EXHIBIT 2.1
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STATE OF GEORGIA
COUNTY OF ▇▇▇▇▇▇
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (hereafter "Agreement") is made and
entered into this 14th day of May, 1997, by and among CARESOUTH HOME HEALTH
SERVICES, INC., a Georgia corporation ("Purchaser"), and THE CARE GROUP, INC., a
Delaware corporation ("Parent"), CARE LINE OF GEORGIA, INC., a Georgia
corporation ("Care Line"), and THE CARE GROUP OF GEORGIA, INC., a Georgia
corporation ("Care Georgia") and (collectively with Parent and Care Line
referred to as "Sellers").
RECITALS:
WHEREAS, Sellers are business corporations engaged in the Medicare
regulated home health care and related medical services business in and about
metropolitan Atlanta, Georgia including the Georgia counties of DeKalb, ▇▇▇▇▇▇,
Gwinnett, Cherokee, Clayton, Cobb, and ▇▇▇▇▇▇▇; and
WHEREAS, Sellers desire to sell substantially all of its assets used in
the operation of the Business (as defined below), and Purchaser desires to
purchase such assets, all subject to the terms and conditions set forth herein;
and
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00), the
mutual covenants contained herein and other good
and valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings ascribed to such terms below:
(a) "Affiliate" of a person shall mean (i) any person which, directly
or indirectly, is in control of, is controlled by, or under common control with,
such person or (ii) any person who is a director or officer (1) of such person,
(2) of any subsidiary of such person or (3) of any person described in clause
(a) above. For purposes of this definition, control of a person shall mean the
power, direct or indirect, (i) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such persons, or (ii) to
direct or cause the direction of the management and policies of such person
whether by contract or otherwise.
(b) "Assets" shall have the meaning set forth in Section 2(a) below.
(c) "Best Efforts" shall mean that the parties shall undertake all
reasonable efforts including the dedication of know-how, labor, and resources;
provided, however, that a party shall not be obligated in the performance or
exercise of Best Efforts to remit funds to or incur expenses of a third party
unless this Agreement otherwise provides.
(d) "Business" shall mean Sellers' operations in the Service Area (and
throughout the State of Georgia) to render
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regulated home health care and related medical services of the type and in the
fashions authorized by the Licenses (as defined herein), and also in the Service
Area and throughout the State of Georgia related medical services including
Durable Medical Equipment supply ("DME") and Home Infusion Therapy which require
no special permit or license; provided, however, that Business shall not mean
the sale by mail of pharmaceuticals and other medicine.
(e) "Certificate(s) of Need shall mean those certificates issued by the
Georgia State Health Planning Agency ("SHPA") in the Service Area (as defined
herein) authorizing Sellers to engage in the Business and specifically set forth
in Section 2(a)(i).
(f) "Closing" shall mean the consummation of the transaction set forth
herein and contemplated hereby and which shall take place at Care Georgia's
business offices in Atlanta, Georgia, or by mail upon the mutual agreement of
the parties.
(g) "Closing Date" shall mean the date upon which the Closing occurs,
which date shall occur at a time and on a date mutually agreeable to the parties
hereto within ten (10) days after satisfaction of all conditions precedent set
forth herein or at such other time as the parties hereto mutually agree,
provided that in no event shall the Closing Date be later than May 16, 1997.
Notwithstanding the foregoing, Purchaser in its discretion may extent the Date
of Closing up to and including May 23, 1997, in order to permit Seller adequate
time to satisfy all
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conditions precedent to Purchaser's performance hereunder. Notwithstanding the
actual time of wire transfer or delivery of the consideration payable hereunder
to Sellers, or tender or delivery of the Assets to the control and custody of
Purchaser, the effective time for all purposes hereunder including any
prorations pursuant to Paragraph 6 of this Agreement for transfer of the Assets
shall be 6:00 p.m. EDT on the Date of Closing.
(h) "Code" shall mean the Internal Revenue Code of 1996, as amended.
(i) "Confidential Information" shall mean any and all confidential
information of the Sellers and Purchaser which is generally not known to or by
businesses which compete with the Sellers or Purchaser in the Business,
including without limitation information relating to the Sellers' or Purchaser's
financial affairs, accounting, operations and marketing, all information of the
foregoing types relating to any customer or patient of the Sellers or Purchaser,
customer and patient lists, referral lists and data, prospective customer,
patient and referral source lists, customer, patient and referral source account
records, training and operations material and memoranda, personnel records, code
books, pricing information and any other information treated by the Sellers,
Purchaser or both, as being confidential or labeled "Confidential," as well as
all physical embodiments of any of the foregoing, all of which are hereby agreed
to be the property of and confidential to the Sellers, Purchaser or both.
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(j) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
(k) "Excluded Assets" shall have the meaning set forth in Section 2(b)
hereof.
(l) "NPR" shall mean a Notice of Program Reimbursement or other similar
notice provided by a fiscal intermediary to a provider of Medicare covered
services notifying the provider of a reimbursement (and any potential
adjustments to the provider's cost report) due to Medicare.
(m) "Permitted Exceptions" shall mean only those exceptions listed as
described on a respective schedule hereto.
(n) "Periodic Interim Payments" shall mean those biweekly periodic
payments or other reimbursement under the federal Medicare program.
(o) "Service Area" shall mean the service area of Sellers' Atlanta
Georgia Home Health Agency including the Georgia counties of Dekalb, ▇▇▇▇▇▇, and
Gwinnett County wherein Sellers provides nursing care, physical therapy,
medical/social work, occupational therapy, speech therapy, and home health aid,
and also the Georgia counties of Cherokee, Clayton, Cobb, and ▇▇▇▇▇▇▇ where the
Sellers provide "specialized, high technology" home health services as further
outlined in the Certificate of Need and Licensure. In addition, the Service Area
shall include the State of Georgia wherein Sellers provides certain unregulated
related home health care services including DME and home infusion therapy.
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Section 2. Purchase and Sale of Properties and Assets.
(a) Subject to and in reliance upon the representations, warranties and
agreements herein set forth, and subject to the terms and conditions herein
contained, Sellers hereby agrees to convey, sell, assign, transfer and deliver
to Purchaser, and Purchaser hereby agrees to purchase and accept from Sellers,
on the Closing Date, the following specified assets owned by Sellers and used in
connection with the Business as of the close of business on the Closing Date
(collectively, the "Assets"):
(i) all licenses, permits, Certificates of Need,
authorizations to conduct the Business and all other governmental or
regulatory authorizations of Sellers necessary to operate Sellers'
Business in the Service Area pertaining to the Business, to the extent
transferrable, including specifically, without limitation, the
licenses, permits, Certificates of Need and authorizations listed on
Schedule 2(a)(i) attached hereto and made a part hereof (collectively,
the "Licenses");
(ii) all supplies, inventory, machinery, equipment, computer
hardware and software, furniture, fixtures, and other similar tangible
personal property of Care Georgia and Care Line owned or used in
connection with the Business, including without limitation, all of the
tangible personal property listed on Schedule 2(a)(ii) attached hereto
and made a part hereof, excluding any personal property
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specifically excluded in Section 2(b) hereof (collectively
the "Tangible Personal Property");
(iii) to the extent permitted by law, all documents and
records, electronic data and electronic records, patient lists, book of
business, telephone numbers, patient charts/records/files/financial
information, provider referral lists and relationships, personnel
records, employee handbooks, training manuals, quality control
documents, peer review and similar information owned by Care Georgian
and Care Line and used in the Business, the right to maintain and use
the patient files of Care Georgia and Care Line used in the Business,
software licenses, and, except as otherwise provided in Section 2(b)
hereto, all other intangible personal property owned by Care Line or
Care Georgia, including without limitation, those listed on Schedule
2(a)(iii) attached hereto and made a part hereof (collectively the
"Intangible Personal Property"), except as specifically excluded in
Section 2(b)(v) herein;
(iv) such of the leases, executory contracts, manufacturers'
and other warranties and other agreements of Care Georgia and Care Line
relating to the Business or the Assets which are identified on Schedule
2(a)(iv) attached hereto and made a part hereof (collectively the
"Contracts");
(v) Care Georgia's and Care Line's goodwill as a going
concern, including any goodwill associated with the
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Intangible Personal Property (except as excluded herein),
Care Georgia's and Care Line's lists of customers,
providers, and suppliers, and the books, records and all
other data relating to the operation of the Business,
including without limitation, all records, correspondence,
purchase orders and confidential information pertaining to
the Business.
(b) Excluded Assets. Purchaser agrees to purchase hereunder only those
Assets set forth and described in Section 2(a) above. Purchaser does not agree
to purchase and Sellers does not agree to sell any other assets or properties of
Sellers including, without limitation, the following property and assets as of
the close of Business on the Closing Date (collectively the "Excluded Assets"):
(i) Accounts receivable related to Sellers' provision of
services prior to Closing from private entities and under all
applicable governmental health programs (including without limitation
Medicare, Medicaid and Champus), notes receivable, negotiable
instruments and tax and other refunds;
(ii) Sellers' articles of incorporation, by-laws, minute books
and other corporate records;
(iii) Any and all rights of Sellers under any lease, executory
contract, manufacturer's or other warranty or other agreement of
Sellers relating to the Business or the Assets not identified on
Schedule 2(a)(iv) hereof;
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(iv) all causes of action, claims and demands of Sellers
against third parties arising out of warranties or guarantees, express
or implied (whether or not liquidated) relating to the Assets which
accrued prior to the Closing date;
(v) All trademarks, servicemarks, logos, and trade names,
whether registered or unregistered, including, without limitation, the
name "Care Group of Georgia", "Care Group", Care Line of Georgia" and
all derivations thereof, and copyrights and all applications and
registrations therefore owned by Sellers and relating to or used in the
operation of the Business within Georgia as identified and described on
Schedule 2(b) attached hereto and made a part hereof; and
(vi) Any other asset of The Care Group, Inc. not enumerated in
Section 2(a) above.
(c) Liens. The Assets shall be conveyed free and clear of all
liabilities, liens, claims, charges, encumbrances, taxes levies or other
material imperfections of title except for "Permitted Exceptions" as scheduled
on Schedule 2(c). For the purposes of this paragraph "Material" shall mean
greater than $1,000.00 dollars in claims, liens or charges.
(d) Liabilities. Except for those certain liabilities and obligations
under all Contracts and as listed on Schedule 2(a)(iv) and demarcated as
assumed obligations or liabilities (the "Assumed Liabilities"), no obligation
or liability of
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Sellers or relating to the business operations of Sellers or to the Assets, in
Georgia or elsewhere, of any nature whatsoever (whether express or implied,
fixed or contingent, liquidated or unliquidated, known or unknown, accrued, due
or to become due), is to be assumed by Purchaser, nor shall Purchaser be liable
to pay, perform or discharge any such obligation or liability, nor shall the
Assets be subject to any such obligation or liability (all such obligations or
liabilities other than the Assumed Liabilities are referred to as the "Excluded
Liabilities"). Without limiting the generality of the foregoing, except for the
Assumed Liabilities, Purchaser shall not assume or become liable to pay, perform
or discharge (hereafter collectively "Sellers' Liabilities"):
(i) Any and all liabilities and obligations of Sellers,
whether or not reflected on the books and records of Sellers on the
Closing Date, and all obligations of Sellers under all contracts,
leases, debts, notes, negotiable instruments and written commitments
(excepting those listed on Schedules 2(a)(iv).
(ii) Any and all liabilities or obligations of Sellers for
personal injury (including sickness, trauma, disease, pain and
suffering, loss of future earnings, death, punitive damages and the
like), property damage, and other damage and injury claims arising out
of Sellers' (or any predecessor's) conduct of business prior to the
Closing, whether or not any claim or litigation has been instituted
with respect thereto
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and whether or not any claim is covered, partially or fully,
by insurance;
(iii) Any mortgage, security interest, lien or encumbrance
of any kind affecting the Assets, except for the Permitted
Exceptions;
(iv) Any obligations or liability arising from the
relationship between Sellers and any of its employees or based upon
termination of such employees by Sellers, including, without
limitation, any bonus, commission, or severance obligations of Sellers
existing as of the Closing Date or arising by reason of the termination
of Sellers' employees by Sellers;
(v) Any obligation or liability of Sellers for any federal,
state, or local or foreign taxes, whenever incurred or accrued, or any
interest or penalties with respect thereto;
(vi) Any obligation or liability of Sellers under any "Benefit
Plan" (as defined) (including, without limitation, any profit sharing
plan or any pension plan);
(vii) Any obligation or liability by or on behalf of Sellers
for any finder's, broker's or advisor's fee and expenses or the like
incurred in connection with the transactions contemplated by this
Agreement;
(viii) Any obligation or liability of Sellers arising under
this Agreement or the transaction contemplated hereby;
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(ix) Any obligation or liability arising as a result of the
failure or alleged failure of Sellers to comply with any applicable
local, state or federal law, ordinance, regulation, order or decree,
including, without limitation, any claim obligation, liability, loss,
damage or expense, of whatever kind or nature, contingent or otherwise,
incurred or imposed or based upon any provision of federal, state or
local law or regulations or common law, pertaining to health, safety or
environmental protection and arising out of Sellers' ownership, use,
control or operation of any facility, site, area or property from which
any substance was released into the environment (the term "release"
meaning any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing into
the environment, and the term "environment" meaning any surface or
ground water, drinking water supply, land, surface or subsurface
strata, or the ambient air); and
(x) Any legal proceedings (any debts, obligations and
liabilities with respect thereto) now pending or hereafter instituted
against Sellers and any legal proceedings (any debts, obligations and
liabilities with respect thereto) instituted prior to or after the date
of this Agreement arising out of the business operations of Sellers on
or after the date of this Agreement arising out of the business
operations of Sellers on or prior to the Closing Date.
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(xi) Obligations of Sellers to governmental entities or
agencies such as the Health Care Financing Administration, state
Medicaid programs and fiscal intermediaries involved in the Medicare
program, or obligations to any other third party payors, health
maintenance organizations, or other similar entities.
Section 3. Purchase Price. The Purchase Price for the Assets shall be
One Million Six Hundred Thousand and 00/000 Dollars ($1,600,000.00) (the
"Purchase Price"). The Purchase Price shall be allocated among the Assets as
set forth on Schedule 3 attached hereto. Each of the parties hereto agrees to
report this transaction for federal income tax and Medicare cost reporting
purposes in accordance with this allocation and to execute and deliver at
Closing the forms necessary to report the transactions contemplated hereby in
accordance with the Code.
Section 4. Payment of Purchase Price. The Purchase Price shall be paid
by Purchaser as follows: At Closing, Purchaser shall deliver or cause to be
delivered to Parent the amount of the Purchase Price in immediately available
funds, less or plus those amounts required for prorations as provided at Section
6.
Section 5. Reserved.
Section 6. Prorations and Assumptions.
(a) Except as otherwise provided for in this Agreement, all
other revenue and expense items arising in the ordinary course of
business, as determined in accordance with generally accepted
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accounting principles consistently applied, will be pro-rated on an accrual
basis between the Sellers and Purchaser, so that, as between the Sellers and
Purchaser, Sellers shall receive the benefit of all revenues and be responsible
for all expenses and liabilities allocable to the period prior to the Closing
Date and Purchaser shall receive the benefit of all revenues and be responsible
for all expenses and liabilities allocable to the period from the Closing Date
and thereafter.
(b) Any proration permitted and agreed to under this Agreement for any
reason is not apportioned at Closing shall be apportioned as soon thereafter as
practicable. If any mutual mistakes, including without limitation, any erroneous
mathematical calculations, are made in any apportionment at Closing, Sellers and
Purchasers shall, within forty-five (45) days after Closing, correct said
mistakes and make any payment required to produce an accurate apportionment. Any
Party (the "Requesting Party") shall present a detailed accounting in writing,
together with supporting documentation of all proration required by Section 6(a)
within forty-five (45) days after the Closing. If either party disputes the
other party's proration, the disputing party shall provide written notice to
Requesting Party of such dispute together with all necessary detail and
supporting documentation within fifteen (15) days of receipt of the proposed
proration. All such disputes shall be resolved by the parties in good faith.
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(c) In the event that Sellers and Purchaser are unable to resolve any
such dispute within ten (10) days following delivery of Purchaser's such notice
to Sellers, Sellers and Purchaser shall together designate a third-party
accounting firm (the "Mediating Accountants") to act as mediator with respect to
any such dispute. In the event that Sellers and Purchaser are unable to agree as
to the identity of such Mediating Accountants, each of Sellers and Purchaser
shall identify a third-party accounting firm, and the two (2) accounting firms
so designated shall themselves identify the Mediating Accountants.
(d) In the event of a dispute, as aforesaid, the Mediating Accountants
shall be instructed to review the proration required by Section 6(a), meet with
Sellers and Purchaser to review the extent of any dispute, and resolve any such
disputes as promptly as possible. The determination of the Mediating Accountants
shall be final and binding upon Sellers and Purchaser. The costs of the
Mediating Accountants shall be borne equally by Sellers and Purchaser.
Section 7. Closing.
(a) Costs and Expenses. Sellers and Purchaser shall each bear its own
legal, financial, accounting, consulting and other fees and expenses and any and
all costs and expenses not specified herein incurred by such party with respect
to the sale and purchase of the Business or the Assets, whether or not the
Closing occurs. Sellers shall pay any transfer or sales taxes
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due with respect to the transactions contemplated herein, including without
limitation, transfer of the Asset.
(b) At the Closing, Sellers shall deliver (or shall cause to be
delivered) to Purchaser:
(i) the ▇▇▇▇ of Sale substantially in the form of
Exhibit "B" attached hereto and made a part hereof;
(ii) the Assignment and Assumption Agreements with respect to
any Assumed Liabilities substantially in the form of Exhibit "C"
attached hereto and made a part hereof;
(iii) Officer's Certificates of the Sellers in substantially
in the form of Exhibit D attached hereto and made a part hereof;
(iv) the consents of all third parties to any material
Contracts that require consent for transfer or assignment to Purchaser,
which Contracts requiring consent and the consenting parties thereto
are listed on Schedule 7(b)(iv) attached hereto and made a part hereof
("Contract Consents"), which consents (1) shall not impose any material
conditions or requirements upon Purchaser or any of its Designees or
Affiliates, (2) shall not result in any liabilities or claims against
the Assets and/or the Business after the Closing, and (3) shall allow
Purchaser to operate the Business in the Service Area after the Closing
in substantially the same manner as the Business was being operated
prior to the date hereof;
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(v) the Estoppel Certificates, Releases, UCC Termination
Statements, or other proof of releases and satisfaction of any liens
and encumbrances against the Assets including the leases from those
Creditors listed on Schedule 7(b)(v) attached hereto;
(vi) a notification to the fiscal intermediary concerning
transfer of ownership, and delivery of post-closing payment,
substantially in the form attached hereto as Exhibit E;
(vii) updated financial statements of the Business as of
December 31, 1996 with depreciation schedules with respect to the
Assets;
(viii) reserved;
(ix) an updated certificate from the Sellers certifying the
correctness of the Sellers' representations and warranties contained in
the Agreement as of the Closing Date substantially in the form of the
Officer's Certificate as attached at Exhibit "D";
(x) the Assets, including without limitation, all original
documentation in Sellers' possession relating to patient records,
Business records, Certificates of Need, Licenses, Contracts, Tangible
Personal Property, and Intangible Personal Property, except as
specifically excluded herein;
(xi) the Non-Competition Agreement substantially in the form
as set forth in Exhibit "F" from the Sellers;
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(xii) appropriate and valid resolutions of the Board of
Directors and Shareholders of Care Georgia and Care Line, authorizing
the Officers to undertake and bind those entities to this Agreement;
and
(xiii) such other and further documents and take such other
actions as Purchaser or its counsel may reasonably request to effect
the transactions contemplated hereby.
(c) At the Closing, Purchaser shall deliver (or cause to be
delivered) to Sellers:
(i) the Purchase Price in immediately available certified
funds (or Electronic Wire transfer) as set forth in Section 3 hereof;
(ii) an updated certificate from the Purchaser certifying the
correctness of the Purchaser's representations and warranties contained
in the Agreement as of the Closing Date in the form of the Officer's
Certificate attached at Exhibit "A";
(iii) the Assignment and Assumption Agreement;
(iv) certificates of the officers of Purchaser substantially
in the form of Exhibit A attached hereto and made a part hereof; and
(v) deliver such other and further documents and take such
other actions as Sellers or its counsel may reasonably request to
effect the transactions contemplated hereby.
Section 8.A Covenants and Agreements of Sellers.
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(a) Insurance. Sellers have maintained, and will maintain at all times
up to and on the Closing Date adequate insurance coverage, including worker's
compensation, comprehensive casualty coverage, automobile collision and bodily
injury coverage, and malpractice ("claims accrual" and tail coverage for "claims
made" after the date of Closing) coverage in the coverage amounts as reflected
on Schedule 8(a) hereto.
(b) Hiring of Employees. Purchaser may offer employment to such of Care
Georgia's and Care Line's employees from and after the Closing Date at such
rates of pay, benefits and working conditions as Purchaser may desire. Sellers
shall not interfere with and shall use its Best Efforts to assist Purchaser's
efforts in attempting to employ any employees of Care Georgia or Care Line that
Purchaser decides to employ. Sellers shall be responsible for and shall pay all
of Sellers' employees when due the amount of all accrued but unpaid wages,
bonuses and other benefits to which the employees are entitled prior to the
Closing Date and make all appropriate withholding and tax payments associated
therewith. Purchaser shall not assume or otherwise be responsible or liable for
any payments or other consideration due employees with respect to periods prior
to the Closing Date.
(c) Reserved.
(d) Cooperation and Disclosure of Pending and Threatened Litigation.
Sellers shall (i) use their Best Efforts and cooperate fully with Purchaser to
investigate all aspects of any pending or threatened civil or criminal
investigations and
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proceedings against Sellers and their Affiliates, (ii) assist Purchaser in and
attend meetings with governmental and quasi-governmental authorities instituting
and/or prosecuting such investigations and proceedings, and (iii) provide all
non-privileged information, written and oral, concerning said investigations and
proceedings to Purchaser within ten (10) days of the date of this Agreement.
Sellers shall work with Purchaser to negotiate in good faith with such
authorities agreements permitting Purchaser to acquire the Business and the
Assets without any carryover liability or other adverse effect to the Assets or
the Business associated with such investigations and/or proceedings.
(e) Receipt of Payments from Governmental or Private Entities. In the
event Sellers receive on or after the Closing Date, any reimbursement or other
payments, in part or in whole, including without limitation any such payments
made under any governmental health programs such as Medicare, Medicaid and
Champus, with respect to operation of the Business by Purchaser after the
Closing, Sellers shall immediately pay over any such amounts to Purchaser. At
the Closing, Sellers shall execute and deliver to Purchaser the letter attached
hereto as Exhibit "E" and made a part hereof, directing the fiscal
intermediaries of the Medicare program to deliver all payments, including
without limitation, all Periodic Interim Payments, with respect to the Business
on or after the Closing Date to Purchaser. Sellers hereby authorize Purchaser as
of the Closing Date to deliver the
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original of such letter to such fiscal intermediaries. Sellers will cooperate
with Purchaser to cash or otherwise negotiate, all payment checks contemplated
hereby and deliver the proceeds therefrom to Purchaser.
(f) Additional Assistance. Sellers agrees to execute and provide any
documents and assistance reasonably necessary to assist Purchaser in securing
all governmental approvals, Licenses and authorizations necessary to operate
the Business after the Closing.
(g) Confidentiality. If the purchase and sale transactions do not close
for any reason, then each party agrees promptly to return to the other all
copies of any Confidential Information and maintain the confidentiality of such
Confidential Information. Sellers shall not use any of the Confidential
Information for any purpose other than the purchase and sale transactions
described in this Agreement. Sellers will not make any disclosures concerning
the transactions or this Agreement without the prior approval of the other party
except (i) to such officers, employers, and representatives who need to know
such information for purposes of evaluating the transaction, (ii) to the
appropriate governmental authorities as set forth above, or (iii) as may be
otherwise required by law.
(h) Access for Due Diligence Review. Upon execution of this
Agreement, Purchaser and its counsel, accountants and other representatives
shall have upon reasonable notice have reasonable access during normal
business hours to all properties, books,
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accounts, records, cost reports, contracts and documents of or relating to Care
Georgia and Care Line, the Business and the Assets, and to interview its senior
management personnel. Subject to the foregoing, the Sellers shall furnish, or
cause to be furnished, to Purchaser and its representatives, all data and
information concerning Sellers, the Assets and the Business that Purchaser may
reasonably request.
(i) Certain Acts Prohibited. Between the date hereof and the Closing
Date, Care Line and Care Georgia will not, without the prior written consent
of Purchaser:
(1) incur any liability with regard to the Assets
other than in the ordinary course of business or
encumber or permit the encumbrance of any of the
Assets;
(2) dispose of or contract to dispose of any of its
properties or the Assets other than in the ordinary
course of business;
(3) enter into any lease or contract for the
purchase, lease, or acquisition of real or personal
property other than in the ordinary course of
business;
(4) enter into any material agreement, which is not
cancelable by Sellers without penalty upon notice
of thirty (30) days or less, which would
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have a material adverse effect upon Purchaser's use
or enjoyment of the Assets post-Closing;
(5) enter into any contract involving the
acquisition or purchase of the stock or assets of
any other company or business which would affect
the Assets;
(6) reserved;
(7) make any commitment for capital expenditures
other than for ordinary repairs and maintenance;
(8) make any material adjustments in accounting
methods, principles or practices;
(9) enter into or make any commitment to employ any
person except those whose employment may be
terminated at will or increase other than in the
ordinary course of business compensation or
benefits of employees, or pay or agree to pay any
bonus or adopt any new employee benefit plan; or
(10) grant any general or uniform increase in the
rates of pay to any employees or grant any bonus.
(11) make any changes to the Certificate or
Articles of Incorporation or bylaws of Sellers
which would result in any representation of Sellers
made herein becoming untrue as in preventing
Sellers from full performance of this Agreement.
(12) reserved;
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(13) amend, alter or terminate any agreement to which
it is a party and which is to be assumed by Purchaser
hereunder other than renewals in the ordinary and
regular course of the Agencies business on terms no
less favorable than the agreement being renewed; or
(14) fail to maintain in effect the insurance
coverage referred to in Section 8A(a).
(j) Changes in Operations. Subject to the provisions of Section 8A(i)
above, Sellers shall operate the Business in substantially the manner currently
operated. Between the date hereof and the Closing Date, Sellers shall promptly
notify Purchaser in writing of any material adverse changes in the financial
condition of Care Georgia and/or Care Line, the method of conducting the
Business of Care Georgia or Care Line, any material damage to or loss of any
Assets or any material property or material amount of property used in the
Business, or the institution of or the threat of institution of legal or
administrative proceedings against Sellers, which would have a material adverse
effect upon the Business or the Assets.
(k) Final Cost Reports. Sellers shall prepare, or cause to be
prepared, and file the final cost reports for Sellers for all periods prior to
Closing.
(l) Agreement Regarding Further Offers. Sellers shall promptly report
to Purchaser any inquiries or discussions
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concerning any offers with respect to the purchase of the Assets or the
Business of Sellers.
(m) Press Releases. Press releases and media disclosures concerning the
transactions contemplated by this Agreement shall be mutually agreeable to the
Sellers and Purchaser, except that Sellers may make such disclosures as may be
required of it by applicable law or regulation with prior notice to Purchaser.
(n) Seller's consent to the use by Purchaser, post-closing, of Care
Georgia and Care Line's provider numbers for the Medicare, Medicaid, and Champus
programs for use during the interim until HCFA, the fiscal intermediary, and
health and human resources and all other state and federal regulatory agencies
approve of the change of ownership and the issuance of a new Medicare, Medicaid,
and Champus provider agreement numbers and provider agreements in favor of
Purchaser.
(o) Reserved.
(p) Conditions Precedent and Best Efforts. Sellers shall use its Best
Efforts in good faith to satisfy and/or assist Purchaser to satisfy the
conditions precedent to Purchaser's obligations hereunder.
(q) License Applications. Sellers shall cooperate in all reasonable
respects with Purchaser in its application to obtain such licenses, permits
and governmental approvals. In connection with each such application on the
part of Purchaser, Sellers will furnish promptly with such information and
data as may reasonably
29
be necessary or desirable and shall otherwise assist Purchaser in any
reasonable way requested.
(r) Certificates Of Need. Sellers covenant and agree that Purchaser
shall have control over filings with Certificate of Need agencies and regulatory
bodies after consultation with Sellers and that Sellers shall fully cooperate
with Purchaser in preparing and making such filings.
(s) Reimbursement - Filing of Cost Reports.
Contractual allowances for Medicare or any other third party
payor for any period prior to Closing were and shall be determined by Sellers in
a consistent manner. Sellers have filed, or shall cause to be filed, all third
party cost reports for Medicaid, cost reports and any other reports required in
connection with amounts due from third parties pursuant to cost reports, with
respect to the Business for any period which ends on or prior to the Closing
Date. The liabilities of cost reports for periods ending on or prior to the
Closing Date shall accrue to, and be the responsibility of, Sellers, and if any
third party payor deducts from payments due Purchaser any amounts in respect of
claims or amounts owed by Sellers, Sellers will promptly reimburse Purchaser for
the amounts so deducted within ten (10) days after demand therefore by
Purchaser. If after the Closing Date, the Purchaser receives a demand for
payment in connection with overpayments or alleged overpayments from any third
party payor, which demand relates to the operation of the Business prior to the
Closing, Sellers covenant and agree with Purchaser
30
that Sellers shall, within ten (10) days after receipt of any notice from
Purchaser of such requests for any such payment, promptly pay in cash to
Purchaser an amount equal to any and all such overpayments claimed by any third
party payor. After making such payment to Purchaser, Sellers shall have the
right to pursue a contest of such claim of overpayment. If Sellers are
successful in recovering all or part of the amount paid to Purchaser by Sellers,
then Purchaser shall promptly remit such recovery to Sellers.
Section 8B. Covenants and Agreements of Purchaser.
(a) Availability of Records. For a period of five (5) years from and
after the Closing Date and subject to applicable law, Purchaser shall
maintain, and Sellers and the Sellers' counsel shall, for legitimate business
reasons, have access to, original records (as well as space reasonably
necessary for any applicable regulatory agency to conduct any audit of such
records), and the right to copy at the expense of any such party seeking
access to such records at all reasonable times, the books, records and files
delivered to Purchaser pursuant to this Agreement or otherwise;
(b) Receipt of Payments from Governmental or Private Entities. In the
event Purchaser receives on or after the Closing Date, any reimbursement or
other payments, including without limitation any such payments made under any
governmental health programs such as Medicare, Medicaid and Champus, with
respect to, or arising out of, operation of the Business by
31
Sellers prior to the Closing, Purchaser shall immediately pay over any such
amounts to Sellers. Purchaser will cooperate with Sellers to cash or otherwise
negotiate, all payment checks contemplated hereby and deliver the proceeds
therefrom to Sellers.
(c) Additional Assistance Concerning Post-Closing Collection of
Accounts Receivable. Purchaser agrees to execute and provide any documents and
to provide assistance reasonably necessary to assist Sellers in securing
collection of all accounts receivable (reserved to the Sellers as an Excluded
Asset as defined herein) after the Closing, including providing the physical
space for two (2) employees of Sellers to undertake such collection for at least
180 days after the Closing Date.
(d) Confidentiality. If the purchase and sale transactions do not close
for any reason, then each party agrees promptly to return to the other all
copies of any Confidential Information and maintain the confidentiality of such
Confidential Information. Purchaser shall not use any of the Confidential
Information for any purpose other than the purchase and sale transactions
described in this Agreement. Purchaser will not make any disclosures concerning
the transactions or this Agreement without the prior approval of the other party
except (i) to such officers, employers, and representatives who need to know
such information for purposes of evaluating the transaction, (ii) to the
appropriate governmental authorities as set forth above, or (iii) as may be
otherwise required by law.
32
(e) Purchaser's Best Efforts. Purchaser shall use its Best Efforts in
good faith to satisfy and/or assist Sellers to satisfy the conditions precedent
to Sellers' obligations hereunder and to cause all its covenants and agreements
and all conditions precedent to the parties' obligations to close hereunder to
be performed, satisfied and fulfilled.
(f) License Applications. Purchaser shall apply promptly for all
licenses, permits, and government approvals that are required for Purchaser to
acquire the Assets and to operate the Business.
(g) Certificates Of Need. Purchaser covenants and agrees
with Sellers that Purchaser shall promptly make filings with certificate of
need agencies with respect to the transactions contemplated by this Agreement.
Section 9. Representations and Warranties of Sellers. Sellers
represent, warrant and agree as follows:
(a) Due Organization. Care Georgia is a corporation duly organized,
validly existing and in good standing under the laws of the State of Georgia.
Care Georgia is qualified to do business in and has the corporate power and
authority to own, lease or operate those Assets owned by Care Georgia and to
carry on the Business as now being conducted in Georgia.
Care Line is a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia. Care Line is qualified to do
business in and has the corporate power and authority to own, lease or operate
those Assets owned
33
by Care Line and to carry on the Business as now being conducted in Georgia.
Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Parent is qualified to do
business in and has the corporate power and authority to own, lease or operate
those Assets owned by Parent and to carry on the Business as now being conducted
in Georgia.
(b) Authorization of Agreement: No Breach. The execution, delivery and
performance of this Agreement has been duly and validly authorized and approved,
or will be duly and validly authorized and approved prior to Closing, by all
necessary action on behalf of Sellers and Sellers have the legal power and
authority to execute, deliver and perform this Agreement and such other
instruments necessary to consummate the transactions hereby contemplated. This
Agreement constitutes the valid and binding obligation of Sellers enforceable in
accordance with its terms. Neither the execution, delivery and performance of
this Agreement by Sellers, nor compliance by Sellers with, the terms and
provisions hereof will conflict with or result in a material breach of or
material default under (i) any of the terms, conditions or provisions of the
Certificate or Articles of Incorporation, as appropriate, or By-laws of Sellers,
(ii) any judgment, order, injunction, decree, regulation or ruling of any court
or other governmental authority to which the Sellers are subject or (iii) any
agreement or contract to which Sellers are a party or to which they are subject.
34
(c) Tax Returns. To the knowledge of Sellers, Sellers have filed all
federal, state, and local tax returns required by law and has paid all taxes
relating to the Assets and the Business, including without limitation all ad
valorem or intangibles taxes on the Assets, assessments and penalties due and
payable on or before the Closing Date or has adequately reserved therefore.
Purchaser shall not be liable for any tax of any kind with respect to the Assets
or the operation of the Business for any periods prior to the Closing Date or in
connection with the transactions contemplated by this Agreement. To the
knowledge of Sellers, there are no pending tax disputes or investigations
involving the Assets or the Business. Sellers have withheld or will withhold at
or prior to Closing all taxes required to be withheld from the employees of the
Business for income taxes, social security taxes and other required or agreed
upon withholdings and all such amounts together with the employer's share, if
any, shall have been deposited as of the Closing Date with the appropriate
governmental agency or other depository for all periods prior to the Closing
Date.
(d) Ownership. Both Care Georgia and Care Line are wholly owned
subsidiaries of the Parent and no other stock or ownership interest of Care Line
or Care Georgia is issued or outstanding.
(e) Licenses and Authorizations. Schedule 2(a)(i) contains a complete
and accurate list of all material Licenses all of which are held by Sellers.
The Licenses are in full force and effect and, to the knowledge of the
Sellers, constitute all
35
material licenses, permits and authorization which are required for the
operation of the Business as conducted on the date hereof and as of the Closing
Date. To the knowledge of Sellers, all Governmental Consents are set forth on
Schedule 9(e) have been duly and validly executed by the appropriate
governmental agency. To the knowledge of Sellers, Sellers have not been charged
or notified of an investigation for the violation of any federal, state or local
law or regulation in the operation of its Business which was not remedied,
except as set forth on Schedule 9(e) attached hereto and made a part hereof.
Sellers further warrant and represent that the consents and approvals of, or
evidence of the timely submission of notice to, governmental and other
regulatory authorities with jurisdiction over Sellers, the Business or the
Assets to the transactions contemplated hereby, (the "Governmental Consents"),
may be obtained by the Purchaser, which consents (i) shall not impose any
material conditions or requirements upon Purchaser or any of its Designees, as
that term is hereafter defined, or Affiliates, (ii) shall not result in any
liabilities or claims against the Assets and/or the Business after the Closing,
and (iii) shall not prohibit Purchaser from operating the Business in the
Service Area after the Closing in substantially the same manner as the Business
was being operated prior to the date hereof.
(f) Personal Property. Schedule 2(a)(ii) hereto contains a complete
list as of the Closing Date of all Tangible Personal Property used by it in
the operation or conduct of the Business,
36
all of which Tangible Personal Property is owned by Sellers. The Tangible
Personal Property is in good operating condition and repair (ordinary wear and
tear excepted), is fit for the purpose for which it is currently used by Sellers
and is sufficient to permit Purchaser as of the Closing Date to operate and
conduct the Business substantially as conducted by Sellers prior to the Closing
Date. None of the Tangible Personal Property is subject to any lease,
encumbrance, lien or other imperfection of title or any third party interest,
except as listed in Schedule 2(a)(iv) and Schedule 2(c), and except for security
interests held by the United States and Key Bank (which Sellers intend to
satisfy or obtain release of upon Closing).
(g) Real Property. Sellers owns no real property. All leases relating
to real property used in the operation of the Business which are being assumed
by Purchaser are set forth in Schedule 2(a)(iv) attached hereto.
(h) Reserved.
(i) Contracts. To the knowledge of the Sellers, the Contracts (i)
constitute valid and binding obligations of Sellers and the other parties
thereto enforceable in accordance with their respective terms and condition and
(ii) shall be in full force and effect on the Closing Date and are in full force
and effect as of the date hereof. To the knowledge of Sellers, Sellers are not
in default, nor have events occurred which with notice or lapse of time or both
would constitute a default under any of the Contracts, or if a default has
occurred under any of
37
the Contracts, such default shall be cured on or before the Closing Date. To the
knowledge of Sellers, Sellers have not received or given notice of any default
thereunder from or to any of the other parties thereto and all sums due and
payable by Sellers under the Contracts to the Closing Date have been fully paid
or shall be fully paid as of the Closing Date.
(j) No Litigation. Except as set forth on Schedule 9(j) attached
hereto, there is no suit, action, arbitration or other proceeding or
governmental investigation pending or to Sellers' knowledge threatened, against
Care Line or Care Georgia, or as to which Care Line or Care Georgia have
received any claim or assertion, including any threatened or pending action
before the Equal Employment Opportunity Commission, Social Security
Administration, Health Care Finance Administration, or other federal, state or
local agency or commission. To the knowledge of Sellers, neither Care Line nor
Care Georgia are in default concerning any order, writ, department, commission,
board, bureau, agency or instrumentality that may have a material adverse effect
on the Assets or the Business.
(k) Compliance with Laws. To the knowledge of Sellers, and except as
set forth on Schedule 9(k), Sellers have operated the Business in compliance
with and are not in default under any applicable laws, rules and regulations,
the failure to comply with which would have a material adverse effect on the
Business or the Assets. To the knowledge of Sellers, Sellers are not subject to
any judgment, order, writ, injunction, or decree that
38
has, or would be likely to in the future have, a material adverse effect on the
Business or the Assets. Sellers have no knowledge, nor have Sellers received any
notice, of any violations of law, regulations, permits, municipal ordinances or
other legal requirements which would have a material adverse effect on the
Assets or the Business.
(l) Labor Matters.
(i) Schedule 9(l) contains a list of all present employees of
Care Line and Care Georgia (excluding temporary, per visit or similar
types of employees), their salaries and a description of all fringe
benefits they receive or are eligible to receive. To the knowledge of
Sellers, there are no collective bargaining agreements, employment
agreements or similar arrangements presently in force with respect to
the employees of the Business or Assets and Sellers have no commitment
or agreement to enter into any such agreements. Sellers know of no
activities of any labor union or representative thereof to organize any
employees of Care Line or Care Georgia and knows of no threats of
strikes or work stoppages by any employees of Sellers. Neither Care
Line nor Care Georgia have been charged or to its knowledge threatened
with the charge of any unfair labor practice. To the knowledge of
Sellers, Care Line and Care Georgia are in material compliance with all
applicable federal and state laws and regulations relating to the
employment of, employees including, without
39
limitation, provisions relating to wages, bonuses, hours of work,
nondiscrimination, discharge of employees, working conditions and the
payment of Social Security taxes. Neither Care Line nor Care Georgia
are liable for any unpaid wages, bonuses, or commissions or any tax,
penalty, assessment, or forfeiture for failure to comply with any of
the foregoing.
(ii) Wage Claims. Purchaser will not be subjected to any claim
or liability for severance pay as a result of the termination by Care
Line or Care Georgia of its employees on the Closing Date. Except as
disclosed in the Financial Statements or incurred in the ordinary
course of business after December 31, 1996 to Closing, neither of which
shall relieve Sellers of liability therefore, no present or former
employee of either Care Line or Care Georgia has, to Sellers'
knowledge, any claim (whether under federal or state law, under any
employment agreement or otherwise) on account of or for (a) overtime
pay any period on or before the Closing, (b) wages or salary (excluding
bonuses and amounts accruing under pension and profit sharing plans,
all of which shall be listed on the Closing Financial Statements) on or
before the Closing, (c) sick pay, severance pay, claims for unlawful
discharge, vacation pay, time off or pay in lieu thereof; or (d)
punitive damages relating to any of the foregoing.
40
(iii) Employment Discrimination. Except as disclosed in
Schedule 9(l), no past or present employee or other person or party
(including, but not limited to, any governmental agency) has asserted
any claim against Care Line or Care Georgia with reference to the
Business arising out of any statute, ordinance or regulation relating
to wages, collective bargaining, discrimination in employment or
employment practices or occupational safety and health standards,
(including, but not limited to, the Fair Labor Standards Act, Title VII
of the Civil Rights Act of 1964, as amended, the Occupational Safety
and Health Act or the Age Discrimination in Employment Act of 1967).
Also, notwithstanding anything in this Agreement, nothing disclosed on
Schedule 9(l) shall result in any liability or obligation on the
Purchaser. Except as set forth on Schedule 9(l) hereto: (i) Care
Georgia and Care Line are in compliance with all federal and state laws
respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any unfair labor
practice; and (ii) there is no unfair labor practice complaint against
Care Georgia and Care Line pending before the National Labor Relations
Board.
(m) Employee Benefit Plans.
(i) To the knowledge of Sellers, except as set forth on
Schedule 9(m) hereof, Sellers, or any other entity which, together with
Sellers, constitutes a single employer within
41
the meaning of Section 414 of the Code, does not have any liability or
unfunded obligations under any "employee benefit plans" as defined in
Section 3(3) of ERISA, multi-employer plans as defined in Section 4001
(a)(3) of ERISA, or any employee pension benefit plan as drafted in
Section 3(2) of ERISA or any other employee benefit plans or
obligations (collectively, the "Company Plans"); and
(ii) To the knowledge of Sellers, Sellers and each Company
Plan are in compliance with ERISA, the Code, and any other laws,
rules, or regulations applicable thereto and are fully funded.
(n) Financial Records. The financial statements, related footnotes
and similar disclosures of Sellers dated December 31, 1996 are attached hereto
as Schedule 9(n) and made a part hereof by reference. To the knowledge of
Sellers, the financial statements set forth in Schedule 9(n) are true and
correct, have been prepared in accordance with generally accepted accounting
principles consistently applied, fairly present in all material respects the
financial condition and the results of operations of Sellers as of the date of
such financial statements, except that such financial statements do not have
footnote disclosure and are subject to year-end adjustments and any balance
sheet information does not comply with generally accepted accounting
principles.
Except as set forth on Schedule 9(n), since December 31, 1996:
42
(i) There has not been any material adverse change in the
working capital, financial condition, assets, liabilities (whether
absolute, accrued, contingent or otherwise), reserves, business or
operations of Care Line and Care Georgia;
(ii) The Business has not suffered any casualty loss (whether
or not such loss or damage shall have been covered by insurance) that
materially affects the ability of the Care Line and Care Georgia to
conduct the Business;
(iii) The Business has not incurred any liability or
obligation of any nature (whether absolute, accrued, contingent or
otherwise) except in the ordinary and regular course of the Business;
(iv) Neither Care Line nor Care Georgia have paid, discharged
or satisfied any liability or obligation (whether absolute, accrued,
contingent or otherwise) other than by payment, discharge or
satisfaction in the ordinary and regular course of the Business;
(v) Neither Care Line nor Care Georgia have permitted or
allowed any of the Assets (real, personal or mixed, tangible or
intangible) to be subjected to any mortgage, pledge, lien, security
interest, encumbrance, restriction or charge of any kind, other than in
the ordinary and regular course of the Business;
(vi) Neither Care Line nor Care Georgia have, with
regard to the Business, cancelled or waived any material
43
claims or rights of value or sold, transferred, distributed or
otherwise disposed of any assets or properties, except in the ordinary
and regular course of the Business;
(vii) Reserved;
(viii) Neither Care Line nor Care Georgia have granted any
increase in the compensation of officers, directors or employees,
whether now or hereafter payable, including any such increase pursuant
to any option, bonus, stock purchase, pension, profit sharing, deferred
compensation, retirement payment or other plan, arrangement, contract
or commitment and neither Care Line nor Care Georgia have employed any
additional executive or management personnel, other than in the
ordinary and regular course of the Business consistent with past
practices;
(ix) Neither Care Line nor Care Georgia have made any capital
expenditure or commitment for additions to property, plant or equipment
for the Business in excess of twenty-five thousand dollars ($25,000);
(x) Neither Care Line nor Care Georgia have made any change
in any method of accounting or account practice of the Business;
(xi) Neither Care Line nor Care Georgia have paid any amount
to any federal, state or local government or authority or any other
third party for any claim, obligation, liability, loss, damage or
expenses, of whatever kind or nature, incurred or imposed or based upon
any
44
provision of federal, state or local law or regulations or common law
pertaining to environmental protection; and
(xii) Neither Care Line nor Care Georgia have agreed, whether
in writing or not, to do any of the foregoing. Sellers agree to advise
Purchaser in writing of any material changes in the financial condition
of the Sellers occurring after the date of said audited financial
statements to the Closing Date and to provide to Purchaser on or before
the Closing Date unaudited financial statements certified by Sellers
that such updated financial statements are true and correct. Sellers
agree to keep all records, financial data, rent rolls, paid ▇▇▇▇ files,
depreciation schedules, tax returns and payroll tax returns with
respect to the Business available to Purchaser for a reasonable period
after Closing and shall permit Purchaser at Purchaser's expense to make
use of, copy and to publish all or parts of such records.
(o) Environmental Matters. Except as set forth in Schedule 9(o), to
the knowledge of Sellers, the compliance with environmental laws, rules and
regulations of the Business is as follows:
(i) Care Georgia and Care Line are in material compliance with
all laws, rules and regulations relating to environmental matters,
including without limitation, laws, rules or regulations concerning the
handling, storage or disposal of medical or biohazardous waste;
45
(ii) Neither Care Line nor Care Georgia have been notified
that it is potentially liable, has not received any requests for
information or other correspondence concerning any site or facility,
and is not otherwise aware of any fact which would cause Sellers to be
considered potentially liable under the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended, or any
similar federal, state or local law, rules and regulations with regard
to the operation of the business;
(iii) Neither Care Line nor Care Georgia have entered into or
received any consent decree, compliance order or administrative order
relating to environmental matters with regard to the operation of the
Business;
(iv) Neither Care Line nor Care Georgia have entered into or
received nor is Care Line or Care Georgia in default under any
judgment, order, writ, injunction or decree of any federal, state or
municipal court or other governmental authority relating to
environmental matters with regard to the operation of the Business;
(v) Except as set forth on Schedule 9(o) attached hereto and
made a part hereof, the Business is not required to have any permits,
licenses, approvals, consents and authorizations relating to
environmental matters which may be required under federal, state or
local laws, rules and regulations;
(vi) Reserved; and
46
(vii) Neither Care Line nor Care Georgia have caused any
disposal, release, or burial of hazardous or toxic substances,
pollutants, contaminants, petroleum, gas products or
asbestos-containing materials (as any of such terms may be defined
under federal, state or local laws, rules or regulations) (hereinafter
collectively referred to as "Hazardous Materials") on or about any of
Care Line's or Care Georgia's properties or facilities used in the
Business, and, except as set forth on Schedule 9(o), Sellers, in
conducting the Business, have not taken any Hazardous Materials at any
time to any other facility or site.
(p) Medicare and Related Disclosures.
To the knowledge of Sellers, each Medicare Provider Agreement of the
Business, copies of which are attached as Schedule 9(q) hereto and made a part
hereof (A) constitutes the valid and binding obligation of Sellers enforceable
in accordance with its terms and (B) are in full force and effect as of the
date hereof and shall be in full force and effect as of the Closing Date.
Except as set forth on Schedule 9(q), Sellers are not in default, nor have
events occurred which, with notice or lapse of time or both, would constitute
a default, under any of Sellers' Medicare Provider Agreement which default
would have a material adverse effect on the Business or the Assets and Sellers
have not received or given notice of any default thereunder. Schedule 9(q)
sets forth all current disputes Sellers have with
47
Medicare with respect to reimbursement pursuant to each Medicare Provider
Agreement and Sellers know of no facts or circumstances which may lead to other
disputes with respect to reimbursement pursuant to the Medicare Provider
Agreement.
(q) Medicaid Agreements. To the knowledge of Sellers, each agreement
with Georgia Medicaid agencies (the "Medicaid Agreements") of the Business,
copies of which are attached hereto as Schedule 9(r), constitute valid and
binding obligations of Sellers, enforceable in accordance with their terms and
are in full force and effect as of the date hereof and shall be in full force
and effect as of the Closing Date. To the knowledge of Sellers, Sellers are not
in default, nor have events occurred which, with notice or lapse of time or both
would constitute a default, under any of Sellers' Medicaid Agreements and
Sellers have not received or given notice of any default thereunder. To the
knowledge of Sellers, Schedule 9(r) sets forth all current disputes Sellers have
with respect to reimbursement pursuant to the Medicaid Agreements and Sellers
know of no facts or circumstances which may lead to other disputes with respect
to reimbursement pursuant to the Medicaid Agreements.
(r) Reserved.
(s) Reliance By Purchaser. The foregoing and following representations
and warranties of Sellers are made by Sellers with the knowledge and
expectation that Purchaser is placing reliance thereon.
(t) Reserved.
48
(u) Cost Reports, Third Party Receivables and Conditions of
Participation. The cost reports of Care Line and Care Georgia for Medicare
payments have been either desk reviewed or closed through December 31, 1995 and
for Aetna (or other fiscal intermediary) reimbursement through December 31,
1995. There are no pending claims by the fiscal intermediary against Sellers
other than the potential settlement of costs reports not yet audited. Neither
Care Line nor Care Georgia have suffered a loss of waiver of liability for
utilization review denials with respect to any such program during the past two
(2) years. Except as set forth on Schedule 9(v), Sellers are a participant in
the Medicaid, Medicare, and Blue Cross programs and Sellers are unaware of any
action that would cause the Business to lose participation in such programs.
(v) Reserved.
(w) Reserved.
(x) Reserved.
(y) Referral Sources. Attached hereto as Schedule 9(z) is a list of
Sellers' Referral Sources for the Business for the year prior to the Date of
Closing.
(z) Managed Care Contracts. Attached hereto as Schedule 9(aa) is a
listing of Sellers' Managed Care Contracts relating to or involving the
Business which are currently in force. The Managed Care Contracts:
(1) constitute valid and binding obligations of the Sellers
and other parties thereto enforceable in
49
accordance with their respective terms and conditions; and
(2) shall be in full force and effect on the Closing Date
and are in full force and effect on the date hereof. To the
knowledge of Sellers, Sellers are not in default, nor have
events occurred which with notice or the lapse of time or
both would constitute a default under any of said contracts,
such default shall be cured on or before the Closing Date.
Section 10. Purchaser's Representations and Warranties. Purchaser
represents, warrants and agrees as follows:
(a) Due Incorporation. Purchaser is a Georgia corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia and has the power and authority to conduct its business as presently
conducted and as proposed to be conducted upon the acquisition of the Assets.
(b) Authorization of Agreement; No Breach. The execution, delivery and
performance of this Agreement has been duly and validly authorized and approved
by all necessary action on behalf of Purchaser. Purchaser has the power and
authority to execute, deliver and perform this Agreement and such other
instruments necessary to consummate the transactions hereby contemplated. This
Agreement constitutes the valid and binding obligation of Purchaser enforceable
in accordance with its terms. Neither the execution, delivery and performance of
nor compliance by Purchaser with the terms and provisions hereof will conflict
with
50
or result in a breach of (i) the Articles of Incorporation and By-laws of
Purchaser, (ii) any judgment, order, injunction, decree regulation or ruling of
any court or other governmental authority to which Purchaser is subject or (iii)
any agreement or contract to which Purchaser is a party or to which it is
subject.
(c) Representations True and Correct. All of the representations,
warranties, and covenants of Purchaser contained in this Agreement or in any
document or information delivered to Sellers pursuant to the terms of this
Agreement are true and correct.
(d) No Action Pending with Respect to this Transaction. Except as set
forth on Schedule 10(d) attached hereto, there is no suit, action, arbitration,
or other proceeding or governmental investigation pending, or to Purchaser's
knowledge threatened relating to or in connection with this Asset Purchaser
Agreement or the proposed transactions between Sellers and Purchaser.
(e) Licenses and Authorizations Required of Purchaser. Purchaser
represents that the licenses, authorizations, and governmental consents set
forth on Schedule 10(e) hereto are all that are required for the operation of
the Business and that Purchaser shall seek by diligent and timely submission or
application the governmental consents, approvals, licenses, authorizations, and
permits to operate the Business after the Closing.
Section 11. Conditions Precedent.
51
(a) Conditions Precedent to Purchaser's Obligations. The obligation
of Purchaser to consummate the transactions contemplated herein are expressly
subject to and conditioned upon the following:
(i) Sellers shall have executed and delivered (or shall have
caused to be delivered) to Purchaser all documents and instruments to
be delivered at the Closing pursuant to Section 7 or any other Section
hereof;
(ii) Sellers shall have substantially complied with any and
all agreements and covenants set forth herein to be complied with on
or prior to the Closing;
(iii) No breach of the Sellers's representations of
paragraph 9(b) shall have occurred or be in existence on or prior to
the Closing;
(iv) Reserved;
(v) Reserved;
(vi) approval of this Agreement by the Board of Directors of
Purchaser and the Board of Directors of its parent, Central Georgia
Health Systems, Inc.; provided, however, that this condition shall be
deemed satisfied upon May 16, 1997 if said Boards have not rejected a
request for approval before such date;
(vii) Reserved; and
(viii) All representations and warranties of Sellers made in
this Agreement shall be true and correct on and as of the Closing Date
with the same effect as though such
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representations and warranties had been made on and as of such date
(except for those representations and warranties made as of a date
other than the Closing Date which representations and warranties will
be true and correct in all material respects as of such date).
(b) Conditions Precedent to Sellers's Obligations. The obligation of
Sellers to consummate the transactions contemplated herein are expressly
subject to and conditioned upon the following:
(i) Purchaser shall have executed and delivered (or shall have
caused to be delivered) to Sellers all documents and instruments to be
delivered at the Closing pursuant to Section 7 or any other Section
hereof;
(ii) Purchaser shall have complied with any and all
agreements and covenants set forth herein to be complied with on or
prior to the Closing;
(iii) No breach of the Purchaser's representations of
paragraph 10(b) shall have occurred or be in existence on or prior to
the Closing; and
(iv) All representations and warranties of Purchaser made in
this Agreement shall be true and correct on and as of the Closing Date
with the same effect as though such representations and warranties had
been made on and as of such date (except for those representations and
warranties made as of a date other than the Closing Date which
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representations and warranties will be true and correct in all
material respects as of such date).
Section 12. Rights of Indemnification.
(a) Indemnification By Sellers. Except as provided herein, Purchaser
does not assume and shall not be obligated to pay any liabilities of Sellers
of any kind or manner. Sellers hereby agree to indemnify, defend and hold
Purchaser, its successor and assigns harmless from and against any and all
claims, charges, losses, damages, deficiencies, fines, penalties, expenses and
other liabilities, including attorneys' fees and costs, including, without
limitation, court costs, suffered or incurred by Purchaser resulting from or
arising out of or with respect to any of the following:
(i) any breach of any representation, warranty or covenant
of Sellers contained in or made pursuant to this Agreement or in any
exhibit or schedule hereto;
(ii) any obligation or liability of Sellers which is not
expressly assumed by Purchaser hereunder and is asserted against
Purchaser; or
(iii) Sellers' failure or refusal to defend any claim
incident to the foregoing provisions.
(b) Limitations on Indemnification of Purchaser by Sellers.
Notwithstanding anything to the contrary herein, the extent of the Sellers'
obligation of indemnification of Purchaser under Section 12 herein shall not
cumulatively exceed the Purchase Price of One Million Six Hundred Thousand
Dollars
54
($1,600,000.00), and a claim for indemnification must exceed a floor of Five
Thousand Dollars ($5,000.00) before the Sellers' obligations of indemnification
hereunder may be invoked. Furthermore, claim(s) by Purchaser for indemnification
must be made in writing, and if at all within four (4) years of the Closing
Date.
(c) Notice of Claim for Indemnification. If any person or entity has
reason to believe that he, she, or it has suffered or incurred (or has a
reasonable belief that he, she, or it will suffer or incur) any loss (an
"Indemnity Loss') subject to indemnity hereunder, such person or entity shall so
notify the indemnifying party promptly in writing describing such loss or
expense, the amount thereof, if known, and the method of computation of such
Indemnity Loss, all with reasonable particularity. If the nature of the
Indemnity Loss set forth in the notice does not involve any third party claim,
and if the indemnifying party does not respond to the indemnified party in
writing contesting the existence or amount of any Indemnity Loss within sixty
(60) days after delivery of such notice, then such indemnifying party shall be
obligated to pay, in cash or certified funds, the amount of the Indemnity Loss
set forth in such notice to the indemnified party.
Section 13. Survival of Representations, Warranties, Covenants and
Indemnities. All representations, warranties, covenants and indemnities made
herein shall survive the Closing and shall not be merged into the documents
delivered at Closing.
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However, all warranties, representations, covenants and indemnities
("Obligations") made herein shall lapse four (4) years after the Closing Date
and any claim made or asserted after such time with respect to such Obligations
will be null and void. Any inspection or examination of the Assets and/or
Business prior to Closing by Purchaser shall in no way limit, affect, impair the
ability of Purchaser to rely upon the representations, warranties, covenants and
indemnities of Sellers set forth herein; provided that Purchaser has an
affirmative duty to inform Sellers of any discovered state of facts which make
such representation and warranties untrue.
Section 14. Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement and the obligations of the parties
hereunder may be terminated on or prior to the Closing Date, as follows:
(a) By Purchaser (i) in the event that the transactions contemplated
hereunder have been prohibited or enjoined by reason of any final judgment,
decree or order entered or issued by a court of competent jurisdiction in
litigation or proceedings involving either Purchaser or Sellers; (ii) in the
event the conditions precedent to Purchaser's obligation to close are not
satisfied and performed in full at or prior to the Closing Date; (iii) in the
event of material damage or destruction to the Property prior to Closing; or
(iv) in the event Sellers breach or violate any material provision of this
Agreement or fails to perform any material covenant or agreement to be performed
by
56
Sellers under the terms of this Agreement and such breach, violation or failure
is not cured by Sellers within fifteen (15) days of written notice from
Purchaser or cured or waived by Purchaser prior to Closing.
(b) By Sellers (i) in the event that the transactions contemplated
hereunder have been prohibited or enjoined by reason of final judgment, decree
or order entered or issued by a court of competent jurisdiction in litigation or
proceedings involving Purchaser; (ii) in the event the conditions precedent to
Sellers' obligation to close are not satisfied and performed in full at or prior
to the Closing Date; or (iii) in the event Purchaser breaches or violates any
material provision of this Agreement or fails to perform any material covenant
or agreement to be performed by Purchaser under the terms of this Agreement, and
such breach, violation or failure is not cured by Purchaser within fifteen (15)
days of written notice from Sellers or cured or waived by Sellers prior to
Closing.
(c) By Sellers and Purchaser by mutual agreement. Except for the
obligations set forth in Section 13, upon termination pursuant to this Section
14, the provisions of this Agreement shall be of no further force or effect, and
no party, or any party's officers, directors, trustees, shareholders or
representatives, shall have any liability under this Agreement.
Section 15. Notices. All notices, consents, approvals and the like
required under any of the provisions of this Agreement shall be in writing and
shall be deemed to have been given (a) if
57
personally delivered, upon receipt, (b) if sent by overnight courier (such as
Federal Express), upon delivery, (c) if sent by telecopier or facsimile upon
delivery as confirmed by a facsimile machine or hardware if sent between the
hours of 8:00 a.m. and 5:00 p.m. EST on a particular day, and if sent after 5:00
p.m. EST on a particular day, receipt shall be deemed on the next calendar day,
or (d) if sent by U.S. Mail registered or certified, return receipt requested,
with sufficient postage affixed thereto, three days after being mailed,
addressed as follows:
(i) If to Purchaser to:
CareSouth Home Health Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO and President
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Senior Vice President and Sell & ▇▇▇▇▇▇, LLP
General Counsel P.0. Box 229
691 Cherry Street Macon, Georgia 31202-0299
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(ii) If to Sellers, to:
▇▇▇ ▇▇▇▇▇, CFO
The Care Group, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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or to such other address as such party shall specify in writing to the other
party hereto. Any notice given to a party personally shall be delivered to a
general partner of such party, if such party is a partnership, or an officer of
such party, if such party is a corporation.
Section 16. Broker's or Finder's Fee. The Telesis Group or any agent,
broker, investment banker, or other person or firm acting on behalf of Sellers
who may be entitled to any broker's or finder's fee or any other commission or
similar fee, directly or indirectly, in connection with the transactions
contemplated by this Agreement shall be paid by Sellers. Sellers hereby agree to
indemnify and hold harmless Purchaser against any claim for any such fee or
commission arising out of Sellers' conduct or actions in connection with such
transactions. Purchaser represents and warrants that it has not engaged any
person or entity who may be entitled to any broker's or finder's fee or any
other commission or similar fee, directly or indirectly, in connection with the
transactions contemplated by this Agreement, except for contact with Sellers'
broker Telesis Group.
Section 17. Assignment. This Agreement and the right to purchase the
Assets hereunder may be assigned in whole or in part by Purchaser to an
Affiliate of Purchaser or to any other third party ("Designee") without the
consent of the Sellers; provided that such assignment shall not relieve
Purchaser of its obligations hereunder prior to the Closing. Sellers may not
59
assign this Agreement without the prior written consent of Purchaser.
Section 18. Amendment of Agreement. At any time on or
prior to the Closing Date, Purchaser and Sellers, may, by written
Agreement:
(a) extend the time for performance of any of the obligations or
other actions of the parties hereto;
(b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant thereto;
(c) waive compliance with any of the covenants or conditions contained
in this Agreement; provided, however, that a party may waive any or all of the
conditions precedent to its obligation to close without a written amendment
signed by both parties; and
(d) amend this Agreement in any other respect. Any and all amendments
shall be effective if made in writing by Purchaser and Sellers.
Section 19. Exhibits & Schedules. The following exhibits and
schedules are attached hereto and incorporated herein by this reference:
Exhibit "A": Purchaser's Officer's Certificate;
Exhibit "B": ▇▇▇▇ of Sale;
Exhibit "C": Assignment and Assumption Agreements;
Exhibit "D": Seller's Officer's Certificate;
Exhibit "E": Fiscal Intermediary Notification Letter;
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Exhibit "F": Non-Competition Agreement;
Schedule 2(a)(i): Licenses;
Schedule 2(a)(ii): Tangible Personal Property;
Schedule 2(a)(iii): Intangible Personal Property;
Schedule 2(a)(iv): Contracts;
Schedule 2(b): Excluded Assets;
Schedule 2(c): Permitted Exceptions;
Schedule 3: Allocation of Purchase Price;
Schedule 7(b)(iv): Contracts Consents;
Schedule 7(b)(v): List of Estoppel Certificates and Releases;
Schedule 8(a): Insurance Coverage;
Schedule 9(e): Listing of licenses and authorizations, charges or
notices of claim, investigation or violation;
Schedule 9(j): Litigation or Proceedings;
Schedule 9(k): Non-Compliance with laws, judgment or order;
Schedule 9(l): List of all present employees of Care Line and Care
Georgia;
Schedule 9(m): List of Employee Benefit Plans;
Schedule 9(n): Financial Statements of December 31, 1996;
Schedule 9(o): Environmental Permits, Licenses, and Approvals;
Schedule 9(q): Medicare Provider Agreement/Reimbursement Disputes;
Schedule 9(r): Georgia Medicaid Agreements;
Schedule 9(v): Conditions of Participation - Notices;
Schedule 9(z): Sellers' Referral Sources;
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Schedule 9(aa): Managed Care Contracts;
Schedule 10(d): List of Pending Actions; and
Schedule 10(e): Listing of licenses, authorizations, and governmental
consents.
Section 20. Miscellaneous.
(a) Amendment; Entire Agreement. This Agreement may be modified or
amended only by a writing executed by the parties hereto. This Agreement and any
and all instruments and documents to be delivered at Closing constitute the
entire agreement and understanding between the parties thereto with respect to
the transactions contemplated herein, and supersedes all prior understandings or
agreements between the parties relating to the subject matter hereof.
(b) Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, their respective heirs, successors
and assigns.
(c) CONTROLLING LAW: JURISDICTION. THIS AGREEMENT SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
(d) Knowledge. References in this Agreement to the "knowledge" of a
party shall mean actual knowledge based upon reasonable investigation of the
facts and circumstances by the party, such investigation to include review of
documentation and inquiry of officers and employees of the party.
(e) Time of Essence. Time is of the essence in the performance of
this Agreement by each party hereto.
62
(f) Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, and all of which, when
taken together, shall constitute one and the same instrument.
(g) Construction. Should any provision of this Agreement require
judicial interpretation, the parties hereto agree that the court interpreting or
construing the same shall not apply a presumption that the terms hereof shall be
more strictly construed against one party by reason of the rule of construction
that a document is to be more strictly construed against the party who itself or
through its agents prepared the same, it being agreed that the parties hereto
and their respective agents have participated in the preparation hereof.
Section 21. Guaranty.
For good and valuable consideration, receipt of which is hereby
acknowledged, The Care Group, Inc., the Parent, hereby guarantees to CareSouth
the full and faithful performance of each and every obligation of Care Georgia
or Care Line to CareSouth, jointly or severally under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers and representatives as of
the day and year first above written.
Signatures continue on next page
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FOR PURCHASER:
CARESOUTH HOME HEALTH SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Sec.
------------------------------------
FOR Sellers:
CARE GROUP OF GEORGIA, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇, CFO
----------------------------------------
Attest: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
THE CARE GROUP, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇, CFO
----------------------------------------
Attest: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
(SIGNATURES CONTINUED ON NEXT PAGE)
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CARE LINE OF GEORGIA, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇, CFO
----------------------------------------
Attest: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
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