<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
___________________________________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _______________
Commission file number: 0-24260
--------
AMEDISYS, INC.
--------------
(Exact Name of Registrant as Specified in Charter)
Delaware 11-3131700
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3029 S. Sherwood Forest Blvd., Ste. 300 Baton Rouge, LA 70816
---------------------------------------------------------------
(Address of principal executive offices including zip code)
(504) 292-2031
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Number of shares of Common Stock outstanding as of June 30, 1998: 3,064,918
shares
1
<PAGE>
PART I.
FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997... 3
Consolidated Statements of Operations for the Three and Six Months
ended June 30, 1998 and 1997....................................... 4
Consolidated Statements of Cash Flows for the Six Months ended
June 30, 1998 and 1997............................................. 5
Notes to Consolidated Financial Statements.............................. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS...............................................11
PART II.
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS..................................................13
ITEM 2. CHANGES IN SECURITIES..............................................13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES....................................13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................14
ITEM 5. OTHER INFORMATION..................................................14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................................14
2
<PAGE>
AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED, IN 000'S)
ASSETS JUNE 30, DECEMBER 31,
1998 1997
CURRENT ASSETS:
Cash $ 471 $ 4,070
Accounts Receivable, Net of Allowance for Doubtful
Accounts of $2,957 in June 1998 and $1,617 in
December 1997 6,892 9,630
Prepaid Expenses 891 247
Other Current Assets 4,004 654
------- ------
Total Current Assets 12,258 14,601
Notes Receivable from Related Parties 224 252
Property, Plant and Equipment, Net 6,056 4,785
Other Assets, Net 12,374 3,232
------- ------
Total Assets $ 30,912 $ 22,870
======= ======
LIABILITIES
CURRENT LIABILITIES:
Notes Payable $ 6,090 $ 5,806
Current Portion of Long-Term Debt 927 927
Accounts Payable 2,486 1,338
Accrued Expenses:
Payroll and Payroll Taxes 1,541 2,025
Insurance 1,020 521
Other 3,998 847
------- ------
Total Current Liabilities 16,062 11,464
Long-Term Debt 4,948 3,129
Other Long-Term Liabilities 1,136 0
------- ------
Total Liabilities 22,146 14,593
------- ------
Minority Interest 3 3
------- ------
STOCKHOLDERS' EQUITY
Common Stock 3 3
Preferred Stock 1 1
Additional paid-in capital 12,006 7,092
Treasury Stock (25) (25)
Stock Subscriptions Receivable (1) 0
Retained Earnings (deficit) (3,221) 1,203
------- ------
Total Stockholders' Equity 8,763 8,274
------- ------
Total Liabilities and Stockholders' Equity $ 30,912 $ 22,870
======= ======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
Amedisys, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three and six months ended June 30, 1998 and 1997
(Unaudited, in 000's except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------- ------------------
JUNE 98 JUNE 97 JUNE 98 JUNE 97
<S> <C> <C> <C> <C>
Income:
Service revenue $ 11,765 $ 13,880 $ 24,475 $ 27,264
Cost of service revenue 6,652 8,094 14,319 15,973
------- ------- ------- -------
Gross margin 5,113 5,786 10,156 11,291
------- ------- ------- -------
General and administrative expenses:
Salaries and benefits 4,151 2,763 9,389 5,497
Other 3,663 2,276 7,098 4,433
------- ------- ------- -------
Total general and administrative expenses 7,814 5,039 16,487 9,930
------- ------- ------- -------
Operating income (loss) (2,701) 747 (6,331) 1,361
------- ------- ------- -------
Other income and expense:
Interest income 9 15 21 18
Interest expense (215) (209) (418) (393)
Miscellaneous 17 58 25 76
------- ------- ------- -------
Total other income and expenses (189) (136) (372) (299)
------- ------- ------- -------
Income (loss) before income taxes and minority interest (2,890) 611 (6,703) 1,062
Provision (benefit) for estimated income taxes (987) 217 (2,279) 379
------- ------- ------- -------
Income (loss) before minority interest (1,903) 394 (4,424) 683
Minority interest in consolidated subsidiary 0 (21) 0 (9)
------- ------- ------- -------
Net income (loss) $ (1,903) $ 373 $ (4,424) $ 674
======= ======= ======= =======
Basic earnings (losses) per common share $ (0.62) $ 0.14 $ (1.45) $ 0.26
======= ======= ======= =======
Weighted average common shares outstanding 3,064 2,697 3,057 2,639
======= ======= ======= =======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED, IN 000'S)
<TABLE>
<CAPTION>
JUNE 1998 JUNE 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ (4,424) $ 674
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 870 581
PROVISION FOR BAD DEBTS 415 425
MINORITY INTEREST IN AFFILIATED COMPANY 0 9
(GAIN) LOSS ON DISPOSAL OF PROPERTY AND EQUIPMENT 4 (13)
LOSS ON SALE OF MARKETABLE SECURITIES 0 3
CHANGES IN ASSETS AND LIABILTIES:
(INCREASE) DECREASE IN ACCOUNTS RECEIVABLE 2,919 (974)
(INCREASE) IN PREPAID EXPENSES (644) (189)
(INCREASE) IN OTHER CURRENT ASSETS (3,217) (3)
(INCREASE) IN OTHER ASSETS (198) (391)
INCREASE (DECREASE) IN ACCOUNTS PAYABLE 170 (603)
INCREASE IN ACCRUED EXPENSES 485 723
--------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (3,620) 242
--------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
PURCHASE OF FURNITURE, FIXTURES & EQUIPMENT (1,625) (754)
PROCEEDS FROM SALE OF FURNITURE, FIXTURES & EQUIPMENT 0 56
CASH PAID FOR ACQUISITIONS (2,005) 0
(INCREASE) DECREASE IN NOTES RECEIVABLE FROM RELATED PARTIES 28 (5)
--------- --------
NET CASH (USED IN) INVESTING ACTIVITIES (3,602) (703)
--------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
PURCHASE OF TREASURY STOCK 0 (25)
CASH RECEIVED IN ACQUISITIONS 317 0
NET INCREASE IN BORROWINGS ON LINE OF CREDIT 284 672
PAYMENTS ON NOTES PAYABLE (704) (377)
PROCEEDS FROM NOTES PAYABLE 473 1,704
INCREASE (DECREASE) IN NOTES PAYABLE TO RELATED PARTIES 0 (988)
PROCEEDS FROM COMMON STOCK 0 831
DECREASE IN STOCK SUBSCRIPTIONS 0 1
PROCEEDS FROM PREFERRED STOCK 3,253 0
--------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,623 1,818
--------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,599) 1,357
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,070 1,104
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 471 $ 2,461
========= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAYMENTS FOR:
INTEREST $ 426 $ 360
========= ========
INCOME TAXES $ 151 $ 22
========= ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITY (SEE NOTE 9 TO FINANCIAL STATEMENTS):
VALUE OF STOCK ISSUED IN EXCHANGE $ 894
VALUE OF NOTE PAYABLE ISSUED IN EXCHANGE 1,575
CASH ACQUIRED IN EXCHANGE (317)
WORKING CAPITAL DEFICIT ACQUIRED NET OF CASH AND CASH EQUIVALENTS 3,553
FAIR VALUE OF PROPERTY, PLANT AND EQUIPMENT ACQUIRED (385)
FAIR VALUE OF OTHER ASSETS ACQUIRED (27)
LONG TERM DEBT ASSUMED 3,069
FAIR VALUE OF OTHER LIABILTIES ASSUMED 54
---------
NON CASH PORTION OF ACQUISITIONS 8,416
CASH PAYMENT FOR ACQUISITIONS 2,005
---------
GOODWILL RECORDED IN EXCHANGE $ 10,421
=========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. UNAUDITED FINANCIAL INFORMATION
The financial information as of June 30, 1998 and 1997, included herein is
unaudited; however, such information reflects, in the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) that are
necessary to present fairly the results of operations for such periods. Results
of operations for the interim periods are not necessarily indicative of results
of operations which will be realized for the year ending December 31, 1998.
These interim consolidated financial statements should be read in conjunction
with the Company's annual financial statements and related notes in the
Company's Form 10-K.
2. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share," which simplifies the computation of earnings per share (EPS). The
Company adopted SFAS No. 128 in the fourth quarter of 1997. SFAS No. 128
requires the restatement of prior years' EPS data; however, application of the
statement has no impact on the Company's prior years' EPS data.
Basic net income per share of common stock is calculated by dividing net
income applicable to common stock by the weighted-average number of common
shares outstanding during the year. Diluted net income per share is not
presented as stock options and convertible securities outstanding during the
periods presented were not dilutive.
3. RECENT ACCOUNTING PRONOUNCEMENTS
Accounting for Start-up Costs. During April 1998, the Accounting Standards
Executive Committee of the AICPA issued Statement of Position 98-5 ("SOP"),
"Reporting on the Costs of Start-Up Activities." The SOP requires costs of
start-up activities and organization costs to be expensed as incurred. The SOP
is effective for financial statements for fiscal years beginning after December
15, 1998. The Company elected to write off start-up costs in the fourth quarter
of 1997 in anticipation of the issuance of the SOP.
Accounting for Derivative Instruments and Hedging Activities. In June
1998, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities". The Statement establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
Statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting. SFAS 133 is
effective for fiscal years beginning after June 15, 1999 and must be applied to
instruments issued, acquired, or substantively modified after December 31, 1997.
The Company does not expect the adoption of the accounting pronouncement to have
a material effect on its financial position or results of operations.
4. MEDICARE REIMBURSEMENT REDUCTIONS AND RELATED RESTRUCTURING
The Company derives approximately 40% of its revenues from the Medicare
system. In 1997, Congress approved the Balanced Budget Act of 1997 (the "Budget
Act"). The Budget Act established an interim payment system (the "IPS") that
provided for the lowering of reimbursement limits for home health visits. For
cost reporting periods beginning on or after October 1, 1997, Medicare-
reimbursed home health agencies will have their cost
6
<PAGE>
limits determined as the lesser of (i) their actual costs, (ii) cost limits
based on 105% of median costs of freestanding home health agencies, or (iii) an
agency-specific per-patient cost limit, based on 98% of 1994 costs adjusted for
inflation. The new IPS cost limits will apply to the Company for the cost
reporting period beginning January 1, 1998. On March 31, 1998, the government
released its final determination and definitions of the new IPS cost limits.
These changes in the reimbursement of home health agencies will result in a
significant impact on the profitability of these services. There is currently
proposed legislation that may alter the determination of the IPS cost limits.
IPS was implemented to position the home care industry for a Prospective
Payment System (PPS) which is to be implemented for cost reporting periods
beginning on or after October 1, 1999. Although PPS is not defined at this
time, it will take into consideration an appropriate unit of service and number
of visits within that unit, variations in the acuity of patients and the related
costs, and a general system design that provides for continued access to quality
services.
During the 1st quarter of 1998, the Company initiated a restructuring plan
which included cost reductions and productivity enhancements to position the
Company to be successful under the new IPS, as well as PPS. The Company reduced
operational cost, increased operational efficiencies and enhanced marketing
efforts, which should result in projected annualized cost savings of
approximately $5 million. The restructuring was substantially completed as of
June 30, 1998.
The implementation of IPS and the strategic decisions made by management
has resulted in a decrease to net revenues in the first and second quarters of
1998. The Company also expects to report losses in the third quarter of 1998
due to IPS.
As the home care industry faces changes in reimbursement structure,
Amedisys is committed to improve and streamline systems and take appropriate
actions to combat these changes and create a company focused on long-term
growth.
5. ACCRUED PAYROLL AND PAYROLL TAXES
The Company currently has an Employee Stock Ownership Plan ("ESOP")
relating to a subsidiary of the Company. During the second quarter of 1998, the
Company issued stock in the subsidiary valued at $705,000 to the ESOP.
4. PLACEMENT OF PREFERRED STOCK
In March, 1998, Amedisys completed a secondary phase of its private
placement of $.001 par value convertible preferred stock pursuant to Regulation
D of the Securities Act of 1933. The Company issued an additional 350,000
shares at $10 per share for gross proceeds of $3.5 million. The Company has
used the proceeds of this placement to fund synergistic acquisitions within the
South East and South Central regions of the U.S. in order to accelerate the
growth of its fully integrated network of outpatient health care services
including the Alternate Site Infusion Therapy division. These shares are
convertible into 756,757 shares of common stock which is equivalent to $4.625
per share.
5. ACQUISITIONS
In January 1998, the Company acquired all of the stock of Alliance Home
Health, Inc. ("Alliance"), a home health care business with locations throughout
Oklahoma, in exchange for $300,000 and 194,286 shares of common stock. Of the
194,286 shares of Company common stock issued to the former owners of Alliance,
122,857 shares were placed in escrow as consideration for certain contingent
liabilities which may be asserted against the former stockholder of Alliance to
the extent such claims exceed $500,000 (singularly and/or in aggregate). The
contingent liabilities include any material misstatement or omission in any
representation or breach of any warranty, covenant or agreement of Alliance or
its stockholder, any Medicare liabilities, any liability from lawsuits or
arbitration, any payment to be made by Alliance pursuant to a previous
acquisition, or any liability specifically addressed in the
7
<PAGE>
purchase document. The escrow period expires December 31, 2003. The majority
stockholder of Alliance entered into a three year employment agreement and two
year non-compete and non-solicitation agreement with the Company. The employment
agreement was terminated in March 1998. The non-compete and non-solicitation
agreement is for a period of two years after the termination of the employment
agreement. The non-compete and non-solicitation agreement provides that the
employee will not divert any business from the Company or compete in the
business area defined as the State of Oklahoma. This restricted activity is in
relation to home health agencies or infusion-related business. Additionally, the
non-compete and non-solicitation agreement provides that the employee will not
solicit employees or clients from the Company. A Form 8-K was filed on July 23,
1998 relating to this acquisition and includes audited financial statements for
Alliance Home Health, Inc. as well as proforma financial statements for the
Company and Alliance Home Health, Inc. consolidated.
In February 1998, the Company acquired all of the stock of PRN, Inc.
("PRN"), a home infusion pharmacy business located in San Antonio, Texas, in
exchange for $430,000 and the assumption of $71,000 in debt. The Company has
agreed to pay additional consideration of up to $150,000 should PRN have annual
net revenues of $625,000 for the next two years. This additional consideration
is to be paid quarterly for a period of two years, bearing interest at 9% from
the date of acquisition. The sellers, a key employee and his spouse, executed a
non-compete and non-solicitation agreement at the date of closing for a period
of two years within Bexar County Texas, which includes San Antonio, and any
counties contiguous thereto. The non-compete and non-solicitation agreement
provides that the sellers will not divert any business from the Company or
compete with the Company; as well as, not solicit any employees or clients of
the Company. This restricted activity is in relation to home infusion pharmacy
business. The Company has retained the right to offset certain indemnifiable
liabilities against the additional consideration.
In February 1998, the Company acquired all of the stock of Infusion Care
Solutions, Inc. ("ICS") a home health care and infusion business, based in Baton
Rouge, Louisiana, in exchange for aggregate consideration of $500,000, of which
$375,000 was payable in cash at closing and $125,000 was payable pursuant to a
two year promissory note. The note bears interest at prime plus 1% with 24
equal monthly payments. The sole stockholder executed a non-compete and non-
solicitation agreement at closing for a period of two years from the date of the
exchange. The business area is defined as the Parishes of East Baton Rouge,
Assumption, West Baton Rouge, Livingston, and Ascension in the State of
Louisiana. The non-compete and non-solicitation agreement provides that the
sole stockholder will not divert any business from the Company or compete with
the Company, as well as, not solicit any employees or clients of the Company.
The restricted business activity is in relation to any infusion or pharmacy
business unless such business is related to nursing home patients or assisted
living patients. The Company has retained the right to offset certain
indemnifiable liabilities against the sums payable pursuant to the promissory
note.
In February 1998, the Company acquired substantially all of the assets of
Precision Health Systems, L.L.C. ("PHS") a home health care and infusion
business, based in Baton Rouge, Louisiana, in exchange for aggregate
consideration of $1,000,000, of which $750,000 was payable in cash at closing
and $250,000 is payable pursuant to a two year promissory note. The note bears
interest at 9.5% with equal payments due monthly. The Company has retained the
right to offset certain indemnifiable liabilities against the sums payable
pursuant to the promissory note. The majority stockholder of PHS entered into a
two year non-competition and non-solicitation agreement and a two year
consulting agreement with the Company. The non-compete and non-solicitation
agreement provides that the sole stockholder will not divert any business from
the Company or compete with the Company; as well as, not solicit any employees
or clients of the Company. The business area is defined as the Parishes of East
Baton Rouge, Assumption, West Baton Rouge, Livingston, and Ascension in the
State of Louisiana. The restricted business is in relation to any infusion or
pharmacy business unless such business is related to nursing home patients or
assisted living patients. The consulting agreement is in the amount of $50,000
per year, payable in equal monthly increments. The majority stockholder is to
assist the Company in developing referral sources and retain current referral
sources.
8
<PAGE>
In March 1998, the Company acquired certain assets and no liabilities,
contingent or certain, prior to the closing date, of StaffCor Staffing Services,
L.L.C. (StaffCor) in exchange for $30,000 cash and $20,000 in additional
consideration payable quarterly over two years, without interest. This
additional consideration is to be paid prorata based on net income of StaffCor
without any adverse changes due to purchaser's corporate headquarters expense,
additional capital expenditures or materially increased operating expense. The
assets acquired were a minimal amount of furniture and fixtures, the right to
the StaffCor Staffing Service name, and contracts to provide medical staffing to
hospitals and other health care providers. The seller entered into a two year
non-competition and non-solicitation agreement with the Company. The non-
compete and non-solicitation agreement is for the business area of Oklahoma,
Grady and Logan Counties in the State of Oklahoma relative to any supplemental
staffing business. The non-compete and non-solicitation agreement provides that
the sole stockholder will not divert any business from the Company or compete
with the Company; as well as, not solicit any employees or clients of the
Company. StaffCor is a medical staffing business located in Oklahoma City,
Oklahoma.
In April 1998, the Company acquired all of the stock of Home Health of
Alexandria, Inc., d/b/a Cornerstone Home Health (Cornerstone), a closely held
entity, in exchange for $20,000 cash. With this acquisition, the Company will
have home health agencies serving all the major metropolitan areas in Louisiana.
A key employee and former stockholder executed an employment agreement with the
Company for a two year period; along with a non-compete and non-solicitation
agreement. The non-compete and non-solicitation agreement provides that the key
employee will not divert any business from the Company or compete with the
Company; as well as, not solicit any employees or clients of the Company. The
business area covered by the non-compete and non-solicitation agreement is for
the Parishes of Allen, Avoyelles, Caldwell, Catahoula, Concordia, Evangeline,
Grant, LaSalle, Natchitoches, Rapides, St. Landry, and Winn and is relative to
home health agencies. The agreement is for a two year period after the key
employee is no longer employed by the Company. Cornerstone is a state
licensed, Medicare certified, JCAHO accredited home health agency in Alexandria,
Louisiana.
In April 1998, the Company acquired all of the stock of Quality Home
Health Care, Inc. (Quality), of Stilwell, Oklahoma. In exchange, the Company
paid $80,000 and issued 4,897 shares of Company common stock worth $20,000. A
key employee and former stockholder executed an employment agreement for two
years in conjunction with a non-compete and non-solicitation agreement for a
period of two years after employment with the Company is terminated. The non-
compete and non-solicitation agreement provides that the key employee will not
divert any business from the Company or compete with the Company; as well as,
not solicit any employees or clients of the Company. The business area covered
by the non-compete and non-solicitation agreement is for the Counties of Adair,
Cherokee, Delaware, Haskell, Leflore, Mayes, McIntosh, Muskogee, Sequoyah, and
Wagoner in the State of Oklahoma and is relative to home health agencies.
Quality is a state licensed, Medicare certified home health agency with three
locations serving eastern Oklahoma.
In April 1998, the Company acquired certain assets of Precision Home
Health Care, Inc., (Precision) in exchange for $1,250,000; consisting of an
$800,000 note payable at 9.5% due July 1, 1998, a $400,000 note payable at 9.5%
payable monthly for a period of two years, and $50,000 in liabilities for
capital improvements. The $800,000 note payable has subsequently been extended
to October 1, 1998. The assets acquired were furniture and fixtures, inventory,
rights to use the Precision business name, current patients, and leasehold
interests. At closing the sole stockholder (who was also the majority
stockholder in the February 1998 ICS and PHS acquisitions) executed a non-
compete and non-solicitation agreement. The sole stockholder entered into a two
year non-competition and non-solicitation agreement which provides that the sole
stockholder will not divert any business from the Company or compete with the
Company; as well as, not solicit any employees or clients of the Company. The
business area is defined as the Parishes of East Baton Rogue, Assumption, West
Baton Rouge, Livingston, and Ascension in the State of Louisiana. The
restricted business activity is in relation to any Medicare or Medicaid home
health care business unless such business is related to nursing home patients or
assisted living patients. Additionally, the stockholder executed a consulting
agreement with the Company to provided services related to patient advocation,
introduce the Company to referral sources, and advise and assist the Company
concerning Medicare regulations. The consulting agreement is for a period of
two years in the amount of $50,000, payable monthly. Precision is a state
licensed, Medicare certified home health agency operating in the Baton Rouge,
Louisiana area.
Each of the above transactions was accounted for as a purchase.
9
<PAGE>
8. INCOME TAXES
The Company recorded a tax benefit of 34% of pre-tax loss at June 30, 1998,
as the Company anticipates carrying back taxable losses to previous years in
which the Company paid income taxes or generating taxable income in future
periods to offset the first and second quarter 1998 losses.
9. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITY
The following unaudited table presents (in 000's) a summary of the
acquisitions completed during the first quarter of 1998 and a detail of the
acquisitions completed during the second quarter of 1998 as presented in the
supplemental schedule to the consolidated cash flow statement.
<TABLE>
<CAPTION>
Precision Quality Home
1st Quarter Home Home Health of
1998 Health, Health, Alexandria
Total Inc. Inc. Inc. Total
-------------- ----------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Supplemental schedule of non-cash investing activity:
Value of stock issued in exchange $ 874 $ 0 $ 20 $ 0 $ 894
Value of note payable issued in exchange 375 1,200 0 0 1,575
Cash acquired in exchange (123) (0) (132) (62) (317)
Working capital deficit acquired net of cash and cash
equivalents 3,272 0 306 (25) 3,553
Fair value of property, plant and equipment acquired (279) (102) 3 1 (385)
Fair value of other assets acquired (26) (0) 1 0 (27)
Long term debt assumed 2,998 0 2 69 3,069
Fair value of other liabilities assumed 54 0 0 0 54
------ ------- ----- ---- -------
Non cash portion of acquisitions 7,146 1,098 192 (20) 8,416
Cash payment for acquisition 1,905 0 80 20 2,005
------ ------- ----- ---- -------
Goodwill recorded in exchange $9,051 $ 1,098 $ 272 $ 0 $10,421
------ ------- ----- ---- -------
</TABLE>
10. NOTES PAYABLE
Notes payable consist primarily of borrowings under revolving bank lines of
credit of $7,500,000 and $750,000, bearing interest at bank prime plus 1.5% and
bank prime plus 1%, respectively. The lines of credit are collateralized by
80% of eligible receivables in staffing and outpatient surgery, 75% of eligible
receivables in home health care, and 80% of physician notes receivable.
Eligible receivables are defined principally as accounts that are aged less
than 90 days for staffing and outpatient surgery and 120 days for home health
care. At June 30, 1998, approximately $109,000 was available based on eligible
receivables under the combined lines of credit. The line of credit is subject to
certain covenants, including a monthly borrowing base, a debt service coverage
ratio, and a leverage ratio. At December 31, 1997, March 31, 1998, and June 30,
1998, the Company was in default on the debt service coverage ratio requirement
of 1.1 : 1.0 due to the losses incurred in these periods. This default was
waived by the bank through June 30, 1998.
11. OTHER CURRENT ASSETS
Included in Other Current Assets at June 30, 1998 is a deferred tax asset
of $2,279,000 resulting from the first and second quarter 1998 losses. The
Company anticipates carrying back taxable losses to previous years in which the
Company paid income taxes or generating taxable income in future periods to
offset the first and second quarter 1998 losses.
12. ACCRUED OTHER
Included in Accrued Other at June 30, 1998 is an accrual of $2,600,000 for
estimated Medicare reimbursement rate reductions for 1998 cost reporting years
related to the Home Health Nursing division.
10
<PAGE>
13. RECENT DEVELOPMENTS
On June 2, 1998, the Company signed a letter of intent to purchase a
portion of Columbia/HCA homecare operations subject to satisfactory completion
of due diligence and approval by the Board of Directors of both companies. The
homecare operations covered by the letter of intent are located in the states of
Alabama, Georgia, Louisiana, North Carolina, Oklahoma, and Tennessee and may
include up to 116 offices and 50 Medicare provider numbers. The Company is
currently conducting due diligence and negotiating with investment banks to
obtain financing for the purchase of these operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's results
of operations and financial condition. This discussion should be read in
conjunction with the Consolidated Financial Statements appearing in Item 1.
GENERAL
Amedisys, Inc. (the "Company") is a leading multi-regional provider of
fully integrated alternate-site health care services. The Company's
alternative-site provider services division offers the following services:
infusion therapy; home health nursing services; and ambulatory surgery centers.
Its management services division includes staffing and professional services and
provider management services. The Company operates 55 offices within a network
of subsidiaries in the southern United States.
During the 1st quarter of 1998, the Company initiated a restructuring
plan which included cost reductions and productivity enhancements to position
the Company to be successful under the new IPS, as well as PPS (See note 4 to
financial statements). The Company reduced operational costs, increased
operational efficiencies and enhanced marketing efforts, which should result in
projected annualized cost savings of approximately $5 million. The restructuring
was substantially completed as of June 30, 1998.
The implementation of IPS and the strategic decisions made by management
has resulted in a decrease to net revenues in the 1st and 2nd quarters of
1998. The Company also expects to reports losses in the 3rd quarter of 1998
due to IPS while showing improved operating results.
The Company is developing a restructuring strategy which includes focusing
on the core business of being a home health care provider of nursing and
infusion therapy services. As a result, the Company is currently evaluating
opportunities to divest its non-core businesses, including supplemental
staffing, ambulatory surgery centers, and management services division.
RESULTS OF OPERATIONS
Revenues. Net revenues decreased 15% and 10% for the three and six months
ended June 30, 1998 as compared to the same periods in 1997. Home Health
Nursing division's net revenues decreased $2,067,000 or 34% for the three months
ended June 30, 1998 and $3,241,000 or 26% for the six months ended June 30,
1998, as compared to the same periods in 1997. This decrease was due to the
reductions in Medicare reimbursement rates as a result of the IPS and a
reduction in visits, offset by acquisitions made during the periods. Visits
for the three month period ended June 30 decreased from 98,916 in 1997 to 68,205
in 1998, inclusive of the acquisitions made in the second quarter of 1998. For
the six months period ended June 30, visits decreased from 202,309 in 1997 to
167,349 in 1998, inclusive of the acquisitions made in the first and second
quarters of 1998. Offsetting these comparative decreases in net revenues in the
Home Health Nursing division were revenues relating to the acquisition of Care
Medical & Mobility in August 1997 and the startup and acquisitions in the
Alternative Site Infusion Therapy division. Care Medical & Mobility recorded
net revenues of $730,000 and $1,133,000 for the three and six month periods
ending June 30, 1998, and Alternate Site Infusion Therapy recorded net revenues
of $877,000 and $1,410,000 for the three and six month periods ending June 30,
1998.
11
<PAGE>
Cost of Revenues. Cost of revenues decreased by 18% and 10% for the three
and six months ended June 30, 1998 as compared to the same periods in 1997. As
a percentage of the net revenues, cost of revenues decreased to 57% in the three
months ended June 30, 1998 from 58% for the three months ended June 30, 1997.
For the six month periods ended June 1997 and 1998, cost of revenues as a
percentage of net revenues have remained consistent at 59%.
General and Administrative Expenses ("G&A"). General and administrative
expenses increased by 55% and 66% for the three and six months ended June 30,
1998 as compared to the same periods in 1997. An increase of $2,153,000 and
$4,382,000 for the three and six months ended June 30, 1998 is directly
attributable to additional personnel and related expenses to support the startup
of the Alternate Site Infusion Therapy division as well as the Company's recent
acquisitions. Additionally, G&A expenses increased approximately $438,000 and
$1,188,000 from the three and six months ended June 30, 1997 to 1998 due to the
addition of experienced, senior management and increased resources for marketing
and managed care sales. These additions should enable the Company to achieve
its planned growth and position it to be a leader in the alternate-site
healthcare services market.
Provision for Estimated Income Taxes. The Company recorded a tax benefit
of 34% of pre-tax loss for the six months ended June 30, 1998.
Net Income (Loss). As a result of the reasons described above, the Company
had a net loss of ($1,903,000) for the three months ended June 30, 1998 compared
with net income of $373,000 for the three months ended June 30, 1997. For the
six month period ending June 30, 1998, the Company recorded a net loss of
($4,424,000) as compared to net income of $674,000 for the same period in 1997.
The company expects the loss to be significantly reduced during the latter half
of 1998 after all the cost reductions are implemented; however, there can be no
assurance the Company will be able to achieve the expected cost savings from its
restructuring efforts or will be able to reduce costs without negatively
impacting operations.
LIQUIDITY AND CAPITAL RESOURCES
Notes payable consist primarily of borrowings under revolving bank lines of
credit of $7,500,000 and $750,000, bearing interest at bank prime plus 1.5% and
bank prime plus 1%, respectively. The lines of credit are collateralized by 80%
of eligible receivables in staffing and outpatient surgery, 75% of eligible
receivables in home health care, and 80% of physician notes receivable.
Eligible receivables are defined principally as accounts that are aged less
than 90 days for staffing and outpatient surgery and 120 days for home health
care. At June 30, 1998, approximately $109,000 was available based on eligible
receivables under the combined lines of credit. The line of credit is subject
to certain covenants, including a monthly borrowing base, a debt service
coverage ratio, and a leverage ratio. At December 31, 1997, March 31, 1998, and
June 30,1998, the Company was in default on the debt service coverage ratio
requirement of 1.1 : 1.0 due to the losses incurred in these periods. This
default was waived by the bank through June 30, 1998.
The Company's operating activities used $3,620,000 during the first six
months of 1998, whereas such activities provided $242,000 in cash during the
first six months of 1997. This increase in cash used in operating activities
is primarily attributable to net losses partially offset by a decrease in
accounts receivable. Net cash used in investing activities increased to
$3,602,000 from $703,000 for the six months ending June 30, 1998 and 1997
respectively. Purchases of furniture, fixtures and equipment increased $871,000
in addition to $2,005,000 used to purchase several acquisitions. Net cash
provided by financing activities increased to $3,623,000 from $1,818,000 for the
six months ending June 30, 1998 and 1997, respectively. The change is primarily
due to a proceeds from a private placement of preferred stock.
At June 30, 1998, the Company had negative working capital of ($3,804,000)
and stockholder's equity of $8,763,000. The Company's ratio of total
liabilities to equity at June 30, 1998 was 2.5 to 1.0. The Company's sources of
external and internal financing are limited. The Company will need to obtain
additional financing in order to meet future capital requirements or complete
further acquisitions.
12
<PAGE>
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities". The Statement establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
Statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting. SFAS 133 is
effective for fiscal years beginning after June 15, 1999 and must be applied to
instruments issued, acquired, or substantively modified after December 31, 1997.
The Company does not expect the adoption of the accounting pronouncement to have
a material effect on its financial position or results of operations.
YEAR 2000 COMPLIANCE ISSUES
The Company is currently evaluating its information system for the Year
2000 compliance. The Company does not anticipate any material disruption in its
operations resulting from any failure by the Company to achieve compliance. At
present, the Company does not have, but expects to solicit, information
concerning the Year 2000 compliance status of its suppliers, customers, and
payors. In the event that any of the Company's significant suppliers,
customers, or payors does not successfully and timely achieve Year 2000
compliance, the Company's business or operations could be adversely affected.
FORWARD LOOKING STATEMENTS
When included in the Quarterly Report on Form 10-Q or in documents
incorporated herein by reference, the words "expects", "intends", "anticipates",
"believes", "estimates", and analogous expressions are intended to identify
forward-looking statements. Such statements inherently are subject to a variety
of risks and uncertainties that could cause actual results to differ materially
from those projected. Such risk and uncertainties include, among others,
general economic and business conditions, current cash flows and operating
deficits, debt services needs, adverse changes in federal and state laws
relating to the health care industry, competition, regulatory initiatives and
compliance with governmental regulations, customer preferences and various other
matters, many of which are beyond the Company's control. Theses forward-looking
statements speak only as of the date of the Quarterly Report on Form 10-Q. The
Company expressly disclaims any obligation or undertaking to release publicly
any updates or any changes in the Company's expectations with regard thereto or
any changes in events, conditions or circumstances on which any statement is
based.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
During the second quarter of 1998, the Company's Nasdaq trading symbol was
changed from "AMED" to "AMEDE". This trading symbol change resulted from the
Company's lack of compliance with Nasdaq criteria pertaining to net tangible
assets as a result of acquisitions and operating losses in the first and second
quarters of 1998.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
At June 30, 1998, the Company was in default on the $7,500,000 revolving
bank line of credit. The line of credit is collateralized by accounts
receivable and is subject to certain covenants, including a monthly borrowing
base, a debt service coverage ratio, and a leverage ratio. The Company was in
default on the debt service coverage ratio requirement of 1.1 : 1.0 due to the
losses incurred in these periods. This default was waived by the bank.
13
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
No. Identification of Exhibit
- -------- -------------------------
2.1 --- Stock Purchase Agreement by and among Amedisys Specialized
Medical Services, Inc., Quality Home Health Care, Inc., Frances
Unger, and James Unger dated May 1, 1998.
2.2 --- Asset Purchase Agreement by and among Amedisys Specialized
Medical Services, Inc., and Precision Home Health Care, Inc.
dated May 1, 1998.
2.3 --- Promissory note in the amount of $800,000 to Precision Home
Health Care, Inc. in connection with the purchase of the company.
2.4 --- Promissory note in the amount of $400,000 to Precision Home
Health Care, Inc. in connection with the purchase of the company.
27.1 --- Financial Data Schedule
(b) Report on Form 8-K
No reports on form 8-K were filed during the second quarter of 1998.
14
<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: August 14, 1998
15
<PAGE>
EXHIBIT 2.1
EXCHANGE AGREEMENT
BY
AND
AMONG
AMEDISYS SPECIALIZED MEDICAL SERVICES, INC.,
A LOUISIANA CORPORATION
AND
QUALITY HOME HEALTH CARE, INC.,
AN OKLAHOMA CORPORATION
AND
FRANCES UNGER
AND
JAMES UNGER
<PAGE>
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is made effective as of May 1,
1998, by and between AMEDISYS, SPECIALIZED MEDICAL SERVICES, INC., a Louisiana
corporation, with its principal place of business at 3029 South Sherwood Forest
Blvd., Suite 300, Baton Rouge, Louisiana 70816 ("AMED") and QUALITY HOME HEALTH
CARE, INC., an Oklahoma corporation with its principal place of business at 110
West Maple, Stillwell, Oklahoma, 74960 (the "Company"), and FRANCES UNGER and
JAMES UNGER (collectively, the "Stockholders"). AMED, the Company and the
Stockholders are sometimes referred to collectively as the "Parties."
RECITALS
WHEREAS, AMED desires to exchange shares of its common stock for 100% of
the issued and outstanding capital stock of the Company ("Company Stock") from
the Stockholders as hereinafter provided and the Stockholders desire to effect
such exchange; and
NOW, THEREFORE, in consideration of the premises and the mutual promises
made herein, and in consideration of the representations, warranties, and
covenants contained herein, the Parties agree as follows:
1. Definitions. As used in this Agreement, the following terms have the
meanings indicated:
1.01. Closing: The consummation of the transactions contemplated by
this Agreement.
1.02. GAAP: Generally accepted accounting principles.
1.03. Health Care Laws: All federal, state and local laws, regulations
and ordinances related to the business of the Company including but not
limited to Medicaid, Medicare and regulations of the Health Care Finance
Administration.
1.04. Knowledge: means actual knowledge after reasonable investigation.
1.05. Material Adverse Effect: Any change in the financial condition or
operation of the business that would materially affect the Company's
business adversely, including, but not limited to, material changes to
management, business conditions, or financial condition.
1.06. Operating Licenses: Licenses, permits and registrations issued by
the appropriate state and federal agencies, which are necessary to the
operation of the Company's business. Such Operating Licenses are more
fully described in Schedule 3.11 hereto.
2
<PAGE>
2. Terms of Exchange. On the basis of the representations, warranties,
covenants, and agreements contained in this Agreement and subject to the terms
and conditions of this Agreement:
2.01. Transfer. The Stockholders shall assign, transfer and convey at
the Closing the Company Stock, representing 100% of the issued and outstanding
capital stock of the Company, to AMED. The Stockholders shall deliver, at
Closing, Stock Powers in the form attached hereto as Schedule 2.01, letters of
Non-distributive Intent attached hereto as Schedule 5.08 and any other documents
required by this Agreement.
2.02. Consideration. The purchase price of the Company Stock shall be
ONE HUNDRED THOUSAND AND NO/100 ($100,000.00) DOLLARS, to be paid as follows:
2.02.01 AMED will pay Stockholders EIGHTY THOUSAND AND NO/100
($80,000.00) DOLLARS cash at closing; and
2.02.02 AMED shall deliver, and the Stockholders shall be entitled to
receive, the number of shares of Amedisys, Inc. common stock
produced from a fraction, the numerator of which shall be TWENTY
THOUSAND AND NO/100 ($20,000.00) DOLLARS and the denominator of
which shall be the average of the last sales price for the ten
(10) trading days prior to the date of the Closing.
2.03. The Company Stock referred to in Section 2.01. and the
consideration to be paid by AMED referred to in Section 2.02. shall constitute
all of the consideration to be paid in connection with the transactions
contemplated by this Agreement.
2.04. If, for the twelve month period commencing May 1, 1998 and ending
April 30, 1999, the Company has averaged twenty-five (25) patient admits per
month (company-wide), then AMED shall pay to Frances Unger as additional
consideration for her stock, the amount of $12,500.00, payable by May 31, 1999.
Additionally, if for the twelve month period commencing May 1, 1999 and ending
April 30, 2000, the Company has averaged twenty-five (25) patient admits per
month (company-wide), then AMED shall pay to Frances Unger as additional
consideration for her stock, the amount of $12,500, payable by May 31, 2000.
2.05. The Closing. The Closing of the transactions contemplated by
this Agreement shall be on or before May 1, 1998, and shall be made effective on
May 1, 1998.
3. Representations and Warranties of the Company and the
Stockholders. The Company and the Stockholders hereby agree, represent, and
warrant to AMED, on the date of this Agreement and on the Closing Date, as
follows:
3.01. Organization and Qualification. The Company does not own any
interest in any other business enterprise or legal entity, except as disclosed
in Schedule 3.01. Schedule 3.01 also correctly
3
<PAGE>
sets forth as to the Company its state of incorporation, principal place of
business, and jurisdictions in which it is qualified to do business. The Company
is an Oklahoma corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation, with all requisite
power and authority to conduct its business and is not in breach of, or in
default with respect to, any term of its Certificate of Incorporation, Bylaws or
other organizational documents, except where such breach would not have a
Material Adverse Effect. The Company has obtained all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits of and
from, and declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals, to own, lease,
license, and use its properties and assets and to carry on the business in which
it is now engaged and the business in which it contemplates engaging, except
where the failure to do so would not have a Material Adverse Effect. The Company
is duly qualified to transact the business in which it is engaged in every
jurisdiction in which its ownership, leasing, licensing, or use of property or
assets or the conduct of its business makes such qualification necessary, except
where the failure to do so would not have a Material Adverse Effect.
3.02. Capitalization. The Stockholders own 2000 shares of the Company
Stock, which constitutes all of the outstanding capital stock of Company. The
Company Stock is not owned or held in violation of any preemptive right of any
other person or entity, is validly authorized, validly issued, fully paid and
non-assessable, and is owned of record and beneficially by the Stockholders. The
shares of Company Stock held by the Stockholders are free and clear of all
liens, security interests, pledges, charges, encumbrances, voting agreements,
and voting trusts. There is no commitment, plan, or arrangement to issue, and
no outstanding option, warrant, or other right calling for the issuance of, any
shares of capital stock of the Company or any security or other instrument
convertible into, exercisable for, or exchangeable for capital stock of the
Company. There is outstanding no security or other instrument convertible into
or exchangeable for capital stock of the Company.
3.03. Due Authorization; Third Party Consents. The Company has the
right, power, legal capacity, and authority to enter into and perform its
obligations under this Agreement and, except as set forth on Schedule 3.03 to
this Agreement, no approval or consent of any person other than the Company is
necessary in connection with the execution, delivery, or performance of this
Agreement. The execution, delivery, and performance of this Agreement by the
Company has been duly authorized by its board of directors and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement constitutes a legal and binding obligation of the Company, and is
valid and enforceable against the Company in accordance with its terms except
that (i) the enforcement of certain rights and remedies created by this
Agreement is subject to bankruptcy, insolvency, reorganization, and similar laws
of general application affecting the rights and remedies of parties, (ii) the
enforceability of any particular provision of this Agreement under principles of
equity or the availability of equitable remedies, such as specific performance,
injunctive relief, waiver or other equitable remedies, is subject to the
discretion of courts of competent jurisdiction, and (iii) any court or
administrative body may refuse to enforce the choice of law provision of Section
9.12 of this Agreement.
4
<PAGE>
3.04. Litigation. Except as set forth in Schedule 3.04, there is not
any suit, action, arbitration, or legal, administrative, or other proceeding or
governmental investigation (formal or informal), pending or to the best of
Company's or Stockholders' Knowledge threatened (or any basis therefor known to
the Company or the Stockholders), with respect to the Company or the
Stockholders (as it relates to the business of the Company), including but not
limited to any action or claim under any federal, state, local or other
governmental act, rule, regulation, or any interpretations thereof, relating to
environmental matters or the protection of the safety and health of persons
connected with the Company's business (including but not limited to the
transportation, treatment, storage, recycling, disposal, or release into the
environment of hazardous or toxic materials or waste), or any basis on which any
proceeding or investigation against the Company or the Stockholders might
reasonably be undertaken or brought. The Company and the Stockholders have
informed AMED of, and upon request has furnished or made available to AMED
copies of all relevant court papers and other documents relating to, the matters
set forth in Schedule 3.04. Included in Schedule 3.04 is a list of all suits,
actions, arbitrations, or other proceedings or investigations in which the
Company has been involved during the five year period immediately preceding the
Closing. The Company is not presently engaged in any legal action to recover
monies due to the Company, for damages sustained by the Company, or amounts owed
to the Company, except as set forth on Schedule 3.04. During the five year
period immediately preceding the Closing, the Company has neither received nor
been a party to any written notice of violations, orders, claims, citations,
complaints, penalties, assessments, court, or other proceedings, administrative,
civil or criminal, at law or in equity, with respect to any Health Care Law. In
addition, to the Company's and Stockholders' Knowledge, the Company has neither
received nor been party to any written notice of violations, orders, claims,
citations, complaints, penalties, assessments, court, or other proceedings,
administrative, civil or criminal, at law or in equity, with respect to any
alleged violations of any other federal, state, or local environmental law,
regulation, ordinance, standard, permit, or order in connection with the conduct
of its business or otherwise during the past five years.
3.05. Employees. The Company does not have, or contribute to, any
pension, profit-sharing, option, other incentive plan, or other Employee Benefit
Plan (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974), or has any obligation to or customary arrangement with employees for
bonuses, incentive compensation, vacations, severance pay, insurance, or other
benefits, except as set forth in Schedule 3.05. Schedule 3.05. contains a true
and correct statement of the names, relationship with the Company, present rates
of compensation (whether in the form of salary, bonuses, commissions, or other
supplemental compensation now or hereafter payable), and aggregate compensation
for the fiscal year ended December 31, 1997 of each Stockholders, and the three
highest paid employees of the Company. Since December 31, 1997, the Company has
not changed the rate of compensation of any of its stockholders, employees,
agents, dealers or distributors, except as disclosed in Schedule 3.05.
3.06. No Violation of Employee Contracts. To the Knowledge of the
Company or the Stockholders, no employee of the Company is in violation of any
term of any employment contract, non-competition agreement, or any other
contract or agreement or any restrictive covenant with, or
5
<PAGE>
any other common law obligation to, a former employer relating to the right of
any such employee to be employed by the Company because of the nature of the
business conducted by the Company or of the use of trade secrets or proprietary
information of others. There is neither pending nor, to the Knowledge of the
Company or the Stockholders, threatened, any actions, suits, proceedings, or
claims with respect to any contract, agreement, covenant, or obligation referred
to in the preceding sentence, except as listed in Schedule 3.04.
3.07. Insurance. Schedule 3.07 sets forth an accurate and complete
list and brief description of all policies of fire and extended coverage,
liability, and the forms of similar insurance or indemnity bonds held by the
Company. The Company is not in default with respect to any provisions of any
such policy or indemnity bond and has not failed to give any notice or present
any claim thereunder in due and timely fashion, which failure or failures to
give such notice or present such claim, individually or in the aggregate, could
have a Material Adverse Effect on the business of the Company. All such policies
and bonds are (i) in full force and effect, (ii) with insurance companies
believed by the Company and the Stockholders to be financially sound and
reputable, (iii) are sufficient for compliance by the Company with all
requirements of law and of all agreements and instruments to which the Company
is a party, (iv) provide that they will remain in full force and effect through
the respective dates set forth in Schedule 3.07, and (v) will not in any
significant respect be affected by, and will not terminate or lapse by reason
of, the transactions contemplated by this Agreement. Schedule 3.07 sets forth
an accurate and complete list of all accident or other liability claims received
by or known by the Company and the Stockholders for the three year period
immediately preceding the Closing, as well as a description of the status of
each such claim. Such claims are covered by one or more insurance policies set
forth in Schedule 3.07.
3.08. Contracts, Agreements and Instruments. Schedule 3.08 accurately
and completely sets forth the information required to be contained therein. The
Company has furnished to AMED:
3.08.01. The Certificate of Incorporation, Bylaws and other
organizational documents of the Company and all amendments
thereto, as presently in effect, certified by the president of
the Company;
3.08.02. True and correct copies of all material contracts,
agreements and other instruments referred to in Schedule 3.08;
3.08.03. True and correct written descriptions of all service, material
supply, distribution, agency, financing or other arrangements
or understandings referred to in Schedule 3.08 involving an
obligation on the part of the Company in excess of $5,000.
Except for matters which, in the aggregate, would not have a Material Adverse
Effect or are otherwise disclosed in the Agreement, to the Knowledge of the
Company and the Stockholders, no other party to any such contract, agreement,
instrument, leases, or license is now in violation or breach of, or in default
with respect to complying with, any material provision thereof, and each such
6
<PAGE>
contract, agreement, instrument, lease, or license contained in the Schedules
hereto is in full force and effect and is the legal, valid, and binding
obligation of the parties thereto and is enforceable as to them in accordance
with its terms. Each such service, supply, distribution, agency, financing, or
other arrangement or understanding contained in the Schedules hereto is a valid
and continuing arrangement or understanding, except for matters which, in the
aggregate, would not have a Material Adverse Effect; neither the Company, the
Stockholders, nor any other party to any such arrangement or understanding has
given notice of termination or taken any action inconsistent with the
continuance of such arrangement or understanding, except for matters which, in
the aggregate, would not have a Material Adverse Effect; and the execution,
delivery, and performance of this Agreement will not prejudice any such
arrangement or understanding in any way contained in the Schedules hereto,
except for matters which, in the aggregate, would not have a Material Adverse
Effect. The Company is not a member of a customer or user organization or of a
trade association which relationship would be materially affected by the
execution and performance of this Agreement.
3.09. Compliance With Laws. The Company has complied with, and is not
in violation of any (i) term or provision of its Certificate of Incorporation or
Bylaws; or (ii) to the Company's and the Stockholders' Knowledge, term or
provision of any applicable judgment, decree, order, statute, injunction, rule,
ordinance; (iii) to the Company's and the Stockholders' Knowledge, any Health
Care Law; or (iv) or the Company's and the Stockholders' Knowledge, foreign,
United States, state or local statutes, laws, rules, or regulations.
3.10. Financial Condition. The Company has delivered to AMED true and
correct copies of the following: the balance sheet ("the Company's Last Balance
Sheet") dated as of December 31, 1997 ("the Company's Last Balance Sheet Date"),
and a statement of income, statement of cash flows and consolidated statement of
the Company for the twelve month period ended December 31, 1997, 1996 and 1995.
Each such balance sheet presents fairly the financial condition, assets and
liabilities of the Company as of its date; each such statement of income
presents fairly the results of operations of the Company for the period
indicated; and each statement of cash flows presents fairly the information
purported to be shown therein. The financial statements referred to in this
Section 3.10 have been prepared in accordance with GAAP consistently applied
throughout the periods involved, are correct and complete in all material
respects, and are in accordance with the books and records of the Company. The
Stockholders shall have the right to amend Company's income taxes for the years
1994, 1995, and 1996, in accordance with IRS Code Section 45, related to Indian
Employment Credit.
3.11. Permits and Licenses. The Company has all permits, licenses, and
other similar authorizations necessary for the conduct of its business as now
being conducted by it, and it is not in default in any respect under any such
permits, licenses, or authorizations. All permits, licenses, and other similar
authorizations necessary for the conduct of the Company's business as now being
conducted by it are as set forth in Schedule 3.11. Except as set forth in
Schedule 3.11, no royalties, commissions, or fees are payable by the Company to
any person by reason of the ownership or use of any intangible property. The
Company is the sole and exclusive owner of all of its assets, does not use any
of its assets by the consent of any other person and is not required to and does
not make
7
<PAGE>
any payments to others with respect thereto. Except as set forth in Schedule
3.11, there are no material licenses, sub-licenses, or agreements relating to
the use of any intangible property now in effect, and the Company and the
Stockholders have no Knowledge that any intangible property is being infringed
by others. Except as listed in Schedule 3.04, no claim that would have a
Material Adverse Effect on the business of the Company is pending or, to the
Knowledge of the Company, threatened, or has been made since the Company's
inception to the effect that, nor does the Company have any Knowledge that the
operation of the Company's business or any method, process, part, or material
that the Company employs, conflicts in any material way with, or infringes in
any material way upon any rights of the type enumerated above, owned by others.
3.12. Properties. The Company has good and marketable title to all
properties and assets used in its business or owned by it (except such real and
other property and assets as are held pursuant to leases or licenses described
in Schedule 3.12), free and clear of all liens, mortgages, security interests,
pledges, charges, and encumbrances (except such as are disclosed in Schedule
3.12 or disclosed on the Company Last Balance Sheet).
3.12.01. Attached as Schedule 3.12 is a true and complete list of all
properties and assets owned, leased, or licensed by the Company
having an individual or aggregate value of $5,000 or more,
including with respect to such properties and assets leased or
licensed by the Company, a description of such lease or license.
All such properties and assets owned by the Company are reflected
on the Company Last Balance Sheet. All properties and assets
owned, leased, or licensed by the Company are in good and usable
condition (reasonable wear and tear, which is not such as to have
a Material Adverse Effect on the operation of the business of the
Company, excepted). Both parties agree and acknowledge that the
four (4) company automobiles will become the property of
Stockholders, who will assume any liabilities associated
therewith, prior to the Closing;
3.12.02. The properties and assets owned, leased, or licensed by the
Company constitute all such properties and assets which are
necessary to the business of the Company as presently conducted
or as it contemplates conducting;
3.12.03. No real property owned, leased or licensed by the Company lies in
an area which is, to the Knowledge of the Company or any
Stockholders, or will be subjected to zoning, use or building
code restrictions which would prohibit, and no stated facts
relating to the actions or inaction of another person or entity
of his or its ownership, licensing, leasing, or use of any real
or personal property exists or will exist which would prevent,
the continued effective ownership, leasing, licensing or use of
such real property in the business in which the Company is now
engaged or the business in which it contemplates engaging; and
8
<PAGE>
3.12.04. All accounts and notes receivable reflected on the Company's Last
Balance Sheet, and arising since the Company's Last Balance Sheet
Date, have been collected, or are and will be good and
collectible, in each case at the aggregate amount of at least
eighty (80%) percent of the recorded amounts thereof without
right of recourse, defense, deduction, return of goods,
counterclaim, offset, or setoff on the part of the obligor, and,
if not collected, can reasonably be anticipated to be paid within
90 days of the date incurred. Those receivables which are
Medicare reimbursables are warranted at the Medicare
reimbursement rate. The Stockholders shall have the right to
appeal all Medicare reimbursement denials in coordination with
Company. Company shall give Stockholders notice of any such
denial within three (3) days of Company's receipt of notice
thereof. The right of Stockholders to appeal said denials shall
cease on December 31, 1998.
3.13. Hazardous Materials. Except as disclosed on Schedule 3.13, the
Company is not in the business of possession, transportation, or disposal of
hazardous materials. If and to the extent that the Company's business has
involved the possession, transportation, or disposal of hazardous materials, to
the best of the Company's and the Stockholders' Knowledge the Company has
complied with any and all applicable laws, ordinances, rules, and regulations
and has not and will not be the basis of any claim or proceeding against, or any
liability of, the Company with respect to the period prior to the Closing. To
the Knowledge of the Company and the Stockholders, no employee of the Company
has been exposed to hazardous materials such that exposure could cause damage to
such employee.
3.14. Interest in Competitors. Except as set forth in Schedule 3.14
to this Agreement, no shareholder, officer, director, or employee of the
Company, nor any spouse or child of any shareholder, officer, director, or any
employee with authority to enter into contracts on behalf of the Company, has
any direct or indirect interest in any competitor, supplier, or customer of the
Company or in any person from whom or to whom the Company leases any real or
personal property, or in any other person with whom the Company is doing
business.
3.15. Tax and Other Liabilities. The Company does not have any present
liability of any nature, accrued or contingent, including, without limitation,
liabilities for federal, state, local, or foreign taxes and liabilities to
customers or suppliers, which could have a Material Adverse Effect upon the
Company, other than the following:
i. Liabilities for which full provision has been made on the
Company's Last Balance Sheet as of the Company's Last Balance
Sheet Date; and
ii. Other liabilities arising since the Company's Last Balance Sheet
Date and prior to the Closing in the ordinary course of business
which are not inconsistent with the representations and
warranties of the Company or any other provision of this
Agreement.
9
<PAGE>
Without limiting the generality of the foregoing, the amounts set forth as
provisions for taxes on the Company's Last Balance Sheet are sufficient for all
accrued and unpaid taxes of the Company, whether or not due and payable and
whether or not disputed, under tax laws, as in effect on the Company's Last
Balance Sheet Date or now in effect, for the period ended on such date and for
all fiscal years prior thereto. The Company has filed all applicable tax
returns required to be filed by it or has obtained applicable extensions and are
not delinquent with respect to such extensions; have paid (or have established
on the Company's Last Balance Sheet a reserve for) all taxes, assessments, and
other governmental charges payable or remittable by it or levied upon it or its
properties, assets, income, or franchises, which are due and payable and have
delivered to the Company a true and correct copy of any report as to adjustments
received by the Company from any taxing authority during the past five years and
a statement as to any litigation, governmental or other proceeding (formal or
informal), or investigation pending.
3.16. Changes or Events. Except as set forth in Schedule 3.16, since
the Company's Last Balance Sheet Date, none of the following has occurred:
3.16.01. Any material transaction by the Company not in the ordinary
course of business involving amounts in excess of $5,000;
3.16.02. Any material capital expenditure by the Company involving
amounts in excess of $5,000;
3.16.03. Other than in the ordinary course of business, any changes in
the condition (financial or otherwise), liabilities, assets,
or business or in any business relationships of the Company,
including relationships with suppliers or customers, that,
when considered individually or in the aggregate, might
reasonably be expected to have a Material Adverse Effect;
3.16.04. The destruction of, damage to, or loss of any asset of the
Company (regardless of whether covered by insurance) that,
when considered individually or in the aggregate, might
reasonably be expected to have a Material Adverse Effect;
3.16.05. Any labor disputes that, when considered individually or in
the aggregate, might reasonably be expected to have a Material
Adverse Effect;
3.16.06. Except as listed on Schedule 3.16., there have been no changes
in accounting methods or practices (including, without
limitation, any change in depreciation or amortization
policies or rates) by the Company, except for any such changes
as were required by law;
3.16.07. Other than in the ordinary course of business, any increase in
the salary or other compensation payable or to become payable
by the Company to any employee, or the declaration, payment,
or commitment or obligation of any kind for
10
<PAGE>
the payment by the Company of a bonus or other additional
salary or compensation to any such person;
3.16.08. The material amendment or termination of any material
contract, agreement, or license to which the Company is a
party, except in the ordinary course of business;
3.16.09. Any loan by the Company to any person or entity, or the
guaranteeing by the Company of any loan other than loans made
in the ordinary course of business;
3.16.10. Any mortgage, pledge, or other encumbrance of any asset of the
Company except in the ordinary course of business;
3.16.11. The waiver or release of any right or claim of the Company,
except in the ordinary course of business;
3.16.12. Any loss or, to the Knowledge of the Company or the
Stockholders, any threatened loss of any permit, license,
qualification, special charter or certificate of authority
held or enjoyed or formerly held or enjoyed by the Company
which loss has had or upon occurrence might reasonably be
expected to have a Material Adverse Effect;
3.16.13. To the Knowledge of the Company and the Stockholders, any
statute, regulation, order, ordinance or other law the
adoption or rescission of which might reasonably be expected
to have a Material Adverse Effect;
3.16.14. Any failure on the part of the Company to operate its business
in the ordinary course and consistent with past practices so
as to preserve its business organization intact, to retain the
services of its employees and to preserve its goodwill and
relationships with suppliers, creditors, customers, and others
having business relationships with it;
3.16.15. To the Knowledge of the Company and the Stockholders, any
action taken or omitted to be taken by the Company which would
cause (after lapse of time, notice or both) the breach,
default, or acceleration of any right, contract, commitment,
or other obligation of the Company which would have a Material
Adverse Effect; or
3.16.16. Any agreement by the Company to do any of the things described
in the preceding clauses 3.16.01 through 3.16.15.
11
<PAGE>
3.17. No Defaults. Except as set forth in Schedule 3.17, the consummation of
the transactions contemplated by this Agreement will not result in or constitute
any of the following: (i) a breach of any term or provision of any other
agreement of the Company that will not be waived or released at Closing; (ii) a
default or an event that will not be waived or released at Closing, and that,
with notice or lapse of time or both, would be a default, breach, or violation
of the Certificate of Incorporation or Bylaws of the Company or of any lease,
license, promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust, or other agreement, instrument, or arrangement to which
the Company is a party or by which the Company or its assets are bound; (iii) an
event that will not be waived or released at Closing and that would permit any
party to terminate any agreement or to accelerate the maturity of any
indebtedness or other obligation of the Company; (iv) the creation or imposition
of any lien, charge, or encumbrance on any of the Company's assets; or (v) a
violation of any law or any rule or regulation of any administrative agency or
governmental body unrelated to the business or profession of health care and any
profession related to health care, of any order, writ, injunction or decree of
any court, administrative agency or governmental body to which the Company is
subject. Stockholders shall not be responsible for any liability associated with
approvals required by any administrative or governmental body related to change
of ownership or control.
3.18. No Prohibited Payments. Neither the Company nor any employee, or
agent of the Company, has made or authorized any payment of funds of the Company
or on behalf of the Company prohibited by law and no funds of the Company have
been set aside to be used for any payment prohibited by law.
3.19. Non-Distributive Intent. The Stockholders are receiving the shares of
AMED's Common Stock to be issued hereunder to them for their own account (and
not for the account of others) for investment and not with a view to the
distribution thereof. Neither the Company nor any Stockholders will sell or
otherwise dispose of such shares without registration under the Securities Act
of 1933, as amended (the "Act"), or an exemption therefrom, and the certificate
or certificates representing such shares will contain a legend to the foregoing
effect. The Company and the Stockholders further acknowledge and agree that
unless the resale of the shares is registered under the Act, such resale must be
made pursuant to Rule 144 under the Act. Each Stockholder understands that they
may not sell or otherwise dispose of such shares in the absence of either a
registration statement under the Act or an exemption from the registration
provisions of the Act.
3.20. Completeness of Disclosure. No representation or warranty and no
Schedule, Exhibit, or certificate prepared by the Company pursuant hereto and no
statement made or other document prepared by the Company and furnished to AMED
by the Company contains any untrue statement of a material fact or omits or will
omit any material fact necessary in order to make the statements contained
therein not misleading.
4. Representations and Warranties of AMED. AMED hereby agrees,
represents, and warrants to the Stockholders, on the date of this Agreement and
on the Closing Date, as follows:
12
<PAGE>
4.01. Organization. AMED is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Louisiana and
authorized to carry on business in every other jurisdiction in which its
ownership, leasing, licensing, or use of property or assets or the conduct of it
business makes such qualification necessary, except where the failure to do so
would not have a Material Adverse Effect.
4.02. Due Authorization; Third Party Consents. AMED has the right, power,
legal capacity, and authority to enter into and perform its obligations under
this Agreement and, except as set forth on Schedule 4.02 to this Agreement, no
approval or consent of any person other than AMED is necessary in connection
with the execution, delivery, or performance of this Agreement. The execution,
delivery, and performance of this Agreement by AMED has been duly authorized by
its board of directors and no other corporate proceedings on the part of AMED
are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement constitutes a legal and
binding obligation of AMED, and is valid and enforceable against AMED in
accordance with its terms except that (i) the enforcement of certain rights and
remedies created by this Agreement is subject to bankruptcy, insolvency,
reorganization, and similar laws of general application affecting the rights and
remedies of parties, (ii) the enforceability of any partic ular provision of
this Agreement under principles of equity or the availability of equitable
remedies, such as specific performance, injunctive relief, waiver or other
equitable remedies, is subject to the discretion of courts of competent
jurisdiction, and (iii) any court or administrative body may refuse to enforce
the choice of law provision of Section 9.12 of this Agreement.
4.03. No Violation. The consummation of the transactions contemplated by
this Agreement will not result in or constitute any of the following: (i) a
breach of any term or provision of any other agreement of AMED that will not be
waived or released at Closing; (ii) a default or an event that will not be
waived or released at Closing and that, with notice or lapse of time or both,
would be a default, breach, or violation of the Certificate of Incorporation or
Bylaws of AMED or of any lease, license, promissory note, conditional sales
contract, commitment, indenture, mortgage, deed of trust, or other agreement,
instrument, or arrangement to which AMED is a party or by which AMED or the
property of AMED is bound; or (iii) a violation of any law or any rule or
regulation of any administrative agency or governmental body or any order, writ,
injunction, or decree of any court, administrative agency or governmental body
to which AMED is subject.
4.04. Compliance With Laws. To the best of its knowledge AMED has complied
with, and is not in violation of any (i) term or provision of its Certificate of
Incorporation or Bylaws; (ii) term or provision of any applicable judgment,
decree, order, statute, injunction, rule, ordinance; (iii) any Health Care Law;
or (iv) foreign, United States, state or local statutes, laws, rules, or
regulations.
4.05. AMED Stock. All of the shares of Amedisys, Inc. common stock to be
issued to the Stockholders hereunder will, upon delivery, be duly authorized and
validly issued, fully paid and non-assessable and issued in compliance with
federal and state securities laws, free and clear of all liens charges,
restrictions, mortgages, security interests or claims of any kind, except those
restrictions regarding transfer pursuant to Rule 144 of the Act.
13
<PAGE>
4.06. Completeness of Disclosure. No representation or warranty and no
Schedule, Exhibit, or certificate prepared by AMED pursuant hereto and no
statement made or other document prepared by AMED and furnished to the Company
by AMED contains any untrue statement of a material fact or omits or will omit
any material fact necessary in order to make the statements contained therein
not misleading.
5. Conditions to Obligations of AMED. The obligations of AMED under this
Agreement are subject, at the option of AMED, to the following conditions:
5.01. Accuracy of Representations and Compliance With Conditions. All
representations and warranties of Company or the Stockholders contained in this
Agreement shall be accurate when made and, in addition, shall be materially
accurate as of the Closing as though such representations and warranties were
then made by Company or such Stockholders on the part of Company or any
Stockholders. As of the Closing, the Company and the Stockholders shall have
performed and complied with all covenants and agreements and satisfied all
conditions required to be performed and complied with by any of them at or
before such time by this Agreement and AMED shall have received certificates
signed by the Stockholders dated the date of the Closing to that effect,
substantially in the form of Schedule 5.01.
5.02. Other Closing Documents. Company and the Stockholders shall have
delivered to AMED at or prior to the Closing such other documents as AMED may
reasonably request in order to enable AMED to determine whether the conditions
to their obligations under this Agreement have been met and otherwise to carry
out the provisions of this Agreement.
5.03. Review of Proceedings. All actions, proceedings, instruments, and
documents required to carry out this Agreement, or any agreement incidental
thereto and all other related legal matters shall be subject to the reasonable
approval of counsel to AMED, and the Company shall have furnished such counsel
for AMED such documents as such counsel may have reasonably requested for the
purpose of enabling them to pass upon such matters.
5.04. Legal Action. There shall not have been instituted or threatened any
legal proceeding relating to, or seeking to prohibit or otherwise challenging
the consummation of, the transactions contemplated by this Agreement or related
agreements or to obtain substantial damages with respect thereto, except as
listed in Schedule 3.04.
5.05. No Governmental Action. There shall not have been any action taken,
or any law, rule, regulation, order, or decree proposed, promulgated, enacted,
entered, enforced, or deemed applicable to the transactions contemplated by this
Agreement by any federal, state, local, or other governmental authority or by
any court or other tribunal, including the entry of a preliminary or permanent
injunction, which, in the reasonable judgment of AMED:
5.05.01. Makes any of the transactions contemplated by this Agreement
illegal;
14
<PAGE>
5.05.02. Results in a delay which affects the ability of AMED to
consummate any of the transactions contemplated by this Agreement;
5.05.03. Requires the divestiture by AMED of a material portion of the
business of either AMED taken as a whole, or of the Company taken
as a whole; and
5.05.04. Otherwise prohibits, restricts, or delays consummation of any of
the transactions contemplated by this Agreement or impairs the
contemplated benefits to AMED of the transactions contemplated by
this Agreement.
5.06. Contractual Consents Needed. The parties to this Agreement shall have
obtained at or prior to the Closing all consents required for the consummation
of the transactions contemplated by this Agreement from any party to any
contract, agreement, instrument, lease, license, arrangement, or understanding
to which any of them or any subsidiary is a party, or to which any of their
respective businesses, properties, or assets are subject, except where the
failure would not have a Material Adverse Effect.
5.07. Other Agreements. Agreements set forth as exhibits or schedules to
this Agreement shall have been duly authorized, executed, and delivered by the
parties thereto at or prior to the Closing, shall be in full force and effect,
valid and binding upon the parties thereto, and enforceable by them in
accordance with their terms at the Closing, and no party thereto at any time
from the execution thereof until immediately after the Closing shall have been
in violation of or in default in complying with any material provision thereof.
5.08. Non-Distributive Intent. AMED shall have received from the Company
and the Stockholders executed letters of non-distributive intent, substantially
in the form of Schedule 5.08.
5.09. Non-Competition and Non-Solicitation Agreement. Stockholders shall
have entered into the non-competition and non-solicitation agreement in the form
attached hereto as Schedule 5.09.
5.10. Board and Shareholder Approval. The Board of Directors and
shareholders of the Company shall have approved the transactions contemplated
herein.
5.11. Legal Opinion. AMED shall have received the opinion of Rosenstein,
Fist & Rinsold, dated __________________, in the form of Schedule 5.11 attached
hereto.
6. Conditions to Obligations of The Company. The obligations of the
Company under this Agreement are subject, at the option of the Company, to the
following conditions:
6.01. Accuracy of Representations and Compliance With Conditions. All
representations and warranties of AMED contained in this Agreement shall be
accurate when made and, in addition,
15
<PAGE>
shall be materially accurate as of the Closing as though such representations
and warranties were then made by AMED on the part of AMED. As of the Closing,
AMED shall have performed and complied with all covenants and agreements and
satisfied all conditions required to be performed and complied with at or before
such time by this Agreement and the Company shall have received certificates
signed by the officers of AMED dated the date of the Closing to that effect,
substantially in the form of Schedule 6.01.
6.02. Other Closing Documents. AMED shall have delivered to the Company, at
or prior to the Closing, such other documents as the Company may reasonably
request in order to enable the Company to determine whether the conditions to
its obligations under this Agreement have been met and otherwise to carry out
the provisions of this Agreement.
6.03. Review of Proceedings. All actions, proceedings, instruments, and
documents required to carry out this Agreement, or any agreement incidental
thereto and all other related legal matters shall be subject to the reasonable
approval of counsel to the Company and AMED shall have furnished such counsel
such documents as such counsel may have reasonably requested for the purpose of
enabling them to pass upon such matters.
6.04. Legal Action. There shall not have been instituted or threatened any
legal proceeding relating to, or seeking to prohibit or otherwise challenging
the consummation of, the transactions contemplated by this Agreement or related
agreements set forth as an exhibit hereto, or to obtain substantial damages with
respect thereto.
6.05. No Governmental Action. There shall not have been any action taken,
or any law, rule, regulation, order, or decree proposed, promulgated, enacted,
entered, enforced, or deemed applicable to the transactions contemplated by this
Agreement by any federal, state, local, or other governmental authority or by
any court or other tribunal, including the entry of a preliminary or permanent
injunction, which, in the reasonable judgment of the Company:
6.05.01. Makes any of the transactions contemplated by this Agreement
illegal;
6.05.02. Results in a delay which affects the ability of the Company to
consummate any of the transactions contemplated by this Agreement;
6.05.03. Requires the divestiture by the Company or the Stockholders of
any of the shares of AMED's Common Stock;
6.05.04. Imposes material limitations on the ability of the Company or the
Stockholders to effectively exercise full rights of ownership of
the shares of Common Stock including the right to vote the shares
on all matters properly presented to the Stockholders of AMED; or
6.05.05. Otherwise prohibits, restricts, or delays consummation of any of
the transactions
16
<PAGE>
contemplated by this Agreement or impairs the contemplated
benefits to the Company or the Stockholders of the transactions
contemplated by this Agreement.
6.06. Contractual Consents Needed. The Parties to this Agreement shall have
obtained at or prior to the Closing all consents required for the consummation
of the transactions contemplated by this Agreement from any party to any
contract, agreement, instrument, lease, license, arrangement, or understanding
to which any of them or any subsidiary is a party, or to which any of their
respective businesses, properties, or assets are subject, except where the
failure would not have a Material Adverse Effect.
6.07. Other Agreements. Agreements set forth as exhibits or schedules to
this Agreement shall have been duly authorized, executed, and delivered by the
Parties thereto at or prior to the Closing, shall be in full force, valid and
binding upon the Parties thereto, and enforceable by them in accordance with
their terms at the Closing, and no party thereto at any time from the execution
thereof until immediately after the Closing shall have been in violation of or
in default in complying with any material provision thereof.
6.08. Board Approval. The Board of Directors of AMED shall have approved
the transactions contemplated herein.
6.09. Employment Agreements. On or before Closing, Frances Unger shall
enter into an employment agreement in the form attached hereto as Schedule 6.09.
6.10. 1997 Company Medicare Cost Report. AMED shall allow the
Stockholders, and the Stockholders shall have the authority on behalf of the
Company, to prepare and submit Company's 1997 year-end Medicare Cost Report.
7. Covenants and Agreements of the Company. The Company covenants and
agrees as follows:
7.01. Public Statements. Before the Company shall release any information
concerning this Agreement or the transactions contemplated by this Agreement
which is intended for or may result in public dissemination thereof, the Company
shall cooperate with AMED, shall furnish drafts of all documents or proposed
oral statements to AMED for comment, and shall not release any such information
without the written consent of AMED. Nothing contained herein shall prevent the
Company from furnishing any information to any governmental authority if
required to do so by law, with the exception of consents more fully described in
7.06 of this Agreement.
8. Covenants and Agreements of AMED. AMED covenants and agrees as
follows:
8.01. Public Statements. Before AMED shall release any information
concerning this Agreement or the transactions contemplated by this Agreement
which is intended for or may result in public dissemination thereof, AMED shall
cooperate with the Company, shall furnish drafts of
17
<PAGE>
all documents or proposed oral statements to the Company for comments, and shall
not release any such information without the written consent of the Company.
Nothing contained herein shall prevent AMED from furnishing any information to
any governmental authority if required to do so by law. In the event AMED and
the Company have not completed the terms of this Agreement, both AMED and the
Company shall not disclose any information concerning this Agreement to any
third party, except as more fully described in Section 8.01 of this Agreement.
9. Miscellaneous.
9.01. Brokerage and Other Fees. The parties agree that there are no
brokerage arrangements or fee obligations, in writing or otherwise, with respect
to the transactions set forth in this Agreement. Each party shall be
responsible for the fees of their respective professionals (including, without
limitation, legal and accounting fees) engaged to assist in the preparation,
negotiation and counseling with respect, and relating, to this Agreement and
consummation of the transactions contemplated herein, as well as their
respective out-of-pocket expenses except AMED agrees to pay for the preparation
of the necessary transfer documents to accomplish the transactions herein.
9.02. Further Actions. At any time and from time to time, the parties
agree, at their expense, to take such actions and to execute and deliver such
documents as may be reasonably necessary to effectuate the purposes of this
Agreement.
9.03. Availability of Equitable Remedies. Since a breach of the provisions
of this Agreement could not adequately be compensated by money damages, the
parties shall be entitled before, and only before, Closing, in addition to any
other right or remedy available to them, to an injunction restraining such
breach or a threatened breach and to specific performance of any such provision
of this Agreement; and in either case, no bond or other security shall be
required in connection therewith, and the parties hereby consent to the issuance
of such an injunction and to the ordering of specific performance.
9.04. Survival. The covenants, agreements, representations, and warranties
contained in or made pursuant to this Agreement shall survive for fifteen (15)
months after the date of the Closing (the "Survival Date"). No claim for
indemnification may be brought pursuant to this Section 9.04 unless asserted by
written notice as provided herein by the party claiming indemnification on or
before the Survival Date.
9.05. Modification. The Agreement and the schedules and exhibits hereto set
forth the entire understanding of the parties with respect to the subject matter
hereof supersede all existing agreements among them concerning such subject
matter, and may be modified only by a written instrument duly executed by the
Parties.
9.06. Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested (or by
18
<PAGE>
the most nearly comparable method if mailed from or to a location outside of the
United States), or delivered against receipt to the party to whom it is to be
given at the address of such party set forth in the preamble or signature pages
to this Agreement. Any notice or other communication given by certified mail (or
by such comparable method) shall be deemed given at the time of mailing (or
comparable act), except for a notice changing a party's address, which will be
deemed given at the time of receipt thereof.
9.07. Waiver. Any waiver by any party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term
of this Agreement on one or more occasions will not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing
and, in the case of a corporate party, be authorized by a resolution of the
Board of Directors or by an officer of the waiving party.
9.08. Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of each party's respective successors, assigns,
heirs, and personal representatives.
9.09. No Third-Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement.
9.10. Severability. If any provision of this Agreement is invalid, illegal,
or unenforceable, the balance of this Agreement shall remain in effect, and if
any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
9.11. Headings. The headings of this Agreement are solely for convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.
9.12. Counterparts, Governing Law. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. It shall be
governed by and construed in accordance with the laws of the State of Louisiana
without giving effect to conflict of laws.
9.13. Indemnification by the Stockholders. The Stockholders shall,
indemnify, defend and hold harmless AMED and each of its officers, directors,
agents and affiliates from and against any damage, loss, claim, liability, cost
or expense, including fees and disbursements of counsel, accountants, experts
and other consultants (collectively, "Damages"), resulting from, arising out of,
based upon or occasioned by any fraudulent misstatement or fraudulent omission
from any representation by, or any breach of warranty, covenant or agreement
of, the Company or the Stockholders contained herein. The Stockholders'
indemnification liability for damage, loss, claim, liability, cost or expense
incurred by AMED and provided for hereunder shall be limited to an amount equal
to Fifty Thousand ($50,000) Dollars.
19
<PAGE>
9.14. Indemnification Procedures. Promptly after receipt by AMED (the
"Indemnitee"), of notice of any action, suit, proceeding, audit, claim or
potential claim (any of which is hereinafter individually referred to as a
"Circumstance"), which could give rise to a right to indemnification for damages
pursuant to Section 9.13, the Indemnitee shall give the party who may become
obligated to provide indemnification hereunder (the "Indemnitor") written notice
describing the Circumstance in reasonable detail; provided, that failure of an
Indemnitee to give such notice to the Indemnitor shall not relieve the
Indemnitor from any of its indemnification obligations hereunder unless (and
then only to the extent) that the failure to give such notice prejudices the
defense of the Circumstance by the Indemnitee. Such Indemnitor shall have the
right, at its option and upon its acknowledgment to the Indemnitee of
Indemnitor's liability to indemnify Indemnitee in respect of such asserted
liability, to compromise or defend, at its own expense and by its own counsel,
any such matter involving the asserted liability of the Indemnitee; provided,
that any such compromise (i) shall include as an unconditional term thereof, the
giving by the claimant or the plaintiff to such Indemnitee of a release from all
liability in respect of such claim and (ii) shall not result in the imposition
on the Indemnitee of any remedy other than monetary damages to be paid in full
by the Indemnitor pursuant to this Section 9.14. If any indemnitor shall
undertake to compromise or defend any such asserted liability, it shall promptly
notify the Indemnitee of its intention to do so, and the Indemnitee agrees to,
and to cause its own independent counsel to, cooperate fully with the Indemnitor
and its counsel in the compromise of, or defense against, any such asserted
liability. All reasonable out-of-pocket costs and expenses incurred by the
Indemnitee in connection with such cooperation (including, without limitation,
the reasonable fees and expenses of the Indemnitee's own independent counsel)
shall be borne by the Indemnitor. In any event, the Indemnitee shall have the
right to participate with its own counsel (the reasonable fees and expenses of
which will be borne by Indemnitor) in the defense of such asserted liability;
provided that if with respect to a Circumstance, Indemnitor shall have
acknowledged Indemnitor's liability to indemnify Indemnitee if and to the extent
of any loss arising out of such Circumstance and Indemnitor shall be diligently
defending such matter, Indemnitor shall not be obligated to indemnify Indemnitee
for the cost of Indemnitee's participation in such defense, including
Indemnitee's attorney's fees. Under no circumstances shall the Indemnitee
compromise any such asserted liability without the written consent of the
Indemnitor (which consent shall not be unreasonably withheld), unless the
Indemnitor shall have failed or refused to undertake the defense of any such
asserted liability after a reasonable period of time has elapsed following the
notice of a Circumstance received by such Indemnitor pursuant to this Section
9.14.
9.15. Other Indemnification Provisions. The foregoing indemnification
provisions under this Section 9 are in addition to, and not in derogation of,
any statutory, equitable or common law remedy any party may have for breach of
representation, warranty or covenant.
20
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement effective
as of the date written in the preamble of this Agreement.
AMEDISYS SPECIALIZED MEDICAL
SERVICES, INC.
By: /s/ MICHAEL McMAUDE
-------------------------
Michael A. McMaude, President
QUALITY HOME HEALTH CARE, INC.
By: /s/ FRANCES UNGER
---------------------------
Name: FRANCES UNGER
------------------------
Title: ADMINISTRATOR
-----------------------
/s/ FRANCES UNGER
------------------------------
FRANCES UNGER
/s/JAMES UNGER
------------------------------
JAMES UNGER
21
<PAGE>
LIST OF SCHEDULES
Schedule No. Schedule Description
- ------------ --------------------
2.01 Stock Power
3.01 Organization and Qualification
3.03 Authorizations and Third Party Consents
3.04 Litigation
3.05 Employees and Compensation
3.07 Insurance
3.08 Contracts, Agreements and Instruments
3.11 Permits and Licenses
3.12 Properties
3.13 Hazardous Materials
3.14 Interest in Competitors
3.16 Changes or Events
3.17 Defaults
4.02 Authorizations and Third Party Consents
5.08 Letters of Non-Distributive Intent
5.09 Non-Compete and Non-Solicitation Agreement
5.11 Legal Opinion of Rosenstein, Fist & Rinsold
6.09 Employment Agreement
22
<PAGE>
EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
BY
AND
BETWEEN
AMEDISYS SPECIALIZED MEDICAL SERVICES, INC. AS PURCHASER
AND
PRECISION HOME HEALTH CARE, INC., AS SELLER
DATED AS OF MAY 1, 1998
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into and made
effective as of 1st day of May, 1998, by and between AMEDISYS SPECIALIZED
MEDICAL SERVICES, INC., a Louisiana corporation, with its principal place of
business at 3029 South Sherwood Forest Blvd., Suite 300, Baton Rouge, Louisiana
70816 (hereinafter referred to as "Purchaser") and , PRECISION HOME HEALTH CARE,
INC. a Louisiana corporation having its principal place of business at 10473 Old
Hammond Highway, Baton Rouge, Louisiana 70816 (hereinafter referred to as
"Seller").
RECITALS
WHEREAS, Seller conducts a home health care business which provides
services to Medicare and Medicaid patients and whose offices are located at
10473 Old Hammond Highway, Baton Rouge, Louisiana;
WHEREAS, Purchaser desires to buy and Seller desires to sell certain of the
assets of Seller's business enterprise; and
WHEREAS, the parties expect that this Agreement will further advance their
respective business objectives, including without limitation, integration of the
business operations of Seller with the business operations of Purchaser in order
for Purchaser to more effectively compete in the marketplace.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Definitions. As used in this Agreement, the following terms have the
meanings indicated:
1.01 Assets: The assets to be sold and transferred by Seller to Purchaser
pursuant to this Agreement consisting of the assets owned by Seller as
of the Closing that are described in clauses (a) - (i) below and that
are more specifically detailed in Schedule 1.01 of this Agreement,
provided however, the Excluded Assets are specifically excluded from
the assets to be sold under this Agreement.
a) All furniture, fixtures, equipment, leasehold improvements and
supplies owned by Seller located at and used by Seller in the
operation of Seller's Business at the address stated above, which
are further identified in Schedule 1.01;
b) All inventory owned by Seller and used by Seller in the operation
of Seller's Business at the address stated above, which are
further identified in Schedule 1.01;
2
<PAGE>
c) Seller's right to use the name "Precision Home Health, Inc.", any
d/b/a or other name utilized to market its service and products,
and all trademarks, trade names, signage, marketing symbols and
logos;
d) All of Seller's current patient lists of present or former
patients, all of Seller's mailing lists, all business records
relating to the operations of Seller's Business (including all
records relating to patients), and all telephone numbers and
listings used by Seller in Seller's Business, and all intangibles
and other rights and privileges of Seller currently used in
Seller's Business;
e) Seller's leasehold interest in the premises occupied by Seller in
Baton Rouge, Louisiana, in accordance with the Sublease Agreement
described in Schedule 1.01 of this Agreement;
f) The goodwill and going concern of Seller;
g) The benefits of all amounts previously paid by Seller for
advertising, design, fees, rent services, or interest relating to
Seller's Business or the Assets, to the extent that they extend
or are to be performed after the Closing;
h) All of Seller's rights under the agreements described in Schedule
5.08 (other than those described in Section 5.08.01), and the
rights given therein;
i) Seller's rights under all other contracts, including all leases
and non-competition agreements relating to Seller's Business;
j) All technical outlines and records (including all plans,
drawings, diagrams, notes, reports, memoranda, and other similar
documents), and any and all know-how and software and other
technology, including all contracts, licenses, authorizations,
permits, and other documents necessary for Seller's Business that
are owned by Seller; and
k) All trade secrets, inventions, patents, copyrights, trade names,
business names, trademarks, and other intangible assets used by
Seller for Seller's Business that are owned by Seller.
1.02 Closing. The consummation of the transactions contemplated by this
Agreement.
1.03 Excluded Assets. The assets of Seller in which are not to be sold and
transferred to Purchaser pursuant to this Agreement and which consists of the
following: organizational documents of Seller, insurance policies providing
coverage to Seller and all rights under such policies, Seller's tax
identification number, all cash on hand, Seller's depositary accounts and the
agreements between Seller and Seller's
3
<PAGE>
bank(s), all licenses of Seller, Medicare or Medicaid provider numbers
of Seller, all accounts receivables and all other indebetedness owing
to Seller, and cost report receivables which are further identified in
Schedule 1.03.
1.04 GAPP. Generally accepted accounting principles.
1.05 Reserved
1.06 Inventory . All inventory of the Seller as of the Closing, including
Seller's interest in equipment which has been expensed but not capitalized, more
fully described in Schedule 1.06.
1.07 Accounts Payable. All accounts payable of the Seller as of the
Closing, including but not limited to, trade payables and account payables of
Seller, except those more fully described in Schedule 1.07.
1.08 Liabilities. Those liabilities of Seller to be assumed by Purchaser at
the Closing pursuant to this Agreement, which consist of those liabilities of
Seller specifically disclosed on Schedule 1.08. Purchaser shall also assume the
obligations of Seller accruing after the Closing Date on the contracts and
agreements comprising a part of the Assets, as disclosed on Schedule 1.08.
Purchaser shall not assume any other liabilities, contingent or certain, of
Seller unless incurred and disclosed in the manner provided in this Section
1.08. Without limiting the foregoing, Purchaser is noT assuming (i) any
expenses, liabilities, or obligations of Seller arising out of the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby which are unpaid at the Closing, (nor may Seller pay any of such expenses
out of the Assets), except for its payment as provided in Section 3.03, (ii) any
liabilities or obligations of Seller relating to federal, state, or local income
for the period through the Closing, or other taxes attributable to the
transactions contemplated hereby or the conduct of Seller's Business , (iii) any
obligation of Seller to pay a fee to any agent, broker, or finder relating to
this transaction, or (iv) any liabilities that may accrue to Seller as a result
of any present or future Medicare and/or Medicaid audit.
1.09 Material Adverse Effect. Any change in the financial condition of
Seller or operation of its business that would materially effect the Seller's
Business adversely, including, but not limited to, material changes to its
business condition or financial condition.
1.10 Purchaser's Knowledge. The actual knowledge of Purchaser's officers
and directors after reasonable inquiry.
4
<PAGE>
1.12 Seller's Business. The home health care business which provides
services to Medicare and Medicaid patients as presently carried on by Seller at
Seller's address stated above.
1.13 Seller's Knowledge. The actual knowledge of Seller or Seller's
President, Daniel D. Brown, after reasonable inquiry.
2. Agreement to Purchase and Sell. Subject to the terms and conditions of
this Agreement, Purchaser agrees to purchase from Seller, and Seller agrees to
sell, transfer, convey, assign, and deliver to Purchaser, at the Closing, the
Assets, free and clear of all liens, claims, liabilities, restrictions on
transfer and encumbrances, except (i) those liabilities listed in Schedule 1.08,
(ii) the restrictions set forth in the agreements and contracts identified in
Schedule 1.01, copies of which are attached thereto; (iii) the consents required
but not obtained identified in Schedule 5.03 and (iv) liens, claims and
liabilities accruing after the Closing.
2.01 The Closing. The Closing of the transactions contemplated by this
Agreement shall occur on April 23, 1998, to be effective the 1st day of May,
1998.
3. Purchase Price. The purchase price for the sale, transfer, conveyance,
assignment, and delivery of the Assets to Purchaser, subject to the terms and
conditions of this Agreement, shall be ONE MILLION TWO HUNDRED THOUSAND AND
NO/100 ($1,200,000.00) DOLLARS, to be paid to Seller by the Purchaser as
follows:
3.01 Purchaser will deliver and execute a promissory note ("Primary
Promissory Note"), the form of which is attached hereto as Schedule 3.01,
payable to the order of Seller, for the principal amount of EIGHT HUNDRED
THOUSAND AND NO/100 ($800,000.00) DOLLARS. The Primary Promissory Note shall
bear interest from May 1, 1998 until paid on the unpaid principal balance at a
per annum interest rate equal to the prime interest rate designated in the Wall
Street Journal plus one percentage point, adjusted on an annual basis, and shall
be payable in one lump sum payment, on July 1, 1998. The Primary Promissory Note
shall be solidarity guaranteed by Amedisys, Inc. (the "Guarantor"), shall
provide for acceleration of the entire principal balance in the event of default
by Purchaser in the payment of any installment thereunder or under this
Agreement and shall provide for the payment of the reasonable attorney fees
incurred by Seller in the collection thereof.
3.02 Purchaser will deliver and execute a promissory note ("Secondary
Promissory Note"), the form of which is attached hereto as Schedule 3.02,
payable to the order of Seller, for the principal amount of FOUR HUNDRED
THOUSAND AND NO/100 ($400,000.00) DOLLARS. The Secondary Promissory Note shall
bear interest from May 1, 1998 until paid on the unpaid principal balance at a
per annum interest rate equal to the prime interest rate designated in the Wall
Street Journal plus one percentage point, adjusted on an annual basis, and shall
be payable, principal
5
<PAGE>
plus interest, in twenty-four (24) equal monthly installments. The Secondary
Promissory Note shall be solidarity guaranteed by Amedisys, Inc. (the
"Guarantor"), shall provide for acceleration of the entire principal balance in
the event of default by Purchaser in the payment of any installment thereunder
or under this Agreement and shall provide for the payment of the reasonable
attorney fees incurred by Seller in the collection thereof.
3.03 In addition to the Purchase Price, Purchaser will pay up to FIFTY
THOUSAND AND NO/100 ($50,000.00) DOLLARS to Seller's landlord for leasehold
improvements, if requested by Landlord from Seller or Purchaser, and if said
improvements are to be actually commenced.
3.04 The consideration to be paid pursuant to the provisions of this
Section 3 and the Liabilities to be assumed by Purchaser pursuant to Section 4
shall constitute all the consideration to be paid by Purchaser in connection
with the purchase of the Assets contemplated by this Agreement.
4. Assumption of Liabilities. In connection with the purchase of the
Assets hereunder, Purchaser shall specifically assume at Closing the Liabilities
listed on Schedule 1.08. Purchaser shall not assume any other liabilities,
contingent or certain, of Seller.
5. Representations and Warranties of Seller. Seller hereby represents and
warrants to Purchaser, as of the date of this Agreement (unless another date is
expressly provided in this Section 5) that the statements contained in this
Section 5 are correct and complete:
5.01 Ownership. Seller is the beneficial owner of the Assets and has good
and marketable title to, and/or a valid leasehold interest in, and the right to
sell, assign, and transfer the Assets to Purchaser, free and clear of any
security interest, claims, liens, pledges, penalties, charges, restrictions on
transfer, encumbrances whatsoever of every kind and character, other than (i)
the restrictions set forth in the agreements and contracts identified in
Schedule 1.01, copies of which are attached thereto; (ii) the consents required
but not obtained identified in Schedule 5.03; and (iii) those accruing after the
Closing. Upon the execution of this Agreement and obtaining the consents
described on Schedule 5.03, good and marketable title to, or valid leasehold
interest in, the Assets shall be delivered to Purchaser, free and clear of any
security interest, claims, liens, pledges, penalties, charges, encumbrances,
whatsoever, other than the liabilities set forth in Schedule 1.08, the
restrictions set forth in the agreements and contracts identified in Schedule
1.01, copies of which are attached thereto, and those accruing after the
Closing.
5.02 Valid Expense. Seller is duly organized, validly existing, and in good
standing as a a corporation under the laws of the State of Louisiana and has
full power and authority (including all licenses, franchises, permits, and other
authorizations that are
6
<PAGE>
legally required) to own the Assets, its properties and to engage in the
business and activities now conducted by it. Seller is in good standing in each
jurisdiction in which it conducts business.
5.03 Due Authorization: Consent of Third Parties. Seller has the right,
power, legal capacity and authority to enter into and perform Seller's
obligations under this Agreement, and no approval or consent of any person other
than the Seller is necessary in connection with the execution, delivery, or
performance of this Agreement by the Seller, except for the consents set forth
in Schedule 5.03. This Agreement constitutes a legal and binding obligation of
the Seller, and is valid and enforceable against the Seller in accordance with
its terms except that (i) the enforcement of certain rights and remedies created
by this Agreement is subject to bankruptcy, insolvency, reorganization, and
similar laws of general application affecting the rights and remedies of
parties, and (ii) the enforceability of any particular provision of this
Agreement under principles of equity or the availability of equitable remedies,
such as specific performance, injunctive relief, waiver, or other equitable
remedies, is subject to the discretion of courts of competent jurisdiction.
5.04 Use of Assets. All of the Assets which are tangible personal property
are located at the above stated address of Seller and are free and clear from
defects, are maintained in accordance with normal industry practice and are in
good operating condition and repair, normal wear and tear excepted. Seller has
had no other business address within the three years prior to the Closing. The
Assets are being utilized by Seller in conformity with all applicable federal,
local and state health care related and imposed rules, regulations, laws,
statutes, and permits ("Health Care Laws") applicable to Seller, and to the best
of Seller's Knowledge all other federal, state and local rules, regulations,
laws, statutes and permits, except where failure to so conform will not have a
Material Adverse Effect.
5.05 Reserved.
5.06 Litigation. Except as described on Schedule 5.06, there is not any
suit, action, arbitration, or legal, administrative, or other proceeding or
governmental investigation pending or, to the best of Seller's Knowledge,
threatened (in the form of threats made to representatives of Seller), against
or affecting Seller or any of the Assets or other assets of Seller, including
but not limited to any action or claim under any federal, state, local or other
governmental act, rule, regulation, or any interpretations thereof, relating to
environmental matters or the protection of the safety and health of persons
connected with Seller's Business (including but not limited to the
transportation, treatment, storage, recycling, disposal, or release into the
environment of hazardous or toxic materials or waste), or any basis on which any
proceeding or investigation against Seller might reasonably be undertaken or
brought.
7
<PAGE>
The Seller has informed Purchaser of, and upon request has furnished or made
available to Purchaser, copies of all relevant court papers and other documents
relating to, the matters set forth in this Section. Seller has described on
Schedule 5.06 all suits, actions, arbitrations, or other proceedings or
investigations in which Seller has been a party to during the five year period
immediately preceding the Closing. Except as described on Schedule 5.06, Seller
is not in default with respect to any order, writ, injunction, or decree of any
Health Care Law. In addition, to Seller's Knowledge, it is not in violation of
any other federal, state, local law, rule or regulation, or foreign court,
department, agency, or instrumentality. Except as set forth on Schedule 5.06,
Seller is not presently engaged in any legal action to recover monies due to the
Seller, for damages sustained by the Seller, or amounts owed to the Seller.
During the five year period immediately preceding the Closing, except as
described on Schedule 5.06, Seller has neither received nor been a party to any
written notice of violations, orders, claims, citations, complaints, penalties,
assessments, court, or other proceedings, administrative, civil or criminal, at
law or in equity, with respect to any Health Care Law. In addition, to Seller's
Knowledge, except as described on Schedule 5.06, it has neither received nor
been party to any written notice of violations, orders, claims, citations,
complaints, penalties, assessments, court, or other proceedings, administrative,
civil or criminal, at law or in equity, with respect to any alleged violations
of any other federal, state, or local environmental law, regulation, ordinance,
standard, permit, or order in connection with the conduct of its business or
otherwise during the past five years.
5.07 Contracts, Agreements and Instruments. Schedule 5.08 contains a list
of the following, copies of which have been heretofore furnished by Seller to
Purchaser, which acknowledges receipt thereof:
5.08.01 The Articles of Incorporation, Bylaws and other organizational
documents of Seller and all amendments thereto, as presently in effect,
certified by a member of Seller;
5.08.02 True and correct copies of all material contracts, agreements
and other instruments to which Seller is a party;
5.08.03 True and correct written descriptions of all verbal material
contracts and/or agreements to which Seller is a party.
Except for matters which, in the aggregate, would not have a Material
Adverse Effect or age otherwise disclosed in the Agreement, Seller is no, and to
the best of Seller's Knowledge, no other party to any such contract, agreement,
instrument, lease, or license is now in violation or breach of, or in default
with respect to complying with, any material provision thereof, and each such
contract, agreement, instrument, lease, or license by which Seller is presently
engaged is in full force and effect and is the legal, valid, and binding
obligation of the parties thereto and is enforceable as to
8
<PAGE>
them in accordance with its terms, except that (i) the enforcement of certain
rights and remedies created thereby and is subject to bankruptcy, insolvency,
reorganization, and similar laws of general application affecting the rights and
remedies of parties, and (ii) the enforceability of any particular provision
thereof under principles of equity or the availability of equitable remedies,
such as specific performance, injunctive relief, waiver, or other equitable
remedies, is subject to the discretion of courts of competent jurisdiction. Each
such service, supply, distribution, agency, financing, or other arrangement,
contract or understanding is a valid and continuing arrangement, contract or
understanding, except for matter which, in the aggregate, will not have a
Material Adverse Effect; neither Seller, nor any other party to any such
arrangement, contract or understanding has given notice of termination or taken
any action inconsistent with the continuance of such arrangement, contract or
understanding, except for matters which, in the aggregate, will not have a
Material Adverse Effect; and, subject to obtaining the consents described on
Schedule 5.03, the execution, delivery, and performance of this Agreement will
not prejudice any such arrangement, contract or understanding in any way, except
for matters which, in the aggregate, will not have a Material Adverse Effect.
5.09 Compliance With Law; Taxes. Seller has complied with, and is not in
violation of any (i) term or provision of its Articles of Incorporation or
Bylaws; (ii) term or provision of any applicable judgment, decree, order,
statute, injunction, rule, ordinance known to it; (iii) any Health Care Law; or
(iv) to the best of Seller's Knowledge, foreign, United States, state or local
statutes, laws, rules or regulations except where such non-compliance or
violation will not have a Material Adverse Effect. Seller has timely filed all
federal, state, and local tax returns required to be filed and all such returns
are complete and correct. Except as described on Schedule 5.06, the Seller has
made timely payment of all such taxes when due and payable and has paid all
interest, penalties, deficiencies, and assessments, if any, levied or assessed
against it. Except as described on Schedule 5.06, Seller has duly withheld,
collected, and timely paid to the proper governmental authorities all taxes
required to be withheld and collected by it. There are no agreements for
extension of the time of assessment of payment of any taxes of Seller, except as
otherwise disclosed by Seller. No waiver of any statue of limitations has been
executed by the Seller. There are no examinations by the Internal Revenue
Service of Seller presently in process of the tax returns of Seller for any
year(s) open to such examination.
5.10 Permits and Licenses. Seller has all permits, licenses, and other
similar authorizations necessary for the conduct of its business as now being
conducted by it, and it is not in default in any respect under any such permits,
licenses, or authorizations. No royalties, commissions, or fees are payable by
Seller to any person by reason of the ownership or use of any intangible
property, except as set forth in the contracts described on Schedule 5.08. There
are no material licenses, sublicenses, or agreements relating to the use by
Seller of any intangible property now in effect, except as set forth in the
contracts described on Schedule 5.08, and Seller has no knowledge that any
intangible property is being infringed by others. No claim that
9
<PAGE>
will have a Material Adverse Effect on the business of the Seller is pending or,
to the best of Seller's Knowledge, threatened, that the operation of Seller's
Business or any method, process, part, or material that Seller employs,
conflicts in any material way with, or infringes in any material way upon any
rights of the type enumerated above, owned by others.
5.11 Employees. Schedule 5.11 is a list of names of all employees of
Seller, stating the amounts or rates of compensation payable to each, the
employee benefits enjoyed by each, and whether or not each respective employee
has executed any employment agreement with Seller. Purchaser has no obligation
to employ any of Seller's employees.
5.12 No Violation of Employee Contracts. Seller is not, and to the best of
Seller's knowledge, no employee of Seller is in violation of any term of any
employment contract, non-competition agreement, or any other contract or
agreement or any restrictive covenant with, or any other common law obligation
to, a former employer of such employee relating to the right of any such
employee to be employed by Seller because of the nature of the business
conducted by Seller or of the use of trade secrets or proprietary information of
others. There is no pending nor, to the best of Seller's Knowledge, threatened,
any actions, suits, proceedings, or claims with respect to any contract,
agreement, covenant, or obligation referred to in the preceding sentence.
5.13 Hazardous Materials. The Seller is not in the business of possession,
transportation, or disposal of hazardous materials. If and to the extent that
Seller's Business has involved the possession, transportation, or disposal of
hazardous materials, to Seller's Knowledge, the Seller has complied with any and
all applicable laws, ordinances, rules, and regulations and has not and will not
be the basis of any claim or proceeding against, or any liability of, Seller
with respect to the period prior to the Closing. To the best of Seller's
Knowledge, no employee of Seller has been exposed to hazardous materials during
the period of employment by Seller such that exposure could cause damage to such
employee.
5.14 Interest in Competitors. To Seller's Knowledge, except as disclosed on
Schedule 5.14, Daniel D. Brown has no direct or indirect ownership interest in
any competitor, supplier, or customer of Seller or in any person from whom or to
whom Seller leases any real or personal property, or in any other person with
whom Seller is doing business.
5.15 Financial Condition. Seller has delivered to Purchaser true and
correct copies of the following: the unaudited balance sheet and income
statement of Seller for the fiscal year ended December 31, 1997; and an
unaudited balance sheet ("Seller's Last Balance Sheet"), and income statement
for the three months ended March 31, 1998 ("Seller's Last Balance Sheet Date").
Each such balance sheet presents fairly in all material respects the financial
condition, assets and liabilities of Seller as of its date; and, except for
unrecorded revenue, each such statement of income presents fairly in all
10
<PAGE>
material respects the results of operations of Seller for the period indicated.
The financial statements referred to in this section have been prepared in
accordance with the books and records of Seller.
5.16 Changes of Events. Since April 1, 1998, except as described on
Schedule 5.16, none of the following has occurred:
5.16.01 Other than in the ordinary course of business, any changes in
the condition (financial or otherwise), liabilities, Assets, or business,
or in any business relationships of Seller, including relationships with
suppliers or customers, that, when considered individually or in the
aggregate, are reasonably expected to have a Material Adverse Effect;
5.16.02 The destruction of, damage to, or loss of any asset of Seller
(regardless of whether covered by insurance) that, when considered
individually or in the aggregate, are reasonably expected to have a
Material Adverse Effect;
5.16.03 Any labor disputes that, when considered individually or in
the aggregate, are reasonably expected to have a Material Adverse Effect;
5.16.04 There have been no change in accounting methods or practices
(including, without limitation, any change in depreciation or amortization
policies or rates) by Seller, except for any such changes as were required
by law;
5.16.05 Other than in the ordinary course of business, any increase in
the salary or other compensation payable or to become payable by Seller to
any employee, or the declaration, payment, or commitment or obligation of
any kind for the payment by Seller of a bonus or other additional salary or
compensation to any such person;
5.16.06 Any mortgage, pledge, or other encumbrance of any asset of
Seller except in the ordinary course of business;
5.16.07 The material amendment or termination of any material contract
or agreement to which Seller is a party, except in the ordinary course of
business;
5.16.08 The waiver or release of any right or claim of Seller, except
in the ordinary course of business;
11
<PAGE>
5.16.09 Except such matters undertaken in consultation with Purchaser,
any failure on the part of Seller to operate its business in the ordinary
course and consistent with past practices so as to preserve its business
organization intact, to retain the services of its employees and to
preserve its goodwill and relationships with suppliers, creditors,
customers, and others having business relationships with it;
5.16.10 Any action taken or omitted to be taken by Seller which would
clause (after lapse of time, notice or both) the breach, default, or
acceleration of any right, contract, commitment, or other obligation of
Seller; or
5.16.11 Any agreement by Seller to do any of the things described in
the preceding clauses in this section.
5.17 No Defaults. Subject to obtaining the consents described on
Schedule 5.03, the consummation of the transactions contemplated by this
Agreement will not result in or constitute any of the following: (i) a breach of
any term or provision of any other agreement to which Seller is a party that
will not be waived or released at the Closing, (ii) a default on an event that
will not be waived or released at the Closing and that, with notice or lapse of
time or both, would be a default, breach, or violation of the Articles of
Incorporation or Bylaws of Seller or of any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust, or
other agreement, instrument, or arrangement to which Seller is a party or by
which Seller or its assets is bound; (iii) an event that will be waived or
released at Closing and that would permit any party to terminate any agreement
or to accelerate the maturity of any indebtedness or other obligation of Seller;
(iv) the creation or imposition of any lien, charge, or encumbrance on any of
the Assets; or (v) a violation of any law or any rule or regulation of any
administrative agency or governmental body unrelated to the business or
profession of health care and any profession related to health care, of any
order, writ, injunction or decree of any court, administrative agency or
governmental body to which Seller is subject.
5.18 Liabilities. No liabilities of Seller will be assumed by or
transferred to Purchaser pursuant to the transactions contemplated by this
Agreement, except as provided in Section 1.08, those listed in Schedule 1.08, or
as provided in Section 4, nor will any of the Assets to be acquired by Purchaser
to this Agreement be subject to any pre-Closing liabilities, nor will Purchaser
otherwise be liable for any other liabilities of Seller.
5.19 No Prohibited Payments. Neither Seller nor any employee or agent of
Seller had made or authorized any payment of funds of Seller or on behalf of
Seller prohibited by law or no funds of Seller have been set aside to be used
for any payment prohibited by law.
12
<PAGE>
5.20 Completeness of Disclosure. No representation or warranty by Seller in
this Agreement including the Schedules, Exhibits, and certificates prepared by
Seller incorporated herein, contains any untrue statement of a material fact or
omits any material fact necessary in order to make the statements contained
herein not misleading.
6. Representation and Warranties of Purchaser and Guarantor. Purchaser,
and with respect to Sections 6.05, 6.06 and 6.07, Guarantor, hereby represents
and warrants to Seller, as of the date of this Agreement, that the statements
contained in this Section 6 are correct and complete:
6.01 Organization. Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Louisiana and is
authorized to do business in every other jurisdiction in which its ownership,
leasing, licensing, or use of property assets or the conduct of its business
makes such qualification necessary, except where the failure to do so would not
have a Material Adverse Effect. Purchaser is a wholly owned subsidiary of
Guarantor.
6.02 Due Authorization: Third Party Consents. Purchaser has the right,
power, legal capacity, and authority to enter into and perform its obligations
under this Agreement and, except as otherwise set forth herein, no approval or
consent of any person other than the Purchaser is necessary in connection with
the execution, delivery, or performance of this Agreement. The execution,
delivery, and performance of this Agreement by the Purchaser has been duly
authorized by its board of directors and no other corporate proceedings on the
part of Purchaser are necessary to authorize this Agreement or the consummation
of the transactions contemplated hereby. This Agreement constitutes a legal and
binding obligation of the Purchaser, and is valid and enforceable against the
purchaser in accordance with its terms except that (i) the enforcement of
certain rights and remedies created by this Agreement is subject to bankruptcy,
insolvency, reorganization, and similar laws of general application affecting
the rights and remedies of parties, and (ii) the enforceability of any
particular provision of this Agreement under principles of equity or the
availability of equitable remedies, such as specific performance, injunctive
relief, waiver or other equitable remedies, is subject to the discretion of
courts of competent jurisdiction.
6.03 No Violation. The consummation of the transactions contemplated by
this Agreement will not result in or constitute any of the following: (i) a
breach of any term or provision of any other agreement or Purchaser that will
not be waived or released at the Closing; (ii) a default or an event that will
not be waived or released at the Closing and that, with notice or lapse of time
or both, would be a default, breach, or violation of the Certification of
Incorporation or Bylaws or Purchaser or of any lease, license, promissory, not
conditional sales contract, commitment, indenture, mortgage, deed of trust, or
other agreement, instrument, or arrangement to which Purchaser is a party or by
which Purchaser or the property of Purchaser is bound; or (iii) a
13
<PAGE>
violation of any law or any rule or regulation of any administrative agency or
governmental body or any order, writ, injunction, or decree of any court,
administrative agency or governmental body to which Purchaser is subject.
6.04 Completeness of Disclosure. No representation or warranty and no
Schedule, Exhibit, or certificate incorporated herein and prepared by Purchaser
pursuant hereto and no statement made or other document prepared by Purchaser
and furnished to Seller by Purchaser contains any untrue statement of a material
fact or omits or will omit any material fact necessary in order to make the
statements contained therein not misleading.
6.05 Organization of Guarantor. Guarantor is a corporation duly organized,
validly existing, and in good standing under the laws of the Sate of Delaware
and is authorized to do business in every other jurisdiction in which its
ownership, leasing, licensing, or use of property or assets or the conduct of it
business makes such qualification necessary, except where the failure to do so
would not have a Material Adverse Effect.
6.06 Due Authorization: Third Party Consents. Guarantor has the right,
power, legal capacity, and authority to enter into and perform its obligations
under this Agreement and, except as otherwise set forth herein, no approval or
consent of any person other than the Guarantor is necessary in connection with
execution, delivery, or performance of this Agreement. The execution, delivery,
and performance of this Agreement by the Guarantor has been duly authorized by
its board of directors and no other corporate proceedings on the part of
Guarantor are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement constitutes a legal and binding
obligation of the Guarantor, and is valid and enforceable against the Guarantor
in accordance with its terms except that (i) the enforcement of certain rights
and remedies created by this Agreement is subject to bankruptcy, insolvency,
reorganization, and similar laws of general application affecting the right and
remedies of parties, and (ii) the enforceability of any particular provision of
this Agreement under principles of equity or the availability of equitable
remedies, such as specific performance, injunctive relief, waiver or other
equitable remedies, is subject to the discretion of courts of competent
jurisdiction.
6.07 No Violation. The consummation of the transactions contemplated by
this Agreement will not result in or constitute any of the following: (i) a
breach of any term or provision of any other agreement of Guarantor that will
not be waived or released at the Closing; (ii) a default of an event that will
not be waived or released at the Closing and that, with notice or lapse of time
or both, would be a default, breach, or violation of the Certificate of
Incorporation or Bylaws of Guarantor or of any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust, or
other agreement, instrument, or arrangement to which
14
<PAGE>
Guarantor is a party or by which Guarantor or the property of Guarantor is
bound; or (iii) a violation of any law or any rule or regulation of any
administrative agency or governmental body or any order, writ, injunction, or
decree of any court, administrative agency or governmental body to which
Guarantor is subject.
7. Condition to Obligations of Purchaser. The obligations of Purchaser
under this Agreement are subject, at the option of Purchaser, to the
satisfaction of the following conditions:
7.01 Accuracy of Representations and Compliance With Conditions. All
representations and warranties of Seller contained in this Agreement shall be
accurate when made and, in addition, shall be materially accurate as of the
Closing as though such representations and warranties were then made by Seller,
other than such representations and warranties that are made as to another date.
As of the Closing, Seller shall have performed and complied with all covenants
and agreements and satisfied all conditions required to be performed and
complied with by Seller at or before such time by this Agreement.
7.02 Closing Documents. In connection with the Closing, Seller shall
deliver to Purchaser the following items:
7.02.01 Bills of sale, endorsements, assignments, drafts, checks, and
other instruments of transfer in form and substance consistent with this
Agreement and mutually satisfactory to Purchaser and Seller in order to
transfer all right, title and interest of Seller in the Assets to
Purchaser;
7.02.02 To the extent applicable, original evidences of title or
ownership of the Assets, including drafts, warehouse receipts and licenses;
7.02.03 Evidence (including, if applicable, the delivery of duly
executed UCC-3 Termination Statements) reasonably satisfactory to Purchaser
and its counsel, of the satisfaction and discharge by Seller of all
existing liens, claims, and encumbrances upon or affecting the Assets; and
7.02.04 Such other instruments and documents in form and content
consistent with the terms of this Agreement and mutually satisfactory to
Seller and Purchaser, as may be necessary or appropriate to (i) effectively
transfer and assign to and vest in Purchaser good and marketable title to
the Assets and/or to consummate more effectively the transactions
contemplated hereby and (ii) in order to enable Purchaser to determine
whether the conditions to Seller's obligations under this Agreement have
been met and otherwise to carry out the provisions of this Agreement.
15
<PAGE>
7.03 Review of Proceedings. All actions, proceedings, instruments, and
documents required to carry out this Agreement, or any agreement incidental
thereto and all other related legal matters shall be subject to the reasonable
approval of counsel to Purchaser, and Seller shall have furnished such counsel
for Purchaser such documents as such counsel may have reasonably requested for
the purpose of enabling them to pass upon such matters.
7.04 Legal Action. There shall not have been instituted or threatened any
legal proceeding relating to, or seeking to prohibit or otherwise challenging
the consummation of, the transactions contemplated by this Agreement or related
agreements or to obtain substantial damages with respect thereto.
7.05 No Governmental Action. There shall not have been any action taken, or
any law, rule, regulation, order, or decree proposed, promulgated, enacted,
entered, enforced, or deemed applicable to the transactions contemplated by this
Agreement by any federal, state, local, or other governmental authority or by
any court or other tribunal, including the entry of a preliminary or permanent
injunction which, in the reasonable judgement of Purchaser:
7.05.01 Makes any of the transactions contemplated by this Agreement
illegal;
7.05.02 Results in a dely which affects the ability of Purchaser to
consummate any of the transactions contemplated by this Agreement;
7.05.03 Requires the divestiture by Purchaser of a material portion of
the business of either Purchaser taken as a whole, or of Seller taken as a
whole; and
7.05.04 Otherwise prohibits, restricts, or delays consummation of any
of the transactions contemplated by this Agreement or impairs the
contemplated benefits to Purchaser of the transactions contemplated by this
Agreement.
7.06 Contractual Consents Needed. Except for the consents described in
Schedule 5.03, the Parties to this Agreement shall have obtained at or prior to
the Closing all consents required for the consummation of the transactions
contemplated by this Agreement from any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which either of
them is a party, or to which any of their respective businesses, properties, or
assets are subject, except where the failure to obtain the same would not have a
Material Adverse Effect on such party.
7.07 Other Agreements. Agreements set forth as exhibits or schedules to
this Agreement shall have been duly authorized, executed, and delivered by the
parties thereto at or prior to the Closing, shall be in full force and effect,
valid and binding upon the parties thereto, and enforceable by them in
accordance with their terms at the Closing, and no party thereto at any time
from the execution thereof until
16
<PAGE>
immediately after the Closing shall have been in violation of or in default in
complying with any material provision thereof.
7.08 Board of Director Approval. The Board of Directors of Seller shall
have approved the transactions contemplated herein.
7.09 Public Statements. Before Seller shall execute or administer a press
release or public announcement related to consummation of this transaction,
Seller shall cooperate with Purchaser, shall furnish drafts of all documents or
proposed oral statements to Purchaser for comment, and shall not release any
such information without the written consent of Purchaser. Nothing contained
herein shall prevent Seller from furnishing any information to any governmental
authority if required to do so by law.
8. Conditions to Obligations of Seller. The obligations of Seller under
Agreement are subject, at the option of Seller, to the satisfaction of the
following conditions:
8.01 Accuracy of Representations and Compliance With Conditions. All
representations and warranties of Purchaser contained in this Agreement shall be
accurate when and shall be accurate as of the Closing as though such
representations and warranties as are made as to another date. As of the
Closing, Purchaser shall have performed and complied with all covenants and
agreements and satisfied all conditions required to be performed and complied
with by any of them or before such time by this Agreement.
8.02 Other Closing Documents. Purchaser shall have delivered to Seller, at
or prior to the Closing, such other documents as Seller may reasonably request
in order to enable Seller to determine whether the conditions to its obligations
under this Agreement have been met and otherwise to carry out the provision of
this Agreement.
8.03 Review of Proceedings. All actions, proceedings, instruments, and
documents required to carry out this Agreement, or any agreement incidental
thereto and all other related legal matters shall be subject to the reasonable
approval of counsel to Seller and Purchaser shall have furnished such counsel
such documents as such counsel may have reasonably requested for the purpose of
enabling them to pass upon such matters.
8.04 Legal Action. There shall not have been instituted or threatened any
legal proceeding relating to, or seeking to prohibit or otherwise challenging
the consummation of, the transactions contemplated by this Agreement or related
agreements set forth as an exhibit hereto, or to obtain substantial damages with
respect thereto.
8.05 No Governmental Action. There shall not have been any action taken, or
any law, rule, regulation, order, or decree proposed, promulgated, enacted,
entered, enforced,
17
<PAGE>
or deemed applicable to the transactions contemplated by this Agreement by any
federal, state, local, or other governmental authority or by any court of other
tribunal, including the entry of a preliminary or permanent injunction, which,
in the reasonable judgment of Seller:
8.05.01 Makes any of the transactions contemplated by this Agreement
illegal;
8.05.02 Results in a delay which affects the ability of Seller to
consummate any of the transactions contemplated by this Agreement;
8.05.03 Otherwise, prohibits, restricts, or delays consummation of any
of the transactions contemplated by this Agreement or impairs the
contemplated benefits to Seller or the Stockholders of the transactions
contemplated by this Agreement.
8.06 Contractual Consents Needed. The parties to this Agreement shall have
obtained at or prior to the Closing the consents described on Schedule 5.03 and
all other consents required for the consummation of the transactions
contemplated by this Agreement from any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which either of
them is a party, or to which any of their respective businesses, properties, or
assets are subject, except where the failure would not have a Material Adverse
Effect.
8.07 Other Agreements. Agreements set forth as exhibits or schedules to
this Agreement shall have been duly authorized, executed, and delivered by the
parties thereto at or prior to the Closing, shall be in full force, valid and
binding upon the parties thereto, and enforceable by them in accordance with
their terms at the Closing, and no party thereto any time from the execution
thereof until immediately after the Closing shall have been in violation of or
in default in complying with any material provision thereof.
8.08 Board Approval. The Boards of Directors of Purchaser and Guarantor
shall have approved the transactions contemplated herein and certified copies or
authorizing resolutions shall have been delivered to Seller.
9. Covenants and Agreements of Purchaser. Purchaser covenants and agrees
as follows:
9.01 Payment of Sales Taxes. Any sales tax incurred as a result of this
transaction will be paid by Purchaser to Seller at the Closing for remittance to
the appropriate taxing authority.
9.02 Post Closing Covenants. On and after the Closing, Purchaser agrees to
maintain in confidence and not to disclose, except in accordance with and as
permitted by
18
<PAGE>
applicable laws and regulations, the records of the patients to whom Seller
provided services.
9.03 Release of Daniel D. Brown. Subsequent to Closing, Purchaser shall
use its best faith efforts to ensure that Daniel D. Brown is released from any
personal contract, lease or agreement guarantees which are active with respect
to Seller's Business and are assumed by Purchaser.
9.04 Information Accessibility. Upon prior reasonable notice and at
reasonable times, Seller shall be allowed access to those patient records
transferred herein.
10. Covenants and Agreements of Seller. Seller covenants and agrees as
follows:
10.01 Payment of Taxes. Except City sales taxes in the amount shown on
Seller's Last Balance Sheet, all accrued but unpaid federal, state, and local
income and other taxes of Seller for the period ended as of the Closing and all
prior periods will be paid by Seller.
10.02 Post-Closing Consents. Seller agrees to use its best good faith
effort to secure and/or assist Purchaser in securing post-Closing third party
consents material to the ongoing operation of Seller's Business.
11. Miscellaneous.
11.01 Brokerage and Other Fees. The parties agree that there are no
brokerage arrangements or fee obligations, in writing or otherwise, with respect
to the transactions set forth in this Agreement. Each party shall be responsible
for the fees of their respective professionals (including, without limitation,
legal and accounting fees) engaged to assist in the preparation, negotiation and
counseling with respect, and relating, to this Agreement and consummation of the
transactions contemplated herein, as well as their respective out-of-pocket
expenses except Purchaser agrees to pay for the preparation of the necessary
transfer documents to accomplish the transactions herein.
11.02 Further Actions. At any time and from time to time, the parties
agree, at their expense, to take such actions and to execute and deliver such
documents as may be reasonably necessary to effectuate the purposes of this
Agreement.
11.03 Reserved.
11.04 Survival. The representations, and warranties contained in or made
pursuant to this Agreement by the parties hereto shall survive for a period of
24 months from the date of the Closing, irrespective of any investigation made
by or on behalf of any party
19
<PAGE>
(the "Survival Date"). No claim for indemnification or otherwise may be brought
by a party hereto against another party hereto unless asserted by written notice
as provided herein by the party claiming indemnification or otherwise on or
before the Survival Date.
11.05 Entire Agreement: Modification. The Agreement and the Schedules and
Exhibits hereto set forth the entire understanding of the parties with respect
to the subject matter hereof, supersede all existing agreements between them
concerning such subject matter, and may be modified only by a written instrument
duly executed by the parties.
11.06 Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be given or made (and shall be
deemed to have been duly given or made upon receipt) by delivery in person, by
courier services, by telecopy (confirmed by telephone within twenty-four (24)
hours following receipt thereof), or by registered or certified mail, (postage
prepaid, return receipt requested) to the respective parties at the following
address (or at such other address for a party as shall be specified in a notice
given in accordance with this Section 11.06):
(a) If to Seller
Precision Home Health Care, Inc.
10473 Old Hammond Highway,
Baton Rouge, Louisiana 70816
Attention: Danny D. Brown
Telecopy: (504) 928-2183
with copy to:
Kantrow, Spaht, Weaver & Blitzer
(A Professional Law Corporation)
Suite 300, City Plaza
445 North Boulevard
P.O. Box 2997
Baton Rouge, Louisiana 70821-2997
Attention: Lee C. Kantrow
Telecopy: (504) 343-0637
Telephone: (504) 383-4703
(b) If to Purchaser
Amedisys Specialized Medical Services, Inc.
20
<PAGE>
3029 S. Sherwood Forest Blvd.
Suite 300
Baton Rouge, Louisiana 70816
Attention: Stephen Taglianetti
Telecopy: (504) 292-8163
Telephone: (504) 292-2031
11.07 Waiver. Any waiver by any party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions will not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing
and, in case of a corporate party, be authorized by a resolution of the Board of
Directors or by an officer of the waiving party.
11.08 Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of each party's respective successors and assigns;
provided, however, any such assignment by Purchaser shall not release Purchaser
of any of its obligations under this Agreement.
11.09 No Third-Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement.
11.10 Severability. If any provision of this Agreement is invalid, illegal,
or unenforceable, the balance of this Agreement shall remain in effect, and if
any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
11.11 Headings. The headings of this Agreement are solely for convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.
11.12 Counterparts, Governing Law. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute on and the same instrument. It shall be governed
by and construed in accordance with the laws of the State of Louisiana without
giving effect to conflict of laws.
11.13 Indemnification. Subject to the limitations set forth in Sections
11.14 and 11.15 hereof, Seller shall indemnify, defend and hold harmless
Purchaser and each of its officers, directors, agents and affiliates from and
against any damage, loss, claim, liability, cost or expense incurred by
Purchaser, including fees and disbursements of
21
<PAGE>
counsel, accountants, experts and other consultants reasonably and necessarily
incurred by Purchaser, net of any tax benefit to which Purchaser is entitled and
net of any and all amounts to which Purchaser is entitled to from insurance,
guarantees, indemnities, and contractual and legal rights by, from or against
other persons, firms, or entities (collectively, "Damages"), resulting from,
arising out of, based upon or occasioned by the inaccuracy of any warranty or
any representation made by Seller in this Agreement, or any breach of any
covenant or agreement of Seller contained herein. Purchaser shall indemnify,
defend and hold harmless Seller and each of its shareholders, officers,
directors, agents and affiliates from and against any Damages, resulting from,
arising out of, based upon or occasioned by the inaccuracy of any warranty or
representation made by the Purchaser herein, or any breach of any covenant or
agreement of Purchaser contained herein.
11.14 Limitations on Indemnification and Other Claims. The maximum amount
of Damages for which Seller shall be responsible under this Agreement, whether
pursuant to a claim for indemnification or otherwise, shall not exceed the
unpaid the amount due by Purchaser under the Consulting Agreement with Seller's
affiliate of even date hereof (the "Consulting Agreement"), such maximum amount
to be reduced by payments made by the Purchaser on the Consulting Agreement and
by amounts offset against the unpaid amount of the Consulting Agreement in the
manner permitted by this Agreement. Such right of offset shall be the exclusive
remedy of the Purchaser, and all other persons entitled to indemnity against the
Seller pursuant to Section 11.13 above, for Damages under this Agreement and
otherwise. It is understood and agreed that Seller shall have no liability to
return any portion of the Purchaser Price or any amount paid under the
Consulting Agreement or otherwise pay any amount of Damages (except pursuant to
the right of offset as permitted by this Agreement). The right of offset
permitted in this Agreement shall be exercised solely against the unpaid
payments due under the Consulting Agreement .
11.15 Right of Off-Set. If Purchaser reasonably believes it is entitled to
indemnification under this Agreement, it shall be entitled to the right of
offset against amounts owing by it under the Consulting Agreement in accordance
with the following terms and provisions: Purchaser shall promptly notify Seller
of the matter for which it seeks indemnification and shall specify in reasonable
detail the facts and circumstances thereof and a good faith estimate of the
Damages occasioned thereby. Seller shall have ten (10) days from the receipt of
Purchaser's notice in which to cure the circumstance giving rise to the Damages
and provide evidence of such cure to the Purchaser. If the circumstance is not
cured within the ten day period, Purchaser shall have the immediate right to
deposit the monthly payment due and payable pursuant to the Consulting Agreement
into an escrow account at a bank mutually acceptable to the parties to be held
and invested pursuant to a mutually agreeable escrow agreement. Monthly payments
into said
22
<PAGE>
escrow account shall continue until the amount of the Damages specified in
Purchaser's notice is equal to the balance of said escrow account, at which time
payments to Seller under the Consulting Agreement shall resume as originally
contemplated. In the event the Purchaser's claim for indemnification is disputed
by Seller, such dispute shall be resolved by the provisions of Section 9.15. If
it is ultimately determined that Purchaser's claim for indemnification was
improper, the escrowed funds and earnings thereon shall be distributed to
Seller. If it is ultimately determined that Purchaser's claim for
indemnification was proper, the escrowed funds and earnings thereon shall be
distributed to Purchaser. Buyer specifically understands and agrees that it
shall not have the right of offset for damages or otherwise with respect to the
Primary Promissory Note or Secondary Promissory Note outlined in 3.01 and 3.02
herein.
11.16 Arbitration Procedures. Any and every dispute of any nature
whatsoever that may arise between the parties hereto, whether sounding in
contract, statute, tort, fraud, misrepresentation, discrimination or any other
legal theory, or breach of this Agreement, or any schedule, certificate or other
document delivered by any party thereto or thereto, or those arising under any
federal, state or local law, regulation or ordinance, shall be subject to the
limitations of Section 11.14 and shall be determined by binding arbitration in
accordance with the then-current commercial arbitration rules of the American
Arbitration Association ("AAA"), to the extent such rules do not conflict this
the provision of this Section 11. The arbitration shall be conducted by a single
neutral arbitrator. The parties shall endeavor to select a neutral arbitrator by
mutual agreement. If such agreement cannot be reached within thirty (30)
calendar days after a dispute has arisen which is to be decided by arbitration,
any party or the parties jointly shall request AAA to submit to each party an
identical panel of fifteen (15) persons. Alternate strikes shall be made to the
panel, commencing with the party bringing the claim, until the name of one (1)
person remains. The parties may, however, by mutual agreement, request AAA to
submit additional panels of possible arbitrators. The arbitrator shall have the
power to determine all matters incident to the conduct of the arbitration,
including without limitation all procedural and evidentiary matters and the
scheduling of any hearing. The award made by the arbitrator shall be governed by
the United States Arbitration Act, 9 U.S.C. 1-16, and judgment upon the award
rendered by the arbitrator(s) may be entered by any court having jurisdiction
thereof. Unless otherwise agreed by the parties, the arbitration shall be held
in Baton Rouge, Louisiana.
11.17 Provision applicable to claims for injunctive relief. This agreement
to arbitrate shall specifically include, without limitation, an application for
injunctive relief under Section 11. In the event injunctive relief is sought,
the parties agree that Commercial Arbitration Rule 13 (as amended November 1,
1993, or its subsequent equivalent) shall not apply, and instead, a single
arbitrator shall be appointed within one business day after the filing of the
demand or submission. Such arbitrator shall then preside over the application
for injunctive relief and all other disputes then arising under this agreement.
The arbitrator appointed under this paragraph 10(b) shall be appointed by
23
<PAGE>
JAMS Endispute, Baton Rouge, Louisiana ("JAMS"), in the following manner: the
case administrator for the AAA shall contact JAMS immediately on receipt of the
demand for arbitration containing the claim for injunctive relief. The case
administrator shall provide JAMS with the names of the parties to, and a copy
of, this agreement. From its then current list of qualified, licensed, but non-
practicing attorneys who are former, sitting trial judges, the Baton Rouge
national account manager (or equivalent position) of JAMS shall appoint one such
individual as the arbitrator to preside over the application for injunctive
relief and all other disputes between the parties. Except in the unlikely event
of an actual conflict of interest under the Rules of Professional Conduct or
code of Judicial Conduct, neither party shall have any right to strike or object
to the appointment of any person so selected. The parties expressly agree and
desire that the selection of any arbitrator hereunder shall be effected within
one business day of any application for injunctive relief and agree that such
application shall then be considered at least as expeditiously as would be the
case in the District Courts for East Baton Rouge Parish. The parties further
agree that in the District Court for East Baton Rouge Parish, to the same extent
as would be the case for a final award of the arbitrator.
IN WITNESS WHEREOF, the parties have duly executed this Agreement effective as
of the date written in the preamble of this Agreement.
AMEDISYS SPECIALIZED MEDICAL SERVICES, INC.
By: /s/MICHAEL MCMAUDE
-----------------------------------
Michael A. McMaude, President
AMEDISYS, INC.
By: /s/LARRY GRAHAM
----------------------------------
Larry Graham, VP Operations
PRECISION HOME HEALTH CARE, INC.
By: /s/DANIEL D. BROWN
----------------------------------
Daniel D. Brown, President
24
<PAGE>
EXHIBIT 2.3
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993,
AS AMENDED AND IS TRANSFERRABLE ONLY UPON COMPLIANCE WITH OR AN EXEMPTION FROM
ALL APPLICABLE SECURITY AND OTHER LAWS.
PROMISSORY NOTE
$800,000.00 Baton Rouge, Louisiana May 1, 1998
FOR VALUE RECEIVED, the undersigned, AMEDISYS SPECIALIZED MEDICAL SERVICES,
INC. a Louisiana corporation ("Maker"), hereby promises to pay to the order of
PRECISION HOME HEALTH CARE, INC. ("Payee"), at Baton Rouge, Louisiana, the
principal sum of Eight Hundred Thousand and no/100 Dollars ($800,000.00), in
lawful money of the United States of America, which shall be legal tender, in
payment of all debts and dues, public and private at the time of payment,
bearing interest and payable as provided herein.
Interest on the unpaid balance of this Note shall accrue from the date
hereof at a rate per annum equal to 9.5% from the date hereof until paid;
provided, however, that such interest shall not exceed the Maximum Rate as
hereinafter defined. All past-due principal and interest shall bear interest at
the maximum rate permitted by applicable law. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
The principal amount of and accrued interest on this Note shall be due and
payable July 1, 1998.
This note may be prepaid in whole or in part, at any time and from time to
time, without premium or penalty.
If any payment of principal of or interest on this Note shall become due on
a Saturday, Sunday or any other day on which national banks are not open for
business, such payment shall be made on the next succeeding business day.
An event of default means default by the Maker (i) in the payment of any
installment of the principal of, and interest on, the Note when due, whatever
the reason for such event of default and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any Court or any order, rule or regulation of any administrative
governmental body or (ii) in the performance of its obligations under the Asset
Purchase Agreement dated as of May 1, 1998, between Payee and Maker ("The Asset
Purchase Agreement") ("Event of Default").
If an Event of Default shall occur with respect to this Note, or the
Secondary Promissory Note, as defined in the Asset Purchase Agreement, and be
continuing, the Payee or subsequent
1
<PAGE>
holders may, at its option, declare the unpaid principal amount of this Note
immediately due and payable.
The indebtedness of the Maker hereunder is solidarily guaranteed by
Amedisys, Inc. pursuant to a Guaranty Agreement having the same date hereof.
Notwithstanding anything to the contrary in this Note or any other
agreement entered into in connection herewith, whether now existing or hereafter
arising and whether written or oral, it is agreed that the aggregate of all
interest and any other charges constituting interest, or adjudicated as
constituting interested, and contracted for, chargeable or receivable under this
Note or otherwise in connection with this loan transaction, shall under no
circumstances exceed the Maximum Rate. In other agreement entered into in
connection herewith or therewith, by voluntary preparyment by Maker or
otherwise, then earned interest may never include more than the Maximum Rate. If
from any circumstances any holder of this Note shall ever receive interest or
any other charges constituting interest, or adjudicated as constituting
interest, the amount, if any, which would exceed the Maximum Rate shall be
applied to the reduction of the principal amount owing on this Note, and not to
the payment of interest; or if such excessive interest exceeds the unpaid
balance of principal thereof, the amount of such excessive interest that exceeds
the unpaid balance of principal hereof shall be refunded to Maker. In
determining whether or not the interest paid or payable exceeds the Maximum
Rate, to the extent permitted by applicable law (i) any nonprincipal payment
shall be characterized as an expense, fee or premium rather than as interest;
and (ii) all interest at any time contracted for, charged, received or preserved
in connection herewith shall be amortized, prorated, allocated and spread in
equal parts during the period of the full stated term of this Note. The term
"Maximum Rate" shall mean the maximum rate of interest allowed by applicable
federal or state law.
Except as provided herein, Maker and any sureties, guarantors and endorsers
of this Note jointly and severally waive demand, presentment, notice of
nonpayment or dishonor, notice of intent to accelerate, notice of acceleration,
diligence in collecting, grace, notice and protest, and consent to all
extensions without notice for any period or periods of time and partial
payments, before or after maturity, without prejudice to the holder. The holder
shall similarly have the right to deal in any way, at any time, with one or more
of the foregoing parties without notice to any other party, and to grant any
such party any extensions of time payment for any of said indebtedness, or to
grant any other indulgences or forbearance whatsoever, without notice to any
other party and without in any way affecting the personal liability of any party
hereunder. If any efforts are made to collect or enforce this Note or any
installment due hereunder, the undersigned agrees to pay all collection costs
and fees, including reasonable attorney's fees.
This Note shall be construed and enforced under and in accordance with the
laws of the State of Louisiana.
2
<PAGE>
IN WITNESS WHEREOF, Maker has duly executed this Note as of the day and
year first above written.
AMEDISYS SPECIALIZED MEDICAL SERVICES, INC.
By: /s/MICHAEL MCMAUDE
-----------------------------
Michael A. McMaude, President
3
<PAGE>
EXHIBIT 2.4
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993,
AS AMENDED AND IS TRANSFERRABLE ONLY UPON COMPLIANCE WITH OR AN EXEMPTION FROM
ALL APPLICABLE SECURITY AND OTHER LAWS.
PROMISSORY NOTE
$400,000.00 Baton Rouge, Louisiana May 1, 1998
FOR VALUE RECEIVED, the undersigned, AMEDISYS SPECIALIZED MEDICAL SERVICES,
INC. a Louisiana corporation ("Maker"), hereby promises to pay to the order of
PRECISION HOME HEALTH CARE, INC. ("Payee"), at Baton Rouge, Louisiana, the
principal sum of Four Hundred Thousand and no/100 Dollars ($400,000.00), in
lawful money of the United States of America, which shall be legal tender, in
payment of all debts and dues, public and private at the time of payment,
bearing interest and payable as provided herein.
Interest on the unpaid balance of this Note shall accrue from the date
hereof at a rate per annum equal to 9.5% from the date hereof to May 1, 1999,
and thereafter at the prime interest rate designated in the Wall Street Journal
on the anniversary date hereof, plus one percentage point; provided, however,
that such interest shall not exceed the Maximum Rate as hereinafter defined. All
past-due principal and interest shall bear interest at the maximum rate
permitted by applicable law. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
The principal amount of and accrued interest on this Note shall be due and
payable in twenty-four (24) equal monthly installments, the first installment of
which is due on June 1, 1998, and like amount on the same day of each month
thereafter. The monthly installments through May 1, 1999, shall be in the amount
of $18,365.80 each, with the amount thereafter to be adopted on the basis of the
changes in the interest rate as provided above.
This note may be prepaid in whole or in part, at any time and from time to
time, without premium or penalty.
If any payment of principal of or interest on this Note shall become due on
a Saturday, Sunday or any other day on which national banks are not open for
business, such payment shall be made on the next succeeding business day.
An event of default means default by the Maker (i) in the payment of any
installment of the principal of, and interest on, the Note when due, whatever
the reason for such event of default and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any Court or any order, rule or regulation of any administrative
governmental body or (ii) in the performance of its obligations under the Asset
Purchase Agreement
1
<PAGE>
dated as of May 1, 1998, between Payee and Maker ("The Asset Purchase
Agreement") ("Event of Default").
If an Event of Default shall occur with respect to this Note, or the
Primary Promissory Note, as defined in the Asset Purchase Agreement, and be
continuing, the Payee or subsequent holders may, at its option, declare the
unpaid principal amount of this Note immediately due and payable.
The indebtedness of the Maker hereunder is solidarily guaranteed by
Amedisys, Inc. pursuant to a Guaranty Agreement having the same date hereof.
Notwithstanding anything to the contrary in this Note or any other
agreement entered into in connection herewith, whether now existing or hereafter
arising and whether written or oral, it is agreed that the aggregate of all
interest and any other charges constituting interest, or adjudicated as
constituting interested, and contracted for, chargeable or receivable under this
Note or otherwise in connection with this loan transaction, shall under no
circumstances exceed the Maximum Rate. In other agreement entered into in
connection herewith or therewith, by voluntary preparyment by Maker or
otherwise, then earned interest may never include more than the Maximum Rate. If
from any circumstances any holder of this Note shall ever receive interest or
any other charges constituting interest, or adjudicated as constituting
interest, the amount, if any, which would exceed the Maximum Rate shall be
applied to the reduction of the principal amount owing on this Note, and not to
the payment of interest; or if such excessive interest exceeds the unpaid
balance of principal thereof, the amount of such excessive interest that exceeds
the unpaid balance of principal hereof shall be refunded to Maker. In
determining whether or not the interest paid or payable exceeds the Maximum
Rate, to the extent permitted by applicable law (i) any nonprincipal payment
shall be characterized as an expense, fee or premium rather than as interest;
and (ii) all interest at any time contracted for, charged, received or preserved
in connection herewith shall be amortized, prorated, allocated and spread in
equal parts during the period of the full stated term of this Note. The term
"Maximum Rate" shall mean the maximum rate of interest allowed by applicable
federal or state law.
Except as provided herein, Maker and any sureties, guarantors and endorsers
of this Note jointly and severally waive demand, presentment, notice of
nonpayment or dishonor, notice of intent to accelerate, notice of acceleration,
diligence in collecting, grace, notice and protest, and consent to all
extensions without notice for any period or periods of time and partial
payments, before or after maturity, without prejudice to the holder. The holder
shall similarly have the right to deal in any way, at any time, with one or more
of the foregoing parties without notice to any other party, and to grant any
such party any extensions of time payment for any of said indebtedness, or to
grant any other indulgences or forbearance whatsoever, without notice to any
other party and without in any way affecting the personal liability of any party
hereunder. If any efforts are made to collect or enforce this Note or any
installment due hereunder, the undersigned agrees to pay all collection costs
and fees, including reasonable attorney's fees.
2
<PAGE>
This Note shall be construed and enforced under and in accordance with the
laws of the State of Louisiana.
IN WITNESS WHEREOF, Maker has duly executed this Note as of the day and
year first above written.
AMEDISYS SPECIALIZED MEDICAL SERVICES, INC.
By: /s/MICHAEL MCMAUDE
-------------------------------
Michael A. McMaude, President
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 471,000
<SECURITIES> 0
<RECEIVABLES> 9,849,000
<ALLOWANCES> 2,957,000
<INVENTORY> 1,054,000
<CURRENT-ASSETS> 12,258,000
<PP&E> 9,959,000
<DEPRECIATION> 3,903,000
<TOTAL-ASSETS> 30,912,000
<CURRENT-LIABILITIES> 16,062,000
<BONDS> 4,948,000
0
1,000
<COMMON> 3,000
<OTHER-SE> 8,759,000
<TOTAL-LIABILITY-AND-EQUITY> 30,912,000
<SALES> 0
<TOTAL-REVENUES> 24,475,000
<CGS> 0
<TOTAL-COSTS> 14,319,000
<OTHER-EXPENSES> 16,072,000
<LOSS-PROVISION> 415,000
<INTEREST-EXPENSE> 418,000
<INCOME-PRETAX> (6,703,000)
<INCOME-TAX> (2,279,000)
<INCOME-CONTINUING> (4,424,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,424,000)
<EPS-PRIMARY> (1.45)
<EPS-DILUTED> (1.45)
</TABLE>
