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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 22, 1996
COMMUNITY MEDICAL TRANSPORT, INC.
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(Exact name of Registrant as specified in charter)
Delaware 0-24640 13-3507464
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(State or Other (Commission File No.) (IRS Employer
jurisdiction of Identification Number)
incorporation)
45 Morris Street, Yonkers, New York 10705
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 963-6666
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Item 2. Acquisition or Disposition of Assets
On August 22, 1996, a wholly owned subsidiary (the "Subsidiary") of
Community Medical Transport, Inc. (the "Company") completed the purchase from
Elite Ambulance & Medical Coach, Inc. ("Elite") of ambulettes and certain other
assets, including accounts receivable and a license to operate an ambulette
service by the State of New Jersey. The assets were acquired pursuant to an
asset purchase agreement among the Company, Elite and its shareholders (the
"Purchase Agreement"). Elite operated an ambulette service from Orange, New
Jersey servicing Essex County, New Jersey and other nearby counties under the
name Elite. After the acquisition, the Subsidiary changed its name to Elite
Ambulance & Medical Coach, Inc. and is operating the acquired ambulette service
under the name Elite. The consideration for the acquisition was $759,576 of
which half was paid in cash at the closing and the balance pursuant to a one
year note (the "Note"). In connection with the acquisition, the Company (i)
assumed certain debts related to the assets, including bank indebtedness of
approximately $19,500, (ii) entered into a contract with affiliates of Elite to
acquire the real estate facility containing Elite's operating facility for
approximately $1,200,000 in cash and short term mortgage notes, and (iii)
assumed a lease for such facility until the closing of the real estate contract
of sale.
Reference is made to the Asset Purchase Agreement and the Note,
copies of which are attached hereto and incorporated by reference herein, for
more detailed information as to the transactions described herein.
Item 7. Financial Statements, Pro-Forma Information and Exhibits
(a) Financial Statements of Elite Ambulance & Medical Coach, Inc.*
(i) (A) Report of Independent Auditors.
(B) Balance Sheet as of December 31, 1995.
(C) Statement of Operations and Retained Earnings for
the year ended December 31, 1995.
(D) Statement of Cash Flows for the year ended
December 31, 1995.
(E) Notes to the Financial Statements.
(ii) (A) Balance Sheet as of June 30, 1996 (unaudited).
(B) Statement of Income and Retained Earnings for the
six months ended June 30, 1996 (unaudited).
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(C) Statement of Cash Flows for the six months ended
June 30, 1996 (unaudited).
(b) Pro Forma Financial Statements of the Company*
(i) Pro-Forma Consolidated Balance Sheet as of June 30, 1996.
(ii) Pro-Forma Consolidated Statement of Income for the year
ended December 31, 1995.
(iii) Pro-Forma Consolidated Statement of Income for the six
months ended June 30, 1996.
(c) Exhibits
(i) Asset Purchase Agreement, dated as of February 23, 1996,
among the Company, Elite Ambulance & Medical Coach, Inc.
and shareholders of Elite Ambulance & Medical Coach, Inc.
(ii) One Year Promissory Note, dated as of August 15, 1996,
between the Company and Elite Ambulance & Medical Coach,
Inc.
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* The Company's requirements pursuant to Regulation S-X, promulgated by
the Securities and Exchange Commission, to file financial statements and
pro-forma information relating to the asset purchase within 15 days
after the asset purchase is impracticable. The Company will file such
financial statements and pro-forma financial information by amendment
hereto no later than 75 days after consummation of the asset purchase.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Dated: September 5, 1996 COMMUNITY MEDICAL TRANSPORT, INC.
(registrant)
By: /s/ Donald Panos
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Donald Panos, Vice President
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Exhibit 7(c) (i)
ASSET PURCHASE AGREEMENT DATED AS OF
FEBRUARY 23, 1996 AMONG COMMUNITY MEDICAL
TRANSPORT, INC. ("COMMUNITY"), A DELAWARE
CORPORATION, ELITE AMBULANCE & MEDICAL
COACH, INC., A NEW JERSEY CORPORATION ("ELITE"),
AND SHAREHOLDERS OF ELITE EXECUTING THIS
AGREEMENT (THE "ELITE SHAREHOLDERS") AS SET
FORTH ON THE SIGNATURE PAGE HERETO.
INTRODUCTION
Elite is the owner and operator of ambulance and ambulette
services in New Jersey pursuant to appropriate licenses (the "Business");
The Elite Shareholders are the sole shareholders of Elite; and
Community, through subsidiaries, operates ambulances and
ambulette services in the New York metropolitan area.
Elite desires to sell and Community (or a subsidiary to be
wholly-owned by Community) desires to acquire operating and other assets
utilized in the Business, and to assume certain liabilities of Elite arising in
connection with the assets to be acquired.
NOW, THEREFORE, in consideration of the premises and of the
mutual promises and covenants contained herein, the parties, intending to be
legally bound, hereby represent, warrant and agree as follows:
I. PURCHASE AND SALE
1.1 Assets To Be Conveyed. Subject to the terms and conditions
herein set forth, and on the basis of the mutual representations, warranties and
covenants herein set forth, at the Closing (as hereinafter defined), Elite
agrees to sell, and Community agrees to buy, substantially all of the operating
assets used in, or related to, the Business (collectively the "Assets"), as more
fully described in Schedule A-1, free and clear of all mortgages, liens,
encumbrances, security interests, equities and claims, to other persons of every
kind and character ("Liens") except as set forth in the Disclosure Schedule,
including but not limited to all physical assets of Elite reflected on the
Balance Sheet other than Excluded Assets which may include one or more of the
items described below in this Section 1.1, with only such changes therein as
shall have occurred in the ordinary course of conduct of the Business between
the close of business on the date hereof and the Closing Date (as hereinafter
defined);
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(a) all ambulances and ambulettes and other vehicles,
as well as all machinery and equipment used in connection with the Business,
together with all replacements thereof and additions thereto;
(b) all of Elite's right, title and interest in, to and
under all contracts, leases of personal property and other agreements related
to the Business (exclusive of those relating to Excluded Assets) as well as
customer lists;
(c) all governmental licenses, operating certificates
and permits, including reimbursement authorizations, which may be transferred
pursuant to applicable law.
(d) all books, papers, files, documents, and records
(including without limitation, records stored on electronic media) pertaining
to the Assets (other than the corporate minute and stock books and tax returns);
1.2 Disclosure Schedules. By March 5, 1996, (a) Elite shall
deliver a schedule relating to Elite (the "Elite Disclosure Schedule") together
with Schedules A-1 through A-3, and (b) Community shall deliver a schedule
relating to Community (the "Community Disclosure Schedule" and collectively with
the Elite Disclosure Schedule, the "Disclosure Schedules") setting forth the
matters required to be set forth in the Disclosure Schedules as described
elsewhere in this Agreement. The Disclosure Schedules shall be deemed to be part
of this Agreement.
1.3 Excluded Assets. Elite shall retain following the Closing
all of Elite's right, title and interest as at the Closing to each of the
"Excluded Assets" listed in Schedule A-2, including but not limited to real
property at which Elite's facility is located and the assets, properties, rights
and claims so listed.
1.4 Assumed Liabilities. From and after the Closing Date, any
liabilities of Elite incurred in the ordinary course of business, including the
liabilities related to the Assets acquired (the "Assumed Liabilities") as set
forth in Schedule A-3.
1.5 Subsidiary. On or prior to the Closing Date, Community
shall designate a wholly owned subsidiary (the "Subsidiary") to acquire the
Assets and Business. Unless otherwise indicated by the context, references
herein to Community shall include the Subsidiary. Community shall remain
primarily liable, however, for all obligations herein.
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1.6 Definitions - General. As used herein the following terms
shall have the definitions set forth below:
(a) The term "Knowledge" shall mean with respect to a
party's awareness of the presence or absence of a fact, event or condition
shall mean (a) actual knowledge plus, if different, (b) the knowledge that would
be obtained if such party conducted itself faithfully and exercised reasonable
diligence in light of known facts.
(b) The term "Regulatory Agency" shall refer to any
foreign federal state or local governmental agency licensing any aspect of the
Business or otherwise regulating Elite or any aspect of the Business.
(c) "Reimbursement Agency" shall refer to any Regulatory
Agency, any insurance company or other private or public association
corporation, partnership or other entity or person of any description
responsible for administering or paying amounts to any public or private medical
reimbursement program including but not limited to the governmental programs
under Medicaid, Medicare, or pursuant to any private insurance program or
policy.
II. PURCHASE PRICE
2.1 Purchase Price. The Purchase Price to be paid by Community
for the Assets shall equal three times the 1995 pre-tax income as set forth in
the 1995 income statement included in the Elite Audited Financial Statements to
be delivered pursuant to Section 8.1.
2.2 Purchase Price Payment. One-half the purchase price shall
be paid in cash at the closing with the balance payable one year after the
closing period to the Note to be mutually agreed and to be attached as Exhibit 1
("Purchase Note").
2.3 Allocation of Purchase Price. For the purposes of Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code"), the parties
hereto agree that the Purchase Price shall be allocated pursuant to the mutual
agreement of the Parties.
2.4 Adjustment - Post March 31, 1996 Closing. In the event
that the Closing does not occur by March 31, 1996, Elite shall cause the
preparation of an unaudited balance sheet as of the last day of the month prior
to Closing (the "Adjustment Date") together with an unaudited income statement
for the period then ended (such statements referred to as "Pre-Closing
Financial Statements"). Such Pre-Closing Financial Statements shall be prepared
and meet the requirements of Sections 4.15(b) and 4.15(c) hereof and shall be
subject to the review of Richard A. Eisner & Co., Community's independent public
accountants. Such Pre-Closing Financial Statements shall be delivered no later
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than thirty (30) days after the Adjustment Date and any payments due pursuant to
the adjustment as hereinafter provided shall be made within fifteen (15) days
after delivery or acceptance of such Pre-Closing Financial Statements or the
Closing, if later. Notwithstanding the foregoing, if Richard A. Eisner & Co.
does dispute the amount of Net Worth (the "Pre-Closing Net Worth") set forth in
the income statement included in such Pre-Closing Financial Statements, and if
such accounting firm and Elite's accounting firm can not resolve any dispute,
they shall appoint a third accounting firm to make such determination which
shall be binding on both parties. The party against whom the determination is
made shall pay the fees of such third party accountants.
If the Adjusted Net Worth exceeds the Net Worth of Elite as
set forth in the audited Elite balance sheet included in the Elite Audited
Financial Statements delivered pursuant to Section 8.1 hereof ("1995 Net Worth")
by more than $20,000, the Purchase Price shall be increased by such excess. If
the 1995 Net Worth exceeds the Adjusted Net Worth by an amount in excess of
$20,000, then the Purchase Price shall be reduced by the amount of such excess.
Any increase in the Purchase Price shall be paid to Elite and a decrease shall
reduce the Purchase Note.
III. CLOSING; TERMINATION
3.1 Closing. The closing of the purchase and sale of the
Assets and other transactions contemplated hereby (the "Closing") shall be held
on such date no later than May 31, 1996, or as soon as practicable (the "Closing
Date") after all conditions precedent to the obligations of Community and Elite,
as set forth in Articles VII and VIII have been satisfied (or waived in writing)
and at a time mutually agreeable to Community and Elite. The Closing shall be at
the offices of Community's counsel in New York, New York or such other place as
may be mutually agreed upon by the parties.
3.2 Elite's Closing Deliveries. At the Closing (in addition to
deliveries pursuant to the Real Estate Agreement), Elite or Elite Shareholders
shall deliver to Community or the Subsidiary (duly executed by Elite or Elite
Shareholders where appropriate):
(a) an instrument or instruments of conveyance in the
form to be agreed upon including bills of sale, and other instruments of
conveyance pertaining to the Assets, all containing a general warranty of title
as shall, in Community's opinion, be necessary or appropriate to convey to the
Subsidiary all of the Assets, including but not limited to all vehicles;
(b) originals of all material Contracts (as hereinafter
defined);
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(c) a certificate, dated as of the Closing Date, to be
executed by the chairman or the President of Elite and by Elite Shareholders, to
the effect that the representations and warranties of Elite contained in this
Agreement are true and correct in all material respects at and as of the Closing
Date and that Elite has substantially performed all material terms, covenants
and conditions to be complied with or performed by Elite pursuant to the terms
hereof on or prior to the Closing Date;
(d) Non-Competition Agreement ("Non-Competition
Agreement") to be mutually agreed upon and to be attached hereto as Exhibit 2,
dated as of the Closing Date, among Community, Elite and the Elite Shareholders,
excepting therefrom Greg Scott and Daniel Cozza the ownership of Able Ambulance
and Medical Coach, Inc.;
(e) an opinion of counsel of Elite and the Elite
Shareholders in form and substance satisfactory to Community;
(f) written consents, licenses, permits, certificates and
authorizations, to the extent required to be obtained by Elite from all third
parties, including without limitation any Regulatory Authority with respect to
the assignment of all Elite's contracts comprising a portion of the Assets, or
the transfer of Elite's Assets, or Business (it being understood that
notwithstanding anything to the contrary contained in this Agreement, Elite
shall only be required to use its best efforts to obtain the consent of parties
to the Contracts);
(g) such other documents, at the Closing or subsequently,
as may be reasonably requested by Community from Elite as necessary for the
implementation and consummation of this Agreement and the other transactions
contemplated hereby.
3.3 Community's Closing Deliveries. At the Closing,
Community shall deliver to Elite:
(a) certified or bank checks in clearing house funds
drawn to the order of Elite in the amount of the Purchase Price to be paid at
closing pursuant to paragraph 2.2;
(b) the Purchase Note;
(c) a certificate of Community, dated as of the Closing
Date, executed by the Chairman or the President or a Vice President of Community
to the effect that the representations and warranties of Community contained in
this Agreement are true and correct in all material respects and that Community
has substantially complied with or performed all material terms, covenants, and
conditions to be complied with or performed by Community on or prior to the
Closing Date;
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(d) an opinion of Community's counsel, Parker Duryee
Rosoff & Haft, in form and substance reasonably satisfactory to Elite;
(e) Non-Competition Agreement;
(f) such other documents, at the Closing or subsequently,
as may be reasonably requested by Elite from Community as necessary for the
implementation and consummation of this Agreement and the other transactions
contemplated hereby.
IV. REPRESENTATIONS AND WARRANTIES OF ELITE AND ELITE
SHAREHOLDERS
Except as set forth in the Disclosure Schedule, Elite and
Elite Shareholders ("Elite Representatives") jointly and severally represent and
warrant to Community, as follows as of the date hereof and the Closing date,
with the Knowledge and understanding that Community and Subsidiary are relying
materially upon such representations and warranties:
4.1 Organization and Standing of Elite. Elite is a
corporation, duly organized, validly existing and, except as set forth in the
Disclosure Schedule, in good standing under the laws of the State of New Jersey.
Elite has all requisite corporate power to carry on its business as it is now
being conducted and is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where such qualification is
necessary under applicable law, except where the failure to qualify
(individually or in the aggregate) would not have material adverse effect on the
Business or the Assets. Elite does not own any capital stock in any other
corporation, business trust or similar entity.
4.2 Elite's Authority. This Agreement and the transactions
contemplated hereby have been duly authorized by all necessary action of the
directors and shareholders of Elite. This Agreement constitutes, and all other
agreements contemplated hereby, when executed and delivered by Elite in
accordance herewith, will constitute the valid and binding obligations of Elite,
enforceable in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency and other laws
affecting the enforcement of creditors' rights generally and by equitable
principles.
4.3 Properties. Except as set forth on the Disclosure
Schedule, Elite has good and marketable title, free and clear of liens, claims
and encumbrances, to all of the Assets which it purports to own as reflected on
the Balance Sheet and which are being conveyed hereunder. Neither the whole nor
any material portion of the Assets is subject to any governmental decree or
order to be sold or is being condemned, expropriated or otherwise taken by any
public authority with or without payment of compensation therefor, nor, to
Elite Representatives' Knowledge has any such condemnation, expropriation or
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taking been proposed. Except as otherwise disclosed, none of the Assets is
subject to any restriction which would prevent continuation in any material
respect of the use currently made thereof or materially adversely affect the
value thereof. Elite has complete and unrestricted power and the unqualified
right to sell, assign, transfer and deliver to Community, the General Assignment
and all deeds, endorsements, assignments and other instruments to be executed
and delivered to Community by Elite at the Closing. Such transfer documents will
be valid and binding obligations of Elite, enforceable in accordance with their
respective terms except as such enforcement may be limited by applicable
bankruptcy, insolvency and other laws affecting the enforcement of creditors
rights generally and by equitable principles, and will effectively vest in
Community, and Community will acquire good and valid title to the Assets, free
and clear of all Liens, except as otherwise reflected in the Disclosure
Schedule. Elite does not own any interest in real property, whether in fee or
leaseholds, that constitutes any part of the Assets.
4.4 Contracts Listed; No Default. All material contracts,
agreements, licenses, leases, permits, commitments, instruments and
understandings, written or oral, presently existing and in force, (individually,
a "Contract" and collectively, the "Contracts"), connected with or relating in
any respect to present or proposed material operations of the Business or the
Assets will be listed in the Disclosure Schedule. Elite is the holder of, or
party to, or beneficiary of, all the Contracts. The Contracts constitute all
contracts necessary for the operation of the Business as it is currently being
operated and are each valid, binding and enforceable by Elite and, to the extent
assigned at the Closing, will be valid, binding and enforceable by Community,
against the other parties thereto in accordance with their respective terms
except in each such case as such enforcement may be limited by applicable
bankruptcy, insolvency and other laws affecting the enforcement of creditors'
rights generally and by equitable principles and the provisions of such
contracts. Except as otherwise set forth therein or in the Disclosure Schedule,
the Contracts do not provide for any change after the Closing Date, in amounts
presently being paid or received by Elite thereunder. Except as set forth in the
Disclosure Schedule, Elite is not in default or breach of any material provision
of the Contracts. Elite's operation of the Business has been, is, and will,
between the date hereof and the Closing Date, continue to be, consistent in all
material respects with the terms and conditions of the Contracts. True, correct
and complete copies of all the Contracts were previously delivered to Community
along with the Disclosure Schedule.
4.5 Litigation. Except as otherwise disclosed, (a) there is no
claim, action, proceeding, or investigation pending or, to Elite's
Representative's knowledge, threatened against or affecting Elite, the Assets or
the Business before or by any court, arbitrator or governmental agency or
authority. Except as set forth in the Disclosure Schedule, all such pending
actions are covered by insurance and in no event shall Community or Subsidiary
have any liability therefor nor (b) to Elite Representatives' knowledge, has
Elite engaged in any conduct that would give rise to any such claim, action,
proceeding or investigation. There is no strike or unresolved labor dispute
relating to Elite's employees which, in Elite's and Elite Shareholders'
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reasonable judgment, could have any material adverse effect on the Business or
the Assets. There are no decrees, injunctions or orders of any court,
arbitrator, governmental department, or agency against Elite relating to or
affecting the Assets or the Business.
4.6 Taxes and Fees. For purposes of this Agreement, (A) "Tax"
(and, with correlative meaning, Taxes") shall mean any federal, state, local or
foreign, income, alternative or add-on minimum, business, employment, franchise,
occupancy, payroll, property, sales, transfer, use, withholding or other tax,
levy, impost, fee, imposition, assessment or similar charge together with any
related addition to tax, interest, penalty or fine thereon; (B) "Returns" shall
mean all returns (including, without limitation, information returns and other
material information) reports and forms relating to Taxes; and (C) "Fees" shall
mean any fees payable to third parties in connection with the Business or the
Assets;
Elite has duly filed all Returns required to be filed by it.
All such Returns were, when filed, and to Elite Representatives's Knowledge,
are, accurate and complete in all material respects and were prepared in
conformity with applicable laws and regulations. Elite has paid or will pay in
full or has adequately reserved against (with disclosure of such reserves in the
Disclosure Schedule) all Taxes otherwise assessed against it through the Closing
Date except for assessments being challenged in good faith as set forth in the
Disclosure Schedule and has paid or will pay all Fees and all installment
payments for Fees due and payable through the Closing Date.
Elite is not a party to any pending action or proceeding by
any governmental authority for the assessment of any Tax, and no claim for
assessment or collection of any Tax has been asserted against Elite that has not
been paid. There are no Tax liens upon the Assets (other than the lien of
personal property taxes not yet due and payable). To the Knowledge of Elite
Representatives, there is no valid basis for any assessment, deficiency, notice,
30-day letter or similar intention to assess any Tax to be issued to Elite by
any governmental authority. All material Returns of Elite have been closed by
applicable statute for all periods to and including December 31, 1989 and
examined by all relevant tax authorities for all such periods. All deficiencies
proposed or assessed as a result of such examinations have been paid and
settled. There are no outstanding agreements or waivers extending any statutory
period of limitations applicable to any material return of Elite for any period.
No property of Elite comprising part of the Assets is property which Community
is or will be required to treat as owned by another person pursuant to the safe
harbor leasing provisions (now repealed) of the Code.
4.7 Compliance with Laws and Regulations and Reimbursement
Agents.
(a) Except as otherwise disclosed, the Business,
operations, property and Assets of Elite, conform with and have been conducted
and operated in compliance with all, and are not in violation of any, applicable
federal, state and local laws, rules and regulations, the violation of which
(individually or in the aggregate) would have a material adverse effect on
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the financial condition, operations, properties, assets, liabilities or
prospects of the Business or the Assets (taken as a whole).
(b) Except as otherwise disclosed, to the knowledge of
Elite Representatives, Elite is conforming, and has conformed in all material
respects, with all policies, procedures, contracts, rules, regulations, and laws
with respect to reimbursement from any source, including governmental sources
(including without limitation Medicare and Medicaid), third party payors and
individual payors. Elite has also not made any payment or other inducement to
any individual or entity in return for using or ordering services from Elite, or
in return for referring or influencing another individual or entity to use or
order services from Elite. Nor has Elite received any payment or other
inducement from any individual or entity in return for using or ordering
services from any healthcare provider or in return for referring or influencing
another individual or entity to use or order services from any healthcare
provider.
(c) Without limiting any other representations, neither
Elite nor any other stockholder of Elite has engaged in any activities that are
prohibited under federal Medicare and Medicaid statutes, 42 U.S.C. Section
1320a-7b, or the regulations promulgated pursuant to such statutes, or related
state or local statutes or regulations or which are prohibited by binding rules
of professional conduct, including but not limited to the following:
(i) knowingly and willfully making or causing to be
made a false statement or representation of a material fact in any applications
for any benefit or payment;
(ii) knowingly and willfully making or causing to be
made any false statement or representation of a material fact for use in
determining rights to any benefit or payment;
(iii) failing to disclose knowledge by a claimant of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with intent to
secure such benefit or payment fraudulently;
(iv) knowingly and willfully soliciting or receiving
any remuneration (including any kickback, bribe or rebate), directly or
indirectly, overtly or covertly, in cash or in kind, or offering to pay such
remuneration (i) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by any Reimbursement Agency, or (ii) in
return for purchasing, leasing or ordering or arranging for or recommending the
purchasing, leasing or order of any good, facility, service, or item for which
payment may be made in whole or in part by any Reimbursement Agency.
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4.8 Audits, Inquiries, etc. Except as otherwise disclosed,
Elite is not, nor has it been subject to any audit, inquiry or dispute of any
nature with the United States Department of Health or any other Regulatory
Agency or Reimbursement Agency.
4.9 Hazardous Materials. Elite has not received any written
notice from any governmental authority with respect to the violation of any law,
rule, regulation or ordinance pertaining to the use, maintenance, storage,
transportation or disposal of "Hazardous Materials". As used herein, the term
"Hazardous Materials" means any substance now or hereafter designated pursuant
to Section 307(a) and 311(b)(2)(a) of the Federal Clean Water Act, 33 USC
Sections 1317(a), 1321(b)(2)(A), Section 112 of the Federal Clean Air Act, 42
USC Section 3412, Section 3001 of the Federal Resource Conservation and Recovery
Act, 42 USC Section 6921, Section 7 of the Federal Toxic Substances Control Act,
15 USC Section 2606, or Section 101(14) and Section 102 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 USC Sections 9601(14)
and 9602.
4.10 Insurance. Elite has in force insurance policies, or
renewals thereof, as identified and described in the Disclosure Schedule,
reasonably adequate to cover the Assets and the Business against loss, damage
and liability and will maintain such insurance up to and including the Closing
Date.
4.11 Condition of Assets. Except as set forth in the
Disclosure Schedule, all Assets, including the vehicles, equipment, fixtures and
other personal property, will be in good operating condition and repair
(ordinary wear and tear excepted) on the Closing Date.
4.12 No Breaches. The making and performance of this
Agreement and the other agreements contemplated hereby by Elite do not
(i) conflict with or violate the articles of incorporation or the bylaws of
Elite, (ii) violate any material laws, ordinances, rules, or regulations, or
any order, writ, injunction or decree to which Elite is a party of which Elite
Representatives have knowledge or by which Elite or any of its material assets,
businesses, or operations are bound or affected or (iii) result in any material
breach or termination of, or constitute a default under, or constitute an event
which, with notice or lapse of time, or both, would become a default under, or
result in the creation of any encumbrance upon any material Asset under, or
create any rights of termination, cancellation or acceleration in any person
under, any material Contract to which Elite is a party.
4.13 Disclosure Schedule Complete. Elite shall promptly
supplement the Disclosure Schedule if events occur prior to the Closing that
would have been required to be disclosed had they existed at the time of
executing this Agreement. The Disclosure Schedule contains a true, correct and
complete list and description of all material items required to be set forth
therein. The Disclosure Schedule is expressly incorporated herein by reference.
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4.14 Employees. The Disclosure Schedule lists the executive
officers of Elite employed in the Business and their monthly compensation (as
well as a brief description of all benefits payable to employees). The
Disclosure Schedule lists all collective bargaining agreements.
4.15 Financial Statements.
(a) The Disclosure Schedule contains unaudited balance
sheets of Elite as at November 30, 1995 (herein called the "Balance Sheet" and
November 30, 1995 shall be referred to as the Balance Sheet Date) and an
unaudited statement of profit and loss for the eleven month period then ended,
(the "Elite Financial Statements"). The Balance Sheet and related statement for
the period ending on the Balance Sheet Date shall be referred to as the
"Interim Statements".
(b) Except as set forth herein, the Elite Financial
Statements and the Audited Elite Financial Statements required to be delivered
pursuant to Section 8.1 have and will be prepared on an accrual basis and
present fairly the financial position and results of operations of Elite
relating to the Business as of the dates and for the periods indicated, prepared
in accordance with generally accepted accounting principles ("GAAP"),
consistently applied.
(c) Except as otherwise disclosed, during the fiscal
periods to which the statements of income relate, the Business was conducted in
substantially the same manner as it is currently conducted. Except as otherwise
disclosed, there are no (i) material debts, liabilities (contingent or
otherwise) or obligations of any kind or nature relating to the Business or its
operations not fully reflected or reserved against in the Balance Sheet; and
(ii) there are no Assets of Elite relating to the Business, the value of which
is materially overstated in the Balance Sheet. The Physical Assets shown on the
Balance Sheet are carried at actual cost less depreciation computed on a basis
consistent with prior years.
4.16 Absence of Certain Changes or Events. Except as set
forth in the Disclosure Schedule, since the Balance Sheet Date, there has not
been: (a) any material adverse change in the financial condition, operations,
properties, assets, liabilities or prospects of the Business, including but not
limited to:
(a) to the best of their knowledge, any material adverse
change in the financial condition, assets, liabilities (contingent or
otherwise), or income of Elite;
(b) any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting the properties or business
of Elite;
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(c) any change in the authorized capital of Elite or in
the securities outstanding or any change in the ownership interests or any grant
of any options, warrants, calls, conversion rights or commitments;
(d) any distribution in respect of the capital stock
(other than dividends) or any direct or indirect redemption, purchase or other
acquisition of any of the capital stock of Elite;
(e) any increase in the compensation, bonus, sales
commissions or fee arrangement payable or to become payable by Elite to its
officers, directors, the Stockholders, employees, consultants or agents, other
than step increases given to employees in the ordinary course of business
consistent with past practice;
(f) any work interruptions or labor grievances
materially adversely affecting the business of Elite;
(g) any sale or transfer, or any agreement to sell or
transfer, any material assets, property or rights of Elite to any person,
including, without limitation, the Stockholders or their affiliates;
(h) any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to Elite other than in the ordinary
course of business, including without limitation any indebtedness or obligation
of a Stockholder or any affiliate which could reasonably be expected to have a
Material Adverse Effect;
(i) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the assets,
property or rights of Elite or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(j) any waiver of any material rights or claims of
Elite; or
(k) any breach, amendment or termination of any material
contract, agreement, license, permit or other right to which Elite is a party.
4.17 Governmental Licenses, Permits, Etc. Elite has all
governmental licenses, permits, authorizations and approvals for the conduct of
the Business as currently conducted ("Licenses and Permits"). Except as
otherwise disclosed, Elite has been operating in compliance with such licenses
and permits. The Disclosure Schedule includes a list of all such known Licenses
and Permits. All such known Licenses and Permits are in full force and effect,
and no proceedings for the suspension or cancellation of any thereof is pending
or to Elite Representatives's knowledge, threatened.
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4.18 Employee Benefit Plans; ERISA.
(a) Except as set forth in the Elite Disclosure
Schedule, at the date hereof Elite does not maintain or contribute to any
employee benefit plans, programs, arrangements and practices (such plans,
programs, arrangement and practices of Elite being hereinafter collectively
referred to as the "Elite Plans"), including employee benefit plans within the
meaning set forth in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended, and all regulations promulgated thereunder, as in effect
from time to time ("ERISA"), or any written employment contracts providing for
an annual base salary in excess of $100,000 and having a term in excess of one
year, which contracts are not immediately terminable without penalty or further
liability, or other similar arrangements for the provision of benefits
(excluding any "Multiemployer Plan" within the meaning of Section 3(37) of ERISA
or a "Multiple Employer Plan" within the meaning of Section 413(c) of the Code,
and all regulations promulgated thereunder, as in effect from time to time. The
Elite Disclosure Schedule lists all Multiemployer Plans and Multiple Employer
Plans which Elite maintains or to which it makes contributions. Elite has no
obligation to create any additional such plan or to amend any such plan so as to
increase benefits thereunder, except as required under the terms of the Elite
Plans, under existing collective bargaining agreements or to comply with
applicable law.
(b) Except as set forth in the Elite Disclosure
Schedule, (1) there have been no prohibited transactions within the meaning of
Section 406 and 407 of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), with respect to any of the Elite Plans that could
result in penalties, taxes or liabilities which, singly or in the aggregate,
could have a material adverse effect on the business, operations, properties,
assets, condition (financial or other) results of operations or prospects of
Elite, (ii) except for premiums due, there is no outstanding liability in excess
of $10,000, whether measured alone or in the aggregate, under Title IV or ERISA
with respect to any of the Elite Plans, (iii) neither the Pension Benefit
Guaranty Corporation nor any plan administrator has instituted proceedings to
terminate any of the Elite Plans subject to Title IV of ERISA other than in a
"standard termination" described in Section 4041(b) of ERISA, (iv) none of the
Elite Plans has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each of the Elite Plans ended
prior to the date of this Agreement, (v) the current present value of all
projected benefit obligations under each of the Elite Plans which is subject to
Title IV of ERISA did not, as of its latest valuation date, exceed the then
current value of the assets of such plan allocable to such benefit liabilities
by more than the amount, if any, disclosed in the Financial Statements as of
September 30, 1994 (based upon reasonable actuarial assumptions currently
utilized for such Company Plan), (vi) each of the Elite Plans has been operated
and administered in all material respects in accordance with applicable laws
during the period of time covered by the applicable statute of limitations,
(vii) each of the Company Plans which is intended to be "qualified" within the
meaning of Section 401(a) of the Code has been determined by the IRS to be so
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qualified and such determination has not been modified, revoked or limited by
failure to satisfy any condition thereof or by a subsequent amendment thereto or
a failure to amend, except that it may be necessary to make additional
amendments retroactively to maintain the "qualified" status of such Company
Plans, and the period for making any such necessary retroactive amendments has
not expired, (viii) with respect to Multiemployer Plans, neither Elite or its
subsidiaries has made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in Sections 4203, 4204 and
4205 of ERISA and, to the knowledge of the Company, no event has occurred or is
expected to occur which presents a material risk of a complete or partial
withdrawal under said Sections 4203, 4204 and 4205, and neither Elite or its
subsidiaries would be subject to any withdrawal liability as of the Closing Date
due to Elite's or any of its subsidiaries' "complete withdrawal" or "partial
withdrawal" from any such multi-employer plan; (ix) there are no pending or, to
the knowledge of the Company, threatened or anticipated claims involving any of
the Company Plans other than claims for benefits in the ordinary course, and (x)
neither the Company nor any Company Subsidiary has any current liability in
excess of $10,000, whether measured alone or in the aggregate, for plan
termination or withdrawal (complete or partial) under Title IV of ERISA based on
any plan to which any entity that would be deemed one employer with the Company
or any Company Subsidiary under Section 4001 of ERISA or Section 414 of the Code
contributed during the period of time covered by the applicable statute of
limitations (the "Company Controlled Group Plans"), and the Company does not
anticipate that any such liability will be asserted against the Company or any
Company Subsidiary, none of the Company Controlled Group Plans has an
"accumulated funding deficiency" (as defined in Section 302 of ERISA and 412 of
the Code), and no Company Controlled Group Plan has an outstanding funding
waiver which could result in the imposition of liens, excise taxes or liability
against Elite in excess of $10,000 whether measure alone or in the aggregate.
4.19 Assumed Names. Elite has not owned, operated or
conducted the Business under any name other than Elite.
4.20 Accounts and Notes Receivable. Schedule 4.20 sets forth
an accurate list as of the Balance Sheet Date of the accounts and notes
receivable of Elite, including receivables from and advances to employees and
the stockholders, including any such amounts which are not reflected in the most
recent available balance sheet, and an aging of all accounts and notes
receivable showing amounts due in 30-day aging categories. Except to the extent
reflected on Schedule 4.20, all accounts and notes receivable of Elite arose
from the sale of products and services provided in the ordinary course of
business and are legal and binding claims of Elite, collectible in the amounts
shown on Schedule 4.20 net of reserves.
4.21 Business Locations. Elite does not own and has not owned
or leased, any real or personal property relating to the Business in any state
or country subsequent to January 1, 1990. Elite has no facilities relating to
the Business (including, without limitation, Elite's executive offices or places
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where the books and records of the Business are kept) except as otherwise set
forth on the Disclosure Schedule.
4.22 Relationships and Continuity of Relationships. Except as
otherwise disclosed, Elite is not subject to any special credit or other
restrictions by a client, government or reimbursement agency. Except as
otherwise disclosed, the present customers of the Business, as well as
governmental agencies or the reimbursement agency of the Business are expected
to continue to conduct business with Community and the Subsidiary after the
Closing Date in substantially the same manner as it has conducted business with
Elite in the past.
4.23 Governmental Approvals. Except as otherwise set forth in
the Disclosure Schedule, no authorization, license, permit, franchise, approval,
order or consent of, and no registration, declaration or filing by Elite with,
any Regulatory Authority, is required in connection with Elite's execution,
delivery and performance of this Agreement or the other agreements contemplated
hereby.
4.24 Predecessor Status, etc. Set forth in Schedule 4.24 is a
listing of all names of all predecessor companies of Elite, including the names
of any entities from whom Elite previously acquired significant assets. Except
as disclosed in Schedule 4.24, Elite has not been a subsidiary or division of
another corporation nor been a part of an acquisition which was later rescinded.
Except as set forth in Schedule 4.24, there has been no sale or spin-off of
significant assets of Elite within the last two years other than in the ordinary
course of business.
4.25 Labor Matters. Except as set forth in Schedule 4.25,
Elite is not bound by or subject to (and none of its assets or properties is
bound by or subject to) any arrangement with any labor union. Except as set
forth in Schedule 4.25, no employees of Elite are represented by any labor union
or covered by any collective bargaining agreement nor, to their knowledge, is
any organization campaign to establish such representation in progress. There is
no pending or, to the best of their knowledge, threatened labor dispute
involving Elite and any group of employees, nor has Elite experienced any labor
interruptions over the past three (3) years. Elite considers its relationship
with employees to be good.
4.26 No Omissions or Untrue Statements. To Elite
Representatives' knowledge, no representation or warranty made by Elite
Representatives in this Agreement (including the exhibits hereto) or in any
schedule, certificate, or other instrument furnished or to be furnished by Elite
Representatives to Community pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will knowingly contain any untrue
statement of a material fact, or omits or will knowingly omit to state a
material fact necessary to make the statements contained herein or therein not
materially misleading.
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V. REPRESENTATIONS AND WARRANTIES OF COMMUNITY
Community represents and warrants to Elite Representatives as
follows as of the date hereof and the Closing Date, with the Knowledge and
understanding that Elite Representatives are relying materially on such
representations and warranties:
5.1 Organization and Standing of Community. Community is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Community has all requisite corporate power to carry
on its business as it is now being conducted, and it and each of its
subsidiaries (and the Subsidiary), will be duly qualified to do business as a
foreign corporation and in good standing in each jurisdiction where such
qualification is necessary under applicable law except where the failure to
qualify (individually or in the aggregate) does not have any material adverse
effect on the business of Community and its subsidiaries considered as one
enterprise.
5.2 Community's Authority. This Agreement and the
transactions contemplated hereby have been duly authorized by all necessary
action of the directors and shareholders of Community. This Agreement
constitutes, and all other agreements contemplated hereby will constitute, when
executed and delivered by Community, the valid and binding obligations of
Community, enforceable in accordance with their respective terms.
5.3 Governmental Approval; Consents. Subject to Section 8.9,
no authorization, license, permit, franchise, approval, order or consent of, and
no registration, declaration or filing by Community with, any governmental
authority, domestic or foreign, federal, state or local, is required in
connection with Community's execution, delivery and performance of this
Agreement or the other agreements contemplated hereby.
5.4 Compliance with Laws and Regulations. The business,
operations, property and assets of Community and each of its subsidiaries,
conform with and have been conducted and operated in material compliance with,
and are not in material violation of applicable federal, state and local laws,
rules and regulations.
5.5 Community's SEC Reports. Community has previously
delivered to Elite true and complete copies, of (i) its Annual Report on Form
10-K for 1994 and (ii) Quarterly Report on Form 10-Q made by Community
(collectively, "Community's SEC Reports"). Community's SEC Reports do not
contain any untrue statement of a material fact, or fail to state any material
fact required to be stated therein or necessary to make the statements made
therein not materially misleading and the financial statements therein fairly
present the financial position and results of operations of Community on a
consolidated or combined basis as of the dates and for the periods indicated,
prepared in accordance with GAAP.
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5.6 Adverse Developments. Since September 30, 1995 there have
been no materially adverse changes in the assets, properties, operations,
prospects or financial condition of Community and its subsidiaries considered as
one enterprise, and no event has occurred other than in the ordinary and usual
course of business or as set forth in Community's SEC Reports which could be
reasonably expected to have a materially adverse effect upon Community and its
subsidiaries considered as one enterprise, and Community does not know of any
development or threatened development of a nature that will, or which could be
reasonably expected to, have a materially adverse effect upon Community and its
subsidiaries considered as one enterprise.
5.7 No Omissions or Untrue Statements. To Community's
Knowledge, no representation or warranty made by Community in this Agreement
(including the exhibits hereto) or in any schedule, certificate, or other
instrument furnished or to be furnished by Community to Elite or Elite
Shareholders pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will knowingly contain any untrue statement of
a material fact, or omits or will knowingly omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
VI. CONDUCT OF BUSINESS PENDING CLOSING
The parties covenant that between the date hereof and the
Closing:
6.1 Access for Community. Elite shall give to Community and
to Community's counsel, accountants and other representatives full and
reasonable access, during normal business hours throughout the period prior to
the Closing Date, to all of Elite's properties, books, contracts, commitments,
reimbursement and accounting records relating to the Assets, and the Business,
and records pertaining to customers, employees, suppliers and other persons
having business relations with Elite relating to the Assets and the Business
and shall furnish Community during such period with all information concerning
the Assets and the Business that Community may reasonably request, provided,
however, that Elite shall not be required to provide information reflecting
attorney-client communication, or attorney work product. Elite shall permit
Community and Community's representatives, agents, employees and independent
contractors, reasonable access to the properties of Elite at which the
operations of the Business are carried out in order to conduct engineering,
environmental and other inspections at Community's expense, as well as access
to professionals to determine that the Business is operating in full compliance
with all federal, state and local statutes, rules and regulations, and all
building, fire and zoning laws or regulations and that the Assets are in the
condition and of the capacities represented and warranted in this Agreement.
Any such investigation or inspection by Community shall not be deemed a waiver
of, or otherwise limit, the representations, warranties and covenants of Elite
contained herein.
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6.2 Conduct of Business. During the period from the date
hereof to the Closing Date, the Business shall be operated by Elite solely in
the usual and ordinary course and in compliance with the terms of this
Agreement, and all additions to and substitutions for and changes of form of the
Assets occurring from the date hereof to the Closing Date shall be deemed to
constitute Assets hereunder. Without limiting the generality of the foregoing:
(a) Elite will use its best efforts to preserve the
Business and its organization so as to (i) keep available the services of the
present employees and agents of Elite employed in the Business; (ii) complete or
maintain all of the Contracts in full force and effect in accordance with their
existing terms, unimpaired by litigation; (iii) maintain the integrity of all
confidential information regarding the Business; (iv) maintain in full force and
effect the insurance policies (or policies providing substantially the same
coverage, copies of which shall be made available to Community); and (v)
preserve the goodwill of, and the Business and contractual relationship with,
suppliers, customers and others having relations with the Business;
(b) Elite shall use its best efforts to keep in a normal
state of repair and operating efficiency all real property, tangible personal
property, leased property and leasehold improvements used in the operation of
the Business;
(c) Elite will continue to pay accounts payable of the
Business in accordance with present practice or as otherwise agreed upon by
Community and Elite;
(d) Elite will maintain its consumable materials and
supplies and the like at customary levels;
(e) Elite will not sell or transfer any assets or
property relating to the Business except for the Excluded Assets and enter into
or permit any transaction which would result in a breach of any representation
or warranty made by Elite or Elite Shareholders herein.
6.3 Certain Prohibitions. Elite will not amend, waive,
terminate, release or otherwise modify any Contract or other agreement relating
to the Business, except as same shall be necessary to conduct business in the
ordinary course.
6.4 Consents and Notices. Elite shall, on or prior to the
Closing Date, at its expense, obtain all Regulatory Agency, Reimbursement
Agency, and third-party consents and approvals, or give all notices, which are
necessary to be obtained or given by or on the part of Elite to authorize and
validate the sale of the Assets and the Business to Community, as provided
herein. Notwithstanding the foregoing, the Elite Representatives shall only be
obligated to use their best efforts to obtain the consent to the assignment of
all Material Contracts.
6.5 Exclusivity to Community. Elite, its officers,
directors, representatives, or agents, as appropriate, shall not, from the date
hereof until the Closing or termination, hold discussions with any person other
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than Community concerning the sale of the Business, solicit, negotiate or
entertain any inquiries, proposals or offers to purchase the Business from any
person other than Community, or disclose any information concerning the Business
to any person other than Community. This restriction shall lapse if the Closing
shall not have occurred by May 31, 1996.
VII. CONDITIONS TO ELITE'S OBLIGATIONS
Elite's obligation to consummate the Closing is subject to the
following conditions:
7.1 Compliance by Community. Community shall have performed
and complied with all agreements and conditions required by this Agreement to
be performed or complied with by Community prior to or on the Closing Date;
7.2 Accuracy of Community's Representations. Community's
representations and warranties contained in this Agreement (including the
exhibits hereto) or any schedule, certificate, or other instrument delivered
pursuant to the provisions hereof or in connection with the transactions
contemplated hereby shall be true in all material respects at and as of the
Closing Date (except for such changes permitted by this Agreement) and shall be
deemed to be made again as of the Closing Date.
7.3 Litigation. No litigation seeking to enjoin the
transactions contemplated by this Agreement or to obtain damages on account
hereof shall be pending or threatened.
7.4 Material Adverse Change. Except as disclosed in the
Disclosure Schedule, no material adverse change shall have occurred subsequent
to the Balance Sheet Date in the financial position or prospects of the business
of Community.
7.5 Non-Competition Agreement. Elite and the Elite
Shareholders shall have entered into the Non-Competition agreement.
7.6 Purchase of Facility Real Estate. Community shall
purchase the Real Estate presently utilized by Elite pursuant to a separate
agreement.
7.7 Documents. All documents and instruments to be delivered
by Community to Elite at the Closing pursuant to Section 3.3 shall have been
delivered in form and substance reasonably satisfactory to Elite.
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VIII. CONDITIONS TO COMMUNITY'S OBLIGATIONS
Community's and Subsidiary's obligation to consummate the
Closing is subject to the following conditions:
8.1 1995 Audited Financial Statements. On or prior to March
31, 1996, Elite shall cause the balance sheet as at December 31, 1995 and
December 31, 1994, and income cash flow and stockholder's equity statements for
the years then ended to be audited and deliver copies thereof to Community
(without any qualified opinion). Such financial statements shall be referred to
as the Audited Elite Financial Statements and such statements shall comply in
all respects with Regulation S-X promulgated by the Securities and Exchange
Commission. The Audited Elite Financial Statements shall not reflect a material
change in income, revenue, net worth than that set forth in the Elite Financial
Statements. The Elite Audited Financial Statements shall be subject and the
reasonable approval of Richard A. Eisner & Co., Community's independent public
accountants. The representations of Section 4.15(b) and 4.15(c) hereof shall be
applicable to such Audited Elite Financial Statements.
8.2 Compliance by Elite Representatives. Elite
Representatives shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by Elite
or Elite Shareholders prior to or on the Closing Date.
8.3 Accuracy of Elite Representatives' Representations. The
representations and warranties of Elite Representatives contained in this
Agreement (including the exhibits hereto and the Disclosure Schedule) or any
schedule, certificate, or other instrument delivered pursuant to the provisions
hereof or in connection with the transactions contemplated hereby shall be true
in all material respects at and as of the Closing Date (except for changes
permitted by this Agreement) and shall be deemed to be made again as of the
Closing Date.
8.4 Material Adverse Change. Except as set forth in the
Disclosure Schedule, no material adverse change shall have occurred subsequent
to the date hereof in the customer service, maintenance, financial position,
results of operations, liabilities, or prospects of the Business, or the Assets
nor shall any event or circumstance have occurred which would result in a
material adverse change in the customer service, maintenance, financial
position, results of operations, liabilities, or prospects of the Business or
the Assets.
8.5 Consents and Notices. Elite shall have obtained or given,
and delivered to Community, in form and substance reasonably satisfactory to
Community, the consents and notices required by Section 6.4, 3.2(g) and 8.9
hereof.
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8.6 Litigation. No litigation seeking to enjoin the
transactions contemplated by this Agreement or to obtain damages on account
hereof shall be pending or to Community's Knowledge be threatened.
8.7 Non-Competition Agreement. Elite and Elite Shareholders
shall have entered into the Non-Competition Agreement.
8.8 Compliance with Laws. Community shall have received such
additional evidence or assurances it shall have reasonably requested regarding
the operation of the Business being conducted in full compliance with all
applicable health, environmental and employee safety laws, rules and
regulations, state and federal, and all approvals required under applicable law
shall have been obtained as provided herein.
8.9 Governmental Approvals. Community shall have received the
approval of, or an express indication that there is no reason to oppose, this
transaction by the United States Department of Health and Human Services
(Medicare), any other Regulatory Agency or Reimbursement Agency with respect to
the transfer or issuance of any license or permit or to the continuation of the
Business by Community. Elite Representatives shall cooperate fully in
facilitating the receipt of this condition described herein.
8.10 Documents. All documents and instruments delivered by
Elite to Community at the Closing shall be in form and substance reasonably
satisfactory to Community.
IX. CASUALTIES
9.1 Risk of Loss. The risk of loss of any Assets (other than
the March Assets or other assets purchased by Community) by fire, tornado,
hurricane, or for any other reason between the date hereof and the Closing Date
shall be upon Elite. Elite shall notify Community of any material casualty loss
prior to the Closing and shall furnish Community copies of the insurance policy
(if any) applicable to such loss and a written statement of the insurance
carrier (if any) as to whether and to what extent such loss is covered by such
policy. Within 15 days of receiving such insurance policy and written statement
of the insurance carrier, Elite, upon written notice to Community, or Community,
upon written notice to Elite, may terminate this Agreement. If neither party
elects to terminate this Agreement, Elite shall promptly restore or replace the
damaged facilities at Elite's cost and expense.
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X. INDEMNIFICATION
10.1 By Elite Representatives. Elite and the Elite
Shareholders, jointly and severally, shall indemnify, defend, and hold Community
harmless from and against any and all losses, costs, liabilities, damages, and
expenses (including reasonable legal and other expenses incident thereto) of
every kind, nature, and description, including any unassumed liabilities, and
any undisclosed liabilities (collectively "Losses") that result from or arise
out of (i) the breach of any representation or warranty of Elite Representatives
set forth in this Agreement (including the exhibits hereto) or in any
certificate or schedule, or other instrument delivered to Community pursuant
hereto; (ii) the breach of any of the covenants of Elite Representatives
contained in this Agreement; (iii) any liability of Elite or Elite Shareholders
with respect to the ownership or use of the Assets prior to the Closing Date or
to the Business conducted prior to the Closing Date, whether or not such
liability arises prior to, on or following the Closing Date (as well as any
liability arising under Section 13.1); or (iv) any Taxes of Elite for any and
all taxable periods of Elite up to and including the Closing Date, without
regard to whether or not the existence of such tax liability would constitute a
breach of a representation or warranty made by Elite hereunder.
10.2 Claims Procedure. Should any claim covered by Section
10.1 be asserted against a party entitled to indemnification under this Article
X (the "Indemnitee"), the Indemnitee shall promptly notify the party obligated
to make indemnification (the "Indemnitor"), provided that any delay or failure
in notifying the Indemnitor shall not affect the Indemnitor's liability under
this Article X if such delay or failure was not prejudicial to the Indemnitor.
The Indemnitor upon receipt of such notice shall assume the defense thereof with
counsel reasonably satisfactory to the Indemnitee and the Indemnitee shall
extend reasonable cooperation to the Indemnitor in connection with such defense.
No settlement of any such claim shall be made without the consent of the
Indemnitor, such consent not to be unreasonably withheld, nor shall any such
settlement be made by the Indemnitor which does not provide for the absolute,
complete, and unconditional release of the Indemnitee from such claim. In the
event that the Indemnitor shall fail, within a reasonable time, to defend a
claim, the Indemnitee shall have the right to assume the defense thereof without
prejudice to its rights to indemnification hereunder.
10.3 Payment-Set Off. All amounts due hereunder shall be paid
upon demand. Community may set off against the principal or interest of the
Purchase Notes any amounts unpaid hereunder and undisputed. If Elite or Elite
Shareholders disputes the payment of any amount claimed hereunder in writing
within ten (10) days after demand then, in addition to any other remedies,
Community shall withhold payment of amounts due under any Purchase Note until
resolution of any dispute. In the event any dispute herein is litigated, the
losing party shall bear all costs of litigation including reasonable attorneys'
fees, and costs of experts. Interest on any improperly withheld amount by either
party shall accrue at prime rate.
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10.4 No Limitation. Nothing herein shall preclude an action
against a Elite Representative as a result of any claim or action brought
against Community or the Subsidiary relating to any liability referred to in
Section 10.1(iii).
XI. COVENANTS
11.1 No Transferee Liability. The parties agree that Community
will not by virtue of the transactions contemplated hereby assume any
liabilities or obligations of Elite whatsoever other than the Assumed
Liabilities and, accordingly, Elite agrees both prior and subsequent to the
Closing to take all actions which Community may reasonably request so as to
fully protect Community from and against any and all transferee liability (other
than the Assumed Liabilities) arising out of the transaction which is the
subject of this Agreement.
11.2 Preservation of Records. Community and Elite each
covenant that they will preserve and make reasonably available to the other
party, its attorneys and accountants, for six (6) years from and after the
Closing Date and during normal business hours, such of the books, records,
files, correspondence, memoranda and other documents (collectively, the
"Records") they may possess as the other party may reasonably require in
connection with any legitimate purpose, including, but not limited to, the
preparation of tax reports and returns and the preparation of financial
statements provided, however, that Elite shall not be required to furnish
information reflecting attorney-client communications or attorney work product.
After the sixth anniversary of Closing Date, neither Community nor Elite shall
dispose of any of the Records, without giving the other party at least thirty
(30) days' prior notice of its intention to do so. Such other party may, by
written notice, request that such Records be retained and such Records shall be
transferred to the other party at such other party's expense.
11.3 Payment of Taxes. Elite, with cooperation of Community,
will cause to be prepared and filed all Returns required to be filed relating to
the Assets or the Business for periods prior to the Closing Date. Elite will be
solely responsible for and will pay all Taxes relating to the Assets or the
Business for periods prior to or ending on the Closing Date including any Taxes
resulting from the transactions contemplated herein, including any transfer tax.
11.4 Mutual Cooperation. The parties hereto will cooperate
with each other, and will use all reasonable efforts to cause the fulfillment of
the conditions to the parties' obligations hereunder and to obtain as promptly
as possible all consents, authorizations, orders or approvals from each and
every third party, whether private or governmental, required in connection with
the transactions contemplated by this Agreement.
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11.5 Changes in Representations and Warranties of Elite.
Between the date of this Agreement and the Closing Date, neither of Elite
Representatives, directly or indirectly, shall enter into any transaction, take
any action, or by inaction permit an event to occur, which would result in any
of its or his representations and warranties herein contained not being true and
correct at and as of the Closing Date. Elite shall promptly give written notice
to Community upon becoming aware of (A) any fact which, if known on the date
hereof, would have been required to be set forth or disclosed pursuant to this
Agreement and (B) any threatened breach in any material respect of any of their
respective representations and warranties contained in this Agreement and with
respect to the latter shall use all reasonable efforts to remedy same.
11.6 Post-Closing Tax Returns. Elite will duly file all
post-Closing Returns required to be filed by it. All such post-Closing Returns
shall be accurate and complete in all material respects and be prepared in
conformity with applicable laws and regulations.
11.7 COBRA Compliance. Elite shall bear the responsibility of
satisfying any COBRA continuing health care coverage requirements with respect
to any employees of Elite who will have been entitled to continuing coverage as
of the Closing Date.
11.8 Brokers' Fees. Community and Elite shall save and hold
the other harmless from any claims made against the other on account of their
acts or alleged acts from any person for any other agent's, broker's or finder's
fee or commission incurred in connection with the transactions contemplated by
this Agreement. The provisions of this Section 11.8 (and not the provisions of
Article X) shall apply to any claim within the scope of the preceding sentence.
11.9 Employees. Community shall not be obligated to hire any
employees of Elite, provided Bruce Hays and Michael Gardner shall be retained by
the Subsidiary in comparable supervising capacities as they are currently
performing for Elite, and David Morrison will be appointed general manager of
the Subsidiary.
XII. TERMINATION
12.1 Termination Prior to Closing.
(a) Community may terminate the agreement without
liability at a time prior to the fifteenth (15) day after receipt of the Elite
Disclosure Schedule and Schedules A-1, A-2, and A-3 by Community and its
counsel.
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(b) If the Closing has not occurred by May 31, 1996,
any of the parties hereto may terminate this Agreement at any time thereafter
by giving written notice of termination to the other parties; provided, however,
that no party may terminate this Agreement if such party has willfully and
materially breached any of the terms and conditions hereof.
(c) Prior to May 31, 1996 either Elite or Community may
terminate this Agreement following the insolvency or bankruptcy of the other,
or if one of the conditions to Closing set forth in Article VII or Article VIII
shall become incapable of fulfillment and shall not have been waived by the
party for whose benefit the condition was established, then Elite (in the case
of a condition specified in Article VII) or Community (in the case of a
condition specified in Article VIII) may terminate this Agreement.
12.2 Consequences of Termination. Upon termination of this
Agreement pursuant to either Section 12.1 or any other express right of
termination provided elsewhere in this Agreement, the parties shall be relieved
of any further obligation to the other parties hereto except as specified in
Section 13.5 provided, however, that no termination of this Agreement, pursuant
to Section 12.1 hereof or under any other express right of termination provided
elsewhere in this Agreement, shall operate to release any party from any
liability to any other party incurred before the date of such termination or
from any liability resulting from any willful misrepresentation made in
connection with this Agreement or willful breach hereof. The provisions of this
Section 12.2 shall not be considered as a waiver by either Community or Elite of
the remedy of specific performance, it being agreed that each of Community and
Elite shall have the right to specific performance with respect to this
Agreement.
XIII. MISCELLANEOUS
13.1 Waiver of Bulk Sales Law Compliance; Indemnity.
Community, Elite and Elite Representatives hereby waive compliance with any
applicable bulk sales laws. Elite Representatives jointly and severally, agree
to fully indemnify Community, without any deductible, for any and all
liabilities, expenses and costs resulting from the parties' failure to fully
comply with applicable bulk sales laws.
13.2 Expenses. Each party shall pay its own expenses incident
to the negotiation, preparation, and carrying out of this Agreement, including
all fees and expenses of its counsel and accountants for all activities of such
counsel and accountants undertaken pursuant to this Agreement, whether or not
the transactions contemplated hereby are consummated.
13.3 Survival of Representations, Warranties and Covenants.
All statements contained in this Agreement (including the exhibits hereto) or
in any schedule, certificate or other instrument delivered by or on behalf of
Elite or Community pursuant hereto or in connection with the transactions
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<PAGE>
contemplated hereby shall be deemed representations, warranties, agreements and
covenants by Elite, by Elite Shareholders or by Community, as the case may be,
hereunder. All representations, warranties, and covenants made by all parties
to this Agreement or pursuant hereto, shall survive the Closing to the extent
set forth in Article X hereof.
13.4 Further Assurances. Elite and Community will comply with
any and all requirements imposed by applicable federal law or state law which
are necessary to authorize and validate the sale, transfer and assignment of the
Assets to Community and otherwise to effectuate the purposes of this Agreement.
13.5 Nondisclosure. The Elite Representatives will not at any
time after the date of this Agreement divulge, furnish to or make accessible to
anyone any Knowledge or information with respect to confidential or secret
processes, inventions, discoveries, improvements, formulae, plans, material,
devices or ideas or know-how, whether patentable or not, with respect to any
confidential or secret aspects of the Business (including, without limitation,
customer lists, supplier lists and pricing arrangements with customers or
suppliers) ("confidential information"); provided such undertaking shall lapse
if the Closing of this Agreement does not take place as provided herein. In the
event that the transactions contemplated hereby are not consummated, Community
will not thereafter divulge, furnish to or make accessible to anyone any
confidential information and all copies of all such information in Community's
possession shall be returned by Community to Elite.
Any information, which (i) at or prior to the time of
disclosure by Elite or Community was generally available to the public through
no breach of this covenant, (ii) was available to the public on a
nonconfidential basis prior to its disclosure by Elite or Community or (iii) was
made available to the public from a third party provided that such third party
did not obtain or disseminate such information in breach of any legal obligation
of Elite or Community, shall not be deemed confidential information for purposes
hereof, and the undertakings in this covenant with respect to confidential
information shall not apply thereto.
13.6 Succession and Assignments; Third Party Beneficiaries.
This Agreement may not be assigned (either voluntarily or involuntarily) by any
party hereto without the express written consent of the other party. Any
attempted assignment in violation of this Section shall be void and ineffective
for all purposes. In the event of an assignment permitted by this Section, this
Agreement shall be binding upon the heirs, successors and assigns of the parties
hereto. Except as expressly set forth in this Section, there shall be no third
party beneficiaries of this Agreement.
The provisions of this Section shall not apply to the
acquisition of the Assets and the Business by a wholly owned subsidiary
corporation of Community, or following such acquisition, to Community's use of
the Assets and Business. Without limiting the generality of the preceding
sentence, references to Community in Article IV shall be deemed to include
references to the Subsidiary.
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13.7 Accuracy of Documents. All documents delivered by Elite
to Community, and by Community to Elite, as photocopies faithfully reproduce the
originals thereof, and such originals are authentic and were, to the extent
execution was required, duly executed.
13.8 Notices. All notices, requests, demands, or other
communications with respect to this Agreement shall be in writing and shall be
personally delivered by a nationally recognized express courier service, charges
prepaid, to the following addresses (or such other addresses as the parties may
specify from time to time in accordance with this Section).
(a) To Elite and the Elite Shareholders:
Elite Ambulance & Medical Coach, Inc.
50 Main Street
Orange, NJ 07051
Fax:
With a copy to:
John Libretti, Esq.
156 Main Street
Hackensack, NJ 07601
Fax: 201-488-1186
(b) To Elite Shareholders at the address set forth in
the Elite Shareholder signature page:
With a copy to:
John Libretti, Esq.
156 Main Street
Hackensack, NJ 07601
Fax: 201-488-1186
(c) To Community or Subsidiary:
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<PAGE>
Community Medical Transport, Inc.
45 Morris Street
Yonkers, NY 10705
Attn: Dean Sloane, President
Fax: 914-963-7896
With a copy to:
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, NY 10017
Attn: Michael D. DiGiovanna, Esq.
Fax: 212-972-9487
Any such notice shall, when sent in accordance with the preceding sentence, be
deemed to have been given and received on the earliest of (i) the day delivered
to such address or sent by facsimile transmission, (ii) the fifth business day
following the date deposited with the United States Postal Service, or (iii)
twenty-four hours after shipment by such courier service.
13.9 Construction. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of New York without
giving effect to the principles of conflicts of law thereof.
13.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall together constitute one and the same Agreement.
13.11 No Implied Waiver; Remedies. No failure or delay on the
part of the parties hereto to exercise any right, power, or privilege hereunder
or under any instrument executed pursuant hereto shall operate as a waiver nor
shall any single or partial exercise of any right, power, or privilege preclude
any other or further exercise thereof or the exercise of any other right, power,
or privilege. All rights, powers, and privileges granted herein shall be in
addition to other rights and remedies to which the parties may be entitled at
law or in equity.
13.12 Entire Agreement. This Agreement, including the Exhibits
and Schedules attached hereto, sets forth the entire understandings of the
parties with respect to the subject matter hereof, and it incorporates and
merges and supersedes any and all previous communications, representations,
warranties, understandings, agreements, oral or written and can not be amended
or changed except in writing, signed by the parties.
13.13 Headings. The headings of the Sections of this
Agreement, where employed, are for the convenience of reference only and do not
form a part hereof and in no way modify, interpret or construe the meanings of
the parties.
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<PAGE>
13.14 Severability. To the extent that any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
hereof and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
COMMUNITY MEDICAL TRANSPORT, INC.
By: /s/ Dean Sloane
----------------------------------------
Name: Dean Sloane
Title: Chairman and President
ELITE AMBULANCE & MEDICAL COACH, INC.
By: /s/ David Ayers
----------------------------------------
Name: David Ayers
Title: President
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<PAGE>
ELITE SHAREHOLDERS SIGNATURE PAGE
/s/ F. David Ayers /s/ Joseph Hays
- ------------------------------ ---------------------------------
F. DAVID AYERS JOSEPH HAYS
Address: Address:
One Peacock Lane P.O. Box 16
- ------------------------------ ---------------------------------
Mendham, NJ 07945 Chester, NJ 07930
- ------------------------------ ---------------------------------
- ------------------------------ ---------------------------------
Percentage Ownership: 15% Percentage Ownership: 15%
--------- ------------
/s/ Bruce Hays /s/ Michael Gardner
- ------------------------------ ---------------------------------
BRUCE HAYS MICHAEL GARDNER
Address: Address:
28 Bartley Rd. 121 Lyons Rd.
- ------------------------------ ---------------------------------
Flanders NJ 07836 Springfield, NJ 07081
- ------------------------------ ---------------------------------
- ------------------------------ ---------------------------------
Percentage Ownership: 15% Percentage Ownership: 15%
--------- ------------
/S/ Greg Scott /s/ Dave Cozza
- ------------------------------ ---------------------------------
GREG SCOTT DAVE COZZA
Address: Address:
662 Manken Rd. 241 W. Franklin St.
- ------------------------------ ---------------------------------
Bound Brook NJ 08805 Bound Brook NJ 08805
- ------------------------------ ---------------------------------
- ------------------------------ ---------------------------------
Percentage Ownership: 20% Percentage Ownership: 20%
--------- ------------
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Exhibit 7(c)(ii)
PROMISSORY NOTE
$379,788 August 22, 1996
FOR VALUE RECEIVED,
Community Medical Transport, Inc. (the "Undersigned"), hereby promises
to pay to the order of Elite Ambulance & Medical Coach, Inc. (the "Payee") which
is changing its name at Payee's Bank or at such other place as the holder of
this Promissory Note ("Note") may designate from time to time in writing, the
principal sum of Three hundred seventy-nine thousand, seven hundred eighty-eight
($379,788) Dollars in U.S. Dollars with interest at the per annum rate of eight
(8%) percent per annum upon the unpaid principal balance hereof until paid in
full. The principal amount with interest thereon, shall be paid on August 22,
1997. The Note is issued pursuant to an Asset Purchase Agreement dated February
23, 1996 among the Undersigned, Payee and shareholders of Payee (the "Purchase
Agreement") pursuant to which a subsidiary ("Subsidiary") of the undersigned is
acquiring assets of the Payee. Payment of principal and interest shall be
subject to set off provisions of Article X of the Purchase Agreement.
The maturity of this Note may be accelerated at any time by the Payee
upon the occurrence of a "Default" as hereinafter defined. Any one or more of
the following events shall constitute an event of default ("Default") by the
Undersigned hereunder:
(a) If the Undersigned fails to pay when due and payable any of
its obligations hereunder to the Payee which failure remains
uncured for a period of seven (7) days after notice to the
Undersigned;
(b) If any proceeding is commenced by or against the Undersigned
under any provision of the Bankruptcy Code, as amended, or any
other bankruptcy or insolvency law, including but not limited
to assignments for the benefit of creditors, formal or
informal moratoriums, compositions, or extensions with some or
all creditors, any proceeding seeking a reorganization,
arrangement or any other relief under the Bankruptcy Code, as
amended, or any other bankruptcy or insolvency law and any
such proceeding commenced against the Undersigned is not
dismissed within thirty (30) days thereafter;
(c) If any proceeding is filed or commenced by or against the
Undersigned for its dissolution or liquidation and not
dismissed within thirty days;
<PAGE>
In the event of a Default, Payee may, at its election, upon three (3)
written notice of its election, declare the note immediately due and payable and
exercise any other right or remedy available to Payee under applicable law, all
of which are authorized by the Undersigned.
The principal of the Note may be prepaid from time to time without
penalty and shall be prepaid within five (5) business days of any of the
following events: (i) the sale by the Undersigned of all the shares of the
Subsidiary, (ii) the merger of the Subsidiary with a non-affiliate of the
Undersigned or (iii) the sale of substantially all the assets acquired by the
Subsidiary pursuant to the Purchase Agreement to a non-affiliate.
Payee's failure at any time or time hereafter to require strict
performance by the Undersigned of any of the provisions, terms and conditions
contained in this Note or in any of the other Agreements shall not waive, affect
or diminish any right of the Payee at any time or times hereafter to demand
strict performance thereof and such right shall not be deemed to have been
waived by any act or knowledge of the Payee, unless such waiver is contained in
an instrument in writing signed by the Payee and directed to the Undersigned
specifying such waiver. No waiver by the Payee of any Default shall operate as a
waiver of any other Default or the same default on a future occasion. No delay
or omission on the part of the Payee in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by the
Payee of any right or remedy shall preclude other of further exercise thereof or
the exercise of any other right or remedy.
Any notice, demand or communication required or permitted under this
Agreement shall be in writing and shall either be hand-delivered to the other
party or mailed to the addresses set forth below by registered or certified
mail, return receipt requested or sent by overnight express mail or courier or
facsimile to such address, if a party has a facsimile machine. Notice shall be
deemed to have been given and received when so hand-delivered or after three (3)
business days when so deposited in the U.S. Mail, or when transmitted and
received by facsimile or sent by express mail properly addressed to the other
party. The addresses are:
To the undersigned:
Community Medical Transport, Inc.
45 Morris Street
Yonkers, NY 10705
Attn: Dean Sloane, President
Fax: 914-963-7896
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<PAGE>
With a copy to:
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, NY 10017
Attn: Michael D. DiGiovanna, Esq.
Fax: 212-972-9487
To the Payee:
c/o John Libretti, Esq.
156 Main Street
Hackensack, NJ 07601
Fax: 201-488-1186
The foregoing addresses may be changed at any time by notice given in the manner
herein provided.
The Undersigned waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence.
COMMUNITY MEDICAL TRANSPORT, INC.
By: /s/ Steven R. Fittante
-----------------------------------
Steven R Fittante
Vice President
[SEAL]
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