EXHIBIT 2.2
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
THIS AGREEMENT is made as of August 14, 1998, by and among AMERICAN
OXYGEN SERVICES OF TENNESSEE, INC., a Florida corporation, having its principal
place of business at 000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 (the "SELLER"
or the "CORPORATION"), XXXXXXX X. XXXXX ("XXXXX"), XXXXXXX XXXXXXXX
("XXXXXXXX"), AMERIMED HEALTHCARE, INC., a Florida corporation ("AMERIMED")
(Xxxxx, Xxxxxxxx and Amerimed are hereinafter sometimes collectively referred to
as "SHAREHOLDERS" and individually as a "SHAREHOLDER"), IHS ACQUISITION XXVII,
INC., a Delaware corporation (the "BUYER") and INTEGRATED HEALTH SERVICES, INC.,
a Delaware corporation ("IHS").
W I T N E S S E T H :
WHEREAS, Seller operates a home respiratory care and durable medical
equipment business in the States of Florida and Tennessee (the "BUSINESS"); and
WHEREAS, Shareholders are the sole shareholders of the Seller; and
WHEREAS, Buyer is a wholly owned subsidiary of IHS;
WHEREAS, the Seller wishes to transfer its business and substantially
all of its assets to the Buyer solely in exchange for voting shares of IHS in a
transaction intended to qualify as a "reorganization" within the meaning of
ss.368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (thE "CODE"),
it being contemplated by the Seller and Buyer that the Seller will thereafter,
as an integral part of the transaction, distribute the IHS Shares (as
hereinafter defined) to the Shareholders in complete liquidation of the Seller
and dissolve; and Buyer also desires to acquire from Seller and each
Shareholder, and Seller and each Shareholder desire to grant to Buyer, covenants
not to compete and other restrictive covenants as set forth in certain
Restrictive Covenant and Indemnification Agreements of even date herewith (the
"RESTRICTIVE COVENANT AGREEMENTS"); and
WHEREAS, the consent or approval of all persons necessary for the
consummation of the transactions contemplated hereby has been or will be
obtained, including without limitation, all approvals of governmental
authorities and parties to any contracts to be assigned to Buyer in connection
herewith.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed as follows:
1. Purchase and Sale of Assets.
(a) The Assets. As of the Closing Date referred to below in
paragraph 8, Seller shall be deemed to have sold, transferred, conveyed and
assigned, free and clear of all liens, claims, security interests, pledges,
restrictions on transfer or use and other encumbrances of any kind or nature
whatsoever ("LIENS") other than the "Permitted Liens" as hereinafter defined,
all of Seller' rights, title and interest in, to or under:
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(i) Accounts Receivable. All of the accounts receivable
of the Business including, without limitation, all accounts receivable
set forth on the Schedule of Accounts Receivable Data attached hereto
as Schedule 1(a)(i); and
(ii) Inventory; Fixed Assets. All inventory and fixed
assets of the Business, including, without limitation, all of the same
set forth on the Schedule of Inventory and Fixed Assets attached hereto
as Schedule 1(a)(ii); and
(iii) Motor Vehicles. All motor vehicles of the
Business, including without limitation, all of the same set forth on
the Schedule of Motor Vehicles attached hereto as Schedule 1(a)(iii);
and
(iv) Other Assets. All other assets of any kind,
tangible or intangible, real, personal or mixed, owned and used or held
for use by Seller in connection with the Business, including, without
limitation, all of the following: (A) the Patients List of the
Business, as described in Schedule 1(a)(iv)(A); (B) the telephone
numbers listed on the Schedule of Telephone Numbers and Licenses
attached hereto as Schedule 1(a)(iv)(B); (C) all personal property,
machinery and equipment other than the Excluded Assets (as hereinafter
defined); (D) all of Seller's prepaid assets; (E) rights under
contracts, agreements, including, without limitation, franchise
agreements, and instruments; (F) any other assets used in the operation
of the Business, other than the Excluded Assets and real and personal
property leased pursuant to certain equipment operating leases, leases
for Seller's locations in LaFollette, Tennessee and Sneedville,
Tennessee (the "REAL ESTATE LEASES") and the property to be leased by
Seller to Buyer in Harrogate, Tennessee, pursuant to the Excluded Lease
(as hereinafter defined); and (G) all intangible rights of Seller of
every kind and description used in, or held for use in connection with,
the operation of the Business, including, without limitation, all
intangible assets, and to the extent permitted by applicable law, all
licenses, permits and authorizations. The assets described in
subsections 1(a)(i), (ii), (iii) and (iv) are referred to herein as the
"Assets".
(b) For purposes of this Agreement, "Permitted Liens" shall
include all liens, claims or encumbrances, including, but not limited to,
personal and real property taxes, on any of Seller's assets to the extent
securing of the Closing Assumed Lease Payables, any liens for current tax
assessments that are not yet due and payable, the Real Estate Leases and the
Assumed Liabilities (as hereinafter defined).
(c) Excluded Assets. Notwithstanding the foregoing, the Assets
shall not include, and Seller shall not be deemed to have sold, transferred,
conveyed or assigned the following assets to Buyer: Seller's building in
Harrogate, Tennessee, and the related ground lease (the "EXCLUDED LEASE"),
certain computer equipment and software used by Seller in its Orlando, Florida
location and owned by Amerimed Healthcare, Inc., certain computer equipment and
software owned and used by Xxxx Xxxxxxx in connection with the performance of
his duties as an employee of Seller, the ownership interests in the real
property subject to the Real Estate Leases, the ownership interest in equipment
subject to the equipment operating leases and a conditional sale agreement
assumed by Buyer, loan receivable in the amount of $15,000.00 owed by Xxxxxxx X.
Xxxxx to Seller, loan receivable in the amount of $15,000.00 owed by Xxxxxxx
Xxxxxxxx to Seller, $4,691.07 in cash retained by Seller to pay Seller's
outstanding accounts payable as of the Closing, the rights to any federal or
state income tax refunds due Seller, Certificate of Incorporation, qualification
to do business in any jurisdiction, taxpayer identification number, minute
books, stock transfer records and other documents related specifically to
Seller's corporate organization and maintenance (collectively, the "EXCLUDED
ASSETS"). Seller agrees to lease to Buyer, and Buyer agrees to lease from
Seller, the portion of Seller's building in Harrogate, Tennessee presently used
by Seller in the operation of the Business, in accordance with the terms and
conditions set forth in the lease agreement (the "LEASE AGREEMENT") attached
hereto as Exhibit 1(c), and Buyer and Seller agree to execute and deliver said
Lease Agreement at the Closing (as hereinafter defined).
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(d) Restrictive Covenants. Concurrently herewith, Buyer, IHS
and each of Seller and each Shareholder shall enter into a Restrictive Covenant
Agreement, in such form as attached hereto as
Exhibit 1(c)-1, 1(c)-2, 1(c)-3 and 1(c)-4.
2. Purchase Price; Method of Payment.
(a) Purchase Price. The aggregate "PURCHASE PRICE" for the
Assets shall be One Million Seven Hundred Fifty Thousand Dollars ($1,750,000)
increased by (i) the amount of Seller's accounts receivable balance (net of
reserve for doubtful accounts) as of the Closing (the "CLOSING NET RECEIVABLES
AMOUNT") and (ii) the amount of Seller's cash balance as of the Closing (the
"CLOSING CASH AMOUNT") and reduced by (A) the aggregate unpaid balance of
Seller's operating leases as of the Closing (the "CLOSING ASSUMED LEASE
PAYABLES"), and (B) any accrued vacation and sick leave pay owing by Seller to
any of Seller's employees as of the Closing Date (the "EMPLOYEE BENEFITS
PAYABLES"), all of which shall be payable by delivery of newly issued shares of
voting common stock of IHS (the "IHS SHARES") valued as set forth in paragraph
6(a) below. Seller and Shareholders represent and warrant that the Closing Net
Receivables Amount is $350,000, the Closing Cash Amount is $0, the Closing
Assumed Lease Payables amount is $111,239.43, and the Employee Benefits Payables
amount is $7933.75 and accordingly, that the Purchase Price, as adjusted, is
$1,980,826.82
(b) Method of Payment. At the Closing (as defined in paragraph
8), Buyer shall pay, disburse, and deliver the Purchase Price as follows:
(i) by delivery of IHS Shares equal to Two Hundred
Thousand Dollars ($200,000) (having a value determined as of the date
hereof in accordance with Section 6(a) below) (the "ESCROWED SHARES" or
"ESCROW FUND") to Crestar Bank, as escrow agent ("ESCROW AGENT"), to be
held by Escrow Agent during the Escrow Period (as defined in paragraph
5(d), below) pursuant to the terms of an Escrow Agreement, in the form
attached hereto as Exhibit 2(b)(i)-A (the "ESCROW AGREEMENT"), pursuant
to which, among other things, the Escrow Agent shall acknowledge that
it is holding the Escrowed Shares as the agent of Buyer pursuant to the
Stock Pledge Agreement in the form of Exhibit 2(b)(i)-B hereto (the
"STOCK PLEDGE AGREEMENT"). The entire Escrow Fund shall be subject to
the provisions of paragraphs 5 and 16 hereof; and
(ii) by delivery of IHS Shares equal One Million Seven
Hundred Eighty Thousand Eight Hundred Twenty Six Dollars and Eighty Two
Cents ($1,780,826.82) (having a value determined as of the date hereof
in accordance with Section 6(a) below) (the balance of the Purchase
Price) to Seller. Said IHS Shares shall, immediately after the Closing,
be transferred by Seller to the Shareholders as part of a distribution
by Seller to the Shareholders in connection with the complete
liquidation of Seller. Buyer shall deliver the IHS Shares pursuant to
this Section 2(b)(ii) to Seller at the Closing, and subject to Section
6, IHS agrees to reissue the IHS Shares delivered to Seller pursuant to
this Section 2(b)(ii) to the Shareholders within a reasonable period of
time following the Closing.
3. Indemnity Against Creditors Claims; No Assumption of Liabilities.
Seller has requested that Buyer waive the requirements of the bulk sales and
transfer laws of the State of Tennessee. Seller and each Shareholder agree to
indemnify Buyer and save and hold Buyer harmless against all Damages (as defined
in paragraph 16(c)) arising out of any claims made by creditors (including,
without limitation, any Federal, state or local taxing authority) of Seller that
relate to the Business, or that arise out of the failure to comply with any of
such laws other than the Permitted Liens, the Closing Assumed Lease Payables,
obligations arising prior to Closing under the Real Estate Leases, the Employee
Benefits Payables and the Assumed Liabilities.
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4. Closing Date Liabilities.
(a) Seller and Shareholders represent and warrant that, to the
best of Seller's and each Shareholder's knowledge and belief after diligent
inquiry, all of Seller's liabilities (except for the Closing Assumed Lease
Payables, the Real Estate Leases, the Employee Benefits Payables and the Assumed
Liabilities) as of the Closing Date are listed on the Schedule of Liabilities
attached hereto as Schedule 4(a) (the "LISTED LIABILITIES"). For purposes of
this Agreement "LIABILITIES" shall mean and include all claims, lawsuits,
liabilities, obligations or debts of any kind or nature whatsoever, whether
absolute, accrued, due, direct or indirect, contingent or liquidated, matured or
unmatured, joint or several, whether or not for a sum certain, whether for the
payment of money or for the performance or observance of any obligation or
condition, whether or not asserted as of the date hereof, and whether or not of
a type which would be reflected as a liability on a balance sheet (including,
without limitation, federal, state and local taxes of any nature) in accordance
with generally accepted accounting principles, consistently applied ("GAAP"),
including without limitation, any liabilities relating to any Excluded Assets
(including, without limitation, the Excluded Lease), malpractice or other tort
claims, claims for breach of contract, any claims of any kind asserted by
patients, former patients, employees and former employees of Seller or any other
party that are based on acts or omissions by Seller occurring on or before the
Closing Date, amounts due or that may become due in connection with the
participation of Seller in the Medicare or Medicaid programs or due to any other
health care reimbursement or payment intermediary, or that may be due by Seller
to any other third party payor, accounts payable, notes payable, trade payables,
lease obligations, indebtedness for borrowed money, accrued interest, and
contractual obligations other than the Closing Assumed Lease Payables, the Real
Estate Leases, the Employee Benefits Payables and the Assumed Liabilities.
Seller and each Shareholder acknowledge that the Purchase Price for the Assets
is based on the accuracy of Seller's and each Shareholder's representations and
warranties contained in this Agreement, including, but not limited to, Seller's
and each Shareholder's representations and warranties contained in this
paragraph 4(a). Without limiting the generality of the foregoing, Buyer will not
assume any, and Seller shall remain liable for each, liability of Seller arising
out of any facts, circumstances, matter or occurrences existing on or prior to
the Closing Date (whether or not known) ("CLOSING DATE LIABILITIES"), other than
the Closing Assumed Lease Payables, the Real Estate Leases, the Employee
Benefits Payables and the Assumed Liabilities.
(b) Without limiting the generality of the provisions of
subparagraph (a) above, Buyer shall not assume the Contracts (as hereinafter
defined in paragraph 13(b)), if any, set forth on Schedule 4(b), or any
liabilities with respect thereto, and except as provided in subsection (c)
below, Buyer shall not, in any case, assume any liabilities under any Contracts
(whether or not such Contracts are assumed by Buyer) to the extent such
liabilities arise out of facts or circumstances in existence, or obligations to
be satisfied, on or prior to the Closing Date.
(c) At Closing, Buyer shall assume the Closing Assumed Lease
Payables, the Real Estate Leases, the Employee Benefits Payables and the Assumed
Liabilities and shall satisfy the same in the ordinary course of business as the
same shall become due and payable from and after the Closing; provided, however,
that Buyer shall fully satisfy the outstanding obligations with respect to the
Closing Assumed Lease Payables by not later than August 31, 1998. The Closing
Assumed Lease Payables, the Real Estate Leases, the Employee Benefit Payables
and the Assumed Liabilities shall not constitute Closing Date Liabilities or
Listed Liabilities. The "ASSUMED LIABILITIES" shall be those liabilities of
Seller set forth on Schedule 4(c).
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5. Right of Offset Against the Escrow Fund.
(a) Event of Deficiency. If:
(i) Buyer pays for any Closing Date Liabilities, then
Seller and Shareholders shall jointly and severally reimburse Buyer for
such payment (a "LIABILITIES DEFICIENCY"); or
(ii) the actual net cash collections of the Seller's
accounts receivables included in the Assets during the twelve (12)
month period immediately following the Closing Date shall be less than
the Closing Net Receivables Amount, then Seller and Shareholders,
jointly and severally, shall pay to Buyer the amount of such deficiency
("ASSET VALUE DEFICIENCY") and Buyer acknowledges and agrees that the
Shareholders shall be entitled to assist Buyer in collecting Seller's
accounts receivable included in the Assets during the twelve (12) month
period following the Closing Date and agrees to cooperate with the
Shareholders in such collection efforts and if Shareholders assist
Buyer in collecting receivables that exceed the Closing Net Receivables
Amount, i.e. a collection of receivables included in the reserve for
doubtful accounts, then Buyer agrees to deliver additional IHS Shares
to Shareholders calculated based upon the Trade Price as defined in
paragraph 6(a) below; or
(iii) Buyer shall be entitled to be indemnified for
any Damages pursuant to this Agreement ("INDEMNIFICATION CLAIMS", and
together with any Liabilities Deficiencies and Asset Value
Deficiencies, collectively "CLAIMS" and each, a "CLAIM");
then, and in any of such events, Buyer may provide written notice to the
Representative of the Claim, in which case Buyer shall be entitled to recover
the amount of such Claim in accordance with the following procedure.
(b) Procedure if Seller Fails to Pay. If Seller fails to pay
any Claim in full to Buyer within ten (10) days from the date of such written
notice (said ten (10) day period hereinafter referred to as the "NOTICE
PERIOD"), Buyer shall have the right to make offset against the Escrow Fund, in
accordance with the terms and conditions of the Stock Pledge Agreement, in
amounts from time to time equal to the amount of such Claim (subject, however,
in the case of a "DISPUTE", to the provisions of paragraph 16 hereof applicable
thereto), and Seller agrees to any such offset. Buyer's right to proceed against
the Escrow Fund shall not be exclusive of any other rights or remedies that it
may have under this Agreement, law, equity or otherwise, subject, however, in
the case of a "DISPUTE" to the provisions of paragraph 16 below.
(c) Escrow Costs. The fees of the Escrow Agent shall be
borne fifty percent (50%) by Buyer and fifty percent (50%) by Seller.
(d) Escrow Period.
(i) The "ESCROW PERIOD" shall terminate three hundred
sixty five (365) days following the Closing Date.
(ii) The balance, if any, of the Escrow Fund
remaining (the "REMAINING ESCROW FUNDS") at the close of business on
the last day of the Escrow Period shall be disbursed to Seller within
fifteen (15) days after the last day of the Escrow Period.
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(iii) Notwithstanding anything to the contrary
contained in this subparagraph (d), if any Claim made by Buyer is in
dispute at the time that any amounts are otherwise to be disbursed to
Seller, then there shall be withheld from such amount to be disbursed
and there shall be retained in the Escrow Fund, an amount such that
there will be remaining in the Escrow Fund at least one hundred
twenty-five percent (125%) of the amount of the Claim asserted by Buyer
until the final settlement of such Claim or Claims.
(iv) Any interest accruing or income earned or
distributed on any portion of the Escrow Fund shall be paid to the
party receiving such portion of the Escrow Fund.
6. IHS Stock. The Purchase Price shall be payable by Buyer by the
delivery of IHS Shares to Seller in accordance with the following:
(a) Share Value. The number of IHS Shares issuable at Closing
(the "CLOSING DATE SHARE COUNT") or deliverable to any claimant from the Escrow
Fund shall be calculated based upon a price per share of such stock equal to the
average closing New York Stock Exchange ("NYSE") price of such stock for the
thirty (30) trading day period ending on the date that is two (2) business days
immediately preceding the Closing Date (the "TRADE PRICE").
(b) Registration Rights.
(i) IHS will prepare and use its reasonable
commercial best efforts to cause to be filed and declared effective by
the Securities and Exchange Commission (the "COMMISSION"), within one
hundred and twenty (120) days following the Closing Date a registration
statement for the registration of the IHS Shares (including the IHS
Shares in the Escrow Fund) issued to Seller (and subsequently reissued
to the Shareholders as a result of the distribution of the IHS Shares
by Seller to the Shareholders in connection with complete liquidation
of Seller) in connection with this transaction, under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), and IHS shall maintain
the effectiveness of such registration statement for a period of one
(1) year following the date it became effective (the "REGISTRATION
DATE"). IHS agrees that before filing such registration statement or
the prospectus included therein or any amendments or supplements
thereto, IHS shall endeavor to furnish counsel selected by the
Shareholders copies of all such documents proposed to be filed (which
documents shall be subject to the review and comment of such counsel).
(ii) The registration rights provided each of the
Shareholders hereunder may be transferred by each of the Shareholders,
in connection with any sale, assignment, exchange or other disposition
by the Shareholders of their IHS Shares prior to the effective date of
the registration statement required to be filed hereunder, and in
connection with any dispositions made thereafter, other than
dispositions made thereafter pursuant to the registration statement
filed in accordance with Section 6; provided that, as a condition to
such transfer, each such transferee shall have agreed, in writing, to
be bound by the provisions applicable to the transferring Shareholder
under this Section 6. Upon and after any such transfer, references to
the "Shareholder" or a "Shareholder" in Section 6 shall refer to each
such transferee, as the context may indicate, for so long as each such
transferee owns IHS Shares. In the event of any such transfer of
registration rights on or after the Registration Date, if, solely by
reason of such transfer, the prospectus included in the registration
statement addressing the transferring Shareholder and his intended
method of disposing of his registered IHS Shares is required to be
amended or supplemented, as determined in the reasonable discretion of
IHS, then IHS' reasonable costs of preparing and filing such amendment
or supplement, together with the reasonable costs of providing all
selling
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Shareholders named in the prospectus including the transferee each with
a copy of the prospectus, as so amended or supplemented, shall be paid
by the transferring Shareholder or such transferee.
(c) Registration Expenses. Seller and the Shareholders shall
not be responsible for, and IHS shall bear, all of the expenses of IHS related
to such registration including, without limitation, the fees and expenses of its
counsel and accountants, all of its other costs, fees and expenses incident to
the preparation, printing, registration and filing under the Securities Act of
the registration statement and all amendments and supplements thereto, the cost
of furnishing copies of each preliminary prospectus, each final prospectus and
each amendment or supplement thereto to underwriters, dealers and other
purchasers of IHS Shares and the costs and expenses (including fees and
disbursements of its counsel) incurred in connection with the qualification of
IHS Shares under the "Blue Sky" laws of various jurisdictions. IHS, however,
shall not be required to pay underwriter's or brokerage discounts, commissions
or expenses, or to pay any costs or expenses arising out of any Shareholder's or
any transferee's failure to comply with its obligations under this Section 6.
IHS, shall in all events, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit or quarterly
review, the expense of any liability insurance and the expenses and fees for
listing the Shareholders' registered IHS Shares on each securities exchange on
which similar securities issued by IHS are then listed or, if applicable, on the
NASDAQ system.
(d) INTENTIONALLY DELETED BY THE PARTIES
(e) Registration Procedures, etc. In connection with the
registration rights granted to Seller (and the Shareholders) with respect to the
IHS Shares as provided in this Section 6, IHS covenants and agrees as follows:
(i) IHS shall promptly respond to reasonable
inquiries of the Shareholders regarding the effectiveness of the
registration statement filed hereunder, and shall prepare and file with
the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of
one year and shall otherwise comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in accordance
with the methods of disposition by the Shareholders set forth in such
registration statement.
(ii) IHS will promptly notify the Shareholders at any
time when a prospectus relating to a registration statement under this
Section 6 is required to be delivered under the Securities Act and of
the happening of any event known to IHS as a result of which the
prospectus included in such registration statement, as then in effect,
would include an untrue statement of a material fact or omits to state
any material fact required to be stated therein in order to make the
statements set forth therein not misleading in light of the
circumstances then existing. At the request of any Shareholder, IHS
shall expeditiously prepare and file a supplement or amendment to such
prospectus so that, as thereafter delivered to purchasers of the
Shareholders' registered IHS Shares, such prospectus shall not contain
an untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading.
(iii) IHS shall, upon request of the Shareholders,
furnish such number of prospectuses as shall reasonably be requested.
(iv) The Shareholders agree that if they sell their
IHS Shares included in the registration statement they will do so in
compliance with the disclosed method of disposition set forth therein,
and shall discontinue any offers and sales thereunder upon notice from
IHS that the registration
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statement relating to their IHS Shares is not current, until IHS gives
further notice that offers and sales may be recommenced.
(v) IHS shall otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission.
(vi) In the event of the issuance of any stop order
suspending the effectiveness of the registration statement, or of any
order suspending or preventing the use of any related prospectus or
suspending the qualification of any IHS Shares included in such
registration statement for sale in any jurisdiction, IHS shall promptly
use its reasonable commercial efforts to obtain the withdrawal of such
order.
(vii) IHS shall cause all of the Shareholders' IHS
Shares included in the registration statement to be listed on the NYSE.
(viii) IHS shall take all necessary action which may
be required in qualifying or registering IHS Shares included in a
registration statement for offering and sale under the securities or
Blue Sky laws of such states as reasonably are requested by the
Shareholders, provided that IHS shall not be obligated to qualify as a
foreign corporation or dealer to do business under the laws of any such
jurisdiction; and
(ix) The information included or incorporated by
reference in the registration statement filed pursuant to this Section
6 will not, at the time any such registration statement becomes
effective, contain any untrue statement of a material fact, or omit to
state any material fact required to be stated therein as necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading or necessary to correct any
statement in any earlier filing of such registration statement or any
amendments thereto. The registration statement will comply in all
material respects with the provisions of the Securities Act and the
rules and regulations thereunder.
(f) Indemnification.
(i) IHS shall indemnify the Shareholders, their
successors and assigns, and each person, if any, who controls such
Seller within the meaning of ss.15 of the Securities Act or ss.20(a) of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become subject
under the Securities Act, the Exchange Act or any other statute, common
law or otherwise, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in such
registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or contained in any documents
or information furnished by IHS filed in any jurisdiction in order to
qualify IHS Shares under the securities laws thereof (the "BLUE SKY
FILINGS") or filed with the Commission, any state securities commission
or agency, the NYSE or any securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements contained therein not
misleading, unless such statement or omission was made in reliance upon
and in conformity with written information furnished to IHS by any of
the Shareholders expressly for use in such registration statement, any
amendment or supplement thereto or any application, as the case may be.
If any action is brought against the Shareholders in respect of which
indemnity may be sought
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against IHS pursuant to this subsection 6(f)(i), such Shareholder shall
within thirty (30) days after the receipt thereby of a summons or
complaint notify IHS in writing of the institution of such action
(provided, however, that the failure to timely give such notice shall
not affect the Shareholders' right to indemnification hereunder except
to the extent that IHS is damaged by such delay and IHS shall assume
the defense of such actions, including the employment and payment of
fees and expenses of counsel (reasonably satisfactory to such
Shareholder). The Shareholders shall have the right to employ their own
counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of the Shareholders unless (A) the employment
of such counsel shall have been authorized in writing by IHS in
connection with the defense of such action, or (B) IHS shall not have
employed counsel to have charge of the defense of such action, or (C)
such indemnified party or parties shall have reasonably concluded
(after notice to IHS) that there may be defenses available to it or
them which are different from or additional to those available to IHS
(in which case, IHS shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of
which events the fees and expenses of not more than one additional firm
of attorneys for the Shareholders and such controlling persons shall be
borne by IHS.
(ii) To the extent permitted by law, the
Shareholders, and their successors and assigns, shall severally, and
not jointly, indemnify IHS, its officers and directors and each person,
if any, who controls IHS within the meaning of ss.15 of the Securities
Act or ss.20(a) of the Exchange Act against all loss, claim, damage, or
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to
which they may become subject under the Securities Act, the Exchange
Act or any other statute, common law or otherwise, arising from written
information furnished by or on behalf of such Shareholders, or their
successors or assigns expressly for inclusion in such registration
statement, provided that the obligation to indemnify shall be limited
to the net amount of proceeds received by any such Shareholder from the
sale of such Shareholder's IHS shares pursuant to such registration
statement.
(iii) The indemnification provided for under this
Section 6 shall remain in force and effect regardless of any
investigation made by or on behalf of the indemnified party or any
officers, directors or controlling persons of such indemnified party,
and shall survive the transfer of the IHS Shares. Each party agrees to
make such provisions, as are reasonably requested by any of the other
parties, for contribution in the event that a party's indemnification
is unavailable for any reason.
(g) Notice of Sale. If the Shareholders desire to transfer all or any
of the IHS Shares other than pursuant to the registration statement, they will
deliver prior written notice to IHS, describing in reasonable detail their
intention to effect the transfer and the manner of the proposed transfer. If the
transfer is to be pursuant to an effective registration statement as provided
herein, the Seller will sell the IHS Shares in compliance with subsection
6(e)(iv) above. If the Shareholders deliver to IHS an opinion of counsel
reasonably acceptable to IHS and its counsel and to the effect that the proposed
transfer of IHS Shares may be made without registration under the Securities
Act, the Shareholders will be entitled to transfer IHS Shares in accordance with
the terms of the notice and opinion of their counsel.
(h) Furnish Information. The Shareholders shall furnish promptly, in
writing, such information and affidavits as IHS reasonably requests in
connection with such registration statement (or the prospectus included
therein), including written information regarding themselves and their intended
method of disposition of their IHS Shares included in the registration
statement. In that connection, each transferee of any Shareholder shall be
required to represent to IHS that all such information which is given is both
complete and accurate in all material
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respects. Such Shareholders shall deliver to IHS a statement in writing from the
beneficial owners of such securities that they bona fide intend to sell,
transfer or otherwise dispose of such securities. Each transferee will,
severally, promptly notify IHS at any time when a prospectus relating to a
registration statement covering such transferee's shares under this Section 6 is
required to be delivered under the Securities Act, of the happening of any event
applicable to and known to such transferee as a result of which the information
provided by the Shareholders to IHS in writing in connection with the
registration rights for inclusion in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the statements as then existing. The
Shareholders agree and acknowledge that any failure by any of them to timely
satisfy their obligations under this subsection (h) may result in delays,
including delay of the resale of the IHS Shares in a registration statement.
(i) Investment Representations. All IHS Shares to be issued hereunder
will be newly issued shares of IHS. Seller represents and warrants to IHS that
the IHS Shares being issued hereunder are being acquired, and will be acquired,
by the Shareholders for investment for their own accounts and not with a view to
or for sale in connection with any distribution thereof within the meaning of
the Securities Act or the applicable state securities law; the Shareholders
acknowledge that the IHS Shares constitute restricted securities under Rule 144
promulgated by the Commission pursuant to the Securities Act, and may have to be
held indefinitely, and the Shareholders agree that no IHS Shares may be sold,
transferred, assigned, pledged or otherwise disposed of except pursuant to an
effective registration statement or an exemption from registration under the
Securities Act, the rules and regulations thereunder, and under all applicable
state securities laws. The Shareholders have the knowledge and experience in
financial and business matters, are capable of evaluating the merits and risks
of the investment, and are able to bear the economic risk of such investment.
The Shareholders have had the opportunity to make inquiries of and obtain from
representatives and employees of IHS such other information about IHS as they
deem necessary in connection with such investment.
(j) Restrictions on Transferability/Legend. The Shareholders
acknowledge and agree that, except for the Shareholders' IHS Shares that are to
be sold pursuant to an effective registration statement filed in accordance with
this Section 6, the Shareholders will not be permitted to sell, assign, pledge,
encumber or otherwise dispose of their IHS Shares unless otherwise registered
under the Securities Act or sold pursuant to an exemption from the registration
requirements of the Securities Act. The Shareholders each agree that, prior to
each Shareholder's sale, transfer, pledge or other disposition of such
Shareholder's IHS Shares, other than sales or dispositions made pursuant to an
effective registration statement, each such Shareholder shall provide IHS with
an opinion of counsel, reasonably acceptable to IHS, that the proposed sale,
transfer or other disposition of such Shareholder's IHS Shares may be made
without registration under the Securities Act. In furtherance of the foregoing,
it is understood that the certificates evidencing the IHS Shares shall bear a
legend substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES
UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF THE
COMPANY'S COUNSEL THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT.
-10-
IHS agrees to remove the above-described legend from the certificate(s)
evidencing the Shareholders' IHS Shares at such time as they are sold pursuant
to an effective registration statement or pursuant to an exemption from the
registration requirements of the Securities Act.
(k) Certain Transferees. Prior to the effective date of registration of
the IHS Shares, no Shareholder shall transfer any IHS Shares to any person or
entity except as expressly permitted by this Agreement and unless such
transferee shall have agreed in writing to be bound by the provisions applicable
to the Shareholders under this Section 6.
(l) Rule 144 Reporting. As long as any Shareholder owns any IHS Shares,
with a view of making available certain rules and regulations of the Commission
which permit the sale of restricted securities to the public without
registration, IHS agrees to:
(i) make "current public information" available as those terms
are understood and defined in Rule 144 of the regulations under the
Securities Act, as amended;
(ii) use its best efforts to file with the Commission, in a
timely manner, all reports and other documents required to be filed by
IHS under the Exchange Act so long as IHS remains subject to such
reporting requirements; and
(iii) subsequent to the first anniversary of this Agreement,
furnish to any Shareholder, upon request:
(a) a written statement by IHS as to its compliance
with the reporting requirements of Rule 144 under the Exchange
Act (so long as IHS remains subject to such reporting
requirements);
(b) a copy of the most recent annual report of IHS;
and
(c) such other reports and documents filed with the
Commission as any such Shareholder may reasonably request in
availing itself of Rule 144 or any successor statute thereto.
7. Employees. It is expressly understood and agreed that Buyer's
purchase of the Assets does not involve any undertaking on the part of Buyer to
retain any of the employees of the Seller, although Buyer shall have the right
to offer employment to any such employees. Seller shall remain fully responsible
for any severance, benefits, costs or liabilities arising out of the termination
by Seller of any of its employees, all of which liabilities shall constitute
Closing Date Liabilities. Seller and Shareholders shall also remain fully
responsible for any benefits, costs or liabilities incurred or accrued prior to
Closing with respect to each employee retained by IHS, excluding the Employee
Benefits Payables.
8. Closing Date. The consummation of the transactions contemplated by
this Agreement is sometimes referred to as the "CLOSING", and the date on which
such consummation occurs, including, without limitation, the execution and
delivery of this Agreement by each of the parties hereto, is sometimes referred
to as the "CLOSING DATE". The Closing Date for the transactions contemplated
under this Agreement will be August , 1998.
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9. Asset Condition and Quality. Seller and Shareholders, jointly and
severally, represent, warrant and covenant that, as of the Closing Date, all
physical Assets of Seller are free of defects and in good working order,
condition and repair, except for ordinary wear and tear, and conform in all
material respects with all applicable ordinances, regulations, zoning and other
laws.
10. Instruments of Conveyance and Transfer. At the Closing:
(a) Seller will execute and deliver to Buyer such bills of
sale, assignments, motor vehicle certificates of title, and other good and
sufficient instruments of conveyance and transfer in form sufficient to sell,
assign and transfer the Assets to Buyer as of the Closing Date, such documents
to contain full warranties of title, and which documents shall be effective to
vest in Buyer good, absolute, and valid legal title to the Assets of the
Business being transferred to Buyer by Seller, free and clear of all Liens other
than the Permitted Liens, the Closing Assumed Lease Payables, the Excluded
Lease, the Real Estate Leases, the Employee Benefits Payables and the Assumed
Liabilities.
(b) Simultaneously with such delivery, Seller will take all
steps as may be requisite to put Buyer in actual possession, operation and
control of the Assets to be transferred hereunder.
(c) Seller will deliver to Buyer and IHS an opinion or
opinions, dated the Closing Date, of its counsel, in substantially the form
attached hereto as Schedule 10(c).
(d) Seller will deliver a certificate of its Secretary or
other officer certifying as of the Closing Date a copy of resolutions of its
board of directors and, if applicable, its stockholders, authorizing the
execution, delivery and full performance of this Agreement and the Transaction
Documents (as defined in paragraph 13(a) below), and the incumbency of its
officers.
(e) Buyer and Seller shall execute and deliver an assignment
and assumption of equipment leases for the Closing Assumed Lease Payables.
(f) Shareholders shall execute and deliver stock powers
endorsed in blank to the Escrow Agent, covering all of the IHS Shares deposited
with the Escrow Agent.
(g) Seller will deliver a check for the Closing Cash Amount to
Buyer.
(h) Buyer will deliver the Escrow Shares to the Escrow Agent
in accordance with Section 2(b)(i) above.
(i) Buyer will deliver to Seller the IHS Shares in accordance
with Section 2(b)(ii) above,
(j) Buyer and Seller shall execute and deliver the assignment
and assumption of the Real Estate Leases.
(k) Buyer and Seller shall execute and deliver the Lease
Agreement attached hereto as Exhibit 1(c).
(l) Buyer and Seller shall execute and deliver the Stock
Pledge Agreement and the Escrow Agreement.
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(m) Buyer shall execute an Assumption Agreement for the
Assumed Liabilities, the Real Estate Leases, the Closing Assumed Lease Payables
and the Employee Benefits Payables.
(n) Buyer and IHS will deliver to Seller and Shareholders an
opinion, dated as of the Closing, of their counsel in substantially the form
attached hereto as Schedule 10(n).
(o) Buyer will deliver a certificate of its Secretary or other
officer certifying as of the Closing Date a copy of resolutions of its Board of
Directors and, if applicable, its sole shareholder, IHS, authorizing the
execution, delivery and full performance of this Agreement and the Transaction
Documents (as defined in paragraph 13(a) below) and the incumbency of its
officers.
(p) IHS will deliver to Seller a certificate of its Secretary
or other officer certifying as of the Closing Date a copy of resolutions of its
Board of Directors authorizing the execution, delivery and full performance of
this Agreement and its obligations hereunder and the incumbency of its officers.
11. Sales and Transfer Taxes; Fees. All applicable sales, transfer,
use, filing and other taxes and fees that may be due or payable as a result of
the conveyance, assignment, transfer or delivery of the Assets of the Business
to be conveyed and transferred as provided herein, whether levied on Seller or
IHS, shall be borne by Seller and Buyer.
12. Restrictions on Operations of Seller. Seller and Shareholders,
jointly and severally, represent, warrant and covenant that, except as expressly
disclosed on Schedules hereto, since the most recent Financial Statement Date
referred to in paragraph 13(o) below, through the Closing Date, there has been
no material adverse change in the condition (financial or otherwise) or
prospects of the Seller or the Business, and Seller has not:
(i) sold, assigned or transferred any Assets, except in the
ordinary course of business, consistent with past practice;
(ii) subjected any Assets to any Liens other than the Permitted
Liens;
(iii) entered into any contract or transaction binding the
Business other than contracts or transactions entered into in the ordinary
course of business, consistent with past practice;
(iv) incurred any liabilities or indebtedness other than in the
ordinary course of business, consistent with past practice;
(v) except in the ordinary course of business, consistent with
past practice, or otherwise to comply with any applicable minimum wage law, paid
any bonuses, increased the salaries or other compensation of any of its
employees, or made any increase in, or any additions to, other benefits to which
any of such employees may be entitled;
(vi) discharged or satisfied any Lien or encumbrance, or
satisfied, paid or prepaid any material liabilities, other than in the ordinary
course of business consistent with past practice, or failed to pay or discharge
when due any liabilities, the failure to pay or discharge of which has caused or
may cause any actual damage or risk of loss to the Corporation or the Assets;
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(vii) failed to collect its accounts receivable in the ordinary
course of business, consistent with past practice;
(viii) changed any of the accounting principles followed by it or
the methods of applying such principles;
(ix) canceled, modified or waived any debts or claims held by it,
other than in the ordinary course of business, consistent with past practice, or
waived any rights of substantial value, whether or not in the ordinary course of
business; or
(x) issued any capital stock, or declared or paid or set aside or
reserved any amounts for payment of any dividend or other distribution in
respect of any equity interest or other securities, or redeemed or repurchased
any of its capital stock or other securities, or made any payment to any of its
affiliates except for payments of compensation in the ordinary course of
business, consistent with past practice and disclosed to IHS as such;
(xi) instituted, settled or agreed to settle any litigation,
action or proceeding before any Governmental Authority (as such term in defined
in paragraph 13(d) below) relating to it or its property or received any threat
thereof; or
(xii) entered into any material transaction other than in the
ordinary course of business, consistent with past practice.
13. Representations and Warranties by Seller and Shareholder. As a
material inducement to Buyer and IHS to execute and perform their obligations
under this Agreement, Seller and Shareholders hereby, jointly and severally,
represent and warrant to Buyer and IHS as follows as of the Closing Date:
(a) Organization of Seller; Enforceability.
(i) Seller is a corporation, organized, and in good
standing, respectively, in the State of Florida, and is qualified to do
business and is in good standing in each other State where the nature
of its business or the assets held by it requires such qualification,
and has requisite corporate power and authority to carry on its
Business as presently being conducted, to enter into this Agreement,
and to carry out and perform the terms and provisions of this
Agreement. Each of this Agreement and each agreement, instrument,
certificate and document in connection with this Agreement or the
transactions contemplated hereby ("TRANSACTION DOCUMENTS") constitutes
the legal, valid and binding obligations of Seller, enforceable against
it in accordance with its respective terms. Seller does not have any
subsidiaries.
(ii) This Agreement and each Transaction Document to which
any Shareholder is a party constitutes the legal, valid and binding
obligations of such Shareholder, enforceable against that Shareholder
in accordance with its terms.
(b) Consents. Except as set forth on Schedule 13(b), no
authorization, consent, approval, license, exemption by, filing or registration
with any Governmental Authority or of any party to any contract, agreement,
instrument, commitment, lease, indenture or understanding (written, oral or
implied) by which Seller
-14-
or any of the Assets is bound ("CONTRACTS") or by which any Shareholder or any
Shareholder's assets is bound ("SHAREHOLDER CONTRACTS") is necessary in
connection with the execution, delivery and performance of this Agreement or any
of the Transaction Documents by Seller or any Shareholder.
(c) Litigation. Except as set forth on Schedule 13(c), there
are no actions, suits or proceedings affecting Seller or any of the Assets which
are pending or threatened against Seller or affecting any of its properties or
rights, at law or in equity, or before any Governmental Authority (as
hereinafter defined), nor is Seller or any of its respective officers or
directors or any Shareholder aware of any facts which to them or their knowledge
might reasonably be expected to result in any such action, suit or proceeding.
(d) Compliance with Laws and Contracts. Seller is not in
violation of, or in default under: any term or provision of its Articles of
Incorporation or Bylaws, or any judgment, order, writ, injunction, decree,
statute, law, rule, regulation, directive, mandate, ordinance or guideline
("GOVERNMENTAL REQUIREMENT") of any Federal, state, local or other governmental
or quasi-governmental agency, bureau, board, council, administrator, court,
arbitrator, commission, department, instrumentality, body or other authority
(collectively, "GOVERNMENTAL AUTHORITIES" and individually "GOVERNMENTAL
AUTHORITY"); or of any Contract. The execution and delivery by Seller and each
Shareholder of, and the performance and compliance by each of them with this
Agreement, and the Transaction Documents and the transactions contemplated
hereby and thereby, does not and will not result in the violation of or conflict
with or constitute a default under any such term or provision or result in the
creation of any Lien on any of the properties or assets of Seller or any
Shareholder pursuant to any such term or provision or any term or provision of
any Governmental Requirement by which any Shareholder is bound or of any
Shareholder Contract.
(e) Corporate Acts and Proceedings. The execution, delivery
and performance of this Agreement and each of the Transaction Documents, and the
transactions contemplated hereby and thereby, including the sale and transfer of
the Assets by Seller as provided for in this Agreement, have been approved and
consented to by the Board of Directors of Seller and, if applicable, by the
requisite number of holders of its outstanding capital stock, and all action
required by any applicable Governmental Requirement by the stockholders of
Seller with regard thereto have been appropriately authorized and accomplished.
(f) Title to Assets. Seller has good and indefeasible title
to all of the Assets, free and clear of all Liens other than the Permitted
Liens.
(g) Contracts. Set forth on Schedule 13(g) hereto is a list
of all material Contracts of Seller including, without limitation, each:
(i) contract, agreement or commitment for the
employment or retention of, or collective bargaining, severance or
termination of or with, any director, officer, employee, consultant,
sales representative, or agent or group of employees, or any
non-competition, non- solicitation, confidentiality or similar
agreement with any such person or persons;
(ii) contract, agreement or arrangement for the
acquisition or disposition of any assets, property or rights outside
the ordinary course of business or requiring the consent of any party
to the transfer and assignment of any such assets, property or rights
(by purchase or sale of assets, purchase or sale of stock, merger or
otherwise), that is executory or that was entered into during the three
(3) year period ending on the date hereof;
-15-
(iii) contract, agreement or commitment which contains
any provisions requiring the Seller or the Business to indemnify or act
for any other person or entity or to guaranty or act as surety for any
other person or entity;
(iv) contract, agreement or commitment restricting the
Seller or the Business from, or in favor of either of the Seller or the
Business and restricting any other person or entity from, conducting
business anywhere in the world for any period of time or restricting
the use or disclosure of any confidential or proprietary information or
prohibiting the solicitation of business or of employees, agents or
others;
(v) partnership, joint venture or management contract
or similar arrangement, or agreement which involves a right to share
profits or future payments with respect to the Business or any portion
thereof or the business of any other person or entity;
(vi) licensing, distributor, dealer, franchise, sales or
manufacturer's representative, agency or other similar contract,
arrangement or commitment;
(vii) contract, agreement or arrangement granting a
leasehold or other interest in real property, including without
limitation, subleases, licenses and sublicenses (the "LEASES");
(viii) profit sharing, thrift, bonus, incentive, deferred
compensation, stock option, stock purchase, severance pay, pension,
retirement, hospitalization, insurance or other similar plan, agreement
or arrangement applicable to any employee, consultant or agent of the
Seller or the Business not covered by clause (i) above;
(ix) agreement, consent order, plea bargain, settlement
or stipulation or similar arrangement with any Governmental Authority;
(x) agreement with respect to the settlement of any
litigation or other proceeding with any third person or entity;
(xi) agreement relating to the ownership, transfer,
voting or exercise of other rights with respect to any equity in the
Seller, or any other entity, including without limitation, registration
rights agreements, voting trust agreements and shareholder and proxy
agreements;
(xii) contract, agreement or commitment to provide
services or products, or
(xiii) agreement not made in the ordinary and normal
course of business and consistent with past practice, or involving
consideration in excess of $25,000 in each case, that is not set forth
in subsections (i) through (xii) above.
To the best of Seller's and each Shareholder's knowledge, no party to
any Contract other than Seller is in default under any Contract. Seller has
delivered to IHS true and complete copies of each written Contract (or a
description of each oral Contract) requested by IHS.
-16-
(h) Brokers. No broker or finder has acted for Seller in
connection with the transactions contemplated by this Agreement, and no broker
or finder is entitled to any broker's or finder's fee or other commission in
respect thereof based in any way on agreements, understandings or arrangements
with Seller.
(i) Employment Contracts; Employees. There are no Contracts of
employment between Seller and any officer or other employee of the Business,
except as set forth on Schedule 13(g) above. The name, position, current rate of
compensation and any vacation or holiday pay, sick pay, personal leave,
severance and any other compensation arrangements or fringe benefits, of each
current employee, sales representative, consultant and agent of the Seller,
contained on the Schedule of Personnel Payrates and Advances attached hereto as
Schedule 13(i) is accurate and complete. No employee, consultant or agent of the
Seller has any vested or unvested retirement benefits or other termination
benefits, except as described on Schedule 13(i). Since the date that is two (2)
years prior to the Closing Date, there has been no material adverse change in
the relationship between the Seller and its employees, nor any strike or labor
disturbance by any of such employees affecting the Business and there is no
indication that such a change, strike or labor disturbance is likely. No
employees of the Seller are represented by any labor union or similar
organization in connection with their employment by or relationship with,
Seller, and to the knowledge of the Seller and Shareholder, there are no pending
or threatened activities the purpose of which is to achieve such representation
of all or some of such employees, and there are no threats of strikes, work
stoppages or pending grievances by any such employees. Seller is not party to
any collective bargaining or other labor contracts.
(j) Employee Benefit Plans. Seller has no pension or 401K
plans existing as of the Closing Date. Except as disclosed in Schedule 13(j),
Seller has no other bonus, profit-sharing, or retirement plans for officers or
employees of the Business, nor is Seller required to contribute to any such
plan. Without limiting the generality of the foregoing, Seller does not maintain
or make contributions to and has not at any time in the past maintained or made
contributions to any employee benefit plan which is subject to the minimum
funding standards of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or to any multi-employer plan subject to the terms of the
Multi-Employer Pension Plan Amendment Act of 1980 (the "MULTI-EMPLOYER ACT").
(k) Insurance. All inventories, buildings and fixed assets
owned or leased by the Seller are and will be adequately insured against fire
and other casualty through the Closing Date. The information contained on the
Schedule of Insurance Policies, attached hereto as Schedule 13(k), is accurate
and complete. Schedule 13(k) also sets forth any claims made under any of the
insurance policies referred to above or increases in premiums therefor during
the past two years. True and complete copies of all policies of fire, liability
and other forms of insurance held or owned by the Seller or otherwise in force
and providing coverage for the Business or any of the Assets (including but not
limited to medical malpractice insurance, and any state sponsored plan or
program for worker's compensation) have been delivered to IHS. Such policies are
owned by and payable solely to the Seller, and said policies or renewals or
replacements thereof will be outstanding and duly in force at the Closing Date,
and all premiums due on or before the Closing Date in respect thereof have been
paid.
(l) Disclosure. No representation or warranty by Seller or any
Shareholder in this Agreement or in any Transaction Document, contains any
untrue statement of material fact or omits to state any material fact, of which
any Shareholder or Seller or any of its officers, directors or stockholders has
knowledge or notice, required to make the statements herein or therein contained
not misleading.
-17-
(m) Officers, Directors and Shareholders of Seller. As of the
Closing Date, the Shareholders are the sole shareholders of Seller and the
following individuals are all of the officers and directors of Seller:
Name Office/Position
---- ---------------
Xxxxxxx Xxxxxxxx President/Director
Xxxxxxx X. Xxxxx Vice President/Director
Xxxxxxx Xxxxxxxx Secretary - Treasurer
(n) Inventory and Fixed Assets. The information contained on
the Schedule of Inventory and Fixed Assets as of the most recent Financial
Statement Date, attached hereto as Schedule 1(a)(ii), is accurate and complete.
(o) Tax Returns and Financial Statements. Seller has furnished
IHS with its tax returns (the "TAX RETURNS") for the periods ended September 30,
1996 and September 30, 1997, and has furnished IHS with its financial statements
(the "FINANCIAL STATEMENTS") for the periods ended September 30, 1996, September
30, 1997 and June 30, 1998 (the "FINANCIAL STATEMENT DATES"), copies of which
are attached hereto as Schedule 13(o). The Financial Statements: (i) are in
accordance with the books and records of the Seller; (ii) fairly present the
financial condition of the Seller at such date and the results of its operations
for the periods specified; (iii) the Financial Statement for the year ended
September 30, 1996 was prepared on the cash basis of accounting and the
Financial Statement for the year ended September 30, 1997 was prepared in
accordance with GAAP; (iv) with respect to all Contracts of the Seller, reflect
adequate reserves for all reasonably anticipated losses and costs in excess of
anticipated income; and (v) with respect to any balance sheets, disclose all of
the liabilities of the Seller at the Financial Statement Dates and include the
appropriate reserves for all taxes and other accrued liabilities, except that
certain contingent liabilities, if not disclosed on such balance sheets, shall
be considered to be disclosed pursuant to this subparagraph, if expressly
disclosed on any Schedule to this Agreement. The income statements included in
the Financial Statements do not contain any items of special or nonrecurring
income or expense or any other income not earned or expense not incurred in the
ordinary course of business, consistent with past practice, except as expressly
specified therein, and such Financial Statements include all adjustments, which
consist only of normal recurring accruals, necessary for such fair presentation.
(p) Supplemental Tax Information. Seller has furnished IHS
with its most recent (i) tax registration certificates, and (ii) tax returns
required of it by the federal government and each state or other locality in
which it conducts business, which tax returns in all instances where applicable
include, but shall not be limited to franchise taxes, federal, state and local
tangible personal property tax returns, and federal, state and local sales tax
returns, which registration certificates and tax returns are set forth,
collectively, on the Schedule of Supplemental Tax Information, attached hereto
as Schedule 13(p).
(q) Adverse Business Developments. No notice has been received
by Seller or any Shareholder of any new or substantially expanded firm or
individual engaged in a business directly competitive to Seller in its primary
service area within six (6) months before the date hereof. Neither Seller nor
any Shareholder has received, either orally or in writing, any notice specific
to it of pending or threatened adverse action with respect to any Medicare,
Medicaid, private insurance or third party payor reimbursement method, practice
or allowance as to any business activity engaged in by Seller, nor has Seller or
any Shareholder received, or been threatened with, any claim for refund specific
to it in excess of $500.00 by a Medicare or Medicaid carrier, except as
disclosed in the Schedule of Proceedings attached hereto as Schedule 13(q).
(r) Relationships. Except as disclosed on Schedule 13(r),
neither Seller, its officers, directors and employees, nor any Shareholder and
no member of any of their respective immediate families, and no person or entity
which is controlled by, under common control with, or controlling any of them
(each, an
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"AFFILIATE") has, or at any time within the last two (2) years has had, a
material ownership interest in any business, corporate or otherwise, that is a
party to, or in any property that is the subject of, business relationships or
arrangements of any kind relating to the operation of the Business. No Affiliate
of Seller or any Shareholder is guaranteeing any obligations of the Seller.
(s) Assets Comprising the Business. Except as disclosed on
Schedule 13(s), the Assets, with the Excluded Assets, are all of the tangible
and intangible properties (real, personal and mixed), including, without
limitation, all licenses, intellectual property, permits and authorizations, and
contracts that are necessary or material to the operation of the Business as now
operated. The quantities of inventory and supply items included in the Assets
are reasonable in light of the present and anticipated volume of the Business of
the Seller in the ordinary course of the business of the Seller, consistent with
past practice, as determined by the Seller in good faith and consistent with
past practice.
(t) Questionable Payments. Seller has not, and to the
knowledge of the Seller and Shareholders, none of their Affiliates or employees
have offered, made or received any illegal or unlawful payment, bribe, kickback,
political contribution or other similar questionable payment for any referrals
or otherwise in connection with the ownership or operation of the Business,
including, without limitation, any of the same that would constitute a violation
of the Foreign Corrupt Practices Act of 1977, as amended.
(u) Reimbursement Matters. Seller, to the extent necessary to
conduct its business in a manner consistent with past practice, is qualified for
participation in the Medicare and Medicaid programs. Except as disclosed on
Schedule 13(u), (i) Seller and Shareholders have not received any notice of
denial or recoupment from the Medicare or Medicaid programs, or any other third
party reimbursement source (inclusive of managed care organizations) with
respect to products or services provided by it, (ii) to Seller's and each
Shareholder's knowledge, there is no basis for the assertion after the Closing
Date of any such denial or recoupment claim, and (iii) Seller and Shareholders
have not received notice from any Medicare or Medicaid program or any other
third party reimbursement source (inclusive of managed care organizations) of
any pending or threatened investigations or surveys with respect to, or arising
out of, products or services provided by Seller or otherwise, and to the
knowledge of Seller and Shareholders, no such investigation or survey is
pending, threatened or imminent.
(v) Environmental Compliance. Except as disclosed on Schedule
13(v), at all times during Seller's ownership of the Business, the Business has
not been, and currently is not, in violation of any environmental Governmental
Requirement and no notice has ever been served upon any Shareholder or Seller,
their agents or representatives or any prior owner of the Business, claiming any
violation of any Governmental Requirement concerning the environmental state,
condition or quality of any real or personal property related to the Business,
or requiring or calling attention to the need for any work, repairs or
demolition on or in connection with any of the real property in order to comply
with any Governmental Requirement concerning the environmental or healthful
state, condition or quality of the real property.
(w) Questionnaires. The healthcare law questionnaire
heretofore delivered to the Seller by IHS attached hereto as Exhibit 13(w) (the
"QUESTIONNAIRE") has been fully and accurately completed and does not contain
any material misstatement of any fact and does not omit any fact that would have
to be stated in order not to render any response to such questionnaire
materially misleading.
-19-
14. Representations and Warranties of Buyer and IHS. Buyer and
IHS, jointly and severally, represent and warrant to Seller and Shareholders
that:
(a) Due Organization of Buyer; Etc. Buyer is a corporation
duly organized and validly existing and in good standing under the laws of
Delaware and is duly qualified and registered to do business as a foreign
corporation and is in active status or good standing as applicable to each
jurisdiction that requires such qualification or registration except where the
failure to so qualify or register would not have a material adverse affect on
Buyer. Buyer has all the necessary corporate power to own its own properties,
conduct its business as presently conducted and to do and perform all acts and
things required to be done by Buyer under this Agreement. Buyer is a
wholly-owned subsidiary of IHS.
(b) Buyer's Authority to Enter Into Transaction. Buyer has
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and all of the Transaction Documents
contemplated to be executed by Buyer under this Agreement and to perform its
obligations hereunder and thereunder, and the execution and delivery of this
Agreement has been duly authorized and approved by Buyer's Board of Directors.
This Agreement and all of such documents when executed and delivered by Buyer in
connection with this Agreement will constitute the valid and legally binding
obligations of Buyer enforceable in accordance with their respective terms and
conditions.
(c) Noncontravention With Respect to Buyer. Neither the
execution and delivery of this Agreement or any of the Transaction Documents to
be executed by Buyer as contemplated under this Agreement nor the consummation
of the transactions contemplated in this Agreement or the Transaction Documents
will: (i) violate any constitution, statute, regulation, rule, injunction,
judgement, order, decree, ruling, charge or other restriction of any government,
governmental agency or court to which Buyer is subject or any provision of
Buyer's articles of incorporation or bylaws or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or require any
notice under any agreement, contract, lease, license, instrument or other
arrangement to which Buyer is a party or by which it is bound or to which any of
its assets is subject.
(d) Broker's Fees. Neither Buyer nor IHS has any liability or
obligation to pay fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which Seller
and/or the Shareholders could become liable or obligated, and no broker or
finder has acted for Buyer or IHS in connection with the transactions
contemplated under this Agreement.
(e) Stock Payment Authority. Buyer and IHS have the authority
to cause the payment of the purchase price consisting of the IHS Shares to be
delivered to Seller and to Escrow Agent in accordance with the terms of this
Agreement.
(f) Due Organization of IHS, Etc. IHS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified or registered to do business as a foreign
corporation and is in active status or good standing as applicable to each
jurisdiction that requires such qualification or registration except where the
failure to so qualify or register would not have a material adverse affect on
IHS. IHS has all the necessary corporate power to own its own properties,
conduct its business as presently conducted and to do and perform all acts and
things required to be done by IHS under this Agreement.
(g) Noncontravention With Respect to IHS. Neither the
execution and delivery of this Agreement or any of the Transaction Documents to
be executed by IHS as contemplated under this Agreement nor the consummation of
the transactions contemplated in this Agreement or the Transaction Documents
will: (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling , charge or other
-20-
restriction of any government, governmental agency or court to which IHS is
subject or any provision of IHS' articles of incorporation or bylaws or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which IHS is a party or by which it is bound
or to which any of its assets is subject.
(h) IHS Stock. IHS has duly authorized and reserved for
issuance the IHS Shares to be issued in connection with this Agreement and, when
issued in accordance with the terms of Section 6 of this Agreement, such IHS
Shares will be validly issued, fully paid and nonassessable.
(i) IHS' Authority to Enter Into Transactions Contemplated
Under the Agreement. IHS has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and any other
Transaction Documents to be executed by IHS as contemplated under this Agreement
and to perform its obligations with respect thereto including the registration
rights provided to Seller and/or the Shareholders in Section 6 of this
Agreement, and such documents when executed and delivered will constitute the
valid and legally binding obligations of IHS enforceable in accordance with
their respective terms and conditions. The execution of this Agreement and all
of the other documents contemplated in this Agreement to be executed by IHS has
been duly authorized and approved by IHS' Board of Directors.
(j) Securities and Exchange Commission Filings and Financial
Statements. IHS has furnished the Seller and Shareholders with a correct and
complete copy of its Annual Report and its report on Form 10-K for its fiscal
year ended December 31, 1997 (the "10-KS"), its reports on Form 10-Q for its
fiscal quarters ended September 30, 1997 and March 31, 1998 (the "10-QS") and
its proxy statement prepared in connection with its annual meeting held on May
22, 1998 (the "PROXY STATEMENT"). As of their respective dates, none of the
10-Ks, the Annual Report, the 10-Qs and Proxy Statement and no press release or
other schedule or report required by IHS to be publicly disclosed or filed with
the Commission pursuant to the Exchange Act since January 1, 1997 (all of the
foregoing being the "SEC DOCUMENTS") contained any untrue statements, or omitted
to state any disclosures, which, in light of the circumstances, would render any
of such documents materially misleading, and the SEC Documents complied, when
filed, in all material respects with the then applicable requirements of the
Exchange Act and the rules and regulations promulgated by the Commission
thereunder. The financial statements of IHS and its combined subsidiaries and
the notes thereto contained in the Commission reports are correct and complete
in all material respects and fairly present the combined financial position of
IHS and its combined subsidiaries as of the respective dates thereof and the
results of operations for the periods then ended except as disclosed therein or
in the notes thereto or in the explanations thereof contained in the Commission
reports; and the balance sheets and notes thereto show and properly reflect all
material liabilities of IHS and its combined subsidiaries on the respective
dates thereof which were required to be disclosed in accordance with GAAP,
except for any claims and lawsuits against IHS and its combined subsidiaries now
pending which claims and lawsuits IHS does not expect to materially adversely
affect the business, properties or financial condition of IHS and its combined
subsidiaries taken as a whole. Each such financial statement was prepared in
conformity with GAAP consistently applied and presents fairly the financial
condition of IHS and its combined subsidiaries as of such dates, and the results
of operations of IHS and its combined subsidiaries for such periods are correct
and complete in all material respects and are consistent with the books and
records of IHS and its combined subsidiaries. Since the date of the most recent
10-Q, there has not been any material adverse change singularly or in the
aggregate in the business, financial condition, operations, results of
operations, accounting methods, liabilities, assets or earnings of IHS and its
combined subsidiaries.
15. Survival of Representations and Warranties. The representations and
warranties of Seller, Shareholders, IHS and Buyer contained in or made pursuant
to this Agreement shall survive the execution of this Agreement and the
consummation of the transactions contemplated under this Agreement.
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16. Indemnification; Remedies.
(a) Indemnification by Seller and each Shareholder. Seller and
each Shareholder shall, jointly and severally, indemnify and hold harmless at
all times Buyer and IHS and their stockholders, directors, officers, employees,
agents and assigns, from and against any Damages (as hereinafter defined)
arising out of: (i) any inaccurate representation made by Seller or any
Shareholder in, pursuant to or under this Agreement or any Transaction Document;
(ii) any breach of any warranty made by Seller or any Shareholder in, pursuant
to or under this Agreement or any Transaction Document; (iii) any breach or
default in the performance by Seller or any Shareholder of any of the covenants
to be performed by Seller or any Shareholder hereunder or in any Transaction
Document; and (iv) any Closing Date Liabilities.
(b) Indemnification by Buyer and IHS. Buyer and IHS shall,
jointly and severally indemnify and hold harmless at all times Seller and/or
Shareholders from and against any Damages arising out of: (i) any inaccurate
representation made by Buyer and/or IHS in, pursuant to or under this Agreement;
(ii) any breach of any warranty made by Buyer and/or IHS in, pursuant to or
under this Agreement; and (iii) any breach or default in the performance by
Buyer and/or IHS of any of the covenants and agreements to be performed by Buyer
and/or IHS hereunder.
(c) Definition of Damages. The term "DAMAGES" as used herein
shall include any demands, claims, actions, deficiencies, losses, delinquencies,
defaults, assessments, fees, costs, taxes, expenses, debts, liabilities,
obligations, settlements, penalties, and damages, including, without limitation,
reasonable counsel fees incurred in investigating or in attempting to avoid or
oppose the imposition thereof. The term "Damages" shall include, but shall not
be limited to, any Liabilities Deficiency, as defined in paragraph 5 hereof.
(d) Remedies.
(i) Buyer's and IHS' Remedies. Seller and each
Shareholder shall make payment of any Claim made against it, him or her
by no later than the last day of the Notice Period as provided in
paragraph 5(b) above.
(ii) Seller's Remedies. If Seller or any Shareholder
makes written request to Buyer and/or IHS for the payment of Damages,
then Buyer and/or IHS shall pay to Seller or Shareholders the amount of
Damages requested within ten (10) days from the date that such notice
is delivered to Buyer and/or IHS (also a "NOTICE PERIOD").
(iii) Notice of Dispute. Notwithstanding the foregoing
provisions of this subparagraph (d) and Section 5(b) above, if a party
(the "DEMANDING PARTY") serves a request for payment on the other party
(the "OBLIGATED PARTY"), the Obligated Party shall have the option to
provide written notice to the Demanding Party (the "NOTICE OF DISPUTE")
within the applicable Notice Period that the Obligated Party disputes,
in good faith, the validity or amount of the Damages set out in the
request for payment of Damages, and if the affected parties cannot
agree on the validity or amount of such Damages within ten (10) days
following the Notice Period, the dispute as to the validity or amount
of such claim or liability (the "DISPUTE") shall be settled as set
forth in subparagraph (e) of this paragraph 16, with the non-prevailing
party bearing the prevailing party's costs of arbitration if such
Dispute is resolved by arbitration.
-22-
(iv) Arbitration. If arbitration is required pursuant to
this paragraph 16, Buyer and IHS, on the one hand, and the
Representative, on the other hand, each shall select an arbitrator
within ten (10) business days after the Notice of Dispute is delivered;
those two arbitrators will then select a third arbitrator; and the
three arbitrators so chosen will determine the validity of the claim
for Damages. If Representative or Buyer and IHS delays in appointing an
arbitrator when required, and ten (10) days or more has elapsed, the
arbitrator appointed by the other party shall arbitrate the dispute. If
the Seller and the Shareholders shall be subject to a Dispute with
Buyer and IHS, they shall, unless Buyer and IHS elect otherwise in
their sole and absolute discretion, be required to act as a group with
respect to any and all rights and obligations with respect to the
resolutions of the Dispute as provided in this paragraph 16 and
Representative shall have the authority to settle such Dispute and/or
any Claims on behalf of such group. Any arbitration required pursuant
to this paragraph 16 shall be conducted in accordance with and under
the rules of the American Arbitration Association.
(e) Settlement of Disputes.
(i) Disputes Not Involving Third Parties. If a
Dispute involves claims not involving any third party, Buyer and IHS
and Seller and Shareholders shall settle the Dispute by submitting the
same to binding arbitration in accordance with subsection 16(d)(iv)
above.
(ii) Disputes Involving Claims Made by Third Parties.
If a Dispute involves claims made by one or more third parties (a
"THIRD PARTY CLAIM"), the party asserting its right to indemnification
for such Third Party Claim shall give written notice to the other party
as soon as practical after such asserting party receives notice of such
Third Party Claim; provided, however the failure to timely give such
notice shall not affect such party's right to indemnification except to
the extent the party to receive the notice is damaged by such delay.
Upon such notice to Representative or the applicable Seller or
Shareholder, Buyer and IHS and Seller and/or Shareholders shall submit
the Dispute to arbitration, and the following procedures shall apply:
(A) Solely for purposes of
determining the party responsible for defending the
Third Party Claim, the arbitrators shall deem such
Third Party Claim to be valid (although such
consideration shall not be an admission by any party
as to any liability to any party). The arbitrators
then shall decide which party shall be liable for the
Third Party Claim if it is successfully prosecuted by
such third party or parties, and the decision of such
arbitrators with respect to such liability shall be
final and binding as among the parties. (Such party
determined to be liable for such claim sometimes
shall be referred to herein as the "RESPONSIBLE
PARTY".)
(B) If the Responsible Party refuses
to settle (and pay the settlement amount of) the
Third Party Claim immediately, then the Responsible
Party immediately shall select one of the following
two options:
Option One: The Responsible Party,
at the Responsible Party's sole expense and
risk, can assume the defense of the Third
Party Claim, provided the Responsible Party
first places in escrow, in favor of the
other party, adequate collateral (as
determined by the arbitrators on
consideration of all relevant facts) to
protect the other party from all Damages
with respect to such Third Party Claim (in
which case the other party immediately shall
be
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reimbursed by the Responsible Party for any
amount the other party is required to pay
with respect to such Third Party Claim); or
Option Two: The Responsible Party,
at the Responsible Party's expense and risk,
can co-defend the Third Party Claim with the
other party, with the Responsible Party also
responsible for paying all costs incurred by
the other party in connection with such
defense, including, without limitation, the
legal fees and expenses of the other party's
counsel for its reasonable involvement in
such defense. If the other party is found to
be liable for any portion of such Third
Party Claim, the Responsible Party
immediately shall reimburse the other party
for any amount required to be paid by the
other party with respect thereto; provided,
however, if the Responsible Party selects
this option, the Responsible Party shall
attempt diligently to have the other party
removed as a party to any legal action
involving the Third Party Claim (and, upon
such removal, the involvement of the other
party's counsel shall cease unless requested
by the Responsible Party or the Responsible
Party's counsel); and
(C) No party may settle any Third
Party Claim without the prior consent of the other
party or parties hereto unless the settlement will
not have a material adverse effect on the other party
or parties hereto. The parties will resolve any
Dispute with respect to any such proposed settlement
in accordance with this paragraph 16.
(D) Any party responsible for
defending a Third Party Claim shall proceed with
diligence and in good faith with respect thereto.
(E) Nothing contained in this
paragraph 16(e) shall prevent any party from assuming
control of the defense and/or settling any Third
Party Claim against it for which indemnification is
not sought under this Agreement.
17. Use of Corporate and Fictitious Names. Seller and Shareholders,
jointly and severally, agree to take all actions necessary to assist Buyer in
obtaining the rights to use the corporate name and any fictitious names used in
its conduct of any of the Business, including but not limited to the execution
of any assignments and consents to use such name. If Buyer attempts to use such
name, Seller shall consent to Buyer's use of such name if such consent is
required by any state, county or local governmental authority.
18. Prepaid Items; Deposits; Etc. All prepaid insurance premiums, rent
and utility deposits, and similar items paid by or owing to the Seller by any
person, shall be considered to be part of the Assets being purchased by Buyer
and, on consummation of the transactions contemplated by this Agreement, shall
be the property of Buyer.
19. Post-Closing Requirements of Seller.
(a) Final Financial Information. Not later than sixty (60)
days following Closing, Seller, at Seller's sole cost and expense,
shall deliver to Buyer "FINAL FINANCIAL INFORMATION", which shall
include:
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(i) a balance sheet of Seller as of the Closing Date
prepared in accordance with GAAP;
(ii) an income statement of Seller for the period
commencing on the date succeeding the last day of the most
recent Financial Statement Date and ending on the Closing Date
which agrees with the balance sheet submitted at Closing;
(iii) an inventory of fixed assets of Seller as of
the Closing Date which agrees with the balance sheet submitted
at Closing; and
(iv) a listing of resale inventory of Seller as of
the Closing Date which agrees with the balance sheet submitted
at Closing.
(v) a cash settlement summary of Seller in a form
provided by Buyer.
(b) Liabilities Deficiency. If all such Final Financial
Information is not delivered to Buyer within such sixty (60) day period
following Closing, Seller and Shareholders shall be liable to Buyer in
an amount equal to $500.00 for each day after such sixty (60) day
period until all such Final Financial Information is delivered to
Buyer, and such liability shall constitute a Liabilities Deficiency
under the provisions of paragraph 5, above.
20. Third Party Beneficiaries. Nothing in this Agreement, expressed or
implied, is intended to confer on any person, other than the parties hereto, and
their successors, any rights or remedies under or by reason of this Agreement
other than the affiliates entitled to indemnification pursuant to paragraph 16.
21. Expenses. Except as otherwise stated herein, each of the parties
shall bear all expenses incurred by them in connection with this Agreement and
in consummation of the transactions contemplated hereby in preparation thereof.
22. Notices. All notices, consents, waivers and other communications
required or permitted hereunder shall be in writing and shall be deemed to be
properly given when personally delivered to the party or parties entitled to
receive the notice or three (3) business days after sent by certified or
registered mail, postage prepaid, or on the next business day after sent by
nationally recognized overnight courier, in each case, properly addressed to the
party or parties entitled to receive such notice at the address stated below:
to Seller: American Oxygen Services of Tennessee, Inc.
0000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
to Shareholders: Xxxxxxx X. Xxxxx
0000 Xxxxx Xxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxxx
0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx
XxXxxxxxxx, XX 00000
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Amerimed Healthcare, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, President
with a copy to: Xxxx, Xxxx Egerton, Bloodworth,
Capouano & Xxxxxxx, P.A.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
to IHS or Buyer: Integrated Health Services, Inc.
00000 Xxx Xxx Xxxxxxxxx
Xxxxxx Xxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxx
Xxxxxxxxx X. Xxxxx
with copies to: c/o RoTech Medical Corporation
0000 X.X. XxXxxx Xxxx, Xxxxx X
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
and
Blass & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Any party hereto may change the address to which notices, requests,
demands, claims and other communications hereunder are to be delivered by giving
the other party or parties notice in the manner herein set forth.
23. Choice of Law. The laws of the State of Tennessee applicable to
contracts executed, delivered and to be fully performed in such State govern the
validity of this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
24. Sections and Other Headings. Section, paragraph, and other headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
25. Counterpart Execution. This Agreement and/or any of the Transaction
Documents may be executed in two or more identical counterparts. If so executed,
each of such counterparts is to be deemed an original for all purposes and all
such counterparts shall, collectively, constitute one agreement, but, in making
proof of this Agreement and/or any of such Transaction Documents, it shall not
be necessary to produce or account for more of such counterparts than are
required to show that each party hereto executed at least one such counterpart.
-26-
26. Gender. All gender employed in this Agreement shall include all
genders, and the singular shall include the plural and the plural shall include
the singular whenever and as often as may be appropriate.
27. Parties in Interest. This Agreement shall be binding on and shall
inure to the benefit of, and be enforceable by, Seller, Shareholder and Buyer
and IHS and their respective successors and assigns. Buyer shall be entitled to
assign its rights, but not its obligations, under this Agreement and the
Transaction Documents after the Closing. Seller and the Shareholders may not
assign this Agreement or any of their rights hereunder without the prior consent
of Buyer.
28. Entire Agreement. This Agreement including all Schedules and
Exhibits hereto, and all Transaction Documents constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and there
are no agreements, understandings, restrictions, warranties, or representations
between the parties with respect to the subject matter hereof other than as set
forth herein or as herein provided.
29. Performance. In the event of a breach by Seller or Shareholders of
any of their respective obligations hereunder, the Buyer shall have the right,
in addition to any other remedies which may be available, to obtain specific
performance of the terms of this Agreement, and Seller and each Shareholder
hereby waives the defense that there may be an adequate remedy at law.
30. Waiver, Discharge, Etc. This Agreement and the Transaction
Documents and the obligations hereunder and thereunder shall not be released,
discharged, abandoned, changed or modified in any manner, except by an
instrument in writing executed by or on behalf of each of the parties hereto by
their duly authorized officer or representative. The failure of any party to
enforce at any time any of the provisions of this Agreement or any Transaction
Document shall in no way be construed to be a waiver of any such provision, nor
in any way to affect the validity of this Agreement or such Transaction
Document, as the case may be, or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement or any Transaction Document shall be held to be a waiver of any
other or subsequent breach.
31. Cooperation Further Assistance. From time to time, as and when
reasonably requested by any party hereto after the Closing, the other parties
will (at the expense of the requesting party) execute and deliver, or cause to
be executed or delivered, all such documents, instruments and consents and will
use reasonable efforts to take all such action as may be reasonably requested or
necessary to carry out the intent and purpose of this Agreement, and to vest in
Buyer good title to, possession of and control of all the Assets.
32. Joint and Several. Seller and the Shareholders shall be jointly and
severally liable for all representations, warranties and obligations, including,
without limitation, indemnification obligations, and covenants made by any of
them pursuant to this Agreement, including, without limitation, any made
pursuant to any Transaction Document. For all purposes of this Agreement, any
representation or warranty that is qualified to be "to the knowledge of Seller"
or by a requirement that Seller shall have received "notice" of any matter, or
any similar qualification shall be deemed to include the knowledge of the
Shareholders or notices to the Shareholders, as the case may be. Buyer and IHS
shall be jointly and severally liable for all representations, warranties and
obligations including, without limitation, indemnification obligations and
covenants made by either of them pursuant to this Agreement including, without
limitation, any made pursuant to any Transaction Document or other document
executed in connection with this Agreement.
33. Independent Legal Counsel. Seller and Shareholders represent and
warrant that each party has had the opportunity to seek the advice of
independent legal counsel prior to signing this Agreement, and that the Buyer
has recommended to Seller and Shareholders that such party obtain legal counsel.
34. Representative. Notwithstanding anything contained herein to the
contrary, Seller and each Shareholder hereby designates Xxxxxxx X. Xxxxx and
Seller and each Shareholder hereby accepts the designation
-27-
of Xxxxxxx X. Xxxxx as the representative of the Seller and Shareholders (the
"REPRESENTATIVE") to act for and on behalf of the Seller and Shareholders as
provided in this Agreement. Seller and each Shareholder shall be bound by all
actions taken or omitted by the Representative on behalf of Seller or any
Shareholder as provided in this Agreement, and Seller and each Shareholder shall
be deemed to have received notice deemed given or payment made to the
Representative in accordance with the notice provisions of this Agreement on the
date deemed given or the date paid to the Representative, and Buyer shall be
entitled to rely on all notices and consent given, and all settlements entered
into on behalf of Seller or any Shareholder to the extent authorized pursuant to
the terms of this Agreement notwithstanding any objections made by Seller or any
Shareholder prior to, concurrently with or subsequent to the giving of any such
notice or consent or the settlement of any such matter. The Representative may
be replaced only if and when Seller and all of the Shareholders shall notify
Buyer that a new individual person (named in such notice) has been unanimously
selected by them to be to be the new Representative, in which case such new
person shall thereafter be the Representative.
35. IHS' Guarantee of Buyer's Obligations. IHS hereby guarantees to
Seller and Shareholders the full and timely payment of all amounts due or to
become due from Buyer to Seller/and or the Shareholders under this Agreement and
all amounts due or that become due from Buyer to Seller and/or the Shareholders
under the provisions of the Transaction Documents and the full and timely
performance of all covanants and agreements to be performed by Buyer and under
this Agreement and/or the Transaction Documents. This guarantee by IHS is a
guarantee of payment and performance, and Seller and/or the Shareholders shall
not be first required to seek or obtain a judgement against Buyer or institute
any proceedings or take any action with respect to Buyer before Seller and/or
the Shareholders can enforce their rights under this guarantee against IHS.
36. Litigation Expenses. In the event of any litigation, including
appellate proceedings, arising out of or under this Agreement or any of the
Transaction Documents, the prevailing party or parties in such litigation shall
be entitled to recover reasonable attorneys' fees and court costs from the
nonprevailing party or parties.
37. Facsimile signatures. A facsimile, telecopy or other reproduction
of this Agreement and/or any of the Transaction Documents may be executed by the
parties (in counterparts or otherwise) and shall be considered valid, binding
and effective for all purposes. At the request of any party, the parties hereto
agree to execute an original of this Agreement and/or any of such Transaction
Documents as well as any facsimile, telecopy or other reproduction.
[SIGNATURES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first stated above.
IHS:
INTEGRATED HEALTH SERVICES,
INC.
By: /s/ XXXX XXXXXXXX
------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President
BUYER:
IHS ACQUISITION XXVII, INC.
By: /s/ XXXX XXXXXXXX
------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President
SELLER:
AMERICAN OXYGEN SERVICES OF
TENNESSEE, INC.
By: /s/ XXXXXXX XXXXXXXX
------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
SHAREHOLDERS:
/s/ XXXXXXX X. XXXXX
---------------------------------
Xxxxxxx X. Xxxxx
/s/ XXXXXXX XXXXXXXX
---------------------------------
Xxxxxxx Xxxxxxxx
AMERIMED HEALTHCARE, INC.
By: /s/ XXXXXXX X. XXXXX
------------------------------
Xxxxxxx X. Xxxxx
Title: Chief Executive Officer and Treasurer
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STATE OF______________
COUNTY OF_____________
The foregoing instrument was acknowledged before me by Xxxxxxx
Xxxxxxxx, as a shareholder of American Oxygen Services of Tennessee, Inc., a
Florida corporation, and who is personally known to me; or has produced ____
______________ as identification.
-------------------------- ----------------------------------
Date Notary Signature
----------------------------------
Notary Name Printed
My Commission Expires:
STATE OF_____________
COUNTY OF____________
The foregoing instrument was acknowledged before me by Xxxxxxx X.
Xxxxx, as Chief Executive Officer and Treasurer of Amerimed Healthcare, Inc., a
Florida corporation, on behalf of the corporation, and who is personally known
to me; or has produced ______________ as identification.
-------------------------- ----------------------------------
Date Notary Signature
----------------------------------
Notary Name Printed
My Commission Expires:
STATE OF MARYLAND
COUNTY OF BALTIMORE
The foregoing instrument was acknowledged before me by Xxxx Xxxxxxxx ,
as a Senior Vice President of IHS Acquisition XXVII, Inc., a Delaware
corporation, on behalf of the corporation, and who is personally known to me; or
has produced driver's license as identification.
8/12/98 /s/ Xxxxx Xxxxxx Xxxxx
-------------------------- ----------------------------------
Date Notary Signature
XXXXX XXXXXX XXXXX
----------------------------------
Notary Name Printed
My Commission Expires:
XXXXX XXXXXX XXXXX
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES DECEMBER 24, 0000
-00-
XXXXX XX XXXXXXXX
XXXXXX OF BALTIMORE
The foregoing instrument was acknowledged before me by Xxxx Xxxxxxxx,
as a Senior Vice President of Integrated Health Services, Inc., a Delaware
corporation, on behalf of the corporation, and who is personally known to me; or
has produced driver's license as identification.
8/12/98 /s/ Xxxxx Xxxxxx Xxxxx
-------------------------- ----------------------------------
Date Notary Signature
XXXXX XXXXXX XXXXX
----------------------------------
Notary Name Printed
My Commission Expires:
XXXXX XXXXXX XXXXX
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES DECEMBER 24, 2000
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SCHEDULES AND EXHIBITS
Schedule 1(a)(i) - Accounts Receivable
Schedule 1(a)(ii) - Inventory; Fixed Assets
Schedule 1(a)(iii) - Motor Vehicles
Schedule 1(a)(iv)(A) - Patients List
Schedule 1(a)(iv)(B) - Telephone Numbers and Licenses
Schedule 4(a) - Listed Liabilities
Schedule 4(b) - Unassumed Contracts
Schedule 4(c) - Assumed Liabilities
Schedule 10(c) - Seller's Opinion
Schedule 10(n) - Buyer's and IHS' Opinion
Schedule 13(b) - Consents
Schedule 13(c) - Litigation
Schedule 13(g) - Contracts
Schedule 13(i) - Personnel Payrates and Advances
Schedule 13(j) - Employee Benefit Plans
Schedule 13(k) - Insurance Policies
Schedule 13(o) - Tax Returns and Financial Statements
Schedule 13(p) - Supplemental Tax Information
Schedule 13(q) - Adverse Business Developments
Schedule 13(r) - Relationships
Schedule 13(s) - Assets Comprising the Business
Schedule 13(u) - Reimbursement Matters
Schedule 13(v) - Environmental Compliance
Exhibit 1(c) - Lease Agreement
Exhibit 1(c)-1 - Restrictive Covenant Agreement among Buyer, IHS and American
Oxygen Services of Tennessee, Inc.
Exhibit 1(c)-2 - Restrictive Covenant Agreement among Buyer, IHS and Xxxxxxx X. Xxxxx
Exhibit 1(c)-3 - Restrictive Covenant Agreement among Buyer, IHS and Xxxxxxx Xxxxxxxx
Exhibit 1(c)-4 - Restrictive Covenant Agreement among Buyer, IHS and Amerimed
Exhibit 2(b)(i)-A - Escrow Agreement
Exhibit 2(b)(i)-B - Stock Pledge Agreement
Exhibit 13(w) - Healthcare Questionnaire
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