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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
ARBOR HEALTH CARE COMPANY
JACKSONVILLE THERAPY BUSINESS
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TABLE OF CONTENTS
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PAGE
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ARTICLE I: SALE AND PURCHASE OF ASSETS................................................... 2
1.1. Acquired Assets......................................................... 2
1.2. Inventory............................................................... 2
1.3. Assumption of Liability................................................. 2
1.4. Designated Contracts.................................................... 3
1.5. The Physical Therapy Network, Inc....................................... 3
ARTICLE II: PURCHASE PRICE............................................................... 4
2.1. Determination and Payment of Purchase Price............................. 4
2.2. Certain Adjustments to the Purchase Price............................... 5
2.3. Transfer Taxes; Prorated Items.......................................... 5
2.4. Other Prorations........................................................ 6
2.5. Allocation of Purchase Price............................................ 6
ARTICLE III: THE CLOSING................................................................. 6
3.1. Time and Place of Closing............................................... 6
3.2. Certification and Assignment of Participation Agreements................ 6
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF OWNERS
AND SELLERS.................................................... 7
4.01 Jacksonville Group, Inc................................................. 7
4.02 Center for Sports Physical Therapy, Inc................................. 7
4.03 Jacksonville Rehabilitation Center, Inc................................. 7
4.1. Organization and Standing of Sellers.................................... 7
4.2. Authority............................................................... 7
4.3. Binding Effect.......................................................... 7
4.4. Absence of Conflicting Agreements....................................... 8
4.5. Consents................................................................ 8
4.6. Schedule of Assets and Properties....................................... 8
4.7. Contracts............................................................... 8
4.8. Financial Statements.................................................... 10
4.9. Material Changes........................................................ 10
4.10. Cost Reports............................................................ 10
4.11. Licenses; Permits....................................................... 11
4.12. Title, Condition to Personal Property....................................11
4.13. Title, Condition of the Property........................................ 12
4.14. Legal Proceedings....................................................... 12
4.15. Employees............................................................... 12
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4.16. Collective Bargaining, Labor Contracts, Employment
Practices, etc.......................................................... 13
4.17. ERISA................................................................... 13
4.18. Insurance and Surety Agreements......................................... 13
4.19. Relationships........................................................... 14
4.20. Assets Comprising the Therapy Business.................................. 14
4.21. Absence of Certain Events............................................... 14
4.22. Compliance with Laws.................................................... 15
4.23. Environmental Compliance................................................ 15
4.24. Finders................................................................. 16
4.25. Tax Returns............................................................. 16
4.26. Encumbrances Created by this Agreement.................................. 17
4.27. Physical Therapists..................................................... 17
4.28. Claims and Billing...................................................... 17
4.29. Network Stock........................................................... 17
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF BUYER....................................... 17
5.1. Organization and Standing............................................... 18
5.2. Power and Authority..................................................... 18
5.3. Binding Agreement....................................................... 18
5.4. Legal Proceedings....................................................... 18
5.5. Compliance with Laws.................................................... 18
5.6. Claims and Billing...................................................... 18
5.7. Finders................................................................. 18
ARTICLE VI: INFORMATION AND RECORDS CONCERNING THE
FACILITIES....................................................................... 18
6.1. Access to Information and Records before Closing........................ 18
6.2. Maps, Plans, Surveys, etc............................................... 19
ARTICLE VII: OBLIGATIONS OF THE PARTIES UNTIL CLOSING.................................... 19
7.1. Conduct of Business Pending Closing..................................... 19
7.2. Affirmative Covenants................................................... 19
7.3. Pursuit of Consents and Approvals....................................... 20
ARTICLE VIII: CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS................................. 21
8.1. Representations and Warranties.......................................... 21
8.2. Performance of Covenants................................................ 21
8.3. Delivery of Closing Certificate......................................... 21
8.4. Legal Matters........................................................... 21
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8.5. Approvals............................................................... 21
8.6. Material Change......................................................... 22
8.7. Assets Transferred at Closing........................................... 22
8.8. Possession.............................................................. 22
8.9. COBRA................................................................... 22
8.10. Authorization Documents................................................. 22
8.11. Other Documents......................................................... 22
8.12. Due Diligence Review.................................................... 22
8.13. Approval of Schedules................................................... 23
ARTICLE IX: CONDITIONS PRECEDENT TO
SELLERS' OBLIGATIONS........................................... 23
9.1. Representation and Warranties........................................... 23
9.2. Performance of Covenants................................................ 23
9.3. Delivery of Closing Certificate......................................... 23
9.4. Legal Matters........................................................... 23
9.5. Authorization Documents................................................. 23
9.6. Other Documents......................................................... 23
ARTICLE X: OBLIGATIONS OF PARTIES AFTER CLOSING.......................................... 23
10.1. Discharge of Liabilities................................................ 23
10.2. Indemnification......................................................... 24
10.3. Payment by Buyer for Expense Adjustments After Closing.................. 25
10.4. Cost Reports............................................................ 25
10.5. Covenant Not-To-Compete................................................. 25
10.6. Records................................................................. 26
10.7. Collection of Accounts Receivable....................................... 26
10.8. Employment of Existing Employees........................................ 27
10.9. Consents and Approvals.................................................. 27
10.10. Set-Off................................................................. 27
10.11. Therapy Business Books and Records...................................... 28
10.12. Designated Contracts.................................................... 28
ARTICLE XI: TERMINATION.................................................................. 28
11.1. Termination............................................................. 28
11.2. Effect of Termination................................................... 28
ARTICLE XII: CASUALTY, RISK OF LOSS...................................................... 29
12.1. Casualty, Risk of Loss.................................................. 29
ARTICLE XIII: MISCELLANEOUS PROVISIONS................................................... 29
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13.1. Survival of Representations and Warranties.............................. 29
13.2. Public Announcements.................................................... 29
13.3. Costs and Expenses...................................................... 29
13.4. Benefit and Assignment.................................................. 30
13.5. Effect and Construction of this Agreement............................... 30
13.6. Cooperation - Further Assistance........................................ 30
13.7. Notices................................................................. 30
13.8. Waiver, Discharge, etc.................................................. 31
13.9. Rights of Persons Not Parties........................................... 31
13.10. Governing Law........................................................... 31
13.11. Severability............................................................ 31
13.12. Schedules and Exhibits.................................................. 32
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made as of this 10th
day of September, 1997, by, between and among Arbor Health Care Company, a
Delaware corporation ("Buyer"); and ▇▇▇▇▇▇ E. Sale, III, ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, each a resident of the state
of Florida, who together own all of the outstanding capital stock of
Jacksonville Group, Inc. (collectively, "JG Owners"); ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇, each a resident of the state of Florida, who
together own all of the outstanding capital stock of Center for Sports Physical
Therapy, Inc. (collectively, "CSPT Owners"); ▇▇▇ ▇. ▇▇▇▇▇▇, a resident of the
state of Florida, who owns all of the outstanding capital stock of Jacksonville
Rehabilitation Center, Inc. (collectively, "JRC Owners") (JG Owners, CSPT Owners
and JRC Owners are collectively known as "Owners"); Jacksonville Group, Inc., a
Florida corporation ("JG"); Center for Sports Physical Therapy, Inc., a Florida
corporation ("CSPT"); and Jacksonville Rehabilitation Center, Inc., a Florida
Corporation ("JRC") (collectively, JG, CSPT and JRC are referred to as "Sellers"
and individually, a "Seller").
BACKGROUND
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A. Sellers, collectively, currently own, operate and maintain the
Center for Sports Physical Therapy, Inc. d/b/a Center for Orthopaedic and Sports
Physical Therapy; Jacksonville Rehabilitation Center, Inc., d/b/a Jacksonville
Rehabilitation Center; and Jacksonville Group, Inc. d/b/a Comprehensive Physical
Therapy (collectively, the "Therapy Business").
B. JG previously has conducted its business through JG and three
Florida limited liability companies owned in part by JG. Prior to the Closing
Date, as hereafter defined, JG shall acquire substantially all of the assets of
or sell all interests in such limited liability companies (the "LC Transaction")
so that JG shall be able fully to convey all of such assets to Buyer free and
clear of all liens and encumbrances. The LC Transaction shall be described more
fully on SCHEDULE 4.9 hereto.
C. Owners own all of the issued and outstanding capital stock of
Sellers, as set forth on EXHIBIT A hereto.
D. Buyer wishes to acquire and Sellers wish to sell substantially all
of the assets of Sellers that comprise the Therapy Business in accordance with
the terms and conditions hereinafter set forth. The locations from which the
Therapy Business is operated are set forth on SCHEDULE 4.12.
E. As an inducement to Buyer to enter into the Agreement, Owners and
Sellers agree to make certain representations, warranties, agreements and
covenants, as set forth in this Agreement.
F. As an inducement to Owners and Sellers to enter into the Agreement,
Buyer agrees to make certain representations, warranties, agreements and
covenants, as set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
covenants,
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agreements, representations and warranties herein contained, and other good and
valuable consideration, the receipt and adequacy of which hereby are
acknowledged, JG, CSPT, JRC, Sellers and Buyer, intending to be legally bound,
agree as follows:
ARTICLE I: SALE AND PURCHASE OF ASSETS
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1.1. ACQUIRED ASSETS. Subject to the terms and conditions of this
Agreement, at the Closing, Buyer, in reliance upon the respective covenants,
representations, warranties and agreements of the respective Owners and Sellers
contained herein, will acquire from Sellers, and Sellers will sell, assign,
transfer and convey to Buyer, substantially all of the assets, properties and
business of Sellers that comprise the Therapy Business, including without
limitation such property owned or leased by Sellers that comprises or is
directly used in connection with the Therapy Business, including without
limitation all tangible, intangible, personal or mixed property, the Inventory,
Network Stock, claims and rights under Designated Contracts, the trade names,
trademarks, service marks, patient lists and records, telephone numbers, good
will, and, to the extent permitted by law, all permits, licenses and
certificates of need, Medicare and Medicaid provider agreements and other rights
held by Sellers with respect to the ownership or operation of the Therapy
Business as the same shall exist on the Closing Date and copies all of Sellers'
books and records pertaining to the foregoing as set forth on the Schedules and
Exhibits attached hereto, and as provided to Buyer by Sellers pursuant to
Buyer's due diligence request, but excluding cash, cash equivalents, accounts
receivable, notes receivables, and tax refunds, (together, all such properties,
assets or business to be conveyed to Buyer from Sellers at the Closing hereafter
are referred to as the "Assets").
1.2. INVENTORY. Sellers have each, at its own expense, made an
inventory of the complete contents of its respective Therapy Business, and shall
promptly (but not later than ten (10) days from the date hereof) deliver such
list to Buyer (the "Inventory"). Sellers shall maintain the Inventory at its
present inventory levels through the Closing Date. The most recent Inventory is
included on SCHEDULE 4.6 hereto.
1.3. ASSUMPTION OF LIABILITY. Except as expressly provided herein
including, but not limited to Section 2.2 herein, Buyer shall not assume, nor in
any way be liable or responsible for any claims, lawsuits, liabilities,
obligations or debts of Sellers, including without limitation (i) malpractice
claims asserted by patients of the Therapy Business or any other tort claims
asserted against Sellers, claims for breach of contract, or any claims of any
kind asserted by patients, former patients, employees of Sellers or any other
party that are based on acts or omissions occurring on or before the Closing
Date; (ii) amounts due or that may become due to Medicaid and/or Medicare or any
other health care reimbursement or payment intermediary on account of health
care reimbursement cost report adjustments or other payment adjustments
attributable to any period prior to the Closing Date; (iii) any form of Medicaid
and/or Medicare or other health care reimbursement recapture, adjustment or
overpayment whatsoever with respect to any period prior to the Closing Date; and
(iv) any accounts payable, employment or other taxes, and any other obligation
or liability of Sellers to pay money whatsoever.
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Notwithstanding the provisions of the immediately preceding section, on
the Closing Date, contingent upon the consummation of the transactions
contemplated hereby, Buyer shall assume and thereafter in due course fully
satisfy those obligations arising under the Designated Contracts specified
pursuant to Section 1.4 herein and assigned by Sellers to Buyer, with respect
to, and only with respect to, performance and payments owed that become due
thereunder subsequent to the Closing Date. Liabilities and obligations under
such Designated Contracts that have accrued, or the performance of which is due,
on or prior to the Closing Date, and all liabilities and obligations under all
other Contracts shall remain the sole responsibility of Sellers.
1.4. DESIGNATED CONTRACTS.
(a) As soon as practicable after the date hereof but in no
event later than fifteen (15) days after the date hereof, Buyer shall deliver
notice in writing to Sellers designating which, if any, of the Contracts set
forth on SCHEDULE 4.7 hereto will be assigned to and assumed by Buyer (the
"Designated Contracts"). Such notice of designation will be set forth on
SCHEDULE 1.4 hereto. If within said period of time Buyer fails to so deliver
notice to Sellers, Buyer will be deemed to have designated none of the
Contracts, and Sellers will remain fully liable thereunder. To the extent Buyer
makes any such designation, Sellers shall at Closing be obligated to either: (i)
assign all of its right, title and interest under such Designated Contracts to
Buyer and Buyer shall assume the obligations accruing after Closing under such
Designated Contracts; and shall agree to indemnify and hold harmless the
respective Seller from any and all liability thereunder; or (ii) arrange for
termination of such contract and enter into a replacement therefor.
(b) Notwithstanding anything to the contrary contained herein,
unless otherwise specifically agreed in writing, Buyer is not assuming and will
not be responsible for any liabilities or obligations under the Designated
Contracts incurred on or occurring before the Closing Date; all such liabilities
and obligations remaining the sole and exclusive responsibility of Sellers
pursuant to Section 1.3 herein and shall be paid or performed on or prior to the
Closing Date.
(c) Immediately after confirmation by Buyer of the Designated
Contracts to be assigned by Sellers, Buyer and each Seller, respectively, shall
use its best efforts and shall diligently proceed to obtain any consents of any
parties necessary to permit the assignment and assumption of the Designated
Contracts. In the event that any of the Designated Contracts are not assignable,
or the parties to any such Designated Contracts fail or refuse to consent to any
assignment on or before the Closing Date, Buyer shall have no liability to
assume and shall not assume any such Designated Contracts.
1.5. THE PHYSICAL THERAPY NETWORK, INC. The acquired Assets under
Section 1.1 herein shall include one hundred percent (100%) of the issued and
outstanding shares of stock of The Physical Therapy Network, Inc., d/b/a The
Comprehensive Network (the "Network Stock"). Sellers have provided a statement
of assets, liabilities and equity for The Physician Therapy Network, Inc. as set
forth on SCHEDULE 1.5 hereto.
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ARTICLE II: PURCHASE PRICE
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2.1. DETERMINATION AND PAYMENT OF PURCHASE PRICE. The purchase price of
the Assets shall be Four Million Dollars and No Cents ($4,000,000.00), of which
One Million Dollars and No Cents ($1,000,000.00) shall be contingent upon the
performance of the Therapy Business subsequent to the Closing as set forth
herein, subject to adjustment as provided in Sections 2.2 and 2.3 herein (the
"Purchase Price"). The Purchase Price shall be payable as follows:
(a) Two Million Dollars and No Cents ($2,000,000.00) shall be
paid in cash at the Closing to Sellers in "same day" funds by wire transfer to
arrive by 2:00 p.m. to an account designated by Sellers' attorney. Any
adjustments made pursuant to Sections 2.2 and 2.3 herein shall be made against
this cash portion of the Purchase Price;
(b) One Million Dollars and No Cents ($1,000,000.00) shall be
paid at the Closing by delivery from Buyer of three (3) promissory notes, which
shall bear simple interest at the rate of eight percent (8%) per annum and be
amortized over three (3) years with equal annual installments in arrears
(collectively, the "Promissory Note"), copies of which are attached as EXHIBIT B
hereto; and
(c) One Million Dollars and No Cents ($1,000,000.00) shall be
payable on a contingent basis (the "Contingent Payments"). The Contingent
Payments shall be paid, if at all, in one (1) or two (2) installments. One (1)
payment in the amount of Five Hundred Thousand Dollars and No Cents
($500,000.00) shall be payable before March 15, 1999, if the Therapy Business
meets the Cumulative Gross Margin Target for the period from the Closing Date
through December 31, 1998, and one (1) payment in the amount of Five Hundred
Thousand Dollars and No Cents ($500,000.00) shall be payable before March 15,
2000, if the Therapy Business meets the Cumulative Gross Margin Target for the
period January 1, 1999, through December 31, 1999; or one (1) payment of One
Million Dollars and No Cents ($1,000,000.00) shall be payable before March 15,
2000, if the Therapy Business meets the Cumulative Gross Margin Target for the
period from the Closing Date through December 31, 1999 (respectively, the
"Contingency Periods"). Gross Margin is determined on an accrual basis and is
defined as net revenue derived from Therapy Business less all expenses with
respect thereto, except for: (i) amortization, depreciation and interest
associated with the acquisition of the Therapy Business; and (ii) allocation of
Buyer's general corporate overhead. For purposes hereof, upon completion of a
review by Buyer's independent auditors, the computation of Gross Margin shall be
final, binding and conclusive on the parties. Cumulative Gross Margin Targets
are as follows:
(i) Three Hundred Sixteen Thousand Dollars and
No Cents ($316,000.00) for the four (4)
months ended 12/31/97 or an amount adjusted
proportionately to the remaining period in
1997 if the Closing Date is subsequent to
September 1, 1997.
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(ii) One Million One Hundred Thirty Seven
Thousand Dollars and No Cents
($1,137,000.00) for the twelve (12) months
ended 12/31/98, and
(iii) One Million Three Hundred Sixty Five
Thousand Dollars and No Cents
($1,365,000.00) for the twelve (12) months
ended 12/31/99.
2.2. CERTAIN ADJUSTMENTS TO THE PURCHASE PRICE. In addition, at the
Closing hereunder:
(a) Sellers shall deliver to Buyer SCHEDULE 2.2(a) hereto,
effective as of the Closing Date, showing the amount of accrued holiday and
vacation pay, accrued sick pay and personal leave, and payroll taxes and
workers' compensation insurance premiums with respect therein for each of their
employees who Buyer desires to employ and who accept such employment with Buyer
as of the Closing Date. The amount of all such accrued holiday and vacation pay
and accrued sick pay and personal leave and payroll taxes and workers'
compensation insurance premiums with respect therein due for such employees as
of the Closing Date shall reduce the Purchase Price at Closing pursuant to
Subsection (c) herein.
(b) Sellers shall deliver to Buyer SCHEDULE 2.2(b) hereto
listing the amount of any prepayments received or paid by Sellers prior to
Closing on account of any goods or services to be rendered or supplied by
Sellers or to be received by Sellers and such prepayments, which Buyer receives
the benefit of shall adjust the Purchase Price at Closing pursuant to Subsection
(c) herein.
(c) The amount of any accruals calculated under Section 2.2(a)
herein and any prepayment amounts under Section 2.2(b) herein will reduce or
increase, as the case may be, the Purchase Price payable to Sellers on a
dollar-for-dollar basis, rather than be paid separately.
2.3. TRANSFER TAXES; PRORATED ITEMS. On the Closing Date, the following
adjustments and prorations shall be computed as of the Closing Date with respect
to the following taxes (unless otherwise stated herein) and the cash portion of
the Purchase Price shall be adjusted, upward or downward as appropriate, to
reflect such prorations:
(a) TRANSFER TAXES. All documentary stamps and recording fees
shall be borne by Buyer.
(b) CHARGES. All public or governmental charges against the
Assets (including charges for sewer, water, drainage or other services) assessed
for the fiscal year in which the Closing Date occurs shall be adjusted and
apportioned as of the Closing Date and paid thereafter by Buyer.
(c) SERVICES CONTRACTS, LEASES AND UTILITIES. All prepayments
made or payments due under any continuing service contracts and leases affecting
the Assets, including without limitation water, sewer, electric, gas and utility
bills, parking, garbage removal, and maintenance agreements shall be adjusted
and apportioned as of the Closing Date and such obligations thereafter shall be
assumed by Buyer.
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2.4. OTHER PRORATIONS. In the event that accurate prorations and other
adjustments cannot be made as of the Closing Date because current bills or
adjustments are not obtainable (as, for example, utility bills), the parties
shall prorate such items upon receipt of the final ▇▇▇▇ of statement, but in no
event later than sixty (60) days after Closing. Sellers shall use their best
efforts to have all utility meters read on the Closing Date so as accurately to
determine the proration of current liability bills.
2.5. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated as set forth in SCHEDULE 2.5 hereto, and the parties shall adhere to
such allocations in filing all returns to the appropriate taxing authorities.
Sellers reserve the right to approve the allocation of the Purchase Price.
ARTICLE III: THE CLOSING
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3.1. TIME AND PLACE OF CLOSING.
(a) Except as otherwise set forth herein, the closing (the
"Closing") of the purchase and sale of the Assets contemplated by this Agreement
shall take place on or before September 10, 1997, hereinafter called the
"Closing Date," but shall be effective as of September 1, 1997. Sellers shall
deliver possession of the Assets to Buyer, which shall accept the same on said
Closing Date.
(b) If prior to or on the Closing Date, Buyer has received
notice that any of the Sellers may not assign Medicare or Medicaid provider
agreements to Buyer, or if Buyer has received notice that it cannot obtain
Medicare or Medicaid reimbursement for physical therapy services rendered from
the Effective Date through the Closing Date, the Closing Date shall be postponed
until a time mutually agreed upon by Buyer and Sellers.
3.2. CERTIFICATION AND ASSIGNMENT OF PARTICIPATION AGREEMENTS . In the
event that: (i) all conditions precedent specified in Sections 8 and 9 herein
have been satisfied except for the conditions in Section 8.5 herein relating to
receipt of the Required Approvals; and (ii) Buyer has obtained assurances by all
the applicable authorized government agencies that are satisfactory to Buyer to
the effect that such governing agencies have reason to believe that the existing
certifications and provider agreement(s) will be assigned to Buyer, and that
such agency has no reason to believe that any condition existing during the
period of Sellers' operation will, if left uncorrected, prevent or delay
granting the Required Approvals to Buyer, the transactions contemplated in this
Agreement may, at Buyer's option, be closed.
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ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF OWNERS
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AND SELLERS
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4.01 JACKSONVILLE GROUP, INC. JG and JG Owners (collectively, "JG
Group"), jointly and severally, represent and warrant to Buyer the provisions
contained in this Article IV, but only to the extent that any such
representation or warranty pertains to JG Group. Each JG owner shall be liable
individually for any material breach of a representation or warranty made by him
or on his behalf, but not for any breach of a representation or warranty made by
or on behalf of any other JG Owner.
4.02 CENTER FOR SPORTS PHYSICAL THERAPY, INC. CSPT and CSPT Owners
(collectively, "CSPT Group"), jointly and severally, represent and warrant to
Buyer the provisions contained in this Article IV, but only to the extent that
any such representation or warranty pertains to CSPT Group. Each CSPT owner
shall be liable individually for any material breach of a representation or
warranty made by him or on his behalf, but not for any breach of a
representation or warranty made by or on behalf of any other CSPT Owner.
4.03 JACKSONVILLE REHABILITATION CENTER, INC. JRC and JRC Owners
(collectively, "JRC Group"), jointly and severally, represent and warrant to
Buyer the provisions contained in this Article IV, but only to the extent that
any such representation or warranty pertains to JRC Group. Each JRC owner shall
be liable individually for any material breach of a representation or warranty
made by him or on his behalf, but not for any breach of a representation or
warranty made by or on behalf of any other JRC Owner.
4.1. ORGANIZATION AND STANDING OF SELLERS. Except as provided on
SCHEDULE 4.1 hereto, Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida. Copies of its
Articles of Incorporation and By-Laws and all amendments hereof to date, have
been delivered to Buyer and are complete and correct. Seller has the power and
authority to own the property and assets now owned by Seller and to conduct the
business presently being conducted by Seller. Seller is not qualified to do
business as a foreign corporations in any state, and neither the ownership of
its assets nor the conduct of its business makes such qualifications necessary.
4.2. AUTHORITY. Except as provided on SCHEDULE 4.2 hereto, Seller has
the full corporate power and authority to make, execute, deliver and perform
this Agreement including all Schedules and Exhibits herein, and the other
instruments and documents required or contemplated hereby and thereby ("Seller's
Transaction Documents"). Such execution, delivery, performance and consummation
have been duly authorized by all necessary action, corporate or otherwise, on
the part of Seller, its directors and shareholders, and all consents of holders
of indebtedness of Seller that are not being paid prior to or at the Closing
Date have been obtained.
4.3. BINDING EFFECT. This Agreement and all of the other Seller's
Transaction Documents when executed and delivered by Seller and the other
parties hereto constitute the legal valid and
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binding obligation of Seller, enforceable against Seller in accordance with its
respective terms, except as enforceability may be affected by bankruptcy,
insolvency or other legal or equitable principles affecting creditor rights,
generally.
4.4. ABSENCE OF CONFLICTING AGREEMENTS. Except as provided on SCHEDULE
4.4 hereto, neither the execution or delivery of this Agreement or any of
Seller's Transaction Documents by Seller nor the performance by Seller of the
transactions contemplated hereby and thereby, conflicts with, or constitutes a
breach of or a default under (i) Seller's Articles of Incorporation or By-Laws;
(ii) any applicable law, rule, judgment, order, writ, injunction, or decree of
any court, currently in effect; (iii) any applicable rule or regulation of any
administrative agency or other governmental authority currently in effect; or
(iv) any agreement, indenture, contract or instrument to which Seller or any
shareholder thereof is now a party or by which any of them or any of the Assets
is bound.
4.5. CONSENTS. Except as set forth in SCHEDULE 4.5 hereto, no
authorization, consent, approval, license, exemption by filing or registration
with any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary in connection with
Seller's entry into, execution, delivery and performance of this Agreement, any
of the transaction documents related herein, or for the Seller's consummation of
the transactions contemplated hereby and thereby.
4.6. SCHEDULE OF ASSETS AND PROPERTIES.
(a) Set forth in SCHEDULE 4.6 hereto are complete and accurate
lists of all the material items comprising Seller's Assets as of the date of
this Agreement as follows:
(i) All Inventory, machinery, vehicles and equipment, office
equipment, furniture and supplies owned or leased by Seller
and used in connection with the Therapy Business and any other
items of personal property that comprise or is otherwise used
by Seller in connection with the Therapy Business.
(ii) All patents, trademarks, service marks, or applications
for any of the same, copyrights, franchises, licenses,
permits, easements, rights and other authorizations, if any,
and any other item of intangible or intellectual property that
are owned, possessed or used by Seller or any person in the
operation of the Therapy Business. Neither the trade name nor
any logo used for the Therapy Business has been registered as
a service ▇▇▇▇ under any state or federal statute, and to the
best of Seller's knowledge and belief, Seller's interest
therein, if any, is fully and freely assignable by Seller.
4.7. CONTRACTS
(a) SCHEDULE 4.7 hereto sets forth a complete and correct list
of all material agreements, contracts and commitments whether written or oral,
relating to the Therapy Business or its operations or to which Seller is a party
or by which it or the Assets are bound (the "Contracts").
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Seller has delivered to Buyer true and correct copies of all Contracts. All the
information set forth on SCHEDULE 4.7 hereto with respect to the Contracts is
materially true, complete and accurate. The Contracts and commitments referred
to in this Section 4.7 were entered into and require performance in the ordinary
course of business and are in full force and effect. Seller is not in material
default under any Contract and there has not been asserted, either by or against
Seller under any Contract, any notice of default, set-off or claim of default.
To the best of Seller's knowledge and belief, the parties to the Contracts other
than Seller are not in default of any of their respective obligations under the
Contracts, and there has not occurred any event which with the passage of time
or the giving of notice (or both) would constitute a default or breach under any
Contract. All amounts payable or receivable under the Contracts are, or at the
Closing Date will be on a current basis under the terms thereof. Except as set
forth in SCHEDULE 4.7 hereto, the Contracts are assignable to Buyer without the
consent of the remaining parties therein.
(b) Except as listed on SCHEDULE 4.7 hereto, Seller is not a
party to or liable in connection with and has not granted any written or
express, oral or implied:
(i) contract, agreement or commitment for the employment or
retention of, or collective bargaining, severance or
termination agreement with, any director, officer, employee,
consultant or agent or group of employees;
(ii) profit sharing, thrift, bonus, incentive, deferred
compensation, stock option, stock purchase, severance pay,
pension, retirement, hospitalization, insurance or other
similar plan, agreement or arrangement;
(iii) agreement or arrangement for the sale of any of its
assets, property or rights outside the ordinary course of
business, or requiring the consent of any party to the
transfer and assignment of any such assets, property or rights
(by sale of assets, sale of stock, merger or otherwise);
(iv) contract which contains any provisions requiring Seller
to indemnify or act for any other person or entity;
(v) agreement restricting Seller from conducting business
anywhere in the world;
(vi) partnership or joint venture contract or similar
arrangement or agreement which is likely to involve a sharing
of profits or future payments with respect to the Therapy
Business;
(vii) licensing, distributor, dealer, franchise, sales or
manufacturer's representative, agency or other similar
contract, arrangement or commitment;
(viii) agreement not made in the ordinary and normal course of
business and consistent with past practice of Seller; or
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(ix) agreement with any physician (or an immediate family
member of such physician) who has a financial relationship (as
defined in 42 U.S.C.A. ss.1395) with Seller and who makes
referrals to Seller.
4.8. FINANCIAL STATEMENTS.
(a) Seller has delivered to Buyer true and correct copies, in
all material respects, of: (i) the compiled statement of assets, liabilities and
equity of Seller at December 31, 1996, and the statements of revenues and
expenses for the fiscal year then ended, including the notes therein, which have
been compiled by the certified public accountants serving Seller, as more fully
described in their reports included therein, and (ii) the compiled monthly
statement of assets, liabilities and equity and the statements of revenues and
expenses as more fully set forth on SCHEDULE 4.8 hereto (collectively referred
to as the "Financial Statements"). The Financial Statements (including any
related notes therein) are true and correct in all material respects and present
fairly the financial condition and results of operations of Seller as, at and
for the periods therein specified and were prepared on a basis consistent with
prior periods. Seller's books of account from which the Financial Statements
were prepared accurately and fully reflect all of Seller's items of income and
expense, all of its assets and liabilities and all of its accruals.
(b) The most recent statement of assets, liabilities and
equity contained in the Financial Statements as set forth on SCHEDULE 4.8 (the
"Statement") reflects all liabilities and obligations of Seller, whether
absolute, accrued, contingent, due or otherwise as of the date thereof, and
Seller does not have any material liabilities or obligations that are not
reflected thereon, except for such current liabilities as have been incurred
since the date of the Statement in the ordinary course of business consistent
with past practice (such current liabilities hereinafter called "Current
Liabilities"). To the best of Seller's knowledge, there is no basis for the
assertion against Seller of any liability or obligation of any nature or in any
amount (other than Current Liabilities as aforesaid) not fully reflected or
reserved against in the Statement.
4.9. MATERIAL CHANGES. Except as noted on SCHEDULE 4.9 hereto, between
the date of the Statement and the date of this Agreement, there has not been any
material adverse change in the condition (financial or otherwise) of the assets,
properties or operations of Seller or the Therapy Business, or any damage or
destruction of the Therapy Business by fire or other casualty, whether or not
covered by insurance, and Seller has, and as of the Closing will have, conducted
its business only in the normal course. Seller has identified and communicated
to Buyer all material information with respect to any fact or condition that
might adversely affect the future prospects (financial or otherwise) of the
Therapy Business. Since the most recent date on the Financial Statements, there
has been no sale or disposition of the machinery and equipment reflected
therein.
4.10. COST REPORTS. Except as provided in SCHEDULE 4.10 hereto: (i)
Seller has delivered to Buyer true and correct copies of all Medicare cost
reports relating to the Facilities for the last three (3) fiscal years, if any;
(ii) to the best of the Seller's knowledge, after diligent inquiry, the
information contained in such reports is true and correct in all respects; (iii)
the Medicare cost reports have been
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audited and fully settled through the respective years set forth in SCHEDULE
4.10 hereto; (iv) and there is no dispute between Seller and such fiscal
intermediaries regarding prior cost reports other than with respect to
adjustments made in the ordinary course of business, which do not involve
amounts in excess of Ten Thousand Dollars and No Cents ($10,000.00) in the
aggregate except as disclosed on SCHEDULE 4.10 hereto.
4.11. LICENSES; PERMITS. SCHEDULE 4.11 hereto sets forth a description
of (a) each license and all other governmental or other regulatory permits and
approvals relating to the operation of the Therapy Business hereinbefore
obtained and that is now in effect and to the best of Seller's knowledge and
belief, (b) each other license, permit, easement, right or other authorization
that is necessary to operate the Therapy Business legally (collectively, the
"Licenses"). Seller has delivered to Buyer true and correct copies of all of the
Licenses listed on SCHEDULE 4.11 hereto. SCHEDULE 4.11 hereto also sets forth a
description of each accreditation of the Therapy Business, Seller has delivered
such copies to Buyer. Seller owns, possesses or has the legal right to use the
Licenses, free and clear of all liens, pledges, claims or other encumbrances of
any nature whatsoever. Seller is not in default under, nor has it received any
notice of any claim of default or any other claim or proceeding relating to any
such License. The Therapy Business is fully and completely licensed by all
appropriate authorities for Seller to carry on the business presently conducted
at the Therapy Business. Except as provided in SCHEDULE 4.11 hereto, the Therapy
Business is accredited for participation in the Florida Medicaid program and the
federal Medicare program. No shareholder, director or officer, employee or
former employee of Seller, or any other person, firm or corporation owns or has
any proprietary, financial or other interest, direct or indirect, in whole or in
part in any such License owned, possessed or used in the operation of the
Therapy Business as now operated.
4.12. TITLE, CONDITION TO PERSONAL PROPERTY.
(a) Each of Seller's property comprising the Assets is located
at the location(s) set forth in SCHEDULE 4.12 hereto. Except for the security
interests that will be discharged and released prior to or at the Closing,
Seller has good and marketable title to all such personal property, subject to
no mortgage, security interest, pledge, lien, conditional sales agreement,
lease, claim, encumbrance or charge, or restraint on transfer whatsoever, except
for landlord's lien for rent. Except as provided in SCHEDULE 4.12 hereto, no
other person has any right to the use or possession of any of such assets.
Except as set forth in SCHEDULE 4.12 hereto, during the five (5) year period
preceding the date hereof, or since the Seller's inception if more recent,
Seller has conducted its business activities only under the corporate and/or
trade names currently in use. All of such personal property comprising
equipment, improvements, furniture and other tangible personal property, whether
owned or leased, is in good operating condition and is functioning in the manner
and for the purpose for which it was intended and is in compliance with (and the
operation thereof is in compliance with) all applicable Federal, state, and
local laws, rules, and regulations, and is sufficient and suitable to enable
Buyer to operate the Therapy Business in a normal and efficient manner.
(b) No tangible personal property, except as otherwise
disclosed on Schedules attached herein, used by Seller in connection with the
operation of the Therapy Business is subject to
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a lease, conditional sale, security interest or similar arrangement that will
not be satisfied and released at the Closing.
4.13. TITLE, CONDITION OF THE PROPERTY
(a) Except as provided in SCHEDULE 4.13 hereto, Seller owns a
valid leasehold estate in the business premises used by or comprising the
Therapy Business (the "Property") at the locations described in SCHEDULE 4.12
hereto.
(b) There are no leases or other agreements of Seller as
lessor, granting any third party the right to use or occupy any of the Property
and no person, firm or entity has any ownership interest or option or right of
first refusal to acquire any ownership interest in the Property or any
building or improvements thereon.
(c) To the best of Seller's knowledge, the buildings and other
improvements comprising the Therapy Business and all of their systems, including
without limitation, the heating, ventilating and air condition systems, and the
plumbing, electrical, mechanical and drainage systems, and roof are in good
operating condition, repair and working order.
(d) Seller has not received any notice of noncompliance from
any governmental authority regarding any of the improvements constructed at the
Therapy Business or the use or occupancy thereof.
4.14. LEGAL PROCEEDINGS. Other than as set forth on SCHEDULE 4.14
hereto, there are no known disputes, claims, actions, suits or proceedings,
arbitrations or investigations, either administrative or judicial, pending,
threatened or contemplated, nor, to the best of Seller's knowledge, is there any
basis therefor, against or affecting the Therapy Business or Seller's rights
therein or Seller's ability to consummate the transactions contemplated herein,
at law or in equity or otherwise, before or by any court or governmental agency
or body, domestic or foreign, or before an arbitrator of any kind. Seller has
received no requests for information with respect to the transactions
contemplated hereby from any governmental agency.
4.15. EMPLOYEES. SCHEDULE 4.15 hereto contains a complete and correct
list of the name, position, current rate of compensation and any vacation or
holiday pay, sick pay, personal leave and any other compensation arrangements or
fringe benefits, of each current employee, consultant and agent of Seller
(together with a description of any specific arrangements or rights concerning
such persons) that are not reflected in any agreement or document referred to in
SCHEDULE 4.7 hereto. Except as provided in SCHEDULE 4.15 hereto, Seller
currently has no, and has never had any pension, profit sharing, bonus,
incentive, welfare benefit, or other plan applicable to any of the employees of
the Therapy Business. No such employee, consultant or commission agent has any
vested or unvested retirement benefits or other termination benefits, except as
described on SCHEDULE 4.15 hereto.
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4.16. COLLECTIVE BARGAINING, LABOR CONTRACTS, EMPLOYMENT PRACTICES,
ETC.
(a) Except as provided in SCHEDULE 4.16(A) hereto, during the
two (2) years prior to the Closing Date, there has been no material or adverse
change in the relationship between Seller and their employees nor any strike or
labor disturbance by such employees affecting Seller's business, and there is no
indication that such a change, strike or labor disturbance is likely. Seller's
employees are not represented by any labor union or similar organization, and
Seller knows of no reason to believe that there are pending or threatened any
activities the purpose of which is to achieve such representation of all or some
of Seller's employees. There are no pending suits, actions or proceedings
against Seller relating to employees of Seller, and Seller does not know of any
threats of strikes, work stoppages or pending grievances by any such employees.
Except as set forth on SCHEDULES 4.7 or 4.15 hereto, Seller has no collective
bargaining or other labor contracts, employment contracts, pension,
profit-sharing, retirement, insurance, bonus, deferred compensation or other
employee benefit plans, agreements or arrangements with respect to such
employees. Seller is in compliance with the requirements prescribed by all
federal, state and local statutes, orders and governmental rules and regulations
applicable to any of the employee benefit plans, agreements and arrangements
(each individually, a "Plan") identified on SCHEDULES 4.7 and 4.15 hereto,
including, without limitation the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Seller has performed all obligations required to be
performed by them under each Plan and Seller is not in default under, or
violation of, the term and conditions of any Plan. All current and prior
material documents, including all amendments therein, with respect to each Plan
have been given to the Buyer.
(b) Between the date hereof and the Closing Date, Seller shall
not enter into any contract or agreement (or negotiations in connection
therewith) with any union or other collective bargaining representative
representing any employees at the Therapy Business without the prior written
consent of Buyer.
4.17. ERISA. Seller does not maintain or make contributions to and has
not at any time in the past maintained or made contributions to any employee
benefit plan which is subject to the minimum funding standards of ERISA. Seller
does not now maintain or make contributions to and have not at any time in the
past maintained or made contributions to any multi-employer plan subject to the
terms of the Multi-employer Pension Plan Amendment Act of 1980 (the
"Multi-employer Act").
4.18. INSURANCE AND SURETY AGREEMENTS. SCHEDULE 4.18 hereto contains a
true and correct list of: (a) all policies of fire, liability and other forms of
insurance held or owned by Seller or otherwise in force and providing coverage
for the Therapy Business or the Assets (including but not limited to medical
malpractice insurance, and any state sponsored plan or program for worker's
compensation) and (b) all bonds, indemnity agreements and other agreements of
suretyship made for or held by Seller or otherwise in force and relating to the
Therapy Business or the Assets, including a brief description of the character
of the bond or agreement and the name of the surety or indemnifying party.
SCHEDULE 4.18 hereto sets forth for each such insurance policy the name of the
insurer, the amount of coverage, the type of insurance, the policy number, the
annual premium and a
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brief description of the nature of insurance included under each such policy and
of any claims made thereunder during the past two (2) years. Such policies are
owned by and payable solely to Seller, and said policies or renewals or
replacements thereof will be outstanding and duly in force at the Closing Date.
All insurance policies listed on SCHEDULE 4.18 hereto are in full force and
effect, all premiums due on or before the Closing Date have been or will be paid
on or before the Closing Date, Seller has not been advised by any of their
insurance carriers of an intention to terminate or modify any such policies, nor
has Seller failed to comply with any of the material conditions contained in any
such policies and no notice of termination or cancellation has been received
with respect to any such policy.
4.19. RELATIONSHIPS. Except as disclosed on SCHEDULE 4.19 hereto,
neither Seller nor any shareholder, director or officer thereof or any member of
such person's immediate family has, or at any time within the last two (2) years
has had, a material ownership interest in any business, corporate or otherwise,
that is a party to, or in any property that is the subject of, business
relationships or arrangements of any kind relating to the operation of the
Therapy Business by which Buyer will be bound after the Closing.
4.20. ASSETS COMPRISING THE THERAPY BUSINESS. The Assets, Contracts,
Inventory, and Licenses listed on the Schedules hereto as owned by Seller,
represent all of the real and personal property, licenses, permits and
authorizations, contracts, leases and other agreements that are necessary and
material to the operation of the Therapy Business as now operated.
4.21. ABSENCE OF CERTAIN EVENTS. Except as set forth on SCHEDULE 4.21,
any other Schedule, termination provision of Seller's managed care contracts or
assignment of leases required to comply with the transactions contemplated
hereby, since the date of the Balance Sheet, Seller has not and from the date of
the Balance Sheet to the Closing Date, Seller will not have (except for
transactions directly with Buyer):
(a) sold, assigned or transferred any of their Assets or
properties, except in the ordinary course of business consistent with past
practice;
(b) mortgaged, pledged or subjected to any lien, pledge,
mortgage, security interest, conditional sales contract or other encumbrance of
any nature whatsoever any of the Assets other than the liens, if any, of current
taxes not yet due and payable;
(c) made or suffered any amendment or termination of any
contract, commitment, instrument or agreement materially relating to the Therapy
Business;
(d) except in the ordinary course of business, consistent with
past practice, or otherwise to comply with any applicable minimum wage law,
increased the salaries or other compensation of any of their employees at the
Therapy Business, or made any increase in, or any additions to, other benefits
to which any of such employees may be entitled.
(e) discharged or satisfied any lien or encumbrance, or paid
any material liabilities,
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other than in the ordinary course of business consistent with past practice, or
failed to pay or discharge when due any liabilities, the failure to pay or
discharge that has caused or will cause any actual damage or risk of loss to
Seller or the Therapy Business;
(f) changed any of the accounting principles followed by it or
the methods of applying such principles;
(g) made or suffered any amendment or termination of any
material contract, commitment or agreement to which they are a party or by which
they are bound, or canceled, modified or waived any debt or claims held by them,
other than in the ordinary course of business consistent with past practice, or
waived any rights of substantial value, whether or not in the ordinary course of
business; or
(h) entered into any material transaction other than in the
ordinary course of business consistent with past practice.
4.22. COMPLIANCE WITH LAWS. Except as provided in SCHEDULE 4.22 hereto,
Seller has not received any claim or notice that the Therapy Business is not in
compliance with any applicable federal, state, local or other governmental laws
or ordinances, or any applicable order, rule or regulation of federal, state,
local or other governmental agency. Seller shall report to Buyer, within five
(5) days after Seller's receipt thereof, any written or oral claims or notices
that the Therapy Business is not in compliance with any of the foregoing.
4.23. ENVIRONMENTAL COMPLIANCE.
(a) At any time during Seller's possession of the Property
and, to the best of Seller's knowledge, prior to Seller's possession thereof:
(i) The Property has not been used for the disposal of any
industrial refuse or waste, including but not limited to
potentially infectious waste, blood-contaminated materials, or
other wastes generated in the course of patient treatment
(collectively "Medical Waste"), or for the processing,
manufacture, storage, handling, treatment or disposal of any
hazardous or toxic substance, material or waste.
(ii) No asbestos-containing materials have been used or
disposed of on the Property.
(iii) No machinery, equipment or fixtures containing
polychlorinated biphenyls ("PCBs") have been located on the
Property.
(iv) No storage tanks for gasoline, petroleum, or any other
substance have been located on the Property.
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(v) No toxic or hazardous substances or materials have been
located on the Property, which substances or materials, if
found on the Property, would subject the owner or occupant of
the Property to damages, penalties, liabilities or an
obligation to remove such substances or materials under any
applicable federal, state or local law, regulation or
ordinance.
(vi) No notice from any governmental body has ever been served
upon Seller, its agents or representatives, or upon any prior
owner of the Property, claiming any violation of any federal,
state or local law, regulation or ordinance concerning the
generation, handling, storage, or disposal of Medical Waste,
or the environmental state, condition, or quality of the
Property, or requiring or calling attention to the need for
any work, repairs, or demolition, on or in connection with the
Property in order to comply with any law, regulation or
ordinance concerning the environmental or healthful state,
condition or quality of the Property.
(vii) SCHEDULE 4.23 hereto lists all reports of health care
and environmental agencies received by Seller during the last
five (5) years from any supervisory governmental authority
with respect to the operations of the Therapy Business. Seller
has delivered copies of each such report to Buyer.
(b) To the best of Seller's knowledge and belief, at all
times, Seller has complied, and is complying in all respects with all
environmental and related laws, ordinances and governmental rules and
regulations applicable to it, the Property, the Assets and the Therapy Business,
including, but not limited to, the Resource Conservation and Recovery Act of
1976, as amended, the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, the federal Water Pollution Control Act, as
amended by the Clean Water Act, and subsequent amendments, the Federal Toxic
Substances Control Act, as amended, and all other Federal and, state and local
laws, regulations and ordinances with respect to the protection of the
environment (collectively "Environmental Laws"). The foregoing representation
and warranty applies to all aspects of the operation of the Therapy Business and
the Assets including, but not limited to, the use, handling, treatment, storage,
transportation and disposal of any hazardous, toxic or infectious waste,
material or substance (including Medical Waste) and petroleum products, material
or waste whether performed on Seller's properties or at any other location.
4.24. FINDERS. Except for Healthquest, Inc., a Florida corporation, and
▇▇▇▇▇ ▇. ▇▇▇▇, its sole shareholder, no broker or finder has acted for Seller in
connection with the transactions contemplated by this Agreement, and no broker
or finder is entitled to any broker's or finder's fee or other commission in
respect thereof based in any way on agreements, understandings or arrangements
with Seller. Seller shall be responsible for any fees, commissions or any other
financial obligation due to Healthquest, Inc. and/or ▇▇▇▇▇ ▇. ▇▇▇▇ in connection
with the transactions contemplated by this Agreement and shall hold Buyer
harmless for any such obligation.
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4.25. TAX RETURNS. Except as provided in SCHEDULE 4.25 hereto, Seller
has filed all federal, state, county and local income, excise, property and
other tax returns and abandoned property reports (if any) to date that are due
and required to be filed by them, and there are no claims, liens, or judgments
for taxes due from Seller affecting the Therapy Business or any of the Assets,
and no basis for any such claim, lien, or judgment exists.
4.26. ENCUMBRANCES CREATED BY THIS AGREEMENT. The execution and
delivery of this Agreement or any of the Seller's Transaction Documents do not,
and the consummation of the transactions contemplated hereby or thereby will
not, create any liens or other encumbrances on any of the Assets in favor of
third parties.
4.27. PHYSICAL THERAPISTS. SCHEDULE 4.27 hereto contains a true,
accurate and complete list of all of the physical therapists employed or
otherwise retained to private services on behalf of Seller ("Seller's Physical
Therapists"). Each of Seller's Physical Therapists is duly licensed to engage in
the practice of physical therapy in the State of Florida. The Florida Board of
Physical Therapy Practice has never placed any of Seller's Physical Therapists
on probation, it has never denied a license to any of Seller's Physical
Therapists nor has it ever limited, suspended or revoked any of their licenses,
nor, to the best of Seller's knowledge do there exist any facts which could
provide a basis for the taking of any such action.
4.28. CLAIMS AND BILLING. Claims, billing and other information
submitted to, or required to be filed in connection with Seller's participation
in and reimbursement under Medicare, Medicaid and any private third party payor
programs have been submitted to the appropriate intermediary, state agency or
third party payor in accordance with applicable laws and regulations or pursuant
to contracts between Seller and the appropriate third party payor, as the case
may be. Except as disclosed on SCHEDULE 4.28 or any other Schedules hereto, (i)
no audit or investigation has been initiated by any governmental authority or
agency or private third party payor within the past five (5) years which
questions the validity or accuracy of the information submitted by Seller or
Seller's right to participate in Medicare, Medicaid or other private third party
payor programs, (ii) Seller has not been required to repay any money received
from Medicare, Medicaid, or any private third party payor, and (iii) to the best
of Seller's knowledge, no facts exist which could provide a basis for any
action, suit, proceeding or investigation against Owners, Seller or any of
Seller's officers, directors or employees relating to claims, billing and other
information submitted to, or required to be filed in connection with Seller's
participation in and reimbursement under Medicare, Medicaid, or any third party
payor programs.
4.29. NETWORK STOCK. The statement of assets, liabilities and equity
for The Physical Therapy Network, Inc. as set forth on SCHEDULE 1.5 is true and
correct, and to the best of its shareholders' knowledge after diligent inquiry,
no liabilities, contingent or otherwise, except for those on SCHEDULE 1.5 exist.
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ARTICLE V: REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Sellers as follows:
5.1. ORGANIZATION AND STANDING. Buyer has been duly incorporated and is
validly existing in good standing under the laws of the State of Delaware and is
authorized to do business in the State of Florida.
5.2. POWER AND AUTHORITY. Buyer has the corporate power and authority
to execute, deliver and perform this Agreement and the corporate power and
authority to execute and deliver the instruments and agreements required to be
delivered by it to Sellers at the Closing (collectively, "Buyer's Transaction
Documents").
5.3. BINDING AGREEMENT. This Agreement has been duly executed and
delivered by Buyer. This Agreement is, and when executed and delivered by Buyer
at the Closing each of the related transaction documents executed by Buyer will
be, the legal, valid and binding obligation of Buyer, enforceable against Buyer
in accordance with its respective terms.
5.4. LEGAL PROCEEDINGS. There are no known disputes, claims, actions,
suits or proceedings, arbitrations or investigations, either administrative or
judicial, pending, threatened or contemplated, which would have a material
adverse effect on Buyer's business taken as a whole, nor, to the best of Buyer's
knowledge, is there any basis therefor, against or affecting Buyer's rights
therein or ability to consummate the transactions contemplated herein, at law or
in equity or otherwise, before or by any court or governmental agency or body,
domestic or foreign, or before an arbitrator of any kind.
5.5. COMPLIANCE WITH LAWS. Buyer has not received any claim or notice
that it is not in compliance with any applicable federal, state, local or other
governmental laws or ordinances, or any applicable order, rule or regulation of
federal, state, local or other governmental agency, which would have a material
adverse effect on Buyer's business taken as a whole.
5.6. CLAIMS AND BILLING. To the best of Buyer's knowledge, no facts
exist which could provide a basis for any action, suit, proceeding or
investigation against Buyer or any of Buyer's officers, directors or employees
relating to claims, billing and other information submitted to, or required to
be filed in connection with Buyer's participation in and reimbursement under
Medicare, Medicaid, or any third party payor programs, which would have a
material adverse effect on Buyer's business taken as a whole.
5.7. FINDERS. Except for Healthcare Alliance Group, Inc., no broker or
finder has acted for Buyer in connection with the transactions contemplated by
this Agreement, and no broker or finder is entitled to any broker's or finder's
fee or other commission in respect thereof based in any way on agreements,
understandings or arrangements with Buyer. Buyer shall be responsible for any
fees, commissions or any other financial obligation due to Healthcare Alliance
Group, Inc. in connection with this transaction and shall hold Sellers harmless
for any such obligation.
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ARTICLE VI: INFORMATION AND RECORDS CONCERNING THE FACILITIES
-------------------------------------------------
6.1. ACCESS TO INFORMATION AND RECORDS BEFORE CLOSING.
(a) Prior to the Closing Date, Buyer may make, or cause to be
made, such investigation of the Therapy Business and Sellers' financial and
legal conditions as Buyer deems necessary or advisable to familiarize itself
with the Therapy Business and/or matters relating to its history or operation.
Sellers shall permit Buyer and its authorized representatives (including legal
counsel and accountants), to have full access to the Therapy Business and
Sellers' books and records, and Sellers will furnish, or cause to be furnished,
to Buyer such financial and operating data and other information and copies of
documents with respect to the products, services, operations and assets, the
Property and the Therapy Business as Buyer shall from time to time request. The
documents to which the Buyer shall have access shall include but not be limited
to Sellers' tax returns and related work papers since its inception and
printouts of patient or resident account information maintained by or on behalf
of any person with respect to the Therapy Business; and Sellers shall make, or
cause to be made, extracts thereof as Buyer or its representatives may request
from time to time, to enable Buyer and its representatives to investigate the
affairs of Sellers and the Therapy Business and the accuracy of the
representations and warranties made in this Agreement. Sellers shall cause their
accountants to cooperate with Buyer and to disclose the results of audits
relating to Sellers and/or to the Therapy Business and to produce the working
papers relating therein. Except with respect to matters reflected in Schedules
or Exhibits hereto provided to by Sellers to Buyer, no such investigation by
Buyer or its representatives shall affect any of the Sellers' or Owners'
representations and warranties in this Agreement or Buyer's right to rely
thereon.
(b) In the event of the termination of this Agreement prior to
Closing, Buyer will deliver to Sellers all documents, work papers and other
materials hereunder obtained from Sellers and relating to Sellers or the
transactions herein contemplated, shall treat all information and data, written
or unwritten, obtained therefrom as confidential, not to be disclosed, shall
retain no copies thereof, shall not use any information or data to the detriment
of the Sellers, and shall instruct and cause its legal, financial and marketing
consultants to do the same.
6.2. MAPS, PLANS, SURVEYS, ETC. Sellers shall deliver, or cause to be
delivered, to Buyer, without charge, all plans, maps, surveys, descriptions, and
title reports respecting the Therapy Business and the use and occupancy thereof
in Sellers' possession that exist as of the date of this Agreement.
ARTICLE VII: OBLIGATIONS OF THE PARTIES UNTIL CLOSING
----------------------------------------
7.1. CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Closing, Sellers shall conduct their business relating to the
operation of the Therapy Business solely in the ordinary course of business
consistent with past practice and maintain their existence.
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7.2. AFFIRMATIVE COVENANTS. Between the date hereof and the Closing,
Sellers shall and Owners shall use their best efforts to cause Sellers to:
(a) maintain the Therapy Business in substantially the state
of repair, order and condition as on the date hereof, reasonable wear and tear
or loss by casualty excepted;
(b) maintain in full force and effect all Licenses currently
in effect with respect to the Therapy Business;
(c) maintain in full force and effect the insurance policies
and binders currently in effect with respect to the Therapy Business, including
without limitation those listed on SCHEDULE 4.18 hereto;
(d) to preserve intact the present business organization of
Sellers; keep available the services of Sellers' present employees and agents,
and any other employees and agents employed in connection with the Therapy
Business and maintain Sellers' relations and goodwill with the suppliers,
patients and residents, employees, affiliated medical personnel and anyone
having business relating to the Therapy Business;
(e) maintain all of the books and records relating to the
Therapy Business in accordance with its past practices;
(f) comply with all provisions of the Contracts listed in
SCHEDULE 4.7 hereto and with any other agreements that Sellers have entered into
with respect to the Therapy Business in the ordinary course of business since
the date of this Agreement and with the provisions of all laws, rules and
regulations applicable to Sellers' business or the Therapy Business;
(g) cause to be paid when due, all taxes, assessments and
changes or levies imposed upon them or on any of their properties or which they
are required to withhold and pay over;
(h) promptly advise Buyer in writing of the threat or
commencement against Sellers or Owners of any dispute, claim, action, suit or
proceeding, arbitration or investigation that would materially adversely affect
the operations, properties, assets or prospects of the Therapy Business.
7.3. PURSUIT OF CONSENTS AND APPROVALS. Prior to the Closing, the
parties shall undertake to obtain all consents and approvals of governmental
agencies and all other parties necessary for the lawful consummation of the
transactions contemplated hereby and the lawful use, occupancy and enjoyment of
the Therapy Business by Buyer in accordance herewith. Sellers and Owners shall
cooperate with and use their best efforts to assist Buyer in obtaining all such
consent and approvals, and Buyer shall use its best efforts to assist Sellers in
obtaining such consents and approvals, including any managed care contracts.
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If the applicable State of Florida Medicaid or Medicare certification
agency requires that, prior to giving written assurance regarding the issuance
of an operating license, certification or provider agreement to Buyer following
the Closing, all Medicaid and/or Medicare estimated adjustments be paid to the
applicable agency on or before the Closing, Sellers shall pay such amounts on or
before the Closing Date in order to permit Buyer to obtain such written
assurances.
ARTICLE VIII: CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
-------------------------------------------
Unless waived by Buyer, its obligation to consummate the purchase of
the Assets is subject to the fulfillment, prior to or at the Closing, of the
conditions in Article III herein and each of the following conditions. Upon
failure of any of the following conditions, Buyer may terminate this Agreement
pursuant to and in accordance with Article XI herein.
8.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Sellers contained in this Agreement or on any Schedule, Exhibit, list,
certificate or other document delivered pursuant to the provisions hereof shall
be true and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made at and as of such time
except to the extent affected by the transactions herein contemplated.
8.2. PERFORMANCE OF COVENANTS. Sellers shall have performed or complied
in all material respects with each of their agreements and covenants required by
this Agreement to be performed or complied with by them prior to or at the
Closing.
8.3. DELIVERY OF CLOSING CERTIFICATE. Sellers shall have executed and
delivered to the Buyer a certificate of each of the chief executive officer of
Sellers dated the Closing Date upon which Buyer may rely, certifying that the
statements made in Sections 8.1 and 8.2 herein are true, correct and complete as
of the Closing Date.
8.4. LEGAL MATTERS. No suit, action, investigation, or legal or
administrative proceeding shall have been brought or shall have been threatened
by any person that questions the validity or legality of this Agreement or the
transactions contemplated hereby. Sellers shall have delivered an opinion of
counsel of Sellers, dated the Closing Date, in the form of SCHEDULE 8.4 hereto.
8.5. APPROVALS.
(a) The consent or approval of all persons necessary for the
consummation of the transactions contemplated hereby shall have been granted,
including without limitation, the Required Approvals and any tax clearance or
similar approval;
(b) None of the foregoing consents or approvals (i) shall have
been conditioned upon the modification, cancellation or termination of any
material lease, contract, commitment, agreement, license, easement, right or
other authorization with respect to the Therapy Business, or (ii) shall impose
on the Buyer any material condition or provision or requirement with respect to
the
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Therapy Business or its operation that is more restrictive than or different
from the conditions imposed upon such operation prior to Closing.
8.6. MATERIAL CHANGE. Since the date of this Agreement there shall not
have been any material adverse change in the condition (financial or otherwise)
of the assets, properties or operations of the Therapy Business or Sellers.
8.7. ASSETS TRANSFERRED AT CLOSING. Sellers shall have delivered or
caused to be delivered to Buyer possession of the Assets (or the right to obtain
possession on demand pursuant to the terms of a mutually agreed upon Escrow
Agreement) together with such instruments of sale and transfer, including
without limitation a ▇▇▇▇ of Sale and Assignment of Contracts, in form
acceptable to Buyer, sufficient to vest in Buyer good and marketable title to
the Assets, free and clear of all liens, security interests, encumbrances,
claims and other exceptions of any kind whatsoever. Sellers also shall execute
and deliver to Buyer at Closing a form of withdrawal of assumed name with
respect to the trade names of the Therapy Business in form and substance
acceptable to Buyer and its counsel.
8.8. POSSESSION. Possession of the Therapy Business shall be or shall
have been delivered to Buyer as provided in this Agreement, free and clear of
any liens, claims to or rights of possession.
8.9. COBRA. Sellers shall have, and shall have caused all concerned
benefits plan administrators to have, given all notices, made all offers, paid
and collected all premiums, obtained all group health plan coverage, and
performed all other actions mandated by Title X of the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA"), and which is required to be given,
made, paid, obtained, and performed as a result of the Closing under this
Agreement. Any amounts under COBRA or similar state or federal law or regulation
which becomes a liability to Buyer after Closing but which relates to any period
of time in which Sellers owned the Therapy Business shall be paid by Sellers
either by a dollar for dollar reduction of the Purchase Price at the Closing or
upon demand after the Closing.
8.10. AUTHORIZATION DOCUMENTS. Buyer shall have received a certificate
of the Secretary or other officer of each Sellers certifying a copy of
Resolutions of the Board of Directors of Sellers and consent of their
shareholders authorizing Sellers' execution and full performance of Sellers'
Transaction Documents, the Articles or Certificate of Incorporation and By-Laws
of Sellers and the incumbency of the officers of Sellers.
8.11. OTHER DOCUMENTS. Sellers shall have furnished Buyer with all
other documents, certificates and other instruments required to be furnished to
Buyer by Sellers pursuant to the terms herein.
8.12. DUE DILIGENCE REVIEW. Notwithstanding anything to the contrary
stated in this Agreement, the parties recognize and agree that the obligation of
Buyer to consummate the transactions contemplated by this Agreement are
expressly conditioned upon and subject to Buyer having completed, by the
Closing, its due diligence review of the Therapy Business and Sellers'
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business, and Buyer's satisfaction therewith in all respects as determined in
its sole and absolute discretion.
8.13. APPROVAL OF SCHEDULES. Schedules delivered previously and through
the Closing Date shall be satisfactory to Buyer.
ARTICLE IX: CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS
--------------------------------------------
Unless waived by Sellers, its obligation to consummate the sale of the
Assets is subject to the fulfillment, prior to or at the Closing, of each of the
following conditions:
9.1. REPRESENTATION AND WARRANTIES. The representations and warranties
of Buyer in this Agreement or on any Schedule, Exhibit, list, certificate or
document delivered pursuant to the provisions hereof shall be true at and as of
the Closing Date as though such representations and warranties were made at and
as of such time, except to the extent affected by the transactions herein
contemplated.
9.2. PERFORMANCE OF COVENANTS. Buyer shall have performed or complied
with each of its agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
9.3. DELIVERY OF CLOSING CERTIFICATE. Buyer shall have delivered to
Sellers a certificate of an officer of Buyer dated the Closing Date upon which
Sellers can rely, certifying that the statements made in Sections 9.1 and 9.2
herein are true, correct and complete as of the Closing Date.
9.4. LEGAL MATTERS. No suit, actions, investigation or legal or
administrative proceedings shall have been brought or shall have been threatened
by any person that questions the validity or legality of the Agreement or the
transactions contemplated hereby.
9.5. AUTHORIZATION DOCUMENTS. Sellers shall have received a certificate
of the Secretary or other officer of the Buyer certifying a copy of Resolutions
of the Board of Directors of Buyers authorizing Buyer's execution and full
performance of Buyer's Transaction Documents and the incumbency of the officers
of the Buyer.
9.6. OTHER DOCUMENTS. Buyer shall have furnished Sellers with all
documents, certificates and other instruments required to be furnished to
Sellers by Buyer pursuant to the terms hereof.
ARTICLE X: OBLIGATIONS OF PARTIES AFTER CLOSING
------------------------------------
10.1. DISCHARGE OF LIABILITIES. The Owners shall cause Sellers to pay
all of their liabilities and obligations with respect to the Therapy Business
that are not expressly assumed by Buyer at Closing, as and when the same shall
become due and payable.
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10.2. INDEMNIFICATION.
(a) The Owners and Sellers, jointly and severally, hereby
covenant to and shall defend and indemnify Buyer and hold it harmless against
and with respect to any and all damage, loss, liability, deficiency, cost and
expense (including without limitation reasonable attorneys' fees and paralegals'
fees) (all of the foregoing hereinafter collectively referred to as "Loss")
resulting from: (i) any misrepresentation, breach of warranty, or failure to
fulfill any agreement or covenant on the part of the Owners or Sellers or under
this Agreement; (ii) any taxes, interest, penalties and additions to tax
(including workers' compensation charges) that are required to be paid to the
United States Government or any state or local taxing authority resulting from
the operation of the Therapy Business for any period ending on or before the
Closing Date; (iii) if applicable, all amounts that are due or that may become
due to Medicaid and/or Medicare intermediaries, or to other public or private
third party payors, if any, on account of adjustments to Medicaid and/or
Medicare or any other public or private third party payer cost reimbursement
claims made with respect to the Therapy Business for any period ending on or
before the Closing Date; (iv) any claim relating to any liability of the Therapy
Business or Sellers that are not expressly assumed by Buyer pursuant to the
terms of this Agreement ("Unassumed Liability"); (v) any liability arising out
of Sellers' noncompliance with COBRA or any like statute; (vi) any liability
arising out of any environmental hazard or condition with respect to the
Property or the Therapy Business existing as of the Closing Date and any law,
regulation or decree on action of any government entity in connection therewith;
(vii) any other claims, liability or cost of any nature whatsoever, known or
unknown, whether accrued, absolute contingent or otherwise, presently existing
or arising in the future which such liability arose out of Sellers' conduct
prior to Closing; and (viii) any and all actions, suits, proceedings, demands,
assessments, judgments, costs and legal and other expenses incident to any of
the foregoing.
(b) Buyer covenants and shall indemnify Owners and Sellers and
hold them harmless against and with respect to any and all Loss from: (i) any
misrepresentation, breach of warranty, or failure to fulfill and agreement or
covenant on the part of Buyer under this Agreement; (ii) any taxes, interest,
penalties and additions to tax (including workers' compensation charges) that
are required to be paid to the United States government or any state or local
taxing authority resulting from the operation of the Therapy Business for any
period after the Closing Date; (iii) if applicable, all amounts that are due or
that may become due to Medicaid and/or Medicare intermediaries, or to other
public or private third party payors, if any, on account of adjustments to
Medicaid and/or Medicare or any other public or private third party payer cost
reimbursement claims made with respect to the Therapy Business for any period
after the Closing Date, (iv) any claim relating to any liabilities of the
Therapy Business after Closing, except claims expressly assumed in writing by
Buyer; (v) any liability arising out of any environmental hazard or condition
with respect to the Property or the Therapy Business existing after the Closing
Date and any law, regulation or decree on action of any government entity in
connection therewith; (vi) any other claims, liability or cost of any nature
whatsoever, known or unknown, whether accrued, absolute contingent or otherwise,
presently existing or arising in the future which such liability arose out of
Buyer's conduct after Closing; and (vii) any and all actions, suits,
proceedings, demands, assessments, judgments, costs and legal and other expenses
incident to any of the foregoing.
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10.3. PAYMENT BY BUYER FOR EXPENSE ADJUSTMENTS AFTER CLOSING. If after
the Closing Date Buyer is required from time to time to pay any amounts for
Medicaid and/or Medicare or other third party payor cost adjustments, federal,
state or local taxes, workers' compensation insurance premiums or other
expenditures that relate to the operation of the Therapy Business before the
Closing Date other than those obligations expressly assumed in this Agreement,
and Buyer provides Sellers written notice and details of same within thirty (30)
days of first receiving knowledge of same, Sellers shall, upon the later of
twenty (20) days of such written demand from Buyer and presentation of evidence
of such requirement, pay to Buyer the amount of such required payment. Any
payment pertaining to operation of the Therapy Business after the Closing Date
shall be the responsibility of Buyer. Notwithstanding anything to the contrary
stated herein, Sellers shall not be responsible for increased workers'
compensation premiums or similar increased charges to Buyer which arise after
the Closing and by reason of Buyer becoming the transferee of Sellers' Assets
hereunder and/or operator of the Therapy Business.
10.4. COST REPORTS. Sellers shall prepare, execute and file all interim
cost reports and all other reports and statements required to be filed by
Sellers with all intermediaries and any other public or private third party
payor or administrative or regulatory agency or body in connection with the
transactions hereunder in a timely fashion and no later than forty-five (45)
days after closing.
10.5. COVENANT NOT-TO-COMPETE.
(a) Except for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇, for a
period commencing on the Closing Date and ending on December 31, 1999, neither
Sellers, nor any corporation, partnership or other business entity or person
controlling, controlled by or under common control with any of the foregoing,
including each of the Owners ("Restricted Party") shall, directly or indirectly,
operate, manage, own, control, finance or provide financing for, be a consultant
for or enter into a service contract with, any nursing home, hospital or
licensed health care facility or other entity of any type, licensed or
unlicensed, existing or to be constructed and that provides physical therapy
services, or any entity existing or to be formed that competes in any way with
the Therapy Business, within Clay County, ▇▇▇▇▇ County or Nassau County or
within fifty (50) miles of any business premises of the Therapy Business;
provided, however, this Subsection shall not be applicable if Buyer is in
material breach of the Promissory Note or the Contingent Payments.
(b) Except for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇, for a
period commencing on January 1, 2000, and ending on the third anniversary of the
Closing Date, the Restricted Parties shall not, directly or indirectly, operate,
manage, own, control, finance or provide financing for, be a consultant for or
enter into a service contract to provide outpatient therapy services with, any
nursing home, hospital or licensed health care facility or other entity of any
type, licensed or unlicensed, existing or to be constructed that provides
outpatient therapy services within Clay County, ▇▇▇▇▇ County or Nassau County or
within fifty (50) miles of any business premises of the Therapy Business;
provided, however, this Subsection shall not be applicable if Buyer is in
material breach of the Promissory Note or the Contingent Payments.
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(c) From and after the Closing Date, no Restricted Party shall
disclose, directly or indirectly, to any person outside of Buyer's employ
without the express authorization of Buyer, any patient lists, pricing
strategies, patient files and records, any proprietary data or trade secrets
relating to the Therapy Business or any financial or other information about the
Therapy Business not then in the public domain.
(d) For a period of three (3) years from and after the Closing
Date, no Restricted Party shall engage or participate in any effort or act to
induce any of the patients, physicians, suppliers, associates, employees or
independent contractors admitted to or employed by Sellers at the Therapy
Business prior to Closing, or by the Therapy Business or by Buyer, to take any
action or to refrain from taking any action or inaction that might be
disadvantageous to Buyer, including but not limited to the solicitation of their
respective patients, physicians, suppliers, associates, employees or independent
contractors to cease doing business, or their association or employment, with
the Therapy Business or Buyer.
(e) The Restricted Parties acknowledge that the restrictions
contained in this Section are reasonable and necessary to protect the legitimate
business interests of Buyer and that any violation thereof by any of them would
result in irreparable harm to Buyer. Accordingly, the Restricted Parties agree
that upon the violation by any of them of any of the restrictions contained in
this Section, Buyer shall be entitled to obtain from any court of competent
jurisdiction a preliminary and permanent injunction as well as any other relief
provided at law, equity, under this Agreement or otherwise. In the event any of
the foregoing restrictions are adjudged unreasonable in any proceeding, then the
parties agree that the period of time or the scope of such restrictions (or
both) shall be adjusted to such a manner or for such a time (or both) as is
adjudged to be reasonable.
10.6. RECORDS. On the Closing Date, Sellers shall deliver, or cause to
be delivered, to Buyer all patient lists and records and all other records or
copies of same and files or copies of same not then in Buyer's possession
relating to the operations of the Therapy Business.
10.7. COLLECTION OF ACCOUNTS RECEIVABLE. Buyer shall make reasonable
efforts to assist Sellers in collecting all accounts receivable resulting from
activities occurring or services rendered to patients prior to the Closing
including sending follow-up reminders, telephone calls, making or answering such
inquiries as would be undertaken by the Buyer in ordinary course of its own
collections. Such assistance, however, shall not include any legal work or more
than nominal out of pocket expenses. In addition, Buyer shall assist Sellers by
allowing examination by Sellers' authorized representative of relevant
documentation in Buyer's possession after the Closing Date, and by transferring
to Sellers any payments Buyer may receive from any source whatsoever concerning
Sellers' recovery of accounts receivable as provided below. Any payments
received by Buyer from Medicaid, Medicare or other third party payors for
services rendered prior to the Closing Date will be transferred to Sellers
monthly within fifteen (15) days after the last day of the month in which such
payments were received. Any payments made by such payors and earmarked or
itemized to certain time periods preceding or following Closing shall be applied
to accounts receivables arising for such time periods. Notwithstanding the
foregoing, and subject to the last paragraph of this Section 10.7,
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Sellers shall be paid promptly upon receipt one hundred percent (100%) of
collections of Sellers's accounts receivable for ▇▇▇▇▇▇▇▇ generated by Sellers
within thirty (30) days prior to the Closing Date and which are received within
thirty (30) days after the Closing Date.
After one hundred twenty (120) days, Sellers shall meet with Buyer to
review and appraise outstanding accounts receivable and determine the
feasibility of collection and any nonextraordinary measures to be taken. The
collection of any accounts receivable due Sellers that have not been collected
by Buyer or Sellers within one hundred twenty (120) days after the Closing Date
shall become the sole responsibility of Sellers, and Buyer shall have no further
obligation to assist Sellers with respect to collection thereof, except to
provide billing and collection data to Sellers for purposes of initiating their
own collection action, if necessary.
For one (1) year after Closing, Sellers may, during regular business
hours and upon reasonable notice to Buyer, and at Sellers' expense, access,
audit and photocopy all accounts, reports and medical records in order to allow
Sellers to document claims or submittals to Medicaid, Medicare or other third
party payors.
For its collection services rendered herein, Buyer shall receive an
administrative fee equal to: (i) three percent (3%) of the amount of receivables
collected by Buyer that are outstanding ninety (90) days or less, and (ii) five
percent (5%) of the amount of receivables collected by Buyer that are
outstanding between ninety (90) days, exclusive, and one hundred twenty (120)
days, inclusive.
10.8. EMPLOYMENT OF EXISTING EMPLOYEES. On the Closing Date Buyer shall
have the option of offering to employ those of Sellers' employees set forth on
SCHEDULE 4.15 hereto, except those listed on SCHEDULE 10.8 hereto. Sellers shall
compensate all employees for all services performed up to and including the
Closing Date. Subsequent to the Closing Date, Buyer shall assume the duty to
compensate any employees who are hired by it, subject to any other terms
contained in this Agreement relating to compensation of employees. Sellers
hereby agree to use their best efforts to facilitate Buyer in its efforts to
employ any of said employees.
10.9. CONSENTS AND APPROVALS. The parties shall undertake to obtain all
consents and approvals of governmental and reimbursement agencies and all other
parties necessary for the lawful consummation of the transactions contemplated
hereby.
10.10. SET-OFF. Anything in this Agreement to the contrary
notwithstanding, Buyer shall have the right to set-off from its payment
obligations under the Promissory Note (against the principal balance and not
only against the next payment due) and Contingent Payments any liability for any
Loss or other indemnification obligations of Sellers and/or Owners herein to
Buyer under this Agreement. Buyer shall notify Owners and/or Sellers in writing
as to the reason for and the amount of the set-off as soon as practicable but at
least thirty (30) days before the day that payment of such set-off amounts would
otherwise be due; provided, however, the failure to provide such notice shall
not affect Buyer's set-off right herein.
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10.11. THERAPY BUSINESS BOOKS AND RECORDS. Buyer shall maintain
separate books and records for the Therapy Business, which books and records
shall be available for review upon reasonable notice during normal business
hours by Owners and Sellers and their independent auditors and attorneys.
10.12. DESIGNATED CONTRACTS. Owners and Sellers shall use their best
efforts to assist Buyer in its assumption of or substitution of the Designated
Contracts within sixty (60) days of the Closing Date. To Owners' and Sellers'
knowledge, the inability of Buyer to assume or substitute all of the Designated
Contracts will not have a material adverse effect on the Therapy Business.
ARTICLE XI: TERMINATION
-----------
11.1. TERMINATION. This Agreement may be terminated at any time at or
prior to the time of Closing Date by:
(a) Buyer, if any condition precedent to Buyer's obligations
hereunder, including without limitation those conditions set forth in Article
VIII herein, have not been satisfied by the Closing Date or pursuant to Section
12.1 herein if any portion of the Assets is damaged or destroyed as a result of
fire, other casualty or for any reason whatsoever;
(b) Sellers, if any condition precedent to Sellers'
obligations hereunder, including without limitation those conditions set forth
in Article IX herein, have not been satisfied by the Closing Date;
(c) Buyer, if any Schedule or Exhibit hereto has been altered
or modified materially after the date hereof by Sellers or Owners;
(d) Sellers, upon the occurrence of an event that results in a
material adverse change in the financial condition of Buyer.
(e) the mutual consent of Buyer and Sellers.
11.2. EFFECT OF TERMINATION. Except as provided in Section 10.5 herein,
if a party terminates this Agreement because one of its conditions precedent has
not been fulfilled, or if this Agreement is terminated by mutual consent, this
Agreement shall become null and void without any liability of any party to the
other. Furthermore, nothing in this Section shall affect Buyer's right to
specific performance of Sellers' obligations at Closing hereunder. Upon
termination, each party shall redeliver promptly all documents, work papers and
other material (and all copies thereof) of any other party relating to the
transaction contemplated hereby, whether so obtained before or after the
execution hereof, to the party furnishing the same. The parties shall each use,
and will cause their advisors and representatives to use their respective best
efforts to keep confidential all information and documents to which it is given
access or copies by any of the parties in the course of its investigation of the
transaction contemplated hereby and will not (except as required by applicable
law, regulation or legal
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process), without the applicable party's prior written consent, disclose any
information or use any information for any purpose unrelated to the consummation
of the transactions contemplated hereby.
ARTICLE XII: CASUALTY, RISK OF LOSS
----------------------
12.1. CASUALTY, RISK OF LOSS. Sellers shall bear the risk of all loss
or damage to the Assets from all causes, until the Closing. If at any time prior
to the Closing any portion of the Assets is damaged or destroyed as a result of
fire, other casualty or for any reason whatsoever, Sellers shall immediately
give notice thereof to Buyer. Buyer shall have the right, in its sole and
absolute discretion, within ten (10) days of receipt of such notice, to (a)
elect not to proceed with the Closing and terminate this Agreement or (b)
proceed to Closing and consummate the transactions contemplated hereby and
receive any and all insurance proceeds received or receivable by Sellers on
account of any such casualty.
ARTICLE XIII: MISCELLANEOUS PROVISIONS
------------------------
13.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, covenants and agreements made by each party in this Agreement or in
any Schedule, Exhibit, certificate, document or list delivered by any such party
pursuant herein shall survive the Closing. Notwithstanding any investigation
conducted before or after the Closing or the decision of any party to consummate
the Closing, each party herein shall be entitled to rely and is hereby declared
to have reasonably relied upon the representations and warranties of the other
party.
13.2. PUBLIC ANNOUNCEMENTS AND CONFIDENTIALITY. No party shall make or
cause to be made any public announcement or similar media publicity with respect
to this Agreement or the transactions contemplated herein prior to the Closing
Date without the prior written notice of each party, and after the Closing Date,
all public announcements or similar media publicity with respect to this
Agreement or the transactions contemplated herein shall be at such time and in
such manner as Buyer shall determine; provided that nothing herein shall prevent
either party, upon prior written notice to the other, from making such written
notices as such party's counsel may consider advisable in order to satisfy the
party's legal and contractual obligations in such regard. The parties shall not,
and use their best efforts to ensure that their respective spouses, relatives,
employees and others associated with the parties, including but not limited to
attorneys and accountants do not, make or publish any negative, critical,
disparaging, slanderous or libelous statements about any of the parties, or any
of their officers, directors, shareholders, agents, employees, or
representatives concerning the parties.
13.3. COSTS AND EXPENSES. Except as expressly otherwise provided in
this Agreement, each party herein shall bear its own costs and expenses in
connection with preparation and closing of this Agreement and the transactions
contemplated hereby.
13.4. BENEFIT AND ASSIGNMENT. This Agreement binds and inures to the
benefit of each party herein and its successors and proper assigns. Buyer shall
remain liable on the Promissory Note and for the Contingent Payments in the
event Buyer assigns or sells any interest in the Therapy Business.
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13.5. EFFECT AND CONSTRUCTION OF THIS AGREEMENT. This Agreement and the
Exhibits and Schedules as updated by either party between the date hereof and
closing herein embody the entire agreement and understanding of the parties and
supersede any and all prior agreements, arrangements and understandings relating
to matters provided for herein, including without limitations the Letter of
Intent executed by the parties as of June 4, 1997. The captions used herein are
for convenience only and shall not control or affect the meaning or construction
of the provisions of this Agreement. This Agreement may be executed in one or
more counterparts, and all such counterparts shall constitute one and the same
instrument.
13.6. COOPERATION - FURTHER ASSISTANCE. Subject to the terms and
conditions herein provided, each of the parties herein shall use its best
efforts to take, or cause to be taken, such action, to execute and deliver, or
cause to be executed and delivered, such additional documents and instruments,
and to do, or cause to be done, all things necessary, proper and advisable under
the provisions of this Agreement and under applicable law to consummate and make
effective the transactions contemplated by this Agreement.
13.7. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed to be properly given when personally delivered to
the party entitled to receive the notice or when sent by telecopier or by
overnight courier, properly addressed to the party entitled to receive such
notice at the address stated below:
If to Sellers: Jacksonville Rehabilitation Center, Inc.
c/o ▇▇▇ ▇▇▇▇▇▇, President
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Center for Sports Physical Therapy, Inc.
c/o ▇▇▇ ▇▇▇▇▇▇, Administrator
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Jacksonville Group, Inc.
c/▇ ▇▇▇▇▇▇ E. Sale, III, President
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
30
36
With a copy to: ▇▇▇▇▇▇▇ ▇. Prom, Esq.
Brant, Moore, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
Suite 3100 ▇▇▇▇▇▇▇ Center
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer: Arbor Health Care Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Senior Vice President
With a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
General Counsel
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
13.8. WAIVER, DISCHARGE, ETC. This Agreement shall not be released,
discharged, abandoned, changed or modified in any manner, except by an
instrument in writing executed by or on behalf of each of the parties herein by
their duly authorized officer of representative. The failure of any party to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
13.9. RIGHTS OF PERSONS NOT PARTIES. Nothing contained in this
Agreement shall be deemed to create rights in persons not parties herein, other
than the successors and proper assigns or the parties herein.
13.10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, disregarding any rules
relating to the choice or conflict of laws.
13.11. SEVERABILITY. Any provision, or distinguishable portion of any
provision, of the Agreement which is determined in any judicial or
administrative proceeding to be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. It
is the intention of the parties that if any provision of Section 10.6 herein
shall be determined to be overly broad in any respect, then it should be
enforceable to the maximum extent permissible under the law. To the extent
permitted by applicable law, the parties waive any provision of law which
renders a provision hereof prohibited or unenforceable in any respect.
31
37
13.12. SCHEDULES AND EXHIBITS. Each Schedule and Exhibit to this
Agreement that provides information of the Sellers or Owners shall be comprised
of three separate Schedules or Exhibits, as the case may be, each denominated by
the letter A, B or C to specify Seller or Owner Group for which the information
of such Schedule or Exhibit is provided. For example, the Contracts relating to
JG shall be listed on SCHEDULE 4.7-A, the Contracts relating to CSPT shall be
listed on SCHEDULE 4.7-B, and the Contracts relating to JRC shall be listed on
SCHEDULE 4.7-C.
IN WITNESS WHEREOF, each of the parties herein and in the capacity
indicated below has executed this Agreement as of the day and year first above
written.
ARBOR HEALTH CARE COMPANY JACKSONVILLE REHABILITATION
CENTER, INC.
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: \s\ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------- -----------------------
Title: Vice President - Outpatient Rehab Title: President
---------------------------------- --------------------
JACKSONVILLE GROUP, INC. CENTER FOR SPORTS PHYSICAL
THERAPY, INC.
By: \s\ ▇▇▇▇▇▇ E. Sale, III By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------- -----------------------
Title: President Title: President
---------------------------------- --------------------
\s\ ▇▇▇▇▇▇ E. Sale, III \s\ ▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------- ---------------------------
▇▇▇▇▇▇ E. SALE, III ▇▇▇ ▇. ▇▇▇▇▇▇
\s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ \s\ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------- ---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
\s\ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------- ---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
\s\ ▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
32
38
Exhibit A-CSPT
All of the issued and outstanding stock of Center for Sports Physical
Therapy, Inc., a Florida corporation, is owned by the following named
individuals in the following amounts:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 331/3%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 331/3%
▇▇▇ ▇. Wledon 331/3%
-----
TOTAL 100%
=====
39
Exhibit A-JG
All of the issued and outstanding stock of Jacksonville Group, Inc., a
Florida corporation, is owned by the following named individuals in the
following amounts:
▇▇▇▇▇▇ E. Sale, III 23%
▇▇▇ ▇. ▇▇▇▇▇▇ 23%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 23%
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 8%
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 23%
-----
TOTAL 100%
=====
40
Exhibit A-JRC
All of the issued and outstanding stock of Jacksonville Rehabilitation
Center, Inc., a Florida corporation, is owned by the following named individuals
in the following amounts:
▇▇▇ ▇. ▇▇▇▇▇▇ 100%
----
TOTAL 100%
====
41
Exhibit B-CSPT
PROMISSORY NOTE
$175,000.00
Lima, Ohio
September 10, 1997
For value received, the receipt and sufficiency of which are hereby
acknowledged, the undersigned, ARBOR HEALTH CARE COMPANY, a Delaware corporation
("Payor"), hereby promises to pay to the order of CENTER FOR SPORTS PHYSICAL
THERAPY, INC., a Florida corporation ("Payee") or its successors and assigns, at
Jacksonville, Florida, or at such other place as the holder hereof may, from
time to time, designate in writing, the total outstanding principal balance of
One Hundred Seventy-Five Thousand and No/100 Dollars ($175,000.00), with simple
interest on the unpaid principal sum hereof at a rate of eight percent (8%) per
year, payable at the times and on the terms as hereinafter provided in this
promissory note (the "Note"):
1. Interest hereon and the principal sum shall be paid in lawful money of the
United States of America.
2. Payor shall make three (3) annual payments of principal and accrued interest
thereon in arrears, with the first such annual payment due September 2, 1998.
The second payment is due September 2, 1999 and the third and final payment is
due on September 2, 2000. A payment shall be deemed "Late" if not received by
Payee on or before the tenth (10th) day after the date such payment is due.
Payor further agrees to pay a late payment charge of five percent (5%) of the
unpaid portion of any Late payment.
3. Prepayment of all or any part of the principal sum of this Note, together
with accrued interest thereon, shall be allowed at any time. Any partial
prepayment shall be applied first against accrued interest and then as a
reduction of principal. Any such prepayment shall not postpone the due date of
any subsequent installment.
4. The principal amount of this Note and/or any accrued interest thereon may be
reduced in the manner specified in Section 10.2: "Indemnification" of that
certain Asset Purchase Agreement entered into by and among Payor and Payee and
dated as of September 10, 1997 to be effective September 1, 1997 (the
"Agreement").
5. The happening of the following event shall be deemed a default under this
Note: default by Payor in the payment of any installment of principal or
interest when due under this Note and the same shall remain unpaid for a period
of fifteen (15) days after the date of such payment is due.
6. It is hereby agreed that in the event default shall be made in the payment of
principal or interest of this Note, then the whole of said principal sum
remaining unpaid hereunder and all interest then accrued thereon shall at the
option of the Payee of this Note forthwith become due and payable without demand
or notice (TIME BEING OF ESSENCE HEREOF) and shall thereafter bear interest at
the highest rate allowed by law until paid. The Payor agrees to pay all costs of
collection, including reasonable attorneys' fees, whether suit be brought or
not, if after maturity or default an attorney shall
42
be employed to collect this Note or any payment of principal and/or interest due
hereunder and whether or not this Note is collected through the Bankruptcy Court
or any other judicial proceeding.
7. The Payor, for itself, its legal representatives, successors and assigns,
jointly, severally and expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
and the benefit of any exemption under any exemption or insolvency laws.
8. Any acceptance of more lenient terms of repayment of the principal or
interest by the Payee shall not waive the Payee's rights of repayment so
stipulated herein. No partial exercise by the Payee of any right or remedy shall
preclude any other future exercise thereof, or the exercise of any other right
or remedy.
9. This Note shall be construed by the laws of the State of Florida. Any and all
suits for any and every breach of this contract may be instituted and maintained
in any court of competent jurisdiction in ▇▇▇▇▇ County, Florida.
10. This Note has been executed and delivered at Jacksonville, ▇▇▇▇▇ County,
Florida on the date first above written.
ARBOR HEALTH CARE COMPANY
By:
-------------------------------------
Title:
----------------------------------
-2-
43
Exhibit B-JG
PROMISSORY NOTE
$525,000.00
Lima, Ohio
September 10, 1997
For value received, the receipt and sufficiency of which are hereby
acknowledged, the undersigned, ARBOR HEALTH CARE COMPANY, a Delaware corporation
("Payor"), hereby promises to pay to the order of JACKSONVILLE GROUP, INC., a
Florida corporation ("Payee") or its successors and assigns, at Jacksonville,
Florida, or at such other place as the holder hereof may, from time to time,
designate in writing, the total outstanding principal balance of Five Hundred
Twenty-Five Thousand and No/100 Dollars ($525,000.00), with simple interest on
the unpaid principal sum hereof at a rate of eight percent (8%) per year,
payable at the times and on the terms as hereinafter provided in this promissory
note (the "Note"):
1. Interest hereon and the principal sum shall be paid in lawful money of the
United States of America.
2. Payor shall make three (3) annual payments of principal and accrued interest
thereon in arrears, with the first such annual payment due September 2, 1998.
The second payment is due September 2, 1999 and the third and final payment is
due on September 2, 2000. A payment shall be deemed "Late" if not received by
Payee on or before the tenth (10th) day after the date such payment is due.
Payor further agrees to pay a late payment charge of five percent (5%) of the
unpaid portion of any Late payment.
3. Prepayment of all or any part of the principal sum of this Note, together
with accrued interest thereon, shall be allowed at any time. Any partial
prepayment shall be applied first against accrued interest and then as a
reduction of principal. Any such prepayment shall not postpone the due date of
any subsequent installment.
4. The principal amount of this Note and/or any accrued interest thereon may be
reduced in the manner specified in Section 10.2: "Indemnification" of that
certain Asset Purchase Agreement entered into by and among Payor and Payee and
dated as of September 10, 1997 to be effective September 1, 1997 (the
"Agreement").
5. The happening of the following event shall be deemed a default under this
Note: default by Payor in the payment of any installment of principal or
interest when due under this Note and the same shall remain unpaid for a period
of fifteen (15) days after the date of such payment is due.
6. It is hereby agreed that in the event default shall be made in the payment of
principal or interest of this Note, then the whole of said principal sum
remaining unpaid hereunder and all interest then accrued thereon shall at the
option of the Payee of this Note forthwith become due and payable without demand
or notice (TIME BEING OF ESSENCE HEREOF) and shall thereafter bear interest
at the highest rate allowed by law until paid. The Payor agrees to pay all costs
of collection, including
44
reasonable attorneys' fees, whether suit be brought or not, if after maturity or
default an attorney shall be employed to collect this Note or any payment of
principal and/or interest due hereunder and whether or not this Note is
collected through the Bankruptcy Court or any other judicial proceeding.
7. The Payor, for itself, its legal representatives, successors and assigns,
jointly, severally and expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
and the benefit of any exemption under any exemption or insolvency laws.
8. Any acceptance of more lenient terms of repayment of the principal or
interest by the Payee shall not waive the Payee's rights of repayment so
stipulated herein. No partial exercise by the Payee of any right or remedy shall
preclude any other future exercise thereof, or the exercise of any other right
or remedy.
9. This Note shall be construed by the laws of the State of Florida. Any and all
suits for any and every breach of this contract may be instituted and maintained
in any court of competent jurisdiction in ▇▇▇▇▇ County, Florida.
10. This Note has been executed and delivered at Jacksonville, ▇▇▇▇▇ County,
Florida on the date first above written.
ARBOR HEALTH CARE COMPANY
By:
-------------------------------------
Title:
----------------------------------
-2-
45
Exhibit B-JRC
PROMISSORY NOTE
$300,000.00
Lima, Ohio
September 10, 1997
For value received, the receipt and sufficiency of which are hereby
acknowledged, the undersigned, ARBOR HEALTH CARE COMPANY, a Delaware corporation
("Payor"), hereby promises to pay to the order of JACKSONVILLE REHABILITATION
CENTER, INC., a Florida corporation ("Payee") or its successors and assigns, at
Jacksonville, Florida, or at such other place as the holder hereof may, from
time to time, designate in writing, the total outstanding principal balance of
Three Hundred Thousand and No/100 Dollars ($300,000.00), with simple interest on
the unpaid principal sum hereof at a rate of eight percent (8%) per year,
payable at the times and on the terms as hereinafter provided in this promissory
note (the "Note"):
1. Interest hereon and the principal sum shall be paid in lawful money of the
United States of America.
2. Payor shall make three (3) annual payments of principal and accrued interest
thereon in arrears, with the first such annual payment due September 2, 1998.
The second payment is due September 2, 1999 and the third and final payment is
due on September 2, 2000. A payment shall be deemed "Late" if not received by
Payee on or before the tenth (10th) day after the date such payment is due.
Payor further agrees to pay a late payment charge of five percent (5%) of the
unpaid portion of any Late payment.
3. Prepayment of all or any part of the principal sum of this Note, together
with accrued interest thereon, shall be allowed at any time. Any partial
prepayment shall be applied first against accrued interest and then as a
reduction of principal. Any such prepayment shall not postpone the due date of
any subsequent installment.
4. The principal amount of this Note and/or any accrued interest thereon may be
reduced in the manner specified in Section 10.2: "Indemnification" of that
certain Asset Purchase Agreement entered into by and among Payor and Payee and
dated as of September 10, 1997 to be effective September 1, 1997 (the
"Agreement").
5. The happening of the following event shall be deemed a default under this
Note: default by Payor in the payment of any installment of principal or
interest when due under this Note and the same shall remain unpaid for a period
of fifteen (15) days after the date of such payment is due.
6. It is hereby agreed that in the event default shall be made in the payment of
principal or interest of this Note, then the whole of said principal sum
remaining unpaid hereunder and all interest then accrued thereon shall at the
option of the Payee of this Note forthwith become due and payable without demand
or notice (TIME BEING OF ESSENCE HEREOF) and shall thereafter bear interest at
the highest rate allowed by law until paid. The Payor agrees to pay all costs of
collection, including reasonable attorneys' fees, whether suit be brought or
not, if after maturity or default an attorney
46
shall be employed to collect this Note or any payment of principal and/or
interest due hereunder and whether or not this Note is collected through the
Bankruptcy Court or any other judicial proceeding.
7. The Payor, for itself, its legal representatives, successors and assigns,
jointly, severally and expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
and the benefit of any exemption under any exemption or insolvency laws.
8. Any acceptance of more lenient terms of repayment of the principal or
interest by the Payee shall not waive the Payee's rights of repayment so
stipulated herein. No partial exercise by the Payee of any right or remedy shall
preclude any other future exercise thereof, or the exercise of any other right
or remedy.
9. This Note shall be construed by the laws of the State of Florida. Any and all
suits for any and every breach of this contract may be instituted and maintained
in any court of competent jurisdiction in ▇▇▇▇▇ County, Florida.
10. This Note has been executed and delivered at Jacksonville, ▇▇▇▇▇ County,
Florida on the date first above written.
ARBOR HEALTH CARE COMPANY
By:
-----------------------------------------
Title:
--------------------------------------
-2-
47
ARBOR HEALTH CARE COMPANY
JACKSONVILLE THERAPY BUSINESS
ASSET PURCHASE AGREEMENT
SCHEDULE INDEX *
Schedule
--------
1.2 Inventory
1.4 Designated Contracts
1.5 The Physical Therapy Network, Inc.
2.1(c) Determination and Payment of Purchase Price
2.2(a) Accrued Vacation Pay
2.2(b) Prepayments
2.5 Allocation of Purchase Price
4.1 Organization and Standing of Sellers
4.2 Authority
4.4 Absence of Conflicting Agreements
4.5 Consent List
4.6 Schedule of Assets
4.7 Contracts
4.8 Financial Statements
4.9 Material Changes
4.10 Cost Report Disputes
4.11 Licenses; Permits
4.12 Title, Condition to Personal Property
4.13 Title, Condition of the Property
4.14 Litigation
4.15 Employees
4.16(a) Collective Bargaining, Labor Contracts, Employments Practices, etc.
4.18 Insurance
4.19 Relationships
4.21 Absence of Certain Events
4.22 Compliance with Laws
4.23 Notices from Environmental Authorities
4.25 Tax Returns
4.27 Physical Therapists
4.28 Claims and Billing
8.4 Legal Matters
8.5 Approvals
10.8 Employment of Existing Employees
10.9 Excepted Employees
* The Company agrees to furnish to the Securities and Exchange Commission
supplementally a copy of the omitted schedules upon the Commission's
request.