Doc. 665151
STOCK PURCHASE AGREEMENT
among
THE PHOENIX GROUP CORPORATION
and
XX. XXXXXX X. XXXXXX, III M.D.
and
MR. XXX XXXXXXXX
Dated as of May 9, 2002
TABLE OF CONTENTS
Page
ARTICLE 1 AGREEMENT OF PURCHASE AND SALE 1
1.1 AGREEMENT. 1
1.2 CLOSING. 1
1.3 DELIVERY AND PAYMENT. 1
1.4 DELIVERIES AT CLOSING. 1
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF BUYER 2
2.1 DUE ORGANIZATION 3
2.2 DUE AUTHORIZATION; NO CONFLICTS. 3
2.3 BROKERS AND FINDERS. 3
2.4 INVESTMENT INTENT. 3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS 3
3.1 CAPITALIZATION; OWNERSHIP OF SHARES. 3
3.2 NO LIENS ON SHARES. 4
3.3 OTHER RIGHTS TO ACQUIRE CAPITAL STOCK. 4
3.4 DUE ORGANIZATION. 4
3.5 SUBSIDIARIES. 4
3.6 DUE AUTHORIZATION; NO CONFLICTS 5
3.7 FINANCIAL STATEMENTS 5
3.8 CONDUCT OF BUSINESS; CERTAIN ACTIONS. 6
3.9 PROPERTIES 7
3.10 LICENSES AND PERMITS. 8
3.11 INTELLECTUAL PROPERTY RIGHTS. 8
3.12 COMPLIANCE WITH LAWS. 9
3.13 INSURANCE. 9
3.14 EMPLOYEE BENEFIT MATTERS. 10
3.15 CONTRACTS AND AGREEMENTS. 11
3.16 CLAIMS AND PROCEEDINGS. 11
3.17 TAXES. 11
3.18 PERSONNEL. 13
3.19 BUSINESS RELATIONS. 13
3.20 ACCOUNTS RECEIVABLE. 13
3.21 BANK ACCOUNTS. 14
3.22 AGENTS. 14
3.23 INDEBTEDNESS TO AND FROM OFFICERS, DIRECTORS,
STOCKHOLDERS, AND EMPLOYEES. 14
3.24 COMMISSION SALES CONTRACTS. 14
3.25 CERTAIN CONSENTS. 14
3.26 BROKERS. 14
3.27 INTEREST IN COMPETITORS, SUPPLIERS, AND
CUSTOMERS. 15
3.28 INVENTORY. 15
3.29 WARRANTIES. 15
3.30 CUSTOMERS AND SUPPLIERS. 15
3.31 ENVIRONMENTAL MATTERS. 15
3.32 INFORMATION FURNISHED. 16
3.33 CONTROLLED GROUP LIABILITY. 16
ARTICLE 4 INDEMNIFICATION 16
4.1 INDEMNIFICATION OF BUYER AND THE COMPANY. 16
4.2 DEFENSE OF THIRD-PARTY CLAIMS. 17
4.3 DIRECT CLAIMS. 18
4.4 TAX AUDITS. 18
ARTICLE 5 MISCELLANEOUS 18
5.1 COLLATERAL AGREEMENTS, AMENDMENTS, AND WAIVERS. 18
5.2 SUCCESSORS AND ASSIGNS. 18
5.3 EXPENSES AND TRANSFER TAXES. 19
5.4 INVALID PROVISIONS. 19
5.5 INFORMATION AND CONFIDENTIALITY. 19
5.6 WAIVER. 19
5.7 NOTICES. 20
5.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND OTHER PROVISIONS. 20
5.9 PUBLIC ANNOUNCEMENT. 21
5.10 WAIVER OF CERTAIN RIGHTS. 21
5.11 FURTHER ASSURANCES. 21
5.12 NO THIRD-PARTY BENEFICIARIES. 21
5.13 DISPUTE RESOLUTION. 21
5.14 JURISDICTION AND VENUE. 22
5.15 GOVERNING LAW. 22
LIST OF EXHIBITS
Exhibit A Form of Promissory Notes
Exhibit B Form of Seller's Counsel Legal Opinion
Exhibit C Form of Employment Agreement
LIST OF SCHEDULES
[TO COME]
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is
entered into as of May 9, 2002, among The Phoenix Group
Corporation, a Delaware corporation ("Buyer"), and the persons
holding capital stock of Homecare Dimensions, Inc., a Texas
corporation ("Homecare" or the "Company"), that have executed
this Agreement on the signature pages hereof, who are signing
this Agreement in their capacities as shareholders, as well as,
on behalf of Homecare (collectively referred to as the
"Sellers").
The parties hereto agree as follows:
ARTICLE 1
AGREEMENT OF PURCHASE AND SALE
1.1 Agreement.
Upon the basis of the representations and warranties, for the
consideration, and subject to the terms and conditions set forth
in this Agreement, each of the Sellers agree to (1) sell all of
the issued and outstanding shares ("Shares") of common stock, par
value $.10 per share (the "Common Stock"), of Homecare owned by
the Sellers to Buyer and (2) Xx. Xxxxxx X. Xxxxxx, III M.D. will
deliver and cancel a $2.0 million promissory note owed by the
Company to Xx. Xxxxxx ("Cancelled Note"), and Buyer agrees to
purchase such Shares from each such Seller and the Cancelled Note
from Xx. Xxxxxx, for an aggregate purchase price of Five Million
Dollars ($5,000,000) (the "Purchase Price") with $250,000 cash at
closing. The balance of the Purchase Price will be paid by the
Buyer to the Sellers through issuing to each Seller a promissory
note ("Note" or "Notes") in such amount to each Seller as is set
forth in Schedule 1.3.
1.2 Closing.
The closing of the transactions contemplated hereby shall take
place on the date this Agreement is signed by the Seller and the
Buyer (the "Closing"). The location of the Closing shall be the
offices of Homecare Dimensions, Inc., 0000 XX Xxxx 000, Xxxxx
000, Xxx Xxxxxxx, Xxxxx 00000 or at such other place as Buyer
and the Sellers may agree. The date on which the Closing occurs
is hereinafter referred to as the "Closing Date."
1.3 Delivery and Payment.
At the Closing, each Seller shall deliver or cause to be
delivered to Buyer the stock certificate or certificates
evidencing the number of Shares set forth opposite such Seller's
name on Schedule 1.3 attached hereto duly endorsed or accompanied
by a duly executed stock power assigning such shares to Buyer and
otherwise in good form for transfer. At Closing, the Buyer shall
execute the Notes in favor of the Sellers identified in Schedule
1.3. The Notes will have such terms as are set forth in the
forms of promissory note set forth in Exhibit A.
1.4 Deliveries at Closing.
(a) Deliveries of the Sellers at Closing. Buyer acknowledges
that the following listed items were delivered by the Sellers at
Closing:
(i) Sellers shall have obtained all Consents required in
connection with the execution, delivery, and performance of this
Agreement, including, without limitation, those listed on
Schedule 3.25 hereto.
(ii) The stock certificate or certificates representing all of
the Shares owned by the Sellers, and such Shares shall be free
and clear of any Liens, duly endorsed for transfer or accompanied
by stock powers duly executed in blank and all stock certificates
for each Subsidiary.
(iii) Each Seller shall deliver affidavits which satisfy
Section 1445(b) of the Code, in form and substance reasonably
acceptable to Buyer.
(iv) Good standing certificates, officer's certificates,
secretary certificates and similar documents and certificates as
counsel for Buyer shall have reasonably requested prior to the
Closing Date.
(v) Xx. Xxxxxx'x Cancelled Note marked "paid-in-full".
(b) Deliveries of Buyer at Closing. Sellers acknowledges that
the following listed items were delivered by Buyer at Closing:
(i) Buyer shall have delivered fully executed Notes to the
Sellers for the Shares and the Cancelled Note in such amounts as
are set forth in Schedule 1.3.
(ii) Buyer shall have entered into an employment agreement with
Mr. Xxx Xxxxxxxx and Xx. Xxxxxx Xxxxxx, III MD in the form
attached hereto as Exhibit C.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Sellers as set forth in
this Article 2 (with the understanding that the Sellers are
relying materially on such representations and warranties in
entering into and performing this Agreement).
2.1 Due Organization.
Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware and has
full corporate power and authority to enter into and perform this
Agreement.
2.2 Due Authorization; No Conflicts.
This Agreement has been duly and validly authorized, executed,
and delivered by Buyer and constitutes a valid and binding
obligation of Buyer enforceable in accordance with its terms.
The execution, delivery, and performance of this Agreement by
Buyer will not (a) violate any federal, state, county, or local
law, rule, or regulation applicable to Buyer or its property, (b)
violate or conflict with, or permit the cancellation of, any
agreement to which Buyer is a party or by which it or its
property is bound, (c) permit the acceleration of the maturity of
any indebtedness of, or any indebtedness secured by the property
of, Buyer, or (d) violate or conflict with any provision of
Buyer's certificate of incorporation or bylaws. No action,
consent, or approval of, or filing with, any federal, state,
county, or local governmental authority is required in connection
with the execution, delivery, or performance of this Agreement.
2.3 Brokers and Finders.
Buyer has not engaged, or caused to be incurred any liability to,
any finder, broker, or sales agent in connection with the
execution, delivery, or performance of this Agreement or the
transactions contemplated hereby.
2.4 Investment Intent.
Buyer is acquiring the Shares for its own account for investment
purposes and not with a view to, or in connection with, any
distribution thereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby jointly and severally represent and
warrant to Buyer as set forth in this Article 3 (with the
understanding that Buyer is relying materially on each such
representation and warranty in entering into and performing this
Agreement). As used herein, the term "Company" means Homecare
and all of its Subsidiaries (as defined herein) on a consolidated
basis.
3.1 Capitalization; Ownership of Shares.
The authorized capital stock of Homecare consists of 1,000 shares
of Common Stock, par value $.10 per share, of which 1,000 shares
are issued and outstanding. All such issued and outstanding
Shares are duly authorized, validly issued, fully paid, and
nonassessable. Except for the Shares, there are, no other equity
securities of Homecare outstanding. All of the Shares are owned
of record and beneficially by the Sellers as set forth on
Schedule 1.3 attached hereto. None of the Shares were issued or
will be transferred under this Agreement in violation of any
preemptive or preferential rights of any person or entity.
3.2 No Liens on Shares.
Each Seller is the true and lawful owner, of record and
beneficially, of his Shares, free and clear of any liens,
restrictions, security interests, claims, rights of another, or
encumbrances (each a "Lien"); none of the Shares are subject to
any outstanding options, warrants, calls, or similar rights of
any other person to acquire the same; none of the Shares are
subject to any restrictions on transfer thereof; and each Seller
has the full power and authority to convey, and will convey to
Buyer at Closing, good and marketable title to such Seller's
Shares, free and clear of any Liens.
3.3 Other Rights to Acquire Capital Stock.
There are no authorized or outstanding warrants, options, or
rights of any kind to acquire from Homecare or from any Seller
any equity or debt securities of Homecare or securities
convertible into or exchangeable for equity or debt securities of
Homecare.
3.4 Due Organization.
Homecare is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Texas and has
full power and authority to carry on its business as now
conducted and as proposed to be conducted. Complete and correct
copies of the certificate of incorporation and bylaws of Homecare
and all amendments thereto have been delivered to Buyer and have
been certified by the corporate secretary of Homecare. Homecare
is qualified to do business as a foreign corporation and is in
good standing in the states set forth on Schedule 3.4 attached
hereto. Homecare is duly qualified to do business as a foreign
corporation in every jurisdiction where such qualification is
required except where failure to be so qualified would not have a
material adverse effect on the business, properties, or assets of
Homecare. Homecare has not received any notice or communication
from any other jurisdiction to the effect that it is or may be
required to qualify to do business as a foreign corporation in
any such jurisdiction.
3.5 Subsidiaries.
(a) Schedule 3.5 sets forth (i) the name, percentage ownership
and number of shares of stock owned or controlled by Homecare of
each corporation, partnership, joint venture or other entity in
which Homecare has, directly or indirectly, an equity interest
therein (individually, a "Subsidiary" and collectively,
"Subsidiaries"); (ii) the jurisdiction of incorporation,
capitalization and ownership of each Subsidiary; (iii) the names
of the officers and directors of each Subsidiary; and (iv) the
jurisdictions in which each Subsidiary is qualified or licensed
to do business as a foreign corporation.
(b) Homecare owns of record and beneficially all the capital
stock of each of the Subsidiaries free and clear of all Liens.
Each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction listed on Schedule 3.5.
(c) Each of the shares of capital stock of each Subsidiary shown
in Schedule 3.5 to be issued and outstanding has been duly
authorized and is validly issued, fully paid and nonassessable
and is free of preemptive rights.
(d) There are not outstanding any (i) options, warrants or other
rights with respect to the capital stock of any Subsidiary,
(ii) securities convertible into or exchangeable for shares of
such capital stock or any other debt or equity security of any
Subsidiary or (iii) other commitments of any kind for the
issuance of additional shares of capital stock or any other debt
or equity security of any Subsidiary or options, warrants or
other rights with respect to such securities.
3.6 Due Authorization; No Conflicts.
The Company has full corporate power and authority to enter into
and perform each agreement, instrument, and document required to
be executed by the Company in connection herewith. The
execution, delivery, and performance of such agreements,
instruments, and documents have been duly authorized by the Board
of Directors of the Company. Each Seller has full power and
authority to enter into and perform this Agreement and each other
agreement, and document required to be executed by each Seller in
connection herewith. This Agreement has been duly and validly
executed and delivered by each of the Sellers and constitutes a
valid and binding obligation of each of the Sellers enforceable
in accordance with its terms. The execution, delivery, and
performance of this Agreement does not (a) violate any federal,
state, county, or local law, rule, or regulation applicable to
the Company, any Seller, or their respective properties, (b)
violate or conflict with, or permit the cancellation of, any
agreement to which the Company or any Seller, is a party, or by
which any of them or any of their respective properties is bound,
or result in the creation of any lien, security interest, charge,
or encumbrance upon any of such properties, (c) permit the
acceleration of the maturity of any indebtedness, or indebtedness
secured by the property of, the Company or any Seller, or (d)
violate or conflict with any provision of the certificate of
incorporation or bylaws of the Company. No action, consent, or
approval of, or filing with, any governmental authority is
required in connection with the execution, delivery, or
performance of this Agreement (or any agreement or other document
executed in connection herewith by the Company or any Seller)
except for any filings described in Section 4.12 hereof.
3.7 Financial Statements.
The following Financial Statements (herein so called) of the
Company have been delivered to Buyer by the Company:
(a) Unaudited consolidated balance sheets, statements of income
and cash flow, and statements of changes in financial position of
the Company as of and for each of the years ended December 31,
2001, 2000 , 1999 and 1998 and for the three months ended
September 30, 2001, (collectively, the " Financial Statements");
and
(b) Unaudited consolidated balance sheet, statements of income
and cash flow, and statement of changes in financial position of
the Company as of and for each of the three months ended March
30, 2002 and 2001 (collectively, the "Interim Financial
Statements").
The Financial Statements and Interim Financial Statements have
been prepared in accordance with generally accepted accounting
principles ("GAAP") in the United States applied on a consistent
basis throughout the periods indicated and fairly present the
financial position, results of operations, and changes in
financial position of the Company as of the indicated dates and
for the indicated periods (except, in the case of the Interim
Financial Statements, for the absence of notes thereto and
subject to normal year-end audit adjustments and accruals
required to be made in the ordinary course of business which are
not materially adverse to and are consistent with past practices
of the Company). Except to the extent reflected or provided for
in the balance sheet included in the Interim Financial
Statements, the Company has no liabilities or obligations
(whether absolute, contingent, or otherwise), other than open-
account current liabilities incurred in the ordinary course of
business subsequent to March 31, 2002; and neither the Company
nor any Seller has knowledge of any basis for the assertion of
any such liability or obligation. Since March 31, 2002, there
has been no material adverse change in the financial position,
assets, results of operations, or business of the Company. To
the best knowledge of the Sellers, there are no pending or
proposed statutes, rules, or regulations, nor any current or
pending developments or circumstances, which could have a
material adverse effect on the financial position, assets,
results of operations, or business of the Company.
3.8 Conduct of Business; Certain Actions.
Except as set forth on Schedule 3.8 attached hereto, since the
March 31, 2002, the Company has conducted its business and
operations in the ordinary course and consistent with its past
practices and has not (a) paid or declared any dividend or
distribution or purchased or retired any indebtedness from any
holder of capital stock of the Company (a "Stockholder") and has
not purchased, retired, or redeemed any capital stock from any
Stockholder, (b) increased the compensation of any of the
directors, officers, or key employees or sales representatives of
the Company or, except for wage and salary increases made in the
ordinary course of business and consistent with the past
practices of the Company, increased the compensation of any other
employees or sales representatives of the Company, (c) made any
capital expenditures exceeding $25,000 individually or $50,000 in
the aggregate, (d) sold any asset (or any group of related
assets) in any transaction (or series of related transactions) in
which the purchase price for such asset (or group of related
assets) exceeded $25,000 individually or $50,000 in the aggregate
(other than sales of inventory in the ordinary course of
business), (e) discharged or satisfied any Lien or paid any
obligation or liability, absolute or contingent, other than
current liabilities incurred and paid in the ordinary course of
business, (f) made or guaranteed any loans or advances to any
party whatsoever, (g) suffered or permitted any Lien to arise or
be granted or created against or upon any of the assets of the
Company, real or personal, tangible or intangible, (h) cancelled,
waived, or released any of the Company's debts, rights, or claims
against third parties, (i) amended the certificate of
incorporation or bylaws of the Company, (j) made, paid or
incurred (1) any severance or termination payment or obligation
therefor with respect to any employee, consultant, or sales
representative of the Company or (2) any legal or accounting
fees, as to items (1) and (2) together, in excess $50,000 in the
aggregate, (k) made any change in the method of accounting of the
Company, (l) made any investment or commitment therefor in any
person, business, corporation, association, partnership, joint
venture, trust, or other entity, (m) made, entered into, amended,
or terminated any written employment contract, created, made,
amended, or terminated any bonus, stock option, pension,
retirement, profit sharing, or other employee benefit plan or
arrangement, or withdrawn from any "multi-employer plan" (as
defined in Section 414(f) of the Internal Revenue Code of 1986,
as amended (the "Code")) so as to create any liability under
Article IV of the Employee Retirement Income Security Act of
1974, as amended (including applicable regulations) ("ERISA") to
any entity, (n) amended or experienced a termination of any
material contract, agreement, lease, franchise, or license to
which the Company is a party, except in the ordinary course of
business, (o) incurred or assumed any indebtedness (whether
directly or by way of guaranty or otherwise) for borrowed money,
except in the ordinary course of business, (p) enter into any
other material transaction except in the ordinary course of
business, (q) entered into any contract, commitment, agreement,
or understanding to do any acts described in the foregoing
clauses (a)-(p) of this Section 3.8, (r) suffered any material
damage, destruction, or loss (whether or not covered by
insurance) to any assets, (s) experienced any strike, slowdown,
or demand for recognition by a labor organization by or with
respect to any of the employees of the Company, (t) experienced
or effected any shutdown, slow-down, or cessation of any
operations conducted by, or constituting part of, the Company,
(u) materially accelerated the collection of accounts receivable
or decelerated payment of accounts payable, except in the
ordinary course of business consistent with past practice, or (v)
made or rescinded any material express or deemed election
relating to Taxes, settled or compromised any material claim,
action, suit, litigation, proceeding, arbitration, investigation,
audit or controversy relating to Taxes, or except as may be
required by applicable law, made any change to any of its
material methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of its
most recently filed federal income tax return.
3.9 Properties.
Attached hereto as Schedule 3.9 is a list and description of all
real and personal properties (excluding, in the case of personal
properties, any asset having a book value of less than $5,000 as
of the date hereof) owned or leased by the Company as of the
date hereof. Except as set forth on Schedule 3.9, the Company is
not a party to any real property lease, sublease or assignment,
either as tenant or landlord. Except as expressly set forth on
Schedule 3.9 attached hereto, the real and personal properties of
the Company are free and clear of all liens, security interests,
claims, rights of another, and encumbrances. The physical
properties owned or utilized by the Company in the conduct of its
business are in good operating condition and repair, normal wear
and tear excepted, and are free from material defects. Except as
otherwise set forth on Schedule 3.9 attached hereto, the Company
has full and unrestricted legal and equitable title to or a valid
leasehold interest in all such properties. The operation of the
properties and business of the Company in the manner in which
they are now and have been operated does not violate in any
material respect any zoning ordinances, municipal regulations, or
other rules, regulations, or laws. No covenants, easements,
rights-of-way, or regulations of record impair in any material
respect the uses of the respective properties of the Company for
the purposes for which they are now operated. Except as
described on Schedule 3.9 attached hereto, there are no past,
present, or proposed conditions, activities, actions, or plans
which may prevent compliance by the Company with any law related
to the manufacture, process, distribution, use, treatment,
storage, disposal, transport, or handling, or the emission,
discharge, or release, of any pollutant, contaminant, chemical,
or industrial toxic or hazardous substance or waste ("Hazardous
Substance Issues") or any regulations, plans, judgments,
injunctions, or notices promulgated or approved thereunder
applicable to the operations, properties, or assets of the
Company, or which may give rise to any liability of the Company,
or otherwise form the basis of any claims, actions, demands,
suits, proceedings, hearings, studies, or investigations against
or relating to the Company, based on or related to any Hazardous
Substance Issues. The Company delivered to Buyer true and
complete copies of any surveys, appraisals and title insurance
policies related to its owned or leased real properties.
3.10 Licenses and Permits.
Attached hereto as Schedule 3.10 is a list of all federal, state,
county, and local governmental licenses, certificates, and
permits held or applied for by the Company. The Company has
complied in all material respects, and is in compliance in all
material respects, with the terms and conditions of all such
licenses, certificates, and permits, and no material violation of
any such licenses, certificates, or permits or the laws or rules
governing the issuance or continued validity thereof has
occurred. No additional license, certificate, or permit is
required from any federal, state, county, or local governmental
agency or body thereof in connection with the conduct of the
business of the Company which, if not obtained, would materially
and adversely affect the business or properties of the Company.
No claim has been made by any governmental authority (and, to the
best knowledge of the Sellers, no such claim is anticipated) to
the effect that a license, permit, or order is necessary in
respect of the business conducted by the Company.
3.11 Intellectual Property Rights.
Except as set forth on Schedule 3.11 hereto, Schedule 3.11 hereto
contains a true and complete list of (a) all patents, patent
applications, trademarks, trademark registrations, and trademark
applications service marks, service xxxx registrations, and
service xxxx applications, trade names, and copyrights, copyright
registrations, and copyright applications ("Intellectual
Property") owned by the Company in connection with its business
as presently conducted or as presently proposed to be conducted,
(b) all licenses or other agreements giving the Company rights in
Intellectual Property of third parties in connection with the
Company's business as presently conducted or as presently
proposed to be conducted, and (c) all licenses or other
agreements giving to third parties rights in the Intellectual
Property listed on Schedule 3.11 hereto. Except as set forth on
Schedule 3.11 hereto, the Company has good and marketable title,
free and clear of any liens or other encumbrances, to, owns or
possesses adequate and enforceable licenses or other rights to
use, all Intellectual Property and all computer software,
software programs, inventions, drawings, designs, customer lists,
proprietary know-how or information or other rights in connection
with the business of the Company as presently conducted or as
presently proposed to be conducted (hereinafter, collectively,
"Proprietary Rights"). Each item of Intellectual Property owned
by the Company and listed on Schedule 3.11 has been, to the
extent indicated in Schedule 3.11 duly registered with, filed in,
or issued by the United States Patent and Trademark Office, the
United States Copyright Office or such other domestic or foreign
government entity as indicated on Schedule 3.11, and such
registrations, filings and issuances remain in full force and
effect. Except as set forth on Schedule 3.11 hereto, to the best
knowledge of the Sellers, the operations of the business of the
Company, including but not limited to use of service marks and
copyrighted material and to products, processes, services,
methods, substances, parts or other materials currently made,
sold or used by or contemplated to be made, sold or used by the
Company in connection with its business, do not conflict with or
infringe upon any Proprietary Rights of any third party. Except
as set forth on Schedule 3.11 hereto, the Company has not granted
to any third parties exclusive licenses or options to obtain
exclusive licenses under any of the Intellectual Property owned
by the Company listed on Schedule 3.11 hereto. Except as set
forth on Schedule 3.11 hereto, the Company has given no
indemnification in connection with any patent, trademark,
copyright or other Proprietary Right as to any product made, used
or sold by any third party. Except as set forth on Schedule 3.11
hereto, there are no pending or, to the best knowledge of the
Sellers, threatened claims, proceedings or actions against the
Company or any of its licensors that could have a material
adverse effect on the Company's Proprietary Rights or that could
limit the Company's right to use any patent, trademark, trade
name, service xxxx or copyrighted material or to make, have made,
sell or use any product, process, service, method, substance,
part, or other material in connection with its business. Except
as set forth on Schedule 3.11 hereto, there is no infringement by
or claim of infringement against any third party of any
Proprietary Rights of the Company which could be likely to have a
material adverse effect on the Company's business, operations,
condition (financial or otherwise), or assets.
3.12 Compliance with Laws.
The Company has complied in all material respects, and is in
compliance in all material respects, with all federal, state,
county, and local laws, regulations, and orders applicable to its
business and has filed with the proper authorities all statements
and reports required by the laws, regulations, and orders to
which the Company or any of its properties or operations are
subject. No claim has been made by any governmental authority
(and, to the best knowledge of the Sellers, no such claim is
anticipated) to the effect that the business conducted by the
Company fails to comply, in any respect, with any law, rule,
regulation, or ordinance.
3.13 Insurance.
Attached hereto as Schedule 3.13 is a list of all policies of
fire, liability, business interruption, and other forms of
insurance and all fidelity bonds held by or applicable to the
Company at any time within the past three years, which schedule
sets forth in respect of each such policy the policy name, policy
number, carrier, term, type of coverage, deductible amount or
self-insured retention amount, limits of coverage, and annual
premium. No event relating to the Company has occurred which
will result in a retroactive upward adjustment of premiums under
any such policies or which is likely to result in any prospective
upward adjustment in such premiums. The insurance currently held
by the Company is in such amount and is of such type and scope as
is customary in the industry in which the Company is engaged.
Except as disclosed on Schedule 3.13 attached hereto, there has
been no material change in the type of insurance coverage
maintained by the Company during the past five years which has
resulted in any period during which the Company had no insurance
coverage. Excluding insurance policies which have expired and
been replaced, no insurance policy of the Company has been
cancelled within the last three years and, to the best knowledge
of the Sellers, no threat has been made to cancel any insurance
policy of the Company within such period. No pending claims made
by or on behalf of the Company under such policies have been
denied. All premiums payable with respect to such policies have
been timely paid, or adequate arrangements for payment have been
made.
3.14 Employee Benefit Matters.
(a) Benefit Plans. Attached hereto as Schedule 3.14(a) is a
list of each Homecare employee benefit plan (such employee
benefit plans being hereinafter collectively referred to as the
"Benefit Plans"). True, correct, and complete copies of such
plans and their related summary plan descriptions have been
delivered to Buyer. Schedule 3.14(a) attached hereto also sets
forth (i) the amount of any liability of the Company for payments
more than 30 days past due with respect to each Benefit Plan as
of March 31, 2002, and as of the end of each subsequent month
ending prior to the date hereof and (ii) the amount of any
liability of the Company for retiree benefits under any Benefit
Plan to current or retired employees of the Company.
(b) No ERISA Benefit Plans. Neither Homecare nor any Subsidiary
have at any time ever had an "employee benefit plan" as defined
in Section 3(1) of ERISA.
(c) Benefit Plan Compliance. There are no claims pending or, to
the best knowledge of the Sellers, threatened with respect to any
Benefit Plan other than routine claim for benefits under the
terms of such plans in the ordinary course.
(d) Employee Contracts and Arrangements. Attached hereto as
Schedule 3.14 is a complete and accurate description of each
deferred compensation, bonus or other incentive compensation,
stock option, employee stock purchase, and any other employee
benefit plan, agreement, arrangement, or commitment (including
policies concerning holidays, vacations, and salary continuation
during short absences for illness or other reasons) maintained by
the Company with respect to any individual who contributes to the
operations of the Company. A true, complete and correct copy of
each such plan, agreement, arrangement or commitment has been
delivered to Buyer.
(e) Benefit Plans Enforceable. All Benefit Plans, related trust
agreements, annuity contracts (or any other funding instruments),
employment contracts, and other plans, agreements, arrangements,
and commitments listed in any schedule to this Section 3.14 are
legally valid and binding and in full force and effect and
without default (and no event has occurred which, with the
passage of time or giving of notice, or both, would constitute
such a default).
(f) Effect of Consummation. Except as set forth on Schedule
3.14(h), the consummation of the transactions contemplated by
this Agreement will not: (i) entitle any current or former
employee of the Company or any other individual, to severance
pay, unemployment compensation or similar payment, or (ii)
otherwise accelerate the time of payment or vesting, or increase
the amount of any compensation due to any current or former
employee or other individual.
(g) WARN Act. Neither the Company nor any person with whom the
Company would be treated as an "employer" for purposes of the
Worker Adjustment and Retraining Notification Act or any similar
state law ("WARN") has incurred any liability or obligation under
WARN.
3.15 Contracts and Agreements.
Attached hereto as Schedule 3.15 is a list and brief description
of all written or oral contracts, commitments, leases, and other
agreements (including, without limitation, promissory notes, loan
agreements, and other evidences of indebtedness) to which the
Company is a party or by which the Company or its properties are
bound, pursuant to which the obligations thereunder of either
party thereto are, or are contemplated as being, in respect of
any such individual contracts, commitments, leases, or other
agreements during the term thereof, $5,000 or greater, or which
are otherwise material to the business of the Company (including,
without limitation, all mortgages, deeds of trust, security
agreements, pledge agreements, and similar agreements and
instruments and all confidentiality agreements). Each such
contract, commitment, lease and other agreement is in full force
and effect, and the Company is not and, to the best knowledge of
the Sellers, no other party thereto is in default (and no event
has occurred which, with the passage of time or the giving of
notice, or both, would constitute a default) under any such
contracts, commitments, leases, or other agreements, The Company
has not waived any right under any such contracts, commitments,
leases, or other agreements. Except as set forth on Schedule
3.15 attached hereto, the Company has not guaranteed any
obligations of any other person.
3.16 Claims and Proceedings.
Attached hereto as Schedule 3.16 is a list and description of all
claims, actions, suits, proceedings, and investigations pending
or, to the best knowledge of the Sellers, threatened against or
affecting the Company or any of its properties or assets, at law
or in equity, or before or by any court, municipal or other
governmental department, commission, board, agency, or
instrumentality. Except as set forth on Schedule 3.16 attached
hereto, none of such claims, actions, suits, proceedings, or
investigations will result in any liability or loss to the
Company which (individually or in the aggregate) is material, and
the Company has not been, and the Company is not now, subject to
any order, judgment, decree, stipulation, or consent of any
court, governmental body, or agency. No inquiry, action, or
proceeding has been asserted instituted, or, to the best
knowledge of the Sellers, threatened to restrain or prohibit the
carrying out of the transactions contemplated by this Agreement
or to challenge the validity of such transactions or any part
thereof or seeking damages on account thereof. To the best
knowledge of the Sellers, there is no basis for any such valid
claim or action or any other claims or actions which would, or
could reasonably be expected to (individually or in the
aggregate), have a material adverse effect on the business,
operations, or financial condition of the Company or result in a
material liability of the Company.
3.17 Taxes.
All federal, foreign, state, county, and local income, gross
receipts, excise, property, franchise, license, sales, use,
withholding, and other taxes (collectively, including any
liability in respect thereof as a transferee or as an indemnitor,
guarantor, surety or in a similar capacity under any contract,
arrangement, agreement, understanding or commitment (whether oral
or written) and together with additional assessments, penalties
and interest chargeable in connection therewith, "Taxes" ),
returns, reports, and declarations of estimated tax
(collectively, "Returns" ) which were required to be filed by the
Company on or before the date hereof have been filed within the
time and in the manner provided by law, and all such Returns are
true and correct and accurately reflect the Tax liabilities of
the Company. All Taxes shown to be or that otherwise would have
been due had the required Returns been timely filed, and all
other Taxes of the Company that are attributable to taxable
periods beginning on or prior to Closing, including, without
limitation, periods that end as a result of the Closing as well
as periods that continue, whether or not returns have become due
or Taxes have become due and payable as of Closing, have been
paid or adequately provided for in the Financial Statements. For
purposes of the preceding sentence, payment or adequate provision
therefor shall be measured according to the agreement of the
parties that the Sellers shall be responsible for all Taxes
attributable to periods and partial periods that end on or before
Closing and that begin before Closing and end at any time;
provided, however, that in the latter case (i) Taxes for which
the Sellers are responsible shall be Taxes that are attributable
to the portion of any incomplete period which has transpired as
of the end of the Closing Date, and (ii) Taxes attributable to
such partial period shall be determined by means of a closing of
the books and records of the Company as of the close of business
on the Closing Date, provided that exemptions, allowances or
deductions that are calculated on an annual basis (including, but
not limited to, depreciation and amortization deductions) shall
be allocated between the period ending on the Closing Date and
the period after the Closing Date in proportion to the number of
days in such period. The provisions for Taxes reflected on the
balance sheet contained in the Interim Financial Statements are
adequate to cover all of the Company's estimated Tax liabilities
for the respective periods then ended and all prior periods. The
Company has not executed any presently effective waiver or
extension of any statute of limitations against assessments and
collection of Taxes. There are no pending or threatened claims,
assessments, notices, proposals to assess, deficiencies, or
audits (collectively, "Tax Actions") with respect to any Taxes
owed or allegedly owed by the Company. To the best knowledge of
the Sellers, there is no basis for any Tax Actions. The
Company's federal income tax returns have not been audited. No
Taxes other than as set forth on the Financial Statements are
payable by the Company. There are no tax liens on any of the
assets of the Company. Proper and accurate amounts have been
withheld and remitted by the Company from and in respect of all
persons from whom it is required by applicable law to withhold
for all periods in compliance with the tax withholding provisions
of all applicable laws and regulations. Neither the Company nor
any other corporation has (i) filed an election under section
341(f) of the Internal Revenue Code of 1986, as amended (the
"Code"), that is applicable to the Company or any assets held by
the Company, (ii) agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code or any similar
provision of state, local or foreign law by reason of a change in
accounting method initiated by the Company or has any knowledge
that the Internal Revenue Service has proposed any such
adjustment or change in accounting method, or has any application
pending with any taxing authority requesting permission for any
changes in accounting methods that relate to the business or
operations of the Company, or (iii) executed or entered into a
closing agreement pursuant to Section 7121 of the Code or any
predecessor provision thereof or any similar provision of state,
local or foreign law with respect to the Company. No property
owned by the Company (x) is property required to be treated as
being owned by another Person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately prior to the enactment of the
Tax Reform Act of 1986, (y) constitutes "tax-exempt use property"
within the meaning of Section 168(h)(1) of the Code or (iii) is
"tax-exempt bond financed property" within the meaning of Section
168(g) of the Code. The Company is not subject to any private
letter ruling of the Internal Revenue Service or comparable
rulings of other taxing authorities. The Company has never made
an election to be taxed under subchapter S of the Code. The
Company is not a party to any tax sharing agreement with any
Stockholder or any other person. The Company utilizes the
accrual method of accounting for federal income tax purposes.
There is no contract, plan, or arrangement covering any person
that, individually or collectively, would give rise to the
payment of any amount that would not be deductible by the Company
by reason of Section 280G of the Code. None of the Sellers is a
"foreign person" within the meaning of Section 1445(b)(2) of the
Code.
3.18 Personnel.
Attached hereto as Schedule 3.18 is a list of the names and
annual rates of compensation of the directors and officers of the
Company and of the employees and sales representatives of the
Company. Schedule 3.18 attached hereto also summarizes the stock
option, stock purchase, bonus or other incentive compensation,
profit sharing, percentage compensation, salary continuation,
company automobile, club membership, and other like benefits, if
any, paid or payable to such directors, officers, employees, and
sales representatives during the Company's fiscal year ended
December 31, 2000 and to the date hereof. Schedule 3.18 attached
hereto also contains a brief description of all material terms of
employment agreements and confidentiality agreements to which the
Company is a party and all severance benefits which any director,
officer, employee, or sales representative of the Company is or
may be entitled to receive. The Company has delivered to Buyer
true, correct and complete copies of all such employment
agreements, confidentiality agreements, and all other agreements,
plans, and other instruments to which the Company is a party and
under which its employees and/or sales representatives are
entitled to receive benefits of any nature. There is no pending
or, to the best knowledge of the Sellers, threatened labor
dispute or union organization campaign. None of the employees or
sales representatives of the Company are represented by any labor
union or organization. The Company is in compliance in all
material respects with all federal and state laws respecting
employment and employment practices, terms and conditions of
employment, and wages and hours and is not engaged in any unfair
labor practices. There is no unfair labor practice claim against
the Company before the National Labor Relations Board or any
strike, labor dispute, work slowdown, or work stoppage pending
or, to the best knowledge of the Sellers, threatened against or
involving the Company. The Company has approximately ____
employees.
3.19 Business Relations.
No Seller knows that any customer or supplier of the Company will
cease to do business with the Company after the consummation of
the transactions contemplated hereby in the same manner as
previously conducted with the Company. The Company has not
received any notice of any disruption (including delayed
deliveries or allocations by suppliers) in the availability of
the materials or products used by the Company nor is any Seller
aware of any facts which could lead it to believe that the
business of the Company will be subject to any such material
disruption.
3.20 Accounts Receivable.
Except as set forth on Schedule 3.20 attached hereto, all of the
accounts, notes, and loans receivable that have been recorded on
the books of the Company are bona fide and represent amounts
validly due and all such accounts receivable (net of reserves set
forth on the Company's unaudited balance sheet as of the date
hereof) will be collected in full within 120 days of the Closing
Date. All of such accounts, notes, and loans receivable are free
and clear of any security interests, liens, encumbrances, or
other charges; none of such accounts, notes, or loans receivable
are subject to any offsets or claims of offset; and none of the
obligors of such accounts, notes, or loans receivable have given
notice that they will or may refuse to pay the full amount
thereof or any portion thereof.
3.21 Bank Accounts.
Attached hereto as Schedule 3.21 is a list of all banks or other
financial institutions with which the Company has an account or
maintains a safe deposit box, showing the type and account number
of each such account and safe deposit box and the names of the
persons authorized as signatories thereon or to act or deal in
connection therewith.
3.22 Agents.
Except as set forth on Schedule 3.22 attached hereto, the Company
has not designated or appointed any person or other entity to act
for it or on its behalf pursuant to any power of attorney or any
agency which is presently in effect.
3.23 Indebtedness To and From Officers, Directors, Stockholders,
and Employees.
Except as set forth in Schedule 3.23, the Company does not owe
any indebtedness to any of its officers, directors, stockholders,
employees, or sales representatives or have indebtedness owed to
it from any of its officers, directors, stockholders, employees,
or sales representatives, excluding indebtedness for travel
advances or similar advances for expenses incurred on behalf of
and in the ordinary course of business of the Company and
consistent with the Company's past practices.
3.24 Commission Sales Contracts.
Except as disclosed in Schedule 3.24 attached hereto, the Company
does not employ or have any relationship with any individual,
corporation, partnership, or other entity whose compensation from
the Company is in whole or in part determined on a commission
basis.
3.25 Certain Consents.
Except as set forth on Schedule 3.25 attached hereto, there are
no consents, waivers, or approvals (each a "Consent") required to
be executed and/or obtained from any third parties in connection
with the execution, delivery, and performance of this Agreement
and the transactions contemplated hereby, including, but not
limited to, any federal, state, local government or regulatory
agency.
3.26 Brokers.
Other than as set forth in Schedule 3.26 attached hereto, none of
the Sellers or the Company has engaged, or caused any liability
to be incurred to, any finder, broker, or sales agent in
connection with the execution, delivery, or performance of this
Agreement or the transactions contemplated hereby.
3.27 Interest in Competitors, Suppliers, and Customers.
Except as set forth on Schedule 3.27 attached hereto, no Seller,
officer, or director of the Company or any affiliate of any such
Seller, officer, or director has any ownership interest (other
than any ownership interest in a publicly-held corporation of
which the applicable Person owns, or has real or contingent
rights to own, less than five percent (5%) of any class of
outstanding securities) in any competitor, supplier, or customer
of the Company or any property used in the operation of the
business of the Company.
3.28 Inventory.
Except as set forth on Schedule 3.28 attached hereto, the
inventories shown on the balance sheet contained in the Interim
Financial Statements consist of items of a quality and quantity
usable and readily saleable in the ordinary course of business by
the Company.
3.29 Warranties.
Attached hereto as Schedule 3.29 is a list and brief description
of all warranties and guarantees made by the Company to third
parties with respect to any products sold or services rendered by
it. Except as set forth on Schedule 3.29 attached hereto, no
claims for breach of product or service warranties to customers
have been made against the Company since December 31, 1995. To
the best knowledge of the Sellers, no state of facts exists, or
event has occurred, which may form the basis of any present claim
against the Company for liability on account of any express or
implied warranty to any third party.
3.30 Customers and Suppliers.
Schedule 3.30 attached hereto contains a true, correct, and
complete list of (a) the ten largest customers (measured in
dollar volume) of the Company during each of the years ended
December 31, 2001, 2000, 1999 and 1998 and the nine months ended
September 30, 2001, (b) the ten largest suppliers (measured in
dollar volume) of the Company during each of the years ended
December 31, 2001, 2000, 1999 and 1998 and the nine months ended
September 30, 2001, and (c) with respect to each such customer
and supplier, the name and address thereof, dollar volume
involved, and nature of the relationship (including the principal
categories of products bought and sold).
3.31 Environmental Matters.
Except as described on Schedule 3.31 attached hereto, (a) the
Company possesses all permits, licenses, approvals and other
authorizations required by Environmental Laws (collectively,
"Environmental Permits") for its operations and such
Environmental Permits are valid and in good standing and, to the
best knowledge of the Sellers, there is no action pending or
threatened to revoke, modify, terminate or amend any
Environmental Permit; (b) the Company has been in the past and is
now in compliance with (i) all federal, state, local and foreign
laws, rules, regulations, codes and other legal requirements, as
well as any applicable orders, decrees, judgments or injunctions
issued, promulgated, approved or entered thereunder relating to
pollution, protection of the environment or health and safety
(collectively, "Environmental Laws") and (ii) all requirements of
Environmental Permits; (c) all emission control equipment
installed at the owned and leased real properties of the Company
(the "Real Properties") pursuant to the requirements of
Environmental Laws or Environmental Permits, is operated in
accordance with the requirements of the Environmental Laws and
the manufacturer's specifications; (d) the Company has received
no notification that it is or could be, and, to the best
knowledge of the Sellers, there is no basis for it to become,
subject to any claim, action, obligation, proceeding,
investigation or evaluation, directly or indirectly relating to
any of its current or past operations or any of its currently or
formerly owned, leased or operated properties, arising under or
pursuant to Environmental Laws or principles of common law which
address pollution or protection of the environment; and (e) the
Company has not entered into any agreement with any governmental
authority or other person by which responsibility was assumed by
the Company, either directly or indirectly, for the conduct of
any investigation or remediation of environmental conditions.
Except as described on Schedule 3.31, there are no underground
storage tanks, and there have been no releases from underground
storage tanks, located on the real properties. The Company and
the Sellers have provided Buyer with copies of all environmental,
health or safety assessments, investigations, analyses or other
reports relating to any current or former Real Properties that
are in the Company's or any Seller's possession, custody or
control.
3.32 Information Furnished.
Each of the Sellers and the Company have made available to Buyer
and its officers, attorneys, accountants, and representatives
true and correct copies of all agreements, documents, and other
items listed on the schedules to this Agreement and all books and
records of the Company and neither this Agreement, the schedules
hereto, nor any information, agreements, or document delivered to
or made available to Buyer or its officers, attorneys,
accountants, and representatives pursuant to this Agreement
contain any untrue statement of a material fact or omit any
material fact necessary to make the statements herein or therein,
as the case may be, not misleading. The Company's corporate
minute books contain all of the minutes of meetings of
stockholders, board of directors, and any committees of the board
of directors of the Company that have been held preceding the
date hereof and all of the written consents to action written in
lieu thereof.
3.33 Controlled Group Liability.
The Company is not or will not be subject to any liability on
account of any of the Sellers or the Company having been
affiliated, prior to the Closing Date, directly or indirectly,
with any other entity or person under Code Section 414, ERISA
Section 4001 or any similar foreign law.
ARTICLE 4
INDEMNIFICATION
4.1 Indemnification of Buyer and the Company.
Each of the Sellers jointly and severally agree to indemnify and
hold harmless Buyer and the Company and each officer, director,
employee, representative and affiliate of Buyer and the Company
(collectively, the "Indemnified Parties") from and against any
and all damages, losses, claims, liabilities, demands, charges,
suits, penalties, costs, fees and expenses (including court costs
and attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding and costs of any
settlement) (collectively, "Indemnified Costs") which any of the
Indemnified Parties may sustain, or to which any of the
Indemnified Parties may be subjected, arising out of (i) any
breach or default by any of the Sellers of or under any of the
representations, warranties, covenants, conditions, agreements,
or other provisions of this Agreement or any agreement or
document executed in connection herewith; (ii) environmental or
health and safety matters arising out of the use or operation of
the Company's properties (whether owned or leased) prior to the
Closing (whether or not disclosed to Buyer at or prior to the
Closing); and (iii) any Taxes owed by the Company with respect to
all taxable periods ending on or prior to the Closing Date and
the pre-Closing portion of all taxable periods beginning before
and ending after the Closing Date.
4.2 Defense of Third-Party Claims.
An Indemnified Party shall give prompt written notice to the
Sellers (each an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand, or claim by a third
party (collectively, a "third-party action") in respect of which
such Indemnified Party shall seek indemnification hereunder. Any
failure so to notify the Sellers shall not relieve such
Indemnifying Party from any liability that it may have to such
Indemnified Party under this Article 4 unless and to the extent
the failure to give such notice materially and adversely
prejudices such Indemnifying Party. The Indemnifying Parties
shall have the right to assume control of the defense of, settle,
or otherwise dispose of such third-party action and shall assume
full costs as set forth in 4.1 regardless of whether they assume
control of such defense; provided, however, that:
(a) The Indemnified Party shall be entitled, at his,
her, or its own election to participate in the defense of
such third-party action and to select the counsel used in
defense of the third-party action;
(b) The Indemnifying Parties shall obtain the prior
written approval of the Indemnified Party before entering
into or making any settlement, compromise, admission, or
acknowledgment of the validity of such third-party action or
any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or
acknowledgment, injunctive or other equitable relief would
be imposed against the Indemnified Party or if, in the
opinion of the Indemnified Party, such settlement,
compromise, admission, or acknowledgment could have a
material adverse effect on its business or, in the case of
an Indemnified Party who is a natural person, on his or her
assets or interests;
(c) No Indemnifying Party shall consent to the entry
of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by each
claimant or plaintiff to each Indemnified Party of a release
from all liability in respect of such third-party action;
and
(d) The Indemnifying Parties shall not be entitled to
control (but shall be entitled to participate at their own
expense in the defense of), and the Indemnified Party shall
be entitled to have sole control over, the defense or
settlement, compromise, admission, or acknowledgment of any
third-party action (i) as to which the Indemnifying Parties
fail to assume the defense within a reasonable length of
time or (ii) to the extent the third-party action seeks an
order, injunction, or other equitable relief against the
Indemnified Party which, if successful, would materially
adversely affect the business, operations, assets, or
financial condition of the Indemnified Party.
The parties hereto shall extend reasonable cooperation in
connection with the defense of any third-party action pursuant to
this Article 4 and, in connection therewith, shall furnish such
records, information, and testimony and attend such conferences,
discovery proceedings, hearings, trials, and appeals as may be
reasonably requested.
4.3 Direct Claims.
In any case in which an Indemnified Party seeks indemnification
hereunder which is not subject to Section 4.2 hereof because no
third-party action is involved, the Indemnified Party shall
notify the Sellers of any Indemnified Costs which it claims are
subject to indemnification under the terms hereof. The failure
of the Indemnified Party to exercise promptness in such
notification shall not amount to a waiver of such claim unless
the resulting delay materially prejudices the position of the
Indemnifying Parties with respect to such claim.
4.4 Tax Audits.
In the event of an audit of a Return of the Company with respect
to which an Indemnified Party might be entitled to
indemnification pursuant to Section 4.1 hereof, the Company shall
have the right to control the defense and conduct of any and all
such audits which may result in the assessment of additional
Taxes against the Company and any and all subsequent proceedings
in connection therewith, including appeals. Sellers shall
cooperate fully in all matters relating to any such audit or
other Tax proceeding and will execute and file any and all
consents, powers of attorney, and other documents as shall be
reasonably necessary in connection therewith.
ARTICLE 5
MISCELLANEOUS
5.1 Collateral Agreements, Amendments, and Waivers.
This Agreement (together with the documents delivered pursuant
hereto) supersedes all prior documents, understandings, and
agreements, oral or written, relating to this transaction and
constitutes the entire understanding among the parties with
respect to the subject matter hereof. Any modification or
amendment to, or waiver of, any provision of this Agreement (or
any document delivered pursuant to this Agreement unless
otherwise expressly provided therein) may be made only by an
instrument in writing executed by the party against whom
enforcement thereof is sought.
5.2 Successors and Assigns.
Neither Buyer's, the Company's, nor any Seller's rights or
obligations under this Agreement may be assigned, except that
Buyer may assign its rights and obligations to any subsidiary,
stockholder or affiliate thereof. Any assignment in violation of
the foregoing shall be null and void. Subject to the preceding
sentences of this Section 5.2, the provisions of this Agreement
(and, unless otherwise expressly provided therein, of any
document delivered pursuant to this Agreement) shall be binding
upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors, and assigns.
5.3 Expenses and Transfer Taxes.
Buyer shall pay all of its own costs and expenses incurred in
connection with this Agreement. Sellers, and not the Company,
shall pay all of the Sellers' and the Company's costs and
expenses incurred in connection with this Agreement. Buyer and
Sellers shall each bear responsibility for, and timely pay, 50%
of all applicable transfer and sales taxes, if any, due as a
result of the consummation of the transactions contemplated
hereby.
5.4 Invalid Provisions.
If any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future laws, such
provision shall be fully severable, this Agreement shall be
construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance
from this Agreement. The parties hereto shall endeavor in good
faith negotiations to replace the prohibited or unenforceable
provision with a valid provision, with the economic effect of
which comes as close as possible to that of the prohibited or
unenforceable provision.
5.5 Information and Confidentiality.
Each party hereto agrees that such party shall hold in strict
confidence all information and documents received from any other
party hereto, and if the Closing does not occur each such party
shall return to the other parties hereto within three (3)
business days, all such documents then in such receiving party's
possession without retaining copies. From and after the Closing,
the Sellers shall not use or disclose to any person, any
confidential or proprietary information regarding the Company or
Buyer; provided, however, that each party's obligations under
this Section 5.5 shall not apply to (a) any information or
document required to be disclosed by law, (b) any information or
document in the public domain, or (c) any information or document
that Buyer discloses to any potential lender to or investor in
Buyer or the Company or representative or agent of Buyer.
5.6 Waiver.
No failure or delay on the part of any party in exercising any
right, power, or privilege hereunder or under any of the
documents delivered in connection with this Agreement shall
operate as a waiver of such right, power, or privilege; nor shall
any single or partial exercise of any such right, power, or
privilege preclude any other or future exercise thereof or the
exercise of any other right, power, or privilege.
5.7 Notices.
Any notices required or permitted to be given under this
Agreement (and, unless otherwise expressly provided therein,
under any document delivered pursuant to this Agreement) shall be
given in writing and shall be deemed received (a) when actually
delivered if sent by courier or overnight delivery service (or
the next business day, if delivered after regular business hours
on a Saturday, Sunday or holiday), (b) if sent by mail, on the
third day following the date when deposited in the United States
mail, certified or registered mail, postage prepaid or (c) when
electronically confirmed if sent by facsimile, to the relevant
party as indicated below:
Buyer: The Phoenix Group Corporation
000 Xxxx Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Attn.: Xxx Xxxx
Facsimile: (000) 000-0000
With a copy to: Xxxxxx Xxxxx LLP
0000 X Xx., X.X.
Xxxxxxxxxx, X.X. 00000
Attn.: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
Any of the Sellers: Xx. Xxxxxx X. Xxxxxx, III, M.D.
0000 XX Xxxx 000
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to: Xxx Xxxxxxxx
0000 Xxxxxxxxxxxxxx Xxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Facsimile: (000)000-0000
Each party may change its address for purposes of this Section
5.7 by proper notice to the other parties.
5.8 Survival of Representations, Warranties, Covenants and Other
Provisions.
The representations and warranties in Article 3, indemnification
in Article 4 and Sections 5.5, 5.8, 5.13, 5.14 and 5.15 shall
survive the Closing.
5.9 Public Announcement.
Prior to the Closing, all press releases and other public
announcements concerning this Agreement and the transactions
contemplated hereby must be approved by Buyer and the Company
prior to publication, except with respect any releases or
announcements that may be required by applicable law, court
process or obligations pursuant to any listing agreement with any
national securities exchange or interdealer quotation system.
5.10 Waiver of Certain Rights.
Each Seller hereby waives any rights of first refusal, preemptive
rights, or other rights of any nature whatsoever which such
Seller may have to purchase any of the Shares or other capital
stock or equity securities of any nature of the Company. Each
Seller agrees that, upon the consummation of the transactions
contemplated hereby, any and all rights of such Seller with
respect to the payment of dividends (whether or not previously
earned, accrued, or declared), preferential payments, or
distributions of the Company's assets upon the liquidation,
dissolution, or merger of the Company or otherwise, or any other
right of any nature whatsoever to receive any monies or assets of
the Company as a result of such Seller's ownership of Shares,
shall terminate, and each Seller hereby waives any and all such
rights and agrees to indemnify and hold harmless the Company and
its officers, directors, employees, and affiliates from and
against any and all Indemnified Costs suffered or incurred by or
assessed against the Company or any of its officers, directors,
employees, or affiliates and arising, directly or indirectly,
from the exercise or attempted exercise of any of such rights by
any Seller. Furthermore, each Seller agrees that, immediately
prior to consummation of the transactions contemplated hereby,
each voting, stock transfer restriction, and buy-sell agreement
to which he is a party and which relates to any Shares shall be
terminated and be of no further force or effect.
5.11 Further Assurances.
At, and from time to time after, the Closing, at the request of
Buyer, but without further consideration, each Seller shall
execute and deliver such other instruments of conveyance,
assignment, transfer, and delivery and take such other action as
Buyer may reasonably request in order more effectively to
consummate the transactions contemplated hereby; provided, that
this covenant may be complied with after the Closing by the
execution of documents and instruments under powers of attorney,
unless and until revocations thereof.
5.12 No Third-Party Beneficiaries.
No person or entity not a party to this Agreement shall be deemed
to be a third-party beneficiary hereunder or entitled to any
rights hereunder.
5.13 Dispute Resolution.
Other than any claims for equitable relief, all controversies,
claims and disputes arising in connection with this Agreement
shall be settled by arbitration, conducted in Dallas, Texas in
accordance with the rules and procedures promulgated by the
American Arbitration Association, before one arbitrator. The
arbitrator shall be authorized to award the prevailing party its
reasonable expenses of such arbitration, including attorneys'
fees. The decision of the arbitrator will be final and binding
on the parties. Either party may bring an action in any court of
competent jurisdiction to compel arbitration under this Agreement
and to enforce an arbitrator's award. In the event of any court
action brought to enforce this agreement to arbitrate, the
prevailing party shall be entitled to recover its reasonable
expenses of such court action, including attorneys' fees.
5.14 Jurisdiction and Venue.
Any action or proceeding seeking to enforce any provision of, or
based on any claims for equitable relief arising out of this
Agreement may be brought against any of the parties in the courts
of Dallas County in the State of Texas or, if it has or can
acquire jurisdiction, in the United States District Court for the
Northern District of Texas, and each of the parties consents to
the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection
to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party
anywhere in the world.
5.15 Governing Law.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the
conflicts of laws principles thereof.
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement in one or more counterparts (all of which shall
constitute one and the same agreement) as of the day and year
first above written.
BUYER:
THE PHEONIX GROUP CORPORATION
By:
Name:
Title:
SELLERS:
(Executing in their capacity as
Sellers and on behalf of Homecare)
Xx. Xxxxxx X. Xxxxxx, III M.D.
Xxx Xxxxxxxx
Exhibit A
Form of Promissory Notes
Exhibit B
Form of Seller's Counsel Legal Opinion
Exhibit C
Form of Employment Agreement
