ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into this
12th day of February, 1997, by, among and between CONTINENTAL CHOICE CARE, INC.
("CCC"), a New Jersey corporation, and its subsidiaries and affiliates
identified on Schedule 1 attached hereto (each a "Seller" and collectively, the
"Sellers"), and IHS of New York, Inc., a New York corporation (the "Buyer").
WITNESSETH:
WHEREAS, Sellers operate certain hemodialysis, peritoneal
dialysis, and acute care dialysis facilities identified on Schedule 2 attached
hereto (collectively, the "Facilities"), and /or provide fee-based dialysis
nursing services, and equipment and services to the Facilities and other third
party care givers and programs (the Sellers' operations of the Facilities,
together with all nursing services, employment agencies, programs and other
activities related to the provision of dialysis services by any of the Sellers,
shall be referred to collectively as the "Business"); and
WHEREAS, each of the Sellers desires to convey, transfer and
assign to Buyer all of its respective assets directly relating to the Business
its respective operations at the Facilities, and Buyer desires to purchase such
assets from the Sellers;
WHEREAS, each of the Sellers desires to sell and transfer to
Buyer and Buyer desires to purchase and receive from the Sellers all of the
assets owned by the Sellers and which are utilized by the Sellers in or are
otherwise connected with the operation of the Facilities (except for certain
excluded assets which are described below), for the consideration and upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, FOR AND IN CONSIDERATION of the promises and
of the mutual agreements hereinafter set forth, the parties hereto agree as
follows:
Section 1. Sale of the Business; Allocation of Purchase Price:
A. Assets. Upon and subject to the terms and conditions set
forth in this Agreement, the Sellers hereby jointly and severally agree to sell
to Buyer on or before the date provided in Section 2 hereof, and Buyer agrees to
purchase from the Sellers, free and clear of all liens and encumbrances save and
except those hereinafter specifically assumed by Buyer pursuant to Section 1.C.
hereof, all of the tangible and intangible assets, business and properties owned
by the Sellers and/or utilized or otherwise connected with the operation of the
Facilities and Business including, without limitation, all right, title and
interest in and to the furniture; fixtures; equipment; vehicles; real and
personal property; inventories; disposables; medical supplies (including
pharmaceuticals and other supplies held for resale), warranties and service
contracts relating to all items transferred to Buyer pursuant hereto; contracts
for services or
products, including all acute dialysis contracts; patient
lists; any goodwill associated with the Business; prepaid expenses; transferable
licenses; utility and security deposits; and all other tangible and intangible
property currently being used by any Seller in or otherwise directly connected
with providing services at the Facilities, or elsewhere in the operation of the
Business and any asset located at any Seller's offices which relates to its
operations of the Business or at the Facilities including such assets as are
listed in detail on Exhibit 1.1 hereto. All of such assets, except for those
excluded pursuant to Section 1.B hereof, shall be referred to collectively as
the "Assets".
B. Excluded Assets. Notwithstanding the above, excluded from
the sale shall be all: cash; cash equivalents; accounts receivable; insurance
benefit assignments; books of account; Medicare claims receivable for collection
losses owned by each Seller; the executory contracts and other agreements not
specifically assumed by Buyer pursuant to Section 1.C hereof; the names
"Continental Choice Care, Inc.", "Renal Management, Inc.", and any other name
substantially similar thereto; and the assets of CCC used in or for
administration, collections, accounting and legal functions, including, but not
limited to, the assets owned by Renal Management, Inc. (the "Affiliated
Entity"). Such assets so excluded hereunder shall be referred to herein as the
"Excluded Assets", and shall not constitute part of the Assets.
C. No Liabilities. The Assets shall be sold free and clear of
all liabilities, liens, charges and encumbrances, and Buyer shall not assume any
liability of the Sellers, fixed or contingent, disclosed or undisclosed, at the
Closing or otherwise, except those identified on said Exhibit 1.2 hereto, all of
which shall be assumed by Buyer (the "Assumed Liabilities"). Except as set forth
on Exhibit 1.3, each Seller agrees to satisfy at or before the Closing, all
liabilities, indebtedness and obligations which constitute or may give rise to a
lien against the Assets other than Assumed Liabilities
D. Allocation. The purchase price for the Assets shall be
allocated among the Assets in accordance with Exhibit 1.4 attached hereto and
incorporated herein by this reference.
Section 2. The Closing:
A. The sale and purchase provided in this Agreement shall be
consummated at a closing to be held at the offices of Xxxx Xxxxxx & Xxxxx LLP,
000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 at 10:00 o'clock a.m., on the
10th business day, after compliance with all conditions precedent thereto as
specified in Section 7 hereof, whichever shall last occur. The date and event of
the sale and purchase are, respectively, hereinafter referred to as the "Closing
Date" and the "Closing".
B. On the Closing Date, the Sellers shall deliver to Buyer all
instruments and documents reasonably necessary for the transfer to Buyer of the
Assets to be sold hereunder, such documents and instruments to be in form and
substance reasonably satisfactory to counsel to the Buyer and to include the
following:
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(i) A general xxxx of sale containing general
warranties of title and which will convey free and clear from
all claims, liens and encumbrances, the Assets to be sold
pursuant to the terms hereof, except for such liens and
encumbrances to which this transfer may be subject or as may
be specifically assumed by Buyer, as specified pursuant to
Section 1.C of this Agreement.
(ii) An assignment of all intangibles owned by and
utilized by the Sellers in operation of the Business,
excluding the Excluded Assets.
(iii) Such other instruments of sale and assignment
as may be required to effectuate the sale and transfer
contemplated by this Agreement, including the consents
necessary to effectuate the transfer of any contract, right,
or license, which, by its terms, requires such consent unless
one or more specific consents are waived by Buyer on Exhibit
2.1.
At the Closing, the Sellers shall also deliver unto Buyer any releases,
subordinations or waivers of security interests against the Assets as Buyer
reasonably may require.
Section 3. Payment of Consideration for the Assets:
Subject to reduction for liabilities assumed by Buyer or
encumbering Assets acquired by Buyer as identified pursuant to Section 1.B
hereof, the consideration to be paid by Buyer to the Sellers shall be the sum of
Thirteen Million One Hundred Twenty Thousand Dollars ($13,120,000) subject to a
reduction of $5,750,000 in the event Buyer should exercise the option to acquire
fifty (50%) percent of the shares of Upper Manhattan Dialysis Center, Inc.
("UMDC") as set forth in the Acknowledgment by UMDC Stockholders in this
Agreement (the "Purchase Price"). Such consideration shall be payable at the
Closing as follows: (a) One Million Dollars ($1,000,000) to be placed in escrow
with Crummy, Del Deo, Dolan, Griffinger & Xxxxxxxxx, P.C., of Newark, New Jersey
(the "Escrow Agent") pursuant to the Escrow Agreement attached as Exhibit 3.1
hereto (the "Escrow Agreement") between Buyer, Sellers and Escrow Agent and
shall be disbursed in accordance with the terms specified in the Escrow
Agreement, and (b) the remainder to be paid in full by wire transfer to an
account designated in writing by CCC.
Section 4. Additional Agreements
A. Access to Properties and Records. From the date of
execution of this Agreement to and until the Closing, the Sellers agree to
afford to the authorized representatives of Buyer opportunity to review the
books and records of the Business for the purpose of investigating the affairs
of the Business and the completion of Buyer's due diligence investigation. From
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and after the date of execution of this Agreement and until the Closing, the
Sellers shall provide Buyer and its agents and employees with copies of all
medical, supplies, equipment, personnel, accounts receivable and other financial
records relating to patients, equipment, supplies and employees related to the
Business, subject to applicable law relating to maintaining privacy of medical
records. During such time period, Buyer shall be provided with the opportunity
to examine and/or audit the financial statements, books and records of the
Sellers relating to the Business and to investigate all aspects of the Business.
Information so obtained will be kept confidential by Buyer (except for
disclosure to Buyer's accountants, attorneys and other professionals involved in
the transaction whose conduct in complying with the confidentiality provisions
hereof shall be the responsibility of Buyer) prior to Closing.
B. Exclusive Dealings. From the date of execution of this
Agreement to and until the earlier of (i) Closing, or (ii) the Termination of
this Agreement pursuant to Section 14.A hereof, no Seller shall directly or
indirectly, nor shall it authorize or permit any of its directors, officers,
employees, affiliates, attorneys, accountants, or other representatives or
agents to (i) solicit or encourage submission of any proposal or offer to
acquire any of the Facilities, or, (ii) unless it is advised in writing by
outside legal counsel experienced in representing public corporations that
failure to do so would constitute a breach of fiduciary duty and such written
advice is delivered to Buyer, (a) participate in any discussion or negotiations
regarding any proposal or offer to acquire the Facilities; (b) furnish to any
person other than Buyer, information with respect to the acquisition of the
Facilities; or (c) cooperate in any way with or assist or participate in any
proposal or offer from any person other than Buyer to acquire the Facilities;
and Seller shall give Buyer prompt written notice of any other offer or other
proposal received regarding any acquisition of the Facilities, including the
terms thereof.
C. Medicare Cost Reports. Each Seller shall promptly prepare,
submit to Buyer for its review and file Medicare cost reports for the Facilities
for all periods up to and including the Closing Date within the time provided by
applicable law and regulations.
D. Proxy Statement. CCC will prepare and file a preliminary
Proxy Statement with the Securities and Exchange Commission ("SEC") as soon as
practicable after the date hereof, and will use its best efforts to respond to
the comments of the SEC in connection therewith. Promptly after receipt of
comments from the SEC, CCC will cause the definitive Proxy Statement to be
mailed to the stockholders of CCC in compliance with SEC Regulations and, if
necessary, after the definitive Proxy Statement shall have been so mailed,
promptly circulate amended, supplemental or supplemented proxy material and, if
required in connection therewith, resolicit proxies. Buyer will furnish CCC with
such information as the parties may agree is necessary or advisable for the
Proxy Statement, and any other statement or applications made by or on behalf of
Buyer or the Sellers to any public, governmental or regulatory body in
connection with the transaction contemplated by this Agreement and the other
transactions contemplated by this Agreement. In connection therewith:
(i) The Sellers' jointly and severally shall, without
limitation as to time, indemnify and hold harmless
the Buyer and its officers, directors, agents and
employees, to the fullest extent lawful, from and
against any and all losses, claims, damages,
liabilities, costs (including, without limitation,
costs of preparation and reasonable attorneys' fees)
and expenses, as incurred, arising out of or based
upon any untrue or alleged untrue
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statementof a material fact contained in the Proxy
Statement, or any communication issued or made with
respect to the CCC Stockholder's Meeting (as defined
in Section 4.E below), or in any amendment or
supplement thereto, or arising out of or based upon
any omission or alleged omission of a material fact
required to be stated therein or necessary to make
the statements therein not misleading, except insofar
as the same are based upon information furnished in
writing to the Sellers by the Buyer; and
(ii) The Buyer shall, without limitation as to time,
indemnify and hold harmless CCC and its officers,
directors, agents and employees, to the fullest
extent lawful, from and against any and all losses,
claims, damages, liabilities, costs (including,
without limitation, costs of preparation and
reasonable attorneys' fees) and expenses, as
incurred, arising out of or based upon any untrue or
alleged untrue statement of a material fact contained
in the Proxy Statement, or any communication issued
or made with respect to the CCC Stockholder's
Meeting, or in any amendment or supplement thereto,
or arising out of or based upon any omission or
alleged omission of a material fact required to be
stated therein or necessary to make the statements
therein not misleading, insofar as the same are based
upon information furnished in writing to the Sellers
by, and were approved in writing by, the Buyer.
E. Stockholder Approval. CCC shall promptly call, give notice
of, convene, and hold a meeting of its stockholders (the "CCC Stockholders'
Meeting) for the purpose of voting upon this Agreement, and CCC agrees that this
Agreement and the transactions described herein shall be submitted at the CCC
Stockholders' Meeting. The CCC Stockholders' Meeting shall be held as soon as
permissible and practicable following the date upon which the Proxy Statement is
distributed. CCC agrees that the Board of Directors of CCC will recommend that
its stockholders adopt and approve the execution, delivery and performance of
this Agreement, unless it is advised in writing by outside legal counsel
experienced in representing public corporations that to do so would constitute a
breach of fiduciary duty, and such written advice is delivered to Buyer.
F. Agreement to Vote for Transaction. The Voting Agreement in
form attached hereto as Exhibit 4.1 in favor of Buyer will be executed by all
parties named therein upon execution of this Agreement. CCC further agrees that
it will vote or cause to be voted all shares directly or indirectly owned by CCC
in the other Sellers in favor of the transactions contemplated by this
Agreement.
G. Each of Sellers and Buyer covenant and agree to execute and
deliver any and all documents to be executed and delivered at the Closing, to
satisfy all conditions to Closing which are solely within the power of such
party and to use reasonable best efforts to satisfy all conditions to Closing
which are within the power of any third party.
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X. Xxxxxxx covenant to complete and deliver to Buyer by
February 23, 1997 all schedules, exhibits and due diligence materials.
Section 5. Representations and Warranties of the Buyer:
A. Organization/ Authorization. Buyer represents and
warrants unto the Sellers that the Buyer is a corporation duly
organized, validly existing, and in good standing under the
laws of the State of New York, that the purchase of the Assets
pursuant to this Agreement, and the execution, delivery and
performance of any agreements required to be executed,
delivered and performed by the Buyer pursuant to this
Agreement hereunder do not violate any agreement to which the
Buyer is a party, or any law, rule, order, or judgment by
which Buyer is bound, and are enforceable in accordance with
their terms, and that the execution and delivery of such
agreements, and the performance by Buyer of the remaining
transactions specified herein or in the schedules, exhibits or
documents appended hereto have been duly authorized by the
Board of Directors of the Buyer, and the officers of the Buyer
who execute such documents have been duly authorized to do so.
B. Financial Resources. Buyer has, or will have at
the Closing, sufficient financial resources to close the
transaction described herein on the Closing Date, assuming
that Sellers are not in breach hereunder and all conditions
for Closing have been fulfilled. Buyer will deliver to Seller
on or before February 14, 1997 a letter from International
Health Specialists, Inc. addressed to Seller confirming the
foregoing in a form reasonably satisfactory to Seller.
C. Licensing. Buyer has no knowledge of any fact or
circumstance which would have a material adverse affect on its
ability to secure the state or federal authorizations, permits
or licenses as conditions of Closing.
Section 6. Representations and Warranties of Sellers:
The Sellers, jointly and severally, represent and warrant
unto, and covenant with, Buyer that:
A. Organization\Authorization. Each of the Sellers is
a corporation which is duly organized, validly existing and in
good standing under the laws of the state of its organization,
as specified in Schedule 1. Other than the Affiliated Entity,
none of the Sellers have any direct or indirect interest in
any subsidiary, corporation, partnership, limited liability
company, joint venture, association or business enterprise
otherwise involved with the Business except for that being
transferred hereunder. Except for the vote to be taken at the
meeting of the Board of Directors and the CCC Stockholder's
Meeting, the execution and delivery by
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the Sellers of this Agreement, and the execution and delivery
by the Sellers of all agreements required to be executed and
delivered by them pursuant to this Agreement, and the
consummation of the transactions contemplated hereby, have all
been duly authorized by all required or necessary corporate
action. The execution and delivery by the Sellers of all
agreements required to be executed and delivered by them
pursuant to this Agreement and the consummation of the
transactions contemplated hereby do not violate, result in the
breach of, or conflict with any agreement to which the
Sellers, or any one or more of them, is a party or by which
the Sellers, or any one or more of them, is or may be bound
(except for consents or approvals to be delivered at the
Closing and listed on Exhibit 6.0 attached hereto); the terms
of any court judgment, rule or order by which the Sellers, or
any one or more of them, is bound; or any of the Sellers'
organizational documents.
B. Financial Statements. Exhibit 6.1 attached hereto
contains: (i) the audited individual balance sheets of Upper
Manhattan Dialysis Center, Inc. ("UMDC"), National Nephrology
Foundation ("NNF") and CCC and the unaudited balance sheets of
all other Sellers except Alpha Administration Corp. who are
subject to consolidation, each as of December 31, 1994, and
December 31, 1995 and Sellers will further provide the
December 31, 1996 balance sheets of such Sellers as they
become available; (ii) the audited income statement and
statement of changes in financial position of each of UMDC,
NNF and CCC and the unaudited income statement and statement
of changes in financial position of the other Sellers except
Alpha Administration Corp., for the periods ending on December
31, 1994 and December 31, 1995, and Sellers will further
provide the audited income statements and changes in financial
position of such Sellers as they become available; (iii) the
unaudited individual balance sheets of each of the Sellers and
the unaudited consolidated balance sheets of all the Sellers
who are subject to consolidation as of September 30, 1996, and
(iv) the unaudited income statement and statement of changes
in financial position of each of the Sellers and the unaudited
consolidated income statement and statement of changes in
financial position of the Sellers, for the period ending on
September 30, 1996 (collectively, the "Financial Statements").
Except for the lack of notes to, and year-end adjustments not
reflected in, the unaudited statements, all of the Financial
Statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a basis
consistent with that of the preceding years. Each of the
Financial Statements is in accordance with the books and
records of the applicable Seller, and fairly presents the
financial condition of such Seller at the dates and the
results of its operations for the periods described therein.
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Except as and to the extent reflected or reserved against in
the Financial Statements, no Seller has any debts, liabilities
or obligations of any nature, whether accrued, absolute,
contingent, primary or secondary, direct or indirect (by
guaranties, surety contracts, indemnities or otherwise), or
otherwise, and whether due or to become due (including bonds
posted and guaranties given), other than obligations and
liabilities incurred since December 31, 1995 in the ordinary
course of the Seller's business.
C. Assets. Exhibit 1.1 contains a complete and
accurate list, arranged by Seller, identifying and specifying
the location, and the direct owner thereof, of all tangible
Assets of each Seller or used by any Seller in the operation
of the Business, and all warranties related thereto. Each of
the Sellers owns and at the Closing will own its respective
Assets free and clear of all claims, liens, security interests
and encumbrances, except for liens to be discharged or paid
off at or before the Closing, those listed on Exhibit 1.3, or
for those to be specifically assumed by Buyer at the Closing
pursuant to Section 1.C of this Agreement. All of the Assets
are now, and as of the Closing will be: (i) in reasonable
operating condition and repair (except for those assets
designated on Exhibit 1.1 as being retained solely for use as
spare parts), (ii) fit for the purpose for which they are
used, and (iii) where used or retained for purposes other than
spare parts, maintained consistently in accordance with the
manufacturer's recommendations. Except as specifically set
forth in Exhibit 6.2, to best of each and every Sellers
knowledge, the Assets and the use thereof by the Sellers in
the Business complies with all applicable governmental laws or
regulations, and there are no adverse circumstances or
conditions that may interfere with Buyer's use of the Assets
in the conduct of the Business immediately after the Closing.
D. Employees. Attached to this Agreement as Exhibit
6.3 is a list of all employees of each Seller who are involved
with the Business, the current compensation of such employee,
and Sellers will supply the date of hire of each such person
on or before February 23, 1997. Except as set forth in such
exhibit, no Seller has a written employment agreement with any
employee, and no Seller is a party to any union contract or
any qualified or nonqualified pension, profit-sharing, or
similar retirement or employee benefit plan, or any other
compensation arrangement.
E. Inventory. The inventory of Sellers consists, and
at the Closing will consist, of items of a quality and
quantity useable in the ordinary course of the Business and is
no less inventory than necessary to conduct the Business for
fourteen (14) business days.
F. Conduct in the Ordinary Course of Business.
Between the date of this Agreement and the Closing, each
Seller will operate and maintain the Business in the usual
course, will take no corporate action out of the ordinary, and
will specifically refrain from disposing of any Assets (other
than Excluded Assets); increasing the compensation of any of
its employees who are to be terminated by Sellers pursuant
hereto; creating any liens; incurring any
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indebtedness for borrowed money; entering into, amending or
renewing any contracts; entering into any contracts to
purchase supplies; or making any unusual payments or
distributions to anyone; or entering into other transactions,
other than such of these enumerated actions as may arise in
the normal and usual course of business as conducted on a
day-to-day basis or as may otherwise be approved in writing by
Buyer. Notwithstanding the foregoing, Buyer acknowledges and
approves the payment for and financing(if desirable) of the
dialysis units obtained since July 1996 listed on Exhibit 6.9
hereto. The salary and fringe benefit package of new employees
of the Business (if other than consistent with past
practices), and the identity of and the arrangement with any
medical director must be approved in writing by Buyer.
G. Compliance with Laws. That, except as disclosed on
Exhibit 6.4 hereto, the Sellers' operation of the Business as
of this date is, and as of the Closing Date will be in
compliance with all applicable laws, rules, and regulations of
the city, county, state, and federal governments including
without limitation, all applicable health, safety, pollution,
equal opportunity (including affirmative action compliance),
and ERISA laws or regulations. None of the Sellers is a party
to any administrative proceeding before any state Department
of Public Health Services or any similar agency, or any other
state or federal agency which governs the Business or the
operation and conduct of the Business, nor is any
administrative order pending as to any such agency. All
permits, licenses, accreditations, consents, approvals,
franchises, certificates of need, certifications, and other
authorizations and the like (the "Licenses", including,
without limitation, the licenses to operate the Facilities
issued by the New York Department of Public Health Services or
New Jersey Division of Health Services, and the Medicare
provider numbers issued by the Health Care Financing
Administration) necessary to operate the Business have been
obtained by each Seller, are valid and in full force and
effect, and a list of each is attached as Exhibit 6.5 hereto.
None of the Sellers engages in any activity which would cause
revocation or suspension of any such License or the like, and
no action or proceeding looking to or contemplating the
revocation or suspension thereof is pending or threatened, nor
have any of the Sellers engaged in any activity which would
cause revocation or suspension of any such License of the
Buyer following the Closing.
H. Litigation. Except as set forth on Exhibit 6.6 to
this Agreement: (i) there are no actions, suits, proceedings
or investigations (whether or not purportedly on behalf of any
Seller) at law or in equity before any court or before any
federal, state, municipal or other governmental department,
commission, board, bureau, agency, arbitrator or
instrumentality, domestic or foreign, pending or threatened,
anticipated or contemplated against, by, or affecting any
Seller, or the transactions contemplated by this Agreement,
including, but not limited to,
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any malpractice claims; any such claims, actions,
suits, proceedings or investigations which question or
challenge the validity of this Agreement or any action taken
or to be taken by Seller pursuant to this Agreement or in
connection with the transactions contemplated hereby; or
which, if valid, would constitute or result in a breach of any
representation, warranty or agreement contained herein; and
(ii) there is no valid basis for the commencement of any such
claims, actions, suits, proceedings or investigations. Sellers
will update Exhibit 6.6 hereto, to the Closing Date to include
any litigation, proceeding, or material claim of any nature
whatsoever pending or threatened against the Sellers or any
one of them, and will as of the Closing Date represent that
none of the Sellers know or have reasonable grounds to know of
any basis for any claim, proceeding or litigation against the
Sellers or any one of them, other than the claims, proceedings
or litigations listed on Exhibit 6.6, as updated.
I. Absence of Changes. Except as set forth on Exhibit
6.7 to this Agreement and for changes in the ordinary course
of business, since December 31, 1995, there has not been:
(i) any actual, pending, threatened, anticipated or
contemplated:
(a) dispute of any kind with any customer,
client, supplier, employee, landlord,
subtenant or licensee of Seller;
(b) loss of contract rights or business
relationships of Seller, or
(c) change, occurrence or situation of any
kind, nature or description;
which, individually or in the aggregate, has resulted
in, or is reasonably likely to result in, a material
adverse change in the business, operations, earnings,
backlog, prospects, properties, assets, liabilities
(absolute, accrued, contingent or otherwise, whether
due or to become due), reserves, or condition,
financial or otherwise, of Seller;
(ii) any material transfer of, or lien or other
encumbrance of any nature whatsoever placed on or
against any of Seller's property or assets used in
the conduct of the Business; or
(iii) any material change in the business or
commercial practices customarily followed by Seller.
Seller knows of no impending loss of customers, suppliers or
employees of Seller that might have a material adverse effect
on the Business, or which might prevent Buyer from carrying on
such Business in substantially the same manner in which it is
carried on at the date of this Agreement.
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J. Taxes. Except as disclosed in Exhibit 6.8 hereto:
(i) all returns for taxes, including but not limited to,
income, sales, use, franchise, excise, property and employment
taxes, whether required by any federal, state, or other
governmental authority, which are due as of the date hereof
for the periods up to and including the date hereof have been,
and those which are due as of the Closing Date for periods up
to and including the Closing Date will be, duly prepared and
filed in good faith by the Sellers, or extensions for filings
have been obtained from the appropriate taxing authorities
within the prescribed time frames for obtaining extensions;
(ii) copies of such returns for the last three completed
fiscal years have been provided to Buyer, and all taxes of any
kind for which the Sellers are liable have been paid or
reserves have been taken and will be preserved therefor; and
(iii) there are no pending tax audits or controversies of the
Sellers before any state or governmental authority. A complete
listing of the tax returns whose filings have been extended is
found on Exhibit 6.8. A copy of any tax return whose filing
has been extended shall be provided to Buyer when such returns
are filed with the appropriate governmental agencies.
K. Material Agreements. Exhibit 6.9 lists (each
identified to an individual Seller) all leases of real and
personal property, employment agreements not specifically
detailed in Exhibit 6.3 hereto, service agreements,
maintenance agreements, medical director agreements,
agreements for acute dialysis, hemodialysis and peritoneal
dialysis services, agreements for the sale or purchase of
supplies, services and other goods, and all other material
contracts relating to the Business to which the Sellers, or
any one or more of them, are a party or by which the Sellers,
or any one or more of them, may be bound in excess of $5,000.
Complete copies of such documents have been delivered to
Buyer. The obligations of the Sellers under each of the
executory contracts relating to the Business to which the
Sellers, or any one or more of them, are a party or may be
bound are current, and none of the Sellers is in default in
performance of the obligations to be performed by Sellers
under such contracts so listed in such exhibit, and none of
the Sellers has received notice of intention to terminate any
such agreement pursuant to the termination rights provided
therein and/or of any alleged default on behalf of Sellers
under any such contract nor are the Sellers aware of any act
or omission on behalf of any of the Sellers or any event which
with the passage of time will entitle any party to any such
contract other than the Sellers to declare a default
thereunder or to entitle such party to terminate any such
contract.
L. ESRD Programs\Surveys. Each of the Facilities is
certified under the conditions of coverage and participates in
the federal Medicare program as an end-stage renal disease
("ESRD") facility providing ESRD services. Each Seller has
delivered to Buyer complete and correct copies of all surveys,
reports or deficiency notices concerning the Facilities by the
Medicare program, the state
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survey agency, the Medicaid program or the Kidney Disease
Program; and all corrective actions set forth in any filing by
the Sellers in response to deficiencies identified by: (i) the
New York or New Jersey Departments of Health, or (ii) the
federal Department of Health and Human Services, in any
monitoring survey of any Seller (all of which have been
delivered to Buyer), have been accepted by such agency and
completed by such Seller, and that, to the best knowledge of
Sellers, no further deficiencies exist. Except as set forth on
Exhibit 6.10 hereto, the Medicare certification of each
Facility is in full force and effect and no violation of the
conditions and standards of coverage, participation or
certification with respect to the Facilities exists and, to
each Seller's knowledge, no event or circumstances exist which
with the giving of notice or passage of time, or both, would
constitute a material violation thereof such as to have an
adverse effect upon the use or operation of the Assets or
Business by the Buyer following the Closing.
M. No Falsehoods or Omissions. No statement made by
any Seller in any certificate, document, list or exhibit
furnished to Buyer in connection with this transaction
contains or will contain any untrue statement of a material
fact, or omits to state or will omit to state a material fact
necessary to make the statement contained herein or therein in
light of the circumstances under which it was made not
misleading. True and correct copies of all documents referred
to on the exhibits hereto as currently in effect, have been
delivered to Buyer.
N. Insurances. Exhibit 6.11(a) is a list and brief
description of all policies or binders of fire, liability,
product liability, worker's compensation, health and other
forms of insurance policies or binders currently in force
insuring the Sellers against risks which will remain in full
force and effect (or will be replaced by substantially similar
coverage) at least through the Closing Date. Exhibit 6.11(b)
contains a description of all malpractice liability insurance
policies of the Sellers. Except as set forth on Exhibit
6.11(c), (i) no Seller has ever filed a written application
for any insurance coverage which has been denied by an
insurance agency or carrier and (ii) each Seller has been
continuously insured for professional malpractice claims for
the lesser of (a) the period from the inception of such Seller
until the date hereof or (b) the past seven (7) years. Exhibit
6.11(c) also sets forth a list of all claims for any insured
loss in excess of $5,000 per occurrence, filed by such Seller
during the three (3) year period immediately preceding the
Closing Date, including but not limited to, worker's
compensation, general liability, environmental liability and
professional malpractice liability claims. None of the Sellers
is in material default with respect to any provision contained
in any such policy and none of the Sellers has failed to give
any notice or present any claim under any such policy in due
and timely fashion.
12
O. [Reserved]
P. Patient List. Attached Exhibit 6.12 is a complete
and correct list ("Patient List") of all ESRD in center and
home based patients, and all other patients receiving dialysis
services and supplies from the Sellers as of the date thereon,
which date is no earlier than February 1, 1997.
Q. Physician List. Attached Exhibit 6.13 is a
complete and correct list ("Physician List") of all physicians
or groups of physicians ("Physicians") attending or admitting
patients to the Facilities, indicating the number of patients
appearing on the Patient List admitted by each, and the
Facility to which they are admitted.
Section 7. Conditions to Obligations of Buyer:
The obligations of Buyer under this Agreement are subject to
the fulfillment, on or before the Closing Date, of each of the following
conditions, unless such are waived by Buyer in writing:
A. The Sellers shall at Closing on the Closing Date
deliver to Buyer UCC and lien searches dated within five (5)
days of the Closing Date in which all liens against any Seller
or the Business are listed.
B. All of the terms, covenants, and conditions of
this Agreement to be complied with or performed by the Sellers
at or before the Closing Date shall have been duly complied
with and performed by them, and all representations and
warranties of the Sellers made in or pursuant to this
Agreement shall be true, accurate and complete as of the
Closing Date as if made on and as of that date; and each
Seller shall have delivered to Buyer their certificates to the
foregoing effect.
C. All executory contracts being assumed by Buyer
shall have been assigned by the Sellers to Buyer unless
otherwise agreed.
D. Each Seller shall have obtained at its sole
expense such written consents and/or approvals as may be
required by Buyer from all creditors, lessors, or other
persons in form and content reasonably satisfactory to Buyer
that the proposed sale of the Assets, including the assignment
of contracts, will not result in a breach, declaration of
default, or otherwise adversely affect any debt, lease,
agreement or other obligation or contract or liability of such
Seller except as may be waived in writing by Buyer.
13
E. That the Sellers shall deliver to the Buyer at
Closing an opinion of counsel to the Sellers in form and
substance satisfactory to counsel for Buyer, to the effect
that, as of the Closing:
(i) Each Seller is a corporation duly
organized, validly existing and in good standing
under the laws of the state of its incorporation;
(ii) Each Seller has full corporate power to
carry out the transactions provided for in this
Agreement; all corporate and other proceedings
required to be taken by or on the part of each Seller
to authorize it to execute and deliver this Agreement
and to consummate the transactions contemplated by
this Agreement have been duly and validly taken; and
this Agreement has been duly and validly authorized,
executed, and delivered by each Seller and is a
legally binding obligation of each Seller enforceable
in accordance with its terms;
(iii) Neither the sale of the Assets nor the
transactions contemplated by this Agreement require
compliance by any Seller with the provisions of any
statutes or regulations applicable to the transaction
contemplated by this Agreement, other than
potentially the New York or Connecticut Bulk Sales
Act; and
(iv) The consummation of this Agreement will
not (a) give rise to or cause any default under any
of the terms, conditions, or provisions of any note,
bond, mortgage, indenture, license, agreement, or any
other instrument or obligation to which any Seller is
a party or by which it or any of its properties or
assets may be bound which are known to counsel after
reasonable inquiry of the Sellers, or (b) violate any
court order, writ, injunction, or decree applicable
to any Seller or any of its properties or assets.
Such opinion of counsel may take exception for or be subject
to matters such as the rights of creditors generally and the
discretion of a court to grant equitable remedies, and once
prepared shall be appended hereto as Exhibit 7.1 to this
Agreement.
F. Alpha Administration Corp. shall have received all
necessary approvals for, and closed its acquisition of, all of
the assets of the South Bronx Kidney Center, on substantially
the terms set forth in the pleadings filed in the December
1996 action entitled In the Matter of the Application of
National Nephrology Foundation, Inc., in the Supreme Court of
the State of New York; and all assets to be acquired thereby
have been listed on Exhibit 1.1 hereof, and otherwise comply
with all of the representations and warranties of Sellers
herein contained.
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G. The transactions contemplated hereby shall have
been approved by all applicable federal, state and other
governmental authorities and agencies which are required to
approve same including, but not limited to, any approvals (or
expiration of applicable waiting periods) required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976. The
parties agree to prepare in good faith and to prosecute with
due diligence all applications for the governmental approvals.
H. The execution and consummation of this Agreement,
the representations, warranties and covenants of Sellers
herein contained, and the transactions described herein shall
have been fully ratified, adopted and approved by the Board of
Directors and the Stockholders of UMDC, and this document
shall have been duly executed on behalf of UMDC by March 31,
1997 or Buyer shall have exercised the option on UMDC shares
set forth at the foot of this Agreement.
I. The execution and consummation of this Agreement,
the representations, warranties and covenants of Sellers
herein contained, and the transactions described herein shall
have been fully ratified, adopted and approved by CCC's Board
of Directors by February 23, 1997 and by the Stockholders of
CCC. By February 24, 1997, CCC shall certify that its Board
has approved the execution and delivery of this Agreement and
all Schedules, Exhibits and due diligence materials required
of Sellers shall have been delivered to Buyer.
J. CCC shall have entered into a Consulting Agreement
with Buyer agreeing to provide the services of certain
officers of Seller identified therein in the form attached
hereto as Exhibit 7.2, and each of the Sellers and the
Affiliated Entity, and the respective executive officers,
directors and affiliates of each, shall have entered into a
Non-Competition Agreement with Buyer in the form attached
hereto as Exhibit 7.3.
K. The Sellers shall have purchased tail insurance
for extension of protection afforded by the current policies
of liability insurance for at least a five year period as
provided in Section 12.C herein, or shall have demonstrated to
Buyer's satisfaction in its sole discretion, that the policies
they have in place will provide coverage in all respects
identical to that which would be provided by such tail
insurance.
L. Effective at Closing, (i) all employees of the
Facilities and the Business designated by Buyer shall have
been terminated by the Sellers and hired by Buyer (with the
exception of the administrative employees of CCC's corporate
office), (ii) all accrued salary, sick leave and vacation time
shall be paid to such employees by the Sellers, and (iii) all
employee benefit plans shall have been
15
treated by Sellers as partially terminated with respect to
such employees, unless such plans are fully terminated by the
Sellers.
M. On or before the Closing Date, the Buyer shall
have been duly licensed in the States of New York, New Jersey
and Connecticut, as applicable, to operate the Facilities and
the Business as it is operated by the Sellers on the date
hereof, and Buyer shall have obtained or applied for a
Medicare provider number for the Facilities and all other
necessary accreditations, authorizations, consents and
approvals necessary to operate the Business, the Buyer
agreeing to use reasonable best efforts with respect to
obtaining the same.
N. On or before the Closing, Buyer shall have entered
into an agreement with one or more nephrologist(s) to act as
medical director(s) of each of the Facilities; provided
however that this condition shall be deemed to have been met
unless Buyer shall have failed to enter into agreements with
such nephrologists as it, in its sole discretion, has
identified as candidates for such position(s), after having
made offers of compensation and other terms of employment
reasonably similar to those enjoyed by individuals currently
in Buyer's employ in similar positions; and provided further
that if Buyer determines to offer any of Sellers' existing
medical directors a continuing position (and makes no other
offer) the condition will not be deemed to have been met if
Buyer fails to offer such physician compensation at least
equal to that which he has been receiving as of December 31,
1996.
O. Buyer shall have completed its investigation and
examination of the ownership, condition, and nature of the
Assets; the financial condition and operations of each
Facility; and the business, affairs, books and records of each
of the Sellers in a "due diligence investigation"; and the
results thereof shall have been deemed acceptable by Buyer in
its sole discretion with respect to each Seller. Such
condition shall be deemed satisfied unless Buyer shall notify
Sellers in writing on or before March 15, 1997, or such later
date as may be two weeks following the receipt by Buyer of the
December 31, 1996 edition of the Financial Statements, as to
the matters which are not acceptable, or as to which matters
have not been fully disclosed.
Section 8. Conditions to Obligations of Sellers:
All obligations of the Sellers under this Agreement are
subject to the fulfillment, on or before the Closing Date, of each of the
following conditions, any or all of which may be waived by the Sellers:
16
A. All the terms, conditions, and covenants of this
Agreement to be complied with and performed by Buyer at or
before the Closing Date shall have been duly complied with and
performed.
B. Buyer shall have delivered to the Sellers at
Closing an opinion of its counsel that as of the Closing Date:
(i) The Buyer is a corporation duly
organized, validly existing and in good standing
under the laws of the state of its incorporation;
(ii) The Buyer has full corporate power to
carry out the transactions provided for in this
Agreement; all corporate and other proceedings
required to be taken by or on the part of Buyer to
authorize it to execute and deliver this Agreement
and to consummate the transactions contemplated by
this Agreement have been duly and validly taken; and
this Agreement has been duly and validly authorized,
executed, and delivered by Buyer and is a legally
binding obligation of Buyer enforceable in accordance
with its terms; and
(iii) The execution of this Agreement, and
the exhibits thereto, and such additional documents
required to be executed or delivered by the Buyer and
the consummation of the transaction contemplated
hereby do not violate any agreement to which the
Buyer is a party which is known to counsel after
reasonable inquiry of the Buyer, or any court order,
injunction or decree applicable to Buyer, and are
enforceable in accordance with their terms.
Such opinion of counsel may take exception for or be subject
to matters such as the rights of creditors generally and the
discretion of a court to grant equitable remedies, and once
prepared shall be appended hereto as Exhibit 8.1 to this
Agreement.
C. Buyer shall have assumed the obligations of the
Sellers under the contracts it agrees to assume as identified
on Exhibit 1.2 hereof, subject to the required consents and
approvals of third parties disclosed herein.
D. The execution and consummation of this Agreement,
the representations, warranties and covenants of Sellers
herein contained, and the transactions described herein shall
have been fully ratified, adopted and approved by the Board of
Directors and the Stockholders of UMDC, and this document
shall have been duly executed on behalf of UMDC or Buyer shall
have exercised the option on UMDC shares set forth at the foot
of this Agreement.
17
E. Buyer shall have entered into a Consulting
Agreement with CCC and the individuals named therein, agreeing
to provide the services of certain officers of Seller
identified therein in the form attached hereto as Exhibit 7.2.
F. The execution and consummation of this Agreement,
the representations, warranties and covenants of Sellers
herein contained, and the transactions described herein shall
have been fully ratified, adopted and approved by CCC's Board
of Directors by February 23, 1997 and by the Stockholders of
CCC
G. The transactions contemplated hereby shall have
been approved by all applicable federal, state and other
governmental authorities and agencies which are required to
approve same including, but not limited to, any approvals (or
expiration of applicable waiting periods) required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976. The
parties agree to prepare in good faith and to prosecute with
due diligence all applications for the governmental approvals.
Section 9. Risk of Loss:
It is understood and agreed that pending the Closing and the
parties' delivery of the instruments of transfer referred to in Section 2
hereof, the Buyer does not assume and shall not in any event be responsible or
liable for, any loss or damage to any of the properties and assets to be
transferred hereunder from any cause whatsoever, whether by fire, casualty or
otherwise. In the event any such loss occurs prior to the Closing, or in the
event any Facility is closed or interrupted by reason of any event not in the
ordinary course of its business, the Buyer shall have the right to terminate
this Agreement on written notice to Sellers, or to make an equitable adjustment
to the Purchase Price reasonably acceptable to Seller with respect to such loss,
damage or action. All risk of loss after the Closing shall be borne by Buyer.
Section 10. Adjustments; Prorations:
A. The Purchase Price shall be adjusted dollar for dollar for
any Assumed Liabilities, other than (i) real estate leases and (ii) except as
set forth on Exhibit 1.3.
B. Any liability, accrued or unaccrued, for taxes from
operation of the Facilities or the Business prior to Closing shall be discharged
by the Sellers promptly and in their entirety. Any taxes from operation of the
Facilities or the Business after the Closing Date shall be discharged by the
Buyer in their entirety. For this purpose, "taxes" shall include federal income
taxes, and any and all business related taxes including, but not limited to,
franchise and excise taxes, sales and use tax, gross receipt taxes, state and
federal employee income tax withholding, Federal Social Security Tax (FICA)
withholding, employment taxes, ad valorem personal property taxes, and business
or license fees or any other tax applicable to the Facilities or the Business.
18
In no event shall Buyer be liable for income, transfer, sales, use and other
taxes arising from or in connection with the consummation of the transactions
contemplated hereby.
Section 11. Indemnification:
A. The Sellers jointly and severally agree to indemnify Buyer
from and with respect to any and all loss, liability, or additional expense,
including reasonable attorney's fees, as Buyer may incur from and with respect
to any material misrepresentation made herein, or in any schedule, exhibit or
other document executed by the Sellers or delivered by them pursuant to this
Agreement, or for any material breach of any Seller's warranties or covenants
imposed herein upon the Sellers or made herein by the Sellers, whether due to an
undisclosed or understated liability of the Sellers, or from any action or
inaction of the Sellers on or prior to the Closing Date, including specifically,
but not limited to, any and all expenses, costs and liabilities that may arise
as a result of the failure of the parties to comply with the Bulk Sales Acts of
the States of New York, New Jersey or Connecticut, if applicable, and to
indemnify and hold harmless Buyer and its affiliates from any and all expenses,
costs and for liabilities associated therewith.
B. The Buyer agrees to indemnify the Sellers from and with
respect to any and all loss, liability, or additional expense, including
reasonable attorney's fees, as any one or more of them may incur from and with
respect to any material misrepresentation made herein, or in any schedule,
exhibit or other document executed by Buyer or delivered by it pursuant to this
Agreement, or for any material breach of Buyer's warranties or covenants imposed
herein upon the Buyer or made herein by the Buyer, whether due to the failure of
Buyer to perform an executory contract assumed by the Buyer, or from any action
or inaction of the Buyer after the Closing Date, or otherwise.
C. The rights of any party seeking recourse under the
indemnification provisions of this Agreement must be asserted by filing an
action in a court of appropriate jurisdiction or by delivering a written notice
of the claim for indemnification to the party from whom indemnification is
sought within two (2) years after the Closing Date, unless the claim so asserted
(i) relates to a medical malpractice claim or is attributable to loss,
liability, expenses or claims made by any federal, state or local government,
governmental agency or governmental payor for health services, in which instance
the indemnification claim must be asserted within three (3) years after the
Closing Date; or (ii) relates to the failure to pay the proper amount of taxes
(as such term is used in Section 10(B) hereof) in which instance the
indemnification claim must be asserted within three (3) years from the later of:
(a) the date the tax return for such tax was filed, or (b) the date the tax
payment was due to be paid to an appropriate taxing authority, including any
extensions; or (iii) relates to any loss, liability or cost described in the
last sentence of Section 4.D, in which instance the indemnification claim may be
asserted within two years after the date the party claiming indemnification
receives notice of such loss, cost or liability.
D. In no event shall there be any recourse by Buyer to the
provisions for indemnification under this Agreement unless the amount of loss,
liability, or expense actually incurred by Buyer seeking to exercise the right
to indemnification under this Agreement exceeds $100,000 with all loss,
19
liability or expense (net of related insurance recovery) associated with this
Agreement. In such event the right of any party to enforce this indemnification
provision shall be all loss, liability, or expense, not just that in excess of
$100,000. Notwithstanding the above, the restrictions set forth in the preceding
two sentences shall not apply with respect to: (i) any loss, liability or
expense actually incurred which relates to: (i) any liability for taxes as such
term is used in Section 10.B. hereof; (ii) any liability or obligation to third
parties which is not specifically assumed by Buyer; or (iii) any liability, cost
or loss described in Section 4.D(i).
E. Notwithstanding the previous provisions of this Section 11,
the covenants, warranties, representations, and obligations of the parties
regarding: (i) Buyer's obligation to indemnify the Seller for the executory
contracts and agreements assumed pursuant to Section 1.B. shall survive for the
life of such contracts and/or agreements; (ii) the parties' obligations and
covenants which by the terms hereof are to be performed hereafter, shall survive
for the periods within which such performance is to occur, plus 180 days; and
(iii) Sellers' warranties and representations of title shall not expire.
Section 12. Post-Closing Covenants:
A. Cooperation. The Parties agree to cooperate with each other
in the preparation and filing of any federal, state or other governmental
reports or filings required to be filed by any of them as a result of or with
respect to the transactions contemplated hereby. Each such return, report or
filing shall be reviewed by the non-filing parties, and its truth and accuracy
confirmed, to the best of such parties' knowledge, in writing, such that the
return may be timely filed.
B. Discharge of Debts. Sellers jointly and severally agree
promptly and in due course to discharge any and all of the debts, claims, and
expenses of each Seller which relate to the Business or the Facilities and which
are not specifically assumed or agreed to be discharged by Buyer pursuant to
this Agreement. The liabilities to be discharged by the Sellers shall include
without limitation: [i] all short-term or long-term liabilities of the Sellers,
whether or not shown on the books of the Sellers as of the Closing; [ii] any
liabilities whether or not required by GAAP to be recorded on the books of the
Sellers for accrued vacation and sick pay leave, compensatory time medical
insurance benefits, qualified plan benefits and other employee-related
obligations through the Closing; [iii] all taxes which relate to the operation
of the Business by the Sellers through the Closing, including liability of the
Sellers for federal income taxes or New York, New Jersey or Connecticut
franchise and excise taxes, sales, use or other taxes for that portion of 1997
which ends with the Closing Date; [iv] liability for all sums payable to third
parties for goods or services ordered by, shipped to or received by the Sellers
at
20
or prior to the Closing; and [v] within 5 months after the Closing, all other
obligations of the Sellers of any kind whether known or unknown, except for
executory contracts, which exist as of the Closing or which arise after the
Closing and are based on any act, omission, transaction or circumstance
occurring on or before the Closing unless such liability is specifically assumed
or agreed to be discharged by Buyer pursuant to this Agreement, and any other
liability from the provision of services by the Sellers on or prior to the
Closing.
C. Tail Insurance. Each Seller shall maintain in force and
effect for five (5) years from the Closing Date the Tail Insurance Coverage
relating back five (5) years prior to the Closing Date, as defined in this
Section. Each Seller shall deliver to Buyer at the Closing and on each of the
successive anniversaries of the Closing Date a certificate of insurance
evidencing the Tail Insurance Policy. The "Tail Insurance Coverage" shall be
health care services professional liability converge with its current insurers
or a financially sound and reputable insurance company or association selected
by each Seller with limits of liability of $1,000,000 per loss and $3,000,000
annual aggregate, naming each Seller, its individual shareholders or successor
in interest, as may be appropriate, as an insured and covering the health care
services professional liability risk arising out of such Seller's operation of
the Business and the Facilities on or before the Closing Date. In the alternate,
Seller shall have demonstrated to Buyer's satisfaction in its sole discretion,
that the policies they have in place will provide coverage in all respects
identical to that which would be provided by such Tail Insurance.
D. Tax Matters. Each party will provide the other such
assistance as may be reasonably requested in connection with the preparation of
any tax return, any audit or other examination by any taxing authority, or any
judicial or administrative proceedings relating to liability for taxes, and each
will retain and provide the other with any records or information which may be
relevant to such return, audit or examination, proceedings or determination. The
party requesting assistance hereunder shall reimburse the other party for
reasonable expenses incurred in providing such assistance. Any information
obtained pursuant to this Section or pursuant to any other Section hereof
providing for the sharing of information or the review of any tax return or
other schedule relating to taxes shall be kept confidential by the parties and
shall not be used to the detriment of the other party or for the benefit of the
requesting party.
E. Records and Documents. For seven (7) years following the
Closing Date, Sellers shall grant to Buyer and its representatives, at Buyer's
request, at such reasonable times during regular business hours as may be
requested by Buyer, access to and the right to make copies of those records and
documents related to the operation of the Business, and Facilities or the Assets
prior to the Closing Date, possession of which is retained by each Seller as
Buyer may deem to be reasonably necessary or useful in regard to the Business,
the Facilities or the Assets. If during such period any Seller elects to dispose
of such records, such Seller shall first give Buyer 90 days' written notice
during which period Buyer shall have the right to take such records.
21
Section 13. Expenses:
Each party shall bear its own expenses and costs, including,
without limitation, all counsel fees and fees of finders or brokers, and
transfer taxes. Neither party knows of the existence of any person entitled to a
finders or brokers fee as a result of the negotiations relative to or
consummation of this transaction.
Section 14. Termination:
A. Any party to this Agreement may terminate this Agreement
with the prior authorization of its board of directors as provided below:
(i) the parties may terminate this Agreement by
mutual written consent at any time prior to the Closing Date;
(ii) the Buyer may terminate this Agreement by giving
written notice to the Sellers at any time prior to or at the
Closing, (a) in the event that any Seller has breached any
representation, warranty, or covenant contained in this
Agreement in any material respect, (b) if Buyer shall
determine that: (I) the transaction has become inadvisable or
impracticable by reason of the institution or threat by any
state, local or federal governmental authorities or by any
other person of material litigation or proceedings against any
of the parties hereto or any of the entities controlled by or
affiliated with such entities pertaining to or affecting the
transaction; or (II) the business or assets or financial
condition of any of the Sellers hereto individually, or in the
aggregate, has been materially and adversely affected, whether
by reason of changes or developments or operations in the
ordinary course of business since December 31, 1996, or (c) if
the Closing shall not have occurred on or before September 30,
1997, and the failure to so close relates to conditions not
met by Sellers;
(iii) the Sellers may terminate this Agreement by
giving written notice to the Buyer at any time prior to or at
the Closing: (a) in the event that Buyer has breached any
representation, warranty or covenant contained in this
Agreement in any material respect; (b) the transaction has
become inadvisable or impractical by reason of the institution
or threat by any state, local or federal governmental
authorities or by any other person of material litigation or
proceedings against any of the parties hereto or any of the
entities controlled or affiliated with such entities
pertaining to or affecting the transaction; or (c) if the
Closing shall not have occurred on or before September 30,
1997 and the reason for the failure to so close relates to
conditions not met by Buyer; or
22
(iv) notwithstanding the provisions of clauses (ii)
or (iii) hereof, either the Sellers or Buyer may terminate
this Agreement by giving written notice to the other party if
the requisite governmental approvals and licenses have not
been obtained by August 31, 1997 but not sooner, despite the
reasonable best efforts of the terminating party, unless
extended by the mutual consent of the parties.
If Buyer or Sellers asserts or assert the existence of a breach pursuant to
clauses (ii) or (iii) of this Section 14.A., the party asserting such breach
shall so notify the other party in writing. Such notice shall include a specific
statement as to the act, omission or breach which specifically sets forth the
corrective action which the party asserting such breach contends is necessary to
cure the breach, or if no such cure is possible, a statement to that effect. The
other party shall be given a period of thirty (30) days within which to cure
such alleged breach, if capable of being cured, and the closing of the
transaction shall be extended during such thirty (30) day period.
B. If any Party terminates this Agreement pursuant to Section
14.A. above, all rights and obligations of the parties hereunder shall terminate
without any liability of any party to any other party (except for any liability
of any party then in breach); provided, however that the confidentiality
provisions contained in the first sentence of Section 15 below and Section 14.C
shall survive any such termination.
C. If Buyer is not in material breach of its obligations
contained herein and if this Agreement is terminated by Buyer by reason of
Seller's breach of any representation, warranty or covenant contained in this
Agreement, or by Seller or Buyer by reason of the failure of the CCC
stockholders to adopt this Agreement or if the meeting of CCC Stockholders to
approve this Agreement is not held, and at any time on or prior to the
expiration of eighteen 18 months following termination of this Agreement, a
definitive agreement is entered into for the acquisition of all or substantially
all of the Sellers' equity or assets with a person other than Buyer, or any of
its affiliates at an aggregate purchase price in excess of the Purchase Price
contemplated in this Agreement, then CCC shall pay Buyer, upon Buyer's request,
$500,000. The Sellers acknowledge that the agreement contained in this Section
14.C are an integral part of the transactions contemplated by this Agreement and
that, without these agreements, Buyer would not enter into this Agreement.
Accordingly, if CCC fails to pay any amounts pursuant to this Section 14.C, and,
in order to obtain such payment, legal action is commenced which results in a
judgment against CCC therefor, CCC will pay the plaintiff's reasonable costs
(including reasonable attorneys' fees) in connection with such suit, together
with interest computed on any amounts determined pursuant to this Section 14.C
(computed from the date or dates incurred) at the prime rate of interest
announced from time to time by Citibank, N.A. CCC's obligations pursuant to this
Section 14.C will survive any termination of this Agreement.
Section 15. Confidentiality:
All information and documents relating to the Facilities
obtained pursuant to Buyer's due diligence investigation and not otherwise
publicly available shall at all times be
23
treated as confidential by Buyer, and shall not be disclosed to or discussed
with any third party (except Buyer's accountants, bankers, counsel, and other
advisors) or otherwise utilized for any purpose unrelated to the transactions
contemplated by this Agreement. In the event this Agreement is terminated for
any reason, all documents relating to the Sellers and the Business obtained by
Buyer from Seller in Buyer's due diligence investigation shall be promptly
returned to the Sellers.
Section 16. Miscellaneous:
A. The parties agree, after the Closing, to do, execute,
acknowledge, and deliver all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney, and assurances as may be required to consummate
the transactions contemplated hereby.
B. Subject to the terms and conditions hereof, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective administrators, successors, and assigns.
C. Any notice, request, instruction, or other document to be
given hereunder to any party shall be in writing and delivered personally or
sent by Certified United States Mail, postage prepaid, return receipt requested,
as follows:
If to the Sellers or Continental Choice Care, Inc.
a Seller: 00-X Xxxxxxxx Xxxx
X.X. Xxx 00
Xxxxxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, President
With copies to Crummy, Del Deo, Dolan, Griffinger & Xxxxxxxxx
A Professional Corporation
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
and
Continental Choice Care, Inc.
00-X Xxxxxxxx Xxxx
X.X. Xxx 00
Xxxxxxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxx, General Counsel
24
If to the Buyer: IHS of New York, Inc.
c/o International Health Specialists,
Incorporated
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, President
With a Copy to: Xxxx Xxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Any party may change its address for purposes of this paragraph
by giving notice of such change of address to the other party in the manner
herein provided for giving notice.
D. This instrument contains the entire agreement between the
parties hereto with respect to the transaction contemplated hereby and shall not
be changed or terminated except by written amendment signed by the parties
hereto.
E. All exhibits hereto are incorporated herein.
F. This Agreement is declared to have been made under the laws
of the Commonwealth of Massachusetts. Venue for resolution of any dispute
arising out of the provisions of this Agreement shall be Middlesex County,
Massachusetts.
G. This Agreement may be executed in a number of counterparts
and all counterparts executed by Buyer and the Sellers together shall constitute
one and the same Agreement.
H. Buyer may assign its rights and obligations under this
Agreement to a third party subject to Seller's approval, which shall not be
unreasonably withheld, or to an affiliate, but no such assignment shall relieve
Buyer of its liabilities hereunder.
I. This Agreement, including without limitation Section 14C
hereof, shall not be legally binding upon or effective against the parties and
shall be void ab initio unless duly authorized by the Board of Directors of CCC
on or before February 23, 1997. CCC covenants to provide Buyer with written
confirmation of such approvals within one business day after action of the Board
of Directors.
25
IN WITNESS WHEREOF, the parties have hereunto executed this
Agreement on the day and year first above written.
CONTINENTAL CHOICE CARE, INC. CONTINENTAL DIALYSIS, INC.
By: /s/Xxxxxx X. Xxxxx By: /s/Xxxxxx X. Xxxxx
Title: President Title: President
CHOICE CARE, INC. CONTINENTAL DIALYSIS OF
THE BRONX, INC.
By: /s/Xxxxxx X. Xxxxx By: /s/Xxxxxx X. Xxxxx
Title: President Title: President
CHOICE STAFFING, INC. DIALYSIS STAFFING, INC.
By: /s/Xxxxxx X. Xxxxx By: /s/Xxxxxx X. Xxxxx
Title: President Title: President
CHOICE CARE INFUSION CONTINENTAL DIALYSIS
SERVICES, INC (Delaware) OF LINDEN, INC.
By: /s/Xxxxxx X. Xxxxx By: /s/Xxxxxx X. Xxxxx
Title: President Title: President
CHOICE CARE INFUSION ALPHA ADMINISTRATION CORP.
SERVICES, INC (New York)
By: /s/Xxxxxx X. Xxxxx By: /s/Xxxxxx X. Xxxxx
Title: President Title: President
UPPER MANHATTAN DIALYSIS
CENTER, INC.
By: ____________________________
Title: ____________________________
IHS OF NEW YORK, INC.
By: /s/Xxxxxx Xxxxxxx
Title: President
ACKNOWLEDGMENT BY UMDC STOCKHOLDERS
Each of the undersigned hereby jointly and severally represent and
warrant to, and covenant and agree that with the Buyer named above, that:
(1) in the aggregate, they hold 50% of the issued and outstanding
voting stock ( the "Shares) of Upper Manhattan Dialysis
Center, Inc. ("UMDC");
(2) promptly after the execution of this document, they will
promptly and diligently commence to use their reasonable best
efforts to obtain the ratification and adoption of this
Agreement by the Board of Directors and Stockholders of UMDC;
(3) each will vote in favor of such ratification and adoption at
all meetings at which such issue is presented; and
(4) that, at the request of Buyer, but conditioned upon the
consummation of all transactions contemplated by this
Agreement, each will grant Buyer an option on the shares of
UMDC owned by him at a price of one million dollars
($1,000,000) for all Shares, which option may be exercised
only in whole and not in part, at any time, or from time to
time, through the date of Closing, subject to the terms of
that certain Shareholder's Agreement among Xxxxx X. Xxxxx,
Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxxx
Xxxxx and UMDC, with respect to which the undersigned agree to
submit for a vote and to vote in favor of waiving all
prohibitions against the issuance or exercise of this option
in the UMDC Shareholders Agreement and solely upon (i)
purchase in full by Buyer on or before the Closing of all sums
due to Continental Choice Care, Inc. and its subsidiaries from
UMDC and Drs. Xxxxx and Xxxxxxx (which shall not exceed
$3,100,000), and (ii) payment in full or release, on or before
the Closing, of all guarantees and security deposits (other
than those of Drs. Xxxxx and Xxxxxxx) under all loans by PNC
Bank to UMDC(which shall not exceed $1,300,000). This option
shall not be exercisable in the event UMDC approves and
authorizes a sale of its assets pursuant to this Agreement.
/s/ Xxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxxx, M.D.
Xxxxx X. Xxxxx Xxxxxx X. Xxxxxx, M.D.
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
ACKNOWLEDGMENT OF
INTERNATIONAL HEALTH SPECIALISTS, INC.
The undersigned hereby represents and warrants to, and covenants and
agree that it does hereby guarantee all obligations of the Buyer under this
Agreement to close and pay the purchase price.
International Health Specialists, Inc.
By: /s/Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx, President
