsidiaries, taken as a whole, or (v) the ability
of Seller to consummate the transactions contemplated hereby. A "Material
Adverse Effect" shall also include any event or condition which would, with the
passage of time, constitute such a "material adverse effect."
"Permits" shall mean all licenses, permits, approvals, authorizations
or consents of any governmental authority, whether foreign, federal, state or
local, necessary for, or in effect with respect to, the conduct of the Business
as currently conducted.
"Permitted Encumbrances" shall mean (i) materialmen's, mechanics,
carriers', workmen's repairmen's or other like liens arising in the ordinary
course of Seller's business for amounts not yet due or which are being contested
in good faith by appropriate proceedings and (ii) liens for current taxes not
yet due or any taxes being contested in good faith by appropriate proceedings.
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"Person" shall mean any individual, partnership, corporation, trust,
association, limited liability company, unincorporated organization, government
or any department or agency thereof or any other entity.
"Personal Property Leases" shall mean all of the existing leases with
respect to the personal property of Seller and its Subsidiaries used or held for
use in the Business.
"Proprietary Rights" shall mean all right, title and interest of
Seller and its Subsidiaries in and to (i) all patents, trademarks, copyrights,
trade names, trade rights, trade dress, mask works, trade secrets, designs,
plans, specifications, technical information and processes, formulae, computer
programs and software, and other proprietary or intellectual property rights,
(ii) any registrations of the foregoing (domestic or foreign) and pending
applications for such registration, (iii) rights under any licenses to use any
of the foregoing and (iv) all good will associated with or attributable to the
foregoing, in each case, used or held for use in the operation of the Business,
as currently conducted.
"Seller" shall have the meaning set forth in the preamble.
"Subsidiary" shall mean, with respect to any Person, a corporation or
other entity of which 50% or more of the voting power of the equity securities
or equity interests is owned, directly or indirectly, by such Person.
ARTICLE II.
PURCHASE AND SALE OF ASSETS
2.1. Transfer of Assets. Upon the terms and subject to the conditions
contained herein, at the Closing, Seller and each of its Subsidiaries will sell,
convey, transfer, assign and deliver to Buyer, and Buyer will purchase from
Seller and such Subsidiaries, free and clear of all Encumbrances, all of the
right, title and interest of Seller and such Subsidiaries in and
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to all properties, assets and rights of any kind, whether tangible or
intangible, real or personal, used or held for use in the conduct of the
Business, except for the Excluded Assets (collectively, the "Assets"),
including, without limitation, all of Seller's and such Subsidiaries' right,
title and interest in the following:
(a) deposits, prepayments or prepaid expenses relating to the
Business;
(b) Contracts;
(c) Fixtures and Equipment;
(d) Books and Records;
(e) Proprietary Rights, including, without limitation, all
rights in the home health information system developed and used by Seller and
its Subsidiaries (including the source code and exclusive use thereof) commonly
known as Analytical Medical Systems or AMS, along with all trademark
applications, service marks, service mark applications, registered trademarks
and all renewals thereof;
(f) Permits; and
(g) rights under or pursuant to all warranties, representations
and guarantees made by vendors or suppliers in connection with the Assets or the
Business, and services furnished to Seller or its Subsidiaries.
2.2. Assumption of Liabilities. On the Closing Date, Buyer shall
assume the liabilities of Seller and its Subsidiaries which accrue under the
Contracts listed on Schedule 2.2 (the "Assumed Contracts") after the Closing
(the "Assumed Liabilities"). Buyer shall not assume any other liabilities or
obligations of Seller, including, without limitation, (i) any obligations or
liabilities under any contract, agreement or lease not included in the Assumed
Contracts, (ii) any obligations or liabilities under the Assumed Contracts
relating to the period prior to the Closing,
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(iii) any obligations or liabilities relating to or arising out of any claims or
pending litigation proceedings, (iv) any obligations or liabilities of Seller
under any employee pension, retirement or other benefit plans and (v) any
obligations or liabilities to any employee of the Business, including, without
limitation, any obligation for severance benefits, vacation time or sick leave,
and all such obligations and liabilities shall remain and be the obligations and
liabilities of Seller.
2.3. Purchase Price. At the Closing, upon the terms and subject to
the conditions set forth herein, as consideration for the Assets, Buyer shall
pay to Seller Eleven Million Dollars ($11,000,000) in cash (the "Purchase
Price") by wire transfer of immediately available funds to an account designated
by Seller. Buyer and Seller hereby agree that Five Hundred Thousand Dollars
($500,000) of the Purchase Price is attributable to the Covenant Not to Compete
contained in Section 10.5.
2.4. Allocation of Purchase Price. Buyer and Seller shall negotiate
in good faith to agree within 90 days of the Closing Date on an allocation of
the Purchase Price in accordance with the requirements of Section 1060 of the
Code. Buyer and Seller shall each file with their respective federal income tax
returns for the tax year in which the Closing occurs, IRS Form 8594 containing
the information agreed upon by the parties pursuant to the immediately preceding
sentence. Buyer and Seller shall each deliver to the other a copy of the IRS
Form 8594 as filed with their respective federal income tax returns within 30
days of the filing of such return. Buyer agrees to report the purchase of the
Assets, and Seller agrees to report the sale of the Assets, for income tax
purposes (including but not limited to, on their respective income tax returns,
before any governmental agency charged with the collection of income tax or in
any judicial proceeding concerning the income tax consequences of the
Purchaser's purchase or the Seller's sale of the Assets hereunder) in a manner
consistent with the information agreed upon by
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the parties pursuant to this Section and the information contained in IRS Form
8594.
2.5. Prorations and Adjustments. The operation of the Business and
the income and normal operating expenses, including, without limitation, Assumed
Liabilities and prepaid expenses, attributable thereto through 12:01 a.m. on the
Closing Date (the "Adjustment Time") shall be for the account of Seller and
thereafter for the account of Buyer. Expenses for goods or services received
both before and after the Adjustment Time and deferred items shall be prorated
between Seller and Buyer as of the Adjustment Time. Buyer will prepare and
deliver within sixty (60) days after the Closing Date a report computing the net
payment owing by Buyer or Seller, as the case may be, and the details of such
determination in accordance with the provisions of this Section 2.5. Within
twenty (20) days after receiving the report, Seller will provide Buyer with any
objections to the report and the party obligated to make payment under the
report will do so within five (5) days after the expiration of the twenty (20)
day period. If any disagreement with respect thereto cannot be resolved by the
parties, Seller and Buyer will select a certified public accountant to resolve
the dispute. The resolution of such accountant shall be binding on the parties
and subject to judicial enforcement. One-half of the cost of the accountant
shall be paid by each party.
2.6. Closing Costs; Transfer Taxes and Fees. The cost of any transfer
or conveyance taxes and the recording or filing of all applicable conveyancing
instruments incurred by reason of the transfer of Assets hereunder (including
documentary and transfer taxes in connection therewith) will be paid by Seller.
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ARTICLE III.
CLOSING
3.1. Closing. The Closing of the transactions contemplated hereby
(the "Closing") shall be held at 10:00 a.m. local time on the Closing Date at
such location as the parties hereto agree.
3.2. Conveyances at Closing.
(a) Instruments and Possession. To effect the sale and
assumption referred to in Article II, Seller will, at the Closing, execute and
deliver to Buyer:
(i) one or more bills of sale conveying in the aggregate
all of Seller's and its Subsidiaries' owned personal property included in the
Assets;
(ii) an instrument of assignment providing for the
assignment by Seller to Buyer of the Contracts;
(iii) assignments of the Proprietary Rights in recordable
form to the extent necessary to assign such rights; and
(iv) such other instruments as shall be reasonably
requested by Buyer to vest in Buyer such right, title or interest in and to the
Assets in accordance with the provisions hereof.
(b) Assumption and Other Documents. To effect the sale and
assumption referred to in Article II, at the Closing, Buyer shall execute and
deliver to Seller:
(i) an instrument of assumption evidencing Buyer's
assumption pursuant to Section 2.2 of the Assumed Liabilities; and
(ii) such other instruments as shall be reasonably
requested by Seller to evidence Buyer's assumption of the Assumed Liabilities in
accordance with the provisions hereof.
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(c) Form of Instruments. To the extent that a form of any
document to be delivered hereunder is not attached as an Exhibit hereto, such
documents shall be in form and substance, and shall be executed and delivered in
a manner, reasonably satisfactory to the party or parties in whose favor the
document runs.
(d) Certificates; Opinions. Buyer and Seller shall deliver the
certificates, opinions of counsel and other documents described in Articles VII
and VIII.
(e) Consents. Seller shall obtain and deliver evidence of all
governmental and other third party consents and waivers required pursuant to
Section 8.2.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
4.1. Organization of Seller. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Seller is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of its properties owned or
leased or the nature of its activities make such qualification necessary. Copies
of the corporate charter and bylaws of Seller, and all amendments thereto,
heretofore delivered to Buyer are accurate and complete as of the date hereof.
Schedule 4.1 contains a true, correct and complete list of all jurisdictions in
which Seller is qualified to do business as a foreign corporation.
4.2. Authorization. Seller has all requisite corporate power and
authority to own, lease and operate the Assets, to conduct its business as it is
presently being conducted, to execute and deliver this Agreement and the
Ancillary Agreements, and to perform its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Ancillary
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Agreements by Seller and the consummation by Seller of the transactions
contemplated hereby and thereby have been duly approved by the board of
directors of Seller. No other corporate proceedings on the part of Seller are
necessary to authorize this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by Seller and is a legal, valid and binding obligation of
Seller, and the Ancillary Agreements when executed at Closing will constitute a
valid and binding obligation of Seller, enforceable against Seller in accordance
with their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
4.3. Absence of Certain Changes or Events. Since June 30, 1998, there
has not been any:
(a) Material Adverse Change;
(b) change in accounting methods, principles or practices by
Seller or any of its Subsidiaries, except as required by law or by generally
applicable changes instituted in the accounting profession;
(c) material damage, destruction or loss (whether or not covered
by insurance) adversely affecting the Assets or the Business;
(d) adverse change in employee relations which has had or would
have a Material Adverse Effect;
(e) except as set forth on Schedule 4.3(e), cancellation or
termination of any Contract or entry into any Contract;
(f) sale, assignment or transfer of any material portion of the
Assets, other than in the ordinary course of business;
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(g) any failure to operate the Business in the ordinary course;
(h) except as set forth on Schedule 4.3(h), actual or threatened
termination of any Contract;
(i) material adverse change in the business of Seller and its
Subsidiaries, taken as a whole;
(j) agreement by Seller or its Subsidiaries to do any of the
things described in the preceding clauses (a) through (i) other than as
expressly provided for herein.
4.4. Assets. Seller and its Subsidiaries have good and marketable
title to the Assets, free and clear of all Encumbrances, other than Permitted
Encumbrances, and, upon the consummation of the transactions contemplated
hereby, Buyer will acquire good title to all such Assets, free and clear of any
Encumbrances, other than Permitted Encumbrances. The Assets include all material
assets used in, or necessary for, the conduct of the business of Seller and its
Subsidiaries as currently conducted.
4.5. Real Property. Schedule 4.5 contains a complete and accurate
list of all real property used in the conduct of the Business, as currently
conducted.
4.6. Contracts and Commitments.
(a) Contracts. Schedule 4.6 sets forth a complete and accurate
list of all Contracts of the following categories:
(i) Contracts not made in the ordinary course of the
Business;
(ii) Contracts providing for the provision of services by
the Business to its customers;
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(iii) Contracts (including licenses and sublicenses)
relating to Proprietary Rights and other intellectual property rights;
(iv) Material distribution, franchise, license, sales,
commission, consulting agency or advertising Contracts which are not cancelable
on thirty (30) calendar days notice;
(v) Contracts involving expenditures or liabilities in
excess of $5,000 or otherwise material to the Business;
(vi) Contracts containing covenants limiting the freedom
of Seller or its Subsidiaries to engage in any line of business or compete with
any Person; and
(vii) Personal Property Leases.
Seller has delivered or made available to Buyer true, correct and
complete copies of all of the Contracts listed on Schedule 4.6, including all
amendments and supplements thereto. Except as set forth on Schedule 4.6, the
assignment of the Contracts to Buyer will not require the consent or approval of
any party to any of the Contracts.
(b) Absence of Breaches or Defaults. All of the Contracts are
valid and in full force and effect. Seller and each of its Subsidiaries has duly
performed all of its material obligations under such Contracts to the extent
those obligations to perform have accrued, and no material violation of, or
material default or breach under, such Contracts by Seller or its Subsidiaries,
or, to Seller's knowledge, any other party has occurred and neither Seller nor
its Subsidiaries, nor, to Seller's knowledge, any other party has repudiated any
material provisions thereof. Neither Seller nor any of its Subsidiaries is in
material breach or default under any contract, agreement, indenture or other
instrument relating to the borrowing of money
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by Seller or any of its Subsidiaries, and Seller does not have any reason to
believe that any such breach or default could reasonably be expected to occur in
the foreseeable future.
(c) Warranty. Seller and its Subsidiaries have committed no act,
and there has been no omission, which would result in, and there has been no
occurrence which would give rise to, any material liability for breach of
warranty on the part of Seller or its Subsidiaries.
4.7. Permits. Seller and its Subsidiaries have all Permits required
to conduct their business in all material respects as now being conducted. All
such Permits of Seller or its Subsidiaries are valid and in full force and
effect. Schedule 4.7 contains a true and accurate list of all such Permits.
4.8. No Conflict or Violation. Neither the execution, delivery or
performance of this Agreement and the Ancillary Agreements by Seller nor the
consummation by Seller of the transactions contemplated hereby and thereby will
(a) violate or conflict with any provision of the corporate charter or bylaws or
similar organizational documents of Seller or any of Seller's Subsidiaries, (b)
violate, conflict with, or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any material Encumbrance upon any of the
Assets under any of the terms, conditions or provisions of any Contract,
indebtedness, note, bond, indenture, security or pledge agreement, commitment,
license, Lease, franchise, Permit, agreement, or other instrument or obligation
(i) to which Seller or any of its Subsidiaries is a party or (ii) by which the
Assets are bound, (c) violate any statute, rule, regulation, ordinance,
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code, order, judgment, ruling, writ, injunction, decree or award to which Seller
or any of its Subsidiaries or the Assets is subject, or (d) impose any
Encumbrance on the Assets.
4.9. Consents and Approvals. Except as listed on Schedule 4.9, no
material consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority, or any other
Person, is required to be made or obtained by Seller in connection with Seller's
execution, delivery and performance of this Agreement or the Ancillary
Agreements.
4.10. Financial Statements. Seller has previously delivered to Buyer
the following financial statements, all of which have been prepared in
accordance with GAAP and present fairly the consolidated financial position of
Seller and its consolidated Subsidiaries at the dates stated in such financial
statements and the results of their operations for the periods stated therein
(subject, in the case of the financial statements referenced in paragraph (ii),
to the absence of footnotes and to normal year-end adjustments, the effect of
which will not, individually or in the aggregate, be materially adverse to the
business, operations or financial condition of Seller or any of its
Subsidiaries):
(i) the audited consolidated balance sheets of Seller and
its consolidated Subsidiaries as of December 31, 1997, 1996 and 1995, and the
related audited consolidated statements of operations, stockholders' equity and
cash flows of Seller and its consolidated Subsidiaries for the years ended
December 31, 1997, 1996 and 1995, together with the auditors' report thereon;
and
(ii) the unaudited consolidated balance sheet of Seller
and its consolidated Subsidiaries as of June 30, 1998, and the related unaudited
consolidated statements
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of operations, stockholders' equity and cash flows of Seller and its
consolidated Subsidiaries for the six-month period ended June 30, 1998.
4.11. Books and Records. Seller and its Subsidiaries have made and
kept (and given Buyer access to) the Books and Records, which, in all material
respects, accurately and fairly reflect the activities of Seller and its
Subsidiaries with respect to the Assets and the Business that would be so
recorded.
4.12. Litigation. Except as set forth on Schedule 4.12, there is no
action, order, writ, injunction, judgment or decree outstanding or any claim,
suit, litigation, proceeding, labor dispute, arbitral action, governmental audit
or investigation (collectively, "Actions") pending, or to Seller's knowledge,
threatened against, related to or affecting Seller or any of its Subsidiaries
(i) that relates to or affects the Assets or the Business, (ii) that could have
a Material Adverse Effect, or (iii) seeking to delay, limit or enjoin the
transactions contemplated by this Agreement or the Ancillary Agreements. Neither
Seller nor its Subsidiaries is in default with respect to or subject to any
judgment, order, writ, injunction or decree of any court or governmental agency,
and, to the knowledge of Seller, there are no unsatisfied judgments against
Seller or any of its Subsidiaries or the Assets.
4.13. Compliance with Law. Seller and its Subsidiaries are, and at all
times during the past five (5) years have been, in compliance in all material
respects with all applicable statutes and governmental rules, regulations,
Permits and policies in respect of the Assets and the Business. Except as
described on Schedule 4.13, during the past five (5) years, neither Seller nor
any of its Subsidiaries has conducted any internal investigation relating to any
actual or alleged violation of any statute, law or governmental rule or
regulation by Seller or any of its Subsidiaries relating in any way to the
Business. Without limiting the foregoing, except with
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respect to matters set forth on Schedule 4.13, Seller and its Subsidiaries are,
and at all times during the last five (5) years have been, in compliance in all
material respects with all applicable laws (including rules and regulations
thereunder) of federal, state, local and foreign governments relating to health
care, the health care industry, the provision of health care products or
services and any applicable third party reimbursement laws (including, without
limitation, Medicare and Medicaid). Neither Seller nor any of its Subsidiaries
since inception has received notice that Seller or any of its Subsidiaries has
been the subject of any investigative proceeding before any federal or state
regulatory authority or the agent of any such authority, including, without
limitation, federal and state health authorities. In addition, Seller and its
Subsidiaries have complied in all material respects with all applicable Medicare
and Medicaid program requirements. All Medicare and Medicaid bills or claims for
payment in connection with the business of Seller and its Subsidiaries
(collectively, "Bills") submitted by or on behalf of Seller or its Subsidiaries
for items, services and goods provided to beneficiaries of the programs
represent bona fide claims receipts (i.e., Seller or its Subsidiaries believed
in good faith that such services were medically necessary and met all coverage
and documentation requirements) for items, services or goods provided to
Medicare or Medicaid beneficiaries and in accordance with applicable laws, rules
and regulations, and were submitted by or on behalf of Seller or one of its
Subsidiaries materially in accordance with applicable laws, rules and
regulations. There are no threatened audits, investigations or claims for or
relating to any material liability with respect to Medicare and Medicaid. Seller
and its Subsidiaries are eligible to receive payments with respect to operations
of their respective business under Title XVIII and Title XIX of the Social
Security Act. Seller and its Subsidiaries have timely filed all claims and
reports required to be filed with respect to the operations of their respective
businesses in connection with all state Medicaid and
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federal Medicare programs, which claims and reports are complete and correct in
all material respects. There are no actions, appeals or investigations pending
or threatened before any entity, commission, board or agency, including an
intermediary or carrier or the administrator of the Health Care Financing
Administration, with respect to any Medicare or Medicaid claims, or CHAMPUS (as
defined below) or other claims, or reports filed by Seller or its Subsidiaries
with respect to the operations of their respective businesses on or before the
date hereof or program compliance matters, which would reasonably be expected to
have a Material Adverse Effect. Neither Seller nor any Subsidiary, nor the
officers, directors or employees or agents of any of Seller or any Subsidiary
have engaged in any activities which are prohibited under criminal law, or are
cause for civil penalties or mandatory or permissive exclusion from Medicare or
Medicaid or any other state or federal health care program under Sections 1320a-
7, 1320a-71, 1320a-7b, or 1395nn of Title 42 of the United States Code, the
federal Civilian Health and Medical Plan of the Uniformed Services ("CHAMPUS")
Statute, or the regulations promulgated pursuant to such statutes or regulations
or related state or local statutes or which are prohibited by any private
accrediting organization from which the Seller or any of its Subsidiaries seeks
accreditation or by generally recognized professional standards of care or
conduct. Neither Seller nor any of its Subsidiaries, nor any of their respective
officers, directors or employees or agent of Seller or any of its Subsidiaries,
(i) has had a civil monetary penalty assessed against it under Section 1128A of
the Social Security Act or any regulations promulgated thereunder, (ii) has been
excluded from participation under Medicare, Medicaid or a state health care
program or a federal health care program, or (iii) has been convicted of any of
the offenses set forth in Social Security Act Section 1128(a) and (b)(1), (2),
(3) or any regulations promulgated thereunder. For the purpose hereof, "Medicaid
and Medicare" mean, respectively, the State Care Programs for the indigent
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under Title XIX of the Social Security Act and the Federal Health Care program
for those over age 65 years and the disabled and Title XVIII of the Social
Security Act.
4.14. Fixtures and Equipment and Other Tangible Property. Except as
set forth on Schedule 4.14, the Fixtures and Equipment and other tangible
personal property used in the conduct of the Business are in good operating
condition and repair (subject to normal wear and tear) and are suitable for the
purposes for which each is presently and has historically been used.
4.15. No Brokers. Except as set forth on Schedule 4.15, no broker,
finder or similar agent is entitled to any finder's fee, brokerage fees or
commission or similar payment from Seller in connection with the transactions
contemplated hereby.
4.16. No Other Agreements to Sell the Assets. Neither Seller nor any
of its officers, directors, shareholders or Affiliates have any commitment or
legal obligation, absolute or contingent, to any other Person other than Buyer
to sell, assign, transfer or effect a sale of any material portion of the Assets
or the Business or to effect any other business combination relating to the
Assets or the Business or to enter into any agreement or cause the entering into
of an agreement with respect to any of the foregoing business combination
transactions.
4.17. Proprietary Rights.
(a) Proprietary Rights. Schedule 4.17 lists all Proprietary
Rights material to the conduct of the Business as currently conducted.
(b) Ownership and Protection of Proprietary Rights. Seller or
one of its Subsidiaries owns each of the Proprietary Rights listed on Schedule
4.17. The Proprietary Rights listed on Schedule 4.17 constitute all of the
material Proprietary Rights necessary to conduct the Business in the manner
currently conducted. None of the Proprietary Rights is involved in any pending
or, to the knowledge of Seller, threatened litigation. No other Person
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(i) has the right to use any of the Proprietary Rights or (ii) is infringing
upon any Proprietary Rights. Seller's use of the Proprietary Rights is not
infringing upon or otherwise violating the rights of any third party. No
proceedings have been instituted against or notices received by Seller that are
presently outstanding alleging that Seller's use of the Proprietary Rights
infringes upon or otherwise violates any rights of a third party in or to such
Proprietary Rights, and Seller knows of no basis for any such proceeding. All
Proprietary Rights are freely assignable by Seller to Buyer. Concurrently with
the Closing, Buyer will be vested with all rights, title and interest and
authority to use the Proprietary Rights to the same degree as the Seller and its
Subsidiaries immediately prior thereto. No Proprietary Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
use or licensing thereof by Seller or its Subsidiaries. No Person (including,
without limitation, any employee, developer, licensee, licensor, lender or
supplier) other than Seller and its Subsidiaries has any interest in, or right
or claim to, any Proprietary Right.
4.18. Customers. Schedule 4.18 sets forth a complete and accurate list
of the names and addresses of all customers of the Business for the most recent
fiscal year, showing the approximate total sales in dollars by the Business to
each such customer during such fiscal year. As of the date hereof, Seller has
not received any communication from any customer named on Schedule 4.18 of any
intention to terminate or materially reduce purchases from the Business.
4.19. Environmental Matters. Except as set forth on Schedule 4.19: (a)
Seller and its Subsidiaries are in substantial compliance with all Environmental
Laws in connection with the conduct of the Business; (b) Seller and its
Subsidiaries have no material liability under any Environmental Law with respect
to the Business; (c) no notices of any material violation or alleged material
violation of, or any material liability under, any Environmental Law relating to
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the Business have been received by Seller or its Subsidiaries during the
preceding three (3) years; and (d) there are no writs, injunctions, decrees,
orders or judgments outstanding, or any actions, suits, claims, proceedings or
investigations pending or, to Seller's knowledge, threatened, relating to
compliance with or liability under any Environmental Law affecting the Assets or
the Business.
4.20. Affiliate Transaction. Schedule 4.20 hereto describes all
material transactions affected during the last 3 years involving the Business,
on the one hand, and the other divisions, subsidiaries and businesses of Seller
or any officer, director, stockholder or Affiliate of Seller or its
Subsidiaries, on the other hand.
4.21. Taxes. Seller and each of its Subsidiaries have filed all
applicable federal, state, local and foreign tax returns required to be filed to
date, in accordance with provisions of law pertaining thereto, and has paid all
taxes, interest, penalties and assessments (including, without limitation,
income, withholding, excise, unemployment, Social Security (OASDI and Medicare),
occupation, transfer, franchise, property, sales and use taxes, and all
penalties and interest in respect thereof) required to have been paid to date by
Seller or such Subsidiary.
4.22. Loss Contracts. Except as set forth on Schedule 4.22, Seller and
its Subsidiaries have not incurred any loss with respect to any Contract listed
in Schedule 4.6, and Seller does not expect, to the best of Seller's knowledge,
the performance of any Contract listed on Schedule 4.6 to result in any loss
being incurred by Seller or any of its Subsidiaries.
4.23. Year 2000. Except as set forth on Schedule 4.23, the Assets
include all systems and software solutions necessary or appropriate to address
and accommodate Year 2000 computer systems issues, and the computer software
included in the Assets has been tested and is fully capable of providing
accurate results using data having date ranges spanning the twentieth
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and twenty-first centuries. Without limiting the generality of the foregoing,
the computer software included in the Assets is able, except as set forth on
Schedule 4.23, to (i) manage and manipulate data involving all dates from the
twentieth and twenty-first centuries without functional or data abnormality
related to such dates; (ii) manage and manipulate data involving all dates from
the twentieth and twenty-first centuries without inaccurate results related to
such dates; (iii) have user interfaces and data fields formatted to distinguish
between dates from the twentieth and twenty-first centuries; and (iv) represent
all data related to include indications of the millennium, century and decade as
well as the actual year.
4.24. Windows Operating System Compatibility. As of the date of this
Agreement, (i) Seller has developed and is implementing a Windows 95 version of
Analytical Medical Systems that operates in the Windows NT environment of the
Microsoft Windows operating system (the "Windows AMS Product"), (ii) the Windows
AMS Product is complete, tested and ready for implementation and has at least
the same level and degree of functionality as the current MS-DOS based version
of AMS, (iii) each of the MS-DOS based version of AMS and the Windows AMS
Product performs in accordance with the specifications listed on Schedule 4.24
and (iv) the MS-DOS based version of AMS and the Windows AMS Product will
perform in accordance with such specifications if applied with respect to
operations consisting of at least (A) 100 separate home health care sites and
(B) two million patient visits.
4.25. Full Disclosure. No representation or warranty made by Seller in
this Agreement, nor any document, exhibit, statement, certificate or schedule
furnished by Seller to Buyer in connection with the transactions contemplated
hereby, contains any untrue statement of material fact or omits to state any
material fact necessary in order to make the statement contained herein or
therein not misleading. Seller has disclosed to Buyer all events, conditions
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and facts material to the Assets and the results of operation, condition
(financial and otherwise) and prospects of the Business.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represent and warrant to Seller as follows:
5.1. Organization of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Copies of the Certificates of Incorporation and Bylaws of Buyer, heretofore
delivered by Buyer to Seller, are accurate and complete as of the date hereof.
Buyer is duly licensed and qualified to do business and is in good standing in
each jurisdiction in which such qualification is required or will be required as
a result of the transaction contemplated by this Agreement by applicable law.
5.2. Authorization. Buyer has full corporate power and authority to
execute and deliver this Agreement and the Ancillary Agreements, and to perform
its obligations hereunder and thereunder. The execution, delivery and
performance by Buyer of this Agreement and the Ancillary Agreements have been
duly authorized by all requisite corporate action on the part of Buyer. This
Agreement has been duly executed and delivered by Buyer and is a valid and
binding obligation of Buyer, and the Ancillary Agreements when executed at
Closing will constitute a valid and binding obligation of Buyer, enforceable
against Buyer in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
5.3. No Conflict or Violation. Neither the execution and delivery of
this Agreement or the Ancillary Agreements by Buyer nor its performance of its
obligations
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hereunder and thereunder will result in (a) a violation of or a conflict with
any provision of the Certificate of Incorporation or Bylaws of Buyer, (b)
violate or conflict with or result in a breach of or constitute a default under
any term or provision of any contract, agreement, commitment, lease, license,
franchise or permit or other instrument or obligation to which Buyer is a party
or is bound, or (c) a violation by Buyer of any statute, rule, regulation,
ordinance, code, order, judgment, writ, ruling, injunction, decree, or award, to
which Buyer is subject.
5.4. Consents and Approvals. No consent, approval or authorization or
declaration, filing or registration with any governmental or regulatory
authority, or any other Person, is required to be made or obtained by Buyer in
connection with Buyer's execution, delivery and performance of this Agreement or
the Ancillary Agreements.
5.5. Broker and Finders. Neither Buyer nor any of its Affiliates has
entered into any agreement or incurred any obligation, directly or indirectly,
for the payment of any brokerage fees, commissions or finder's fee, for which
the Seller will be liable, in connection with the transactions contemplated by
this Agreement.
5.6. Litigation and Proceedings. There are no Actions pending or, to
the best of knowledge of Buyer, threatened against Buyer.
5.7. Full Disclosure. No representation or warranty made by Buyer in
this Agreement, nor any document, exhibit, statement, certificate or schedule
furnished by Buyer to Seller in connection with the transactions contemplated
hereby, contains any untrue statement of material fact or omits to state any
material fact necessary in order to make the statement contained herein or
therein not misleading.
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ARTICLE VI.
COVENANTS OF SELLER AND BUYER
Seller and Buyer each covenant as follows:
6.1. Further Assurances. Each of the parties hereto agrees, both
before and after the Closing, (i) subject to the satisfaction of the conditions
set forth in Article VII and Article VIII, to use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement and (ii) to execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereby.
6.2. [INTENTIONALLY OMITTED.]
6.3. [INTENTIONALLY OMITTED.]
6.4. [INTENTIONALLY OMITTED.]
6.5. [INTENTIONALLY OMITTED.]
6.6. Employee Matters. The parties acknowledge that Buyer shall have
no obligation to hire any employee of Seller or its Subsidiaries at or following
the Closing and that Buyer is assuming no liabilities or obligation with respect
to such employees of Seller of such Subsidiaries. In the event that, prior to 90
days after the Closing Date, Buyer notifies Seller in writing that it desires to
hire any current employee or employees of Seller employed in the Business at or
following the Closing, Seller shall use its reasonable best efforts to cause any
employee so identified by Buyer except for Peter Hartley, Lynn Bernhard, and
Marguerite Adams (the "Key Employees") to accept an offer of employment made by
Buyer to such Key Employee that is substantially consistent with the current
terms of employment between such Key Employee and Seller.
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6.7. Transitional Services.
(a) Between the Closing Date and the date which is ninety (90)
days after the Closing Date, Seller shall provide, or cause its Affiliates to
provide, to Buyer or its Affiliates, at Seller's sole cost and expense (except
for out-of-pocket expenses, which shall be reimbursed by Buyer), services
requested by Buyer to the extent that (i) such services are of the type
currently provided by Seller to the Business and (ii) such services are
reasonably necessary to conduct the Business as currently conducted. Such
services shall be provided in the manner and at a relative level of service
consistent in all material respects with that provided by Seller to the Business
prior to the date hereof.
(b) Between the date hereof and the first anniversary hereof,
Seller will make available to Buyer, at no cost to Buyer, the services of senior
programming and/or software development professionals employed by Seller for the
purpose of providing the Business with software development support. The
specific senior programming and/or software development employees to perform
such services will be selected by Buyer with the consent of Seller (not to be
unreasonably withheld). Such services will be provided as requested in writing
by Buyer and shall include up to 2,000 man-hours of service.
ARTICLE VII.
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to effect the Closing are subject, in the
discretion of Seller, to the satisfaction, on the Closing Date, of each of the
following conditions, any of which may be waived by Seller:
7.1. Representations, Warranties and Covenants. All representations
and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects at and as of the date of this Agreement and at and as of
the Closing, and Buyer shall have
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performed and satisfied all material agreements and covenants required hereby to
be performed by it prior to the Closing.
7.2. No Proceedings, Litigation or Laws. No Action by any
governmental authority of competent jurisdiction or other Person shall have been
instituted which would reasonably be expected to materially damage Seller if the
transactions contemplated hereunder are consummated.
7.3. Certificates. Buyer shall furnish Seller with such certificates
of its duly authorized officers and others to evidence compliance with the
conditions set forth in this Article VII as may be reasonably requested by
Seller.
7.4. Corporate Documents. Seller shall have received from Buyer
resolutions adopted by the board of directors of Buyer approving this Agreement,
the Ancillary Agreements and the transactions contemplated hereby and thereby,
certified by Buyer's corporate secretary, as applicable.
7.5. Consents. All governmental consents, approvals and waivers
necessary to effect the Closing shall have been obtained.
ARTICLE VIII.
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions provided for
hereby are subject, in the discretion of Buyer, to the satisfaction, on the
Closing Date, of each of the following conditions, any of which may be waived by
Buyer:
8.1. Representations, Warranties and Covenants. All representations
and warranties of Seller contained in this Agreement shall be true and correct
in all material respects at and as of the date of this Agreement and at and as
of the Closing, and Seller shall have
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performed and satisfied all material agreements and covenants required hereby to
be performed by it prior to the Closing.
8.2. Consents. All governmental consents, approvals and waivers
necessary to effect the Closing and for the operation of the Business by Buyer,
and all required third party consents to the assignment of any Contracts to
Buyer, shall have been obtained, and Buyer shall have received written evidence,
reasonably satisfactory to Buyer, that such consents have been obtained.
8.3. No Proceedings or Litigation. No Action by any governmental
authority of competent jurisdiction or other Person shall have been instituted
which would reasonably be expected to materially damage Buyer if the
transactions contemplated hereby are consummated.
8.4. Opinion of Counsel. Seller shall have delivered to Buyer an
opinion of counsel, dated as of the Closing Date, substantially in the form of
Exhibit B hereto.
8.5. Certificates. Seller shall furnish Buyer with such certificates
of its duly authorized officers and others to evidence compliance with the
conditions set forth in this Article VIII as may be reasonably requested by
Buyer.
8.6. Corporate Documents. Buyer shall have received from Seller
resolutions adopted by the board of directors of Seller approving this
Agreement, the Ancillary Agreements and the transactions contemplated hereby and
thereby, certified by Seller's corporate secretary.
8.7. Ancillary Agreements. Seller shall have executed and delivered
to Buyer the Ancillary Agreements.
8.8. [INTENTIONALLY OMITTED.]
8.9. [INTENTIONALLY OMITTED.]
8.10. Key Employees. Each Key Employee identified by Buyer pursuant
to
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Section 6.6 hereof shall have accepted the offer of employment made by Buyer to
such Key Employee and shall become an employee of Buyer (or an Affiliate of
Buyer) as of the Closing Date; provided, that such offer of employment is
substantially consistent with the current terms of employment between such Key
Employee and Seller.
8.11. [INTENTIONALLY OMITTED.]
8.12. Release of Encumbrances. All Encumbrances affecting the Assets
(other than Permitted Encumbrances) shall have been released and/or terminated,
and Seller shall have provided Buyer with evidence of such release and
termination reasonably acceptable to Buyer.
ARTICLE IX.
RISK OF LOSS
9.1. Risk of Loss. If any material portion of the Assets is destroyed
or damaged by fire or any other cause on or prior to the Closing Date, Seller
shall give written notice to Buyer as soon as practicable after, but in any
event within five (5) calendar days of, discovery of such damage or destruction,
including specification of the amount of insurance, if any, covering such Assets
and the amount, if any, which Seller is otherwise entitled to receive as a
consequence of such damage or destruction. Prior to the Closing, Buyer shall
have the option, which shall be exercised by written notice to Seller within ten
(10) calendar days after receipt of Seller's notice or if there are not ten (10)
calendar days prior to the Closing Date, as soon as practicable prior to the
Closing Date, of (a) accepting such Assets in their destroyed or damaged
condition in which event Buyer shall be entitled to the proceeds of any
insurance or other proceeds payable with respect to such loss, or the cash
equivalent thereof, and the full Purchase Price shall be paid for such Assets,
(b) if agreed by Seller and Buyer, excluding such Assets from this Agreement, in
which event the Purchase Price shall be reduced by the amount allocated to
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such Assets, as mutually agreed between the parties or (c) after providing
Seller with a reasonable opportunity to repair or replace the damaged or
destroyed Assets, terminating this Agreement.
ARTICLE X.
ACTIONS BY BUYER AND SELLER AFTER THE CLOSING
10.1. Further Actions. On and after the Closing Date, Buyer and Seller
will take all appropriate actions and execute all documents, instruments or
conveyances of any kind which may be reasonably necessary or advisable to
confirm or effect Buyer's ownership, possession and control (in accordance with
this Agreement) of the Assets and assumption of the Assumed Liabilities.
10.2. Survival of Representations, Etc. The representations,
warranties, covenants and agreements of Seller on the one hand, and Buyer on the
other hand, contained herein shall survive the Closing Date for the period set
forth in this Section 10.2. All such representations and warranties and all
claims and causes of action with respect thereto shall terminate upon expiration
of three (3) years after the Closing Date, except that the representations and
warranties in Sections 4.1, 4.2, 4.4, 4.7, 4.9, 4.13, 4.17 and 4.21, and all
claims and causes of action with respect thereto, shall survive until 90 days
after the expiration of the applicable statute of limitations (with extensions)
with respect to the matters addressed in such Sections. Each such covenant and
agreement shall survive the Closing and remain in full force and effect unless
otherwise limited by its terms. The termination of the representations and
warranties provided herein shall not affect the rights of a party in respect of
any Claim made by such party in a writing received by the other party prior to
the expiration of the applicable survival period provided herein.
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10.3. Books and Records. Buyer agrees that it will cooperate with and
make available to Seller, during normal business hours, all Books and Records,
information and employees (without substantial disruption of employment) which
are necessary or useful in connection with any tax inquiry, audit, investigation
or dispute, any litigation or investigation or any other matter requiring any
such Books and Records, information or employees for any reasonable business
purpose. Except as otherwise required in Section 10.4, Seller shall bear all of
the out-of-pocket costs and expenses (including, without limitation, attorneys'
fees, but excluding reimbursement for salaries and employee benefits) reasonably
incurred in connection with providing such Books and Records, information or
employees. All information received pursuant to this Section 10.3 shall be
subject to the confidentiality provisions of Section 10.6.
10.4. Indemnification.
(a) By Seller. Seller shall indemnify, save and hold harmless
Buyer, its Affiliates and Subsidiaries, and their respective directors,
officers, shareholders and employees (the "Buyer Indemnities") from and against
any and all costs, losses, taxes, liabilities, damages, lawsuits, deficiencies,
claims, demands, and expenses (whether or not arising out of third-party
claims), including, without limitation, reasonable attorneys' fees and all
reasonable amounts paid in investigation, defense or settlement of any of the
foregoing herein, (collectively, "Damages"), incurred in connection with,
arising out of, or resulting from (i) any breach of any representation or
warranty made by Seller in this Agreement (including, without limitation, claims
for Damages asserted within two years after the Closing Date against Buyer or
its Affiliates by licensees or customers of Buyer that would not have been
incurred had such representations and warranties been true and correct); (ii)
any breach of any covenant or agreement made by Seller in this Agreement; and
(iii) any Excluded Liability.
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(b) By Buyer. Buyer shall indemnify, save and hold harmless
Seller, its Affiliates and Subsidiaries, and their respective directors,
officers, shareholders and employees (the "Seller Indemnities" and together with
the Buyer Indemnities, the "Indemnities") from and against any and all Damages
incurred in connection with, arising out of, or resulting from (i) any breach of
any representation or warranty made by Buyer in this Agreement; (ii) any breach
of any covenant or agreement made by Buyer in this Agreement; and (iii) any
Assumed Liability.
(c) The term "Damages" as used in this Section 10.4 is not
limited to matters asserted by third parties, but includes Damages incurred or
sustained by an Indemnitee in the absence of third party claims. Payments by an
Indemnitee of amounts for which such Indemnitee is indemnified hereunder shall
not necessarily be a condition precedent to recovery.
(d) Defense of Claims. If a claim for Damages (a "Claim") is to
be made by an Indemnitee, such Indemnitee shall, subject to Section 10.2, give
written notice (a "Claim Notice") to the indemnifying party as soon as
practicable after such Indemnitee becomes aware of any fact, condition or event
which may give rise to Damages for which indemnification may be sought under
this Section 10.4. If any lawsuit or enforcement action is filed against any
Indemnitee hereunder, notice thereof (a "Third Party Notice") shall be given to
the indemnifying party as promptly as practicable (and in any event within
fifteen (15) calendar days after the service of the citation or summons). The
failure of any Indemnitee to give timely notice hereunder shall not affect
rights to indemnification hereunder, except to the extent that the indemnifying
party demonstrates actual damage caused by such failure. After providing the
Third Party Notice, the Indemnitee shall be entitled, if it so elects, (i) to
control the defense and investigation of such lawsuit or action, (ii) to employ
and engage attorneys of its own choice to
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handle and defend the same, at the indemnifying party's cost, risk and
expense, and (iii) to compromise or settle such claim, which compromise or
settlement shall be made only with the written consent of the indemnifying
party, such consent not to be unreasonably withheld. The indemnifying party
shall cooperate in all reasonable respects with the Indemnitee and such
attorneys in the investigation, trial and defense of such lawsuit or action and
any appeal arising therefrom; and the indemnifying party may, at its own cost,
participate in the investigation, trial and defense of such lawsuit or action
and any appeal arising therefrom. The parties shall also cooperate with each
other in any notifications to insurers. If the Indemnitee fails to defend such
claim within fifteen (15) calendar days after providing the Third Party Notice
or notifies the indemnifying party that it does not intend to defend such claim,
the indemnifying party will undertake the defense, compromise or settlement of
such claim and the Indemnitee shall have the right to participate therein at its
own cost; provided, however, that such claim shall not be compromised or settled
without the written consent of the Indemnitee, which consent shall not be
unreasonably withheld. In the event the indemnifying party assumes the defense
of the claim, the indemnifying party will keep the Indemnitee reasonably
informed of the progress of any such defense, compromise or settlement.
(e) Brokers and Finders. Pursuant to the provisions of this
Section 10.4, each of Buyer and Seller shall indemnify, hold harmless and defend
the other party from the payment of any and all broker's and finder's expenses,
commissions, fees or other forms of compensation which may be due or payable
from or by the indemnifying party, or may have been earned by any third party
acting on behalf of the indemnifying party in connection with the negotiation
and execution hereof and the consummation of the transactions contemplated
hereby.
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10.5. Covenant Not To Compete. Following the Closing until the fifth
(5th) anniversary of the Closing Date, Seller shall not, directly or indirectly
through any Subsidiary or Affiliate of Seller, engage in any business that
competes, directly or indirectly, with the Business as currently conducted or
proposed to be conducted (hereinafter collectively, the "Protected Business") in
any country in which Buyer or its Affiliates now or hereafter conduct any
Protected Business. The term "Protected Business" shall include, without
limitation, the development of any computer software or program or other product
or service that would compete with the computer software or programs (including,
without limitation, Analytical Medical Systems) or other products or service
utilized or provided by the Business, except in connection with the provision of
services to any Affiliate of Buyer. Notwithstanding the foregoing, Seller may
develop computer software or programs, provided that (i) any such software
related to the operation of Medicare-certified home nursing services is used
only for internal development purposes of Seller and its Subsidiaries, (ii)
Seller does not sell, license, transfer or permit any Person to use in any other
manner the results of such development with respect to the operation of
Medicare-certified home health agencies, and (iii) Seller shall grant to Buyer a
perpetual, worldwide, royalty-free license to use, sell or license the results
of such development and any improvements or modifications thereto by Seller or
Buyer. The provisions of this Section 10.5 shall be deemed to be a separate
covenant in each of the countries referred to above. Seller acknowledges and
agrees that the time, scope, geographic area and other provisions of this
Covenant Not to Compete have been specifically negotiated by sophisticated
parties and that such provisions are reasonable under the circumstances. The
parties further agree that if, despite the foregoing acknowledgment, a court or
other tribunal of competent jurisdiction holds that any of the restrictions of
this Covenant Not to Compete are unenforceable, the maximum restrictions
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of time, scope or geographic area reasonable under the circumstances, as
determined by such court or tribunal, shall be substituted for any such
restrictions held unenforceable.
10.6. Confidentiality. Seller and its Affiliates have obtained
confidential information relating to the Business and the Assets. Following the
Closing, Seller and its Affiliates shall treat such information (including,
without limitation, the terms of this Agreement and the Ancillary Agreements) as
confidential, preserve the confidentiality thereof, not duplicate or use such
information and instruct its employees who have had access to such information
to keep confidential and not to use any such information unless such information
(i) is now or is hereafter disclosed, through no act or omission of Seller or
its Affiliates, in a manner making it available to the general public or (ii) is
required by law to be disclosed. Buyer and its Affiliates have obtained
confidential information relating to the business, operations and assets of
Seller. Following the Closing, Buyer and its Affiliates shall treat such
information (including, without limitation, the terms of this Agreement and the
Ancillary Agreements) as confidential, preserve the confidentiality thereof, not
duplicate or use such information and instruct its employees who have had access
to such information to keep confidential and not to use any such information
unless such information (i) is now or is hereafter disclosed, through no act or
omission of Buyer or its Affiliates, in a manner making it available to the
general public or (ii) is required by law to be disclosed.
ARTICLE XI.
MISCELLANEOUS
11.1. Termination.
(a) Termination. This Agreement may be terminated at any time
prior to Closing by mutual written consent of Buyer and Seller.
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(b) In the Event of Termination. In the event of termination of
this Agreement:
(i) Each party will redeliver all documents, work papers
and other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same; and
(ii) No party hereto shall have any further liability or
obligation to any other party to this Agreement, and the provisions of this
Agreement (other than this Section 11.1(b) and Section 11.7) shall be of no
further force and effect; provided, however, that such termination shall not
relieve any part from liability for any breach of this Agreement occurring prior
to the proper termination of this Agreement.
11.2. Assignment. Neither this Agreement, the Ancillary Agreements nor
any of the rights or obligations hereunder or thereunder may be assigned by any
party without the prior written consent of the other parties thereto; except
that Buyer may, without such consent, (i) assign all such rights to any lender
as collateral security and assign all such rights and obligations to an
Affiliate of Buyer, (ii) after the Closing, assign such rights to a successor in
interest to Buyer which shall assume all obligations and liabilities of Buyer
under this Agreement and the Ancillary Agreements and (iii) assign and/or
subcontract any rights or obligations under the Ancillary Agreements to any
Person; provided that no assignment of this Agreement shall release the
assigning party from responsibility for its obligations hereunder. Subject to
the foregoing, this Agreement and the Ancillary Agreements shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, and no other Person shall have any right, benefit or
obligation under this Agreement as a third party beneficiary or otherwise.
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11.3. Notices. All notices under this Agreement shall be in writing
and shall be deemed to have been duly given when received if personally
delivered; when transmitted if transmitted by telecopy, electronic or digital
transmission method provided that such transmission is confirmed by telephone;
the day after it is sent, if sent for next day delivery to a domestic address by
overnight mail; and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:
If to Seller, addressed to:
Amedisys, Inc.
3029 South Sherwood Forest Blvd.
Suite 250
Baton Rouge, LA 70816
Attention: William F. Borne
With a copy to:
Amedisys, Inc.
3029 South Sherwood Forest Blvd.
Suite 250
Baton Rouge, LA 70816
Attention: Michael D. Lutgring
If to Buyer, addressed to:
CPII Acquisition Corp.
c/o Capitol Partners, LLC
2020 Pennsylvania Avenue, N.W., Suite 170
Washington, D.C. 20006
Attention: Managing Director
With a copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W., Suite 1300
Washington, D.C. 20004
Attention: Daniel T. Lennon
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
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11.4. Choice of Law. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the internal law,
and not the law of conflicts, of the State of Delaware.
11.5. Entire Agreement; Amendments and Waivers. This Agreement, the
Ancillary Agreements, together with all exhibits and schedules hereto and
thereto (including the Disclosure Schedule), constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. This Agreement may not be amended or supplemented
except by an instrument in writing signed on behalf of each of the parties
hereto. No modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
11.6. Multiple Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7. Expenses. Except as otherwise specified in this Agreement, each
party hereto shall pay its own legal, accounting, out-of-pocket and other
expenses incident to this Agreement and to any action taken by such party in
preparation for carrying this Agreement into effect.
11.8. Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law,
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such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other such instrument.
11.9. Titles. The titles, captions or headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.10. Publicity. Except as otherwise required by applicable law,
neither Buyer nor Seller shall issue any press release or make any public
statement regarding the transactions contemplated hereby, prior to the Closing
Date, without prior approval of the other party.
11.11. Limitation of Liability. The parties agree that no officer,
director, employee or stockholder of any party shall be responsible for the
liabilities or obligations of such party hereunder and no party shall make any
claim or demand, or file any action against, or otherwise seek to recover any
amount from, any officer, director, employee or stockholder of any other party
hereto pursuant to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on their respective behalf, by their respective officers thereunto duly
authorized, all as of the day and year first above written.
AMEDISYS, INC.
By: /s/ William F. Borne
---------------------------------
Name: William F. Borne
Its: Chief Executive Officer
By:
---------------------------------
Name:
---------------------------------
Its:
---------------------------------
CPII ACQUISITION CORP.
By: /s/ Maher Jubeir
---------------------------------
Name: Maher Jubeir
Its: Managing Director
By: /s/ Peter M. Manos
---------------------------------
Name: Peter M. Manos
Its: Managing Director
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<PAGE>
ASSET PURCHASE AGREEMENT
BY
AND
BETWEEN
COLUMBIA/HCA HEALTHCARE CORPORATION
AND
AMEDISYS, INC.
DATED AS OF NOVEMBER 2, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. SALE OF ASSETS AND CERTAIN RELATED MATTERS......................... 1
1.1 SALE OF THE ASSETS........................................... 1
1.2 EXCLUDED ASSETS.............................................. 2
1.3 DISCLAIMER OF WARRANTIES..................................... 3
1.4 INTERPRETATION............................................... 3
2. FINANCIAL ARRANGEMENTS............................................. 4
2.1 PURCHASE PRICE.............................................. 4
2.2 ALLOCATION OF PURCHASE PRICE................................ 5
2.3 ASSUMED LIABILITIES......................................... 5
2.4 EXCLUDED LIABILITIES........................................ 5
2.5 PURCHASE PRICE ADJUSTMENTS.................................. 6
2.6 INITIAL PURCHASE PRICE ADJUSTMENT........................... 6
2.7 FINAL PURCHASE PRICE ADJUSTMENT............................. 7
2.8 PAYMENT OF FINAL PURCHASE PRICE ADJUSTMENT.................. 7
2.9 COLLECTIONS................................................. 7
2.10 MISDIRECTED PAYMENTS........................................ 7
2.11 ESCROW...................................................... 8
3. CLOSING............................................................ 8
3.1 CLOSING...................................................... 8
3.2 ACTION OF COLUMBIA AT CLOSING................................ 8
3.3 ACTION OF BUYER AT CLOSING................................... 9
3.4 ADDITIONAL ACTS.............................................. 10
4. REPRESENTATIONS AND WARRANTIES OF COLUMBIA......................... 10
4.1 CORPORATE CAPACITY.......................................... 10
4.2 CORPORATE POWERS; CONSENTS; ABSENCE OF CONFLICTS WITH OTHER
AGREEMENTS, ETC. ......................................... 10
4.3 BINDING AGREEMENT........................................... 11
4.4 FINANCIAL STATEMENTS........................................ 11
4.5 LICENSURE................................................... 11
4.6 MEDICARE PARTICIPATION/ACCREDITATION........................ 12
4.7 SCHEDULED CONTRACTS......................................... 12
4.8 LEASEHOLD PROPERTY.......................................... 12
4.9 TITLE....................................................... 12
4.10 QUALITY AND CONDITION OF THE ASSETS......................... 12
4.11 INSURANCE................................................... 13
4.12 LITIGATION OR PROCEEDINGS................................... 13
4.13 TAX LIABILITIES............................................. 13
4.14 POST BALANCE SHEET DATE MATTERS............................. 13
4.15 EMPLOYEE BENEFIT PLANS...................................... 13
</TABLE>
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5. REPRESENTATIONS AND WARRANTIES OF BUYER............................ 14
5.1 CORPORATE CAPACITY........................................... 14
5.2 CORPORATE POWERS; CONSENTS; ABSENCE OF CONFLICTS WITH OTHER
AGREEMENTS, ETC. .......................................... 14
5.3 BINDING AGREEMENT............................................ 15
5.4 FINDERS...................................................... 15
5.5 ADVERSE FACTS AND CIRCUMSTANCES.............................. 15
5.6 ACKNOWLEDGMENT REGARDING YEAR 2000 COMPLIANCE................ 15
6. COVENANTS OF COLUMBIA.............................................. 16
6.1 INFORMATION.................................................. 16
6.2 OPERATIONS................................................... 16
6.3 NEGATIVE COVENANTS........................................... 16
6.4 GOVERNMENTAL APPROVALS....................................... 17
7. COVENANTS OF BUYER................................................. 17
7.1 GOVERNMENTAL APPROVALS....................................... 17
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER....................... 17
8.1 REPRESENTATIONS/WARRANTIES................................... 17
8.2 AGENCIES LICENSE............................................. 17
8.3 HSR ACT...................................................... 17
8.4 ACTION/PROCEEDING............................................ 18
8.5 RECENT AGREEMENTS AND COMMITMENTS............................ 18
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF COLUMBIA.................... 18
9.1 REPRESENTATIONS/WARRANTIES................................... 18
9.2 HSR ACT...................................................... 18
9.3 ACTION/PROCEEDING............................................ 18
10. NONCOMPETITION..................................................... 18
11. ADDITIONAL AGREEMENTS.............................................. 19
11.1 EMPLOYEES................................................... 19
11.2 OWNER'S COST REPORTS........................................ 20
11.3 TRANSITION SERVICES......................................... 20
11.4 TERMINATION PRIOR TO CLOSING................................ 20
11.5 PRESERVATION AND ACCESS TO RECORDS AFTER THE CLOSING........ 21
11.6 COMPLIANCE PROGRAM.......................................... 22
11.7 REMOVAL OF TRADENAMES....................................... 22
11.8 ACCESS TO AGENCIES.......................................... 23
12. INDEMNIFICATION.................................................... 23
</TABLE>
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12.1 INDEMNIFICATION BY COLUMBIA................................. 23
12.2 LIMITATIONS/COLUMBIA........................................ 23
12.3 RECOVERY FROM THIRD PARTIES/COLUMBIA........................ 24
12.4 INDEMNIFICATION BY BUYER.................................... 24
12.5 LIMITATIONS/BUYER........................................... 25
12.6 RECOVERY FROM THIRD PARTIES/BUYER........................... 25
12.7 NOTICE AND PROCEDURE........................................ 26
12.8 LIMITATION ON LIABILITIES................................... 27
12.9 LIMITATION ON CLAIMS........................................ 27
12.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNITY
PERIOD.................................................... 27
13. GENERAL............................................................ 28
13.1 CONSENTED ASSIGNMENT........................................ 28
13.2 CONSENTS, APPROVALS AND DISCRETION.......................... 28
13.3 CHOICE OF LAW; CONSENT TO JURISDICTION...................... 28
13.4 BENEFIT/ASSIGNMENT.......................................... 28
13.5 NO BROKERAGE................................................ 28
13.6 COST OF TRANSACTION......................................... 28
13.7 CONFIDENTIALITY............................................. 29
13.8 WAIVER OF BREACH............................................ 29
13.9 NOTICE...................................................... 29
13.10 SEVERABILITY................................................ 30
13.11 GENDER AND NUMBER........................................... 30
13.12 DIVISIONS AND HEADINGS...................................... 31
13.13 NO THIRD PARTY BENEFICIARIES................................ 31
13.14 ENTIRE AGREEMENT/AMENDMENT.................................. 31
</TABLE>
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LIST OF SCHEDULES
Schedule 1.2 Excluded Assets
Schedule 2.2 Allocation of Purchase Price
Schedule 2.6 Pro Forma Working Capital Statement - Petty Cash
Schedule 4.4 Financial Statements
Schedule 4.4(c) Visits
Schedule 4.6 Medicare Matters
Schedule 4.7 Scheduled Contracts
Schedule 4.8 Leasehold Property
Schedule 4.12 Litigation or Proceedings
Schedule 8.5 Recent Agreements and Commitments
Schedule 11.1 Employees
Schedule 11.1(a) Severance Benefits
LIST OF EXHIBITS
Exhibit A Owners, Agencies and Provider Numbers
Exhibit B Loan Documents
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as of
November 2, 1998, by and between COLUMBIA/HCA HEALTHCARE CORPORATION, a Delaware
corporation ("Columbia"), and AMEDISYS, INC., a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, the subsidiaries of Columbia listed on Exhibit A (the
"Subsidiaries") and the joint venture entities listed on Exhibit A, of which a
subsidiary of Columbia is a joint venturer (the "Joint Ventures") (the
Subsidiaries and the Joint Ventures are collectively referred to herein as the
"Owners") own and operate the home health agencies identified on Exhibit A (the
"Agencies");
WHEREAS, except as indicated on Exhibit A, the Agencies are provider-based
home health agencies based out of acute-care hospitals owned and operated by the
Owners;
WHEREAS, the Medicare and Medicaid, as applicable, provider numbers of the
Agencies are listed on Exhibit A;
WHEREAS, Buyer desires to acquire substantially all of the assets used
exclusively in the operation of the Agencies from the Owners; and
WHEREAS, pursuant to the terms set forth herein, Columbia shall cause the
Subsidiaries to sell the Assets (as hereinafter defined) owned by the
Subsidiaries and shall use its reasonable best efforts to have the Joint
Ventures sell the Assets owned by the Joint Ventures to Buyer.
NOW, THEREFORE, for and in consideration of the premises, and the
agreements, covenants, representations and warranties hereinafter set forth, and
other good and valuable consideration, the receipt and adequacy all of which are
forever acknowledged and confessed, the parties hereto hereby agree as follows:
1. SALE OF ASSETS AND CERTAIN RELATED MATTERS
1.1 SALE OF THE ASSETS. Subject to the terms and conditions of this
Agreement, Columbia shall cause the Subsidiaries to and shall use its reasonable
best efforts to cause the Joint Ventures to sell, convey, transfer, assign and
deliver to Buyer or its affiliates and Buyer agrees to purchase at Closing all
assets, real, personal and mixed, tangible and intangible, other than the
Excluded Assets (as hereinafter defined), owned by the Owners and employed
exclusively in the operation of the Agencies including, without limitation, the
following items (collectively, the "Assets"): (i) leasehold title to the real
property described in SCHEDULE 4.8 hereto, together with all improvements,
buildings and fixtures located thereon or therein (collectively, the "Leasehold
Property"); (ii) all major, minor or other equipment, whether movable or
attached to the Leasehold Property, vehicles, furniture and furnishings; (iii)
all supplies and inventory; (iv) prepaid expenses which are included in the
determination of the Value of Prepaid Expenses;
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(v) all current financial, patient and personnel records; (vi) all commitments,
contracts, leases, and agreements which are required by Section 4.7 to be
described in SCHEDULE 4.7 and are described herein, and those that according to
Section 4.7 are not required to be described in SCHEDULE 4.7 hereto
(collectively, the "Contracts"); (vii) all licenses and permits, to the extent
assignable, held by the Owners relating to the ownership, development and
operations of the Agencies; (viii) all computers, other data processing
equipment and related software, to the extent assignable; and (ix) the goodwill
in the Agencies.
1.2 EXCLUDED ASSETS. Except as indicated on Exhibit A, the Agencies are
provider-based agencies. No asset used in the operation of any hospital or
other healthcare facility, owned or operated by any Owner shall be included in
the Assets. Notwithstanding anything herein to the contrary, the following
assets which are associated with the Owners' operation of the Agencies are not
intended by the parties to be a part of the Assets that are being transferred to
Buyer hereunder and shall be excluded from the definition of Assets
(collectively, the "Excluded Assets"): (i) any asset used in the operation of a
hospital or other healthcare facility, owned or operated by any Owner or its
affiliates; (ii) restricted and unrestricted cash and cash equivalents,
including, without limitation, investments in marketable securities,
certificates of deposit, bank accounts, and promissory notes; (iii) temporary
investments; (iv) all accounts receivable from governmental and non-governmental
third-party payors arising from the rendering of services to patients of the
Agencies prior to the Closing Date ("Receivables"); (v) rights to settlements
and retroactive adjustments, if any, whether arising under a cost report of any
Owner or otherwise, for cost reporting periods ending on or prior to the Closing
Date, whether open or closed, arising from or against the United States
government under the terms of the Medicare program or the Civilian Health and
Medical Program of the Uniformed Services ("CHAMPUS") and against any state
under the Medicaid program and against Blue Cross and Blue Shield and other
third party payor programs which settle upon a basis other than an individual
claims basis ("Agency Settlements"); (vi) all intercompany accounts of the
Owners and their affiliates; (vii) all real property owned in fee; (viii) all
inventory and prepaid expenses disposed of or exhausted prior to Closing in the
ordinary course of business and items of equipment transferred or disposed of in
the ordinary course of business; (ix) any records which by law any Owner is
required to retain in its possession, which shall include all information that
does not pertain to the continuing operation of the Agencies by Buyer and any
records which may be subject to an attorney-client privilege; (x) any
proprietary information contained in any Owner's employee or operation manuals,
including, without limitation, third party reimbursement systems and manuals;
(xi) prepaid expenses not included in the Value of Prepaid Expenses; (xii) all
commitments, contracts, leases, capital leases and agreements between any Owner
and its affiliates; (xiii) all commitments, contracts, leases, capital leases
and agreements which are available only to Columbia and its affiliates; (xiv)
rights to tax refunds or benefits under insurance policies; (xv) all claims,
rights and causes of action of or related to the Assets or the Contracts arising
prior to the Closing Date, and (xvi) the trade name "Columbia" and any trade
name of any one of the Subsidiaries and any Joint Venture and any variations or
derivatives thereof; and (xvii) such other assets as are set forth on SCHEDULE
1.2 hereto.
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1.3 DISCLAIMER OF WARRANTIES. Except as expressly set forth in Article
4 hereof, the tangible Assets will be transferred to Buyer in their condition on
the Closing Date, "AS IS," "WHERE IS" AND "WITH ALL FAULTS," WITH NO WARRANTY OF
HABITABILITY OR FITNESS FOR HABITATION, WITH RESPECT TO LAND, BUILDINGS AND
IMPROVEMENTS, AND WITH NO WARRANTIES, INCLUDING, WITHOUT LIMITATION, THE
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT
TO THE EQUIPMENT, INVENTORY, AND SUPPLIES, ANY AND ALL OF WHICH WARRANTIES (BOTH
EXPRESS AND IMPLIED) COLUMBIA HEREBY DISCLAIMS. The current financial, patient
and personnel records constituting part of the Assets shall be located at, or
delivered to, the locations of the Agencies. All of the Assets shall be further
subject to normal wear and tear on the buildings, improvements and equipment and
normal and customary use of the inventory and supplies up to the Closing.
1.4 INTERPRETATION. In this Agreement, unless the context otherwise
requires:
(A) References to this Agreement are references to this Agreement and
to the Schedules and Exhibits hereto;
(B) References to Articles and Sections are references to articles and
sections of this Agreement;
(C) References to any party to this Agreement shall include references
to its respective successors and permitted assigns;
(D) References to a judgment shall include references to any order,
writ, injunction, decree, determination or award of any court or tribunal;
(E) References to a "Person" shall mean to any individual, company,
body corporate, association, partnership, limited liability company, firm,
joint venture, trust and governmental agency;
(F) The terms "hereof," "herein," "hereby," and derivative or similar
words will refer to this entire Agreement;
(G) References to any document (including this Agreement) are
references to that document as amended, consolidated, supplemented, novated
or replaced by the parties from time to time;
(H) References to any law are references to that law as of the Closing
Date, unless clearly indicated otherwise, and shall also refer to all rules
and regulations promulgated thereunder, unless the context requires
otherwise;
(I) The word "including" shall mean including without limitation;
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(J) References to time are references to Central Standard or Daylight
time (as in effect on the applicable day) unless otherwise specified
herein;
(K) The word "affiliate" shall mean, as to the entity in question, any
person or entity that directly or indirectly controls, is controlled by, or
is under common control with, the entity in question and any successors or
assigns of such entities; and the term "control" means possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of an entity whether through ownership of voting
securities, by contract or otherwise; and
(L) References to "Joint Ventures" shall not include any joint venture
listed on Exhibit A that does not consent to the sale of the home health
agency assets owned by such joint venture to Buyer.
(M) The term "Closing Date" shall refer to the date upon which the
Assets associated with any particular Agency are conveyed to Buyer;
(N) The term "Closing" shall refer to the consummation of the sale to
Buyer of the Assets associated with any particular Agency;
(O) References to "the knowledge of Columbia/and/or the Owners" shall
mean the actual knowledge of the Division Vice Presidents, or other senior
executives of Columbia Homecare; and
(P) In the event there are multiple Closings, all amounts to be
delivered at a Closing pursuant to Section 2.1 shall be prorated in
accordance with SCHEDULE 2.2 based upon the Assets delivered and the
liabilities assumed at such Closing.
2. FINANCIAL ARRANGEMENTS
2.1 PURCHASE PRICE. Subject to the terms and conditions hereof, in
reliance upon the representations and warranties of Columbia herein set forth
and as consideration for the sale and purchase of the Assets as herein
contemplated, Buyer agrees to tender to Columbia or its designee at Closing as
the purchase price hereunder and in the manner hereinafter provided the amount
of TWENTY-FOUR MILLION AND No/100 Dollars ($24,000,000) (the "Purchase Price"),
which amount shall be decreased by the amount of the Purchase Price allocated
(pursuant to SCHEDULE 2.2) to any Joint Venture Agency whose Assets are not
conveyed to Buyer at Closing and shall be adjusted in the manner provided in
Section 2.5 below and shall be payable as follows:
(A) PROMISSORY NOTE. At Closing, Buyer shall deliver to Columbia a
short-term promissory note and loan agreement in favor of Columbia, on
behalf of the Owners, in the original principal amount of FOURTEEN MILLION
AND No/100 Dollars ($14,000,000) (the promissory note and loan agreement
are collectively referred to herein as the "Loan Documents"). The Loan
Documents shall be substantially in the form attached hereto as Exhibit B.
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(B) CASH CONSIDERATION. At Closing, Buyer shall deliver the remainder
of the Purchase Price to Columbia in immediately available funds.
(C) TWO CLOSINGS. The parties hereto hereby agree that the
consummation of the sale and purchase of the Assets contemplated herein may
occur on two Closing Dates. The sale and purchase of the Assets shall only
occur on a state-by-state basis based upon Agency location. The Purchase
Price, including the principal amount of the promissory note, shall be
allocated to the Closing Dates based on SCHEDULE 2.2 adjustments to the
Purchase Price as provided in Sections 2.5 through 2.8 shall be made on
each Closing Date only with respect to the Assets sold and purchased on
such date.
2.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price and the Assumed
Liabilities (as defined in Section 2.3) shall be allocated among the Owners and
to the Assets in a manner consistent with the fair market values set forth in
SCHEDULE 2.2 attached hereto. The parties agree that any tax returns or other
tax information they may file or cause to be filed with any governmental agency
shall be prepared and filed consistently with such agreed upon allocation. In
this regard, the parties agree that, to the extent required, they will each
properly prepare and timely file Form 8594 in accordance with Section 1060 of
the Code.
2.3 ASSUMED LIABILITIES. As of the Closing Date, Buyer shall agree to
pay, perform and discharge the Assumed Liabilities. As used in this Agreement,
the term "Assumed Liabilities" shall mean the following liability of the Owners:
(i) the obligations of the Owners arising on or subsequent to the Closing Date
under the Contracts; and (ii) obligations of the Owners as of the Closing Date
in respect of the sick leave, accrued vacation and other paid time off
(collectively, "PTO") of the Owners' or their affiliates' employees who are
employed by Buyer or its affiliates as of the Closing Date, but only to the
extent such accrued vacation and such paid time off is included in the
determination of the Value of Accrued PTO (as defined in Section 2.7.1).
2.4 EXCLUDED LIABILITIES. Except as expressly provided to the contrary
in Section 2.3 above, under no circumstance shall Buyer be obligated to pay or
assume any liability of the Owners or their affiliates (collectively, the
"Excluded Liabilities"). Columbia and/or the Owners shall dispose of all
Excluded Liabilities when same become due and payable in their ordinary course
of business.
2.5 PURCHASE PRICE ADJUSTMENTS. In accordance with the provisions of
Section 2.6, the Purchase Price shall be adjusted on the Closing Date, and in
accordance with the provisions of Section 2.7, the Purchase Price shall be
adjusted on a date within ninety (90) days after the Closing Date.
2.6 INITIAL PURCHASE PRICE ADJUSTMENT. The Purchase Price on the
Closing Date shall be increased or decreased by an amount equal to the "Initial
Purchase Price Adjustment". The Initial Purchase Price Adjustment shall be an
amount equal to the Value of Supplies (as defined in Section 2.6.1) plus the
Value of Prepaid Expenses (as defined in Section 2.6.2) minus the Estimated
Value
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of Accrued PTO (as defined in Section 2.6.3), and increased or decreased,
as applicable, by the Prorations (as defined in Section 2.6.4).
2.6.1 SUPPLIES. The amount equal to the value of supplies on the
August 31, 1998 unaudited, combined balance sheet of the Agencies.
2.6.2 PREPAID EXPENSES. Prior to the Closing Date, Columbia shall
deliver to Buyer a schedule listing as of the Closing Date all of the prepaid
expenses or deposits, including the amount of each such expense or deposit.
Based on such schedule, Columbia and Buyer shall agree on (i) the prepaid
expenses or deposits in respect of which Buyer shall receive an economic benefit
and which shall be conveyed to Buyer, (the "Value of Prepaid Expenses"), and
(ii) the prepaid expenses or deposits which will be among the Excluded Assets.
2.6.3 ESTIMATED ACCRUED PTO. Prior to the Closing Date, Columbia
shall deliver to Buyer for Buyer's review and approval a schedule of the PTO
under Columbia's existing personnel policies and all other liability related
thereto in respect of the employees of the Owners and their affiliates that are
employed in the operation or the management of the Agencies and to whom offers
of employment will be made by Buyer, as provided herein (the "Estimated Value of
Accrued PTO"). Such schedule will list such amounts with respect to each of
such employees as of the Closing Date.
2.6.4 PRORATION. As of the Closing Date, Columbia and Buyer shall
prorate any amounts which will become due and payable after the Closing Date
with respect to: (i) the Contracts; (ii) property taxes on the Assets; (iii) ad
valorem taxes, if any, on the Assets; (iv) all utilities servicing any of the
Assets, including, without limitation, water, sewer, telephone, electricity, and
gas services; and (v) to the extent not included in the Value of Supplies or
Prepaid Expenses, all other charges and fees customarily prorated and adjusted
in similar transactions (collectively, the "Prorations").
2.7 FINAL PURCHASE PRICE ADJUSTMENT. Within sixty (60) days after the
Closing Date, Seller and Buyer shall determine the "Final Purchase Price
Adjustment." The Final Purchase Price Adjustment shall be an amount equal to
the Value of Supplies plus the Value of Prepaid Expenses minus the Value of
Accrued PTO (as defined in Section 2.7.1) plus or minus the Prorations.
2.7.1 ACCRUED PTO. Promptly following the Closing, Columbia will
provide Buyer with an updated schedule of the Estimated Value of Accrued PTO,
which shall reflect any changes between the date the Estimated Value of Accrued
PTO schedule was prepared and the Closing Date. For purposes of the Final
Purchase Price Adjustment, the amounts reflected in such updated schedule will
be adjusted to eliminate the obligations to any employee of the Owners or their
affiliates that does not accept Buyer's offer of employment. The sum of
obligations set forth in such updated schedule is the "Value of Accrued PTO."
2.8 PAYMENT OF FINAL PURCHASE PRICE ADJUSTMENT. On or before ninety
(90) days after the Closing Date either (i) Columbia shall pay Buyer in
immediately available funds the amount by which the Initial Purchase Price
Adjustment exceeds the Final Purchase Price Adjustment or
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(ii) Buyer shall pay Columbia in immediately available funds the amount by which
the Initial Purchase Price Adjustment is less than the Final Purchase Price
Adjustment.
2.9 COLLECTIONS. On behalf of the Owners, Buyer agrees for a period
commencing on the Closing Date and ending on March 31, 1999 to collect all
Receivables relating to services rendered by any one of the Owners and to
maintain patient account records of such collected Receivables. Columbia shall
pay Buyer a collection fee (the "Collection Fee") equal to six percent (6%) of
the amount of Receivables collected by Buyer on behalf of the Owners
(collections shall include the net value of the claims processed and reflected
on the remittance advice with respect to the Receivables which are subject to
PIP (as defined in Section 3.10) payments). Buyer shall provide to Columbia, on
a monthly basis, an invoice of the Collection Fee owing to Buyer. Columbia
agrees to submit payment to Buyer of the invoice amount within thirty (30) days
of Columbia's receipt of an invoice. All cash receipts from the Receivables
which are collected during such period shall be directed via a lock-box
mechanism to an account in the custody of Columbia. Buyer shall collect the
Receivables and maintain patient account records in substantially the same
manner in which Buyer collects its own patient account receivable and maintains
it own record accounts, provided, however, that Buyer shall not be required to
engage a collection agency or engage in similar efforts to collect delinquent
accounts receivable. Within thirty (30) days after the end of such collection
period, Buyer shall forward to Columbia copies of the records pertaining to the
Receivables of the Owners that remain uncollected at such time together with the
patient account records maintained by Buyer on behalf of the Owners.
2.10 MISDIRECTED PAYMENTS. Except as provided herein, if either party
receives any amount from patients or third-party payors which relate to services
rendered by the other party, the party receiving such amount shall promptly
remit such full amount to the other party, and if Buyer receives any amounts
from the Medicare program for reimbursement associated with the operation of the
Agencies and relating to services performed during periods prior to Closing,
Buyer shall promptly tender same to Columbia. If the Owners receive any amounts
from the Medicare program for reimbursement associated with the operations of
the Agencies relating to services performed during periods subsequent to
Closing, Seller shall promptly tender same to Buyer. Certain of the Agencies
receive payment from the Medicare program on a periodic interim payment ("PIP")
basis. Any PIP payment by the Owners or Buyer with respect to a period that is
prior to and after the Closing Date shall be allocated between the parties in a
manner consistent with that applied by the fiscal intermediaries.
2.11 ESCROW. Pursuant to the terms of an Escrow Agreement entered into
as of the date hereof by and between Columbia, Buyer and Amsouth Bank, N.A.
("Escrow Agent"), Buyer shall escrow $9,000,000 with the Escrow Agent to pay
part of the Purchase Price. The escrow shall be funded prior to 12:00pm central
standard time on November 3, 1998. The terms and conditions of such escrow are
as set forth in the Escrow Agreement.
3. CLOSING
3.1 CLOSING. Subject to the satisfaction or waiver by the appropriate
party of all the conditions precedent to Closing specified in Sections 8 and 9
hereof, the consummation of the sale
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and purchase of the Assets and the other transactions contemplated by and
described in this Agreement (the "Closing") shall take place at the offices of
Vinson & Elkins L.L.P., 3400 First City Tower, 1001 Fannin, Houston, Texas at
10:00 a.m. on or before the later of satisfaction of all conditions precedent to
Closing or November 16, 1998 with respect to the Assets located in Louisiana and
Oklahoma and on November 30, 1998 with respect to the other Assets or at such
later date and/or at such other location as the parties hereto may mutually
designate in writing (the "Closing Date"). The Closing shall be effective as of
12:01 a.m. on the day after the Closing Date or such other date and time as the
parties may mutually designate in writing.
3.2 ACTION OF COLUMBIA AT CLOSING. At the Closing and unless otherwise
waived in writing by Buyer, Columbia and/or each respective Owner shall deliver
to Buyer or its affiliates the following:
(A) General Bills of Sale and Assignment fully executed by each Owner,
transferring all tangible and intangible assets constituting the Assets
owned by each such Owner to Buyer;
(B) Assignments of Contracts and Leases, fully executed by each Owner
assigning all right, title and interest held by each such Owner in and to
the Contracts of such Owner to Buyer;
(C) Copies of resolutions certified by an officer of each Owner as
duly adopted by the governing body of each Owner authorizing and approving
its performance of the transactions contemplated hereby, certified as true
and of full force as of Closing, by the appropriate officers of each such
Owner.
(D) Certificates of the President or a Vice President of each Owner
certifying that each covenant and agreement of each such Owner to be
performed prior to or as of Closing pursuant to this Agreement has been
performed in all material respects;
(E) Certificates of the President or a Vice President of Columbia
certifying that each of the representations and warranties of Columbia set
forth herein is true and correct in all material respects as of the Closing
Date;
(F) Certificates of incumbency for the respective officers of Columbia
and of each Owner executing this Agreement or delivering documents at
Closing dated as of Closing;
(G) Certificate of existence of Seller and each Owner from the state
in which Seller and each such Owner is incorporated, dated the most recent
practical date prior to Closing;
(H) Satisfactory evidence that any and all liens and/or encumbrances
on the Assets required to be satisfied pursuant to the terms of this
Agreement have been satisfied; and
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(I) An opinion of counsel from counsel to Columbia, reasonably
satisfactory to Buyer, as to Columbia's and each Owner's due existence and
authority.
3.3 ACTION OF BUYER AT CLOSING. At the Closing and unless otherwise
waived in writing by Columbia, Buyer, shall deliver to Columbia the following:
(A) The Purchase Price, minus the principal amount of the note
described in Section 2.1(a), in immediately available funds;
(B) The Loan Documents;
(C) Copies of resolutions duly adopted by the board of directors of
Buyer authorizing and approving its performance of the transactions
contemplated hereby and the execution and delivery of this Agreement and
the documents described herein, certified as true and of full force as of
Closing by the appropriate officer of Buyer;
(D) Certificates of the President or a Vice President of Buyer
certifying that each covenant and agreement of Buyer to be performed prior
to or as of Closing pursuant to this Agreement has been performed in all
material respects;
(E) Certificates of the President or a Vice President of Buyer
certifying that each of the representations and warranties of Buyer set
forth herein is true and correct in all material respects as of the Closing
Date;
(F) Certificates of incumbency for the respective officers of Buyer
executing this Agreement or making certifications for Closing dated as of
Closing;
(G) Certificates of existence and good standing of Buyer from the
state in which it is incorporated, dated the most recent practical date
prior to Closing; and
(H) An opinion of counsel to Buyer, reasonably satisfactory to
Columbia, as to Buyer's due existence and authority.
3.4 ADDITIONAL ACTS. From time to time after Closing, Columbia shall
cause the Owners to execute and deliver such other instruments of conveyance and
transfer, and take such other actions as Buyer may reasonably determine, to more
effectively convey and transfer full right, title and interest to, vest in, and
place Buyer in legal and actual possession of, any and all of the Assets.
4. REPRESENTATIONS AND WARRANTIES OF COLUMBIA
As of the date hereof and as of the Closing Date, except as disclosed in
the Schedules, Columbia represents and warrants to Buyer the following:
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4.1 CORPORATE CAPACITY. Columbia is a corporation validly existing
under the laws of the state of Delaware. Columbia has the requisite corporate
power and authority to enter into this Agreement, perform its obligations
hereunder and to conduct its businesses as now being conducted. The Owners are
validly existing and in good standing, where applicable, under the laws of the
states in which they are incorporated or organized, as applicable. The Owners
have the requisite power and authority to convey the Assets to Buyer and to
conduct their businesses as now being conducted.
4.2 CORPORATE POWERS; CONSENTS; ABSENCE OF CONFLICTS WITH OTHER
AGREEMENTS, ETC. The execution, delivery and performance of this Agreement by
Columbia and all other agreements referenced in or ancillary hereto to which it
is a party and the consummation of the transactions contemplated herein by
Columbia or the Owners:
(A) are within Columbia's corporate powers, are not in contravention
of law or of the terms of its Articles of Incorporation or any amendments
thereto and have been duly authorized by all appropriate corporate action;
(B) to the best of Columbia's knowledge, except for notices required
by the HSR Act (as hereinafter defined) and except for regulatory notices
addressed in Section 6.4 hereof do not require any approval or consent of,
or filing with, any governmental agency or authority bearing on the
validity of this Agreement which is required by law or the regulations of
any such agency or authority;
(C) except for the failure to obtain consent to the assignment to
Buyer of the Contracts, will neither conflict with nor result in any
material breach or contravention of, nor permit the acceleration of the
maturity of the Assumed Liabilities, or the creation of any lien, charge or
encumbrance affecting any Assets individually or in the aggregate, having a
material adverse effect on any Agency;
(D) will not violate any statute, law, rule or regulation of any
governmental authority to which Columbia or the Assets may be subject; and
(E) will not violate any judgment of any court or governmental
authority to which Columbia or the Assets may be subject.
4.3 BINDING AGREEMENT. This Agreement and all agreements to which
Columbia and/or any Owner will become a party hereunder are and will constitute
the valid and legally binding obligation of Columbia, and are and will be
enforceable against it in accordance with the respective terms hereof or
thereof.
4.4 FINANCIAL STATEMENTS. Columbia has delivered to Buyer copies of the
following combined financial statements of the Agencies on an accrual-basis
(SCHEDULE 4.4) (the "Financial Statements"):
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(A) Unaudited Balance Sheet dated as of July 31, 1998 (the "Balance
Sheet Date"); and
(B) Unaudited Income Statement for the seven (7) month period ended on
the Balance Sheet Date.
Except as set forth in SCHEDULE 4.4, such Financial Statements accurately
present the material direct expenses of the Agencies and the assets and
liabilities on the Financial Statements are accurately presented in all material
respects based upon an accrual-basis accounting system for a hospital-based home
health agency in accordance with generally accepted accounting policies.
(C) Set forth on SCHEDULE 4.4(C) is a schedule of (i) the approximate
number of visits provided by the Agencies, (ii) the unduplicated patient
census of the Agencies in the aggregate for the seven-month period ending
on the Balance Sheet Date and (iii) the number of admissions of the
Agencies for the month of July 1998 ("July Admissions").
4.5 LICENSURE. The principal office of each Agency is licensed as a
home health agency by the state agency responsible for licensing home health
agencies and has all material local, state and federal licenses and permits
necessary to operate as a home health agency. To the knowledge of Columbia,
there are not any pending or threatened proceedings to terminate, suspend or
revoke any such licenses or permits.
4.6 MEDICARE PARTICIPATION/ACCREDITATION. Except as set forth on
Exhibit A, the Owners are receiving payments under Title XVIII of the Social
Security Act and there is no pending or threatened termination of such status.
Except as set forth on Schedule 4.6, Columbia and the Owners have no knowledge
of and have not received any notice of any claims, actions, payment reviews or
appeals pending or threatened before any commission, board or agency, including
without limitation, any intermediary or carrier or the Administrator of the
Health Care Financing Administration with respect to any Medicare claims filed
by or on behalf of the Owners, or program compliance matters, which if adversely
determined will have a material adverse effect on the Owners or the Assets.
Except as set forth on SCHEDULE 4.6, none of the Agencies is currently subject
to a focused medical review.
4.7 SCHEDULED CONTRACTS. Attached hereto as SCHEDULE 4.7 is an accurate
list of all commitments, contracts, leases and agreements directly related to
the operation of the Agencies which will require expenditures subsequent to
Closing in excess of $25,000.00 or may not be terminated within 120 days after
the Closing Date (the "Scheduled Contracts"), to which any one of the Owners is
a party or by which any one of the Owners or any of the Assets are bound. There
have been delivered to Buyer true and correct copies of each of the Scheduled
Contracts. All Scheduled Contracts are valid, binding and in full force and
effect and, to the knowledge of Columbia, are enforceable in accordance with
their terms against all other parties to such Scheduled Contracts. The Owners
have performed all obligations required to be performed by it to date and, to
the knowledge of Columbia, is not in default in any material respect under any
Scheduled Contract to which it is a party. All such Scheduled Contracts are
assignable to Buyer in accordance with their respective terms. During the thirty
(30) day period following the date of
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this Agreement, Buyer shall have the right to reject any one of the Scheduled
Contracts which constitutes a lease of equipment ("Rejected Equipment Lease") in
the event it is determined that such equipment is not located on the Leasehold
Property and is not used in the operation of the Agencies; provided, however,
that Buyer must deliver written notice to Seller identifying such Rejected
Equipment Lease prior to the expiration of such period. Buyer shall not assume
any of the Scheduled Contracts which are between an affiliate of Seller and one
of the following entities: Alpha Medical, Inc., Simione Central, Inc., Shared
Medical Management, Inc. and Kimberly Home Health Care, Inc., and Health First
Management Services or any of their affiliates, except that Buyer shall assume
the Health First Management contract in Shreveport, Louisiana.
4.8 LEASEHOLD PROPERTY. The Owners hold leasehold title to the
Leasehold Property described in SCHEDULE 4.8 hereto. Each lease so listed is
valid, existing and fully enforceable in accordance with its terms, and, to the
knowledge of Columbia, there exists no default thereunder. The Owners have not
received any notice of, and have no knowledge of, any defaults by the Owners
under any lease. The Owners' leasehold interest in the Leasehold Property is
free and clear of any and all liens, mortgages or restrictions placed by the
Owners. No person other than the Owners is in actual possession of any of such
leased property. SCHEDULE 4.8 shall not contain any locations of Agencies which
have been closed by Seller prior to Closing and Buyer shall not be obligated to
assume any obligations under any leases applicable to such closed locations.
4.9 TITLE. At Closing, the Owners will convey to Buyer all right, title
and interest of the Owners in and to the Assets or any part thereof, subject to
no mortgage, lien, pledge, security interest, conditional sales agreement, right
of first refusal, option, restriction, liability, encumbrance or charge, other
than (a) defects in title that have not interfered with the Owners, operation of
the Agencies, (b) the Contracts, and (c) payable liens securing indebtedness, if
any, assumed by Buyer, (collectively, the "Permitted Encumbrances").
4.10 QUALITY AND CONDITION OF THE ASSETS. Other than with respect to
warranties of title and other representations and warranties as expressly
provided in this Article 4, Columbia shall transfer the tangible Assets to
Buyer, on an "AS IS" basis. The inventory of the Agencies is now and shall be
as of the Closing Date in all material respects of a quantity consistent with
historical inventory levels of the Agencies. Such inventory is carried on the
books and records of the Owners on a first-in first-out basis at the lower of
cost or value.
4.11 INSURANCE. The Owners maintain adequate insurance to cover the
operations of the Agencies and the Assets based upon the historical operations
of the Owners. All of such policies are now, and will be until Closing in full
force and effect with no premium arrearages.
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4.12 LITIGATION OR PROCEEDINGS. Columbia has delivered to Buyer an
accurate list and summary description (SCHEDULE 4.12) of all material litigation
or proceedings with respect to the Agencies and the Assets to which any one of
the Owners is a party. Except to the extent set forth on SCHEDULE 4.12, there
are no claims, actions, suits, proceedings or investigations pending or, to the
best of Columbia's knowledge, threatened against or affecting the Owners with
respect to the Agencies, at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality wherever located which may have a material adverse
effect on the operations or financial condition of Buyer. To the knowledge of
Columbia, Columbia and the Owners are not in default concerning any order, writ,
injunction, or decree of any federal, state, municipal court or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which may have a material adverse effect on the operations
or financial conditions of the Agencies take as a whole.
4.13 TAX LIABILITIES. Neither Columbia nor the Owners have taken nor
will they take any action, and they have not failed to take and will not fail to
take any action, in respect of any federal, state or local taxes (including,
without limitation, any withholdings required to be made in respect of
employees) which may have a material adverse effect upon Buyer or the Assets as
of or subsequent to Closing. Columbia and the Owners have duly filed, or duly
received extensions for the filing, of all tax returns (including but not
limited to income, payroll, sales and use taxes), required to have been filed by
them and have paid the tax shown to be due on any such returns filed and no
waivers or extension of the statutory period of limitation within which
assessments may be made have been granted with respect to any such tax return.
4.14 POST BALANCE SHEET DATE MATTERS. The number of admissions of the
Agencies for the most recently completed calendar month prior to the Closing
Date shall not be less than seventy-five percent (75%) of the number of July
Admissions.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
As of the date hereof and as of the Closing Date, except as disclosed in
the Schedules, Buyer represents and warrants to Columbia the following:
5.1 CORPORATE CAPACITY. Buyer is a business corporation duly organized
and validly existing and in good standing under the laws of the State of
Delaware. Buyer has the requisite corporate power and authority to enter into
this Agreement, perform its obligations hereunder and to conduct its businesses
as now being conducted.
5.2 CORPORATE POWERS; CONSENTS; ABSENCE OF CONFLICTS WITH OTHER
AGREEMENTS, ETC. The execution, delivery and performance of this Agreement by
Buyer and all other agreements referenced in or ancillary hereto to which it is
a party and the consummation of the transactions contemplated herein by Buyer
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(A) are within Buyer's corporate powers, are not in contravention of
law or of the terms of its Articles of Incorporation, Bylaws or any
amendments thereto and have been duly authorized by all appropriate
corporate action;
(B) to the best of Buyer' knowledge, except for notices required by
the HSR Act and except for regulatory notices addressed in Section 7.1, do
not require any approval or consent of, or filing with, any governmental
agency or authority bearing on the validity of this Agreement which is
required by law or the regulations of any such agency or authority;
(C) will neither conflict with nor result in a breach or contravention
of, or the creation of any lien under any indenture, agreement lease,
instrument or understanding to which Buyer is a party or by which Buyer is
bound;
(D) will not violate any statute, law, rule or regulation of any
governmental authority to which Buyer may be subject and which would affect
Buyer's ability to consummate the transaction described herein; and
(E) will not violate any judgment of any court or governmental
authority to which Buyer may be subject and which would affect Buyer's
ability to consummate the transaction described herein.
5.3 BINDING AGREEMENT. This Agreement and all agreements to which Buyer
will become a party hereunder are and will constitute the valid and legally
binding obligation of Buyer, and are and will be enforceable against it in
accordance with the respective terms hereof or thereof.
5.4 FINDERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Buyer directly with
Columbia without the intervention of any Person on behalf of Buyer in such
manner as to give rise to any valid claim by any such Person against Buyer for a
finder's fee, brokerage commission or similar payment.
5.5 ADVERSE FACTS AND CIRCUMSTANCES. Buyer is experienced in owning,
operating and managing home health agencies. Buyer has consulted with its legal
and financial consultants to determine the impact that the Balanced Budget Act
of 1997 and the regulations promulgated thereunder (63 Fed. Reg. 15718) (the
"1997 Act") will have on the reimbursement by the Programs for home health
services provided by the Agencies. Buyer acknowledges that except as set forth
on Exhibit A, the Agencies are provider-based and understands that the status of
certain Agencies was freestanding for the 1994 cost reporting year for such
Agencies and as part of the transfer of the Assets to Buyer the status of the
Agencies will be changed to freestanding. Neither Columbia, its affiliates or
any one of their representatives has made any representations or warranties to
Buyer regarding the future performance or prospects of the Agencies. Buyer
acknowledges that the changes in reimbursement by the Programs that are the
result of the 1997 Act may result in a material adverse change to the Agencies
as compared to the operation and performance of the Agencies prior to such
changes.
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5.6 ACKNOWLEDGMENT REGARDING YEAR 2000 COMPLIANCE. Buyer acknowledges
that (i) all Year 2000 compliance efforts of Columbia and the Owners with
respect to the Assets will terminate on the Closing Date, (ii) notwithstanding
anything to the contrary contained herein, Columbia makes no representation or
warranty regarding Year 2000 compliance with respect to any of the Assets and
(iii) Buyer assumes all liability with respect to Year 2000 compliance relating
to the Assets. As used herein, the term "Year 2000 compliance" includes the
ability to perform any of the following functions: (i) to consistently handle
date information before, at and after January 1, 2000, including accepting date
input, providing date output, and performing calculations on dates or portions
of dates; (ii) to function accurately without interruption (or disruption of
other software or systems) before, at and after January 1, 2000, without any
change in operations associated with the advent of the new century; (iii) to
respond to two-digit date input in a way that resolves any ambiguity as to
century, and (iv) to store and provide output of date information in ways that
are unambiguous as to the century.
6. COVENANTS OF COLUMBIA
6.1 INFORMATION. Between the date of this Agreement and the Closing
Date or any date of termination of this Agreement, Columbia shall afford to the
officers and authorized representatives and agents of Buyer access to and the
right to inspect the properties, books and records of the Owners relating to the
Assets, will furnish Buyer with such additional financial and operating data and
other information as to the business and properties of the Owners relating to
the Assets as Buyer may from time to time reasonably request and will furnish to
Buyer's officers, directors, employees, agents, counsel, accountants, financial
advisors, consultants and other representatives full access, upon reasonable
prior notice and during normal business hours, to the officers, employees and
agents of the Owners who have responsibility for the conduct of the Agencies.
Buyer's right of access and inspection shall not include properties, books and
records that are proprietary or privileged to Columbia or any one of the Owners
(which do not include the Assets) and shall be made in such a manner as not to
interfere with the operations of the Agencies. In this regard, Buyer agrees
that such inspection shall take place and no employees or other personnel at the
Agencies shall be contacted by Buyer or Buyer's representatives without first
coordinating such contact or inspection with Gregg Gerken, Assistant Vice
President of Columbia or his designee.
6.2 OPERATIONS. From the date hereof until the Closing Date, Columbia
will cause the Owners in respect of the Agencies use their commercially
reasonable efforts to:
(A) perform all of the Owners' obligations under the Contracts;
(B) maintain the personal property constituting part of the Assets in
substantially its present condition, normal wear and tear excepted;
(C) endeavor to take all actions necessary and appropriate to render
title to the Assets free and clear of all liens, security agreements,
claims, charges and encumbrances (except for the Permitted Encumbrances and
the Contracts); and
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(D) keep in full force and effect present insurance policies or other
comparable insurance; and
(E) operate the Agencies in the ordinary course of business for a home
health agency that is right sizing its operations to receive reimbursement
for its operating costs by the Medicare program.
6.3 NEGATIVE COVENANTS. From the date hereof until the Closing Date,
the Owners in respect of the Agencies will not, without the prior written
consent of Buyer:
(A) enter into any contract or commitment, or incur or agree to incur
any liability, except in the ordinary course of business;
(B) increase compensation payable or to become payable or make a bonus
payment to or otherwise enter into one or more bonus agreements with any
employee or agent, except in the ordinary course of business;
(C) create, assume or permit to exist any new and material, pledge or
other lien or encumbrance upon any of the Assets, whether now owned or
hereafter acquired; or
(D) enter into or extend for a term greater than six (6) months any
office space lease.
6.4 GOVERNMENTAL APPROVALS. Columbia shall assist and cooperate with
Buyer and Buyer's representatives and counsel in obtaining all governmental
consents, approvals and licenses which Buyer reasonably deems necessary or
appropriate and in the preparation of any document or other material which may
be required by any governmental agency as a predicate to or result of the
transactions contemplated herein.
7. COVENANTS OF BUYER
7.1 GOVERNMENTAL APPROVALS. Buyer shall use Buyer's commercially
reasonable efforts to promptly obtain all governmental consents, approvals and
licenses which are required in order for Buyer to own and operate the Agencies.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer hereunder are, at the option of Buyer, subject to
the satisfaction, on or prior to the Closing Date, of the following conditions
unless waived in writing by Buyer:
8.1 REPRESENTATIONS/WARRANTIES. The representations and warranties of
Columbia contained in this Agreement shall be true in all material respects when
made and on and as of the Closing Date as though such representations and
warranties had been made on and as of such Closing Date; and each and all of the
terms, covenants and conditions of this Agreement to be
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complied with or performed by Columbia on or before the Closing Date pursuant to
the terms hereof shall have been duly complied with and performed in all
material respects.
8.2 AGENCIES LICENSE. Buyer shall have reasonable assurances from the
state licensing agencies that upon Closing licenses to operate the Agencies as
free-standing home heath agencies at their current locations will be transferred
to, or reissued in the name of, Buyer.
8.3 HSR ACT. Buyer shall have complied with all waiting periods under
the Hart-Scott-Rodino Antitrust Improvement Act of 1976 (the "HSR Act").
8.4 ACTION/PROCEEDING. No action or proceeding before a court or any
other governmental agency or body shall have been instituted to restrain or
prohibit the transactions herein contemplated.
8.5 RECENT AGREEMENTS AND COMMITMENTS. Columbia shall have delivered to
Buyer an accurate list and substantially complete description (SCHEDULE 8.5), as
of the Closing Date, showing all material contracts and commitments relating to
the Assets entered into by Columbia since the date hereof.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF COLUMBIA
The obligations of Columbia hereunder are, at the option of Columbia,
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions unless waived in writing by Columbia:
9.1 REPRESENTATIONS/WARRANTIES. The representations and warranties of
Buyer contained in this Agreement shall be true in all material respects when
made and on and as of the Closing Date as though such representations and
warranties had been made on and as of such Closing Date; and each and all of the
terms, covenants and conditions of this Agreement to be complied with or
performed by Buyer on or before the Closing Date pursuant to the terms hereof
shall have been duly complied with and performed in all material respects.
9.2 HSR ACT. Columbia shall have complied with all waiting periods
under the HSR Act.
9.3 ACTION/PROCEEDING. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the transactions herein contemplated, and no governmental
agency or body shall have taken any other action or made any request of Buyer,
or Columbia as a result of which Columbia reasonably and in good faith deems it
inadvisable to proceed with the transactions hereunder.
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10. NONCOMPETITION. Columbia and Buyer recognize that (i) Buyer's
entering into this Agreement is induced primarily because of the covenants and
assurances made by Columbia hereunder; and (ii) Columbia's covenant not to
compete is necessary to insure the continuation of the business of Buyer in
respect of the Assets subsequent to Closing. Therefore, in consideration of the
premises and as an inducement for Buyer to enter into this Agreement and
consummate the transactions set forth herein, Columbia agrees that for a period
of two (2) years from and after the Closing Date, Columbia and its affiliates,
including the Spincos (as hereinafter defined), shall not compete with Buyer in
the business of providing skilled intermittent home care services in the
counties currently serviced by the Agencies; provided, however, that such
covenant shall not apply to a home health agency that is acquired as part of an
acquisition of a general acute care hospital, skilled nursing facility,
ambulatory surgical facility, physician practice management company or assisted
living facility. The term "Spinco" shall mean an entity which is a successor in
interest to the Owners by means of a tax free spin-off to the stockholders of
Columbia.
11. ADDITIONAL AGREEMENTS
11.1 EMPLOYEES.
(A) Buyer and Columbia shall, as of the Closing Date, undertake the
following commitment in connection with the operation of the Agencies.
SCHEDULE 11.1 sets forth a list of all employees, the Owners and their
affiliates employed in the operation or management of the Agencies. As of
the Closing Date, Columbia shall cause the Owners or their affiliates, as
applicable, to terminate all such employees, and as of the Closing Date
Buyer shall offer employment to all such employees at positions and
aggregate compensation and benefit levels equivalent to the position and
aggregate compensation and benefit levels to those provided to similarly
situated employees of Buyer. Buyer shall retain for a period of ninety
(90) days following the Closing Date such number of the Owners' employees
at the Agencies as shall be necessary to avoid any potential liability by
any Owner for a violation of the Workers Adjustment and Retraining and
Notification Act (the "Warn Act") attendant to any Owner's failure to
notify such employees of a "mass layoff" or "plant closing" as defined in
the Warn Act. Buyer shall indemnify and hold Columbia harmless from and
against any liability asserted against the Owners under the Warn Act as a
result of Buyer's failure to comply with the provision of the Warn Act as
of or after the Closing Date or Buyer's failure to comply with the
provisions of this Section 11.1. The term "Employee" as used in this
Agreement shall mean all employees of the Owners or their affiliates who
accept employment with Buyer as of the Closing Date. Buyer shall honor
each Employee's rights in respect of paid time off identified on SCHEDULE
11.1 and recognize the tenure of each Employee while in the employ of the
Owners or their affiliates for purposes of determining benefits available
to the Employees under Buyer's employee benefit plans which shall include a
waiver of preexisting condition exclusions (to the extent such Employee had
qualified for such waiver while in the employ of the Owners or was no
longer subject to such preexisting condition exclusion while in the employ
of the Owners), and recognition of or credit for all deductibles paid by
such Employee during the current period while in the employ of the Owners,
and as of Closing
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shall include such Employees in Buyer's health benefit plans. In the event
that any of the employees listed on Schedule 11.1(a), of any Agency is
terminated by Buyer within twelve (12) months following the Closing Date,
Buyer agrees to pay such individual severance benefits not less than the
severance benefits to which such individual would have been entitled under
the severance policies, practices, programs or plans of the Owners or their
affiliates in effect as of the date hereof, as previously disclosed to
Buyer.
(B) Any applicable employee of the Owners and its Affiliates
identified as a current or former participant (and any eligible dependent
thereof) who is eligible to receive continuation coverage (within the
meaning of Code Section 4980B and Part 6 of Subtitle B of Title 1 of ERISA)
will remain covered through the Owner's COBRA provider. Immediately
following the Closing Date and as a result of the transactions contemplated
by this Agreement, the Owners shall cease to offer COBRA benefits for any
applicable group health plan to former employees (and their dependents) who
are employed by Buyer as of the Closing Date. The Owners will thereby be
released of COBRA responsibility and liability for such employees.
11.2 OWNER'S COST REPORTS. Columbia will cause the Owners to timely
prepare all cost reports relating to the Agencies for periods ending on or prior
to the Closing Date or required as a result of the consummation of the
transactions set forth herein, including, without limitation, terminating cost
reports for the Medicare, Medicaid and CHAMPUS programs (the "Owner's Cost
Reports"). Buyer shall forward to Columbia any and all correspondence relating
to the Owner's Cost Reports within three (3) business days after receipt by
Buyer. Buyer shall remit any receipts of funds relating to the Owner's Cost
Reports promptly after receipt by Buyer and shall forward to Columbia any demand
for payments within three (3) business days after receipt by Buyer. The Owners
shall retain all rights to Agency Settlements and to the Owner's Cost Reports
including any amounts receivable or payable in respect of such reports or
reserves relating to such reports. Such rights shall include, without
limitation, the right to appeal any Medicare determinations relating to Agency
Settlements and the Owner's Cost Reports. The Owners shall retain the originals
of the Owner's Cost Reports, correspondence, work papers and other documents
relating to the Owner's Cost Reports and the Agency Settlements.
11.3 TRANSITION SERVICES.
(A) For a period of ninety (90) days after Closing, Buyer shall
provide to the Owners, at no charge to Columbia or the Owners, reasonable
office accommodation, equipment and clerical support to enable Columbia to
prepare its terminating cost report, and otherwise close out its books with
respect to the Agencies so long as Columbia and the Owners do not interfere
with the normal operations of the Agencies following the Closing.
(B) Columbia shall cause the Owners to provide to Buyer office leases,
for a term not to exceed ninety (90) days, in each acute-care hospital
where an Agency is currently located with rent to be at commercially
reasonable rates.
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11.4 TERMINATION PRIOR TO CLOSING. Notwithstanding anything herein to
the contrary, this Agreement may be terminated at any time: (i) on or prior to
the Closing Date by mutual consent of Buyer and Columbia; (ii) by Buyer if on
the Closing Date any of the conditions specified in Section 8 of this Agreement
have not been satisfied and shall not have been waived in writing by Buyer;
(iii) by Columbia if on the Closing Date any of the conditions specified in
Section 9 of this Agreement have not been satisfied and shall not have been
waived in writing by Columbia; (iv) by Buyer or Columbia if the Closing shall
not have taken place on or before 11:59 p.m. on December 31, 1998 (which date
may be extended by mutual agreement of Buyer and Columbia), unless the party
desiring to terminate as above provided is in default hereunder; and (v) by
Columbia if Buyer has not deposited $10,000,000 in an escrow account to fund
part of the Purchase Price prior to 12:00pm central standard time on November 3,
1998, on terms acceptable to Columbia.
If this Agreement is validly terminated pursuant to this Section 11.4, this
Agreement (other than Sections 13.6 and 13.7 will immediately become null and
void, and there will be no liability or obligation on the part of the parties
hereto (or any of their respective officers, directors, employees, agents or
other representatives or affiliates); provided that if this Agreement is
terminated due to the breach of one of the parties to this Agreement or such
party's inability to satisfy any condition precedent to Closing, then such
breaching party shall remain liable to the non-breaching party for such breach
existing at the time of such termination and such non-breaching party may seek
any remedies, including damages and fees of attorneys, against the breaching
party with respect to such breach as are provided in this Agreement or as are
otherwise available at law or in equity.
11.5 PRESERVATION AND ACCESS TO RECORDS AFTER THE CLOSING.
(A) After the Closing, Buyer shall keep and preserve all medical
records and other records of Agencies existing as of the Closing and which
constitute a part of the Assets delivered to Buyer at or prior to Closing.
For purposes of this Section, the term "records" includes all documents,
electronic data and other compilations of information in any form. Buyer
acknowledges that as a result of entering into this Agreement and operating
the Agencies it will gain access to patient and other information which is
subject to rules and regulations concerning confidentiality. Buyer shall
abide by any such rules and regulations relating to the confidential
information it acquires. Buyer shall maintain the patient records
delivered to Buyer at or prior to Closing at the Agencies after Closing in
accordance with applicable law (including, if applicable, (42 U.S.C.
(S)1395 x(o) and 42 C.F.R. (S)484.48)), and requirements of relevant
insurance carriers, all in a manner consistent with the maintenance of
patient records generated at the Agencies after Closing. Upon reasonable
notice, during normal business hours and upon Buyer's receipt of
appropriate consents and authorizations, Buyer shall and shall afford to
the representatives of Columbia, including its counsel and accountants,
full and complete access to, and the right to make copies of, the records
transferred to Buyer at or prior to the Closing (including, without
limitation, access to patient records in respect of patients treated by the
Owners at the Agencies). Columbia shall reimburse Buyer for reasonable out-
of-pocket expenses incurred by Buyer in granting access to such records
(but not for storage costs).
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Upon reasonable notice and during normal business hours, Buyer shall make
any former employee of Columbia, the Owners or their affiliates, available
to Columbia at reasonable times and places after the Closing; provided that
Columbia shall reimburse Buyer for its direct out of pocket expenses when
Columbia requires access to any such employees for greater than one (1) day
at a time. In addition, Columbia shall be entitled to remove from the
Agencies any such patient records (as long as Buyer may retain a copy
thereof), but only for purposes of pending litigation involving a patient
to whom such records refer, as certified in writing prior to removal by
counsel retained by Columbia in connection with such litigation. Any
patient records so removed from the Agencies shall be promptly returned to
Buyer following its use by Columbia.
(B) Buyer hereby expressly acknowledges that the operations of
Columbia and its affiliates are currently under review by the U.S.
Department of Justice and the U.S. Department of Health and Human Services
(hereinafter "Government"). Upon reasonable notice, during normal business
hours, and consistent with otherwise applicable legal requirements relating
to patient rights, Buyer shall afford to representatives of the Government
full and complete access to the originals of the records transferred to
Buyer at the Closing, as well as the right to make copies of those records,
at Columbia's expense. In addition, Buyer shall afford the Government the
right to remove original records upon reasonable notice and the
substitution of copies for any records to be removed. Furthermore, Buyer
acknowledges that Columbia has been cooperating with the ongoing review by
the Government providing documents and by permitting employees to speak
with Government representatives during normal business hours. Buyer also
acknowledges that Columbia has requested that Buyer provide similar
cooperation after Closing with respect to activities that occurred prior to
Closing.
(C) Buyer hereby agrees that the covenants and obligations set forth
in this Section 11.5 shall apply to any successor in interest or assign of
Buyer (and their successors and assigns) and that Buyer shall specifically
disclose such covenants and obligations to such Person(s). Buyer hereby
agrees that Columbia shall be a third-party beneficiary to any arrangement
with such Person(s) for the purpose of enforcing the covenants and
obligations herein set forth.
11.6 COMPLIANCE PROGRAM. Buyer agrees that with respect to the Agencies
as of Closing, it will implement an effective program to prevent and detect
violations of law as defined in the U.S. Sentencing Guidelines or applicable
HHS-OIG guidelines. Buyer agrees that it will maintain such program for no less
than five years following Closing.
11.7 REMOVAL OF TRADENAMES. Buyer shall remove the names, logos,
tradenames, trademarks and service marks constituting part of the Excluded
Assets from the Agencies within thirty (30) days following the Closing Date,
except for current yellow page advertisements and form documents (excluding
letterhead). Until such time, Buyer shall be permitted to use such names and
marks provided, however, that Buyers shall not promote the Agencies using such
names or marks and shall not hold itself out as being affiliated with Columbia
or its affiliates.
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<PAGE>
11.8 ACCESS TO AGENCIES. Three weeks prior to Closing, Columbia will
allow Buyer access to each of the Agencies for the purposes of: (1) installation
of Buyer's hardware and software systems; (2) training of clerical staff on new
hardware and software systems; and (3) direction of Agency personnel in pre-
loading current patient data into new software and hardware systems. Buyer may
decide to conduct these training sessions at a centralized site within one hour
of each agency location. The purpose of the above activities in to insure a
timely efficient and orderly transfer of patients upon Closing.
12. INDEMNIFICATION.
12.1 INDEMNIFICATION BY COLUMBIA . Subject to and to the extent provided
in this Article 12, Columbia shall indemnify and hold harmless Buyer and its
officers, directors, employees, agents and affiliates during the Indemnity
Period from and against any damages, claims, costs, liabilities, expenses or
obligations (including, without limitation, reasonable attorneys' fees and
associated expenses) incurred or suffered by any of them as a result of or
arising from:
(A) any breach of, misrepresentation associated with or failure to
perform under any covenant, representation, warranty or agreement under
this Agreement on the part of Columbia;
(B) the Excluded Liabilities; and
(C) liability or obligations of the Columbia and/or the Owners in
respect of periods prior to Closing arising from Columbia and/or the Owners
in the Medicare or Medicaid program, including, but not limited to, claims
arising from payments made by such programs.
12.2 LIMITATIONS/COLUMBIA. (A) Columbia shall not be under any
liability or claim arising under this Agreement that shall:
(I) accrue to Buyer against Columbia under Section 12.1 hereof (A)
unless and except to the extent that the liability of Columbia
would in respect of any single claim under Section 12.1 hereof
exceed $30,000 or (B) unless and to the extent the total
liability of Columbia in respect of all claims under Section 12.1
hereof exceeds $300,000 in the aggregate, upon which event the
$30,000 shall not be applicable to such Claims; and
(II) be made to the extent that any loss shall be recovered under a
policy of insurance in force on the date of loss, except that
Columbia shall be liable to the extent of any deductibles or to
the extent such recovery causes an increase in applicable
premiums.
B-22
<PAGE>
(B) Columbia shall not be liable for such claims as may arise after
the date hereof which arise solely as a result of a voluntary and knowing
act, omission or transaction carried out after the date hereof by Buyer (or
persons deriving title under Buyer).
(C) Only Buyer or an entity controlled by Buyer, under common control
with Buyer or controlling Buyer may bring an action against Columbia under
this Article 12.
12.3 RECOVERY FROM THIRD PARTIES/COLUMBIA.
(A) In the event that Buyer is entitled to recover any sum (whether by
payment, discount, credit or otherwise) from any third party that is not an
affiliate of Columbia in respect of any matter for which a claim could be
made against Columbia, Buyer shall use, or ensure that the relevant company
shall use, its commercially reasonable efforts to recover such sum from
such third party and any sum actually recovered by Buyer (less any
reasonable costs and expenses incurred by Buyer in recovering such sum)
will reduce the amount of the claim and if Columbia pays to Buyer an amount
in respect of, and Buyer subsequently receives from a third party a sum
which is referable to that payment, Buyer shall forthwith repay to Columbia
so much of the amount paid by it as does not exceed the sum recovered by
Buyer from the third party less all reasonable costs, charges and expenses
incurred by Buyer in obtaining that payment and in recovering that sum from
the third party.
(B) If, after Columbia has paid in full any claim hereunder in respect
of a tax liability, the company subject to such a claim (the "Subject
Company") receives a payment in respect of such tax liability, Buyer
undertakes to procure that the Subject Company shall repay to Columbia a
sum corresponding to the amount of such refund after deduction from such
repayment of an amount equal to any reasonable costs incurred by the
Subject Company in obtaining it and any tax liability incurred by the
Subject Company in respect of the receipt of payment. Any such repayment
due shall be increased to include interest as the Subject Company shall
have received in respect of the relevant tax liability.
12.4 INDEMNIFICATION BY BUYER. Subject to and to the extent provided in
this Article 12, Buyer shall indemnify and hold harmless Columbia and its
officers, directors, employees, agents and affiliates during the Indemnity
Period from and against any damages, claims, costs, liabilities, expenses or
obligations (including, without limitation, reasonable attorneys' fees and
associated expenses) incurred or suffered by any of them as a result of or
arising from:
(A) any breach of, misrepresentation associated with or failure to
perform under any covenant, representation, warranty or agreement under
this Agreement on the part of Buyer;
(B) the Assumed Liabilities; and
(C) the operation of the Assets and/or the Agencies from and after
Closing.
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12.5 LIMITATIONS/BUYER. (A) Buyer shall not be under any liability or
claim arising under this Agreement that shall:
(I) accrue to Columbia against Buyer under Section 12.4 hereof (A)
unless and except to the extent that the liability of Buyer would
in respect of any single claim under Section 12.4 hereof exceed
$30,000 and (B) unless and to the extent the total liability of
Buyer in respect of all claims under Section 12.4 hereof exceeds
$300,000 in the aggregate; and
(II) be made to the extent that any loss shall be recovered under a
policy of insurance in force on the date of loss, except that
Buyer shall be liable to the extent of any deductibles or to the
extent such recovery causes an increase in applicable premiums.
(B) Only Columbia or an entity controlled by Columbia, under common
control with Columbia or controlling Columbia may bring an action against
Buyer under this Article 12.
12.6 RECOVERY FROM THIRD PARTIES/BUYER.
(A) In the event that Columbia is entitled to recover any sum (whether
by payment, discount, credit or otherwise) from any third party in respect
of any matter for which a claim could be made against Buyer, Columbia shall
use, or procure that the relevant company shall use, its commercially
reasonable efforts to recover such sum from such third party and any sum
actually recovered by Columbia (less any reasonable costs and expenses
incurred by Columbia in recovering such sum) will reduce the amount of the
claim and if Buyer pays to Columbia an amount in respect of, and Columbia
subsequently receives from a third party a sum which is referable to that
payment, Columbia shall forthwith repay to Buyer so much of the amount paid
by it as does not exceed the sum recovered by Columbia from the third party
less all reasonable costs, charges and expenses incurred by Columbia in
obtaining that payment and in recovering that sum from the third party.
(B) If, after Buyer has paid in full any claim hereunder in respect of
a tax liability, the company subject to such a claim (the "Subject
Company") receives a payment in respect of such tax liability, Columbia
undertakes to procure that the Subject Company shall repay to Buyer a sum
corresponding to the amount of such refund after deduction from such
repayment of an amount equal to any reasonable costs incurred by the
Subject Company in obtaining it and any tax liability incurred by the
Subject Company in respect of the receipt of payment. Any such repayment
due shall be increased to include interest as the Subject Company shall
have received in respect of the relevant tax liability.
12.7 NOTICE AND PROCEDURE.
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(A) Any person seeking indemnity under any provision of this Agreement
which provides for indemnification from claims by third parties (the
"Indemnitee") shall promptly notify the party from whom indemnity is sought
(the "Indemnitor") as to (i) the nature of any claims, damages, losses or
liabilities asserted against the Indemnitee for which the Indemnitee
intends to seek indemnity hereunder ("Claims") and (ii) the commencement of
any suit or proceeding brought to enforce any Claims. The Indemnitor shall
assume the defense of any such suit or other proceeding and the Indemnitee
shall cooperate fully, at the Indemnitor's sole cost and expense, and shall
be entitled reasonably to consult with the Indemnitor with respect to such
defense; provided however, that if the defendants in any such action
include both the Indemnitor and Indemnitee and the Indemnitee reasonably
shall have concluded that there may be a conflict between the positions of
the Indemnitor and the Indemnitee in conducting the defense of any such
action or that there may be legal defenses available to it that are
different from or additional to those available to the Indemnitor, the
Indemnitee shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action
on behalf of such Indemnitee, in which case the reasonable fees and
expenses of such counsel shall be at the expense of the Indemnitor.
(B) Indemnitee, at the sole cost and expense of Indemnitor, shall
assist and cooperate with Indemnitor in the conduct of litigation, the
making of settlements and the enforcement of any right of contribution to
which the Indemnitee may be entitled from any person or entity in
connection with the subject matter of any litigation subject to
indemnification hereunder. In addition, Indemnitee shall, upon request by
Indemnitor or counsel selected by Indemnitor and at the sole cost and
expense of Indemnitor, attend hearings and trials, assist in the securing
and giving of evidence, assist in obtaining the presence or cooperation of
witnesses, make available its own personnel, and effect settlements; and
shall do whatever else is reasonably necessary and appropriate in
connection with such litigation. Indemnitee shall not make any demand upon
Indemnitor or counsel for Indemnitor in connection with any litigation
subject to indemnification hereunder, except a general demand for
indemnification as provided hereunder. Indemnitee shall not, except at its
own cost, voluntarily make any payment, assume any obligation, incur any
expense, or settle or compromise any claim without the express approval of
Indemnitor, in connection with any litigation subject to indemnification
hereunder. Notwithstanding the foregoing, the Indemnitee shall have the
right to join in the defense of any litigation or claim at such
Indemnitee's own cost and expense, and, if the Indemnitee agrees in writing
to be bound by and promptly to pay the full amount of any final judgment
from which no further appeal may be taken and if the Indemnitor is
reasonably assured of the Indemnitee's ability to satisfy such agreement,
then, at the option of the Indemnitee, such Indemnitee may take over the
defense of such litigation or claim.
(C) If the Indemnitee shall fail to notify promptly the Indemnitor as
to (i) the nature of any Claims or (ii) the commencement of any suit or
proceeding brought to enforce any Claims, or the Indemnitee shall fail to
perform its obligations as Indemnitee hereunder or to cooperate fully with
Indemnitor in Indemnitor's defense of any suit or proceeding, such
cooperation to include, without limitation, attendance at all depositions
B-25
<PAGE>
and the provision of all documents relevant, in the Indemnitor's sole
discretion, to the defense of any claim, all of which shall be at the sole
cost and expense of Indemnitor, then, except where such failure does not
have a materially adverse effect on Indemnitor's defense of such claims,
Indemnitor shall be released from all of its obligations under this
Agreement with respect to that particular suit or proceeding and any other
claims which had been raised in such suit or proceeding.
(D) Subject to this Article 12, any Claims or losses by Buyer related
to, connected with or otherwise arising from any offset to its Government
Receivables arising from amounts due to the Medicare program by the Owners
under the Owner's Cost Reports shall be paid by Columbia within three (3)
business days of receipt of reasonable proof of such Claims by Columbia.
12.8 LIMITATION ON LIABILITIES. NO PARTY SHALL BE RESPONSIBLE FOR OR
HAVE ANY OBLIGATION TO INDEMNIFY, DEFEND OR HOLD HARMLESS THE OTHER PARTY OR ANY
OTHER PERSON FOR SPECIAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY, INCIDENTAL OR
INDIRECT DAMAGES, COSTS, EXPENSES, CHARGES OR CLAIMS, except to the extent that
losses resulting from a third party Claim include special, consequential,
punitive, exemplary, incidental or indirect damages, costs, expenses, charges,
or claims of the third party and then, only to the extent of such losses,
subject, however, to all of the limitations set forth herein.
12.9 LIMITATION ON CLAIMS. The parties hereto hereby agree that any and
all claims or causes of action that may arise under this Agreement or as a
result of the transactions contemplated hereunder shall only be brought against
the other pursuant to the terms and conditions of this Article 12. No claim or
cause of action, including but not limited to breach of contract, may be brought
under any other term of this Agreement and each party hereto IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO BRING ANY CLAIM OR CAUSE OF ACTION AGAINST THE OTHER OR
ANY OTHER PERSON THAT ARISES OR MAY ARISE UNDER THIS AGREEMENT OR AS A RESULT OF
THE TRANSACTIONS CONTEMPLATED HEREUNDER, EXCEPT AS PERMITTED BY ARTICLE 12 OF
THIS AGREEMENT.
12.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNITY PERIOD.
The representations and warranties made by Columbia, on the one hand, and Buyer,
on the other hand, in this Agreement will terminate one (1) year after the
Closing Date. The Indemnity Period shall terminate two (2) years after the
Closing Date, except that the Indemnity Period for claims brought by Buyer
pursuant to Section 12.1(c) shall terminate the later of (i) five (5) years
after the Closing Date, or (ii) the date that the government investigation of
Columbia identified on SCHEDULE 4.12 is terminated.
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<PAGE>
13. GENERAL
13.1 CONSENTED ASSIGNMENT. Anything contained herein to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
claim, right, contract, license, lease, commitment, sales order or purchase
order if an attempted assignment thereof without the consent of another party
thereto would constitute a breach thereof or in any material way affect the
rights of the assigning party thereunder, an attempted assignment would be
ineffective or would materially affect the assigning party's rights thereunder
so that the assignee would not in fact receive all such rights.
13.2 CONSENTS, APPROVALS AND DISCRETION. Except as herein expressly
provided to the contrary, whenever this Agreement requires any consent or
approval to be given by either party or either party must or may exercise
discretion, the parties agree that such consent or approval shall not be
unreasonably withheld or delayed and such discretion shall be reasonably
exercised.
13.3 CHOICE OF LAW; CONSENT TO JURISDICTION. The parties agree that
this Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware, excluding any conflict-of-laws rule or principle that
might refer the governance or the construction of this Agreement to the laws of
another jurisdiction. BUYER AND COLUMBIA HEREBY WAIVE THE RIGHT TO ANY JURY
TRIAL IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER BUYER OR
COLUMBIA AGAINST THE OTHER.
13.4 BENEFIT/ASSIGNMENT. Subject to provisions herein to the contrary,
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective legal representatives, successors and assigns and no
others; provided, however, that no party may assign this Agreement without the
prior written consent of the other party, which consent shall not be
unreasonably withheld.
13.5 NO BROKERAGE. Buyer and Columbia represents that no broker or
finder has in any way been contracted in connection with the transactions
contemplated hereby. Buyer and Columbia agree to indemnify the other party from
and against all loss, cost, damage or expense arising out of claims for fees or
commissions of brokers or finders employed or alleged to have been employed by
such indemnifying party.
13.6 COST OF TRANSACTION. Whether or not the transactions contemplated
hereby shall be consummated and except as otherwise provided herein, each party
shall be responsible for its own fees, expenses, and disbursements incurred in
connection with the subject matter hereof and any amendments hereto.
13.7 CONFIDENTIALITY. The parties have entered into that certain letter
of confidentiality dated as of April 3, 1998. The parties hereby reaffirm the
terms of such letter and hereby agree that it is understood by the parties
hereto that (i) the information, documents and instruments delivered to Columbia
by Buyer or Buyer's agents, and (ii) the information, documents and instruments
delivered to Buyer by Columbia or Columbia's agents including, without
limitation,
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the Agreement and all documents delivered hereunder are of a confidential and
proprietary nature ("Confidential Information"). Each of the parties hereto
agrees that both prior and subsequent to Closing it will maintain the
confidentiality of all such Confidential Information delivered to it by each of
the other parties hereto or their agents in connection with the negotiation of
this Agreement or in compliance with the terms, conditions and covenants hereof
and only disclose such Confidential Information, documents and instruments to
its duly authorized officers, directors, representatives and agents unless (i)
compelled to disclose by judicial or administrative process (including without
limitation in connection with obtaining the necessary approvals of this
Agreement and the transactions contemplated hereby) or by other requirements of
law, (ii) disclosed in an action or proceeding brought by a party hereto in
pursuit of its rights or in the exercise of its remedies hereunder; provided,
however, that the parties hereto shall not disclose any Confidential Information
not required to be disclosed as part of such permitted disclosure or (ii) unless
requested by the Government. Each of the parties hereto further agrees that if
the transactions contemplated hereby are not consummated, it will return all
such documents and instruments and all copies thereof in its possession to the
other party to this Agreement. Each of the parties hereto recognizes that any
breach of this Section would result in irreparable harm to the other parties to
this Agreement and their affiliates and that therefore either Buyer or Columbia
shall be entitled to an injunction to prohibit any such breach or anticipated
breach, without the necessity of posting a bond, cash or otherwise, in addition
to all of their other legal and equitable remedies. Nothing in this Section,
however, shall prohibit the use of such Confidential Information for such
governmental filings as in the mutual opinion of Columbia's counsel and Buyer's
counsel are (i) required by law or governmental regulations or (ii) otherwise
appropriate.
13.8 WAIVER OF BREACH. The waiver by either party of breach or
violation of any provision of this Agreement shall not operate as, or be
construed to constitute, a waiver of any subsequent breach of the same or other
provision hereof.
13.9 NOTICE. Any notice, demand or communication required, permitted,
or desired to be given hereunder shall be deemed effectively given when
personally delivered, when received by telegraphic or other electronic means
(including telecopy and telex) or overnight courier, or five (5) days after
being deposited in the United States mail, with postage prepaid thereon,
certified or registered mail, return receipt requested, addressed as follows:
COLUMBIA: Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, Tennessee 37203
Attn: Senior Vice President - Development
Fax No. 615/344-2824
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WITH A COPY TO:
Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, Tennessee 37203
Attn: General Counsel
Fax No. 615/344-2598
BUYER Amedisys, Inc.
3029 South Sherwood Forest Blvd. Suite 300
Baton Rouge, Louisiana 70816-2276
________________________
Attn: __________________
Fax No. ________________
WITH A COPY TO:
Wallace, Bauman, Legon, Fodiman & Shannon, P.A.
1200 Brickell Avenue, Suite 1720
Miami, Florida 33131
Attn: Bryan Bauman, Esq.
Fax No. 305/444-9937
or to such other address, and to the attention of such other person or officer
as any party may designate.
13.10 SEVERABILITY. In the event any provision of this Agreement is
held to be invalid, illegal or unenforceable for any reason and in any respect,
such invalidity, illegality, or unenforceability shall in no event affect,
prejudice or disturb the validity of the remainder of this Agreement, which
shall be and remain in full force and effect, enforceable in accordance with its
terms.
13.11 GENDER AND NUMBER. Whenever the context of this Agreement
requires, the gender of all words herein shall include the masculine, feminine
and neuter, and the number of all words herein shall include the singular and
plural.
13.12 DIVISIONS AND HEADINGS. The division of this Agreement into
sections and subsections and the use of captions and headings in connection
therewith are solely for convenience and shall have no legal effect in
construing the provisions of this Agreement.
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<PAGE>
13.13 NO THIRD PARTY BENEFICIARIES. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties hereto to confer third-party beneficiary rights upon any other Person.
13.14 ENTIRE AGREEMENT/AMENDMENT. This Agreement supersedes all
previous contracts, and constitutes the entire agreement of whatsoever kind or
nature existing between or among the parties representing the within subject
matter and no party shall be entitled to benefits other than those specified
herein. As between or among the parties, no oral statements or prior written
material not specifically incorporated herein shall be of any force and effect.
The parties specifically acknowledge that in entering into and executing this
Agreement, the parties rely solely upon the representations and agreements
contained in this Agreement and no others. All prior representations or
agreements, whether written or oral, not expressly incorporated herein are
superseded and no changes in or additions to this Agreement shall be recognized
unless and until made in writing and signed by all parties hereto. This
Agreement may be executed in two or more counterparts, each and all of which
shall be deemed an original and all of which together shall constitute but one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed in multiple originals by their authorized officers, all as of the date
and year first above written.
COLUMBIA: COLUMBIA/HCA HEALTHCARE CORPORATION
By: /s/ Gregg Gerken
-----------------------------
Name: Gregg Gerken
Title: Vice President
BUYER: AMEDISYS, INC.
By: /s/ William F. Borne
-----------------------------
Name: William F. Borne
Title: CEO
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<PAGE>
EXHIBIT B
CREDIT AGREEMENT
DATED AS OF __________________, 1998
AMONG
AMEDISYS, INC.
AS BORROWER,
COLUMBIA/HCA HEALTHCARE CORPORATION
AS LENDER
<PAGE>
THIS CREDIT AGREEMENT dated as of ________________, 1998 is among:
AMEDISYS, INC, a corporation formed under the laws of Delaware (the "Borrower");
and COLUMBIA/HCA HEALTHCARE CORPORATION, a corporation formed under the laws of
Delaware (the "Lender").
R E C I T A L S
---------------
A. Borrower wants to buy from certain affiliates of Lender and such
affiliates want to sell to Borrower or its affiliates certain assets used
exclusively in the operation of certain home health agencies owned by such
affiliates.
B. Borrower will provide or acquire from other sources a portion of the
purchase price for said acquisition; however, Borrower has requested permission
to pay a portion of the purchase price by the delivery of a promissory note.
C. Lender has agreed to accept a promissory note on behalf of such
affiliates, on the terms and conditions set forth in this Agreement, in partial
payment of such purchase price.
D. In consideration of the mutual covenants and agreements herein
contained and of the loans and commitments hereinafter referred to, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above. As used in this Agreement, the
terms "Borrower," and "Lender" shall have the meanings indicated above.
Section 1.02 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Article I or
in other provisions of this Agreement in the singular to have equivalent
meanings when used in the plural and vice versa):
"Affiliate" shall mean, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person within the meaning of control under Section 15 of the
Securities Act of 1933.
"Agencies" shall have the meaning given it in the Asset Purchase Agreement.
"Agreement" shall mean this Credit Agreement, as the same may from time to
time be amended or supplemented.
"Applicable Rate" shall mean the Prime Rate of Union Planters Bank of
Louisiana, plus 0.75%.
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<PAGE>
"Assets" shall have the meaning given it in the Asset Purchase Agreement.
"Asset Purchase Agreement" shall mean that Asset Purchase Agreement dated
________________________________________ by and between Borrower and Lender.
"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in Louisiana.
"Change of Control" shall mean, with respect to any Person, a change of the
Person, or Persons which would constitute a Group, together with any Affiliates
thereof who, at any time, Beneficially Own more than 50% of the aggregate voting
power of all classes of Voting Stock of such Person. As used herein (a)
"Beneficially Own" means "beneficially own" as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended, or any successor provision thereto;
provided, however, that, for purposes of this definition, (a) a Person shall not
be deemed to Beneficially Own securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates until such tendered securities are accepted for purchase or exchange;
(b) "Group" means a "group" for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended, or any successor provision thereto; and (c)
"Voting Stock" of any Person shall mean capital stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Closing Date" shall mean _________________, 1998.
"Collateral" shall mean all of the Assets of the Agencies and the stock of
each Subsidiary which is an acquirer of Assets of the Agencies.
"Consolidated Subsidiaries" shall mean, for any Person, each Subsidiary of
such Person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should be) consolidated with the
financial statements of such Person in accordance with GAAP.
"Debt" of any Person means material (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments (c) obligations of such Person to pay the
deferred purchase price of property or services, (d) obligations of such Person
as lessee under leases which have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases, (e)
obligations secured by any lien or other charge upon property or assets owned by
such Person, even though such Person has not assumed or become liable for the
payment of such obligations, (f) obligations of such Person under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in
clauses (a) through (e) above, and (g) liabilities in respect of unfunded vested
benefits under plans covered by Title IV of the Employee Retirement
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Income Security Act of 1974, as amended; provided, however, that trade payables
incurred in the normal course of business shall be excluded from the above.
"Default" shall mean an Event of Default or an event which with notice or
lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of America.
"Event of Default" shall have the meaning assigned such term in Section
9.01.
"Excepted Liens" shall mean: (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been
maintained; (ii) Liens in connection with workmen's compensation, unemployment
insurance or other social security, old age pension or public liability
obligations not yet due or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (iii) operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or other like
Liens arising by operation of law in the ordinary course of business or
statutory landlord's liens, each of which is in respect of obligations that have
not been outstanding more than 90 days or which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
maintained in accordance with GAAP; (iv) any Liens reserved in or security
deposits required under leases for rent or royalties and for compliance with the
terms of the leases in the case of leasehold estates, to the extent that any
such Lien referred to in this clause does not materially impair the use of the
Property covered by such Lien for the purposes for which such Property is held
or materially impair the value of such Property subject thereto; (v)
encumbrances (other than to secure the payment of borrowed money or the deferred
purchase price of Property or services), easements, restrictions, servitudes,
permits, conditions, covenants, exceptions or reservations in any rights of way
or other Property for the purpose of roads, pipelines, transmission lines,
transportation lines, and other like purposes, or for the joint or common use of
real estate, rights of way, facilities and equipment, and defects,
irregularities, zoning restrictions and deficiencies in title of any rights of
way or other Property which in the aggregate do not materially impair the use of
such rights of way or other Property for the purposes of which such rights of
way and other Property are held or materially impair the value of such Property
subject thereto; and (vi) deposits of cash or securities to secure the
performance of bids, trade contracts, leases, statutory obligations and other
obligations of a like nature incurred in the ordinary course of business.
"Final Maturity Date" shall mean the earlier to occur of (i) (this date
will be the first anniversary of the Closing Date), and (ii) the date that the
Note is mandatorily prepayable in full pursuant to Section 3.03(b).
"Financial Statements" shall mean the financial statement or statements
described or referred to in Section 6.02.
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"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority" shall include the country, the state, county, city
and political subdivisions in which any Person or such Person's Property is
located or which exercises valid jurisdiction over any such Person or such
Person's Property, and any court, agency, department, commission, board, bureau
or instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person's Property. Unless
otherwise specified, all references to Governmental Authority herein shall mean
a Governmental Authority having jurisdiction over, where applicable, the
Borrower, and its Subsidiaries or any of its Property or the Lender.
"Governmental Requirement" shall mean any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement
(whether or not having the force of law) of any Governmental Authority.
"Highest Lawful Rate" shall mean, with respect to Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Note or on other
Indebtedness under the laws of the State of Delaware or, if lower, other laws
applicable to Lender and the Loan.
"Indebtedness" shall mean any and all amounts owing or to be owing by the
Borrower to the Lender in connection with the Loan Documents now or hereafter
arising between the Borrower the Lender and permitted by the terms of this
Agreement, and all renewals, extensions and/or rearrangements of any of the
foregoing.
"Lien" shall mean any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to the
lien or security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For
purposes of this Agreement, with respect to any Person, such Person shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.
"Loan Documents" shall mean this Agreement, the Note and the Security
Instruments.
"Loan" shall mean the loan made by the Lender as provided for by Section
2.01.
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"Material Adverse Effect" shall mean, with respect to any Person, any
material and adverse effect, whether individually or in the aggregate, on (i)
the ability of such Person and its Subsidiaries taken as a whole to carry out
their business as at the Closing Date or as proposed as of the Closing Date to
be conducted or meet their obligations under the Loan Documents on a timely
basis, (ii) the assets, liabilities, financial condition, business, operations,
prospects or affairs of such Person and its Subsidiaries taken as a whole or
from the facts represented or warranted in any Loan Document, (iii) the
legality, validity, binding effect or enforceability against such Person of any
Loan Document or (iv) the Lender's interest in the collateral under the Security
Instruments or the value of such collateral.
"Net Cash Proceeds" shall mean, with respect to the issuance of equity or
Debt securities, the gross proceeds received from issuance of equity or Debt
securities net of actual underwriting, placement and other related costs and
expenses incurred in connection with the issuance of such securities and, with
respect to the sale of Property, the gross proceeds received from the sale net
of actual costs, taxes, and expenses incurred in connection with the sale.
"Note" shall mean the Note provided for by Section 2.03, together with any
and all renewals, extensions for any period, increases, rearrangements,
substitutions or modifications thereof.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government or any agency, instrumentality or political subdivision thereof, or
any other form of entity.
"Post-Default Rate" shall mean, in respect of any principal of the Loan or
any other amount payable by the Borrower under this Agreement or any other Loan
Document, a rate per annum during the period commencing on the date of
occurrence of an Event of Default and continuing until such amount is paid in
full or all Events of Default are cured or waived, the Highest Lawful Rate.
"Prime Rate" shall mean that variable rate of interest per annum
established by the applicable lender from time to time as its "prime rate" or,
if it does not have a prime rate, the "reference rate," "base rate" or other
similar rate which such lender uses as a reference in pricing loans to its
commercial customers, which rate is not necessarily the lowest or best rate
charged to any customer.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible, not including
accounts receivable resulting from patient care.
"Purchase Price" shall mean the Purchase Price set forth in the Asset
Purchase Agreement.
"Security Instruments" shall mean the stock pledge agreements, security
agreements, financing statements and other documents reasonably requested by
Lender to perfect its security interest in the Collateral.
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"Subsidiary" shall mean, with respect to any Person any other Person of
which at least a majority of the outstanding shares of stock having by the terms
thereof ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more of its Subsidiaries
or by such Person and one or more of its Subsidiaries.
"Working Capital Loans" shall mean the debt described in Section 8.01(c)
hereof.
Section 1.03 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Lender hereunder shall be prepared, in
accordance with GAAP, applied on a basis consistent with the Financial
Statements (except for changes concurred with by Borrower's independent public
accountants); provided that, if the Borrower notifies the Lender that the
Borrower requests an amendment to any provision of Article VIII or Article IX
hereof to eliminate the effect of any change occurring after the Closing Date in
GAAP or in the application thereof to such provision (or if the Lender notifies
the Borrower that the Lender requests an amendment to any such provision hereof
for such purposes), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance with the requirements of this
Agreement.
ARTICLE II
COMMITMENTS
Section 2.01 Loan. Lender agrees, subject to the terms and
conditions of this Agreement, to make a term loan to the Borrower in the amount
of Fourteen Million Dollars ($14,000,000). Such Loan shall be made by way of a
single borrowing made on the Closing Date.
Section 2.02 Borrowing. The Loan shall be made by Lender to
Borrower by Lender's accepting the Note from Borrower in payment of a portion of
the Purchase Price equal to the amount of the Loan. Any portion of the Loan
that is repaid or prepaid may not be reborrowed.
Section 2.03 Note. The Loan made by Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit A,
dated as of the Closing Date payable to the order of Lender and otherwise duly
completed. The date, amount of the Loan and all payments made on account of the
principal thereof, shall be recorded by Lender on its books for its Note, and,
prior to any transfer may be endorsed by Lender on a schedule attached to such
Note or any continuation thereof or on any separate record maintained by Lender.
Failure to make any such
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notation or to attach a schedule shall not affect any Lender's or the Borrower's
rights or obligations in respect of such Loan or affect the validity of such
transfer by any Lender of its Note.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Interest.
(a) Interest Rates. The Borrower will pay to the Lender interest on
the unpaid principal amount of the Loan for the period commencing on the
date such Loan is made to, but excluding, the date such Loan shall be paid
in full, at a per annum rate equal to the lesser of (i) the Applicable
Rate, and (ii) the Highest Lawful Rate.
(b) Post-Default Rate. Notwithstanding the foregoing, the Borrower
will pay to the Lender, for the account of Lender, interest at the
applicable Post-Default Rate on the unpaid principal amount of the Loan,
and (to the fullest extent permitted by law) on any other amount payable by
the Borrower hereunder, under any Security Instrument or under any Note
held by Lender to or for account of Lender, for the period commencing on
the date of an Event of Default until the same is paid in full or all
Events of Default are cured or waived.
(c) Due Dates. Accrued interest on the Loan shall be payable in a
single payment on the Final Maturity Date.
Section 3.02 Repayment of Loan. Principal shall be payable in a
single payment on the Final Maturity Date, if not sooner paid.
Section 3.03 Prepayments.
(a) Voluntary Prepayments. The Borrower may prepay the Loan, in whole
or in part, without penalty or premium, upon not less than three (3)
Business Day's prior notice to the Lender which notice shall specify the
prepayment date (which shall be a Business Day) and shall be irrevocable
and effective only upon receipt by the Lender, provided that interest on
the principal prepaid, accrued to the prepayment date, shall be paid on the
prepayment date.
(b) Mandatory Prepayment. Upon the sale or other disposition by
Borrower or its Subsidiaries of any Property, Borrower shall deliver, or
cause such Subsidiary to deliver, to Lender 100% of the Net Cash Proceeds
from such sale or other disposition to repay the outstanding principal on
the Loan, plus interest accrued on the outstanding principal; provided,
however, neither Borrower nor a Subsidiary shall be obligated to deliver to
Borrower more than the sum of the outstanding principal plus interest
accrued thereon.
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Notwithstanding the foregoing, Borrower or its Subsidiaries may sell or
transfer Property with a value not to exceed $2,000,000, provided that such
Property does not include the Assets or any assets associated with the
ambulatory surgery centers owned by Borrower or its Subsidiaries.
ARTICLE IV
PAYMENTS; COMPUTATIONS
Section 4.01 Payments. All payments of principal, interest and
other amounts to be made by the Borrower under this Agreement and the Note shall
be made in Dollars, in immediately available funds, to the Lender at such
account as the Lender shall specify by notice to the Borrower from time to time,
on the date on which such payments shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day). Such payments shall be made without (to the fullest
extent permitted by applicable law) defense, set-off or counterclaim. If the
due date of any payment under this Agreement or any Note would otherwise fall on
a day which is not a Business Day such date shall be extended to the next
succeeding Business Day and interest shall be payable for any principal so
extended for the period of such extension.
Section 4.02 Computations. Interest shall be computed on the basis
of a year of 365 or 366 days, as the case may be, and actual days elapsed
(including the first day, but excluding the last day) occurring in the period
for which such interest is payable.
ARTICLE V
CONDITIONS PRECEDENT
Section 5.01 Funding.
The obligation of the Lender to make the Loans is subject to the
receipt by the Lender of the following documents and satisfaction of the other
conditions provided in this Section 5.01, each of which shall be satisfactory to
the Lender in form and substance:
(a) The Note, duly completed and executed.
(b) The Security Instruments, covering the Collateral duly executed,
acknowledged and sufficient for filing.
(c) A certificate of the Secretary or an Assistant Secretary of the
Borrower setting forth (i) resolutions of its board of directors with
respect to the authorization of the Borrower to execute and deliver the
Loan Documents to which it is a party and to enter into the
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transactions contemplated in those documents, (ii) the officers of the
Borrower (y) who are authorized to sign the Loan Documents to which
Borrower is a party and (z) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its representative for
the purposes of signing documents and giving notices and other
communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of the authorized officers,
and (iv) the articles or certificate of incorporation and bylaws of the
Borrower, certified as being true and complete. The Lender and the Lenders
may conclusively rely on such certificate until the Lender receives notice
in writing from the Borrower to the contrary.
(d) Certificates of the appropriate state agencies with respect to the
existence, qualification and good standing of the Borrower.
(e) A certificate of insurance coverage of the Borrower evidencing
that the Borrower is carrying insurance in accordance with Section 6.12.
(f) The Lender shall have received the Financial Statements described
in Section 6.02 hereof.
(g) No Default or event which could reasonably be expected to have a
Material Adverse Effect shall have occurred.
(h) There shall be no litigation or Governmental Requirement
restraining, enjoining, or prohibiting the parties from consummating the
transactions described herein.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender that on the date hereof
and on the Closing Date:
Section 6.01 Corporate Existence. Each of the Borrower and its
Subsidiaries: (i) is a corporation duly organized, legally existing and in good
standing under the laws of the jurisdiction of its incorporation; (ii) has all
requisite corporate power, and has all governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
now being or as proposed to be conducted except where the failure to obtain and
maintain such licenses, authorizations, consents and approvals would not have a
Material Adverse Effect; and (iii) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would have a Material
Adverse Effect.
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Section 6.02 Financial Condition. The balance sheet of the Borrower
attached hereto as Schedule 6.02 is complete and correct and fairly presents the
financial condition of the Borrower at the date set forth therein, all in
accordance with Borrower's internal accounting practices and GAAP, as applied on
a consistent basis. None of the Borrower or any of its Consolidated
Subsidiaries has on the Closing Date any material Debt, contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as shown on Schedule
6.02-A, nor do any of such Persons have any Debt, that is senior in status to
the Indebtedness. Since the date of the Financial Statements, there has been no
change or event having a Material Adverse Effect. Since the date of the
Financial Statements, neither the business nor the Properties of the Borrower or
any of its Subsidiaries have been materially and adversely affected as a result
of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike
or other labor disturbance, embargo, requisition or taking of Property or
cancellation of contracts, permits or concessions by any Governmental Authority,
riot, activities of armed forces or acts of God or of any public enemy.
Section 6.03 Litigation. Except as disclosed in Schedule 6.03
hereto, there is no litigation, legal, administrative or arbitral proceeding,
investigation or other action of any nature pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower, or any of its
Subsidiaries which involves the possibility of any judgment or liability against
such Person not fully covered by insurance (except for normal deductibles) which
could result in a Material Adverse Effect.
Section 6.04 No Breach. Neither the execution and delivery of the
Loan Documents, nor compliance with the terms and provisions hereof or thereof
will conflict with or result in a breach of, or require any consent which has
not been obtained as of the Closing Date under, the respective charter or by-
laws of each of the Borrower or any of its Subsidiaries, any Governmental
Requirement, or any agreement or instrument to which such Person is a party or
by which it is bound or to which it or its Properties are subject, or constitute
a default under any such agreement or instrument, or result in the creation or
imposition of any Lien upon any of the revenues or assets of such Person
pursuant to the terms of any such agreement or instrument, other than the Liens
created by the Loan Documents.
Section 6.05 Authority. Each of the Borrower and its Subsidiaries
have all necessary corporate power and authority to execute, deliver and perform
its obligations under the Loan Documents to which it is a party; the execution,
delivery and performance by such Person of the Loan Documents to which it is a
party have been duly authorized by all necessary corporate action on its part;
and the Loan Documents constitute the legal, valid and binding obligations of,
and are enforceable in accordance with their terms against, such Person (to the
extent a party thereto).
Section 6.06 Approvals. To the knowledge of Borrower, no
authorizations, approvals or consents of, and no filings or registrations with,
any Governmental Authority are necessary for the execution, delivery or
performance by each of the Borrower and its Subsidiaries of the Loan Documents
to which each is a party or for the validity or enforceability thereof.
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Section 6.07 Taxes. Except as set out in Schedule 6.07, each of the
Borrower and its Subsidiaries has, to the knowledge of Borrower filed all
United States Federal income tax returns and except where there would be no
Material Adverse Effect, all other tax returns which are required to be filed by
them and have paid all taxes due pursuant to such returns or pursuant to any
assessment received by such Person, unless the deadline for such filing or
payment has been extended and the extended deadline has not yet occurred.
Section 6.08 Subsidiaries. The Borrower has no Subsidiaries,
except as listed on Schedule 6.08.
Section 6.09 Defaults. Except as disclosed on Schedule 6.09, none
of the Borrower or its Subsidiaries is in default nor has any event or
circumstance occurred which, but for the expiration of any applicable grace
period or the giving of notice, or both, would constitute a material default
under any agreement or instrument to which such Person is a party or by which
such Person is bound which default would have a Material Adverse Effect. No
Default hereunder has occurred and is continuing.
Section 6.10 Compliance with the Law. None of the Borrower or its
Subsidiaries has violated any material Governmental Requirement or failed to
obtain any material license, permit, franchise or other governmental
authorization necessary for the ownership of any of its Properties or the
conduct of its business, which violation or failure would have (in the event
such violation or failure were asserted by any Person through appropriate
action) a Material Adverse Effect.
Section 6.11 No Material Misstatements. No written information,
statement, exhibit, certificate, document or report furnished to the Lender and
the Lenders (or any of them) by the Borrower in connection with the negotiation
of this Agreement contained any material misstatement of fact or omitted to
state a material fact or any fact necessary to make the statement contained
therein not materially misleading in the light of the circumstances in which
made and with respect to such Person and its Subsidiaries taken as a whole.
There is no fact peculiar to any of the Borrower or its Subsidiaries which has
a Material Adverse Effect or in the future is reasonably likely to have a
Material Adverse Effect and which has not been set forth in this Agreement or
the other documents, certificates and statements furnished to the Lender by or
on behalf of the Borrower of its Subsidiaries prior to, or on, the Closing
Date in connection with the transactions contemplated hereby.
Section 6.12 Insurance. Schedule 6.12 attached hereto contains an
accurate and complete description of all material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by each of the
Borrower and its Subsidiaries. All such policies are in full force and effect,
all premiums with respect thereto covering all periods up to and including the
Closing Date have been paid, and no notice of cancellation or termination has
been received with respect to any such policy. Such policies are sufficient for
compliance with all requirements of law and of all agreements to which such
Person is a party; are valid, outstanding and enforceable policies; provide
adequate insurance coverage in at least such amounts and against at least such
risks
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(but including in any event public liability) as are usually insured against in
the same general area by companies engaged in the same or a similar business for
the assets and operations of such Person; will remain in full force and effect
through the respective dates set forth in Schedule 6.12 without the payment of
additional premiums; and will not in any way be affected by, or terminate or
lapse by reason of, the transactions contemplated by this Agreement. Schedule
6.12 identifies all material risks, if any, which such Person and their
respective Board of Directors or officers have designated as being self insured.
None of the Borrower or its Subsidiaries has been refused any insurance with
respect to its assets or operations, nor has its coverage been limited below
usual and customary policy limits, by an insurance carrier to which it has
applied for any such insurance or with which it has carried insurance during the
last three years.
Section 6.13 Except as listed on Schedule 6.13, no Property of
Borrower or any Subsidiary of Borrower is subject to a Lien.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that until payment in full of the Loan,
all interest thereon and all other amounts payable by the Borrower hereunder:
Section 7.01 Reporting Requirements. The Borrower shall deliver, or
shall cause to be delivered, to the Lender:
(a) Quarterly Financial Statements. As soon as available and in any
event within the time periods required by the Securities and Exchange Act
of 1934 (the "Exchange Act"), the Borrower shall deliver its Form 10-Q
and/or Form 10-K to Lender. In the event that Borrower is not required to
file Form 10-Q or Form 10-K pursuant to the Exchange Act, Borrower shall
deliver a report in substantial conformance with the reporting requirements
of the Exchange Act within the time periods as would have been required in
the event the Borrower was subject to the reporting requirements of the
Exchange Act.
(b) Other Reports to the Securities and Exchange Commission. Promptly
upon filing any report with the Securities and Exchange Commission,
Borrower shall provide Lender with a copy of such filing.
(c) Notice of Default, Etc. Promptly after the Borrower knows that
any Default or any Material Adverse Effect has occurred, a notice of such
Default or Material Adverse Effect, describing the same in reasonable
detail and the action the Borrower proposes to take with respect thereto.
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(d) Other Accounting Reports. Promptly upon receipt thereof, a copy
of each other report or letter submitted to the Borrower or any of its
Subsidiaries by independent accountants in connection with any annual,
interim or special audit made by them of such Person's books and a copy of
any response by such Person or its Board of Directors, to such letter or
report.
(e) Notices Under Other Loan Agreements. Promptly after the
furnishing thereof, copies of any statement, report or notice furnished to
the Borrower pursuant to the terms of any indenture, loan or credit or
other similar agreement, other than this Agreement and not otherwise
required to be furnished to the Lenders pursuant to any other provision of
this Section 7.01.
(f) Other Matters. From time to time such other information regarding
the business, affairs or financial condition of the Borrower or any of its
Subsidiaries of any of the foregoing (including, without limitation, any
Plan or Multiemployer Plan and any reports or other information required to
be filed under ERISA) as the Lender may reasonably request.
The Borrower will furnish to the Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) above, a certificate executed on
behalf of Borrower by an officer of Borrower, stating that, no Default has
occurred and is continuing (or, if any Default has occurred and is continuing,
describing the same in reasonable detail).
Section 7.02 Litigation. The Borrower shall promptly give to the
Lender notice of: (i) all legal or arbitral proceedings, and of all proceedings
before any Governmental Authority affecting the Borrower or any of its
Subsidiaries, except proceedings which, if adversely determined, would not have
a Material Adverse Effect, and (ii) of any litigation or proceeding against or
adversely affecting the Borrower or any of its Subsidiaries in which the amount
involved is not covered in full by insurance (subject to normal and customary
deductibles and for which the insurer has not assumed the defense), or in which
injunctive or similar relief is sought. The Borrower will, and will cause each
of its Subsidiaries to, promptly notify the Lender and each of the Lenders of
any claim, judgment, Lien or other encumbrance affecting any Property of such
Person if the value of the claim, judgment, Lien, or other encumbrance affecting
such Property exceeds or is claimed to exceed $250,000.
Section 7.03 Maintenance, Etc.
(a) Generally. The Borrower shall and shall cause each of its
Subsidiaries to: preserve and maintain its corporate existence and all of
its material rights, privileges and franchises; keep books of record and
account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and activities; comply
with all Governmental Requirements if failure to comply with such
requirements will have a Material Adverse Effect; pay and discharge all
taxes, assessments and governmental charges or levies imposed on it or on
its income or profits or on any of its Property prior to the date on which
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penalties attach thereto, except for any such tax, assessment, charge or
levy the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained; upon
reasonable notice, permit representatives of the Lender during normal
business hours, to examine, copy and make extracts from its books and
records, to inspect its Properties, and to discuss its business and affairs
with its officers, all to the extent reasonably requested by Lender (as the
case may be); and keep, or cause to be kept, insured by financially sound
and reputable insurers all Property of a character usually insured by
Persons engaged in the same or similar business similarly situated against
loss or damage of the kinds and in the amounts customarily insured against
by such Persons and carry such other insurance as is usually carried by
such Persons, in each case, as is acceptable to the Lender.
(b) Proof of Insurance. Contemporaneously with the delivery of the
financial statements required by Section 7.01(a) to be delivered, the
Borrower will furnish or cause to be furnished to the Lender a certificate
of insurance coverage with respect to it, and its Subsidiaries and their
Properties from the insurer in form and substance satisfactory to the
Lender and, if requested, will furnish the Lender and the Lenders copies of
the applicable policies.
Section 7.04 Further Assurances. The Borrower will, and will cause
each Subsidiary to, cure promptly any defects in the creation and issuance of
the Note and the execution and delivery of this Agreement or a Security
Instrument. The Borrower at its expense will promptly execute and deliver to
the Lender upon any commercially reasonable request all such other documents,
agreements and instruments to comply with or accomplish the covenants and
agreements of the Borrower or any Subsidiary, as the case may be, in this
Agreement.
Section 7.05 Performance of Obligations. The Borrower will pay the
Note according to the reading, tenor and effect thereof; and of the Borrower
will and will cause each Subsidiary to do and perform every act and discharge
all of the obligations to be performed and discharged by them under the this
Agreement.
Section 7.06 Licenses. The Borrower and each of its Subsidiaries
shall acquire and maintain all licenses, permits, certificates and other
authorizations required for the conduct of their businesses except where the
failure to acquire and maintain such licenses, permits, certificates and
authorizations would not have a Material Adverse Effect.
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ARTICLE VIII
NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of the Loan hereunder, all interest
thereon and all other amounts payable by the Borrower hereunder, without the
prior written consent of the Lender:
Section 8.01 Debt. Neither Borrower nor any of its Subsidiaries
existing as of the date hereof will incur, create, assume or permit to exist any
Debt, except:
(a) the Note or other Indebtedness or any guaranty of or suretyship
arrangement for the Notes or other Indebtedness;
(b) accounts payable (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of business
which, if greater than 90 days past the invoice or billing date, are being
contested in good faith by appropriate proceedings if reserves adequate
under GAAP shall have been established therefor;
(c) Debt to finance working capital of the Agencies, provided that
such debt is secured solely by the accounts receivable of the Agencies, and
there is no further recourse to Borrower or any of its Subsidiaries
(either direct or indirect by virtue of any guarantee, general partnership
participation, or any commitment which constitutes Debt), that the term of
such Working Capital Loans exceeds the term of the Indebtedness, and that
the terms, covenants and conditions of such Working Capital Loans shall not
place the Borrower or its Subsidiaries in violation of any term or covenant
contained herein; and
(d) Debt, in an aggregate amount not more than $5,000,000, to complete
capital expenditures permitted by Section 8.03(f) hereof and business
acquisitions permitted by Section 8.03(g) hereof.
Section 8.02 Liens. Neither Borrower nor any of its Subsidiaries
existing as of the date hereof will create, incur, assume or permit to exist any
Lien on any of its Properties (now owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness;
(b) Excepted Liens;
(c) Liens disclosed on Schedule 6.13;
(d) Liens on accounts receivable of the Agencies associated with
Working Capital Loans; and
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(e) Liens on assets acquired as permitted by Section 8.03(f) hereof
to secure Debt permitted by Section 8.01(d) hereof.
Section 8.03 Investment, Loan and Advance Limitations. Neither
Borrower nor any of its Subsidiaries existing as of the date hereof, without the
prior express written consent of Lender, will make any loans or advances to or
investments in any Person, or capital expenditures except that the foregoing
restriction shall not apply to:
(a) accounts receivable arising in the ordinary course of business;
(b) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each
case maturing within one year from the date of creation thereof;
(c) commercial paper maturing within one year from the date of
creation thereof and having a short term deposit rating of no lower than A2
or P2, as such rating is set forth from time to time by Standard & Poor's
Corporation or Moody's Investors Service, Inc.;
(d) deposits maturing within one year from the date of creation
thereof with, in cluding certificates of deposit issued by, any Lender or
any office located in the United States of any other bank or trust company
which is organized under the laws of the United States or any state
thereof, has capital, surplus and undivided profits aggregating at least
$100,000,000.00 (as of the date of Lender's or bank or trust company's most
recent financial reports) and has a short term deposit rating of no lower
than A2 or P2, as such rating is set forth from time to time, by Standard &
Poor's Corporation or Moody's Investors Service, Inc., respectively;
(e) deposits in money market funds investing exclusively in
investments described in Section 8.03(b), 8.03(c) or 8.03(d);
(f) capital expenditures for routine replacement of equipment in an
aggregate amount not to exceed $4,000,000; and
(g) acquisition of other businesses or business opportunities in an
aggregate amount not to exceed $1,000,000.00.
Section 8.04 Dividends, Distributions and Redemptions. Except for
the acquisition of up to 100,000 shares of stock pursuant to the sale of the
durable medical equipment business owned by Borrower or its Subsidiaries in
Louisiana, Borrower will not declare nor pay any dividend, purchase, redeem or
otherwise acquire any of its stock now or hereafter outstanding, return any
capital to its stockholders or make any distribution of its assets to its
stockholders.
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Section 8.05 Sales. Neither of the Borrower nor any of its
Subsidiaries will enter into any arrangement, directly or indirectly, with any
Person whereby the Borrower or any of its Subsidiaries shall sell or transfer
any of its Property, whether now owned or hereafter acquired, except where the
Net Cash Proceeds are applied in accordance with Section 3.03(b).
Section 8.06 Mergers, Etc. Neither Borrower nor any of its
Subsidiaries will merge into or with or consolidate with any other Person, or
sell, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its Property or assets to any other
Person, except for mergers or consolidations among Borrower and its
Subsidiaries.
Section 8.07 Sale or Discount of Receivables. Neither Borrower nor
any of its Subsidiaries will discount or sell (with or without recourse) any of
its notes receivable or accounts receivable except in connection with Working
Capital Loans.
Section 8.08 Transactions with Affiliates. Neither Borrower nor
any of its Subsidiaries will enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property or the rendering
of any service, with any Affiliate unless such transactions are otherwise
permitted under this Agreement and are upon fair and reasonable terms. Borrower
or its Subsidiaries may enter into such a transaction provided that such
transaction is only between Borrower and its Subsidiaries and such transaction
does not include the Assets.
Section 8.09 Subsidiary Dividends. Neither Borrower nor any of its
Subsidiaries shall or shall permit any limitation, contractual or otherwise, to
be placed on a Subsidiary's right or power to declare and pay dividends.
Section 8.10 Subsidiaries. Neither Borrower nor any of its
Subsidiaries shall or shall permit any Subsidiary to, create any additional
Subsidiaries. The Borrower shall not nor shall it permit any Subsidiary to sell
or to issue any stock or ownership interest of a Subsidiary.
Section 8.11 Prepayments of Debt. Except for the Indebtedness,
neither Borrower nor any of its Subsidiaries shall make prepayments of principal
or cause prepayments of principal to become mandatorily due prior to the
scheduled due date of any Debt, nor shall Borrower or any of its Subsidiaries
make payments of interest in advance of the required interest payment dates of
such Debt. Notwithstanding the foregoing, Borrower and its subsidiaries may
repay Working Capital Loans pursuant to changes in the accounts receivable
securing such loans.
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ARTICLE IX
EVENTS OF DEFAULT; REMEDIES
Section 9.01 Events of Default. One or more of the following events
shall constitute an "Event of Default":
(a) the Borrower shall default in the payment or prepayment when due
of any principal of or interest on the Loan or any fees or other amount
payable by it hereunder; or
(b) the Borrower or any of its Subsidiaries shall default in the
payment when due of any principal of or interest on any other Debt or any
event specified in any note, agreement, indenture or other document
evidencing or relating to any such Debt shall occur if the effect of such
event is to cause, or (with the giving of any notice or the lapse of time
or both) to permit the holder or holders of such Debt to cause, such Debt
to become due prior to its stated maturity; or
(c) the Borrower shall default in the performance of any of its
obligations under this Agreement (other than the payment of amounts due
which shall be governed by Section 9.01(a)) and such default shall continue
unremedied for a period of thirty (30) days after the earlier to occur of
notice thereof to the Borrower by the Lender; or
(d) the Borrower shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(e) the Borrower shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of its creditors, (iii) commence
a voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, liquidation
or composition or readjustment of debts, (v) fail to controvert in a timely
and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Federal Bankruptcy Code, or
(vi) take any corporate action for the purpose of effecting any of the
foregoing; or
(f) a proceeding or case shall be commenced, without the application
or consent of the Borrower, in any court of competent jurisdiction, seeking
(i) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the Borrower of all
or any substantial part of its assets, or (iii) similar relief in respect
of the Borrower under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and
continue
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unstayed and in effect, for a period of 60 days; or (iv) an order for
relief against the Borrower shall be entered in an involuntary case under
the Federal Bankruptcy Code; or
(g) a judgment or judgments for the payment of money in excess of
$500,000 in the aggregate shall be rendered by a court against the Borrower
or any Subsidiary in which the amount involved is not covered in full by
insurance or by a bond (subject to normal and customary deductibles) and
the same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within
sixty (60) days from the date of entry thereof and the Borrower or such
Subsidiary shall not, within said period of sixty 60 days, or such longer
period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal;
or
(h) an event having a Material Adverse Effect shall occur; or
(i) a Change of Control of the Borrower shall occur.
Section 9.02 Remedies.
(a) In the case of an Event of Default other than one referred to in
clauses (d), (e) or (f) of Section 9.01 the Lender may, by notice to the
Borrower, declare the principal amount then outstanding of, and the accrued
interest on, the Loan and all other amounts payable by the Borrower
hereunder and under the Note to be forthwith due and payable, whereupon
such amounts shall be immediately due and payable without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration or
other formalities of any kind, all of which are hereby expressly waived by
the Borrower.
(b) In the case of the occurrence of an Event of Default referred to
in clauses (d), (e) or (f) of Section 9.01 the principal amount then
outstanding of, and the accrued interest on, the Loan and all other amounts
payable by the Borrower hereunder and under the Note shall become
automatically immediately due and payable without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower.
(c) All proceeds received after maturity of the Note, whether by
acceleration or otherwise shall be applied first to reimbursement of
expenses and indemnities provided for in this Agreement; second to accrued
interest on the Note; third to fees; fourth pro rata to principal
outstanding on the Note and other Indebtedness; and any excess shall be
paid to the Borrower or as otherwise required by any Governmental
Requirement.
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ARTICLE X
MISCELLANEOUS
Section 10.01 Waiver. No failure on the part of the Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under any of the Loan Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege under any of the Loan Documents preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.
Section 10.02 Notices. All notices and other communications provided
for herein and in the other Loan Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement or the other Loan
Documents) shall be given or made by telex, telecopy, courier or U.S. Mail or in
writing and telexed, telecopied, mailed or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof or in the Loan Documents; or, as to any party, at such other address as
shall be designated by such party in a notice to each other party. Except as
otherwise provided in this Agreement or in the other Loan Documents, all such
communications shall be deemed to have been duly given when transmitted, if
transmitted before 1:00 p.m. local time on a Business Day (otherwise on the next
succeeding Business Day) by telex or telecopier and evidence or confirmation of
receipt is obtained, or personally delivered or, in the case of a mailed notice,
three (3) Business Days after the date deposited in the mails, postage prepaid,
in each case given or addressed as aforesaid.
Section 10.03 Payment of Expenses, Costs of Collection
(a) Lender and Borrower each shall pay any fees, expenses and
disbursements of said party in connection with this transaction.
(b) The Borrower agrees to pay or reimburse Lender for the actual out-
of-pocket expenses, including reasonable counsel fees, incurred by the
Lender in enforcement of this Agreement, the Note or the Security
Instruments, in the event the Lender is the prevailing party.
Section 10.04 Amendments, Etc. Any provision of this Agreement or
any Security Instrument may be amended, modified or waived with the Borrower's
and the Lender's prior written consent.
Section 10.05 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
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Section 10.06 Invalidity. In the event that any one or more of the
provisions contained in any of the Loan Documents shall, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of the Note or, this
Agreement.
Section 10.07 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 10.08 References. The words "herein," "hereof," "hereunder"
and other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated herein. Any reference herein
to an exhibit or schedule shall be deemed to refer to the applicable exhibit or
schedule attached hereto unless otherwise stated herein.
Section 10.09 Captions. Captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
Section 10.10 NO ORAL AGREEMENTS. THE LOAN DOCUMENTS EMBODY THE
ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER
AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 10.11
(A) GOVERNING LAW. THIS AGREEMENT AND THE NOTES (INCLUDING, BUT NOT
LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF AND THEREOF) SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE, OTHER THAN THE CONFLICT OF LAWS RULES THEREOF.
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The parties hereto have caused this Agreement to be duly executed as
of the day and year first above written.
BORROWER: AMEDISYS, INC.
By: ___________________________________
Name: _________________________________
Title: ________________________________
Address for Notices:
_______________________________________
_______________________________________
_______________________________________
Telecopier No.: _______________________
Telephone No.: ________________________
Attention: ____________________________
LENDER: COLUMBIA/HCA HEALTHCARE
CORPORATION
By: ___________________________________
Name: _________________________________
Title: ________________________________
Address for Notices:
_______________________________________
_______________________________________
_______________________________________
Telecopier No.: _______________________
Telephone No.: ________________________
Attention: ____________________________
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EXHIBIT A
FORM OF NOTE
$____________________ ___________________, 199__
FOR VALUE RECEIVED, AMEDISYS, INC., a Delaware corporation (the
"Borrower") hereby promises to pay to the order of COLUMBIA/HCA HEALTHCARE
CORPORATION (the "Lender"), the principal sum of _____________ Dollars
($____________) in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement dated _____________________________________, 1998,
between the Borrower and Lender (as amended or supplemented from time to time
the "Credit Agreement"), and to pay interest, at such office, in like money and
funds, at the rates per annum and on the dates provided in the Credit Agreement.
Each payment made on account of the principal and interest hereof shall be
recorded by the Lender on its books.
This Note is the Note referred to in the Credit Agreement and evidences the
Loan made by the Lender thereunder. Capitalized terms used in this Note have
the respective meanings assigned to them in the Credit Agreement.
This Note is issued pursuant to the Credit Agreement and is entitled to the
benefits provided for in the Credit Agreement. The Credit Agreement provides
for the acceleration of the maturity of this Note upon the occurrence of certain
events, for prepayments of the Loan upon the terms and conditions specified
therein and other provisions relevant to the Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF DELAWARE.
AMEDISYS, INC.
By: ___________________________________
Name: _________________________________
Title: ________________________________
