ASSET PURCHASE AGREEMENT
Exhibit 10.24
This Asset Purchase Agreement (this “Agreement”) is made and entered into as of October 28,
2004, by and between OP Hospice, Inc., a Michigan corporation
(“Purchaser”), and Lighthouse Hospice
Limited Partnership, a Delaware limited partnership (“Seller”). Purchaser and Seller are sometimes
referred to collectively as the “Parties” and individually as a “Party”.
RECITALS:
A. Seller
provides hospice services (the “Business”) to patients who primarily reside in
skilled care nursing centers (the “Facilities”).
B. Seller desires to sell to Purchaser, and Purchaser desires to purchase, certain of Seller’s
assets used in connection with the Business, on the terms and subject
to the conditions set forth in
this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing Recitals, the mutual covenants and
undertakings set forth below and other good and valuable consideration, the receipt and adequacy
of which are acknowledged, the Parties hereby agree as follows:
1. CERTAIN DEFINITIONS
1.1. Definitions. The terms defined in this Section 1 have the meanings so stated:
(a)
“Accounts” means all of the accounts of the Seller on the Closing Date, as “account” is
defined in Section 9-102(1)(b) of the Michigan Uniform
Commercial Code, MCLA 440.9102(l)(b).
(b)
“Agreement” means this Asset Purchase Agreement, as the same may be amended.
(c)
“Assets” means all of the assets and properties (other than Excluded Assets) used or usable
in connection with or related to the Business, as the same shall
exist on the Closing Date, whether
known or unknown, tangible or intangible, real or personal, wherever situated, and owned by Seller
or in which Seller has any right, title or interest, including,
without limitation, the following
(but only to the extent the same are not Excluded Assets):
(i) All furniture, fixtures, leasehold improvements, and other fixed
assets;
(ii) All patents, patent applications, trademarks, trademark applications and registrations,
copyrights, copyright applications and registrations, service marks and service names, service
xxxx applications and registrations, commercial and technical trade secrets, technology, computer
and electronic data processing programs and software, web sites and domain names, inventions,
processes, know-how, confidential information and other proprietary property rights and interests
(collectively, “Intellectual Property”) used or usable in
the operation of the Business and in which Seller has any right, title or interest (“Seller’s
Intellectual Property”; provided, however, that the term “Seller’s Intellectual Property” shall
not include any computer or electronic data processing programs and software that are not
assignable, or any confidential information regarding potential transactions considered by Seller
or belonging to any third-party, that is subject to an agreement prohibiting its dissemination
(“Third-Party Confidential Information”));
(iii) All good will, advertising and promotional materials, customer lists, sales and
business records, directory listings, telephone numbers, mailing lists, and all other books and
records of every kind and nature, including, without limitation, the name “Lighthouse Hospice” and
all derivations of such name;
(iv) All equipment, machinery, tools, office equipment and vehicles, including, without
limitation, those listed on the attached Schedule l.l(c)(iv);
(v) All Inventory; and
(vi) All
prepaid expenses and lease deposits.
(d)
“Assumed General Contracts” means (i) all of the General Contracts listed on the attached
Schedule 1.1 (d); (ii) all General Contracts between
Seller and any of the Facilities (each a
“Facility Contract”); and (iii) any General
Contract not listed on the attached Schedule 1.1 (d),
which both (A) require less than sixty days prior notice for
cancellation by Seller without penalty,
and (B) provide for annual payments, either by or to Seller, of
less than $10,000.00.
Notwithstanding anything to the contrary in the definition of Assumed
General Contracts, no Employee
Benefit Plan shall be an Assumed General Contract or assumed by Purchaser.
(e)
“Environmental Laws” means any and all
international, federal, state, and local statutes,
laws, regulations, ordinances, orders, common law, judgments, orders, decrees, rulings, settlement
agreements, consent decrees and similar provisions having the force or effect of law, including but
not limited to, the Federal Air Pollution Control Act, 42 U.S.C.§7401 et seq., the Federal Water
Pollution Xxxxxxx Xxx, 00 X.X.X. §0000 et seq., the Safe Drinking Xxxxx Xxx, 00 X.X.X. § §
000x-000x, the Resource Conservation Recovery Act (“RCRA”), 42 U.S.C. §6901 et seq., the Toxic
Substances Xxxxxxx Xxx, 00 X.X.X. §0000 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. § 1801 et seq., the Atomic Energy Act 42 U.S.C, § 2011 et seq.; or the Comprehensive
Environmental Response, Compensation and Liability Act
(“CERCLA”), 42 U.S.C. §9601 et seq., whether
currently in existence or hereafter enacted or which govern: (i) the existence, cleanup, removal
and/or remedy of contamination or threat of contamination of the environment; (ii) the emission,
leak, discharge, spill or release of Hazardous Materials into the environment; (iii) the control of
Hazardous Materials; (iv) the use, generation, transport, treatment, storage, collection, labeling,
disposal, removal, recycling, handling or recovery of Hazardous Materials, including building
materials; (v) pollution or pollution control; (vi) protection of the environment and natural
resources; or (vii) protection of public health or safety.
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(f)
“Excluded Assets” means the following assets, which shall not be included in the definition
of Assets and shall not be sold by Seller to Purchaser pursuant to
this Agreement:
(i) The minute books and other partnership records of Seller relating
to its organization and existence;
(ii) All cash and cash equivalents, credits, rebates and refunds, notes receivable,
loan receivables, and Accounts;
(iii) All workers’ compensation and other insurance refunds and dividends (including
refundable self-insurance reserves, if any) payable to Seller;
(iv) All claims and rights concerning any litigation in which Seller is a claimant;
(v) All
Tax Returns (as defined in Section 5.14 (c) below) of
Seller.
(g)
“General Contracts” means all written contracts and agreements, including all
governmental or third party payor participation agreements, other
than the Real Property Leases and
the Personal Property Leases, entered into by Seller in connection with the
Business.
(h) “Hazardous Materials” means any material or substance: (i) which is or becomes defined as
a “hazardous substance”, “pollutant” or “contaminant” pursuant to CERCLA and amendments thereto
and regulations promulgated thereunder; (ii) which is or contains gasoline, oil, diesel fuel or
other petroleum products, or fractions thereof, (iii) which is or becomes defined as a “hazardous
waste” pursuant to RCRA and amendments thereto and regulations promulgated thereunder; (iv) which
is or contains polychlorinated biphenyls (PCBs); (v) which is or contains asbestos; (vi) which is
radioactive; (vii) which is biologically hazardous or infectious or carcinogenic; (viii) the
presence of which requires investigation or remediation under any federal, state or local statute,
regulation, ordinance or policy; (ix) which is or becomes defined as a “hazardous waste”,
“hazardous substance”, “pollutant” or “contaminant” or other such terms used to define a substance
having an adverse effect on the environment under any federal, state or local statute, regulation
or ordinance; (x) any toxic, explosive, ignitable, dangerous, corrosive, reactive or otherwise
hazardous substance, material or waste which is or becomes regulated by any federal, state or
local governmental authority; or (xi) which causes a nuisance
upon or waste to real property.
(i) “Inventory” means all of the inventory of the Seller on the Closing Date, wherever
located, as “inventory” is defined in
Section 9-102(l)(vv)(iv) of the Michigan Uniform Commercial
Code, MCLA 440.9102(l)(vv)(iv).
(j) “Knowledge of Seller” means the actual knowledge of Xxx X. Xxxxxxxxx, Xxx Xxxxxxxxx, or
Xxxxx Xxxxxx after at least one of them has made reasonable inquiry into the matter in question
(if any such inquiry is reasonably appropriate under the circumstances).
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(k) “Leased Personal Property” means all personal property currently used in connection with
the Business and covered under the Personal Property Leases.
(l) “Leased Real Property” means the real property currently used in connection with the
Business and set forth on the attached Schedule 1.1 (l).
(m). “Leases” mean the Personal Property Leases and the Real Property Leases.
(n) “Personal Property Leases” means all written personal property leases entered into by
Seller which cover personal property used in connection with or related to the Business, a complete
list of which, together with a list of the Assets subject to such leases, are set forth on the
attached Schedule 1.1 (n).
(o) “Purchase Price” means and shall equal $11,865,000.00.
(p) “Real Property Leases” means all written real property leases entered into by Seller
which cover the Leased Real Property, a complete list of which are set forth on the attached
Schedule 1.1 (p).
(r) “Safety Laws”
means the Occupational Safety and Health Act, 29, U.S.C. § 651 et seq.
(“OSHA”), as amended, and any regulations promulgated thereunder or any laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of state governments (and all agencies thereof), each as amended, pertaining or
relating to the protection of the health and safety of employees in the workplace (but excluding
workers compensation and wage and hour laws).
2. PURCHASE AND SALE OF ASSETS; ASSIGNMENTS
2.1.
Purchase and Sale of the Assets. On the Closing Date (defined in Section 10.1 below),
Seller shall transfer, sell and assign to Purchaser, and Purchaser
shall purchase from Seller, on
the terms and subject to the conditions set forth in this Agreement,
the Assets, free and clear of
all Liens (defined in Section 5.6 below) other than the
Permitted Liens (defined in Section 5.6
below).
2.2. Assignments. Seller shall, at the Closing, assign to Purchaser (pursuant to
the Assignment and Assumption Agreement attached to this Agreement as
Exhibit E): (a) all Assumed
General Contracts; (b) all Personal Property Leases;
(c) all Real Property Leases; (d) all
assignable third party warranties and claims for warranties relating to the Assets or the
Leased Personal Property; (e) all assignable Licenses (as defined in Section 5.6), permits,
registrations and certifications necessary to operate the Assets and the Business; and (f) any and
all assignable governmental or third party payor participation agreements. The agreements and leases
described in clauses (a), (b), and (c) (other than any Facility Contract) and all assignable
agreements, warranties, claims for warranties, Licenses, permits, registrations and certifications
described in clauses (d), (e), and (f) are collectively referred to as the “Assignable Items.” All
warranties,
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claims for warranty, Licenses, permits, registrations, certifications, and governmental or third
party payor participation agreements that are
not-assignable are collectively referred to as the
“Non-Assignable Items.” To the extent the assignment of any Assignable Items requires the consent
of a party (other than Seller), Seller shall not be obligated to obtain any of such consents, until
such time as Purchaser has procured a firm commitment for the financing of the Purchase Price (the
“Financing Commitment”) and Purchaser has paid the commitment fee or other fee initially due and
payable upon the signing of the commitment (the “Commitment Fee”), if any. Upon Purchaser procuring
the Financing Commitment and paying the Commitment Fee, Purchaser shall deliver a copy of the
Financing Commitment to Seller and evidence of payment of the Commitment Fee. To the extent the
Financing Commitment is contingent upon Seller obtaining consents to the assignment of any
Assignable Item (the “Required Consents”), Seller shall use reasonable efforts to obtain all
Required Consents prior to the Closing. To the extent the Financing Commitment is contingent upon
Purchaser obtaining the rights and benefits of any Non-Assignable Items (the “Required Approvals”),
then Purchaser shall endeavor to obtain the rights and benefits under all such Non-Assignable Item
prior to the Closing by obtaining its own licenses, permits, registrations, certifications, and
governmental or third party payor participation agreements (and Seller shall fully cooperate with
Purchaser in that regard). Without limiting the generality of the foregoing, if requested by
Purchaser, Seller shall provide all applicable Government Programs and Private Programs with any
required notices.
2.3. Non-Assignable Items. After the Closing, if requested by Purchaser, Seller shall use
reasonable efforts to the extent legally permitted to provide Purchaser with the rights and
benefits of each Assignable Item for which the consent of a third party was not received prior to
Closing and each Non-Assignable Item that Purchaser failed to obtain its own prior to Closing, in
order to accomplish the goal of the Parties to transfer all benefits, costs and obligations
arising from and after the Closing Date of each Assignable Item and each Non-Assignable Item to
Purchaser. Without limited the generality of the foregoing, under such circumstances, the Parties
shall endeavor, to the extent legally permitted, to (a) subcontract Seller’s performance under
such Assignable Items and Non-Assignable Items to Purchaser, (b) have Seller complete performance
under such Assignable Items and Non-Assignable Items for the account and benefit of Purchaser, but
at no cost to Seller, in which case Purchaser shall make the Assets and Purchaser’s employees
available to Seller for such purposes, and all profits, losses and costs relating to such
agreements shall accrue to Purchaser, and/or (iii) enter into any other reasonable structure,
method or series of transactions between the Parties designed to accomplish the foregoing purposes
and objectives.
3. LIABILITIES ASSUMED
3.1. Assumed Liabilities. In connection with its acquisition of the Assets, Purchaser
shall assume those liabilities arising from and after the Closing Date with respect to: (a) the
Assumed General Contracts, the Personal Property Leases, and the Real Property Leases, (b) those
term loans or installment loans payable by Seller and listed on the attached Schedule 3.1(b) but
only to extent the proceeds of such loan payables were used to acquire equipment or vehicles used
in the ordinary course of the Business, and (c) the employment matters specified in Article 8
(collectively, the “Assumed Liabilities”). The Parties acknowledge that until the Closing, Seller
may make or incur capital expenditures with respect to the Business and may
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expand into territories in which Seller currently does not conduct its Business, but such capital
expenditures or expansion are subject to the prior written consent of Purchaser in accordance with
Section 7.4. If, in the ordinary course of the Business, Seller desires to make or incur such
capital expenditures or expand its Business and the same is consented to by Purchaser in writing
pursuant to Section 7.4, then Seller may finance such expenditures and costs of expansion by
borrowing sufficient funds from Standard Federal Bank and the new loans payable by Seller shall be
added to Schedule 3.1 (b) and assumed by Purchaser at Closing as an Assumed Liability; provided,
however, that the terms of such borrowings and loans must be approved by Purchaser in writing in
accordance with Section 7.4. Notwithstanding anything to the contrary contained in this Agreement,
to the extent Seller desires to make or incur such capital expenditures or expand its Business and
the same is not consented to by Purchaser in writing pursuant to Section 7.4, then Seller shall
have no liability whatsoever to Purchaser for Seller’s failure to make or incur such capital
expenditures or expand its Business. Purchaser shall be in entitled to withhold any and all of the
consents referred to above, in its sole and absolute discretion, without any liability whatsoever
to Seller.
3.2. Excluded Liabilities. Other than the Assumed Liabilities, Purchaser shall not assume and
shall not be liable for any debts, liabilities or obligations of Seller, regardless of the type or
nature of such debts, liabilities and obligations (collectively, the “Excluded Liabilities”). Such
Excluded Liabilities shall include, without limitation: (i) any liabilities relating to any of
Seller’s accounts payable, or accruals for payroll (including personal, sick and vacation day
accruals) and bonuses; (ii) any liability or obligation of Seller under the Environmental Laws with
respect to solid waste or Hazardous Materials which have been transported by or on behalf of Seller
for offsite disposal; (iii) any liability or obligation relating to any investigation, remediation
or monitoring of Hazardous Materials which were present, as of the Closing Date, in the ground
water, surface water or surface or subsurface soil of any real property owned or leased by Seller
or its predecessors in interest on or at anytime before the Closing Date; (iv) any liability or
obligation of Seller for any violation of the Environmental Laws, including, without limitation,
any fine or penalty arising from any permit violations; (v) any liability or obligation relating,
in any way, to any action, suit, investigation or proceeding pending or threatened against Seller,
the Business or the Assets, at law or in equity, before any federal, state, municipal or other
governmental department, commission, board, agency, court or instrumentality; (vi) any liability or
obligation relating, in any way, to the Employee Benefit Plans (defined in Section 5.11) other than
Assumed Liabilities; (vii) any liability or obligation under the Licenses (as defined in Section
5.4); (viii) any liability or obligation arising from Seller’s participation in the Title XVIII
(Medicare), Title XIX (Medicaid) and/or Blue Cross and Blue Shield programs; (ix) any third party
payer program penalties, sanctions, overpayments or other liabilities generated as a result of
prior or future filing of any claim by Seller for payment or reimbursement or with respect to any
alleged fraud or abuse, criminal activity, fee splitting or with respect to any document filed or
to be filed by Seller under any third party payer program; (x) any accrued bonuses payable by
Seller; (xi) any Tax (as defined in Section 5.14 (c) below) liability (or adjustments thereto);
(xii) any liability or obligation with respect to claims for bodily injury or property damage of
any kind, type or description which arises out of any act or occurrence or treatment rendered on or
before the Closing Date; (xiii) any and all oral contracts, agreements or understandings; (xiv) any
General Contracts other than the Assumed General Contracts; and (xv) any and all fees, commissions
or other amounts due Beringea, LLC.
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4. PURCHASE PRICE
4.1.
Purchase Price. For and in consideration of the Assets, Purchaser shall assume the
Assumed Liabilities and shall pay Seller the Purchase Price.
4.2. Payments At Closing. The Purchase Price shall be paid at Closing as follows:
(a) $10,170,000.00 by wire transfer of immediately available funds to an account designated
by Seller; and (b) a $1,695,000.00 promissory note (the
“Note”) issued by Purchaser and delivered to
Seller at Closing in the form attached hereto as Exhibit A.
The Note shall be guaranteed by Tandem
Health Care, Inc., pursuant to a Guaranty (the “Guaranty”)
to be delivered to Seller at Closing in
the form attached hereto as Exhibit B.
4.3 Allocation of Purchase Price. For all tax and other reporting purposes, the Purchase
Price shall be allocated among the Assets in the manner set forth on the attached Schedule 4.3 and
Internal Revenue Service Form 8594 (which Form shall be prepared and filed in accordance with this
Section 4.3). Seller and Purchaser hereby affirm that such allocation is fair and equitable. The
Parties shall make all Tax reports, returns and claims and other statements consistent with the
allocation set forth in Schedule 4.3 and shall not make any inconsistent written statement on any
returns or during the course of any Internal Revenue Service or other tax audit, except to the
extent required by law.
5.
REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents, warrants and covenants the
following to Purchaser:
5.1. Good Standing and Authority. Seller is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware. Seller is duly qualified to
do business as a foreign corporation and is in good standing in each jurisdiction in which it is
required to be so qualified, except where the failure to be so qualified would not have a material
adverse effect on the Business, the Assets or the Assignable Items. All such jurisdictions are
identified on the attached Schedule 5.1. Seller has the power and authority to enter into this
Agreement to enter into any and all documents contemplated in this Agreement (the “Attendant
Documents”) to which it is a party and to consummate the transactions contemplated in this
Agreement and the Attendant Documents. This Agreement and all of the Attendant Documents to which
Seller is a party, and the consummation of the transactions contemplated in this Agreement and the
Attendant Documents, have been (or will be by November 29, 2004) duly authorized and approved by
all necessary and proper action on the part of Seller. Contemporaneously with the execution and
delivery of this Agreement, Seller has provided Purchaser with a true, correct and complete copy
of the resolutions adopted by its partners authorizing the execution and delivery of, and
consummation of the transactions contemplated in, this Agreement. This Agreement, and all of the
Attendant Documents to which Seller is a party, when executed and delivered, will constitute
legal, valid and binding obligations of Seller, enforceable against Seller in accordance with
their respective terms. Schedule 5.1 lists all of Seller’s partners (the “Partners”), and the
partnership interests held by each. Except for the Partners and as set forth on Schedule 5.1,
Seller does not own or control, is not owned or
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controlled by and is not under common ownership or control with any other entity or person and
does not have any investments in any other entity.
5.2.
Intellectual Property. There are no patents, patent
applications, registered trademarks,
applications for registered trademarks, registered service marks,
applications for registered
service marks, logos, registered copyrights or applications for
registered copyrights used in
connection with or related to the Business. There are not any
proceedings which are pending, and,
to the Knowledge of Seller, there are not any claims or demands
pertaining to, or any unasserted
claims or threatened proceedings, which challenge the right of Seller
in respect of any of Seller’s
Intellectual Property. To the Knowledge of Seller, no third-party has
infringed upon or
appropriated any of Seller’s Intellectual Property. Seller has
not infringed upon or appropriated
any Intellectual Property of any third-party. The Third-Party
Confidential Information is
not material to the operation of the Business.
5.3. Seller’s Contracts. The attached Schedule 1.1 (d) identifies all
General Contracts, which require more than sixty days prior notice for cancellation without
penalty and/or payments by or to Seller in excess of $10,000.00 annually, true and complete copies
of all of which have been delivered to Purchaser. Except as set forth
on the attached Schedule 5.3, all of the General Contracts were entered into in the ordinary course of business. Except as set
forth on the attached Schedule 5.3, each General Contract is in full force and effect, each
General Contract is binding and enforceable against each of the parties thereto in accordance with
their respective terms, Seller has complied in all material respects with the provisions of each
General Contract, Seller is not in default under any such General Contract, and, to the Knowledge
of Seller, no party to any General Contract has failed to comply in any material respect with, or is
in default under, the provisions of such General Contract. No party to any General Contract
has advised the other party that it has repudiated or intends to cancel, terminate or amend (other
than Facility Contracts that are cancelled, terminated or amended in the ordinary course of
the Business) any of the General Contract’s provisions, and Seller has not assigned, transferred
or encumbered any interest in any General Contract. There are not
more than 20 General Contracts not
listed on Schedule 1.1 (d), which both (A) require less than sixty days prior notice
for cancellation by Seller without penalty, and (B) provide for annual payments, either by or
to Seller, of less than $10,000.00.
5.4.
Permits and Licenses. The attached Schedule 5.4 lists all governmental franchises,
permits, licenses, certifications, accreditations or other
authorizations held by Seller in
connection with the Business (the “Licenses”), true
and complete copies of all of which have been
delivered to Purchaser. Except as set forth on the attached
Schedule 5.4, all of the Licenses are in
full force and effect and Seller has performed all of the obligations
arising under the Licenses
prior to the Closing Date. Except as set forth on the attached
Schedule 5.4, Seller has obtained all
permits, licenses, franchises, certifications, accreditations and
other authorizations required for
Seller to lawfully engage in the Business. Except as set forth on the
attached Schedule 5.4, no
action or proceeding looking to or contemplating the revocation or
suspension of any License is
pending or, to the Knowledge of Seller, threatened.
5.5. Leases. Seller holds a valid and enforceable leasehold interest in the leased
Real Property. Other than the Leased Real Property, Seller does not have any right, title or
interest in
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or to any real property, whether owned or leased. Other than the Leased Personal Property, Seller
does not have any leasehold interest in or to any personal property. Seller has previously
delivered true and complete copies of all Leases to Purchaser. The Leases are in full force and
effect, are binding and enforceable against each of the parties thereto in accordance with their
respective terms. Except as set forth on the attached Schedule 5.5, Seller has complied in all
material respects with the provisions of each Lease, Seller is not in default under any such Lease,
and no party to any such Lease has failed to comply in any material respect with, or is in default
under, the provisions of such Lease. No party to any Lease has advised the other party that it has
repudiated any of the Lease’s provisions; Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in any Lease; and all facilities leased or
subleased under any Real Property Lease are supplied with utilities and other services necessary
for the operation of such facilities. No property insurer or similar body has made any
recommendations to Seller regarding facilities leased or subleased under any Real Property Lease
which has not been complied with. Seller has received no notice that the Business is in violation,
which violation has not been cured, of local building codes, ordinances or zoning laws, and Seller
has not received any notice which currently remains uncured that indicates that Seller has failed
to obtain any license, permit, approval, certificate or other authorizations required by applicable
statutes, laws, ordinances or regulations for the use and occupancy of the Leased Real Property.
5.6. Liens. Except as set forth on the attached Schedule 5.6, Seller owns the Assets, free and
clear of any and all security interests, liens, mortgages, easements, restrictions, reservations,
tenancies, or other encumbrances of any nature whatsoever (collectively, the “Liens”), Seller has
not assigned, as collateral security or otherwise, all or any portion of its interest in any
Assignable Item or any Non-Assignable Item to any third-party. Except for the Liens identified on
the attached Schedule 5.6 as “Permitted Liens” (the “Permitted Liens”), all of the Liens identified
on the attached Schedule 5.6 will be released at the Closing.
5.7. Litigation. Except as set forth on the attached Schedule 5.7, Seller has not been notified
of any actions, suits, audits, surveys, investigations, proceedings or inquiries pending against, or
threatened against, Seller, the Business, the Assets or the Assignable Items, at law or in equity,
before any federal, state, municipal or other governmental department, commission, board, agency,
court or instrumentality or third party payor. Except as set forth on the attached Schedule 5.7,
there are no outstanding orders, rulings, decrees, judgments, or stipulations to which Seller, the
Business, the Assets or the Assignable Items are subject or in default with respect to, nor is
Seller, the Business or the Assets subject to or in violation of any order, writ, injunction or
decree of any court, or other governmental department, commission, board, agency or instrumentality.
5.8. Compliance with Applicable Laws. Except as set forth on the attached Schedule 5.8, Seller
is in substantial compliance with all laws, regulations, rules, orders, judgments, decrees and other
requirements imposed by any governmental authority applicable to them in connection with the
operation of the Business, including, without limitation, the violation of which could have a
material adverse effect on the Assets, the Assignable Items or the Business, including, without
limitation, the Safety Laws, 42 USC 1320a-7b, 42 USC 1395nn and any applicable conditions of
participation, and Public Law 104-191 of August 21, 1996, known as
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the Health Insurance Portability and Accountability Act of 1996 (“HIPAA) and its implementing
regulations, including without limitation, the Standards for Electronic Transaction and Code Set
(45 CFR Parts 160 and 162), the Standards for Privacy of Individually Identifiable Health
Information (45 CFR Parts 160 and 164), the Security Standards for the Protection of Electronic
Protected Health Information (45 CFR Parts 160 and 164) and such other regulations promulgated
thereunder.
5.9. Employees. The attached Schedule 5.9 contains a complete and accurate list, as of
September 1, 2004, of Seller’s current employees (“Seller’s Employees”) and, with respect to each of
Seller’s Employees: the name of the employee, and such employee’s title or position, salary or rate
of pay (including bonuses and incentive compensation, if any), and whether such employee is exempt
or non-exempt, hourly or salaried. Schedule 5.9 also identifies each of Seller’s Employees who, in
calendar year 2003, received a bonus or incentive compensation that exceeded $10,000 or 10% of his
or her base pay, whichever is the lesser. Except as set forth on the attached Schedule 5.9, as of
September 1, 2004, all of Seller’s Employees are actively at work, and none of Seller’s Employees
are currently on leave of absence, layoff, military leave, suspension, sick leave, workers’
compensation, salary continuance or short or long term disability or otherwise not actively
performing his or her work during all normally scheduled business hours. Except as set forth on the
attached Schedule 5.9, as of September 1, 2004, there are no former employees of Seller (or their
dependents) who are receiving, or who have the right to elect to receive, coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). Each such individual
receiving or entitled to receive COBRA coverage is hereinafter referred to as a “COBRA Qualified
Beneficiary”. Schedule 5.9 sets forth the nature of each COBRA Qualified Beneficiary’s qualifying
event, the date each COBRA Qualified Beneficiary’s COBRA coverage commenced, and the date such COBRA
coverage will end based on the nature of the qualifying event and assuming the maximum COBRA period
for such event. There is no other individual, including, without limitation, any employee or
former employee of any current or former Controlled Group Member (as defined in Section 5.11 (a))
or any spouse or dependent of such an employee or former employee, who is receiving or entitled to
receive coverage under any Seller health or welfare benefit plan pursuant to COBRA, any contract or
agreement or otherwise.
5.10. Employee Relations. Except as set forth on the attached Schedule 5.10, there are no
written or oral collective bargaining agreements or other employment agreements or understandings
with or affecting any of Seller’s Employees, and Seller is not a party to any written or oral
independent contractor agreement. Seller has provided Purchaser with true and complete copies of
all written agreements with or affecting any of Seller’s Employees. Hours worked by, and payments
made to, all of Seller Employees have been in compliance with the Fair Labor Standards Act and other
applicable federal, state and local laws. All payments due from Seller on account of any of Seller’s
Employees’ work, health, welfare or other insurance, under any agreement, whether oral or written,
will have been paid as of the Closing Date, except for such obligations that are expressly assumed
by Purchaser in Article 8. Except as set forth on the attached Schedule 5.10, (a) to the Knowledge
of Seller, there is no unfair labor practice charge or complaint concerning the Business or any of
Seller’s Employees pending before any governmental agency; (b) to the Knowledge of Seller, there is
no labor strike or material slowdown, work stoppage, lockout or other collective labor action
pending or threatened against
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or affecting the Business; (c) Seller has not experienced any strike or material slowdown, work
stoppage, lockout or other collective labor action in connection with the Business; (d) to the
Knowledge of Seller, there is no representation claim or petition concerning the Business or any
of Seller’s Employees pending or threatened before any governmental agency; (e) to the Knowledge
of Seller, there are no charges with respect to or relating to the Business pending or threatened
before the Equal Employment Opportunity Commission or any agency responsible for the prevention of
unlawful employment practices; (f) Seller has not received formal notice from any governmental
agency responsible for the enforcement of labor or employment laws of an intention to conduct an
investigation of the Business and no such investigation is currently in progress; and (g) to the
Knowledge of Seller, no member of Seller’s management and no group of Seller’s Employees has any
plans to terminate employment with Seller prior to Closing or to refuse employment with Purchaser
after Closing.
5.11.
Employee Benefits.
(a) Except
for the employee benefit plans listed in the attached
Schedule 5.11(the “Employee
Benefit Plans”), Seller is not a party to, is not bound by
or, to the Knowledge of Seller, does not
have any liability or potential liability with respect to any profit
sharing, stock option, pension,
severance, retirement, stock purchase, hospitalization, group or
individual life, disability or
health insurance, or employee welfare benefit or other employee
benefit plan, program, policy or
agreement (whether or not terminated, whether or not funded, whether
or not subject to ERISA, and
whether or not providing benefits to the current or former employees
or agents of Seller or to the
current or former employees or agents of any current or former Controlled Group Member). For
purposes of this Section 5.11, the term “Controlled
Group Member” shall mean each corporation,
partnership, trade or business (whether or not incorporated) which is or at any time was,
together with Seller, treated or required to be treated with Seller as a single employer in
accordance with Section 414 of the Internal Revenue Code of
1986, as amended (the “Code”).
(b) Seller
does not, nor will it prior to the Closing Date, participate in, contribute to,
employ any persons covered by or have any liability or reasonable
expectation of liability
(including withdrawal liability within the meaning of Title IV of the
Employee Retirement Income
Security Act of 1974, as amended (“ERISA”)) with respect to
any multiemployer plan, as defined in
Section 3(37) of ERISA. Seller does not, nor will it prior to
the Closing Date, maintain, contribute
to or have any liability whatsoever with respect to (1) any pension plan (as defined in Section 3(3)
of ERISA) subject to Section 412 of the Code, Section 302 of
ERISA or Title IV of ERISA, (ii) any
multiple employer plan within the meaning of Section 413(c) of the Code, or (iii) any plan that
provides post-retirement or post-termination health, life, disability or welfare-type benefits to
current or future former employees of Seller other than in accordance with Section 4980B of the
Code, Part 6 of Subtitle B of Title I of ERISA or applicable state continuation coverage law. All
amounts due under or with respect to the Employee Benefit Plans for services rendered by Seller’s
Employees prior to the Closing Date shall be fully paid as of the Closing. All amounts accrued
under or with respect to the Employee Benefit Plans, payment of which is not due prior to or on the
Closing Date, and all amounts accrued under or with respect to each Employee Benefit Plan that is
unfunded, are Excluded Liabilities (except personal, sick and vacation day accruals).
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(c) Each
Employee Benefit Plan has been, and through the Closing Date will be, maintained,
administered and funded in all material respects in accordance with
all applicable laws and
regulations, including, without limitation, ERISA and the Code. None
of Seller or any trustee,
administrator, fiduciary, service-provider or other party dealing
with any Employee Benefit Plan has
engaged in a non-exempt prohibited transaction (within the meaning of
Section 4975 of the Code or
Section 406 of ERISA) with respect to such Employee Benefit Plan
or has engaged in any action or
omitted any action with respect to any Employee Benefit Plan which action or omission could
reasonably be expected to subject Purchaser to any material liability.
(d) None
of the Employee Benefit Plans will obligate Purchaser to pay separation, severance,
termination or similar-type benefits to any of Seller’s
Employees (or to any other individual)
solely as a result of any transaction contemplated by this Agreement
or solely as a result of a
change of control as such term is contemplated by Section 280G
of the Code.
(e) Each
Employee Benefit Plan that is intended to be qualified under Section 401(a) of the
Code, and each trust (if any) forming a part thereof, has received a
favorable determination letter
from the Internal Revenue Service as to the qualification under the
Code of such plan and the
tax-exempt status of such related trust, and nothing has occurred
since the date of such
determination letter that could adversely affect the qualification of
such Employee Benefit Plan or
the tax-exempt status of such related trust.
5.12. Financial Information.
(a) The
attached Schedule 5.12 consists of (i) the unaudited balance sheet of Seller as of
December 31, 2003, and the related, unaudited statements of
income and cash flows for the
twelve-month period then ended (the “December 31
Financial Statements”), and (ii) the unaudited
balance sheet of Seller as of the June 30, 2004 (the
“June 30 Balance Sheet”), and the related,
unaudited statements of income and cash flows for the twelve-month
period then ended (together with
the June 30 Balance Sheet, the “June 30 Financial
Statements”). Except as set forth on Schedule
5.12, the December 31 Financial Statements and the
June 30 Financial Statements will be true,
accurate and complete in all material respects, will have been
prepared in accordance with generally
accepted accounting principles applied consistently with past practices, and will fairly present the
financial condition, results of operations and cash flows of Seller as of the dates and for the
periods indicated.
(b) As soon as practical after issuance (and in any event no later than forty-five (45) days
after the end of any month), Seller shall deliver to Purchaser drafts
of the unaudited balance sheet
of Seller as of the last day of each of the months from (and
including) August, 2004, through the
month immediately preceding the Closing Date, and the related statements of income and expenses,
retained earnings and cash flow for the months then ended (collectively, the “Remaining Financial
Statements”). Seller shall deliver final copies of such Remaining Financial Statements no later
than sixty (60) days after the end of each month. Except as set forth on Schedule 5.12, the
Remaining Financial Statements will be true, accurate and complete in all material respects, will
have been prepared in accordance with generally accepted
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accounting principles applied consistently with past practices, and will fairly present the
financial condition, results of operations and cash flows of Seller as of the dates and for the
periods indicated. Seller is solvent and no bankruptcy, insolvency or similar proceeding is
pending against Seller.
5.13.
No Undisclosed Liabilities. Except as and to the extent set forth on the
attached Schedule 5.13 or reflected in the June 30 Balance Sheet, and except for current
liabilities incurred by Seller in connection with or with respect to the Business in the ordinary
course since the date of the June 30 Balance Sheet, Seller has no debts, liabilities or obligations
of any nature or kind (whether absolute, accrued, contingent, unliquidated or otherwise, whether or
not known to Seller, whether due or to become due and regardless of when asserted) arising out
of transactions entered into, at or prior to the Closing which could materially adversely affect
the Assets, the Assignable Items or the Business.
5.14.
Tax Matters.
(a) Except
as set forth on the attached Schedule 5.14:
(i) Seller has filed all Tax Returns which it is required to file under applicable laws and
regulations, and all such Tax Returns are complete and correct and have been prepared in
compliance with all applicable laws and regulations;
(ii) Seller has paid all Taxes due and owing by it (whether or not such Taxes are required to
be shown on a Tax Return) and have withheld and paid over to the appropriate taxing authority all
Taxes which it is required to withhold from amounts paid or owing to any employee, stockholder,
creditor or other third party;
(iii) Seller has not waived any statute of limitations with respect to any Taxes or agreed to
any extension of time with respect to any Tax assessment or deficiency;
(iv) Since February 29, 2004, Seller has not incurred any liability for Taxes with respect to
the Business other than in the ordinary course;
(v) No foreign, federal, state or local tax audits or administrative or judicial proceedings
are pending or being conducted with respect to Seller;
(vi) Seller has not received from any foreign, federal, state or local taxing authority any
(a) written notice indicating an intent to open an audit or other review or (b) request for
information related to Tax matters; and
(vii) There are no material unresolved questions or claims concerning any Tax liability of
Seller.
(b) Except
as set forth on the attached Schedule 5.14, Seller
(a) has not made an election
under Section 341 (f) of the Code, (b) is not liable
for the Taxes of another person (1) under
Treasury Regulation Section 1.1502-6 (or comparable provisions of state, local or foreign
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law), (2) as a transferee or successor, (3) by contract or indemnity or (4) otherwise, (c) is not a
party to any tax sharing agreement or (d) has not made any payments, is not obligated to make any
payments or is not a party to an agreement that could obligate it to make any payments that would
not be deductible under Section 28OG of the Code.
(c) For purposes of this Agreement, the term “Tax” means any federal, state, province, local,
or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not. For purposes of this Agreement, the term “Tax Return” means any
return, declaration, report, claim for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and including any amendment thereof.
5.15. Environmental, Health and Safety Matters.
(a) Except
as set forth on the attached Schedule 5.15, Seller has not received any written
notice, and Seller has no information which indicates that Seller
will be receiving notice, of
proceedings, claims or losses relating to alleged violations by
Seller of any Environmental Laws or
Safety Laws relating to the Business or relating to the presence, discharge, release or disposal of
Hazardous Materials on the Leased Real Property, any Former Property (defined below), or any
property adjoining the Leased Real Property or any Former Property. For purposes of this Agreement,
the term “Former Property” means any and all real property ever owned or leased by Seller or any of
its predecessors in interest.
(b) Seller
has not received written notice of, and to the Knowledge of Seller, there are no
pending or threatened claims, actions, suits, or proceedings
identifying Seller as a potentially
responsible party for any facility, site or location pursuant to
CERCLA or other similar
Environmental Law relating to the Business.
(c) Seller
is and has continually been in compliance with all applicable limitations,
restrictions, conditions, standards, prohibitions, requirements and
obligations established
under the requirements of Environmental Laws relating to the
Business, except where such
noncompliance would not have any reasonable likelihood, singly or in the aggregate,of materially
adversely affecting the financial condition, operations, assets,
business or properties of the
Business, taken as a whole.
(d) Seller
has timely filed all applications, registrations, notices, reports and other
submissions required under all Environmental Laws, except for such
notices, reports or other
submissions with respect to which the failure to so file would not
have any reasonable likelihood,
singly or in the aggregate, of materially adversely affecting the
financial condition, operations,
assets, business or properties of the Business, taken as a whole.
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(e) The
Leased Real Property has been (and the Former Property was) operated by Seller in
compliance with all Environmental Laws, in each case except for such violations, which would not
have any reasonable likelihood, singly or in the aggregate, of materially adversely affecting the
financial condition, operations, assets, business or properties of the Business, taken as a whole.
(f) Seller
has been issued all permits, certificates, approvals, licenses and other
authorizations, or if appropriate granted variances therefrom or
filed for exemptions, as required
under all Environmental Laws to operate the Business (collectively
the “Environmental Permits”), has
timely applied therefore and is and continues to be in compliance
therewith and Seller has had all
such required Environmental Permits, and has been in compliance
therewith, in each case except for
such Environmental Permits with respect to which the failure to
obtain or to comply with which would
not have any reasonable likelihood, singly or in the aggregate, of materially adversely affecting
the financial condition, operations, assets, business or properties
of the Business, taken as a
whole.
(g) Seller
has not ever caused or suffered any Hazardous Materials to be disposed, discharged,
spilled or released onto or into soils, sediments, underground pipes
or conveyances or containers,
surface water or groundwater of the Leased Real Property or the Former Property, which would have
any reasonable likelihood, singly or in the aggregate, of materially adversely affecting the
financial condition, operations, assets, business or properties of the Business, taken as a whole.
(h) Seller has not arranged for the transportation, treatment or disposal of any Hazardous
Materials that was disposed of, treated or otherwise managed at any site listed on any federal
CERCLA or state list or other lists of Hazardous Materials sites.
(i) There are no Liens under Environmental Laws on any of the Assets or the Assignable Items,
and no government actions have been taken or are in process, which could subject any of such
properties or assets to such Liens.
5.16.
Consents, Approvals and Authorizations. Except as set forth on the attached Schedule 5.16
(the “Section 5.16 Authorizations”), and any
consents of a party (other than Seller) required in
connection with the assignment of the Assumed General Contracts, the Personal Property Leases, and
the Real Property Leases, no consent, approval or authorization of, or designation, declaration or
filing with, or notice to, any governmental authority, third party payor, lender, lessor, creditor,
shareholder or other third party, is required on the part of Seller
in connection with the valid
execution and delivery of this Agreement and the Attendant Documents to which Seller is a party or
the consummation of the transactions contemplated in this Agreement without breach or violation of
any agreement, lease, indenture or other instrument, or any judgment, decree, order, award, law,
rule or regulation applicable to or affecting Seller, the Business, or the Assets.
5.17.
Insurance. Except as set forth on the attached Schedule 5.17, Seller has maintained and
now maintains insurance with respect to the Assets, the Assignable
Items and the Business, covering
property damage by fire or other casualty, and against such liabilities, claims
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and risks
and in such amounts as is customary or appropriate in the industry.
All such insurance
policies will be in full force and effect through the Closing Date. Except as set forth on the
attached Schedule 5.17, there is no state of facts and no event has occurred forming the basis for
any present property, casualty or fidelity claim against Seller which is not fully covered by
insurance, and to the Knowledge of Seller, there is no occurrence, circumstance, or event which
could reasonably be expected to result in any such claim. Seller has provided Purchaser with true,
correct and complete copies of all insurance policies currently maintained by Seller and maintained
by Seller for the preceding three (3) years. Except as disclosed
in Schedule 5.17, no such policy
of insurance is or was subject to any deductible, self-insured retention, retrospective rating
agreement, indemnification agreement, or any other method or device by which the insured person is
or was subject to all or any part of the liability for any or all claims.
5.18.
Assets. Other than the Excluded Assets, there are no assets
material to the operation of
the Business, which are not included in the Assets, the Assignable
Items, or the Non-Assignable
Items to be transferred to Purchaser on the Closing Date. Except for
the Subsidiaries, Seller
does not have any direct or indirect subsidiaries, wholly-owned or
otherwise, or any interest
whatsoever in any other entity.
5.19.
Accounts. All Accounts arose out of (or will arise out of) the sales of inventory
or services in the ordinary course of business.
5.20
Recent Conduct of Business. Since the date of the June 30 Balance Sheet, (a) there has
not been any material adverse change in the Business or in the operations or condition (financial
or otherwise) of the Business; and (b) the Business has been conducted only in the ordinary
course. Without limiting the generality of clause (b) above, since the date of the June 30 Balance
Sheet, Seller has not, except in the ordinary course of the Business and in regard to subsection
(ii) below only, consistent with past practice:
(i) made or incurred any capital expenditures in excess of $10,000 in any one transaction or
any series of similar transactions;
(ii) made any change in the rate of compensation, commission, bonus or other direct or
indirect remuneration payable or to become payable to any of Seller’s employees or agents, or
agreed or orally promised to pay, conditionally or otherwise, any bonus, extra compensation,
pension or severance or vacation pay, to any of Seller’s employees or agents, except as set forth
on Schedule 5.20 (ii);
(iii) sold or transferred any of its assets;
(iv) terminated or amended any General Contract to the detriment of the Business;
(v) incurred or guaranteed any loan or other obligation (in connection with or related to the
Business, the Assets or the Assignable Items);
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(vi) subjected any of the Assets or the Assignable Items to any Lien, or permitted any of the
Assets or the Assignable Items to become subject to any Lien;
(vii) suffered any material damage, destruction or loss (whether or not covered by insurance)
affecting the Assets;
(viii) experienced any labor dispute or other event that materially and adversely affects the
Business;
(ix) changed any method of accounting or accounting practice; or
(x) entered into any agreement or commitment (other than this Agreement or any arrangement
provided for or contemplated in this Agreement) to take any of the types of action described in
subsection (i) through (vi) above.
5.21.
Non-Violative Agreement. Neither the execution and delivery of this Agreement or the
Attendant Documents to which Seller is a party nor the consummation
of the transactions contemplated
in this Agreement and the Attendant Documents will conflict with,
result in the breach or violation
of or constitute a default under the terms, conditions or provisions
of Seller’s Certificate of
Limited Partnership, Partnership Agreement, or any other agreement or
instrument to which Seller is
a party, or by which Seller may be bound or to which Seller or the
Assets or the Assignable Items
may be subject.
5.22.
Brokerage or Finder’s Fee. Except for Beringea, LLC, no broker, finder, agent or similar
intermediary has acted for or on behalf of Seller in connection with
this Agreement or the
transactions contemplated hereby and no broker, finder, agent or
similar intermediary is entitled to
any broker’s, finder’s or similar fee or other commission
in connection therewith based on any
agreement, arrangement or understanding with Seller or any action taken by Seller.
5.23.
Disclosure. No representation or warranty by Seller contained in this Agreement and no
statement contained in any of the Attendant Documents to which Seller
is a party or any other
certificate or instrument furnished or to be furnished pursuant to
this Agreement or in connection
with the transactions contemplated in this Agreement contains or will
contain any untrue statement
of a material fact, or omits or will omit to state a material fact,
necessary in order to make any
of the statements not misleading, or necessary in order to provide
Purchaser with all pertinent
information regarding the Business.
5.24 Licenses and Authorizations.
(a) Seller is the holder of currently required provider agreements for Government
Programs (as hereinafter defined) and with such private non-governmental programs, including
without limitation any private insurance program, under which Seller directly or indirectly is
presently receiving payments (such non-governmental programs herein referred to as “Private
Programs”). Seller Provider Numbers 23 1579 and 633536 are certified for participation and
reimbursement under Titles XVIII and XIX of the Social Security Act (the “Medicare and Medicaid
programs”) (Medicare and Medicaid programs and such other similar
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federal, state or local reimbursement or government programs for which Seller is eligible to
receive payments on account of services provided by the Business are hereinafter referred to
collectively as the “Government Programs”). Set forth on Schedule 5.24(a) is a correct and
complete list of all provider agreements, certifications or licenses under all Governmental and
Private Programs, complete and correct copies of which have been provided to Purchaser. To the
extent in Seller’s possession, Seller has provided Purchaser with true, complete and correct
copies of all audits, appeals, investigations, reviews or surveys of Seller conducted in
connection with any Government Program, Private Program or licensing or accrediting body during
the past five years have been provided to Purchaser.
(b) Except as set forth on the attached Schedule 5.24(b), Seller has complied in all material
respects with all requirements imposed upon Seller in connection with any Government Program or
Private Program, the violation of which could have a material adverse effect on any of the
provider agreements, certificates or licenses identified on
Schedule 5.24(a). Seller has not
received any written notice of any action pending or recommended against Seller in connection with
any Government Program or Private Program.
5.25
Inspections and Investigations. Except as set forth and described in Schedule 5.25: (i)
Seller’s right to receive reimbursements pursuant to any
Government Program or Private Program has
not been terminated or otherwise adversely affected as a result of
any investigation, audit or
action whether by any federal or state governmental regulatory
authority or other third party; (ii)
to the Knowledge of Seller, Seller has not during the past three
years, been the subject of any
inspection, investigation, survey, audit, monitoring or other form of review by any governmental
regulatory entity, professional review organization, accrediting organization or certifying agency
based upon any alleged improper activity on the part of Seller, and Seller has not received any
written notice of deficiency during the past three years in connection with its operations; (iii)
there are not presently any outstanding survey deficiencies, or work orders of any governmental
authority having jurisdiction over Seller, or other third party, requiring conformity to any
applicable agreement, statute, regulation, ordinance or bylaw, including but not limited to, the
Government Programs and Private Programs; and (iv) Seller has not received any written notice of any
claim, requirement or demand of any licensing or certifying agency or other third party supervising
or having authority over Seller or its operations to rework or redesign any part thereof or to
provide additional furniture, fixtures, equipment, appliances or inventory so as to conform to or
comply with any existing law, code, rule, regulation or standard. Seller has provided to Purchaser
true and complete copies of all reports, correspondence, notices and other documents relating to any
matter described or referenced on Schedule 5.25.
5.26
Xxxxx; Fraud and Abuse; False Claims. Seller has not, nor to the Knowledge of Seller, no
person or entity providing items or services on behalf of Seller has,
engaged in any activities that
are prohibited under 42 U.S.C. §1320a-7b, 42 U.S.C. §1395nn or 31 U.S.C. §3729-3733 (or other
federal or state statutes related to self referral, kickbacks, fee
splitting, or false or fraudulent
claims) or the regulations promulgated thereunder.
5.27
Certain Affiliate Transactions. Except as set forth and
described in Schedule 5.27, no
general partner of Seller or officer or member of the board of
directors of the general partner of
Seller (“Interested Person”) and no member of the immediate family (being a spouse
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or children) of an Interested Person of Seller, directly or indirectly, (a) owns any interest in
any corporation, partnership, proprietorship or other entity which sells to or purchases from
Seller products or services; (b) has any cause of action or claim whatsoever against Seller, the
Assets, or the Business; or (c) holds a beneficial interest in any contract or agreement relating
to the Business to which Seller is a party or by which Seller may be bound.
5.28
Computer Software, Etc. Except for shrink-wrap licensed or similar store bought
computer software, the only material computer software used in the
operation of the Business is as
set forth on Schedule 5.28 (the “Computer
Software”). Seller has not received any written notice,
and Seller has no information, which indicates that Seller will be
receiving notice, of any claims
or demands, which challenge the rights of Seller in respect of any of
the Computer Software. To the
Knowledge of Seller, Seller has not infringed upon or appropriated any computer software of any
third-party. Except as set forth in an Assumed General Contract,Seller has the right to use, free
and clear of any royalty or other payment obligation, the Computer Software.
5.29 Immigration Act. Seller has not received any written notice, and Seller has
no information, which indicates that Seller will be receiving notice, that Seller is not in
compliance with the terms and provisions of the Immigration Reform and Control Act of 1986, as
amended (“IRCA”). For each employee (as defined in 8 C.F.R.
274a.1(f)) of Seller for whom
compliance with the IRCA by Seller is required, Seller has obtained and retained a complete and
true copy of each such employee’s Form 1-9 (Employment Eligibility Verification Form) and all other
records or documents prepared, procured or retained by Seller pursuant to the Immigration Act.
Seller has not been cited, fined, served with a Notice of Intent to Fine or with a Cease and Desist
Order, nor to the Knowledge of Seller, has any action or administrative proceeding been initiated
or, threatened against Seller, by reasons of any actual or alleged failure to comply with IRCA.
5.30
Chief Executive Office. Seller maintains its chief executive office and its books and
records at 00000 Xxxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000. Except as set forth and described inSchedule
5.30, Seller does not conduct any of its business or operations
other than out of the Leased Real
Property.
5.31. HIPAA Compliance. Seller has not received any notice from any governmental authority
that such governmental authority has imposed or intends to impose any enforcement actions, fines
or penalties for any failure or alleged failure to comply with HIPAA or its implementing
regulations.
5.32 Condition of Assets. All of the equipment and tangible personal property will be in good
working order, condition, and repair, normal wear and tear excepted, sufficient to operate the
Business.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby represents, warrants and
covenants the following to Seller:
6.1. Good Standing and Authority. Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of Michigan. Purchaser has the corporate
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power and authority to enter into this Agreement, to enter into the Attendant Documents to which
it is a party and to consummate the transactions contemplated in this Agreement. This Agreement
and all of the Attendant Documents to which Purchaser is a party, and the consummation of the
transactions contemplated in this Agreement, have been duly authorized and approved by all
necessary and proper corporate action on the part of Purchaser. This Agreement, and all of the
Attendant Documents to which Purchaser is a party, when executed and delivered, will constitute
legal, valid and binding obligations of Purchaser enforceable against Purchaser in accordance with
their respective terms.
6.2.
Non-Violative Agreement. Neither the execution and delivery of this Agreement and the
Attendant Documents to which Purchaser is a party nor the
consummation of the transactions
contemplated in this Agreement will conflict with, result in the
breach or violation of or
constitute a default under the terms, conditions or provisions of Purchaser’s Articles
of Incorporation or Bylaws or any other agreement or instrument to
which Purchaser is a party, or by
which Purchaser may be bound or to which it may be subject.
6.3. Brokerage or Finder’s Fee. Except as set forth on the attached Schedule 6.3, no
broker, finder, agent or similar intermediary has acted for or on behalf of Purchaser in
connection with this Agreement or the transactions contemplated hereby and no broker, finder,
agent or similar intermediary is entitled to any broker’s, finder’s or similar fee or other
commission in connection therewith based on any agreement, arrangement or understanding with
Purchaser or any action taken by Purchaser. Purchaser shall be solely responsible for all fees,
charges, costs, and expenses of any entity or person listed on Schedule 6.3.
7. FUTURE DEVELOPMENTS, SURVIVAL, TITLE; ADDITIONAL COVENANTS.
7.1.
Notice of Material Developments. Each Party shall give prompt written notice to the other
Party of any (i) representation or warranty made by such Party
in this Agreement which was true as
of the date of this Agreement, but which subsequently becomes untrue
(or which such Party learns was
not true as of the date of this Agreement), (ii) breach of any
covenant under this Agreement by such
Party, and (iii) any other material development affecting the ability of such Party to consummate
the transactions contemplated in this Agreement.
7.2. Survival. Except in the case of alleged fraud or abuse, criminal activity, or
fee splitting, or with respect to any document filed or to be filed by Seller under any third
party payer program, the representations and warranties set forth in Sections 5 and 6 of this
Agreement shall survive for a period of two years after the Closing Date; provided, however, that
the representations and warranties set forth in the following Sections shall survive for the
periods indicated:
Section 5.1 | Indefinitely | |||
Section 5.2 (last sentence only) | Expiration of the applicable statute of limitations period ("EASLP") | |||
Section 5.8 | March 31, 2007 | |||
Section 5.14 | EASLP | |||
Section 5.15 | March 31, 2007 |
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Section 5.16 | EASLP | |||
Section 5.21 | Indefinitely | |||
Sections 5.24 - 5.25 | March 31, 2007; provided, however, that with respect to governmental demands for | |||
refunds or return of payments under Medicare, the survival period shall end the | ||||
later of March 31, 2007 or 3 years from the date on which Medicare made the payment in question | ||||
Section 5.26 | EASLP | |||
Sections 5.27-5.31 | March 31, 2007 | |||
Section 6.1 | Indefinitely | |||
Section 6.2 | Indefinitely |
7.3.
Affirmative Covenants Regarding Conduct of Business. Until the Closing, Seller shall
keep Purchaser fully informed with respect to the operation and
condition of the Business, and will:
(a) carry
on the Business in substantially the same manner as Seller has heretofore and not
make any material change in operations, finance, accounting policies,
or real or personal property
of the Business;
(b) maintain
the Assets, and keep all Leased Property and equipment in as good working order
and condition as at present, ordinary wear and tear excepted;
(c) materially
perform all of Seller’s obligations under the General Contracts and all
agreements relating to or affecting the Business;
(d) take
all actions necessary and appropriate to render title to the Assets free and clear of
all liens, security agreements, claims, charges and encumbrances
(except for the Assumed Liabilities
and Permitted Liens);
(e) keep
in full force and effect present insurance policies or other comparable insurance;
(f) permit, and allow reasonable access by, Purchaser only to make offers of post-Closing
employment to all of Seller’s personnel, which personnel shall be allowed to accept such offers
without penalty, competing offer or interference; and
(g) keep in full force and effect all licenses, provider numbers, permits, certificates,
qualifications, authorizations, and registrations that are required for Seller to carry on the
Business in accordance with this Section 7.3.
7.4.
Negative Covenants Regarding Conduct of Business Until the Closing, Seller shall not,
without the prior written consent of Purchaser, which consent shall
not be unreasonably withheld:
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(a) make
or incur any capital expenditures with respect to the Business in excess of $10,000.00
in any one transaction or series of similar transactions or
$50,000.00 in the aggregate;
(b) except
in accordance with consistent prior practice and in the ordinary course, make any
change in the rate of compensation, commission, bonus or other direct
or indirect remuneration
payable or to become payable to any of Seller’s Employees or any
agent of Seller, or agree or orally
promise to pay or provide, conditionally or otherwise, any bonus,
extra compensation, pension or
other fringe benefits, or severance or vacation pay to any of
Seller’s Employees or any agent of
Seller;
(c) sell
or transfer any of the assets of the Business, except in the ordinary course of
business;
(d) terminate
or amend any General Contract or Lease, or enter into any agreement, contract or
other document, except in the ordinary course of business;
(e) incur
or guarantee any loan or other obligation (in connection with or related to the
Business or the Assets) other than in the ordinary course of business;
(f) subject
any of the Assets or the Assignable Items to, or permit any of the Assets or the
Assignable Items to become subject to, any Lien other than in the
ordinary course or in order to
secure a loan obtained by Seller in accordance with Section 3.1 of this Agreement;
(g) expand
the Business into any territory in which Seller currently does not conduct business;
or
(h) enter into any agreement or commitment (other than this Agreement or any arrangement
provided for or contemplated in this Agreement) to take any of the types of action described in
subsection (a) through (g) of this Section 7.4.
In the event Seller desires to expand the Business into a territory in which Seller currently
does not conduct business, then Seller shall prepare a budget as to the cost of such expansion
through the Closing Date and shall submit such budget to Purchaser as part of the consent process
required under this Section 7.4. To the extent Purchaser consents to the expansion and approves
the budget submitted to it, Seller may finance the costs of expansion by borrowing sufficient
funds from Standard Federal Bank, on terms acceptable to Purchaser.
7.5.
Accounts and Other Customer Payments. Seller, without any cost or
expense charged to it,
shall have the right and authority to use Purchaser’s employees
to collect all Accounts of Seller
existing as of the Closing Date, pursuant to and in accordance with
the Operations Transfer
Agreement attached hereto as Exhibit C.
7.6.
Full Access. Seller shall fully cooperate with Purchaser and make available
to Purchaser, in an efficient and timely manner, Seller’s accountants, lenders, and those employees
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listed in Section 1.1 (j) above, and all records, books of account, documents and information
which Purchaser, its agents, representatives, attorneys, accountants or lenders may from time to
time request (including, without limitation, Seller’s accountants’ workpapers), so that Purchaser
may investigate all aspects of the Business, Assets, and prospects and financial condition of the
Business. To the extent Purchaser requests that Seller or its accountants or employees participate
in any activities (other than in furtherance of Purchaser’s investigation) and Seller, its
accountants or employees participate in any such activities, then any such participation shall be
done without recourse and without any representations or warranties of any kind, whether express
or implied, oral or written, and Seller shall not be responsible or liable to Purchaser for any
loss or damage that may be occasioned by or through the acts or omissions of Seller, its
accountants or employees relating in any way to such participation, and Purchaser shall indemnify,
defend and hold harmless the Seller Parties from and against any and all liabilities, losses,
costs or expenses (and any and all Related Expenses incident to any of the foregoing) which any of
the Seller Parties may suffer or for which any of the Seller Parties may become liable and which
are based on, the result of, arise out of or are otherwise related to any such participation. The
indemnification provisions contained in this Section 7.6 shall survive the Closing. The foregoing
language shall not, however, limit Seller’s liability for the representations and warranties set
forth in this Agreement.
7.7 Estoppel Certificates. Seller shall use reasonable efforts to obtain, prior to
the Closing, a consent to the assignment of each Real Property Lease
and an estoppel certificate from
the lessor of such Lease, certifying that such Lease and all amendments thereto are as attached to
the certificate and (i) such Lease is in full force and effect, (ii) there are no uncured defaults
thereunder, (iii) the date through which Lease payments or any other applicable payments thereunder
have been paid, and (iv) the amount of any security deposit held thereunder.
7.8
Updating of Disclosure Schedules. On the tenth day prior to Closing, Seller shall update
all of the Schedules to this Agreement (and if a Schedule is of a
specific date, then the applicable
schedule shall be updated to November 1, in the case of a
November 30th Closing, and to December 1,
in the case of a December 30th Closing). The provisions of this Section 7.9 shall not be deemed in
any way to constitute a waiver by Purchaser of the condition set
forth in Section 9.1 (a) below.
8. EMPLOYEE AND EMPLOYEE BENEFIT MATTERS
8.1. Employees.
(a) Employment. The Parties acknowledge that the transfer of Assets to Purchaser constitutes
the sale of one or more businesses within the meaning of the Worker Adjustment and Retraining
Notification Act, 29 USC Sec. 2101 et seq. (the “WARN Act”) and the rules and regulations
promulgated thereunder. Although Purchaser intends to offer employment to substantially all of
Seller’s Employees, Purchaser is unwilling to covenant to do so. If Seller incurs a claim, demand
or liability under the WARN Act as a result of the failure of Purchaser to offer employment to a
sufficient number of Seller’s Employees, then Purchaser shall indemnify, defend and hold harmless
the Seller Parties (as defined in Section 11.2) from
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and against any and all liabilities, losses, costs or expenses which any of the Seller Parties may
suffer or for which any of the Seller Parties may become liable and which are based on, the result
of, arise out of or are otherwise related to a violation of the WARN Act, and any and all Related
Expenses (as defined in Section 11.1) incident to the foregoing. In addition, Purchaser shall
assume all obligations, first arising from and after the Closing Date, under the written employment
agreements disclosed on Schedule 5.10 covering Seller’s Employees to perform comparable services in
such position as is comparable to the position such employee held with Seller prior to Closing.
Each of Seller’s Employees who accepts Purchaser’s offer of employment and becomes Purchaser’s
employee on or immediately after the Closing Date is referred to hereinafter as a “Hired Employee”
and such employees are referred to hereinafter collectively as the “Hired Employees.” Except as
otherwise required by any employment agreement assumed by Purchaser from Seller, and except as
otherwise necessary so as to prevent the Hired Employees from incurring any “employment loss” under
the WARN Act, Purchaser shall determine, in its sole discretion, the terms and conditions of
employment of each Hired Employee. Notwithstanding anything to the contrary contained above, Seller
shall reimburse Purchaser for any payroll payments and payroll tax obligations made by Purchaser
to, or on behalf of, or with respect to, any of Seller’s Employees who are both: (i) “Inactive” (as
defined below) as of the Closing Date; and (ii) entitled to receive payroll compensation from
Seller. Such reimbursement right shall continue as long as the Seller’s Employee in question
remains Inactive. For purposes of this Agreement, an “Inactive” employee of Seller is a Seller’s
Employee who, as of the Closing Date, is not actively at work, and is on leave of absence, lay off,
military leave, suspension, sick leave, workers’ compensation, salary continuance or short or long
term disability, or otherwise not actively performing his or her work during all normally scheduled
business hours. Such reimbursement shall be made within ten days of a written request to Seller,
along with evidence of payroll payments.
(b) Employee Benefits.
(i) Effective as of the Closing, Purchaser shall establish employee benefit plans for
Hired Employees only to the extent required so that Seller shall not be obligated to provide any
notice to Seller’s Employees under the WARN Act. If Purchaser so requests, Seller shall use its
reasonable best efforts to transfer or cause to be transferred to Purchaser any insurance or
re-insurance policy, health maintenance organization, preferred provider, or similar contract,
and/or third-party administrative or other services agreement with respect to the provision of
benefits to Seller’s Employees who become Hired Employees, including, without limitation, Seller’s
self-funded medical plan. Notwithstanding anything to the contrary contained in this Agreement, if
Seller’s self-funded medical plan is transferred to Purchaser, then an accounting shall be
prepared as of the Closing Date to assure that claims incurred under any such plan that relate to
the period prior to the Closing Date are charged to Seller and that Seller receives any refundable
self-insurance reserves or other amounts owing to Seller pursuant to such plan. If such reserves
or other amounts are not paid directly to Seller, but instead are paid to Purchaser or remain in
the plan, then, upon request by Seller, Purchaser shall pay Seller the amount of such reserves or
other amounts.
(ii) The amount of sick, personal and vacation days through the Closing Date awarded to and
that portion of such days that has been used by each of Seller’s
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Employees who is employed by Seller immediately prior to the Closing Date shall be accurately
disclosed to Purchaser prior to and then again at the Closing, and Purchaser shall be obligated to
provide each such Seller’s Employee who becomes a Hired Employee with any remaining unused sick,
personal, and/or vacation days entitlement for the applicable period. On and after the Closing
Date, Purchaser shall recognize the years of service with Seller of all of Seller’s Employees who
become Hired Employees for purposes of the eligibility and vesting provisions of all employee
benefit plans and determining sick, personal, and vacation days entitlement from and after the
Closing Date; provided, however, that, except with respect to vacation time, years of service
performed for Seller prior to the Closing Date shall not be taken into account for benefit accrual
purposes under Purchaser’s employee benefit plans, programs, policies and arrangements.
(iii) It is the intent of the Parties that the sale of the Assets to Purchaser complies with
COBRA. In connection therewith, Purchaser shall be responsible for the provision of continuation
coverage in accordance with COBRA to or with respect to any of Seller’s Employee who becomes a
Hired Employee. Purchaser shall have no liability whatsoever, and Seller shall retain, bear and
discharge all liability, with respect to COBRA for any “qualified beneficiary” (as such term is
defined in the foregoing COBRA sections of ERISA and the Code) who became a qualified beneficiary
prior to the Closing Date or who becomes a qualified beneficiary by reason of any Seller’s
Employee not becoming a Hired Employee.
(iv) Effective as of the Closing Date, Seller shall cause the Seller’s Employees to be fully
vested in their accrued benefits and account balances under each Employee Benefit Plan that
provides for vesting of benefits.
8.2. Workers’ Compensation Claims. Seller is and shall be fully responsible and liable for
all workers’ compensation benefits payable to Seller’s Employees for any claim for such benefits
arising as the result of an injury or occupational disease sustained while employed by Seller.
9. CONDITIONS TO CLOSING
9.1. Purchaser’s Conditions Precedent. The obligations of Purchaser to consummate the
transactions contemplated in this Agreement are subject to the satisfaction, on or prior to the
Closing Date, of the following conditions unless waived in writing by Purchaser. The failure of any
of the following conditions to be met (through no fault of Purchaser) shall cause this Agreement to
be terminated in accordance with Article 12 below (provided, that the obligations of the Parties
found in Sections 13, 14.3 and 14.4 shall remain in effect):
(a) Seller’s Representations and Warranties. All representations and warranties made by
Seller in this Agreement shall have been true and correct in all material respects on the date of
this Agreement and shall be true and correct in all material respects as of the Closing Date (as
modified by any updated Schedules as contemplated by Section 7.9) with the same force and effect
as if they had been made on and as of such date.
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(b) Performance
of Agreement. Seller shall have performed and complied in all material respects
with all of its obligations under this Agreement which are to have
been performed or complied with
on or prior to the Closing Date.
(c) Approvals.
Seller or Purchaser shall have obtained: (a) all of the consents and approvals
set forth on the attached Schedule 5.16; (b) the
Required Consents, if and only if the failure of
obtaining the Required Consents has caused or will cause the termination of the Financing
Commitment; and (c) the Required Approvals, if and only if the
failure of obtaining the Required
Approvals has caused or will cause the termination of the Financing Commitment.
(d) Litigation. There shall not be any litigation, action, suit,
claim, proceeding, order, investigation or inquiry pending or threatened before any court or
quasi judicial or administrative agency to, or pursuant to which a judgment, order, decree,
stipulation, injunction or charge could be entered which would: (i) enjoin or prevent the
consummation of the transactions contemplated in this Agreement, (ii) cause any of the transactions
contemplated in this Agreement to be rescinded following consummation, (iii) adversely affect the
right of Purchaser to own, operate or control the Business, the Assets or the Assignable Items, or
(iv) otherwise have a material adverse effect on the operations or financial condition of the
Business. In addition, no such litigation, action, suit, claim, proceeding, order, investigation or
inquiry shall have been initiated between the date of this Agreement and the Closing Date.
(e) Termination.
This Agreement shall not have been terminated pursuant to Section 12.2 below.
(f) Delivery
of Closing Documents. Seller shall have executed and delivered, or
caused to be executed and delivered, all of the documents described
in Section 10.2 below. All
documents relating to the transactions contemplated in this Agreement
shall be satisfactory in form
and content to Purchaser.
(g) No
Encumbrances. All of the Assets shall be owned free and clear of all Liens other than
the Permitted Liens. Prior to the Closing Date, Purchaser shall have received satisfactory evidence
that all Liens (other than the Permitted Liens) will be released, discharged or terminated on or
prior to the Closing Date. Seller shall not have assigned, as
collateral security or otherwise,
all or any portion of its interest in any Assignable Item or
Non-Assignable Item to any third-party.
(h) Related Transaction. The transactions set forth in the Asset Purchase Agreement of even
date herewith (the “MMG Agreement”) in regards to the sale of substantially all of the assets of
The Mobile Medical Group, Inc. (“MMG”) shall have closed concurrently with the Closing, unless the
failure to close was caused by Purchaser’s (or an affiliate of Purchaser’s) material breach of any
covenant or agreement set forth in the MMG Agreement at a time when MMG (or any affiliate of it)
is not in material default of the MMG Agreement.
9.2. Seller’s Conditions Precedent. The obligations of Seller to consummate the
transactions contemplated in this Agreement are subject to the satisfaction, on or prior to the
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Closing Date, of the following conditions unless waived in writing by Seller. The failure of any
of the following conditions to be met (through no fault of Seller) shall cause this Agreement to
be terminated in accordance with Article 12 below (provided, that the obligations of the Parties
found in Sections 13, 14.3 and 14.4 shall remain in effect):
(a) Purchaser’s
Representations and Warranties. All representations and warranties made by
Purchaser in this Agreement shall have been true and correct in all
material respects on the date of
this Agreement and shall be true and correct in all material respects
as of the Closing Date with
the same force and effect as if they had been made on and as of such date.
(b) Performance
of Agreement. Purchaser shall have performed and complied in all
material respects with all of its obligations under this Agreement
which are to have been performed
or complied with on or prior to the Closing Date.
(c) Consents.
Seller shall have obtained all of the consents and approvals set forth on the
attached Schedule 5.16.
(d) Termination.
This Agreement shall not have been terminated pursuant to Section 12.2 below.
(e) Delivery
of Closing Documents. Purchaser shall have executed and delivered, or caused to be
executed and delivered, all of the documents described in
Section 10.3 below. All documents relating
to the transactions contemplated in this Agreement shall be satisfactory in form and content to
Seller’s legal counsel.
(f) Related Transaction. The transactions contemplated in the MMG Agreement shall have
closed concurrently with the Closing, unless the failure to close was caused by MMG’s (or one of its
affiliates) material breach of any covenant or agreement set forth in the MMG Agreement at a time
when Purchaser (or any affiliate of Purchaser) is not in material default of the MMG Agreement.
10. CLOSING
10.1. Closing. The closing (the “Closing”) of the transactions contemplated in this Agreement
shall be held at the offices of Jacob & Xxxxxxxxxx, 0000 X. Xxx Xxxxxx Xxxx, Xxxxx 000, Xxxx,
Xxxxxxxx 00000, on November 30, 2004 (the “Termination Date”), or at such other location and time
as Seller and Purchaser may mutually agree. For purpose of this Agreement, the date on which the
Closing actually occurs is referred to as the “Closing Date”. Notwithstanding the foregoing,
Purchaser shall have the unilateral right, on notice to Seller (which must be delivered before
November 30, 2004), to extend the Termination Date, to December 30, 2004. In such a case, on or
before November 30, 2004, each Party shall deliver an additional $10,000.00 xxxxxxx money deposit
(to be included in the defined terms “Deposit” and “Deposits” as set forth in Section 12.1) to
Seller’s attorney, Jacob & Xxxxxxxxxx, P.C., to be held in such firm’s interest-bearing escrow
account.
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10.2. Documents to Be Delivered at Closing by Seller. At the Closing, Seller shall properly
execute (if necessary) and deliver to Purchaser, or cause to be executed and delivered to
Purchaser, the following:
(a) A
Warranty Xxxx of Sale in regards to the Assets, the form of which is attached to this
Agreement as Exhibit D.
(b) An
Assignment and Assumption Agreement (the “Assignment and Assumption Agreement”) in
regards to the Assumed General Contracts and the Leases, the form of which is attached to this
Agreement as Exhibit E.
(c) Covenant
Not to Compete and Confidentiality Agreements in the forms set forth in Exhibits
F, F-1, and F-2 hereto, to be executed by Seller, Xxxxx X.
Xxxxxxx, and Xxxxxxx X. Xxxxxxx,
respectively.
(d) An
opinion of Jacob & Xxxxxxxxxx, P.C., counsel to Seller,
addressed to Purchaser, the form
of which is attached to this Agreement as Exhibit G.
(e) A
copy of Seller’s Certificate of Partnership, certified by the State of Delaware, and a
Certificate of Good Standing (or analogous document) for Seller
issued by the State of Delaware and
each and every other state in which such Seller is authorized to do business. All such documents
shall be dated not earlier then ten days prior to the Closing Date.
(f) A
certificate, executed by the general partner of Seller, to the effect (i) all of the
representations and warranties made by Seller in this Agreement are
true and correct in all respects
on the Closing Date with the same effect as though made on and as of the Closing Date, (ii) all
covenants and agreements undertaken to be performed by Seller under
this Agreement have been taken
or performed, (iii) since the date of this Agreement, Seller has
operated the Business only in the
ordinary course, and (iv) there has been no material adverse
change in the Business from the date of
this Agreement to the Closing Date. Attached to such certificate
shall be a copy of Seller’s
Partnership Agreement and a copy of all of the minutes or resolutions approving the transactions
contemplated in this Agreement (as required by Section 9.1 (c)above), and the general partner of
Seller executing such certificate shall certify that, as of the Closing Date, such Partnership
Agreement and minutes or resolutions are true, complete and correct, have not be altered or repealed
and are in full force and effect.
(g) A
Closing Statement (the “Closing Statement”) setting forth the Purchase Price and all
closing adjustments as required by this Agreement.
(h) The Employment Agreement (as defined below in Section 10.3 (c));
(i) The Indemnification Escrow Agreement.
(j) Titles to all the vehicles owned by Seller.
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(k) Such other documents and instruments as are contemplated in this Agreement or as
Purchaser or Purchaser’s counsel may reasonably request in order to evidence or consummate the
transactions contemplated in this Agreement or to effectuate the purpose or intent of this
Agreement.
10.3. Documents to be Delivered at Closing by Purchaser. At the Closing, Purchaser shall
properly execute (if necessary) and deliver to Seller, or cause to be executed and delivered to
Seller, the following:
(a) The Purchase Price (plus or minus all closing adjustments as required by
this Agreement).
(b) The Assignment and Assumption Agreement.
(c) The Closing Statement.
(d) An
opinion of Xxxxxxxx Ingersoll, P.C., counsel to Purchaser, addressed to Seller, the form
of which is attached to this Agreement as Exhibit H.
(e) A copy of Purchaser’s Articles of Incorporation, certified by the Michigan Department of
Labor and Economic Growth, Bureau of Commercial Services, and a
Certificate of Good Standing (or
analogous document) for Purchaser issued by the Michigan Department
of Labor and Economic Growth,
Bureau of Commercial Services and each and every other state in which such Purchaser is authorized
to do business. All such documents shall be dated not earlier then ten days prior to the Closing
Date.
(f) A
certificate, executed by the Chairman and CEO of Purchaser, to the effect that (i) all of
the representations, warranties and covenants made by Purchaser in
this Agreement are true and
correct on the Closing Date with the same effect as though made on
and as of the Closing Date, and
(ii) all covenants and agreements undertaken to be performed by Purchaser under this Agreement have
been taken or performed. Attached to such certificate shall be a copy of Purchaser’s Bylaws and a
copy of the minutes or resolutions approving the transactions contemplated in this Agreement, and
the representative of Purchaser executing such certificate shall certify that, as of the Closing
Date, such bylaws and minutes or resolutions are true, complete and correct, have not be altered or
repealed and are in full force and effect
(g) Such
other documents and instruments as are contemplated in this Agreement or as
Seller or its counsel may reasonably request in order to evidence or consummate the transactions
contemplated in this Agreement or to effectuate the purpose or
intent of this Agreement.
11. INDEMNIFICATION
11.1. Indemnification of Purchaser. If the transactions contemplated by this Agreement
are consummated, Seller shall indemnify, defend and hold harmless Purchaser and its officers,
directors, managers, members, shareholders, employees, independent contractors,
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agents, successors and assigns (collectively, the “Purchaser Parties”) from and against any and
all liabilities, losses, costs or expenses (other than “Assumed Liabilities”) which any of the
Purchaser Parties may suffer or for which any of the Purchaser Parties may become liable and which
are based on, the result of, arise out of or are otherwise related to any of the following:
(a) any
breach of any representation or warranty of Seller contained in this Agreement, any of
the Attendant Documents or any certificate, schedule, list or other
instrument to be furnished by Seller to Purchaser pursuant to this Agreement or any of the
Attendant Documents;
(b) any
breach or failure of Seller to perform any covenant or agreement required to be
performed by Seller pursuant to this Agreement or any of the
Attendant Documents;
(c) any claim, demand, suit, action or legal, administrative or
other proceeding by any person (other than a Party) or any federal, state or local department,
agency or other governmental body (a “Third Party Claim”) against any of the Purchaser Parties
resulting from, arising out of or in any way related to (i) the failure of Seller to perform, pay or
discharge any Excluded Liability, or (ii) the operation of the Business prior to or on the Closing,
including,without limitation, any Medicaid/Medicare or third party payer liability or deficiency of
Seller or the Business arising prior to or on the Closing, as well as any breach of any Assumed
General Contract or Lease first arising prior to or on the Closing; and
(d) any and all actions, suits, proceedings, demands, assessments, judgments,costs and
expenses, including reasonable attorneys’ and consultants’
fees (collectively, “Related Expenses”),
incident to any of the foregoing.
11.2.
Indemnification of Seller. If the transactions contemplated by this Agreement are
consummated, Purchaser shall indemnify, defend and hold harmless Seller and its partners,
employees, independent contractors, agents, successors and assigns (collectively, the “Seller
Parties”) from and against any and all liabilities, losses, costs or expenses which any of the
Seller Parties may suffer or for which any of the Seller Parties may become liable and which are
based on, the result of, arise out of or are otherwise related to any of the following:
(a) any
breach of any representation or warranty of Purchaser contained in this Agreement, any
of the Attendant Documents or any certificate, schedule, list or
other instrument to be furnished by
Purchaser to Seller pursuant to this Agreement or any of the Attendant Documents;
(b) any
breach or failure of Purchaser to perform any covenant or agreement required to be
performed by Purchaser pursuant to this Agreement or any of the
Attendant Documents;
(c) any
Third Party Claim against any of the Seller Parties resulting from, arising out of or
in any way related to (i) the failure of Purchaser to perform, pay or discharge any Assumed
Liability, (ii) the operation of the Business after the Closing; or (iii) the failure of
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Purchaser to offer employment to substantially all of Seller’s Employee in accordance with Section
8 above; and
(d) any and all Related Expenses incident to any of the foregoing.
11.3.
Claims for Indemnification. Whenever any claim shall arise for indemnification under this
Agreement, even if no payment is then due on account thereof, the
person or entity seeking
indemnification (the “Indemnified Party”) shall
notify (the “Notice”) the Party against whom
indemnification is sought (the “Indemnifying Party”)
of the claim within thirty days after the
Indemnified Party has actual knowledge of its existence and, when
known, the facts constituting the
basis for such claim. In the event of any Third Party Claim, the
Notice shall specify, if known,
the amount or an estimate of the amount of the liability arising
therefrom. The Indemnified Party
shall not settle or compromise any Third Party Claim without the
prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld, conditioned or delayed, unless
suit shall have been instituted against the Indemnified Party and the Indemnifying Party shall not
have taken control of such suit in accordance with Section 11.4 below. With respect to a claim for
indemnification arising solely as a result of a breach of a representation or warranty under this
Agreement, the Indemnifying Party shall have a period of thirty days after receipt of the Notice
(the “Cure Period”) to remedy such breach of representation or warranty giving rise to such claim;
provided, however, that if the Indemnifying Party is proceeding diligently and in good faith to cure
such breach of representation or warranty, the Indemnifying Party shall have the right to extend the
Cure Period on notice to the Indemnified Party for a period of ninety days following receipt of the
Notice. Any breach of representation or warranty remedied within the Cure Period shall not
thereafter constitute a basis for a claim of indemnification.
11.4.
Defense by the Indemnifying Party. Within fifteen days after receipt of the Notice, the
Indemnifying Party, at its sole cost and expense, may, upon written notice to the Indemnified Party,
assume the defense of any Third Party Claim. If the Indemnifying
Party timely assumes the defense of
any Third Party Claim, the Indemnifying Party shall select counsel reasonably acceptable to the
Indemnified Party to conduct the defense of such Third Party Claim and, at the sole cost and expense
of the Indemnifying Party, the Indemnifying Party shall take all steps necessary in the defense or
settlement thereof. The Indemnified Party shall be entitled to participate in (but not control) the
defense of any Third Party Claim, with its own counsel and at its own expense; provided, however,
that if the named parties to any such action (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party, and the Indemnified Party has been advised by counsel
that there may be one or more legal defenses available to it that are different from or additional
to those available to the Indemnifying Party, then the Indemnified Party may employ separate counsel
at the expense of the Indemnifying Party. The Indemnifying Party shall not consent to a settlement
of, or the entry of any judgment arising from, any Third Party Claim without the prior written
consent of the Indemnified Party, which consent shall not be unreasonably withheld, conditioned or
delayed. If the Indemnifying Party fails to give the Indemnified Party written notice within fifteen
days after the Indemnifying Party’s receipt of the Notice that the Indemnifying Party is assuming
the defense of such Third Party Claim or if the Indemnifying Party fails to assume and continually
maintain the defense of the Third Party Claim within fifteen days after the Indemnifying Party’s
receipt of the Notice, the
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Indemnified Party may assume sole control of defense or settlement of such claim at the sole cost
and expense of the Indemnifying Party. If the Indemnifying Party thereafter seeks to question the
manner in which the Indemnified Party defended such Third Party Claim or the amount or nature of
any such settlement, the Indemnifying Party shall have the burden to prove by a preponderance of
the evidence that the Indemnified Party did not defend or settle such Third Party Claim in a
reasonably prudent manner. Notwithstanding any provision of this Article to the contrary, the
Indemnified Party shall have the sole and exclusive right to assume and continually defend and/or
settle any indemnification claim under this Article 11 (at the Indemnifying Party’s cost and
expense) if (i) the Indemnified Party concludes in good faith that there may be legal defenses
available to it that are different from or in addition to those available to the Indemnifying
Party, or that another conflict of interest exists or may occur in defense of such claim, (ii) the
third-party in question is one of the Indemnified Party’s former, current or anticipated future
customers, or (iii) the Indemnified Party determines, in good faith, that there are other,
legitimate business reasons why it would not be in the best interests of the Indemnified Party,
Purchaser and/or the Business for the Indemnifying Party to assume the defense of such claim;
provided, however, that the Indemnifying Party shall be entitled to participate in (but not
control) the defense of such claim, with its own counsel and at its
own expense.
11.5.
Minimization of Indemnities. Each Party shall use reasonable efforts to minimize the
indemnification obligations of the other Parties under this
Section 11 by, among other reasonable
things and without limiting the generality of the foregoing, taking
such reasonable remedial action
as it believes may minimize such obligation and seeking to the maximum extent possible reimbursement
from insurance carriers under applicable insurance policies covering any such liability.
11.6. Limitations on Indemnities. Notwithstanding anything to the contrary herein:
(a) no
claim for indemnification under Section 11.1 (a) or Section 11.2 (a) above may be made
under this Agreement after the expiration of the applicable period
set forth in Section 7.2 above;
(b) no claim for indemnification under Sections 11.1 (b), 11.1 (c), 11.2 (b), or 11.2 (c) may
be made under this Agreement after March 31, 2007 (the later of March 31, 2007 or 3 years from the
date on which Medicare made the payment in question, with respect to governmental demands for
refunds or return of payments under Medicare);
(c) no
claim for indemnification by any Party against another Party shall be valid and
assertable unless and until the aggregate amount of all claims exceeds $100,000.00, but then such
Party may seek indemnification for the full amount of all claims, the
aggregate amount of which
exceed the $100,000 basket, and
(d) in
no event shall the aggregate amounts payable to the Purchaser Parties on account of
claims made under this Agreement exceed 40% of the Purchase Price;
provided, however, that the limitations set forth in subsection (d) shall not apply to claims for
alleged fraud or abuse, criminal activity, or fee splitting, or with respect to any document filed
or
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to be filed by Seller under any third party payer program; and provided, further, that if the
claim to be indemnified is covered by the indemnitor’s insurance, then the $100,000 basket shall
not apply. Each indemnitee shall follow and be bound by all conditions of the indemnitor’s
insurance places on the right to defense and indemnity in lieu of the provisions of any provision
of this Article 11.
11.7.
Exclusive Remedy. Except for specific performance, injunctive relief and recoveries
for claims of alleged fraud, indemnification pursuant to this
Section 11 (and the provisions of
Sections 12) shall be the sole remedy available to the Parties
for claims made under this Agreement.
11.8.
Assignment of Claims. On satisfaction of the obligation to indemnify under this Section
11, and in consideration of such obligation, the Indemnified Party
will assign to the Party making
such payment any and all claims, causes of action and demands of
whatever kind and nature which such
Indemnified Party may have against any person, firm or other entity
giving rise to such indemnified
loss, and to reasonably cooperate in any efforts to recover therefrom.
11.9.
Right of Offset. Any amounts payable by Seller to Purchaser under this Agreement
(including pursuant to this Article 11) may, at the option of
Seller or Purchaser, be set off
against any amounts due Seller by Purchaser hereunder or under the Note.
11.10.
Failure to Give Notice Timely. Notwithstanding the notice requirements provided in
Sections 11.1 and 11.2, the right to indemnification under this
Agreement shall not be affected by
any failure to give or any delay in giving such notice unless, and
then only to the extent that, the
rights and remedies of the party to whom such notice was to have been
given shall have been
prejudiced.
12. DEPOSIT, TERMINATION
12.1. Deposit.
(a) Each
Party has delivered a $30,000.00 xxxxxxx money deposit (individually,
a “Deposit” and collectively, the “Deposits”) to Seller’s attorney, Jacob &Weingarten, P.C., to be
held in such firm’s interest-bearing escrow account. Except as
otherwise provided in this Section
12.1, the Purchaser’s Deposit shall be non-refundable and shall
be payable to Seller upon
termination of this Agreement. At the Closing, Purchaser shall
receive a credit toward the Purchase
Price in the amount of its Deposit only, plus accrued interest thereon.
(b) If
Purchaser terminates this Agreement pursuant to Section 12.2 (c)(i) or (iii) below, then
Purchaser’s Deposit, plus accrued interest thereon, shall be
promptly repaid to Purchaser, and
Seller’s Deposit, plus accrued interest thereon, shall be promptly repaid to Seller.
(c) If
Seller terminates this Agreement because the condition set forth in Section 9.2 (c) has
not been satisfied, then Purchaser’s Deposit, plus accrued
interest thereon, shall be promptly
repaid to Purchaser, and Seller’s Deposit, plus accrued interest
thereon, shall be promptly repaid
to Seller.
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(d) If
Seller terminates this Agreement pursuant to Section 12.2 (b)(ii), Purchaser’s Deposit
shall be forfeited to Seller as liquidated damages (which shall be
Seller’s sole and exclusive
remedy against Purchaser and Seller shall have no right to seek
specific performance of this
Agreement). In addition, Seller’s Deposit, plus accrued interest
thereon, shall be promptly repaid
to Seller. SELLER ACKNOWLEDGES THAT: (i) PURCHASER’S DEPOSIT IS A REASONABLE ESTIMATE OF AND
BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES THAT WOULD BE SUFFERED
AND COSTS THAT WOULD BE
INCURRED BY SELLER AS A RESULT OF HAVING SUBJECTED THE ASSETS TO THE TERMS OF THIS AGREEMENT AND THE
FAILURE OF THE CLOSING TO OCCUR; (ii) THE ACTUAL DAMAGES
SUFFERED AND COSTS INCURRED BY SELLER AS
A RESULT OF SUCH SUBJECTION AND FAILURE TO CLOSE UNDER THIS AGREEMENT WOULD BE EXTREMELY DIFFICULT
AND IMPRACTICAL TO DETERMINE; (iii) PURCHASER SEEKS TO LIMIT ITS
LIABILITY UNDER THIS AGREEMENT TO THE AMOUNT OF THE DEPOSIT IN THE EVENT THE CLOSING DOES NOT OCCUR; AND (iv) THE DEPOSIT
SHALL BE AND CONSTITUTE VALID LIQUIDATED DAMAGES.
(e) If
Purchaser terminates this Agreement pursuant to Section 12.2 (c)(ii), Seller’s Deposit
shall be forfeited to Purchaser as liquidated damages (which shall be
Purchaser’s sole and exclusive
remedy against Seller and Purchaser shall have no right to seek
specific performance of this
Agreement). In addition, Purchaser’s Deposit, plus accrued
interest thereon, shall be promptly
repaid to Purchaser. PURCHASER ACKNOWLEDGES THAT: (i)
SELLER’S DEPOSIT IS A REASONABLE ESTIMATE OF AND BEARS
A REASONABLE RELATIONSHIP TO THE DAMAGES THAT WOULD BE SUFFERED AND
COSTS THAT WOULD BE INCURRED BY PURCHASER AS A RESULT OF THE FAILURE OF THE CLOSING TO OCCUR; (ii)
THE ACTUAL DAMAGES SUFFERED AND COSTS INCURRED BY PURCHASER AS A
RESULT OF SUCH FAILURE TO CLOSE
UNDER THIS AGREEMENT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICAL TO DETERMINE; (iii) SELLER
SEEKS TO LIMIT ITS LIABILITY UNDER THIS AGREEMENT TO THE AMOUNT OF THE
DEPOSIT IN THE EVENT THE
CLOSING DOES NOT OCCUR; AND (iv) THE DEPOSIT SHALL BE AND CONSTITUTE VALID LIQUIDATED DAMAGES.
12.2. Termination. This Agreement may be terminated at any time before the Closing:
(a) by the mutual consent of Seller and Purchaser; or
(b) by
Seller: (i) if any of the conditions set forth in Section 9.2 above have not been
fulfilled, satisfied or waived by the Termination Date, or
(ii) if Purchaser materially breaches any
covenant or agreement, or any representation, warranty or covenant,
set forth in this Agreement at a
time when Seller is not in material default of this Agreement; or
(c) by
Purchaser; (i) if any of the conditions set forth in Section 9.1 above have not been
fulfilled, satisfied or waived by the Termination Date, (ii) if
Seller materially breaches any
covenant or agreement, or any representation, warranty or covenant, set forth in
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this Agreement at a time when Purchaser is not in material default of this Agreement; or (iii) if
there shall be any litigation, action, suit, claim, proceeding, order, investigation or inquiry
pending or threatened against Seller (by any person other than Purchaser or an affiliate of
Purchaser) before any court or quasi-judicial or administrative agency to, or pursuant to which a
judgment, order, decree, stipulation, injunction or charge could be entered which would: (A) enjoin
or prevent the consummation of the transactions contemplated in this Agreement, (B) cause any of
the transactions contemplated in this Agreement to be rescinded following consummation, (C)
adversely affect the right of Purchaser to own, operate or control the Business, the Assets or the
Assignable Items, or (D) otherwise have a material adverse effect on the operations or financial
condition of the Business, the Assets or the Assignable Items.
12.3. Effect of Termination. If terminated in accordance with Section 12.2 above, this
Agreement shall be null and void and have no further force or effect and neither Party shall have
any further rights or obligations under this Agreement, except as otherwise provided in the
remaining provisions of this Section 12.3 or in Sections 13.1, 14.3, and 14.4. In the event that
the Parties mutually agree to terminate this Agreement in accordance with Section 12.2 (a), the
Deposits shall be returned to the Party making the Deposit. Otherwise, the Deposits shall be paid
and disbursed in accordance with Section 12.1 above.
13. ARBITRATION.
13.1. Certain Disputes Only. The parties agree that any dispute (collectively, the
“Dispute”) with respect to whether Purchaser is entitled to a return of the Deposit, plus accrued
interest thereon (a “Deposit Dispute”), shall be resolved in accordance with the procedures set
forth in this Section 13. Either Party may submit the Dispute to arbitration by notifying the
other Party in writing. Within ten days after receipt of such notice, the Parties shall designate
in writing one arbitrator to resolve the Dispute; provided, that if the Parties cannot agree on a
single arbitrator within such ten-day period, the Party seeking arbitration may file a proceeding
with the American Arbitration Association (“AAA”) and as promptly as possible, the arbitrator
shall be selected by the AAA in accordance with its rules for the selection of truly neutral
arbitrators. The arbitrator so designated shall not be an employee, consultant, representative,
officer; director or stockholder of any Party, or any affiliate of any Party. Within fifteen days
after the designation of the arbitrator, the arbitrator and the Parties shall meet, at which time
each of the Parties shall be required to set forth in writing each disputed issue, a proposed
ruling on each such issue. This Section shall not apply to any other disputes arising under this
Agreement.
13.2 Logistics. The arbitration shall be governed by the AAA rules, except as modified in
this Section 13. Each Party shall have the right to require the other Party to produce any
relevant documents or books or records. The arbitration shall be conducted in the Detroit
metropolitan area. The arbitration award shall be a declaration of whether the Deposit should or
should not be returned to Purchaser. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The Parties consent and commit themselves to the
jurisdiction of the courts of the State of Michigan for purposes of the enforcement of any
arbitration award. The prevailing party in any arbitration shall be entitled to an award of actual
reasonable attorneys fees incurred in connection with the arbitration ordinary enforcement action.
The non-prevailing party shall pay such fees, together with the fees of the arbitrator and
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the administrative and filing fees and costs and expenses of the arbitration. The prevailing party
shall be the Party who receives the Deposit. All rulings of the arbitrator shall be in writing and
shall be delivered to the Parties.
14. MISCELLANEOUS
14.1. [Intentionally omitted]
14.2.
Post Closing Assistance. Seller shall prepare and timely file all reports required by law
to be filed under any third party pay or program with respect to the
Business as a result of the
consummation of the transactions described herein. On reasonable
request, Purchaser shall allow
Hired Employees to assist Seller in connection with the preparation
of such reports as well as all
other accounting and reporting matters (including tax returns) and the collection of
Seller’s accounts receivable, as reasonably required by Seller in connection with the winding up of
its affairs.
14.3.
Exclusivity; Confidentiality. From the date of this Agreement through the Closing Date
(unless this Agreement is sooner terminated in accordance with
Section 12.2 above), Seller shall
not, either directly or indirectly, offer the Business or the Assets
to, or carry on negotiations
with respect to the sale of the Business or Assets with, any party
other than Purchaser. Seller
agrees to notify the parties who have expressed interest in acquiring
the Business or the Assets
that Seller has entered into negotiations for the sale of the
Business and the Assets and, as such,
any offers from such parties are thereby rejected. Such notification
shall not reveal Purchaser’s
identity. Except to the extent required by applicable law or as
necessary to fulfill their duties
and obligations hereunder or to otherwise consummate the transactions contemplated herein, neither
Seller nor Purchaser shall disclose the existence of or any of the terms of this Agreement to any
other person or entity.
14.4.
Expenses. Except as otherwise expressly provided in this
Agreement, Seller and
Purchaser shall each bear the expenses incurred by them in connection
with the preparation and
negotiation of this Agreement and the Attendant Documents and the
consummation of the transactions
contemplated in this Agreement.
14.5.
Notices. Any and all notices, requests, demands and other
communications permitted under
or required pursuant to this Agreement shall be in writing and shall
be deemed given if personally
delivered or if mailed, postage prepaid, certified or registered
mail, return receipt requested, to
the Parties at the addresses set forth below, or at such other
addresses as they may indicate by
written notice given as provided in this Section 14.5:
If to Seller: | With a required copy to: | |||
Xxx X. Xxxxxxxxx | Xxxxx & Xxxxxxxxxx, P.C. | |||
816 X. Xxxxx | 0000 X. Xxx Xxxxxx Xxxx, Xxxxx 000 | |||
Xxxxxxxxxx, Xxxxxxxx | Xxxx, Xxxxxxxx 00000 | |||
48009 | Attention: Xxxxxx X. Xxxxxxxxx |
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If to Purchaser: | ||||
Tandem Health Care, Inc. | Tandem Health Care, Inc. | |||
000 Xxxxxxxxx Xxxxxxx Xxxxx | One Oxford Centre, 20th Floor | |||
Suite 200 | 000 Xxxxx Xxxxxx | |||
Xxxxxxxx, Xxxxxxx 00000 | Xxxxxxxxxx, XX 00000 | |||
Attn: Chairman and CEO | Attn: General Counsel |
14.6.
Heading. The headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
00.0.Xxxxxxxxxxxx.
This Agreement has been executed in, and shall be construed and enforced
in accordance with the laws of, the State of Michigan without regard
to the conflicts of law
principles thereof. THE PARTIES ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL
ONE, BUT THAT IT MAY BE WAIVED. EACH OF THE PARTIES AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY
TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR
THEIR MUTUAL BENEFIT, WAIVE ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF
LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO,
THIS AGREEMENT.
14.8. Assignment; Benefit. No Seller may assign its rights and obligations under
this Agreement without the prior written consent of Purchaser. Purchaser may assign its rights
and obligations under this Agreement to any party designated by Purchaser. If such designee is
an entity other than a corporation, the Parties shall amend this Agreement to the extent necessary
to reflect that fact. This Agreement shall be binding on and inure to the benefit of the Parties
and their respective successors and assigns. Except as provided in Section 11, this Agreement is
not intended to, and shall not, benefit any person or entity other than the Parties and this
Agreement shall not create any third party beneficiary rights in any person or entity.
14.9.
Entire Agreement. This Agreement, including the Exhibits and the Schedules attached or
to be attached to it, is and shall be deemed to be the complete and
final expression of the
agreement between the Parties as to the matters contained in and
related to this Agreement and
supersedes any previous understandings, dealings and communications,
including negotiations, discussions, representations, warranties, information, documents and
agreements, between the Parties pertaining to such matters.
14.10. Tax Matters.
(a) Seller shall be responsible for the preparation and filing of all Tax Returns for Seller
for all periods as to which Tax Returns are due on or prior to the Closing Date (including the
consolidated, unitary and combined Tax Returns for such Seller which include the operations of the
Business for any period ending on or before the Closing Date). Seller shall make all payments
required with respect to any such Tax Returns.
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(b) Purchaser
shall be responsible for the preparation and filing of all Tax Returns for the
Business for all periods as to which Tax Returns are due after the
Closing Date. Purchaser will make
all payments required with respect to any such Tax Returns.
(c) Seller
shall pay all sales, use and transfer Taxes (including Taxes, if any, imposed on the
transfer of personal property) and filing, recording and registration
fees payable in connection
with the transactions contemplated in this Agreement.
14.11.
Books and Records. Seller shall preserve all documents, books and records concerning the
Business and to be retained by Seller pursuant to this Agreement
(“Retained Records”) for a period
of three years from the Closing Date. Likewise, Purchaser shall
preserve all documents, books and
records concerning the Business to be transferred to Purchaser pursuant to this Agreement (also
“Retained Records”) for a period of three years from the Closing Date. During such three-year
period, on reasonable notice and during normal business hours, each Party shall allow the other
Party full access to the Retained Records and shall permit each other to make copies and extracts
from such documents (at the copying Party’s cost and expense). At the Closing, Seller shall deliver
to Purchaser all patient records, including, without limitation, all medical records, physician’s
orders, therapist’s notes, nurse’s notes, patient care plans and related items currently maintained
at or with respect to the Business (the “Patient Records”), and Purchaser shall preserve all Patient
Records for the period of time required by applicable law. Purchaser acknowledges that the Patient
Records are the property of the patients of the Business and are not owned by Seller. Purchaser
shall allow Seller full access to the Patient Records and shall permit Seller to make copies and
extracts from such documents (at Seller’s cost and expense), as reasonably required by Seller in
connection with the winding up of its affairs. To the extent certain Retained Records of Seller are
stored on a computer sold to Purchaser as part of this transaction, Purchaser shall preserve all
such records for a period of three years from the Closing Date, and during such three-year period,
on reasonable notice and during normal business hours, Purchaser shall allow Seller full access to
such computer records and shall permit Seller to make copies (electronic or on paper) there from.
14.12. Closing Adjustments.
(a) At
the Closing: (i) Seller shall receive a credit for all security deposits held by any
lessor pursuant to the Leases; (ii) Purchaser shall receive a
credit on account of or by reason of
any rental or other payments due under any of the Leases which are
unpaid as of the Closing; and
(iii) if Seller has paid any rental or other payment due under
any of the Leases and any such
payment relates to a period after the Closing, then Seller shall
receive a credit to the extent any
such payment relates to a period after the Closing.
(b) The
parties acknowledge that personal property taxes are paid in advance. Seller shall pay
all personal property taxes, which are a lien upon or levied against
any portion of the Assets
and/or the Leased Personal Property, and which are due and payable on
or prior to the Closing Date.
Personal property taxes which apply to a period after the Closing
shall be prorated on the Closing
Date on a due date basis and shall be paid by Seller (for the period
prior to and on the Closing
Date) or Purchaser (for the period after the Closing Date), as the case may be.
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14.13.
Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original and all of which together shall be considered
one and the same agreement.
Photostatic or facsimile reproductions of this Agreement may be made
and relied upon to the same
extent as originals.
14.14.
Waiver. The waiver by any Party of any breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent or similar breach.
14.15.
Amendment. This Agreement may only be amended by written
agreement executed by all of
the Parties.
14.16.
Further Assurances. From time to time after the Closing Date,
at Purchaser’s request and
without further consideration, Seller shall execute and deliver, or
cause to be executed and
delivered, such further instruments of conveyance, assignment and
transfer and shall take such other
action as Purchaser may reasonably request in order more effectively
to convey, transfer, reduce to
possession or record title to any of the Assets purchased pursuant to this Agreement. Seller shall
assist and cooperate, in all reasonable respects, with Purchaser and its representatives in
obtaining all permits, licenses, and certifications, which Purchaser
deems necessary or appropriate
for the operation of the Business.
14.17.
Litigation Support. In the event and for so long as any Party is actively contesting or
defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or
demand in connection with any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing
Date, the other Party shall cooperate in all reasonable respects with
the contesting or defending
Party and its counsel in the contest or defense, make available its personnel, and provide such
testimony and access to its books and records as shall be reasonably necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification therefor under Section
11 of this Agreement).
14.18.
Disciplinary Reports. Purchaser acknowledges that, prior to divulging to Purchaser
disciplinary reports, letters of reprimand or other disciplinary
action pertaining to any of
Seller’s Employees, Seller shall provide written notice to any such Seller’s Employee in accordance
with the Xxxxxxx-PIawecki Employee Right to Know Act (MCLA §423.506).
14.19
Severability. If any terms or provisions of this Agreement, or
any application thereof
to any circumstances, shall, to any extent and for any reason, be held to be invalid
or unenforceable, such provision shall be enforced to the extent possible and the remainder of
this Agreement, or the application of such term or provision to circumstances other than those
to which it is held invalid or unenforceable, shall not be affected thereby and shall be construed
as if such invalid or unenforceable provisions had never been contained herein, and each term
and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
14.20
Schedules. This Agreement contemplates that all of the Schedules are to be attached, but
only certain of the Schedules have been attached. The remaining Schedules
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(collectively,
the “Remaining Schedules”) are in the process of being prepared, but have not
been finalized. The Remaining Schedules shall be attached to this Agreement on or before November
8, 2004 (the “Delivery Date”). The Remaining Schedules shall be acceptable to Purchaser so long as
the same are “Materially Similar” (as defined below) to the out-of-date Schedules previously
delivered to Purchaser. The Remaining Schedules shall be “Materially Similar” if the information
contained therein when compared against the information on the out-of-date Schedules previously
delivered to Purchaser do not reflect a material adverse change in the results of operation,
financial condition, Assets, or businesses of the Business, If the Remaining Schedules are not
Materially Similar, then Purchaser may terminate this Agreement on notice to Seller (delivered on
or before November 15, 2004), in which event the provisions of Section 12.3 above shall apply, and
the Deposits shall be returned to the Party making the Deposit.
Otherwise, the Parties shall
execute and deliver an appropriate amendment to this Agreement, incorporating the Remaining
Schedules into this Agreement. In the event of any conflict between any provision of this Section
14.20 and any other provision of this Agreement, the provisions of this Section 14.20 shall
control.
IN
WITNESS WHEREOF, the undersigned have executed this Asset Purchase Agreement as of October
28, 2004.
OP Hospice, Inc. | ||||
By: | /s/ Xxxxxxxx X. Xxxxxxx | |||
Lighthouse Hospice Limited | ||||
Partnership | ||||
By: | Integrated Health Systems, Inc., | |||
an Illinois corporation | ||||
By: | /s/ Xxxxx Xxxxxxxxx | |||
Xxxxx Xxxxxxxxx, President |
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