▇▇▇▇▇▇ ▇▇▇▇▇ draft of 8/27/01
652899
Exhibit 10.1
STOCK PURCHASE AGREEMENT
amongamong
AMERICARE MANAGEMENT INC.
and
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Dated as of August May 12, 2002
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (hereinafter referred to
as thise "Agreement") is entered into as of August May 21, 2002,
among Americare Management Inc., a Delaware corporation
(hereinafter referred to as the "Buyer"), and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
(hereinafter referred to individually as ▇▇▇▇▇▇▇▇▇), an
individual holding the capital stock of InterLink Home Health
Care, Inc., a Texas corporation ("the corporation is hereinafter
referred to as InterLink"), that have executed this Agreement on
the signature pages hereof, who is signing this Agreement in his
capacity as shareholder, as well as, on behalf of InterLink
(collectively InterLink and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall hereinafter be
referred to as the "Sellers") all of the foregoing hereinafter
referred to collectively as the Parties.
The parties hereto agree as follows:
ARTICLE 1
AGREEMENT OF PURCHASE AND SALE
1.1 Agreement.
Upon the basis of the representations and warranties, for the
consideration, and subject to the terms and conditions set forth
in this Agreement, ▇▇▇▇▇▇▇▇▇ each of the Sellers agrees to sell
all of the issued and outstanding shares ("Shares") of common
stock of InterLink, par value $.01 per share (hereinafter such
stock shares are referred to as the Common Stock)(the "Common
Stock"), of InterLink owned by Humbersonsuch Seller to Buyer,
and Buyer agrees to purchase such SharesCommon Stock from each
such SellerHumberson, for an aggregate gross purchase price of
_____ One Million Two Hundred Fifty Thousand Dollars ($__)
($1,250,000) (hereinafter referred to as the "Purchase Price").
The Purchase Price will be paid to the SellersHumberson in the
form of both (1) cash consideration and (2) in the form of a
promissory note which shall be issued to only onethe
SellersHumberson as payee in the form as set forth in Schedule
1.13(b).
1.2 Closing.
The closing of the transactions contemplated hereby (such event
hereinafter referred to as the "Closing") shall take place at the
offices of Buyer in Richardson, Texas, on the date of this
Agreement or at such other time and place and/or on such other
date as Buyer and the Sellers may mutually agree. The date on
which the Closing occurs is hereinafter referred to as the
"Closing Date."
1.3 Delivery and Payment
.. At the Closing, Sellers shall deliver or cause to be delivered
to Buyer the stock certificate or certificates evidencing the
number of Shares set forth opposite such Seller's name on
Schedule 1.3(a) attached hereto duly endorsed or accompanied by a
duly executed stock power assigning such shares to Buyer and
otherwise in good form for transfer. At Closing, the Buyer shall
: (1) pay the cash consideration portion of the Purchase Price by
check to each of the Sellers in such amounts as are set forth
opposite each of their names in Schedule 1.3(b) and (2) execute a
promissory note for the balance of the Purchase Price in favor of
the HumbersonSellers identified in Schedule 1.3(b) at an
interest rate and for a term that also set forth in Schedule
1.13(b). Buyer will create an escrow account and deposit the
stock into the escrow account subject to the terms of a note and
security agreement attached hereto as ExhibitSchedule __1. 1 and
ExhibitSchedule __1.3A, respectively.
ARTICLE 1
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Sellers as set forth in
this Article 2 (with the understanding that the Sellers are
relying materially on such representations and warranties in
entering into and performing this Agreement).
2.1 Due Organization.
Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware and has
full corporate power and authority to enter into and perform this
Agreement.
2.2 Due Authorization; No Conflicts.
This Agreement has been duly and validly authorized, executed,
and delivered by Buyer and constitutes a valid and binding
obligation of Buyer enforceable in accordance with its terms.
The execution, delivery, and performance of this Agreement by
Buyer will not (a) violate any federal, state, county, or local
law, rule, or regulation applicable to Buyer or its property, (b)
violate or conflict with, or permit the cancellation of, any
agreement to which Buyer is a party or by which it or its
property is bound, (c) permit the acceleration of the maturity of
any indebtedness of, or any indebtedness secured by the property
of, Buyer, or (d) violate or conflict with any provision of
Buyer's certificate of incorporation or bylaws. No action,
consent, or approval of, or filing with, any federal, state,
county, or local governmental authority is required in connection
with the execution, delivery, or performance of this Agreement,
except as set forth in this Agreement.
2.3 Brokers and Finders.
Buyer has not engaged, or caused to be incurred any liability
to, any finder, broker, or sales agent in connection with the
execution, delivery, or performance of this Agreement or the
transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby jointly and severally represent and
warrant to Buyer as set forth in this Article 3 (with the
understanding that Buyer is relying materially on each such
representation and warranty in entering into and performing this
Agreement). As used herein, the term "Company" means InterLink
and all of its Subsidiaries (as defined herein in the attached
Schedule 3.5) on a consolidated basis.
3.1 Capitalization; Ownership of Shares.
The authorized capital stock of the InterLink consists of
1,000,000 shares of Common Stock, par value $.01 per share, of
which 100,000 shares are issued and outstanding (such issued and
outstanding stock shares of InterLink are hereinafter referred to
as the Shares). All such issued and outstanding Shares are duly
authorized, validly issued, fully paid, and nonassessable.
Except for the Shares, there are, no other equity securities of
InterLink outstanding. All of the Shares are owned of record and
beneficially by Humbersonthe Sellers as set forth on Schedule 1.3
attached hereto. None of the Shares were issued or will be
transferred under this Agreement in violation of any preemptive
or preferential rights of any person or entity.
3.2 No Liens on Shares.
Each SellerHumberson is the true and lawful owner, of record
and beneficially, of his Shares, free and clear of any liens,
restrictions, security interests, claims, rights of another, or
encumbrances (each hereinafter referred to collectively as a
"Lien"); none of the Shares are subject to any outstanding
options, warrants, calls, or similar rights of any other person
to acquire the same, except as set forth on the following
paragraph 3.3; none of the Shares are subject to any restrictions
on transfer thereof; and each Seller has the full power and
authority to convey, and will convey to Buyer at Closing, good
and marketable title to such Seller's Shares, free and clear of
any Liens.
3.3 Other Rights to Acquire Capital Stock.
There are no authorized or outstanding warrants, other than
those issued to ▇▇▇ Leakethe Health Care Industry Fund, Ltd, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, options, or rights of any
kind to acquire from InterLink or from any Seller any equity or
debt securities of InterLink or securities convertible into or
exchangeable for equity or debt securities of InterLink.
3.4 Due Organization.
InterLink is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Texas and has
full power and authority to carry on its business as now
conducted and as proposed to be conducted. Complete and correct
copies of the certificate of incorporation and bylaws of
InterLink and all amendments thereto have been delivered to Buyer
and have been certified by the Secretary of InterLink. InterLink
is qualified to do business as a foreign corporation and is in
good standing in the states set forth on Schedule 3.4 attached
hereto. InterLink is duly qualified to do business as a foreign
corporation in every jurisdiction where such qualification is
required except where failure to be so qualified would not have a
material adverse effect on the business, properties, or assets of
InterLink. InterLink has not received any notice or
communication from any other jurisdiction to the effect that it
is or may be required to qualify to do business as a foreign
corporation in any such jurisdiction.
3.5 Subsidiaries.
(a) Schedule 3.5 sets forth (i) the name, percentage
ownership and number of shares of stock owned or controlled by
InterLink of each corporation, partnership, joint venture or
other entity in which InterLink has, directly or indirectly, an
equity interest therein (individually, a "Subsidiary" and
collectively, "Subsidiaries"); (ii) the jurisdiction of
incorporation, capitalization and ownership of each Subsidiary;
(iii) the names of the officers and directors of each Subsidiary;
and (iv) the jurisdictions in which each Subsidiary is qualified
or licensed to do business as a foreign corporation.
(b) InterLink owns of record and beneficially all the
capital stock of each of the Subsidiaries free and clear of all
Liens, except for those potentially held by the Health Care
Industry Fund, Ltd., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. in stock
shares of InterLink Home Health Services of Southeast Louisiana,
Inc., the security interest of ▇▇▇▇ ▇▇▇▇▇▇ and another minority
shareholder in the stock shares of Data Medical, Inc., the stock
shares owned by a another person in Data Medical, Inc., the
security interest of ▇▇▇▇▇▇▇▇ Vigreuex in the stock shares of
InterLink Home Health Services of Southeast Texas, Inc., and the
stock shares owned by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in InterLink Home Health
Services of the Metroplex, Inc. Each Subsidiary is a corporation
duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted
and is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction listed on Schedule 3.5.
(c) Each of the shares of capital stock of each Subsidiary
shown in Schedule 3.5 to be issued and outstanding has been duly
authorized and is validly issued, fully paid and nonassessable
and is free of preemptive rights, except for the claims of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. regarding the stock shares of
InterLink Home Health Services of Southeast Louisiana, Inc., the
security interests of ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the
warrants and options of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇.
(d) There are not outstanding any (i) options, warrants or
other rights with respect to the capital stock of any Subsidiary,
except for thoshe warrants or options issued to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇, and the security
interests of ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (ii) securities
convertible into or exchangeable for shares of such capital stock
or any other debt or equity security of any Subsidiary or
(iii) other commitments of any kind for the issuance of
additional shares of capital stock or any other debt or equity
security of any Subsidiary or options, warrants or other rights
with respect to such securities.
3.6 Due Authorization; No Conflicts
.. The Company has full corporate power and authority to enter
into and perform each agreement, instrument, and document
required to be executed by the Company in connection herewith.
The execution, delivery, and performance of such agreements,
instruments, and documents have been duly authorized by the Board
of Directors of the Company. Each Seller has full power and
authority to enter into and perform this Agreement and each other
agreement, and document required to be executed by each Seller in
connection herewith. This Agreement has been duly and validly
executed and delivered by each of the Sellers and constitutes a
valid and binding obligation of each of the Sellers enforceable
in accordance with its terms. The execution, delivery, and
performance of this Agreement does not (a) violate any federal,
state, county, or local law, rule, or regulation applicable to
the Company, any Seller, or their respective properties, (b)
violate or conflict with, or permit the cancellation of, any
agreement to which the Company or any Seller, is a party, or by
which any of them or any of their respective properties is bound,
or result in the creation of any lien, security interest, charge,
or encumbrance upon any of such properties, (c) permit the
acceleration of the maturity of any indebtedness, or indebtedness
secured by the property of, the Company or any Seller, or (d)
violate or conflict with any provision of the certificate of
incorporation or bylaws of the Company. No action, consent, or
approval of, or filing with, any governmental authority is
required in connection with the execution, delivery, or
performance of this Agreement (or any agreement or other document
executed in connection herewith by the Company or any Seller)
except for any filings described in Section 4.12 hereof. Buyer
acknowledges that the Shares have not been registered under the
Securities and Exchange Act of 1933, as amended, and that the
Shares are therefore being sold pursuant to an applicable
exemption to the Securities laws of the United States of America
and the State of Texas.
3.7 Financial Statements
.. The following Financial Statements (herein so called) of the
Company have been delivered to Buyer by the Company:
(a) Audited consolidated balance sheets, statements of
income and cash flow, and statements of changes in financial
position of the Company as of and for each of the years ended
_______, December 31, 2000 and 1999, together with, in each case,
the notes thereto and the report of King ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.C.
certified public accountants with respect thereto (hereinafter
referred to collectively ,as the "Audited Financial Statements");
and
(b) Unaudited consolidated balance sheet, statements
of income and cash flow, and statement of changes in financial
position of the Company as of and for each of the three months
ended ________, March 31, 2001 and 2000 (hereinafter referred to
collectively ,as the "Interim Financial Statements").
The Financial Statements have been prepared in accordance with
generally accepted accounting principles (hereinafter referred to
as "GAAP)") in the United States of America applied on a
consistent basis throughout the periods indicated, and fairly
present the financial position, results of operations, and
changes in financial position of the Company as of the indicated
dates and for the indicated periods (except, in the case of the
Interim Financial Statements, for the absence of notes thereto
and subject to normal year-end audit adjustments and accruals
required to be made in the ordinary course of business which are
not materially adverse to and are consistent with past practices
of the Company). Except to the extent reflected or provided for
in the balance sheet included in the Interim Financial
Statements, the Company has no liabilities or obligations
(whether absolute, contingent, or otherwise), other than open-
account current liabilities incurred in the ordinary course of
business subsequent to April 30May 1, 2002; and neither the
Company nor any Seller has knowledge of any basis for the
assertion of any such liability or obligation, except that the
Subsidiaries have a potential liability to CMMS as a result of
the audit of the Subsidiaries regarding lending and financing
feesAUDIT. Since December 31, 2001 (hereinafter referred to as
the "Last Audit Date"), there has been no material adverse change
in the financial position, assets, results of operations, or
business of the Company, except that DVI Business Credit
Corporation which may be the holder of the Elk Omega, Inc. loan
agreement with the Subsidiaries has provided notice that it will
not renew the note agreement and demanded payment of the note,
which is a material adverse change in the financial position. To
the best knowledge of the Sellers as of the Closing Date, there
are no pending or proposed statutes, rules, or regulations, nor
any current or pending developments or circumstances, which could
have a material adverse effect on the financial position, assets,
results of operations, or business of the Company.
3.8 Conduct of Business; Certain Actions
.. Except as set forth on Schedule 3.8 attached hereto, since the
Last Audit Date, the Company has conducted its business and
operations in the ordinary course and consistent with its past
practices and has not (a) paid or declared any dividend or
distribution or purchased or retired any indebtedness from any
holder of capital stock of the Company (hereinafter referred to
as a "Stockholder") and has not purchased, retired, or redeemed
any capital stock from any Stockholder, (b) increased the
compensation of any of the directors, officers, or key employees
or sales representatives of the Company or, except for wage and
salary increases made in the ordinary course of business and
consistent with the past practices of the Company, increased the
compensation of any other employees or sales representatives of
the Company, (c) made any capital expenditures exceeding $25,000
individually or $50,000 in the aggregate, (d) sold any asset (or
any group of related assets) in any transaction (or series of
related transactions) in which the purchase price for such asset
(or group of related assets) exceeded $25,000 individually or
$50,000 in the aggregate (other than sales of inventory in the
ordinary course of business), (e) discharged or satisfied any
Lien or paid any obligation or liability, absolute or contingent,
other than current liabilities incurred and paid in the ordinary
course of business, (f) made or guaranteed any loans or advances
to any party whatsoever, (g) suffered or permitted any Lien to
arise or be granted or created against or upon any of the assets
of the Company, real or personal, tangible or intangible, (h)
cancelled, waived, or released any of the Company's debts,
rights, or claims against third parties except in accordance with
past practices of the Company, (i) amended the certificate of
incorporation or bylaws of the Company, (j) made, paid or
incurred (1) any severance or termination payment or obligation
theretofore with respect to any employee, consultant, or sales
representative of the Company or (2) any legal or accounting
fees, as to items (1) and (2) together, in excess $50,000 in the
aggregate, (k) made any change in the method of accounting of the
Company, (l) made any investment or commitment theretofore in any
person, business, corporation, association, partnership, joint
venture, trust, or other entity, (m) made, entered into, amended,
or terminated any written employment contract, created, made,
amended, or terminated any bonus, stock option, pension,
retirement, profit sharing, or other employee benefit plan or
arrangement, or withdrawn from any "multi-employer plan" (as
defined in Section 414(f) of the Internal Revenue Code of 1986,
as amended (hereinafter referred to as the "Code")) so as to
create any liability under Article IV of ERISA (as hereinafter
defined) to any entity, except for the employment agreements with
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, (n) amended or
experienced a termination of any material contract, agreement,
lease, franchise, or license to which the Company is a party,
except in the ordinary course of business, (o) incurred or
assumed any indebtedness (whether directly or by way of guaranty
or otherwise) for borrowed money, except in the ordinary course
of business, (p) enter into any other material transaction except
in the ordinary course of business, (q) entered into any
contract, commitment, agreement, or understanding to do any acts
described in the foregoing clauses (a)-(p) of this Section 3.8,
(r) suffered any material damage, destruction, or loss (whether
or not covered by insurance) to any assets, (s) experienced any
strike, slowdown, or demand for recognition by a labor
organization by or with respect to any of the employees of the
Company, (t) experienced or effected any shutdown, slow-down, or
cessation of any operations conducted by, or constituting part
of, the Company, (u) materially accelerated the collection of
accounts receivable or decelerated payment of accounts payable,
except in the ordinary course of business consistent with past
practice, or (v) made or rescinded any material express or deemed
election relating to Taxes, settled or compromised any material
claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes, or except
as may be required by applicable law, made any change to any of
its material methods of reporting income or deductions for
federal income tax purposes from those employed in the
preparation of its most recently filed federal income tax return.
3.9 Properties
.. Attached hereto as Schedule 3.9 is a list and description of
all real and personal properties (excluding, in the case of
personal properties, any asset having a book value of less than
$5,000 as of December 31, 2001) owned or leased by the
CompanyInterLink as of the date hereof. Except as set forth on
Schedule 3.9, the CompanyInterLink is not a party to any real
property lease, sublease or assignment, either as tenant or
landlord. Except as expressly set forth on Schedule 3.9 attached
hereto, the real and personal properties of the Company are free
and clear of all liens, security interests, claims, rights of
another, and encumbrances. The physical properties owned or
utilized by the Company in the conduct of its business are in
good operating condition and repair, normal wear and tear
excepted, and are free from material defects. Except as
otherwise set forth on Schedule 3.9 attached hereto, the Company
has full and unrestricted legal and equitable title to or a valid
leasehold interest in all such properties. To the best knowledge
of the Seller and Company, the operation of the properties and
business of the Company in the manner in which they are now and
have been operated does not violate in any material respect any
zoning ordinances, municipal regulations, or other rules,
regulations, or laws. No covenants, easements, rights-of-way, or
regulations of record impair in any material respect the uses of
the respective properties of the Company for the purposes for
which they are now operated. Except as described on Schedule 3.9
attached hereto, there are no past, present, or proposed
conditions, activities, actions, or plans which may prevent
compliance by the Company with any law related to the
manufacture, process, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, or
release, of any pollutant, contaminant, chemical, or industrial
toxic or hazardous substance or waste (such matters referred to
hereinafter as "Hazardous Substance Issues") or any regulations,
plans, judgments, injunctions, or notices promulgated or approved
thereunderthere under applicable to the operations, properties,
or assets of the Company, or which may give rise to any liability
of the Company, or otherwise form the basis of any claims,
actions, demands, suits, proceedings, hearings, studies, or
investigations against or relating to the Company, based on or
related to any Hazardous Substance Issues. The Company will
delivered to Buyer, within ninety (90) days of the Closing Date,
true and complete copies of any surveys, appraisals and title
insurance policies related to its owned or leased real
properties.
3.10 Licenses and Permits.
Attached hereto as Schedule 3.10 is a list of all federal,
state, county, and local governmental licenses, certificates, and
permits held or applied for by the InterLink. Within ninety (90)
days of the Closing Date, Company shall deliver to Buyer a list
of federal, state, county and local governmental licenses,
certificates and permits applied for or held by the Company. The
Company has complied in all material respects, and is in
compliance in all material respects, with the terms and
conditions of all such licenses, certificates, and permits, and
no material violation of any such licenses, certificates, or
permits or the laws or rules governing the issuance or continued
validity thereof has occurred. No additional license,
certificate, or permit is required from any federal, state,
county, or local governmental agency or body thereof in
connection with the conduct of the business of the Company which,
if not obtained, would materially and adversely affect the
business or properties of the Company, except for notification of
change of control in the Subsidiaries. No claim has been made by
any governmental authority (and, to the best knowledge of the
Sellers, no such claim is anticipated) to the effect that a
license, permit, or order is necessary in respect of the business
conducted by the Company.
3.11 Intellectual Property Rights.
Except as set forth on Schedule 3.11 hereto, Schedule 3.11
hereto contains a true and complete list of (a) all patents,
patent applications, trademarks, trademark registrations, and
trademark applications service marks, service ▇▇▇▇ registrations,
and service ▇▇▇▇ applications, trade names, and copyrights,
copyright registrations, and copyright applications
("Intellectual Property") owned by the Company in connection with
its business as presently conducted or as presently proposed to
be conducted, (b) all licenses or other agreements giving the
Company rights in Intellectual Property of third parties in
connection with the Company's business as presently conducted or
as presently proposed to be conducted, and (c) all licenses or
other agreements giving to third parties rights in the
Intellectual Property listed on Schedule 3.11 hereto. Except as
set forth on Schedule 3.11 hereto, the Company has good and
marketable title, free and clear of any liens or other
encumbrances, to, owns or possesses adequate and enforceable
licenses or other rights to use, all Intellectual Property and
all computer software, software programs, inventions, drawings,
designs, customer lists, proprietary know-how or information or
other rights in connection with the business of the Company as
presently conducted or as presently proposed to be conducted
(hereinafter, collectively, "Proprietary Rights"). Each item of
Intellectual Property owned by the Company and listed on Schedule
3.11 has been, to the extent indicated in Schedule 3.11 duly
registered with, filed in, or issued by the United States Patent
and Trademark Office, the United States Copyright Office or such
other domestic or foreign government entity as indicated on
Schedule 3.11, and such registrations, filings and issuances
remain in full force and effect. Except as set forth on Schedule
3.11 hereto, to the best knowledge of the Sellers, the operations
of the business of the Company, including but not limited to use
of service marks and copyrighted material and to products,
processes, services, methods, substances, parts or other
materials currently made, sold or used by or contemplated to be
made, sold or used by the Company in connection with its
business, do not conflict with or infringe upon any Proprietary
Rights of any third party. Except as set forth on Schedule 3.11
hereto, the Company has not granted to any third parties
exclusive licenses or options to obtain exclusive licenses under
any of the Intellectual Property owned by the Company listed on
Schedule 3.11 hereto. Except as set forth on Schedule 3.11
hereto, the Company has given no indemnification in connection
with any patent, trademark, copyright or other Proprietary Right
as to any product made, used or sold by any third party. Except
as set forth on Schedule 3.11 hereto, there are no pending or, to
the best knowledge of the Sellers, threatened claims, proceedings
or actions against the Company or any of its licensors that could
have a material adverse effect on the Company's Proprietary
Rights or that could limit the Company's right to use any patent,
trademark, trade name, service ▇▇▇▇ or copyrighted material or to
make, have made, sell or use any product, process, service,
method, substance, part, or other material in connection with its
business. Except as set forth on Schedule 3.11 hereto, there is
no infringement by or claim of infringement against any third
party of any Proprietary Rights of the Company which could be
likely to have a material adverse effect on the Company's
business, operations, condition (financial or otherwise), or
assets.
3.12 Compliance with Laws.
The Company has complied in all material respects, and is in
compliance in all material respects, with all federal, state,
county, and local laws, regulations, and orders applicable to its
business and has filed with the proper authorities all statements
and reports required by the laws, regulations, and orders to
which the Company or any of its properties or operations are
subject. No claim has been made by any governmental authority
(and, to the best knowledge of the Sellers, no such claim is
anticipated except for the potential audit of the Subsidiaries by
CMS regarding lending and financing fees) to the effect that the
business conducted by the Company fails to comply, in any
respect, with any law, rule, regulation, or ordinance.
3.13 Insurance.
Attached hereto as Schedule 3.13 is a list of all policies of
fire, liability, business interruption, and other forms of
insurance and all fidelity bonds held by or applicable to the
InterLinkCompany at any time within the past three years, which
schedule sets forth in respect of each such policy the policy
name, policy number, carrier, term, type of coverage, deductible
amount or self-insured retention amount, limits of coverage, and
annual premium. Within ninety (90) days of the Closing Date,
Company shall deliver to Buyer a list in substantially the same
format as Schedule 3.13 for all policies of insurance coverage
for the Company. No event relating to the Company has occurred
which will result in a retroactive upward adjustment of premiums
under any such policies or which is likely to result in any
prospective upward adjustment in such premiums. The insurance
currently held by the Company is in such amount and is of such
type and scope as is customary in the industry in which the
Company is engaged. Except as disclosed on Schedule 3.13
attached hereto, there has been no material change in the type of
insurance coverage maintained by the Company during the past five
years which has resulted in any period during which the Company
had no insurance coverage. Excluding insurance policies which
have expired and been replaced, no insurance policy of the
Company has been cancelled within the last three years and, to
the best knowledge of the Sellers, no threat has been made to
cancel any insurance policy of the Company within such period.
No pending claims made by or on behalf of the Company under such
policies have been denied. All premiums payable with respect to
such policies have been timely paid, or adequate arrangements for
payment have been made.
3.14 Employee Benefit Matters.
(a) Welfare Benefit Plans. Attached hereto as
Schedule 3.14(a) is a list of each "employee benefit plan," as
defined in section 3(1) of the Employee Retirement Income
Security Act of 1974 (and any sections of the Code amended by it)
and all regulations promulgated thereunderthere under, as the
same have from time to time been amended (hereinafter referred as
"ERISA") with respect to which the Company has any obligation or
liability (contingent or otherwise), including any multiemployer
welfare plan (within the meaning of section 3(37) of ERISA) (such
employee welfare benefit plans being hereinafter collectively
referred to as the "Welfare Benefit Plans)"). True, correct, and
complete copies of such plans and their related summary plan
descriptions have beenwill be delivered to Buyer within ninety
(90) days of the Closing Date. Schedule 3.14(a) attached hereto
also sets forth (i) the amount of any liability of the Company
for payments more than thirty (30) days past due with respect to
each Welfare Benefit Plan as of _______, 200__December 31, A.D.
2001, and as of the end of each subsequent month ending prior to
the date hereof and (ii) the amount of any liability of the
Company for retiree benefits under any Welfare Benefit Plan to
current or retired employees of the Company.
(b) Pension Benefit Plans. Attached hereto as
Schedule 3.14(b) is a list of each "employee pension benefit
plan" (as defined in section 3(2) of ERISA) with respect to which
the Company has any obligation or liability (contingent or
otherwise), including any multiemployer plan (as defined in
section 3001(a)(3) of ERISA) (such employee pension benefit plans
being hereinafter collectively referred to as the "Pension
Benefit Plans"). True, correct, and complete copies of such
plans and their related summary plan descriptions have beenwill
be delivered to Buyer within ninety (90) days of the Closing
Date. With respect to each Pension Benefit Plan that is subject
to title I, subtitle B, part 3 of ERISA (concerning "Funding"),
the funding method used in connection with such Pension Benefit
Plan is acceptable under ERISA, the actuarial assumptions used in
connection with funding such Pension Benefit Plan, in the
aggregate, are reasonable (taking into account the experience of
such Pension Benefit Plan and reasonable expectations), and
Company shall complete and deliver to Buyer within ninety (90)
days of the Closing Date, the Schedule 3.14(b) attached hereto
completely and accurately sets forth as of December 31, A.D.
2001_______, 200_ (i) the net fair market value of the assets
held to fund such Pension Benefit Plan, (ii) the funding method
used in connection with any such Pension Benefit Plan, and (iii)
the amount and plan year of any "accumulated funding deficiency",
as defined in section 302(a)(2) of ERISA (whether or not waived
and whether arising on account of inadequate contributions,
improper amortization of charges or credits in any funding
standard account, improper determination of any such charge or
credit, or any other reason) that exists with respect to any plan
year of such Pension Benefit Plan. To the best of its knowledge,
Tthe Company does not presently maintain and has never
maintained, or had any obligation of any nature to maintain, a
"defined benefit plan" within the meaning of Section 414(j) of
the Code, without regard to whether such defined benefit plan met
the requirements of section 401(a) of the Code. With respect to
each Pension Benefit Plan, including an "individual account plan"
(as defined in section 3(34) of ERISA), Schedule 3.14(b) attached
hereto completely and accurately sets forth (x) the amount of and
liability of the Company for contributions due with respect to
such Pension Benefit Plan as of ________, 200__,December 31, A.D.
2001, and as of the end of any subsequent period ending prior to
the Closing, and the date any such amounts were paid, and (y) the
amount of any contribution paid with respect to such Pension
Benefit Plan for the plan year in which the Closing occurs.
(c) Benefit Plan Compliance. All of the Welfare
Benefit Plans and Pension Benefit Plans and any related trust
agreements or annuity contracts (or any other funding
instruments) currently comply, and have complied in the past,
both as to form and operation, with the provisions of ERISA, the
Code (including section 410(b) of the Code relating to coverage
where required in order to be tax-qualified under section 401(a)
or 403(a) of the Code) and all other applicable laws and
regulations. Each Pension Benefit Plan that is intended to be
qualified under Section 401 of the Code is so qualified. Future
compliance with the requirements of ERISA as in effect on the
date hereof or any collective bargaining agreements to which the
Company is a party will not result in any increase in the rate of
benefit accrual under any Pension Benefit Plan except as
otherwise completely and accurately set forth in Schedule 3.14(d)
attached hereto. There are no claims pending or, to the best
knowledge of the Sellers, threatened with respect to any Welfare
Benefit Plan or any Pension Benefit Plan other than routine claim
for benefits under the terms of such plans in the ordinary
course.
(d) No Prohibited Transactions. None of the Company or any
of its agents or representatives have engaged in any transaction
in violation of section 406(a) or (b) of ERISA (for which no
exemption exists under section 408 of ERISA) or any "prohibited
transaction" (as defined in section 4975(c)(1) of the Code) for
which no exemption exists under section 4975(c)(2) or (d) of the
Code with respect to any Welfare Benefit Plan or Pension Benefit
Plan.
(e) Employee Contracts and Arrangements. Attached hereto
as Schedule 3.14 is a complete and accurate description of each
deferred compensation, bonus or other incentive compensation,
stock option, employee stock purchase, and any other employee
benefit plan, agreement, arrangement, or commitment (including
policies concerning holidays, vacations, and salary continuation
during short absences for illness or other reasons) maintained by
the Company with respect to any individual who contributes to the
operations of the Company. A true, complete and correct copy of
each such plan, agreement, arrangement or commitment has been
delivered to Buyer.
(f) Determination Letters and Reports. Buyer has been
furnished true, correct and complete copies of (i) the most
recent determination letter issued by the Internal Revenue
Service with respect to each Pension Benefit Plan, (ii) all
Annual Reports on Form 5500 series required to be filed with any
governmental agency for each Welfare Benefit Plan and each
Pension Benefit Plan for the two most recent plan years, and
(iii) all actuarial reports prepared for the last three plan
years of each Welfare Benefit Plan, if applicable.
(g) Benefit Plans Enforceable. All Welfare Benefit Plans,
Pension Benefit Plans, related trust agreements, annuity
contracts (or any other funding instruments), employment
contracts, and other plans, agreements, arrangements, and
commitments listed in any schedule to this Section 3.14 are
legally valid and binding and in full force and effect and
without default (and no event has occurred which, with the
passage of time or giving of notice, or both, would constitute
such a default).
(h) Effect of Consummation. Except as set forth on
Schedule 3.14(h), the consummation of the transactions
contemplated by this Agreement will not: (i) entitle any current
or former employee of the Company or any other individual, to
severance pay, unemployment compensation or similar payment, or
(ii) otherwise accelerate the time of payment or vesting, or
increase the amount of any compensation due to any current or
former employee or other individual.
(i) WARN Act. Neither the Company nor any person with whom
the Company would be treated as an "employer" for purposes of the
Worker Adjustment and Retraining Notification Act or any similar
state law ("WARN") has incurred any liability or obligation under
WARN.
3.15 Contracts and Agreements.
Within ninety (90) days of the Closing Date, Company shall
complete and deliver to Buyer a list substantially in the form of
the Aattached hereto as Schedule 3.15 in which is a list and
brief description of all written or oral contracts, commitments,
leases, and other agreements (including, without limitation,
promissory notes, loan agreements, and other evidences of
indebtedness) to which the Company is a party or by which the
Company or its properties are bound, pursuant to which the
obligations thereunderthere under of either party thereto are, or
are contemplated as being, in respect of any such individual
contracts, commitments, leases, or other agreements during the
term thereof, $5,000 or greater, or which are otherwise material
to the business of the Company (including, without limitation,
all mortgages, deeds of trust, security agreements, pledge
agreements, and similar agreements and instruments and all
confidentiality agreements). Each such contract, commitment,
lease and other agreement is in full force and effect, and the
Company is not and, to the best knowledge of the Sellers, no
other party thereto is in default (and no event has occurred
which, with the passage of time or the giving of notice, or both,
would constitute a default) under any such contracts,
commitments, leases, or other agreements, The Company has not
waived any right under any such contracts, commitments, leases,
or other agreements. Except as set forth on Schedule 3.15
attached hereto, the Company has not guaranteed any obligations
of any other person.
3.16 Claims and Proceedings.
Attached hereto as Schedule 3.16 is a list and description of
all claims, actions, suits, proceedings, and investigations
pending or, to the best knowledge of the Sellers, threatened
against or affecting the Company or any of its properties or
assets, at law or in equity, or before or by any court, municipal
or other governmental department, commission, board, agency, or
instrumentality. Except as set forth on Schedule 3.16 attached
hereto, none of such claims, actions, suits, proceedings, or
investigations will result in any liability or loss to the
Company which (individually or in the aggregate) is material, and
the Company has not been, and the Company is not now, subject to
any order, judgment, decree, stipulation, or consent of any
court, governmental body, or agency, except that each Subsidiary
is subject to current and potential audits and reviews by the
Medicare and Medicaid programs, state licensing agencies, and
management care contracts. No inquiry, action, or proceeding has
been asserted instituted, or, to the best knowledge of the
Sellers, threatened to restrain or prohibit the carrying out of
the transactions contemplated by this Agreement or to challenge
the validity of such transactions or any part thereof or seeking
damages on account thereof. To the best knowledge of the
Sellers, there is no basis for any such valid claim or action or
any other claims or actions which would, or could reasonably be
expected to (individually or in the aggregate), have a material
adverse effect on the business, operations, or financial
condition of the Company or result in a material liability of the
Company.
3.17 Taxes.
All federal, foreign, state, county, and local income, gross
receipts, excise, property, franchise, license, sales, use,
withholding, and other taxes (collectively, including any
liability in respect thereof as a transferee or as an indemnitor,
guarantor, surety or in a similar capacity under any contract,
arrangement, agreement, understanding or commitment (whether oral
or written) and together with additional assessments, penalties
and interest chargeable in connection therewith, "Taxes" ),
returns, reports, and declarations of estimated tax
(collectively, "Returns" ) which were required to be filed by the
Company on or before the date hereof have been filed within the
time and in the manner provided by law, except for 2000 and 2001
federal income tax returns have not been filed, and all such
Returns are true and correct and accurately reflect the Tax
liabilities of the Company. All Taxes shown to be or that
otherwise would have been due had the required Returns been
timely filed, and all other Taxes of the Company that are
attributable to taxable periods beginning on or prior to Closing,
including, without limitation, periods that end as a result of
the Closing as well as periods that continue, whether or not
returns have become due or Taxes have become due and payable as
of Closing, have been paid or adequately provided for in the
Financial Statements. For purposes of the preceding sentence,
payment or adequate provision theretofore shall be measured
according to the agreement of the parties that the Sellers shall
be responsible for all Taxes attributable to periods and partial
periods that end on or before Closing and that begin before
Closing and end at any time; provided, however, that in the
latter case (i) Taxes for which the Sellers are responsible shall
be Taxes that are attributable to the portion of any incomplete
period which has transpired as of the end of the Closing Date,
and (ii) Taxes attributable to such partial period shall be
determined by means of a closing of the books and records of the
Company as of the close of business on the Closing Date, provided
that exemptions, allowances or deductions that are calculated on
an annual basis (including, but not limited to, depreciation and
amortization deductions) shall be allocated between the period
ending on the Closing Date and the period after the Closing Date
in proportion to the number of days in such period. The
provisions for Taxes reflected on the balance sheet contained in
the Interim Financial Statements are adequate to cover all of the
Company's estimated Tax liabilities for the respective periods
then ended and all prior periods. The Company has not executed
any presently effective waiver or extension of any statute of
limitations against assessments and collection of Taxes. There
are no pending or threatened claims, assessments, notices,
proposals to assess, deficiencies, or audits (collectively, "Tax
Actions") with respect to any Taxes owed or allegedly owed by the
Company. To the best knowledge of the Sellers, there is no basis
for any Tax Actions. The Company's federal income tax returns
have not been audited. No Taxes other than as set forth on the
Financial Statements are payable by the Company. There are no
tax liens on any of the assets of the Company, except for
property taxes which are not delinquent. Proper and accurate
amounts have been withheld and remitted by the Company from and
in respect of all persons from whom it is required by applicable
law to withhold for all periods in compliance with the tax
withholding provisions of all applicable laws and regulations.
Neither the Company nor any other corporation has (i) filed an
election under section 341(f) of the Internal Revenue Code of
1986, as amended (hereinafter referred to as the "Code"), that is
applicable to the Company or any assets held by the Company, (ii)
agreed to or is required to make any adjustments pursuant to
Section 481(a) of the Code or any similar provision of state,
local or foreign law by reason of a change in accounting method
initiated by the Company or has any knowledge that the Internal
Revenue Service has proposed any such adjustment or change in
accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting
methods that relate to the business or operations of the Company,
or (iii) executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any predecessor provision thereof or
any similar provision of state, local or foreign law with respect
to the Company. No property owned by the Company (x) is property
required to be treated as being owned by another Person pursuant
to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, (y) constitutes "tax-
exempt use property" within the meaning of Section 168(h)(1) of
the Code or (iii) is "tax-exempt bond financed property" within
the meaning of Section 168(g) of the Code. The Company is not
subject to any private letter ruling of the Internal Revenue
Service or comparable rulings of other taxing authorities. The
Company has never made an election to be taxed under subchapter S
of the Code, except for InterLink Home Health Services of West
Texas, Inc. which had made a previous election under subchapter
S. The Company is not a party to any tax sharing agreement with
any Stockholder or any other person. The Company utilizes the
accrual method of accounting for federal income tax purposes.
There is no contract, plan, or arrangement covering any person
that, individually or collectively, would give rise to the
payment of any amount that would not be deductible by the Company
by reason of Section 280G of the Code. None of the Sellers is a
"foreign person" within the meaning of Section 1445(b)(2) of the
Code.
3.18 Personnel.
Attached hereto as Schedule 3.18 is a list of the names and
annual rates of compensation of the directors and officers of the
Company and of the employees and sales representatives of the
Company. Schedule 3.18 attached hereto also summarizes the stock
option, stock purchase, bonus or other incentive compensation,
profit sharing, percentage compensation, salary continuation,
company automobile, club membership, and other like benefits, if
any, paid or payable to such directors, officers, employees, and
sales representatives during the Company's fiscal year ended
December 31, 2001 and to the date hereof. Schedule 3.18 attached
hereto also contains a brief description of all material terms of
employment agreements and confidentiality agreements to which the
Company is a party and all severance benefits which any director,
officer, employee, or sales representative of the Company is or
may be entitled to receive. The Company haswill delivered to
Buyer within ninety (90) days of the Closing Date true, correct
and complete copies of all such employment agreements,
confidentiality agreements, and all other agreements, plans, and
other instruments to which the Company is a party and under which
its employees and/or sales representatives are entitled to
receive benefits of any nature. There is no pending or, to the
best knowledge of the Sellers, threatened labor dispute or union
organization campaign. None of the employees or sales
representatives of the Company are represented by any labor union
or organization. The Company is in compliance in all material
respects with all federal and state laws respecting employment
and employment practices, terms and conditions of employment, and
wages and hours and is not engaged in any unfair labor practices.
There is no unfair labor practice claim against the Company
before the National Labor Relations Board or any strike, labor
dispute, work slowdown, or work stoppage pending or, to the best
knowledge of the Sellers, threatened against or involving the
Company. The Company has approximately ____ 518 employees.
3.19 Business Relations.
No Seller knows that any customer or supplier of the Company
will cease to do business with the Company after the consummation
of the transactions contemplated hereby in the same manner as
previously conducted with the Company. The Company has not
received any notice of any disruption (including delayed
deliveries or allocations by suppliers) in the availability of
the materials or products used by the Company nor is any Seller
aware of any facts which could lead it to believe that the
business of the Company will be subject to any such material
disruption.
3.20 Accounts Receivable.
Except as set forth on Schedule 3.20 attached hereto, all of
the accounts, notes, and loans receivable that have been recorded
on the books of the Company are bona fide and represent amounts
validly due and all such accounts receivable (net of reserves set
forth on the Company's unaudited balance sheet as of March
31April 30, 2002) willshould be collected in full within 1280
days of the Closing Date. All of such accounts, notes, and loans
receivable are free and clear of any security interests, liens,
encumbrances, or other charges; none of such accounts, notes, or
loans receivable are subject to any offsets or claims of offset,
except that all accounts receivable due from the Medicare and
Medicaid programs, and insurance companies all have rights of
offset, reduction and claims against the accounts receivable of
Company; and none of the obligors of such accounts, notes, or
loans receivable have given notice that they will or may refuse
to pay the full amount thereof or any portion thereof..
3.21 Bank Accounts.
Attached hereto as Schedule 3.21 is a list of all banks or
other financial institutions with which the Company has an
account or maintains a safe deposit box, showing the type and
account number of each such account and safe deposit box and the
names of the persons authorized as signatories thereon or to act
or deal in connection therewith.
3.22 Agents.
Except as set forth on Schedule 3.22 attached hereto and the to
the best knowledge of Company, the Company has not designated or
appointed any person or other entity to act for it or on its
behalf pursuant to any power of attorney or any agency which is
presently in effect.
3.23 Indebtedness To and From Officers, Directors, Stockholders,
and Employees.
Except as set forth in Schedule 3.23, the Company does not owe
any indebtedness to any of its officers, directors, stockholders,
employees, or sales representatives or have indebtedness owed to
it from any of its officers, directors, stockholders, employees,
or sales representatives, excluding indebtedness for travel
advances or similar advances for expenses incurred on behalf of
the Company, payroll, wages, and vacation or paid time off
compensation incurred on behalf of and in the ordinary course of
business of the Company and consistent with the Company's past
practices.
3.24 Commission Sales Contracts.
Except as disclosed in Schedule 3.24 attached hereto, the
Company does not employ or have any relationship with any
individual, corporation, partnership, or other entity whose
compensation from the Company is in whole or in part determined
on a commission basis.
3.25 Certain Consents.
Except as set forth on Schedule 3.25 attached hereto, there are
no consents, waivers, or approvals (each hereinafter referred to
as a "Consent") required to be executed and/or obtained from any
third parties in connection with the execution, delivery, and
performance of this Agreement and the transactions contemplated
hereby, including, but not limited to, any federal, state, local
government or regulatory agency.
3.26 Brokers.
Other than as set forth in Schedule 3.26 attached hereto, none
of the Sellers or the Company has engaged, or caused any
liability to be incurred to, any finder, broker, or sales agent
in connection with the execution, delivery, or performance of
this Agreement or the transactions contemplated hereby.
3.27 Interest in Competitors, Suppliers, and Customers.
Except as set forth on Schedule 3.27 attached hereto, no
Seller, officer, or director of the Company or any affiliate of
any such Seller, officer, or director has any ownership interest
(other than any ownership interest in a publicly-held corporation
of which the applicable Person owns, or has real or contingent
rights to own, less than five percent (5%) of any class of
outstanding securities) in any competitor, supplier, or customer
of the Company or any property used in the operation of the
business of the Company.
3.28 Inventory.
Except as set forth on Schedule 3.28 attached hereto, the
inventories shown on the balance sheet contained in the Interim
Financial Statements consist of items of a quality and quantity
usable and readily saleable in the ordinary course of business by
the Company.
3.29 Warranties.
Attached hereto as Schedule 3.29 is a list and brief
description of all warranties and guarantees made by the Company
to third parties with respect to any products sold or services
rendered by it. Except as set forth on Schedule 3.29 attached
hereto, no claims for breach of product or service warranties to
customers have been made against the Company since December 31,
1995. To the best knowledge of the Sellers, no state of facts
exists, or event has occurred, which may form the basis of any
present claim against the Company for liability on account of any
express or implied warranty to any third party.
3.30 Customers and Suppliers.
Schedule 3.30 attached hereto contains a true, correct, and
complete list of (a) the ten largest customers sources (measured
in dollar volume) of the Company during each of the years endedas
of December 31, 2001, 2000 and 1999, (b) the ten largest
suppliers (measured in dollar volume) of the Company during each
of the years ended DeDecember 31, 2001, 2000 and 1999, and (c)
with respect to each such customer source and supplier, the name
and address thereof, dollar volume involved, and nature of the
relationship (including the principal categories of products
bought and sold).
3.31 Environmental Matters.
Except as described on Schedule 3.31 attached hereto, (a) the
Company possesses all permits, licenses, approvals and other
authorizations required by Environmental Laws (referred to
hereinafter collectively as , "Environmental Permits") for its
operations and such Environmental Permits are valid and in good
standing and, to the best knowledge of the Sellers, there is no
action pending or threatened to revoke, modify, terminate or
amend any Environmental Permit; (b) the Company has been in the
past and is now in compliance with (i) all federal, state, local
and foreign laws, rules, regulations, codes and other legal
requirements, as well as any applicable orders, decrees,
judgments or injunctions issued, promulgated, approved or entered
thereunderthere under relating to pollution, protection of the
environment or health and safety (referred to herein after
collectively ,as "Environmental Laws") and (ii) all requirements
of Environmental Permits; (c) all emission control equipment
installed at the owned and leased real properties of the Company
(the "Real Properties") pursuant to the requirements of
Environmental Laws or Environmental Permits, is operated in
accordance with the requirements of the Environmental Laws and
the manufacturer's specifications; (d) the Company has received
no notification that it is or could be, and, to the best
knowledge of the Sellers, there is no basis for it to become,
subject to any claim, action, obligation, proceeding,
investigation or evaluation, directly or indirectly relating to
any of its current or past operations or any of its currently or
formerly owned, leased or operated properties, arising under or
pursuant to Environmental Laws or principles of common law which
address pollution or protection of the environment; and (e) the
Company has not entered into any agreement with any governmental
authority or other person by which responsibility was assumed by
the Company, either directly or indirectly, for the conduct of
any investigation or remediation of environmental conditions.
Except as described on Schedule 3.31, there are no underground
storage tanks, and there have been no releases from underground
storage tanks, located on the real properties. The Company and
the Sellers have provided Buyer with copies of all environmental,
health or safety assessments, investigations, analyses or other
reports relating to any current or former Real Properties that
are in the Company's or any Seller's possession, custody or
control.
3.32 Information Furnished.
Each of the Sellers and the Company have made available to
Buyer and its officers, attorneys, accountants, and
representatives true and correct copies of all agreements,
documents, and other items listed on the schedules to this
Agreement and all books and records of the Company prior to the
Closing and Closing Date, and neither this Agreement, the
schedules hereto, nor any information, agreements, or document
delivered to or made available to Buyer or its officers,
attorneys, accountants, and representatives pursuant to this
Agreement contain any untrue statement of a material fact or omit
any material fact necessary to make the statements herein or
therein, as the case may be, not misleading. The Company's
corporate minute books contain all of the minutes of meetings of
stockholders, board of directors, and any committees of the board
of directors of the Company that have been held preceding the
date hereof and all of the written consents to action written in
lieu thereof.
3.33 Controlled Group Liability.
TThe Company is not or will not be subject to any liability on
account of any of the Sellers or the Company having been
affiliated, prior to the Closing Date, directly or indirectly,
with any other entity or person under Code Section 414, ERISA
Section 4001 or any similar foreign law.
ARTICLE 4
CONDITIONS TO CLOSING
4.1 Conditions to Obligations of Buyer.
The obligations of Buyer to consummate the transactions
contemplated hereby are subject to the fulfillment of each of the
following conditions:
(a) The representations and warranties of each of the
Sellers contained in this Agreement shall be true and correct and
each of the Sellers shall have performed and complied with all
agreements required by this Agreement to be performed or complied
with at or prior to the Closing.
(b) No action or proceeding shall have been instituted
or threatened for the purpose or with the possible effect of
enjoining or preventing the consummation of this Agreement and
the transactions contemplated hereby or seeking damages on
account thereof.
(a) Buyer shall have received an opinion of_____________,
counsel for the Sellers, dated as of the Closing Date, to the
effect set forth in Exhibit A hereto.
(c) Buyer shall have received all the minute books and
stock transfer records of InterLink and each Subsidiary and the
resignations of each officer and director of InterLink and each
Subsidiary.
(d) All Consents required in connection with the
execution, delivery, and performance of this Agreement shall have
be en obtained, applied for including, without limitation, those
listed on Schedule 3.25 hereto, within five (5) days of the
Closing Date.
(e) Buyer shall have received from each Seller or his duly
appointed agent and attorney-in-fact the stock certificate or
certificates representing all of the Shares owned by such Seller,
free and clear of any Liens, duly endorsed for transfer or
accompanied by stock powers duly executed in blank and all stock
certificates for each Subsidiary within thirty (30) days of the
Closing Date.
(f) Buyer shawill have receivedd from each Seller within
four weeks of the Closing Date, affidavits which satisfy Section
1445(b) of the Code, in form and substance reasonably acceptable
to Buyer.
(g) Buyer shall have completed its review of the
operations, properties, assets, books, and records of the Company
and found the results thereof to be satisfactory to Buyer in its
sole discretion.
(h) Buyer shall have received statements from any
person or entity to whomwhich the Company is owed indebtedness
with a principal amount greater than $10,000, which sets forth
the total principal amount of such indebtedness as of a date
within 5 days of the Closing Date.
(a) [InterLink shall have terminated_______ _____.]
[Company - Please advise if any benefit plans will be
terminated.]
(i) Each of the Sellers and the Company shall have
delivered such good standing certificates, officer's
certificates, secretary certificates and similar documents and
certificates as counsel for Buyer shall have reasonably requested
prior to the Closing Date.
The decision of Buyer to consummate the transactions contemplated
hereby without the satisfaction of any of the preceding
conditions shall not constitute a waiver of any of the Sellers'
representations, warranties, covenants, or indemnities contained
herein or in any ancillary document delivered pursuant hereto.
4.2 Conditions to Obligations of Sellers.
The obligations of Sellers to consummate the transactions
contemplated hereby are subject to the fulfillment of the
following conditions:
(a) Buyer's representations and warranties contained
in this Agreement shall be true and correct; and all
agreements to be performed hereunder by Buyer at or prior to
the Closing shall have been performed.
(b) Buyer shall have delivered to the Sellers the
Purchase Price for the Shares in accordance with Section
1.3, including the promissory note to the Seller identified
in Schedule 1.3(b).
(c) Buyer shall have entered into an employment
agreement with ▇▇. ▇▇▇▇ HumbersonJoe ▇▇▇▇▇▇▇▇ in the form
attached hereto as Exhibit B.
ARTICLE 5
TERMINATION
5.1 Termination.
This Agreement may be terminated only by the mutual written
consent of Buyer and the Sellers.
5.2 Effect of Termination.
Upon the termination of the Agreement pursuant to Section 6.1
hereof, the parties shall be relieved of any further obligations
under this Agreement.
ARTICLE 6
INDEMNIFICATION
6.1 Indemnification of Buyer and the Company.
Each of the Sellers jointly and severally agree to indemnify
and hold harmless Buyer and the Company and each officer,
director, employee, representative and affiliate of Buyer and the
Company (referred to hereinafter collectively, as the
"Indemnified Parties") from and against any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties,
costs, fees and expenses (including court costs and attorneys'
fees and expenses incurred in investigating and preparing for any
litigation or proceeding and costs of any settlement) (referred
to hereinafter collectively, as "Indemnified Costs") which any of
the Indemnified Parties may sustain, or to which any of the
Indemnified Parties may be subjected, arising out of (i) any
breach or default by any of the Sellers of or under any of the
representations, warranties, covenants, conditions, agreements,
or other provisions of this Agreement or any agreement or
document executed in connection herewith (including, without
limitation, the certificate to be delivered pursuant to Section
5.1(a) hereof); (ii) environmental or health and safety matters
arising out of the use or operation of the Company's properties
(whether owned or leased) prior to the Closing (whether or not
disclosed to Buyer at or prior to the Closing); and (iii) any
Taxes owed by the Company with respect to all taxable periods
ending on or prior to the Closing Date and the pre-Closing
portion of all taxable periods beginning before and ending after
the Closing Date.
6.2 Defense of Third-Party Claims.
An Indemnified Party shall give prompt written notice to the
Sellers (each an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand, or claim by a third
party (collectively, a "third-party action") in respect of which
such Indemnified Party shall seek indemnification hereunder. Any
failure so to notify the Sellers shall not relieve such
Indemnifying Party from any liability that it may have to such
Indemnified Party under this Article 6 unless and to the extent
the failure to give such notice materially and adversely
prejudices such Indemnifying Party. The Indemnifying Parties
shall have the right to assume control of the defense of, settle,
or otherwise dispose of such third-party action and shall assume
full costs as set forth in 6.1 regardless of whether they assume
control of such defense; provided, however, that:
(a) The Indemnified Party shall be entitled, at his,
her, or its own election to participate in the defense of
such third-party action and to select the counsel used in
defense of the third-party action;
(b) The Indemnifying Parties shall obtain the prior
written approval of the Indemnified Party before entering
into or making any settlement, compromise, admission, or
acknowledgment of the validity of such third-party action or
any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or
acknowledgment, injunctive or other equitable relief would
be imposed against the Indemnified Party or if, in the
opinion of the Indemnified Party, such settlement,
compromise, admission, or acknowledgment could have a
material adverse effect on its business or, in the case of
an Indemnified Party who is a natural person, on his or her
assets or interests;
(c) No Indemnifying Party shall consent to the entry
of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by each
claimant or plaintiff to each Indemnified Party of a release
from all liability in respect of such third-party action;
and
(d) The Indemnifying Parties shall not be entitled to
control (but shall be entitled to participate at their own
expense in the defense of), and the Indemnified Party shall
be entitled to have sole control over, the defense or
settlement, compromise, admission, or acknowledgment of any
third-party action (i) as to which the Indemnifying Parties
fail to assume the defense within a reasonable length of
time or (ii) to the extent the third-party action seeks an
order, injunction, or other equitable relief against the
Indemnified Party which, if successful, would materially
adversely affect the business, operations, assets, or
financial condition of the Indemnified Party.
The parties hereto shall extend reasonable cooperation in
connection with the defense of any third-party action pursuant to
this Article 6 and, in connection therewith, shall furnish such
records, information, and testimony and attend such conferences,
discovery proceedings, hearings, trials, and appeals as may be
reasonably requested.
6.3 Direct Claims.
In any case in which an Indemnified Party seeks indemnification
hereunder which is not subject to Section 6.2 hereof because no
third-party action is involved, the Indemnified Party shall
notify the Sellers of any Indemnified Costs which it claims are
subject to indemnification under the terms hereof. The failure
of the Indemnified Party to exercise promptness in such
notification shall not amount to a waiver of such claim unless
the resulting delay materially prejudices the position of the
Indemnifying Parties with respect to such claim.
6.4 Tax Audits.
In the event of an audit of a Return of the Company with
respect to which an Indemnified Party might be entitled to
indemnification pursuant to Section 6.1 hereof, the Company shall
have the right to control the defense and conduct of any and all
such audits which may result in the assessment of additional
Taxes against the Company and any and all subsequent proceedings
in connection therewith, including appeals. Sellers shall
cooperate fully in all matters relating to any such audit or
other Tax proceeding and will execute and file any and all
consents, powers of attorney, and other documents as shall be
reasonably necessary in connection therewith.
ARTICLE 7
MISCELLANEOUS
7.1 Collateral Agreements, Amendments, and Waivers.
This Agreement (together with the documents delivered pursuant
hereto) supersedes all prior documents, understandings, and
agreements, oral or written, relating to this transaction and
constitutes the entire understanding among the parties with
respect to the subject matter hereof. Any modification or
amendment to, or waiver of, any provision of this Agreement (or
any document delivered pursuant to this Agreement unless
otherwise expressly provided therein) may be made only by an
instrument in writing executed by the party against whom
enforcement thereof is sought.
7.2 Successors and Assigns.
Neither Buyer's, the Company's, nor any Seller's rights or
obligations under this Agreement may be assigned, except that
Buyer may assign its rights and obligations to any subsidiary,
stockholder or affiliate thereof. Any assignment in violation of
the foregoing shall be null and void. Subject to the preceding
sentences of this Section 7.2, the provisions of this Agreement
(and, unless otherwise expressly provided therein, of any
document delivered pursuant to this Agreement) shall be binding
upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors, and assigns.
7.3 Expenses and Transfer Taxes.
Buyer shall pay all of its own costs and expenses incurred in
connection with this Agreement. Sellers, and not the Company,
shall pay all of the Sellers' and the Company's costs and
expenses incurred in connection with this Agreement. Buyer and
Sellers shall each bear responsibility for, and timely pay, 50%
of all applicable transfer and sales taxes, if any, due as a
result of the consummation of the transactions contemplated
hereby.
7.4 Invalid Provisions.
If any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future laws, such
provision shall be fully severable, this Agreement shall be
construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance
from this Agreement. The parties hereto shall endeavor in good
faith negotiations to replace the prohibited or unenforceable
provision with a valid provision, with the economic effect of
which comes as close as possible to that of the prohibited or
unenforceable provision.
7.5 Information and Confidentiality.
Each party hereto agrees that such party shall hold in strict
confidence all information and documents received from any other
party hereto, and if the Closing does not occur each such party
shall return to the other parties hereto within three (3)
business days, all such documents then in such receiving party's
possession without retaining copies. From and after the Closing,
the Sellers shall not use or disclose to any person, any
confidential or proprietary information regarding the Company or
Buyer; provided, however, that each party's obligations under
this Section 7.5 shall not apply to (a) any information or
document required to be disclosed by law, (b) any information or
document in the public domain, or (c) any information or document
that Buyer discloses to any potential lender to or investor in
Buyer or the Company or representative or agent of Buyer.
7.6 Waiver.
No failure or delay on the part of any party in exercising any
right, power, or privilege hereunder or under any of the
documents delivered in connection with this Agreement shall
operate as a waiver of such right, power, or privilege; nor shall
any single or partial exercise of any such right, power, or
privilege preclude any other or future exercise thereof or the
exercise of any other right, power, or privilege.
7.7 Notices.
Any notices required or permitted to be given under this
Agreement (and, unless otherwise expressly provided therein,
under any document delivered pursuant to this Agreement) shall be
given in writing and shall be deemed received (a) when actually
delivered if sent by courier or overnight delivery service (or
the next business day, if delivered after regular business hours
on a Saturday, Sunday or holiday), (b) if sent by mail, on the
third day following the date when deposited in the United States
mail, certified or registered mail, postage fully prepaid or (c)
when electronically confirmed if sent by facsimile, to the
relevant party as indicated below:
Buyer: Americare Management, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Any of the Sellers: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ North
Highway 360, Apt. No. 515
BradyGrand Prairie, Texas
76825050
[Name]
[Address]
Facsimile: (___) ____-_______
With a copy to: [Name]
[Address]
Facsimile: (___) ___-____
Each party may change its address for purposes of this Section
7.7 by proper notice to the other parties, and the Parties have a
continuing duty until the Purchase Price is fully paid to notify
the other party within three (3) days of a change of address.
7.8 Survival of Representations, Warranties, Covenants and Other
Provisions.
The representations and warranties in Article 3, the covenants
in Article 4, indemnification in Article 6 and Sections 7.5, 7.8,
7.13, 7.14 and 7.15 shall survive the Closing.
7.9 Public Announcement.
Prior to the Closing, all press releases and other public
announcements concerning this Agreement and the transactions
contemplated hereby must be approved by Buyer and the Company
prior to publication, except with respect any releases or
announcements that may be required by applicable law, court
process or obligations pursuant to any listing agreement with any
national securities exchange or interdealer quotation system.
7.10 Waiver of Certain Rights.
Each Seller hereby waives any rights of first refusal,
preemptive rights, or other rights of any nature whatsoever which
such Seller may have to purchase any of the Shares or other
capital stock or equity securities of any nature of the Company.
Each Seller agrees that, upon the consummation of the
transactions contemplated hereby, any and all rights of such
Seller with respect to the payment of dividends (whether or not
previously earned, accrued, or declared), preferential payments,
or distributions of the Company's assets upon the liquidation,
dissolution, or merger of the Company or otherwise, or any other
right of any nature whatsoever to receive any monies or assets of
the Company as a result of such Seller's ownership of Shares,
shall terminate, and each Seller hereby waives any and all such
rights and agrees to indemnify and hold harmless the Company and
its officers, directors, employees, and affiliates from and
against any and all Indemnified Costs suffered or incurred by or
assessed against the Company or any of its officers, directors,
employees, or affiliates and arising, directly or indirectly,
from the exercise or attempted exercise of any of such rights by
any Seller. Furthermore, each Seller agrees that, immediately
prior to consummation of the transactions contemplated hereby,
each voting, stock transfer restriction, and buy-sell agreement
to which he is a party and which relates to any Shares shall be
terminated and be of no further force or effect.
7.11 Further Assurances.
At, and from time to time after, the Closing, at the request of
Buyer, but without further consideration, each Seller shall
execute and deliver such other instruments of conveyance,
assignment, transfer, and delivery and take such other action as
Buyer may reasonably request in order more effectively to
consummate the transactions contemplated hereby; provided, that
this covenant may be complied with after the Closing by the
execution of documents and instruments under powers of attorney,
unless and until revocations thereof.
7.12 No Third-Party Beneficiaries.
No person or entity not a party to this Agreement shall be
deemed to be a third-party beneficiary hereunder or entitled to
any rights hereunder.
7.13 Dispute Resolution.
Other than any claims for equitable relief, all controversies,
claims and disputes arising in connection with this Agreement
shall be settled by arbitration, conducted in Dallas, Texas in
accordance with the rules and procedures promulgated by the
American Arbitration Association, before one arbitrator. The
arbitrator shall be authorized to award the prevailing party its
reasonable expenses of such arbitration, including attorneys'
fees. The decision of the arbitrator will be final and binding
on the parties. Either party may bring an action in any court of
competent jurisdiction to compel arbitration under this Agreement
and to enforce an arbitrator's award. In the event of any court
action brought to enforce this agreement to arbitrate, the
prevailing party shall be entitled to recover its reasonable
expenses of such court action, including attorneys' fees.
7.14 Jurisdiction and Venue.
Any action or proceeding seeking to enforce any provision of,
or based on any claims for equitable relief arising out of this
Agreement may be brought against any of the parties in the courts
of Dallas County in the State of Texas or, if it has or can
acquire jurisdiction, in the United States District Court for the
Northern District of Texas, and each of the parties consents to
the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection
to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party
anywhere in the world.
7.15 Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to
the conflicts of laws principles thereof.
7.16 Waiver of Potential Conflict of Interest.
All of the Parties to this Agreement have been previously
notified that a potential conflict of interest may exist in
having ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ represent both ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the
Company, and that all Parties hereby any such potential conflict
of interest for all purposes.
7.17 Miscellaneous Provisions.
All exhibits, schedules and documents attached hereto are
incorporated by reference herein for all purposes. No failure of
a party to detect, protest, or remedy a breach of any of its
rights under this Agreement shall be deemed a waiver of any of
the aggrieved party's rights. The section and subsection
headings contained in the Agreement are for convenience only and
shall in no manner be construed as part of this Agreement. Each
individual signing the Agreement below warrants and represents
that he has the full authority and power to execute this
Agreement, and that all actions necessary to the execution of and
binding effect of this Agreement have been fully performed prior
to the execution of this Agreement. Time is of the essence to
this Agreement. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original but all
of which together will constitute one and the same agreement.
The Parties have jointly participated in the negotiation and
drafting of this Agreement. In the event of an ambiguity or
question of intent or interpretation of this Agreement, then this
Agreement shall be construed as if drafted jointly by the Parties
with no presumptions or burden of proof arising favoring or
disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to federal, state,
local or foreign law shall be deemed also to refer to all rules
and regulations promulgated there under, unless the context
requires otherwise. Each party shall bear his/its own costs,
expenses, and attorneys' fees incurred in the negotiation and
execution of this Agreement. Each party represents and warrants
to the other party that each has not relied upon any statements
or representations of the other party, or their respective
agents, attorneys, officers, directors, shareholders, or
employees, in any manner in deciding to enter into this
Agreement, except for those explicitly stated in this Agreement.
All parties represent and warrant to the other that each has
relied solely upon his/its own judgment, knowledge, belief, and
advice of his/its respective attorney(s) in entering into this
Agreement, except for the explicit representations and warranties
set forth in this Agreement. Where necessary the singular part
of speech includes the plural and vice versa. Where necessary
the masculine part of speech includes the feminine and vice
versa.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement in one or more counterparts (all of which shall
constitute one and the same agreement) as of the day and year
first above written.
BUYER:
AMERICARE MANAGEMENT, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman
SELLERS:
(Executing in their capacity as
Sellers and on behalf of InterLink)
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, in his individual
and representative capacity as
President of InterLink Home Health
Care, Inc., InterLink Home Health
Services, Inc., InterLink Home
Health Services of Amarillo, Inc.,
InterLink Home Health Services of
wWest Texas, Inc., InterLink Home
Health Services of San Antonio,
Inc., InterLink Home Health
Services of Southern Colorado,
Inc., InterLink Home Health
Services of Metroplex, Inc.,
InterLink Home Health Services of
Southeast Louisiana, Inc.,
InterLink Home Health Services of
Northeast Texas, Inc., InterLink
Home Health Services of South
Texas, Inc., InterLink Home Health
Services of Louisiana, Inc.,
InterLink Home Health Services of
Southeast Texas, Inc., InterLink
Home Health Services of Austin
Texas, Inc., InterLink Home Health
Services of El Paso, Inc., LifeCare
Home Health Central Texas, Inc.,
LifeCare Home Health of Southern
Colorado, Inc., LifeCare Home
Health of Southeast Texas, Inc.,
Nursing Specialists Staffing
Services, Inc., and Data Medical,
Inc.
Exhibit A
Form of Opinion of Counsel to the Company and the Sellers
LIST OF EXHIBITS
[TO COME]
LIST OF SCHEDULES
1.3 OUTSTANDING SHARES i
1.3(B) PROMISSORY NOTE iii
3.10 LICENSES, CERTIFICATES AND PERMITS viii
3.11 INTELLECTUAL PROPERTY ix
3.13 INSURANCE POLICIES x
3.14 COMPENSATION PLANS xi
3.14(A) EMPLOYEE BENEFITS xi, xii, xiii
3.14(B) EMPLOYEE PENSION PLANS xiii
3.14(D) EXCEPTIONS TO BENEFIT PLANS xiv
3.14(H) EXCEPTIONS TO COMPENSATION PLANS xv
3.15 CONTRACTS AND OTHER AGREEMENTS xvi
3.16 PENDING LITIGATION xvii
3.18 KEY EMPLOYEES AND DIRECTORS COMPENSATION xviii
3.20 RECEIVABLES xix
3.21 BANK ACCOUNTS xx
3.22 COMPANY AGENTS xxi
3.23 INDEBTEDNESS TO AND FROM OFFICERS, DIRECTORS AND KEY
EMPLOYEES xxii
3.24 COMMISSION SALES CONTRACTS xxiii
3.25 CERTAIN CONSENTS xxiv
3.26 BROKERS xxv
3.27 INTEREST IN COMPETITORS, SUPPLIERS AND CUSTOMERS xxvi
3.28 INVENTORY xxvii
3.29 WARRANTIES xxviii
3.30 CUSTOMERS AND SUPPLIERS xxix
3.31 ENVIRONMENTAL MATTERS xxx
3.4 CERTIFICATES OF GOOD STANDING iv
3.5 OWNERSHIP OF SUBSIDIARIES OWNERSHIP OF SUBSIDIARIES v
3.8 SUBSEQUENT EVENTS vi
3.9 REAL AND PERSONAL PROPERTY vii
1.3 OUTSTANDING SHARES i
1.3(B) PROMISSORY NOTE ii
3.10 LICENSES, CERTIFICATES AND PERMITS vii
3.11 INTELLECTUAL PROPERTY viii
3.13 INSURANCE POLICIES ix
3.14 COMPENSATION PLANS x
3.14(A) EMPLOYEE BENEFITS xi
3.14(B) EMPLOYEE PENSION PLANS xii
3.14(D) EXCEPTIONS TO BENEFIT PLANS xiii
3.14(H) EXCEPTIONS TO COMPENSATION PLANS xiv
3.15 CONTRACTS AND OTHER AGREEMENTS xv
3.16 PENDING LITIGATION xvi
3.18 KEY EMPLOYEES AND DIRECTORS COMPENSATION xvii
3.20 RECEIVABLES xviii
3.21 BANK ACCOUNTS xix
3.22 COMPANY AGENTS xx
3.23 INDEBTEDNESS TO AND FROM OFFICERS, DIRECTORS AND KEY
EMPLOYEES xxi
3.24 COMMISSION SALES CONTRACTS xxii
3.25 CERTAIN CONSENTS xxiii
3.26 BROKERS xxiv
3.27 INTEREST IN COMPETITORS, SUPPLIERS AND CUSTOMERS xxv
3.28 INVENTORY xxvi
3.29 WARRANTIES xxvii
3.30 CUSTOMERS AND SUPPLIERS xxviii
3.31 ENVIRONMENTAL MATTERS xxix
3.4 CERTIFICATES OF GOOD STANDING iii
3.5 OWNERSHIP OF SUBSIDIARIES OWNERSHIP OF SUBSIDIARIES iv
3.8 SUBSEQUENT EVENTS v
3.9 REAL AND PERSONAL PROPERTY vi
TABLE OF CONTENTS
Page
ARTICLE 1 AGREEMENT OF PURCHASE AND SALE 1
1.1 AGREEMENT. 1
1.2 CLOSING. 1
1.3 DELIVERY AND PAYMENT 1
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF BUYER 2
2.1 DUE ORGANIZATION. 2
2.2 DUE AUTHORIZATION; NO CONFLICTS. 2
2.3 BROKERS AND FINDERS. 2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS 2
3.1 CAPITALIZATION; OWNERSHIP OF SHARES. 2
3.2 NO LIENS ON SHARES. 3
3.3 OTHER RIGHTS TO ACQUIRE CAPITAL STOCK. 3
3.4 DUE ORGANIZATION. 3
3.5 SUBSIDIARIES. 3
3.6 DUE AUTHORIZATION; NO CONFLICTS 4
3.7 FINANCIAL STATEMENTS 4
3.8 CONDUCT OF BUSINESS; CERTAIN ACTIONS 5
3.9 PROPERTIES 6
3.10 LICENSES AND PERMITS. 7
3.11 INTELLECTUAL PROPERTY RIGHTS. 7
3.12 COMPLIANCE WITH LAWS. 8
3.13 INSURANCE. 8
3.14 EMPLOYEE BENEFIT MATTERS. 9
3.15 CONTRACTS AND AGREEMENTS. 11
3.16 CLAIMS AND PROCEEDINGS. 12
3.17 TAXES. 12
3.18 PERSONNEL. 14
3.19 BUSINESS RELATIONS. 14
3.20 ACCOUNTS RECEIVABLE. 14
3.21 BANK ACCOUNTS. 15
3.22 AGENTS. 15
3.23 INDEBTEDNESS TO AND FROM OFFICERS, DIRECTORS,
STOCKHOLDERS, AND EMPLOYEES. 15
3.24 COMMISSION SALES CONTRACTS. 15
3.25 CERTAIN CONSENTS. 15
3.26 BROKERS. 15
3.27 INTEREST IN COMPETITORS, SUPPLIERS, AND
CUSTOMERS. 16
3.28 INVENTORY. 16
3.29 WARRANTIES. 16
3.30 CUSTOMERS AND SUPPLIERS. 16
3.31 ENVIRONMENTAL MATTERS. 16
3.32 INFORMATION FURNISHED. 17
3.33 CONTROLLED GROUP LIABILITY. 17
ARTICLE 4 CONDITIONS TO CLOSING 17
4.1 CONDITIONS TO OBLIGATIONS OF BUYER. 17
4.2 CONDITIONS TO OBLIGATIONS OF SELLERS. 18
ARTICLE 5 TERMINATION 19
5.1 TERMINATION. 19
5.2 EFFECT OF TERMINATION. 19
ARTICLE 6 INDEMNIFICATION 19
6.1 INDEMNIFICATION OF BUYER AND THE COMPANY. 19
6.2 DEFENSE OF THIRD-PARTY CLAIMS. 20
6.3 DIRECT CLAIMS. 21
6.4 TAX AUDITS. 21
ARTICLE 7 MISCELLANEOUS 21
7.1 COLLATERAL AGREEMENTS, AMENDMENTS, AND WAIVERS. 21
7.2 SUCCESSORS AND ASSIGNS. 21
7.3 EXPENSES AND TRANSFER TAXES. 21
7.4 INVALID PROVISIONS. 22
7.5 INFORMATION AND CONFIDENTIALITY. 22
7.6 WAIVER. 22
7.7 NOTICES. 22
7.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND OTHER PROVISIONS. 23
7.9 PUBLIC ANNOUNCEMENT. 23
7.10 WAIVER OF CERTAIN RIGHTS. 23
7.11 FURTHER ASSURANCES. 24
7.12 NO THIRD-PARTY BENEFICIARIES. 24
7.13 DISPUTE RESOLUTION. 24
7.14 JURISDICTION AND VENUE. 24
7.15 GOVERNING LAW. 24
7.16 WAIVER OF POTENTIAL CONFLICT OF INTEREST. 24
7.17 MISCELLANEOUS PROVISIONS. 25
ARTICLE 1 AGREEMENT OF PURCHASE AND SALE 1
1.1 AGREEMENT. 1
1.2 CLOSING. 1
1.3 DELIVERY AND PAYMENT 1
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF BUYER 21
2.1 DUE ORGANIZATION. 2
2.2 DUE AUTHORIZATION; NO CONFLICTS. 2
2.3 BROKERS AND FINDERS. 2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS 2
3.1 CAPITALIZATION; OWNERSHIP OF SHARES. 2
3.2 NO LIENS ON SHARES. 32
3.3 OTHER RIGHTS TO ACQUIRE CAPITAL STOCK. 3
3.4 DUE ORGANIZATION. 3
3.5 SUBSIDIARIES. 3
3.6 DUE AUTHORIZATION; NO CONFLICTS 4
3.7 FINANCIAL STATEMENTS 4
3.8 CONDUCT OF BUSINESS; CERTAIN ACTIONS 5
3.9 PROPERTIES 6
3.10 LICENSES AND PERMITS. 76
3.11 INTELLECTUAL PROPERTY RIGHTS. 7
3.12 COMPLIANCE WITH LAWS. 8
3.13 INSURANCE. 8
3.14 EMPLOYEE BENEFIT MATTERS. 98
3.15 CONTRACTS AND AGREEMENTS. 1110
3.16 CLAIMS AND PROCEEDINGS. 11
3.17 TAXES. 1211
3.18 PERSONNEL. 13
3.19 BUSINESS RELATIONS. 1413
3.20 ACCOUNTS RECEIVABLE. 1413
3.21 BANK ACCOUNTS. 14
3.22 AGENTS. 14
3.23 INDEBTEDNESS TO AND FROM OFFICERS, DIRECTORS,
STOCKHOLDERS, AND EMPLOYEES. 14
3.24 COMMISSION SALES CONTRACTS. 1514
3.25 CERTAIN CONSENTS. 1514
3.26 BROKERS. 1514
3.27 INTEREST IN COMPETITORS, SUPPLIERS, AND
CUSTOMERS. 15
3.28 INVENTORY. 15
3.29 WARRANTIES. 15
3.30 CUSTOMERS AND SUPPLIERS. 1615
3.31 ENVIRONMENTAL MATTERS. 1615
3.32 INFORMATION FURNISHED. 16
3.33 CONTROLLED GROUP LIABILITY. 1716
ARTICLE 4 CONDITIONS TO CLOSING 1716
4.1 CONDITIONS TO OBLIGATIONS OF BUYER. 1716
4.2 CONDITIONS TO OBLIGATIONS OF SELLERS. 18
ARTICLE 5 TERMINATION 1918
5.1 TERMINATION. 1918
5.2 EFFECT OF TERMINATION. 1918
ARTICLE 6 INDEMNIFICATION 1918
6.1 INDEMNIFICATION OF BUYER AND THE COMPANY. 1918
6.2 DEFENSE OF THIRD-PARTY CLAIMS. 19
6.3 DIRECT CLAIMS. 20
6.4 TAX AUDITS. 20
ARTICLE 7 MISCELLANEOUS 2120
7.1 COLLATERAL AGREEMENTS, AMENDMENTS, AND WAIVERS.2120
7.2 SUCCESSORS AND ASSIGNS. 2120
7.3 EXPENSES AND TRANSFER TAXES. 21
7.4 INVALID PROVISIONS. 21
7.5 INFORMATION AND CONFIDENTIALITY. 2221
7.6 WAIVER. 2221
7.7 NOTICES. 2221
7.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND OTHER PROVISIONS. 23
7.9 PUBLIC ANNOUNCEMENT. 23
7.10 WAIVER OF CERTAIN RIGHTS. 23
7.11 FURTHER ASSURANCES. 23
7.12 NO THIRD-PARTY BENEFICIARIES. 24
7.13 DISPUTE RESOLUTION. 24
7.14 JURISDICTION AND VENUE. 24
7.15 GOVERNING LAW. 24
1.31 PROMISSORY NOTE OUTSTANDING SHARES
SEE ATTACHED
1.3(B) OUTSTANDING STOCK SHARES
SEE ATTACHED LIST
1.3A SECURITY AGREEMENT
SEE ATTACHEDPROMISSORY NOTE
3.4 CERTIFICATES OF GOOD STANDING
SEE ATTACHED
3.5 OWNERSHIP OF SUBSIDIARIES
SEE ATTACHED LIST
3.8 SUBSEQUENT EVENTS
INTERLINK DID INCREASE ITS COMPENSATION TO ITS OFFICERS AND
DIRECTORS, AND THE SUBSIDIARIES OF INTERLINK DID GUARANTEE THE
PAYMENT OF THE EMPLOYMENT AGREEMENTS WITH THE OFFICERS AND
DIRECTORS OF INTERLINK.
INTERLINK AND ITS SUBSIDIARIES DID TERMINATE ITS EMPLOYMENT
AGREEMENTS WITH ITS OFFICERS AND DIRECTORS.
INTERLINK'S SUBSIDIARIES DID AMEND THE ARTICLES OF INCORPORATION
OF THOSE SUBSIDIARIES.
INTERLINK HAS DECLERATED THE PAYMENT OF ACCOUNTS PAYABLE IN THE
MONTHS OF APRIL AND MAY OF A.D. 2002
INTERLINK HAS SETTLED LITIGATION REGARDING ITS SUBSIDIARIES.
INTERLINK'S SUBSIDIARIES HAVE TERMINATED EMPLOYEE BENEFITS PLANS.
INTERLINK'S SUBSIDIARIES DID ENTER A SETTLEMENT AND RELEASE
AGREEMENT WITH CENTRATEX, INC. REGARDING PREVIOUS MANAGEMENT AND
BILLING SERVICES PROVIDED BY CENTRATEX TO INTERLINK'S
SUBSIDIARIES.
INTERLINK DID ASSUME THE LIABILITY FOR THE PAID TIME OFF BALANCES
OF THE FORMER EMPLOYEES OF CENTRATEX, INC. AND CENTRATEX, INC. IS
TRANSFERRING TWO AUTOMOBILES TO INTERLINK AS PAYMENT IN FULL FOR
INTERLINK ASSUMING THE LIABILITY FOR THE PAID TIME OFF OF
CENTRATEX, INC.'S FORMER EMPLOYEES.
INTERLINK AND SUBSIDIAIRES DID ENTER INTO A CONSULTING AGREEMENT
WITH MSI21, INC. FOR THE PROVISION OF CERTAIN CONSULTING SERVICES
BY WHICH AGREEMENT MSI21, INC. IS ENTITLED TO A PERCENTAGE OF THE
ACCOUNTS RECEIVABLE OF INTERLINK'S SUBSIDIAIRES, AND THE
REIMBUMBERSEMENT OF CERTAIN COSTS AND EXPENSES OF MSI21, INC. IN
PROVIDING THE CONSULTING SERVICES.
INTERLINK AND ITS SUBSIDIARIES HAVE RECEIVED NOTICE FROM DVI
BUSINESS CREDIT CORPORATION THAT THE LOAN AGREEMENT WITH ELK
OMEGA, INC. HAS BEEN ASSIGNED TO DVI BUSINESS CREDIT CORPORATION
THAT THE LOAN AGREEMENT WILL NOT BE RENEWED, AND THAT DEMAND FOR
PAYMENT OF THE LOAN AGREEMENT HAS BEEN MADE.
3.9 REAL AND PERSONAL PROPERTY
LOT AND BUILDING IN MARKSVILLE, LOUISIANA
LOTS IN MCCAMEY, TEXAS
USUAL AND CUSTOMARY OFFICE EQUIPMENT, FURNITURE AND FIXTURES
AS400 COMPUTER SYSTEM BEING PURCHASED BY INTERLINK
3.10 LICENSES, CERTIFICATES AND PERMITS
INTERLINK HAS AN EMPLOYER TAX IDENTIFICATION NUMBER, A STATE OF
TEXAS TAXPAYER INDENTIFICATION NUMBER, A STATE OF TEXAS CHARTER
NUMBER
3.11 INTELLECTUAL PROPERTY
NONE
3.13 INSURANCE POLICIES
SEE FOLLOWING INSURNACE BINDER FOR INTERLINK
3.14 COMPENSATION PLANS
INTERLINK HOME HEALTH SERVICES OF SAN ANTONIO, INC. HAS
TERMINATED ITS EMPLOYEE BENEFIT PLAN, BUT ALL FUNDS HAVE NOT BEEN
PAID OUT FULLY.
INTERLINK HOME HEALTH SERVICS OF WEST TEXAS, INC. HAS TERMINATED
ITS EMPLOYEE BENEFIT PLAN AND ALL FUNDS HAVE BEEN DSITRIBUTED.
INTERLINK AND ALL OF ITS SUBSIDAIRES CURRENTLY PARTICIPATE IN A
401K PLAN.
3.14(A) EMPLOYEE BENEFITS
INTERLINK HOME HEALTH SERVICES OF SAN ANTONIO, INC. HAS
TERMINATED ITS EMPLOYEE BENEFIT PLAN, BUT ALL FUNDS HAVE NOT BEEN
PAID OUT FULLY.
INTERLINK HOME HEALTH SERVICS OF WEST TEXAS, INC. HAS TERMINATED
ITS EMPLOYEE BENEFIT PLAN AND ALL FUNDS HAVE BEEN DSITRIBUTED.
INTERLINK AND ALL OF ITS SUBSIDAIRES CURRENTLY PARTICIPATE IN A
401K PLAN.
3.14(B) EMPLOYEE PENSION PLANS
INTERLINK HOME HEALTH SERVICES OF SAN ANTONIO, INC. HAS
TERMINATED ITS EMPLOYEE BENEFIT PLAN, BUT ALL FUNDS HAVE NOT BEEN
PAID OUT FULLY.
INTERLINK HOME HEALTH SERVICS OF WEST TEXAS, INC. HAS TERMINATED
ITS EMPLOYEE BENEFIT PLAN AND ALL FUNDS HAVE BEEN DSITRIBUTED.
INTERLINK AND ALL OF ITS SUBSIDAIRES CURRENTLY PARTICIPATE IN A
401K PLAN.
3.14(D) EXCEPTIONS TO BENEFIT PLANS
3.14(H) EXCEPTIONS TO COMPENSATION PLANS
IN THE EVENT THAT THE EMPLOYMENT CONTRACTS OF ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, AND ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ARE NOT TERMINATED AND RELEASED, THEN
THE TRANSACTION SET FORTH IN THIS AGREEMENT WILL ENTITLE THEM TO
SEVERANCE PAY.
3.15 CONTRACTS AND OTHER AGREEMENTS
INTERLINK HAS A 2 YEAR LEASE AGREEMENT ON ITS OFFICE IN
ARLINGTON, TEXAS
INTERLINK HAS GUARANTEED A LEASE AGREEMENT FOR WESTERN HOME
HEALTH, INC., A FORMER SUBSIDIARY OF INTERLINK, FOR OFFICE SPACE
IN DENVER, COLORADO
INTERLINK HAS A LOAN AGREEMENT AND WARRANT WITH THE HEALTH CARE
INDUSTRY FUND, LTD.
THE SUBSIDARIES AND INTERLINK HAVE A FINANCIAL CONSULTING
AGREEMENT WITH ELK FINANCIAL, INC.
AS400 FINANCING AGREEMENT WITH IBM
3.16 PENDING LITIGATION
DVI BUSINESS CREDIT CORPORATION HAS ISSUED A DEMAND FOR PAYMENT
OF THE ELK OMEGA, INC. PROMISSORY NOTE TO THE SUBSIDIARIES OF
INTERLINK, AND LITIGATION APPEARS IMMINENT.
SEE ATTACHED LIST.
3.18 KEY EMPLOYEES AND DIRECTORS COMPENSATION
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, AND ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ WERE OFFICERS AND
DIRECTORS, AND HAD EMPLOYMENT AGREEMENTS WITH INTERLINK THAT WERE
GUARANTEED BY THE SUBSIDIARIES THAT PROVIDED FOR A BASE ANNUAL
SALARY $250,000.00, PLUS BENEFITS AND SEVERANCE PAY.
CMS MAY AUDIT THE SUBSIDIARIES REGARDING LENDING AND FINANCING
FEES.
SEE ATTACHED LIST FOR SALES REPRESENTATIVES AND COMPENSATION
PLANS
3.20 RECEIVABLES
THE ACCOUNTS RECEIVABLES DUE FROM THE MEDICARE AND MEDICAID
PROGRAMS, AND INSURANCE CONTRACTS ALL HAVE AUDIT, RECOUPMENT AND
OFFSET PROVISIONS CONTAINED THEREIN WHICH ALLOWS SUCH PAYOR TO
OFFSET OR WITHHOLD PAYMENT ON THE ACCOUNTS RECEIVABLE OF THE
SUBSIDIARIES OF INTERLINK.
THE SUBSIDIARIES OF INTERLINK HAVE A MANAGEMENT CONTRACT WITH
INTERLINK BY WHICH INTERLINK HAS ACCOUNTS RECEIVABLE DUE AND
OWING TO IT.
INTERLINK AND SUBSIDIAIRES DID ENTER INTO A CONSULTING AGREEMENT
WITH MSI21, INC. FOR THE PROVISION OF CERTAIN CONSULTING SERVICES
BY WHICH AGREEMENT MSI21, INC. IS ENTITLED TO A PERCENTAGE OF THE
ACCOUNTS RECEIVABLE OF INTERLINK'S SUBSIDIAIRES, AND THE
REIMBUMBERSEMENT OF CERTAIN COSTS AND EXPENSES OF MSI21, INC. IN
PROVIDING THE CONSULTING SERVICES.
3.21 BANK ACCOUNTS
SEE ATTACHED LIST
3.22 COMPANY AGENTS
ELK OMEGA, INC. AND THE HEALTH CARE INDUSTRY FUND, LTD. HAVE BEEN
APPOINTED TO ACT AS AGENTS WITH RESPECT TO CERTAIN BILLING AND
ACCOUNTS RECEIVABLE MATTERS PURSUANT TO THE APPLICABLE LOAN
AGREEMENTS WITH THOSE ENTITIES.
INTERLINK IS AN AGENT FOR THE SUBSIDIARIES OF INTERLINK WITH
RESPECT TO BILLING AND COLLECTION OF THE ACCOUNTS RECEIVABLES OF
THE SUBSIDIARIES.
INTERLINK AND SUBSIDIAIRES DID ENTER INTO A CONSULTING AGREEMENT
WITH MSI21, INC. FOR THE PROVISION OF CERTAIN CONSULTING SERVICES
BY WHICH AGREEMENT MSI21, INC. IS ENTITLED TO A PERCENTAGE OF THE
ACCOUNTS RECEIVABLE OF INTERLINK'S SUBSIDIAIRES, AND THE
REIMBUMBERSEMENT OF CERTAIN COSTS AND EXPENSES OF MSI21, INC. IN
PROVIDING THE CONSULTING SERVICES.
3.23 INDEBTEDNESS TO AND FROM OFFICERS, DIRECTORS AND KEY
EMPLOYEES
SALES COMMISSIONS DUE TO SALES OR MARKETING REPRESENTATIVES.
3.24 COMMISSION SALES CONTRACTS
SEE ATTACHED LIST.
3.25 CERTAIN CONSENTS
THE CENTERS FOR MEDICARE AND MEDICAID SERVICES, THE STATE OF
TEXAS DEPARTMENT OF HUMAN SERVICES, THE LOUISIANA DEPARTMENT OF
HEALTH AND HOSPITALS MUST BE NOTIFIED OF THE CHANGE OF CONTROL,
AND THEIR CONSENT IS REQUIRED FOR SUCH CHANGE OF CONTROL.
3.26 BROKERS
NONE.
3.27 INTEREST IN COMPETITORS, SUPPLIERS AND CUSTOMERS
INTERLINK AND ITS SUBSIDIARIES HAVE SOFTWARE LICENSING CONTRACTS
WITH ECLICKMD, INC. WHICH IS A CORPORATION WHOSE PRINCIPLE
SHAREHOLDERS, OFFICERS AND DIRECTORS ARE ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇ AND
▇▇▇▇ ▇▇▇▇▇.
INTERLINK'S SUBSIDARIES HAD A MANAGEMENT AND BILLING CONTRACT
WITH CENTRATEX, INC., WHICH WAS A CORPORATION WHOSE PRINCIPLE
SHAREHOLDERS, OFFICERS AND DIRECTORS ARE ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇ ▇▇▇▇ AND ▇▇▇▇ ▇▇▇▇▇, AND WHCH ALSO FORMERLY EMPOYED ▇▇▇▇
▇▇▇▇▇▇▇▇▇.
THE SUBSIDIARIES HAVE A MANAGEMENT CONTRACT WITH INTERLINK.
3.28 INVENTORY
NONE.
3.29 WARRANTIES
INTERLINK HAS WARRANTIES AND GUARANTEES TO ITS SUBSIDIARIES TO
PROVIDE MANGMENT SERVICES TO THEM, AND THE SUBSIDIDAIRES HAVE AN
OBLIGATION TO PAY INTERLINK FOR THOSE SERVICES.
THE SUBSIDIARIES OF INTERLINK HAVE DUTIES TO PROVIDE NON-
NEGLIGENT HOME HEALTH CARE SERVICES AND PRODCUTS TO THEIR
RESPECTIVE PATIENTS.
3.30 CUSTOMERS AND SUPPLIERS
SEE ATTACHED LIST.
3.31 ENVIRONMENTAL MATTERS