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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into
as of the 24th day of October, 1996, by and among SPECTRUM HEALTH SERVICES,
INC., a Florida corporation ("Seller") and Seller's parent, NEWCARE HEALTH
CORPORATION, a Nevada corporation ("NewCare"), and NCS HEALTHCARE OF FLORIDA,
INC., an Ohio corporation qualified to do business in Florida ("Purchaser").
R E C I T A L S :
A. Purchaser desires to purchase, and Seller is willing to sell,
the operating assets of Seller's institutional and correctional pharmacy,
medical supply and equipment, home infusion and I.V. businesses (collectively,
the "Business"), currently located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇,
▇▇▇▇▇▇▇, 6499 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇-▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
(collectively, the "Premises").
B. As a condition to such acquisition, each of Seller, NewCare,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ are willing to enter into an agreement
prohibiting the unauthorized use or disclosure of confidential information or
competing with Purchaser with respect to the Business.
NOW, THEREFORE, in consideration of and in reliance upon the
representations, warranties, and covenants herein contained and each act to be
performed hereunder, it is agreed as follows:
ARTICLE I
PURCHASE OF ASSETS
Section 1.01. Sale Assets. Seller agrees to sell, transfer, assign,
and convey to Purchaser, and Purchaser agrees to purchase from Seller, for the
consideration, and subject to the conditions and upon the terms hereinafter set
forth, the following assets, rights, and interests of Seller (collectively, the
"Sale Assets"):
(a) Furniture, Equipment, Vehicles, and Leasehold
Improvements. The tangible personal property, movable and fixed, and
leasehold improvements owned by Seller and located at the Premises or
at customers' premises and used in the operation of the Business,
which property is more particularly described in Schedule 1.01(a)
attached hereto and made a part hereof, as well as all rights, title,
and interest under manufacturers' and vendors' warranties, if any,
relating to such tangible personal property and leasehold improvements;
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(b) Inventory and Supplies. In-dated inventory and
supplies located at the Premises, and used or held for sale in
connection with the Business;
(c) Accounts Receivable. Certain accounts receivable as
particularly set forth on Schedule 1.01(c) attached hereto and made a
part hereof;
(d) Prepaid Expenses and Security Deposits. Prepaid
expenses and security deposits paid by or on behalf of Seller in
connection with the Business and which are reflected on the books and
records of Seller as assets of the Business and listed by the parties
at Closing on Schedule 1.01(d) attached hereto and made a part hereof;
(e) Pharmacy, I.V., and Other Agreements. Seller's
rights under each of the pharmacy service, I.V., and other agreements
listed on Schedule 1.01(e) attached hereto and made a part hereof (the
"Pharmacy, I.V., and Other Agreements"), as well as certain contracts,
agreements, commitments, undertakings, and other arrangements
expressly accepted by NCS; and
(f) Customer Lists, Files, and Records; Goodwill and
Non-Compete Covenants. (i) Originals or copies of customer records,
vendor lists, customer lists, and certain other documents used or
intended for use in connection with the Business; (ii) goodwill; and
(iii) certain non-competition covenants as provided herein.
It is understood and agreed by the parties that the Sale Assets will
be sold, conveyed, transferred, and assigned by Seller to Purchaser as of the
Closing Date (hereinafter defined), free and clear of all liens, charges,
encumbrances, debts, and liabilities whatsoever.
Section 1.02. Liabilities.
(a) Purchaser shall not assume any liabilities of Seller
of any nature whatsoever, except for (i) executory and performance
obligations of Seller under certain service agreements, i.e., the
Pharmacy, I.V., and Other Agreements (the "Assumed Contracts"), (ii)
certain equipment lease obligations which are expressly assumed by
Purchaser and do not exceed $255,000.00 (the "Assumed Lease
Obligations"), (iii) certain trade accounts payable of Seller not to
exceed $1,622,000.00 (the "Assumed Accounts Payable") and (iv) such
other liabilities which Purchaser shall have expressly agreed in
writing to assume by an appropriate instrument of assumption. The
Assumed Contracts, Assumed Lease Obligations and Assumed Accounts
Payable (collectively, the "Assumed Liabilities") are more
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particularly set forth on Schedule 1.02 to this Agreement. Personal
property taxes for the current year shall be prorated as of the
Closing Date.
(b) Other than the Assumed Liabilities referred to in
Section 1.02(a) above, Seller and NewCare agree that they will be
solely responsible for the satisfaction and discharge of any debt,
obligation, or liability whatsoever of Seller or NewCare whether known
or unknown, absolute, accrued, contingent, or otherwise and whether
due or to become due including, but not limited to, such liabilities
incurred in connection with, in any way arising out of, or related to,
the Sale Assets, any liabilities for taxes, and any liabilities
resulting from any governmental authority with respect to the
Business, including but not limited to, the federal Medicare program
or any state Medicaid program, which seeks recoupment for payments
attributable to periods prior to the Closing Date.
Section 1.03. Real Estate Lease; Prorated Expenses. As of the
Closing, Purchaser shall assume Seller's non-delinquent obligations under
existing leases for the use of the Premises (collectively, the "Leases").
Certain expenses such as utilities, telephone, trash removal, janitorial,
security, real property taxes, etc. directly relating to the use of the
Premises shall be prorated between Seller and Purchaser as of the Closing Date.
Section 1.04. Employment Agreements. At Closing, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall each enter into an employment agreement with Purchaser
which, among other things, shall contain covenants prohibiting unauthorized use
or disclosure of proprietary and confidential information and against
competition with Purchaser, its parent, NCS HealthCare, Inc. ("NCS") and
subsidiaries of NCS with respect to the Business.
ARTICLE II
PURCHASE PRICE AND PAYMENT
Section 2.01. Purchase Price. Subject to the terms and conditions of
this Agreement, the agreed purchase price for the Sale Assets ("Purchase
Price") shall be the sum of (i) the Assumed Liabilities as described in Section
1.02 of this Agreement and (ii) the items listed below in paragraphs (a)
through (f) below:
(a) Furniture, Equipment, Vehicles, and Leasehold
Improvements. All items of furniture, equipment, vehicles, and
leasehold improvements used or usable in the Business as listed on
Schedule 1.01(a) shall be purchased by Purchaser for $977,187.18.
(b) Inventory and Supplies. Only items of in-dated
inventory and supplies owned by Seller which are salable or useable in
the Business and on hand
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at the Premises at the time of Closing (the "Inventory and Supplies")
shall be purchased by Purchaser. Seller and Purchaser shall perform a
physical inventory immediately following the Closing. Any expenses of
any third party used to take the physical inventory shall be borne
equally by Seller and Purchaser. The purchase price for the Inventory
and Supplies shall be Seller's invoice cost less discounts and rebates
taken or otherwise available to Seller. Seller shall have seven (7)
days from the Closing Date to remove from the Premises any inventory
and supplies not purchased by Purchaser.
(c) Accounts Receivable. Accounts receivable of Seller
which are not more than 180 days outstanding shall be purchased by
Purchaser for their face amount, as more particularly set forth on
Schedule 1.01(c).
(d) Prepaid Expenses and Security Deposits. Prepaid
expenses and security deposits paid by or on behalf of Seller in
connection with the Business and which are reflected on the books and
records of Seller as assets of the Business (the "Prepaid Expenses and
Security Deposits") shall be purchased by Purchaser for their face
amount, as more particularly set forth on Schedule 1.01(d).
(e) Pharmacy, I.V., and Other Agreements. Nondelinquent
obligations of Seller under the Pharmacy, I.V., and Other Agreements
for periods after the Closing Date shall be assumed by Purchaser.
(f) General Intangibles. Seller's general intangibles
including customer lists, files and records, goodwill and non-compete
covenants shall be purchased for Three Million Eight Hundred Thousand
Dollars ($3,800,000.00).
Section 2.02. Allocation. At Closing, Seller and Purchaser shall
execute a written agreement, in the form of Schedule 2.02, setting forth their
calculation of the Purchase Price based upon the foregoing provisions. Seller
and Purchaser shall each report the foregoing agreed-upon allocation on
Internal Revenue Service Form No. 8594 and shall each furnish to the others a
copy of the Form No. 8594 which they file with the Internal Revenue Service.
Section 2.03. Payment of Purchase Price.
(a) Cash Payments. At Closing, the Purchase Price minus
the sum of (i) Assumed Accounts Payable; (ii) Assumed Lease
Obligations; (iii) a holdback of $180,000.00; and (iv) a holdback of
$500,000.00, shall be paid by Purchaser to Seller by wire transfer
pursuant to Seller's written instructions. On or before November 15,
1996 and after determination of Inventory and Supplies, Prepaid
Expenses and Security Deposits, Assumed Accounts Payable and Assumed
Lease
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Obligations, Seller will receive the sum of $180,000.00 minus the sum
of any negative post-closing adjustment as provided in Section 2.03(b)
below. In addition, within ten (10) days of May 1, 1997 and after
determination of any negative post-closing adjustment under Section
2.03(d) herein, Seller will receive the sum of $500,000.00 minus the
sum of any negative post-closing adjustment as provided in Section
2.03(d) below. Such payment(s) shall be made by Purchaser to Seller
by corporate check. In the event post-closing adjustments under
either Section 2.03(b) or Section 2.03(d) of this Agreement exceed the
sum of $180,000.00 or $500,000.00, respectively, Seller shall pay to
Purchaser by bank certified or cashier's check an amount equal to such
excess upon Purchaser's demand.
(b) Adjustment for Deficient Assets and Excess
Liabilities. The payments due hereunder shall be reduced by (1) the
amount, if any, which Inventory and Supplies are less than reported on
Schedule 2.02, (2) the amount, if any, Prepaid Expenses and Security
Deposits are less than reported on Schedule 2.02, (3) the amount, if
any, which Assumed Accounts Payable exceed $1,622,000.00 and (4) the
amount, if any, which Assumed Lease Obligations exceed $255,000.00.
(c) Adjustment for Pro-rated Items. One hundred twenty
(120) days after the Closing Date, Seller and Purchaser shall
determine and make the following post-closing adjustment: Pro-ration
of items described in Section 1.03 which were not properly pro-rated
at the time of Closing. The responsible party shall reimburse the
paying party upon demand.
(d) Adjustment for Uncollectible Accounts Receivable.
The aggregate amount of any accounts receivable purchased by Purchaser
hereunder which is still outstanding as of May 1, 1997 shall be
treated as a credit against the Purchase Price and shall reduce the
final cash payment to Seller as provided in Section 2.03 of this
Agreement. Such accounts receivable shall be assigned by Purchaser to
Seller upon making the negative post-closing adjustments and receipt
of Seller's payment, if applicable, as provided in Section 2 of this
Agreement. Purchaser agrees that it will diligently pursue collection
of the accounts receivable assigned to it at Closing in a manner
consistent with the past practices of its affiliates; provided,
however, that nothing contained herein shall be deemed to require
Purchaser to institute any legal action to collect any of the
outstanding accounts receivable purchased by it hereunder. Within ten
(10) days after the end of each month, Purchaser shall provide NewCare
with a schedule setting forth, for the month just ended, a list of the
accounts receivable collected during such month and the amount
remaining outstanding as of the last day of such month.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of Seller. Subject to
the provisions of Article VIII of this Agreement, Seller and NewCare, jointly
and severally, hereby make the following representations and warranties to
Purchaser:
(a) Due Organization; Qualification; No Subsidiaries.
Seller is duly organized and validly existing under the laws of the
state of Florida. Seller is qualified to do business in the states of
Florida, Texas, Kansas and Georgia. Seller has no subsidiaries.
(b) Power; Authorization: Capacity. Seller has full
right, power, and authority necessary to own, lease, and operate its
assets and properties and carry on the Business in the manner
presently conducted. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby (the
"Transactions") have been duly authorized by all necessary action of
Seller and NewCare. Seller and NewCare have full power and capacity
to execute, deliver, and perform this Agreement and each of the
agreements and documents to be delivered by Seller and NewCare in
connection herewith.
(c) Execution. This Agreement has been duly executed and
delivered by Seller and NewCare and constitutes a legal, valid, and
binding obligation of each such party enforceable against each such
party in accordance with its terms and conditions.
(d) No Violation. Neither the execution and delivery of
this Agreement, nor the consummation of the Transactions, nor the
compliance with or fulfillment of the terms and conditions hereof,
will violate, conflict with, or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, the
Articles of Incorporation or By-Laws of Seller or any contract,
commitment, agreement, understanding, arrangement, or restriction to
which Seller is a party or by which Seller is otherwise bound, or any
statute, ordinance, law, rule, regulation, policy, code, ruling,
order, writ, injunction, decree, or judgment of any governmental
authority or court (collectively, "Laws") applicable to Seller or the
Business.
(e) Capital Stock. NewCare owns all of the issued and
outstanding shares of stock of Seller, all of which shares are validly
issued fully paid and nonassessable, and free and clear of all liens,
claims, charges and encumbrances of any kind, except a lien in which
the lienholder has no rights with respect to the
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assets of Seller.
(f) Ownership of Sale Assets. At Closing Seller will
transfer to Purchaser good and merchantable title to all of the Sale
Assets, free and clear of any and all liens, pledges, security
interests, limitations, restrictions, and encumbrances of every kind
and character, and the documents used to fulfill Seller's obligations
under this Agreement will be sufficient to vest such title in
Purchaser. There are no legal, contractual, or other restrictions
upon Seller's right to sell the Sale Assets. The Sale Assets are in
good operating condition, ordinary wear and tear excepted, neither
require nor can reasonably be expected to require any special or
extraordinary expenditures to remain in such condition beyond normal
maintenance, and are capable of being used for their intended purposes
in the ordinary course of business.
(g) Licenses. Seller has all registrations and licenses
required to own and operate the Business. No proceedings have been
instituted with a view toward terminating or limiting the scope of any
registrations or licenses of Seller. None of such registrations and
licenses is subject to any outstanding order, decree, judgment, or
stipulation, proceeding, or, to the knowledge of Seller and NewCare,
investigation.
(h) Insurance. There is in full force and effect, with
respect to Seller and the Business, policies of insurance of the types
and in amounts determined by Seller upon advice of their insurance
agent to be adequate.
(i) Equipment Leases and Service Agreements. Seller has
all necessary authority to assign to Purchaser the equipment leases
and service agreements being expressly assumed by Purchaser, and
Seller has performed in all respects its duties under such leases and
agreements. All such agreements were entered into by Seller in the
ordinary course of business and are enforceable in accordance with
their terms, and there are no defaults by any party thereunder. No
equipment lease or service agreement being assumed by Purchaser has
been canceled, and Seller has not received a threat of cancellation of
any such leases or agreements. No equipment which is part of an
equipment lease agreement or obligation being assumed by Purchaser is
listed on Schedule 1.01(a).
(j) Premises. There are no structural defects in the
Premises known to Seller or NewCare. The Premises are properly zoned,
and its current and intended use complies in all respects with all
applicable zoning and other ordinances, laws and legal restrictions
regulating development and use of the Premises. Seller has
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not received notice of and has no knowledge of any changes or proposed
changes to access to the Premises. There are no easements or other
use restrictions relating to the Premises which would restrict in any
way Purchaser's use of the Premises. There are presently no special
assessments assessed or levied on the Premises. There is no
condemnation or eminent domain proceeding pending or threatened with
respect to any part of the Premises. Seller has no liability in
respect of any activities associated with the generation,
transportation, release, storage, treatment, disposal or
identification of infectious or biomedical wastes. There is no
underground storage tank ("UST") on or under, nor has any UST been
removed from the Premises. The Premises are not contaminated with any
toxic or hazardous substance, material or waste, and there exists on
or under the surface of the Premises no substance or condition which
is required by any statute, law, rule, regulation or requirement of
any governmental agency or authority to be removed, cured or
corrected, and Seller specifically warrants and represents to
Purchaser that it (a) does not presently engage in nor does it
presently permit, (b) has not at any time in the past engaged in nor
permitted, and (c) has no knowledge of any prior owner of the Premises
or other person or entity engaged in or permitted, any operations or
activities upon, or any use and occupancy of the Premises, or any
portion thereof for the purpose of or in any way involving the
handling, manufacturing, treatment, storage, use, transportation,
spillage, leakage, dumping, discharge or disposal (whether legal or
illegal, accidental or intentional) of any toxic or hazardous
substances, materials or wastes, or any wastes regulated or for which
liability may be imposed under any local, state or federal law,
including, without limitation, any so-called "superfund" or
"superlien" laws, except for pharmaceuticals and supplies that have
been properly disposed.
(k) Possession. Possession of the Sale Assets shall be
transferred by Seller to Purchaser at Closing.
(l) Compliance with Laws. Seller is not in violation of
any law, regulation, or order of any federal, state, or local
governmental authority or court, including, without limitation, any
laws, regulations, or orders relating to Medicare or Medicaid
reimbursement, the corporate practice of medicine, environmental
matters, occupational health or safety, or the generation, storage,
transportation, or disposal of infectious wastes. All health care,
tax, and other returns, reports, plans, and filings of any nature
required to be filed by Seller with any federal, state, or local
governmental authorities and any third-party payors have been properly
completed and filed. Each return, report, plan, and filing contains
no untrue or misleading statements and does not omit anything which
would cause it to be misleading or inaccurate.
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(m) Required Consents. No approval of or consent from
any person, public or private, is required to permit Seller to execute
and deliver this Agreement, to consummate the Transactions, and to
comply with and fulfill the terms and conditions hereof.
(n) Employee Benefits; Employees. Seller shall remain
liable for any and all benefits and liabilities under any pension,
profit-sharing, bonus, deferred compensation, retirement, stock
option, health, disability, insurance, welfare, or other employee
benefit or severance benefit plan, arrangement, contract agreement,
program, or policy of Seller. Seller has not had any unusual pay
increases or material changes in benefits since January 1, 1996 other
than in the ordinary course of business. No essential employee has
given notice to Seller of his or her intention to terminate his or her
employment with Seller.
(o) Employee Disputes. Seller knows of no material
disputes, grievances, charges, complaints or proceedings involving any
past or present employees, independent contractors or agents.
(p) Taxes Withheld and Paid. All monies required to be
withheld by Seller from wages and salaries for income and social
security taxes with respect to employees of Seller have been collected
or withheld and either paid to the respective governmental agencies or
set aside in accounts for such purpose, or accrued, reserved against,
and entered upon the books of Seller. Seller's unemployment insurance
taxes have either been paid to the appropriate governmental agency or
set aside in accounts for such purpose, or accrued, reserved against,
and entered upon the books of Seller. Seller has paid or will pay
prior to Closing any and all taxes or assessments of any form or
nature which have been levied against the Sale Assets or the Business
by any governmental entity with taxing jurisdiction over them which
are due or payable on or before Closing.
(q) Financial Statements; Condition. Schedule 3.01(q)
includes the audited annual financial statements of NewCare (which
include Seller's financials) for its fiscal years ended December 31,
1994 and December 31, 1995 and the unaudited financial statements of
Seller for the 8-month period ended August 31, 1996 (collectively, the
"Financial Statements"). The Financial Statements are accurate and
complete and present fairly the financial position and results of
operations of Seller for the periods they cover in conformity with
generally accepted accounting principles applied on a consistent
basis. The income statements included in the Financial Statements do
not reflect any material items of special or nonrecurring income or
any other income not earned in the ordinary course of business. There
has been no material adverse change in the operation of
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the Business or the financial condition of Seller since January 1,
1996. Seller has no knowledge of any event which might be expected to
have an adverse effect on the financial condition of Seller, the
results of operations of the Business, or its prospects.
(r) No Options. Seller has not made any other agreement
for the sale, lease of, or given any other person an option to
purchase or lease, all or any part of the Sale Assets or the Business.
(s) No Acceleration of Income. Seller has not, in
anticipation of this Agreement or the Transactions, taken any other
action which might have the effect of accelerating the receipt of
income in connection with the Business or received any prepayment for
goods or services to be delivered or provided by the Business after
the Closing Date. All receipts have been taken in the ordinary course
of business.
(t) No Litigation or Claims. Seller is not subject to
nor has any knowledge of potential or threatened actions, suits,
proceedings, or claims affecting the Business or the Sale Assets.
With respect to the Business and the Sale Assets, Seller has not been
charged with, nor, to the knowledge of Seller, is being investigated
with respect to, any Law, and no judgment order, writ, injunction,
decree (including, without limitation, a consent decree), or other
similar command of any court or Federal, state, municipal, or other
governmental department, commission, board, bureau, agency, or
instrumentality which is presently in effect has been entered against
or served upon Seller which affects materially and adversely the
Business and/or the Sale Assets.
(u) Customers. Seller has no knowledge that any nursing
home or other facility or institution served by Seller intends to
modify, cancel, or otherwise terminate its relationship with Seller or
to materially decrease its purchase of products and services from
Seller and Seller is not aware of any reason for modification,
cancellation, or termination thereof, including the consummation of
the Transactions. Schedule 1.01(d) contains a complete and accurate
listing of all licensed nursing homes and other facilities being
served by Seller pursuant to written contracts as of the Closing Date.
The number of licensed nursing home beds being served is 2,500 and the
number of correctional facility beds being served is 2,200.
(v) Absence of Certain Business Practices. Neither
Seller or NewCare, nor to the knowledge of Seller and NewCare, any
officer, employee, agent or any other person acting on their behalf,
directly or indirectly, within the past five years
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has given or agreed to give any gift or similar benefit to any
customer, supplier, governmental employee, or other person who (i)
might subject Seller to any damage or penalty in any civil, criminal,
or governmental litigation or proceeding; (ii) if not given in the
past, might have had an adverse effect on the assets, properties,
business, or operations of Seller; or (iii) if not continued in the
future, might adversely affect Seller's assets, operations, or the
prospects of the Business or which might subject Seller to suit or
penalty in any private or governmental litigation or proceeding.
(w) Affiliated Transactions. Neither Seller nor NewCare
nor any of their respective directors or officers is a partner or
shareholder or has any other economic interest in any customer or
supplier of Seller with respect to the Business that will extend
beyond the Closing Date.
(x) Brokers and Finders. No broker, finder, or other
person or entity active in a similar capacity has participated on
behalf of Seller or NewCare in bringing about the transactions
contemplated by this Agreement, rendered any services with respect
thereto, or been in any way involved therewith.
(y) No Misrepresentations. No representation or warranty
made by Seller or NewCare in this Agreement, the Schedules hereto, or
any certificate, document, or agreement delivered pursuant hereto
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in any such
representation or warranty true.
Section 3.02. Representations and Warranties of Purchaser. Subject
to the provisions of Article VIII of this Agreement, Purchaser hereby makes the
following representations and warranties to Seller:
(a) Due Organization; Qualification. Purchaser is duly
organized, validly existing, and in good standing under the laws of
the State of Ohio. Purchaser is duly qualified to do business in the
State of Florida.
(b) Power; Authorization. Purchaser shall have the full
right, power, and authority necessary to own and operate the Business
after Closing. The execution and delivery of this Agreement and the
consummation of the Transactions have been duly authorized by all
necessary action of Purchaser.
(c) Execution. This Agreement has been duly executed and
delivered by Purchaser, and constitutes a legal, valid, and binding
obligation of Purchaser enforceable against Purchaser in accordance
with its terms and conditions, subject
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to usual equity principles and except as enforceability may be limited
by bankruptcy, insolvency, reorganization, or similar laws affecting
creditors' rights generally.
(d) No Violation. Neither the execution and delivery of
this Agreement, nor the consummation of the Transactions, nor the
compliance with or fulfillment of the terms and conditions hereof,
will violate, conflict with, or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, the
Articles of Incorporation or By-Laws of Purchaser, or, any material
contract, commitment, agreement, understanding, arrangement, or
restriction to which Purchaser is a party or by which Purchaser is
otherwise bound, or any material provisions of any Laws applicable to
Purchaser.
(e) No Misrepresentations. No representation or warranty
made by Purchaser in this Agreement, the Exhibits hereto, or any
certificate or document delivered pursuant hereto contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements contained in any such representation
or warranty true.
ARTICLE IV
COVENANTS OF SELLER
Section 4.01. General. Seller covenants and agrees that, from
January 1, 1996, through the Closing Date, Seller has used and will continue to
use its best efforts to keep the Business intact and to preserve the goodwill
of the Business with its customers, suppliers, employees, independent
contractors, and others having business relations with the Business. During
such period, Seller has conducted the Business, operations, activities, and
practices of the Business in a reasonable manner in accordance with Seller's
past practices and procedures; has engaged only in transactions or other
activities which are in the ordinary course of the Business; has used its best
efforts to kept available and maintained the services of key employees on the
same or substantially similar terms; has maintained all necessary licenses and
permits; has not sold, leased, or otherwise disposed of any of the Sale Assets
except in the ordinary course of business and in compliance with the terms of
this Agreement; and has continued to use its best efforts to pay all taxes,
charges and assessments affecting the Business and the Sale Assets in a timely
fashion.
Section 4.02. Non-Competition. For the five (5) year period
commencing on the date hereof, neither Seller nor NewCare shall, without the
prior written consent of Purchaser, engage (through its officers, directors,
employees or agents) or invest, directly or indirectly, in or compete with the
Business of Purchaser (hereinafter defined) within the State of Florida. For
purposes of this Section 4.02, the "Business of Purchaser" means Purchaser's
institutional and
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correctional pharmacy, medical supply and equipment, I.V. and home infusion
businesses for nursing homes and other institutional care or correctional
facilities, and individuals residing in any such home or facilities.
ARTICLE V
CONDITIONS PRECEDENT
Section 5.01. Conditions Precedent to Purchase. The obligations of
Purchaser hereunder are subject to each of the following conditions precedent,
each of which may be waived by Purchaser:
(a) Due Diligence by Purchaser. Purchaser may terminate
this Agreement by giving written notice to NewCare and Seller on or
before the 18th day of October, 1996, if Purchaser is not satisfied
with the results of its due diligence investigation regarding the
business of Seller.
(b) Assignment of Service Agreements. Seller shall
execute and deliver to Purchaser Assignments of Multi-Care Plan
Services Agreements in a form acceptable to Purchaser and its counsel
relating to Muti-Care Plan Services Agreements, also in a form
acceptable to Purchaser and its counsel, which agreements are by and
between Seller and each nursing home controlled and/or owned by
NewCare.
(c) Corporate Approval. Seller shall have taken all
requisite action for the valid performance of this Agreement and for
the sale and transfer to Purchaser of the Sale Assets, including
obtaining written approval of this Agreement by the shareholders and
the Board of Directors of Seller and the Board of Directors of NewCare;
(d) Covenants and Commitments. Seller shall have
performed in all material respects all covenants and commitments
contained in this Agreement which are to be performed by it on or
before Closing;
(e) Representations and Warranties. The representations
and warranties of Seller and NewCare contained in this Agreement and
the Exhibits attached hereto shall be true and correct in all respects
as of the Closing Date.
(f) Legal Action. There shall have been no institution
of any action or proceeding before any court or governmental or
regulatory or administrative agency or commission, by any person or
entity challenging the consummation by the parties hereto of the
Transactions or otherwise materially and adversely affecting any of
the parties;
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(g) Releases and Consents. Seller shall have obtained a
full and complete release of any and all liens, encumbrances and
security interests to the Sale Assets and the consents of the
respective landlords under the Leases and of the parties to other
contracts to be assigned, where such consent is required; and
(h) Deliveries. Seller shall have delivered to Purchaser
all Deliveries provided for in Section 6.02 below.
Section 5.02. Conditions Precedent to Sale. The obligations of
Seller hereunder are subject to each of the following conditions precedent,
each of which may be waived by Seller:
(a) Corporate Approval. Purchaser shall have taken all
requisite action for the valid performance of this Agreement and for
the purchase by Purchaser of the Sale Assets;
(b) Covenants and Commitments. Purchaser shall have
performed in all material respects all covenants and commitments
contained in this Agreement which are to be performed by it on or
before Closing;
(c) Representations and Warranties. The representations
and warranties of Purchaser contained in this Agreement and the
Exhibits attached hereto shall be true and correct in all material
respects as of the Closing Date;
(d) Legal Action. There shall have been no institution
of any action or proceeding before any court or governmental or
regulatory or administrative agency or commission, by any person or
entity challenging the consummation by the parties hereto of the
Transactions or otherwise materially and adversely affecting any of
the parties; and
(e) Deliveries. Purchaser shall have delivered to Seller
all Deliveries provided for in Section 6.03 below.
ARTICLE VI
CLOSING
Section 6.01. Closing Date. The closing ("Closing") shall be held on
the 24th day of October 1996 (the "Closing Date"). The Closing shall be held
at 11:00 a.m. local time at the law offices of ▇▇▇▇▇▇, Forlizzo & ▇▇▇▇, P.A.,
13577 Feather Sound Drive, Suite 300, Clearwater, Florida, or at such other
time, date or place which is mutually agreeable to Seller, NewCare and
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Purchaser. At Closing, Seller and Purchaser shall execute and/or deliver the
instruments, documents and considerations ("Deliveries") required by Sections
6.02 and 6.03 hereof.
Section 6.02. Deliveries by Seller. Unless otherwise provided, at
Closing, Seller shall execute and/or deliver to Purchaser the following
documents, all of which shall be in form and substance as provided herein or
otherwise reasonably satisfactory to Purchaser and its counsel:
(a) Certificate of Existence of Seller. Certificate of
Existence, or its equivalent, issued by the Secretary of State of the
state of Florida;
(b) ▇▇▇▇ of Sale. A warranty ▇▇▇▇ of sale from Seller
transferring the Sale Assets to Purchaser;
(c) Assignment and Assumption Agreement. An instrument
of assignment executed by Seller assigning to Purchaser all of
Seller's rights and nondelinquent obligations with respect to the
Assumed Liabilities;
(d) Real Estate Leases. The Leases assigned by Seller
along with the respective landlord's written consent;
(e) Employment Agreements. Employment agreements
executed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
(f) Closing Certificate. A Closing Certificate from
Seller and NewCare; and
(g) Other Considerations. Seller shall deliver to
Purchaser each of the other instruments, documents, and considerations
herein elsewhere provided to be delivered by Seller to Purchaser and
such other instruments, documents, and considerations as Purchaser may
reasonably deem necessary to consummate the Transactions.
Section 6.03. Deliveries by Purchaser. At Closing, Purchaser shall
execute and/or deliver to Seller or others, as appropriate, the following
documents, all of which shall be in form and substance as provided herein or
otherwise reasonably satisfactory to Seller and its counsel:
(a) Purchase Price. A wire transfer pursuant to Seller's
written instructions for the initial cash payment of the Purchase
Price as provided in Section 2.03;
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(b) Assignment and Assumption Agreement. An instrument
of assignment executed by Purchaser assuming all of Seller's rights
and nondelinquent obligations with respect to the Assumed Liabilities;
(c) Real Estate Lease. An instrument of assumption for
each of the Leases;
(d) Employment Agreements. Employment agreements for
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ executed by Purchaser; and
(e) Other Considerations. Purchaser shall deliver to
Seller and/or others each of the other instruments, documents, and
consideration herein elsewhere provided to be delivered by Purchaser
to Seller and/or others and such other instruments, documents, and
considerations as Seller and/or others may reasonably deem necessary
to consummate the Transactions.
ARTICLE VII
OBLIGATIONS OF THE PARTIES AFTER CLOSING
Section 7.01. Additional Instruments of Transfer. After Closing,
Purchaser and Seller and their successors shall, from time to time, execute
such additional instruments of transfer and take any such other actions as any
other party may reasonably request in order more effectively or completely to
evidence of record, or otherwise, Purchaser's ownership of the Sale Assets.
Section 7.02. Payment of Nonassumed Liability. Following the
Closing, Seller shall pay in the normal and ordinary course of business all of
its liabilities, which are not being assumed by Purchaser pursuant to this
Agreement.
Section 7.03. Collection of Property. Each party agrees that it will
immediately and without delay transfer or deliver to the other party from time
to time on and after Closing any and all cash remittances or other property
such party may receive which belongs to the other party.
Section 7.04. Unemployment Contribution Rating. Following the
Closing, at Purchaser's request, Seller shall cooperate with Purchaser in
obtaining Seller's state unemployment contribution rate applicable to the
Business and its employees.
Section 7.05. Drug Permits and Licenses. Seller acknowledges that
Purchaser may not have all required licenses, permits, and other governmental
authorizations (the "Licenses") to take title to all of the Sale Assets and to
operate all aspects of the Business immediately following the Closing. Seller
shall cooperate with and assist Purchaser in obtaining the Licenses in a timely
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manner and, to the extent legally able, shall allow Purchaser to operate the
Business under the authority of Seller's Licenses. Purchaser shall distribute
pharmaceutical supplies and provide health and pharmacy services as would be
required of Seller under such Licenses and shall indemnify and hold Seller
harmless from and against any and all claims, liabilities, costs or expenses
arising from the operations after the Closing Date in accordance with Section
8.03 below. Purchaser shall diligently obtain such licenses.
ARTICLE VIII
INDEMNIFICATION
Section 8.01. Survival of Representations and Warranties. Subject to
the provisions of this Article VIII, the representations and warranties of
Seller in Section 3.01 and of Purchaser in Section 3.02 shall survive the
Closing and continue to be binding regardless of any investigation made at any
time by any party.
Section 8.02. Indemnification by Seller and NewCare. Seller and
NewCare shall jointly and severally indemnify Purchaser and its respective
directors and officers (the "NCS Indemnified Parties"), and hold them harmless
from and against, all claims, damages, losses, deficiencies, costs and expenses
(including, but not limited to, reasonable attorneys' fees), which any NCS
Indemnified Party may incur, suffer or become liable for as a result of or
arising out of or in connection with the inaccuracy or breach of any
representations, warranties or covenants of Seller or NewCare contained in this
Agreement, subject in each instance to the following:
(a) Limitations on Periods During Which Claims Can Be
Made. Except with regard to claims for breach of the warranties and
representations of Seller or NewCare set forth in Subsections 3.01(b),
(d), (f), (j), (l), (p) and (q) (claims for which an action may be
brought within the applicable statutory period during which the claims
would not otherwise be time-barred under applicable law), all other
claims must be asserted in writing by Purchaser on or before the third
anniversary of this Agreement.
Section 8.03. Indemnification by Purchaser. Purchaser shall
indemnify Seller and NewCare, and hold them harmless from and against, all
claims, damages, losses, deficiencies, costs, and expenses (including, but not
limited to, reasonable attorneys' fees), which they may incur, suffer or become
liable for as a result of or arising out of or in connection with the
inaccuracy or breach of any representations, warranties or covenants of
Purchaser contained in this Agreement or the operation of the Business
following the Closing, subject in each instance to the following:
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(a) Limitations on Periods During Which Claims Can Be
Made. All claims must be asserted in writing by Seller or NewCare on
or before the third anniversary of this Agreement.
Section 8.04. Third Party Claims. If any legal proceeding is
instituted or any claim asserted by any third party (a "Claim") in respect of
which Seller on the one hand, or the NCS Indemnified Parties on the other hand,
may be entitled to indemnity hereunder, the party asserting such right to
indemnity (the "Indemnitee") will give the party from whom indemnity is sought
(the "Indemnitor") prompt written notice thereof. The Indemnitor will have the
right, at its option and expense, to participate in the defense of such a
Claim, but not to control the defense, negotiation or settlement thereof, which
control will at all times rest with the Indemnitee, unless the Claim involves
only money damages, not an injunction or other equitable relief, and unless the
Indemnitor (a) acknowledges in writing responsibility for investigation and
diligent defense of the Claim and (b) furnishes satisfactory evidence of the
financial ability to indemnify the Indemnitee, in which case the Indemnitor may
assume such control through counsel of its choice and at its expense, but the
Indemnitee will continue to have the right to be represented, at its own
expense, by counsel of its choice in connection with the defense of such a
Claim. In any such event in which Indemnitor undertakes the defense pursuant
to the preceding sentence, Indemnitor shall advise Indemnitee on a regular
basis with respect to the Claim.
If the Indemnitor does not assume control of the defense of
such a Claim, the entire defense of the Claim by the Indemnitee, any settlement
made by the Indemnitee, and any judgment entered in the Claim will not be
deemed to have been consented to by, and will not be binding on, the Indemnitor
without the Indemnitor's written consent, which consent shall not unreasonably
be withheld, and the right of the Indemnitor to contest the right of the
Indemnitee to indemnification under this Agreement with respect to the Claim
will not be extinguished.
If the Indemnitor does assume control of the defense of such a
Claim, it will not, without the prior written consent of the Indemnitee, settle
the Claim or consent to entry of any judgment relating thereto which does not
include as an unconditional term thereof the giving by the claimant to the
Indemnitee a release from all liability in respect of the Claim. The parties
hereto agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such Claim.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Entire Agreement. This Agreement and the Closing
Documents constitute the exclusive statement of the agreement among the parties
concerning the subject matter hereof.
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Section 9.02. Successors Bound. The terms and conditions of this
Agreement shall extend to and inure to the benefit of and be binding on the
respective heirs, successors, and permitted assigns of the parties.
Section 9.03. Title and Captions. All articles or section titles or
captions contained in this Agreement are for convenience of reference only and
shall not be used in the interpretation or construction of this Agreement.
Section 9.04. Injunctive Relief. The parties hereby agree that a
breach or threatened breach by Seller or Purchaser of this Agreement may cause
irreparable injury to the parties hereto that is inadequately compensable in
damages and, as a result, the non-breaching party will not have an adequate
remedy at law to redress such injury. Therefore, in the event any of the
parties hereto threatens to violate or violates any provision of this
Agreement, the parties hereto agree that in addition to other remedies, the
parties shall be entitled to injunctive relief including, but not limited to,
temporary restraining orders and/or preliminary or permanent injunctions to
restrain or enjoin any violation or threatened violation of this Agreement.
Section 9.05. Expenses, Taxes and Brokerage Fees. Each of the
parties hereto shall bear its own legal and accounting expenses incurred in
connection with the negotiation of this Agreement and the consummation of the
transactions contemplated by this Agreement.
Section 9.06. No Assignment. This Agreement may not be assigned by
any party without the written consent of the other party.
Section 9.07. Further Assurances. Each of the parties agrees that as
requested by the other party after the Closing, said party will do all such
further acts as may be required for the parties to effectuate the transactions
contemplated by this Agreement.
Section 9.08. No Public Statement. The parties agree that they shall
not make any public statement or disclosure regarding any amounts paid to or by
them pursuant to this Agreement, except as Purchaser or Seller may be required
by law to disclose (for example, SEC filings).
Section 9.09. Notices. All notices or other communications hereunder
shall not be binding on any party hereto unless in writing, and delivered to
the party at the address for such set forth herein.
Notices shall be deemed duly delivered upon hand or express
delivery thereof at the addresses specified below or two (2) days after deposit
thereof in the United States mails, postage prepaid, certified or registered
mail. Any party may change its address for notice by delivery of written
notice thereof in the manner provided above.
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Section 9.10. No Third-Party Beneficiaries. This Agreement is for
the benefit of and may be enforced only by the parties hereto and their
respective successors, transferees and permitted assignees, and is not for the
benefit of, and may not be enforced by, any third-party.
Section 9.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original.
Section 9.12. Facsimile Signatures. Facsimile signatures shall be
treated the same as original execution signatures for purposes of Closing,
provided original signatures are to be delivered promptly following Closing.
INTENDING TO BE LEGALLY BOUND, the parties hereto or their duly
authorized representatives have executed this Agreement, to be deemed effective
as of the day and year first above written.
SPECTRUM HEALTH SERVICES, NCS HEALTHCARE OF FLORIDA, INC.,
INC., a Florida corporation ("Seller") an Ohio corporation ("Purchaser")
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------- --------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇. Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
NEWCARE HEALTH CORPORATION,
a Nevada corporation ("NewCare")
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., President
Address: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ #▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇