Exhibit 10.1
ASSET PURCHASE AGREEMENT
This is an Asset Purchase Agreement dated as of November 15, 2006
(the
"Agreement"), among (i) Almost Family, Inc., a Delaware
corporation, Caretenders
Visiting Services of Cook County, LLC, an Illinois limited
liability company,
Caretenders Visiting Services of Southern Illinois, LLC, an
Illinois limited
liability company, Caretenders Visiting Services of St. Louis, LLC,
a Missouri
limited liability company, and National Health Industries, Inc., a
Kentucky
corporation (collectively, the "Buyer"), (ii) Health Management
Consultants,
Inc.("HMC") a Delaware corporation, United Home Health Services of
Cook County,
Inc. d/b/a Mederi of Cook County, an Illinois corporation, and
United Home
Health Service of St. Louis, Inc. d/b/a Mederi, a Missouri
corporation (each a
"Seller" and collectively, the "Sellers"), and (iii) David Nesslein
and Sandra
Vazquez (each a "Shareholder" and collectively, the
"Shareholders"). The Seller
and the Shareholders shall be referred to collectively as the
"Selling
Parties").
Recitals
A. The Seller owns and operates home health agencies located in
the
States of Florida, Illinois and Missouri (the "Territory"),
including
Medicare-Certified, Medicaid/Waiver, county contracts, HMO and
other significant
non-certified or "private duty" operations (collectively, the
"Business").
B. The Seller is the holder of one or more licenses issued by
the
Agency for Health Care Administration of the States of Florida, the
Illinois
Department of Public Health and the Missouri Department of Health
and Senior
Services, and Medicare provider agreements issued by the U.S.
Department of
Health and Human Services, all of which authorize the Seller to
provide Medicare
and Medicaid certified home health care services in the Territory
(collectively,
the "Licenses").
C. The Seller desires to sell and the Buyer desires to purchase,
the
assets used by Seller in the operation of the Business.
THE PARTIES, INTENDING TO BE LEGALLY BOUND, AGREE AS FOLLOWS:
Article 1 - Purchase and Sale of Assets
1.1
Purchased Assets.
(a) The Sellers hereby agree to sell, assign, transfer and
convey to the Buyer, and the Buyer hereby agrees to purchase from
the Sellers,
all of the assets of the Sellers used in the Business (the
"Purchased Assets"),
and located within the Territory, including without limitation, the
following
assets and properties:
(i) All leases of real property ("Assumed Leases")
security deposits, any pre-paid rent, furniture, fixtures,
machinery, equipment,
leasehold improvements, computers, software, vehicles, medical
equipment,
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prepaid expenses, and other tangible personal property used in the
Business,
including those assets specifically described on Schedule 1.1(a) as
being
Purchased Assets, together with all manufacturers' warranties
pertaining to the
same, to the extent that such warranties may exist and be
assignable;
(ii) All of the Sellers' goodwill relating to the
Business; all customer and patient lists and
files, referrer lists, provider lists, records and similar sales
and marketing
information in the Sellers' possession relating to the Business;
member service
agreements relating to the Business; medical records of the
patients serviced by
the Business and in the Sellers' possession; personnel records
relating to those
employees hired by the Buyer; and the Sellers' right and interest
in the trade
names (including Mederi and variations thereof used in connection
with the
Business), trademarks, trade secrets, licenses, know-how,
specifications,
literature, and all other intangible property which relate
specifically to the
Business, and all other intangible assets related to the Business,
whether
located at the Business, or any other location;
(iii) All transferable Licenses, permits, licenses,
certificates, authorizations, accreditations,
orders, ratings and approvals of all federal, state, or local
governmental or
regulatory authorities which relate to the Business and which are
held by the
Seller, but only to the extent the same are transferable, including
without
limitation, any provider agreements relating to the Seller's right
to
participate in the Medicare and Medicaid Programs, and all rights
of the Seller
to reimbursement or other payments from CMS for the period prior to
the Closing
Date;
(iv) Any and all rights of the Sellers which by their
terms are transferable and which arise under or pursuant to
warranties,
representations and guarantees made by suppliers in connection with
the
Purchased Assets;
(v) All raw materials, supplies, packaging materials,
purchased products, finished goods and all other goods, merchandise
and
materials owned by the Seller and related solely to the Business;
but excluding
the Excluded Assets;
and
(vi) All accounts receivable and unbilled work in
process.
(b) "Excluded Assets" shall mean cash and cash-like items,
including all letters of credit used to guarantee any leases of the
Seller and
any and all proceeds from current pending litigation with the
Provider
Reimbursement Review Board for disallowances from years prior to
Closing, and
those additional assets identified on Schedule 1.1(b) as being
Excluded Assets.
(c) The Sellers agree to cooperate with the Buyer in
connection with the collection of the Buyer's accounts receivable
relating to
the Business and to pay over to the Buyer as soon as reasonably
possible any of
the Buyer's accounts receivable collected by the Sellers.
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1.2 No Assumed Liabilities. The Sellers acknowledge and agree that
they
shall retain all liabilities, whether known or unknown, arising out
of or
relating to the operation of the Business through the Closing Date
or arising
out of or with respect to the Purchased Assets, including the
ownership or
leasing thereof, through the Closing Date, and that the Buyer is
not assuming
any liabilities of the Sellers of any nature, except for (i)
obligations
accruing after Closing under the Assumed Contracts and Assumed
Leases, (ii) any
lease expenses offsetting the Purchase Price pursuant to paragraph
1.3, (iii)
any accrued personal leave assumed pursuant to paragraph 1.4, and
(iv) any
additional liabilities or accrued expenses mutually agreed upon by
the Sellers
and the Buyer and offsetting the Purchase Price pursuant to
paragraph 2.1(b)
below.
1.3 Assumed
Contracts; Real Property Leases.
(a) The Buyer agrees to assume the Sellers' obligations
arising after the Closing Date with respect to those contracts
listed on
Schedule 1.3(a) (the "Assumed Contracts"), which Schedule 1.3(a)
shall set forth
those Assumed Contracts to be assumed by Buyer.
(b) The Buyer agrees to assume the Sellers' obligations with
respect to the real estate leases listed on Schedule 1.3(b) (the
"Assumed
Leases"), provided that any accrued rent, fees, taxes, expenses or
other amounts
payable as of the Closing Date and/or relating to the period
through the Closing
Date (collectively, "Lease Liabilities") shall be offset against
the Purchase
Price. At the Closing, the Sellers shall deliver to the Buyer
landlord consent
and estoppel certificates for each Assumed Lease, each in a form
reasonably
satisfactory to the Buyer confirming the landlord's consent to
assignment and
further confirming among other customary matters that the Assumed
Lease is not
in default and that there are no accrued and unpaid amounts due the
landlord for
the period through Closing. The Buyer shall have the right to
require as a
condition to the Buyer's obligation to close a renegotiation of the
terms of any
related party lease so that so that said lease reflects current
fair market
value. The Buyer acknowledges that Sellers' letters of credit held
by landlords
are Excluded Assets.
(c) The Sellers acknowledge and agree that the Buyer is not
assuming and that the Sellers remain responsible for all
obligations under the
following real property leases:
(i) Pt.
Charlotte (expires 12/31/06)
(ii)
Sarasota (expires 5/31/09)
(iii)
Ocala (expires 12/31/07)
(iv)
Fruitland Park (expires 5/31/2010)
(v) Orlando
(expires 2/11/07)
(vi)
Melbourne (monthly)
(vii) Pt.
St. Lucie (expires 3/31/09)
(viii) Delray
(expires 9/30/07)
(ix)
West Palm (monthly)
(x) Miami
(expires 5/31/07)
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(d) The Sellers and the Buyer agree that with respect to the
leases listed in paragraph 1.3(c) above which shall be retained by
the Sellers,
the Buyer shall reimburse the Sellers for the cost of occupancy
through January
31, 2007, and the Buyer agrees to vacate each
premises by January
31, 2007. The Sellers agree to refrain from the taking of
any action that would necessitate the Buyer vacating any of such
premises
earlier that otherwise necessary or desirable for an orderly
transition of
operations.
1.4 Employees. The Sellers acknowledge that the Buyer is not
purchasing, recognizing, assuming or otherwise acquiring any
rights,
obligations, assets or liabilities under, arising from or resulting
from any
employment agreement or arrangement in existence between the Seller
and any
employee, or any person employed to consult with or perform
services for the
Sellers. The Sellers acknowledge that they will satisfy in full all
accrued
payroll and withholding obligations of the Business through the
Closing Date,
except for accrued salary remaining unpaid in the normal course of
business for
employees who accept employment with the Buyer for which the Buyer
agrees to
assume liability therefore at closing. The Buyer shall have the
right, but not
the obligation, to make offers of employment to employees of the
Business. With
respect to any employees of the Business who accept employment with
the Buyer,
the Buyer shall assume the paid days off including vacation ("PDO")
liability at
Closing.
1.5 Noncompetition Agreement. The Selling Parties acknowledge that
the
Buyer's obligation to close is conditioned upon each Selling Party
entering into
a Confidentiality, Nonsolicitation and Noncompetition Agreement at
the Closing,
in the form of the agreement attached as Attachment A (the
"Noncompetition
Agreement").
1.6 Health Insurance Matters. The Sellers shall pay their
health
insurance premiums for December, 2006 to United prior to December
1, 2006. The
Buyer shall reimburse the Sellers for the usual and customary
amount of such
premiums on the Closing Statement. The Buyer agrees that all
employees of the
Business hired by the Buyer will be entitled to participate in the
Buyer's
health insurance plans, subject to any applicable qualification or
other plan
requirements, from and after January 1, 2007.
1.7
Transitional Issues.
(a) The Buyer agrees to employ the Seller's Miami home office
employees on a transitional basis according to the terms described
on Schedule
1.7.
(b) The Buyer agrees to take over ownership and control of all
record archives relating to the employees and patients of the
Business. The
Buyer agrees to give the Sellers reasonable access to such records
on an
as-needed basis after the Closing. The Buyer further agrees to
assume the
Sellers' storage facility lease agreements (to be included on
Schedule 1.3(b)).
(c) The Sellers acknowledge and agree that they shall assume
all responsibility for any sign-on bonuses necessary to secure the
employment
and retention of the employees of the Business in an attempt to
achieve the
transition and employment benchmarks set forth on Schedule
2.1(a)(iv)
(Contingent Consideration). Notwithstanding the preceding, the
Buyer shall be
responsible for any bonus amounts paid to the Miami home office
employees who
are employed by the Buyer on a transitional basis pursuant to
paragraph 1.7(a)
above; provided, however, that the Buyer shall approve the payment
of such bonus
amounts in advance.
<PAGE>
Article 2 - Purchase Price and Payment
2.1 Purchase
Price.
(a)
In consideration of the transfer of the Purchased Assets
and the Business, the Buyer agrees to pay for the Purchased Assets
(the
"Purchase Price"), the following:
(i) $4,700,000.00 in cash by wire transfer
of immediately available funds at Closing;
(ii)
$4,000,000.00 in the form of a $3 million
and $1 million promissory note, the form of which promissory notes
are attached
as Attachment B (the "Purchase Notes");
------------
(iii) As additional consideration, 100,000 shares of
Almost Family, Inc. common stock ("AFAM Shares")
will be issued to Health Management Consultants, Inc. The AFAM
Shares shall be
unregistered shares and shall be "restricted securities" under Rule
144 and must
satisfy the Rule 144 holding period requirements of 12 months
before being
tradable upon satisfaction of all Rule 144 requirements;
(iv)
As additional consideration, the Sellers
shall be entitled to an amount equal to 25% of any contingent
consideration
described on Schedule 2.1(a)(iv) ("Contingent Consideration");
(v) The cash portion of the Purchase Price payable at
Closing shall be reduced for any Lease Liabilities as set forth in
paragraph
1.3(b) above;
(vi) The cash portion of the Purchase Price payable
at Closing shall be reduced by an amount equal
to any amounts remaining due on Sellers' Medicare cost report
repayment
obligations and as required to payoff CIT, the Seller's primary
lender, as of
the Closing Date, with such amounts being paid directly out of the
Purchase
Price proceeds at Closing; and
(vii) The cash portion of the Purchase Price shall be
increased or decreased, as applicable, to
account for any pro-ration of expense items relating to the
Business.
(b) The parties agree to enter into a closing statement at
Closing setting forth the determination of the cash portion of the
Purchase
Price payable at Closing.
(c) The number
of AFAM Shares to be issued to Health
Management Consultant's Inc. shall be adjusted as follows:
(i) If the
Transaction Share Price fall between
$22.00 and $26.00, then the number of AFAM Shares to be issued
shall be 100,000;
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(ii)
If the Transaction Share Price is less than
$22.00, then the number of AFAM Shares to be issued shall be
109,091; and
(iii) If
the Transaction Share Price is greater
than $26.00, then the number of AFAM Shares to be issued shall be
92,308.
(d) For purposes of paragraph 2.1(c), "Transaction Share
Price" shall be the average close for the AFAM Shares for the five
trading days
preceding the announcement of the transactions contemplated by this
Agreement.
2.2 Allocation of Purchase Price. The Purchase Price will be
allocated
among the Purchased Assets as set forth on Schedule 2.2. The
Sellers and the
Buyer agree that all tax and information returns will be prepared
on a basis
consistent with such allocation of the Purchase Price.
2.3 Registration Rights Agreement. The AFAM Shares shall be subject
to
certain piggyback registration rights pursuant to a Registration
Rights
Agreement, the form of which is attached as Attachment C (the
"Registration
Rights Agreement"). The Sellers acknowledge and agree that Sellers'
registration
rights with respect to the AFAM Shares are limited to those set
forth in the
Registration Rights Agreement.
Article 3 - The Closing
3.1 Time and Place. The parties anticipate that the closing
("Closing")
will take place at 10:00 a.m., December 3, 2006 in the offices of
Frost Brown
Todd LLC, Louisville Kentucky, or such other date mutually agreed
upon by the
parties, and upon satisfaction or waiver of each of the conditions
to the
parties' obligations to close (the "Closing Date").
3.2 Execution and
Delivery of Documents by the Seller and the Buyer.
(a) At the Closing, the Sellers will execute and deliver to
the Buyer such conveyances, bills of sale, certificates of title,
assignments,
assurances and other instruments and documents as the Buyer may
reasonably
request in order to effect the sale, conveyance, and transfer of
the Purchased
Assets and the Business from the Sellers to the Buyer. Such
instruments and
documents must be sufficient to convey to the Buyer good title to
the Purchased
Assets and the Business. The parties will also cause the Purchase
Notes, the
Noncompetition Agreement, the Stock Pledge Agreement and the
Registration Rights
Agreement (collectively, the "Ancillary Agreements") to be executed
and
delivered at Closing. The parties acknowledge that Purchased
Assets, the Assumed
Contracts and the Assumed Leases will be acquired through separate
bills of sale
and assignment instruments into several Almost Family, Inc.
subsidiaries
included among the Buyer in the preamble above, with such division
of assets to
be geographically based.
(b) The Sellers agree that they shall, from time to time after
the Closing Date, take such additional action and execute and
deliver such
further documents as the Buyer may reasonably request in order to
effectively
<PAGE>
sell, transfer and convey the Purchased Assets and the Business to
the Buyer and
to place the Buyer in position to operate and control all of the
Purchased
Assets and the Business.
(c) At the Closing, the Buyer will execute and deliver to the
Sellers and to other appropriate parties such assignments,
assumptions,
undertakings and other instruments and documents as are necessary
to effect the
Buyer's assumption of the Assumed Contracts and Assumed Leases.
Article 4 - Representations and Warranties of the Sellers
As a material inducement to the Buyer to enter into and perform
this
Agreement, the Sellers represent and warrant to the Buyer as
follows:
4.1 Authority
as to Execution.
(a) Each Seller has full legal power, authority and capacity
to execute and deliver this Agreement and the Ancillary Agreements,
and to
perform each Seller's obligations under this Agreement and the
Ancillary
Agreements. This Agreement and the Ancillary Agreements constitute
valid and
legally binding obligations of each Seller, enforceable in
accordance with their
terms. The execution and delivery of this Agreement, the Ancillary
Agreements
and the agreements and instruments called for by this Agreement by
or on behalf
of each Seller and the consummation of the transactions
contemplated hereunder
and thereunder, subject to the terms of this Agreement, have each
been duly
authorized by all necessary corporate action.
(b) Except as disclosed on Schedule 4.1 (which schedule shall
include a list of any required consents or notifications), the
execution and
delivery of this Agreement and the Ancillary Agreements, the
consummation of the
transactions contemplated hereby and thereby, and the performance
and
fulfillment of its obligations and undertakings hereunder and
thereunder by the
Sellers will not:(i) violate any provision of, or result in the
breach of or
accelerate or permit the acceleration of any performance required
by the terms
of: any contract, agreement, arrangement or undertaking to which
any Seller is a
party or by which it may be bound; (ii) violate any Seller's
Articles of
Incorporation or Bylaws; (iii) violate any judgment, decree, writ,
injunction,
order or award of any arbitration panel, court or governmental
authority against
any Seller; (iv) result in the creation of any claim, lien, charge
or
encumbrance upon any of the properties or assets (whether real or
personal,
tangible or intangible) of any Seller; (v) to the extent a valid
assignment and
consent has occurred, terminate or cancel, or result in the
termination or
cancellation of, any agreement or undertaking to which any Seller
is a party; or
(vi) in any way affect or violate the terms or conditions of, or
result in the
cancellation, modification, revocation or suspension of, any
Seller's permits or
licenses.
(c) Each Seller is a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation, with
full power and authority to execute, deliver and perform its
obligations under
this Agreement.
<PAGE>
4.2 Licenses, Permits and Payment Programs. Except as set forth
on
Schedule 4.2, the Seller has obtained and holds all material
licenses, permits,
certificates, and authorizations necessary for the Seller to
operate the
Business as conducted by the Seller prior to the Closing. A copy of
each of the
foregoing is attached to Schedule 4.2. The Business is certified
for
participation in, and is a party to valid provider agreements for
payment by,
Medicare, Medicaid and other state, local or federal health care
programs listed
on Schedule 4.2 (the "Programs"). The Seller has not received any
notice of any
pending, or to the best of the Seller's knowledge, any threatened
investigations
by, or loss of participation in, the Programs related to the
Business.
4.3 Environmental Standards. Each Seller has operated the
Business
except where such non-compliance would not have any material
adverse effect on
the Business, in compliance with all limitations, restrictions,
conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables
contained in or required under the common law or any federal,
state, local or
foreign law, regulations, ordinances, permits, licenses, consent
decrees, orders
and clearances relating to pollution, the environment, or the use,
storage,
transportation or disposal of pollutants, dangerous substances,
toxic
substances, hazardous wastes, medical wastes, infectious wastes or
hazardous
substances (collectively, the "Environmental Laws"). To the
Sellers' knowledge,
there has been no disposal of waste arising out of the operation of
the Business
that does not comply with all Environmental Laws.
4.4 Taxes. Each Seller has filed all federal, state, local and
other
tax returns required to be filed by it prior to the date of this
Agreement with
respect to the Business, and has paid for or accrued for all taxes
shown as due
on such returns the failure of which returns to be filed or the
failure of which
taxes to be paid could result in a lien upon any of the Purchased
Assets or with
respect to which the Buyer could have successor liability under
applicable laws.
Present taxes which the Sellers have required by law to withhold or
collect with
respect to the Business have been withheld or collected and have
been paid over
to the proper governmental authorities or are properly held by the
Sellers for
such payment. No deficiency for any taxes or claim for additional
tax assessment
by any taxing authority, which if unsatisfied could result in a
lien upon any of
the Purchased Assets or could result in the Buyer incurring
successor liability
under applicable laws, has been, to the best of the Sellers'
knowledge,
proposed, asserted, or assessed against the Sellers, nor has any
Seller granted
any extension or waiver of any limitation period applicable to any
tax claims
relating to the Business which has not been closed.
4.5 Title. The Sellers have and will transfer to the Buyer at
the
Closing good (legal and beneficial) title to all of the assets
included among
the Purchased Assets, free and clear of any mortgage, security
interest, pledge,
lien, claim, encumbrance, sublease, license, or other adverse or
intervening
interest. Except for the Assumed Leases and as identified on
Schedule 1.1(a),
none of the Purchased Assets are leased. The Assumed Leases listed
on Schedule
1.3(b), in the form provided to Buyer are true, correct and
complete, are
currently valid and binding conveyances of leasehold title to the
real property
described therein, and are not currently subject to the default (or
anything
that would constitute default after passage of time or giving of
notice) of any
party thereto. To the knowledge of Sellers, there are no pending or
threatened
condemnation or other proceedings that could adversely affect the
current use,
occupancy, or value of the Assumed Leases or the leased premises
subject
thereto. The real property subject to the Assumed Leases is in good
condition,
free from material defects, and comprises all of the real property
used by
<PAGE>
Seller in the operation of its business in the Territory. The
Sellers' occupancy
and operation of the Business in each leased premises is in
compliance with law
except where such non-compliance would not have any material
adverse effect on
the Business .
4.6 Property,
Equipment and Operations.
(a) The
Purchased Assets are all of the assets used in
the operation of the Business as operated prior to the Closing.
(b) The Sellers have not caused or permitted any hazardous
substance, as that term is now defined in the Comprehensive
Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. ss.
9601, et seq.),
medical wastes or petroleum substances to be disposed on, under or
at the
premises of the Business, or any part thereof, and, to the best of
the Sellers'
knowledge, no part thereof has ever been used by any Seller as a
permanent
storage or disposal site for any such hazardous substances, medical
wastes, or
petroleum substances.
4.7 Insurance. The Sellers have provided the Buyer with a true
and
correct list of all policies of insurance which insure the
Purchased Assets or
the Business, setting forth the types and amounts of coverage. The
parties
acknowledge that upon the Closing, the policies of the Sellers will
terminate
with respect to all claims that relate to activities or events that
occur or
arise after the Closing Date. Schedule 4.7 is a true and correct
list of all
claims against such insurance policies during the past two
years.
4.8 Disclosure. No representation or warranty made by the Sellers
in
this Agreement and no statement made in or any amount set forth on
any schedule
called for by and incorporated into this Agreement is false or
misleading in any
material respect or omits to state any fact necessary to make any
such
representation or statements not misleading in any material
respect.
4.9 Governmental Approvals & Licenses. All material licenses,
permits,
and accreditations maintained by the Sellers with respect to the
Business are
set forth on Schedule 4.9. Except as described on Schedule 4.9, the
Licenses are
in full force and effect and, except as described on Schedule 4.9,
(i) no
default or violation exists under any of the Licenses, (ii) no
suspension,
notice of deficiency, or cancellation of any of the Licenses has
been received
or is threatened, and (iii) there is no reason to believe that but
for the
transaction contemplated by this Agreement on expiration the
Licenses would not
be renewed.
4.10
Compliance with Healthcare Regulatory Compliance.
(a) Except as disclosed on Schedule 4.10, each Seller has
timely filed all requisite cost reports, claims and other reports
required to be
filed in connection with all Programs due on or before the date
hereof, all of
which are complete and correct. True and correct copies of all such
reports for
the three most recent fiscal years of each Seller have been
furnished to the
Buyer. Except as specifically described on Schedule 4.10, there are
no claims,
actions, appeals, reviews or audits pending before any federal or
state
commission, board or agency (including, without limitation, any
intermediary or
carrier, the Provider Reimbursement Review Board or the
Administrator of the
Health Care Financing Administration) with respect to any Seller's
participation
in any Program related to the Business, or any pending
disallowances by any
<PAGE>
commission, board or agency in connection with any Seller's
participation in any
Program, which could adversely or materially affect the Business or
any of the
Purchased Assets, the operation or the utility thereof, or the
consummation of
the transactions contemplated hereby, and each Seller has made
available to the
Buyer true and correct copies of any such claims, actions or
appeals.
(b) The structure and operations of Business by and the
activities of the respective officers, directors and managing
employees of the
Sellers are, and at all times have been, in compliance in all
material respects
with all relevant federal and state laws regulating health services
or payment
including, but not limited to, the federal Anti-kickback Statute,
Social
Security Act ("SSA") ss. 1128B(b), the Stark Anti-Self-Referral
Law, SSA ss.ss.
1877 and 1903(s), the Anti-Inducement Law, SSA ss. 1128A(a)(5), the
Civil False
Claims Act, 31 U.S.C. ss.ss. 3729 et. Seq., the Administrative
False Claims Law,
SSA ss. 1128B(a), the administrative simplification provisions of
the Health
Insurance Portability and Accountability Act of 1996, SSA ss.ss.
1171-1179, the
exclusion laws, SSA ss. 1128, the anti-misleading statements
provision, SSA ss.
1129, and any other state or federal law, regulation, guidance
document, manual
provision, program memorandum or OIG or CMS opinion letter, or
other issuance
which regulates kickbacks, patient or program charges,
recordkeeping, referrals,
the hiring of employees or acquisition of services or supplies from
those who
have been excluded from federal health care programs, quality,
safety, privacy,
security, accreditation or any other aspect of providing health
care.
(c) No Seller has entered into any contract, agreement or
arrangement creating a "financial relationship" as defined in 42
U.S.C. ss.
1395nn, with a physician, if that physician refers patients to the
Seller for
designated health services, as defined in 42 U.S.C. ss. 1395nn,
except in
compliance with the law.
(d) All material reports, documents, claims and notices
required to be filed, maintained or furnished to any governmental
or health care
authority by the Sellers has been so filed, maintained or
furnished. All such
reports, documents, claims and notices were materially complete and
correct on
the date filed (or where corrected in or supplemented by a
subsequent filing).
4.11
Contracts and Commitments. Except for the Assumed Contracts,
and
as described on Schedule 4.11, none of the Sellers are a party to
any contract
or commitment relating to the Business, and neither the Business
nor the
Purchased Assets are the subject of any contract or commitment.
Each of the
Assumed Contracts is valid and binding agreements of the parties to
such
contracts in accordance with its terms, and, to the best of the
Sellers'
knowledge, no party to the Assumed Contracts is in default under
such contracts.
4.12 No Violation of Law. Except as disclosed on Schedule 4.12,
the
conduct of the Business by the Seller does not in any material
manner violate
any statute, ordinance, regulation, order, writ, injunction or
decree of any
court or governmental agencies. The Seller has not received a
notice of default
or violation of, and have no actual knowledge of any fact or event
which with
the lapse of time or giving of notice would constitute a default or
violation of
any statute, ordinance, regulation, order, writ, injunction or
decree of any
court or governmental agency or authority applicable to the
Business or the
Purchased Assets.
<PAGE>
4.13 Litigation. Except as disclosed on Schedule 4.13 and including
the
litigation with the Provider Reimbursement Review Board, there are
no actions,
suits or proceedings, pending, or, to the best of the Sellers'
knowledge,
threatened before any court, commission, agency or other
administrative
authority against, or affecting the Business or the Purchased
Assets and, except
as disclosed on Schedule 4.13, no Seller is the subject of any
order or decree
relating to or affecting the Business or the Purchased Assets other
than those
of general application. Seller agrees retain all right and
liabilities to the
pending litigation with the Provider Reimbursement Review Board for
past
disallowances and will pay for the cost of said litigation; Buyer
agrees that
any payment obtained from the Review Board for disallowances prior
to closing
will belong to the Seller.
4.14 Labor. There is no collective bargaining or other union
contract
relating to the Business to which any Seller is a party. To the
Sellers'
knowledge, after due inquiry, there is not pending or threatened
against any
Seller any grievance, labor dispute, organizational activity, union
trouble,
strike or work stoppage which materially affects or which may
materially disrupt
the Business. Each Seller has complied in all material respects
with all
applicable laws, rules and regulations pertaining to the employment
of labor,
including those relating to wages, hours, collective bargaining and
the payment
of or withholding of taxes. Each Seller has withheld all amounts
required by law
or agreement to be withheld from the wages or salaries of the
Business's
employees and they are not liable for any arrears of wages or any
tax or
penalties for failure to comply with any of the foregoing.
4.15 Employment Contracts. Except as disclosed on Schedule 4.15,
there
are no written or oral contracts for employment of any personnel of
the
Business, other than at-will employment relationships.
4.16 Employee Benefit and Retirement Plans. Except as disclosed
on
Schedule 4.16, no Seller maintains any "employee pension benefit
plan" or any
"employee welfare benefit plan" (as defined respectively in Section
3(2) and
3(1) of the Employee Retirement Income Security Act of 1974, as
amended
("ERISA") on behalf of the Business's employees, and, except as
disclosed on
Schedule 4.16, no Seller maintains any retirement plans, bonus
arrangements,
life insurance or medical insurance programs or any other fringe
benefit
arrangements for any employees whether written or unwritten.
4.17 Employees and Independent Contractors. The Sellers have
provided
the Buyer prior to the Closing Date with a true and correct list
including the
name, salary or compensation (including without limitation all
commission,
override or bonus arrangements), vacation and sick leave policies
or other
benefits, job description and original employment or contract date
of all
current employees and independent contractors of the Business based
upon the
most recently processed information, and the accrued and/or earned
vacation time
of all employees and, to the best of the Sellers' knowledge, the
dates and
information concerning any previous salary or compensation change
or adjustment
and the reasons therefore for each such current employee.
<PAGE>
4.18 Worker's Compensation. Except as disclosed on Schedule 4.18,
the
Sellers are in full compliance with all worker's compensation laws
with respect
to the Business and have worker's compensation insurance coverage
in full force
and effect with respect to the Business.
4.19 Adverse Actions. Except as described on Schedule 4.13 and
Schedule
4.19, the Sellers have not received any written notice of any
judicial or
administrative action against the Business or the Purchased
Assets.
4.20 Consents. Except as described on Schedule 4.20, no
consents,
approvals or authorizations of, any third parties is required in
connection with
the execution and delivery of this Agreement by the Sellers and
consummation by
the Sellers of the transactions contemplated hereby.
4.21 Commissions. Except as described on Schedule 4.21, the
Sellers
have not authorized any person to act in such a manner as to give
rise to any
valid claim against the Buyer for a brokerage commission, finder's
fee, or
similar payment as a result of the transactions contemplated under
this
Agreement.
4.22 Financial Statements. The Sellers have delivered to the
Buyer
financial statements for periods ended June 30, 2006 (the
"Financial
Statements"). The Financial Statements fairly present the financial
condition
and the results of operations, changes in shareholders' equity and
cash flows of
the Sellers as of the respective dates of and for the periods
referred to in
such Financial Statements, all in accordance with generally
accepted accounting
principles for financial reporting in the United States ("GAAP").
The Financial
Statements reflect the consistent application of such accounting
principles
throughout the periods involved. The Financial Statements have been
prepared in
accordance with the accounting records of the Sellers. There are no
(i)
liabilities (whether known, unknown, contingent or otherwise) of
the Sellers
other than liabilities reflected on the Financial Statements, and
(ii)
liabilities incurred since June 30, 2006 in the ordinary course of
business
without violation of this Agreement.
4.23 Internal Control. The Sellers have implemented and maintain
a
system of internal control over the financial reporting sufficient
to provide
reasonable assurance regarding the reliability of financial
reporting and the
preparation of financial statements for external purposes in
accordance with
GAAP, including, without limitation, that (i) transactions are
executed in
accordance with management's general or specific authorizations and
records are
maintained in reasonable detail to accurately and fairly reflect
the
transactions and dispositions of the Setters' assets, (ii)
transactions are
recorded as necessary to permit preparation of financial statements
in
conformity with GAAP and to maintain asset accountability, (iii)
access to
assets is permitted, and receipts and expenditures are being made,
only in
accordance with management's general or specific authorization, and
(iv) the
recorded accountability for assets is compared with the existing
assets at
reasonable intervals and appropriate action is taken with respect
to any
differences, and steps are otherwise taken with respect to the
prevention or
timely detection of unauthorized acquisition, use or disposition of
the Sellers'
assets.
<PAGE>
4.24
Nature of Investment
(a) The AFAM Shares to be received by the Sellers will be
acquired for investment for the Sellers' own accounts, not as a
nominee or
agent, and not with a view to the resale or distribution of any
part thereof,
and none of the Sellers has a present intention of selling,
granting any
participation in, or otherwise distributing the same, but subject
to the ability
of the Sellers to transfer shares to an affiliate (within the
meaning of Rule
405 promulgated under the Securities Act of 1933 (the "Securities
Act")) of the
Sellers. No Seller has any need for liquidity related to the
acquisition of the
AFAM Shares.
(b) Buyer has delivered to each Seller receiving AFAM Shares
true and complete copies of its (i) Annual Report on Form 10-K for
the year
ended December 31, 2005; (ii) Proxy Statement used in the
connection with its
2006 Annual Meeting of Stockholders; (iii) all periodic reports on
Form 8-K
filed with the Securities and Exchange Commission since December
31, 2005 to the
date hereof; and (iv) all Forms 10-Q filed with the Securities and
Exchange
Commission since December 31, 2005 to the date hereof. Each Seller,
or a
representative thereof, has received and read or reviewed, and is
familiar with,
this Agreement and the other agreements executed in connection with
this
Agreement and confirms that all documents, books and records
pertaining to such
Seller's investment in the AFAM Shares and requested by such Seller
have been
made available.
(c) Each Seller receiving AFAM Shares has had an opportunity
to ask questions and receive answers from Buyer regarding the terms
and
conditions of the offering of the AFAM Shares and about other
information,
documents and records relative to Buyer's business assets,
financial condition,
results of operations and liabilities.
(d) Each Seller receiving AFAM Shares is an experienced
investor in securities and acknowledges that such Seller can bear
the complete
economic risk of such Seller's investment and has such knowledge
and experience
in financial or business matters that such Seller is capable of
evaluating the
merits and risks of the investment in the AFAM Shares. Each Seller
also
represents that such Seller is an "accredited investor" within the
meaning of
Rule 501(a) promulgated under the Securities Act.
(e) The purchase of the AFAM Shares by the Sellers is
consistent with the general investment objectives of the Sellers.
Each Seller
understands that the purchase of the AFAM Shares involves a high
degree of risk.
(f) Each Seller understands that the AFAM Shares such Seller
is purchasing are characterized as "restricted securities" under
the federal
securities laws inasmuch as they are being acquired from Buyer in a
transaction
not involving a public offering and that under such laws and
applicable
regulations such securities may not be resold without registration
under the
Securities Act and applicable state securities laws, except in
certain limited
circumstances. In this connection, each Seller represents that such
Seller is
familiar with Rule 144 under the Securities Act, as presently in
effect, and
understand the resale limitations imposed thereby and by the
Securities Act.
Each Seller agrees that in no event will they make a transfer or
disposition of
any of the AFAM Shares unless and until, if requested by Buyer,
such Seller
shall have furnished to Buyer (at the expense of the applicable
Seller or such
Seller's transferee) an opinion of counsel or other evidence,
reasonably
<PAGE>
satisfactory to Buyer, to the effect that such transfer may be made
without
restrictions under the Securities Act. Each Seller understands that
Buyer is
under no obligation to register any of the securities sold
hereunder.
(g) The AFAM Shares shall not be registered under the
Securities Act at the time of issuance, and as such shall
constitute "restricted
securities" within the meaning of Rule 144 under the Securities Act
and the AFAM
Shares shall be available for sale in the public market only in
compliance with
Rule 144. The AFAM Shares shall bear a legend substantially as
follows:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR
ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAW OR OTHER EVIDENCE
SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Article 5 - Representations and Warranties of the Buyer
As a material inducement to the Sellers to enter into this
Agreement,
the Buyer hereby represents and warrants to the Sellers as
follows:
5.1 Authority as to Execution. The execution and delivery of
this
Agreement and the instruments called for by this Agreement by or on
behalf of
the Buyer and the consummation of the transactions contemplated
hereunder and
thereunder, shall have been duly authorized by all necessary
limited liability
company actions on or prior to the Closing Date. This Agreement and
each of the
instruments called for by this Agreement will be a valid and
binding obligations
of the Buyer, each enforceable against Buyer in accordance with
their respective
terms.
5.2 Organization and Entity Authority. The Buyer is a corporation
duly
organized, validly existing and in good standing under the laws of
the State of
Delaware. Each affiliate assigned purchase rights under this
Agreement by the
Buyer is a limited liability company duly organized, validly
existing and in
good standing under the laws the state in which is will operate the
Business,
with full legal power and authority to execute, deliver and perform
its
obligations under this Agreement and the instruments called for by
this
Agreement.
5.3 No Violation of Law; Other Agreements. Neither the execution
and
delivery of this Agreement or the instruments called for by this
Agreement, nor
consummation of the transaction herein or therein contemplated, nor
compliance
with the terms, conditions and provisions hereof or thereof, will
conflict with
or violate any provision of law or of the Articles of Organization
or the
Operating Agreement of the Buyer, or result in a violation or
default in any
provision or any regulation, order, writ, injunction or decree of
any court or
governmental agency or authority, or of any agreement or instrument
to which
Buyer is a party or by which Buyer is bound or subject.
5.4 Commissions. The Buyer has not authorized any person to act in
such
a manner as to give rise to any valid claim against the Seller for
a brokerage
commission, finder's fee, or similar payment as a result of the
transactions
contemplated under this Agreement.
<PAGE>
Issuance and Validity of AFAM Shares. The AFAM Shares, when issued
in
compliance with the provisions of this Agreement, will be validly
issued, fully
paid and nonassessable, will be free of any liens or encumbrances
other than the
pledge of the AFAM Shares contemplated by this Agreement, and will
not be
subject to any preemptive rights, rights of first refusal or
redemption rights
5.6 Disclosure. No representation or warranty made by the Buyer in
this
Agreement is false or misleading in any material respect or omits
to state any
fact necessary to make any such representation or statements not
misleading in
any material respect.
Article 6 - Covenants of the Sellers
6.1 Conduct of Business. From the date of this Agreement until
the
Closing Date, each Seller agrees to operate the Business and
otherwise carry on
the Business in substantially the same manner heretofore conducted
and not make
other than in the ordinary course of business, any material change
in its
personnel, operations, finances, accounting policies, or personal
property,
without the prior written consent of the Buyer. Between the date
hereof and the
Closing Date, each Seller agrees to use its reasonable efforts to
retain its
present employees and preserve the goodwill and business of their
customers,
suppliers, and others having business relations with them, and
agree to conduct
the financial operations of the Business in accordance with its
existing
business practices. From the date of this Agreement to the Closing
Date, each
Seller agrees to not do any of the following in connection with its
ownership
and operation the Business and the Purchased Assets without the
Buyer's prior
written consent:
(a) cancel or permit any insurance, bond, surety instrument or
letter of credit to lapse or terminate, except in the ordinary
course of
business or unless renewed or replaced by like coverage;
(b) default in any respect under any loan, material contract,
agreement, lease or commitment, except as to (i) CIT, the Sellers
primary
lender, with whom the Buyer hereby acknowledge that the Sellers are
already in
default, and (ii) Medicare, with respect to amounts due on Sellers'
Medicare
cost report repayment obligations (in each case the Sellers shall
obtain payoff
letters within a reasonable time prior to the Closing);
(c) enter into any contract, agreement, lease or other
commitment, except in the ordinary course of business;
(d) sell or agree to sell the Business or any of the Purchased
Assets;
(e) hire any employees other than in the ordinary course,
increase any compensation to employees, enter into any employment
arrangement,
agreement or undertaking, or pay or promise to pay any fringe
benefit, bonus or
special compensation to employees, except in the ordinary course of
business,
except as otherwise contemplated in this Agreement;
<PAGE>
(f) impede Buyer, its counsel, accountants and other
representatives from reasonable access, during normal business
hours and upon
reasonable advance notice, to the Business and the Purchased Assets
so that
Buyer may have the opportunity to conduct a reasonable
investigation of the
Business;
(g) encumber any of the Purchased Assets or incur any
liabilities with respect to the Business, except in the ordinary
course of
business; or
(h) permit any employees of the Business to be "hired" or
otherwise used by the Seller other than in connection with the
operation of the
Business (the intention of the parties being that as of the
Closing, the Buyer
will have the opportunity, but not the obligation, to hire all of
the Seller's
employees utilized in the operation of the Business as of the date
of this
Agreement and that none of such employees will have any preexisting
arrangement
to remain employed by the Seller after the Closing Date).
6.2 No Sale of Purchased Assets. The Seller agrees to not sell,
lease,
remove or otherwise dispose of any of the Purchased Assets, which
are located or
used in the Business (except for retirements and replacements in
the ordinary
course of business, provided that all items which are retired or
replaced are
contemporaneously replaced by items of substantially equivalent
value), or
liquidate or dissolve.
6.3 Insurance.
Through the Closing
Date, the Seller agrees to
maintain the insurance described in Article 4.
6.4 Notice. From the date hereof to the Closing Date, the Seller
agrees
to promptly advise the Buyer of the occurrence of any governmental
inspections,
investigations, citations with respect to the Business or the
Purchased Assets,
and of which the Seller has received written or oral
notification.
6.5 Access to Personnel and Records. From the date of this
Agreement
until the Closing Date, the Seller agrees to give the Buyer, and
the Buyer's
counsel, accountants, consultants and other agents and
representatives, full
access, during normal business hours and upon reasonable request,
to its
properties, books, contracts, commitments and records relating to
the Purchased
Assets and the operations of the Business. The review of any such
Business
records shall be conducted subject to the site and business hours
limitations
requested by the Seller to the extent reasonably possible and shall
designed so
as to minimize any disruption to the Seller's business.
6.6 Financial Information. The Seller agrees to provide the Buyer
with
such financial information available to the Seller relating to the
operations of
the Business as the Buyer may reasonably request.
6.7 Collection Practices. The Seller agrees to not deviate from
its
current lawful practices with respect to the collection of accounts
receivable
from the Business's patients to the extent that any such change in
collection
practices would impair or adversely affect the Business' ability to
continue its
relationships with those patients after Closing.
<PAGE>
6.8 Cooperation. From the date hereof to the Closing Date, the
Seller
agrees to cooperate in good faith with the Buyer in order to obtain
all
governmental, regulatory and other third party consents and
approvals which are
necessary or desirable to consummate the transactions contemplated
under this
Agreement. The Seller agrees to use its good faith efforts to cause
each of the
conditions to the Buyer's obligation to close the transactions
contemplated by
this Agreement set forth in Article 8 to be satisfied on or prior
to the Closing
Date.
6.9 Approval of Transfer. From the date hereof to the Closing Date,
the
Seller agrees to use its good faith efforts, at the Buyer's
expense, including
the filing and submission of all necessary and appropriate
applications and
documents, to obtain the approvals and consents of all applicable
governmental
and regulatory authorities, and any other third party identified as
necessary in
order to transfer the Business, the Purchased Assets, the Assumed
Contracts, the
Assumed Leases and the Licenses to the Buyer.
6.10 Consents. The Seller agrees to use its good faith efforts
to
procure the consents of any third parties necessary for the
assignment to the
Buyer of the Assumed Contracts and Licenses (to the extent the
obtaining of such
consents can occur pre-Closing).
6.11
No-Shop Clause. From and after the date of the execution and
delivery of this Agreement until the termination of this Agreement
(unless the
Closing Date is extended beyond such date by the parties), the
Sellers agree to
not, without the prior written consent of the Buyer: (i) offer for
sale any
material portion of the Business or Purchased Assets; (ii) solicit
offers to buy
all or any material portion of the Business or Purchased Assets;
(iii) hold
discussions with any party (other than the Buyer) looking toward
such an offer
or solicitation or looking toward a merger or consolidation with
the Sellers; or
(iv) enter into any agreement with any party (other than the Buyer)
with respect
to the sale or other disposition of any material portion of the
Business or
Purchased Assets.
6.12 Preparation of Financials. The current management of the
Sellers
shall cause the Sellers to prepare such financial information, and
to cooperate
with the Buyer in connection with the preparation of consolidated
financial
information including the Business, as may be requested by the
Buyer.
6.13 Sellers' Post-Closing Insurance Coverage. The Sellers agree
to
purchase tail insurance continuing its professional liability
coverage, with
dollar limits acceptable to the Buyer, for a two year period after
the Closing
Date.
Article 7 - Covenants of the Buyer
7.1 Access to Records. For a period extending to the greatest of
five
years from and after the Closing Date, any longer period required
by law, or the
date of final settlement of cost reports for any period prior to
the Closing
Date, the Buyer agrees to retain the patient and medical records of
the patients
serviced by the Business on and prior to the Closing Date, and will
give the
Seller, and the Seller's counsel, accountants, consultants and
other agents and
representatives, full and complete access, during reasonable
business hours and
upon reasonable request.
<PAGE>
7.2 Cooperation. From the date hereof until the Closing Date, the
Buyer
agrees to cooperate in good faith with the Seller in order to
obtain all
governmental, regulatory and other third party consents and
approvals which are
necessary or desirable to consummate the transactions contemplated
under this
Agreement.
7.3 Approval of Transfer. From the date hereof until the Closing
Date,
the Buyer agrees to use its best efforts, including the filing and
submission of
all necessary and appropriate applications and documents, to obtain
the
approvals and consents of all applicable governmental and
regulatory authorities
and other third parties required or necessary in order to transfer
the Business,
the Licenses, the Assumed Contracts and the Purchased Assets to the
Buyer.
7.4 Medicare Change of Ownership Filings. The Buyer and the
Seller
agree, as soon as reasonably possible after the execution of this
Agreement, to
make their Medicare Form 855 change in control filings.
Article 8 - Conditions Precedent to the Buyer's Obligations
The Buyer's obligation to close is subject to the satisfaction of
the
following conditions before or at Closing, unless waived by the
Buyer:
8.1 Representations and Warranties True at Closing. The
representations, warranties and covenants made by the Seller in
this Agreement
must be true in all material respects at and as of Closing as if
made on and as
of Closing (excluding any materiality qualifier in such
representations and
warranties).
8.2 Compliance with Agreement. The Seller must have performed
and
complied with all of its covenants and obligations under this
Agreement in all
material respects which are to be performed or complied with by
them before or
at Closing, including but not limited to the obtaining of consent
and estoppel
certificates from the landlords under each Assumed Lease as set
forth herein.
8.3 The Sellers' Certificate. The Sellers must have delivered to
Buyer
a certificate stating that (i) the representations, warranties and
covenants
made by the Sellers in the Agreement are true in all material
respects at and as
of Closing as if made on and as of Closing (excluding for this
purpose any
materiality qualifier in such representations and warranties), and
(ii) the
Sellers have performed and complied with all of their covenants and
obligations
under this Agreement in all material respects which are to be
performed or
complied with by it before or at Closing.
8.4 Adverse Proceedings. As of the Closing Date, no suit, action,
claim
or governmental proceeding is pending or threatened against, and no
order,
decree or judgment of any court, agency or other governmental
authority has been
rendered against the parties or any party hereto which would render
it unlawful,
as of the Closing Date, to effect the transactions contemplated by
this
Agreement in accordance with its terms or otherwise have a material
adverse
effect on the Buyer's ownership, use or enjoyment of the Business,
the Licenses,
the Assumed Contracts, the Assumed Leases or the Purchased
Assets.
<PAGE>
8.5 Approvals. All necessary material federal, state and local
governmental and regulatory and other third party consents,
waivers, and other
approvals or determinations required to be obtained with respect to
the sale
and/or transfer of the Licenses, the Assumed Contracts, the Assumed
Leases and
the Purchased Assets to the Buyer, and the Buyer's operation of the
Business
thereafter, must have been obtained, with the form and substance of
such
consents, etc. satisfactory to the Buyer in its sole
discretion.
8.6 Closing Documents. The documents required to be delivered by
the
Seller to the Buyer pursuant to this Agreement must be executed in
a form
reasonably acceptable to the Buyer.
8.7 Opinion of Counsel. The Sellers shall have caused there to
be
delivered at Closing an opinion of counsel in a form satisfactory
to Buyer with
respect to certain matters, including authorization of this
Agreement and the
Ancillary Agreements, no conflict with the Sellers' organizational
documents and
contracts and other customary matters.
8.8 Audited Financial Statements. The Sellers shall provide the
Buyer
with such audited financial statements for the Sellers and/or the
Business for
each of the three fiscal years ended June 30, 2006 and unaudited
financial
statements for the interim period ended September 30, 2006, as
necessary for the
Buyer to satisfy the requirements of Item 9.01 of the Exchange Act
Current
Report on Form 8-K.
8.9 Employee Agreements. The entering into by substantially all of
the
Sellers' employees listed on Schedule 8.9 of restrictive covenant
agreements in
a form satisfactory to the Buyer is a condition both to the Buyer
entering into
of this Agreement and the Buyer's obligation to close the
transactions
contemplated by this Agreement. For purposes of this paragraph
8.9,
"substantially all" shall mean all but two of the applicable
employees.
8.10 Control Agreement. The Sellers and their banks shall have
entered
into a control agreement with the Buyer, giving the Buyer the right
to control
accounts receivable payments made to the Seller's bank accounts,
all in a form
satisfactory to the Buyer.
8.11
Indemnification Agreement. The parties enter into an
Indemnification Agreement, in the form attached as Attachment
D.
8.12
Other Transactions.
The closing of the transactions
contemplated in the Asset Purchase Agreement dated as of the date
hereof of
among certain Buyers and Mederi, Inc., Mederi of Collier County,
Inc., Mederi of
Manatee County, Inc., Mederi of Pinellas County, Inc., Mederi of
Alachua County,
Inc., Mederi of Palm
Beach County, Inc., and Mederi of Orange County, Inc.
d/b/a Mederi of Brevard County, Inc.
Article 9 - Conditions Precedent to the Sellers' Obligations
The Sellers' obligation to close is subject to the satisfaction of
the
following conditions prior to or at Closing, unless waived by the
Seller:
<PAGE>
9.1 Representations and Warranties True at Closing. The
representations
and warranties made by the Buyer in this Agreement must be true in
all material
respects at and as of Closing with the same effect as though
such
representations and warranties had been made or given on and as of
Closing.
9.2 Compliance with Agreement. The Buyer must have performed
and
complied with all its covenants and obligations under this
Agreement in all
material respects which are to be performed or complied with by it
before or at
the Closing.
9.3 Buyer's Certificate. The Buyer must have delivered to the
Seller a
certificate stating that (i) the representations, warranties and
covenants made
by the Buyer in the Agreement are true at and as of Closing as if
made on and as
of the Closing, and (ii) the Buyer has performed and complied with
all of its
covenants and obligations under this Agreement in all material
respects which
are to be performed or complied with by it before or at
Closing.
9.4 Adverse Proceedings. As of the Closing Date, no suit, action,
claim
or governmental proceeding is pending against, and no order, decree
or judgment
of any court, agency or other governmental authority has been
rendered against
the parties or any party hereto which would render it unlawful, as
of the
Closing Date, to effect the transactions contemplated by this
Agreement in
accordance with its terms.
9.5 Approvals. All necessary federal, state and local governmental
and
regulatory and other third party consents, waivers, and other
approvals and
determinations required to be obtained with respect to the sale
and/or transfer
of the Licenses and the Purchased Assets to the Buyer must have
been obtained.
9.6 Closing Documents. The documents required to be delivered by
the
Buyer to the Seller pursuant to this Agreement must be executed and
delivered in
a form reasonably acceptable to the Seller.
9.7 Purchase
Price. Seller's
receipt of the Purchase Price
payable pursuant to paragraph 2.1(a)(i) via wire
transfer.
Medicare Change in Control. The Buyer and the Seller shall have
made
their Medicare Form 855 change of ownership filings.
9.8 Opinion of Counsel. The Buyer shall have caused there to be
delivered at
Closing an opinion of counsel in a form satisfactory to Seller with
respect to
certain matters, including authorization of this Agreement and the
Ancillary
Agreements, no conflict with the Buyer's organizational documents
and contracts
and other customary matters.9.9
Article 10 - Termination of Agreement
10.1 Termination. This Agreement and the transactions
contemplated
hereby may be terminated or abandoned at any time before the
Closing Date: (a)
by mutual consent of the Seller and the Buyer; (b) by the Buyer, if
there has
been a material misrepresentation in this Agreement by the Seller,
or a material
<PAGE>
breach by the Seller of any of its warranties or covenants set
forth in this
Agreement, or an uncured failure of any condition to which the
obligations of
the Buyer are subject; (c) by the Seller, if there has been a
material
misrepresentation in this Agreement by the Buyer, or a material
breach by the
Buyer of any of its warranties or covenants set forth in this
Agreement, or an
uncured failure of any condition to which the obligations of the
Seller are
subject; or (d) by the Seller or the Buyer if the Closing has not
occurred prior
to December 15, 2006.
Article 11 - Survival of Representations and Warranties
11.1 Survival of Representations and Warranties. All of the
representations, and warranties made by the Sellers and the Buyer
under this
Agreement will survive the Closing of the transactions contemplated
by this
Agreement for a period of 36 months after the Closing Date, except
that the
representation and warranty with respect to (i) taxes in paragraphs
4.4 and
4.16, (ii) healthcare matters in paragraph 4.10 shall survive after
the Closing
Date for the greater of 36 months or the applicable statute of
limitations, and
(iii) title in paragraph 4.5 shall survive after the Closing Date
without any
time limitation.
Article 12 - Other Provisions
12.1
Further Assurances.
The parties agree to execute and
deliver any and all papers and documents which may be reasonably
necessary to
carry out the terms of this Agreement.
12.2 Entire Agreement; Amendment. All schedules to this Agreement
are
deemed to be incorporated into and made part of this Agreement.
This Agreement
together with the attachments (each of which is incorporated into
this Agreement
in its entirety through this reference), schedules and recitals
contains the
entire agreement between the parties and there are no
agreements,
representations, or warranties which are not set forth herein. This
Agreement
may not be amended or revised except by a writing signed by both
parties hereto.
12.3 Binding Effect; Assignment. This Agreement is binding upon
and
inures to the benefit of the parties and their respective
successors and
assigns; provided, however, that other than an assignment by the
Buyer of its
rights under this Agreement to an affiliate of the Buyer which does
not relieve
the Buyer of its obligations under this Agreement, neither this
Agreement nor
any rights hereunder are assignable nor transferable without the
prior written
consent of the other party. This Agreement is not intended and must
not be
construed to create any rights in any parties other than the Buyer
and the
Seller and no person may assert any rights as a third party
beneficiary.
12.4 Separate Counterparts. This Agreement may be executed in
several
identical counterparts, all of which when taken together
constitutes but one
instrument, and it will not be necessary in any court of law to
introduce more
than one executed counterpart in proving this Agreement. This
Agreement may be
executed and delivered by fax counterpart signatures, and upon
exchange of fax
counterpart signatures, this Agreement will be binding upon the
parties.
<PAGE>
12.5 Transaction Costs. Each party to this Agreement agrees to
be
responsible for its own costs for any legal, accounting and other
services, if
any, attendant to the transactions contemplated by this Agreement.
The Buyer
will bear the cost of transfer of the Licenses and any regulatory
approvals
necessary to complete the transaction. The Buyer acknowledges and
agrees that it
shall be solely responsible for any brokerage fees or sales
commissions that may
be due and payable to Stoneridge Partners as a result of the
transactions
contemplated by this Agreement. The Selling Parties shall be
responsible for any
filing fees or stamp tax associated with the Purchase Notes.
12.6 Notices. Any notice, request, instruction or documents
required or
permitted hereunder must be in writing and will be deemed given if
delivered
personally or by certified mail, U.S. mail, national recognized
overnight
courier service or sent by telex, telecopy or other
telecommunication device
capable of creating a written record (and promptly confirmed by
hard copy
delivery) to a party at the address set forth below:
(i) If to any Selling Party:
c/o Mr. David
Nesslein
3948 Little Ave.
Coconut Grove, Florida 33131
With a copy to:
John B. Gallagher, Esq.
2128 NE 63rd Street
Fort Lauderdale, Florida 33308
(ii) If to the Buyer:
9510 Ormsby Station Road, Suite 300
Louisville, Kentucky
40223
Fax: (502)
891-8067
Attn: President
With a copy to:
Frost Brown Todd LLC
400 West Market Street, 32nd Floor
Louisville, Kentucky 40202-3363
Fax: (502) 581-1087
Attn: Scott W. Dolson
unless and until notice of another or different address is given as
provided
herein.
<PAGE>
12.7
Severability. The
provisions of this Agreement are severable,
and the invalidity of
any provision will not affect the validity of any other
provision.
12.8 Captions. The captions herein have been inserted solely
for
convenience of reference and in no way define, limit or describe
the scope or
substance of any provision of this Agreement.
12.9 Gender.
All pronouns used
herein will include both the
masculine and feminine gender as the context requires.
12.10 Governing Law; Joint Preparation. The execution,
interpretation,
and performance of this Agreement will be governed by the laws of
the State of
Florida, without regard to or application of its conflicts of law
principles.
This Agreement is deemed to have been prepared jointly by the
parties. Any
ambiguity in this Agreement will not be interpreted against either
party and
will be interpreted as if each of the parties hereto had prepared
this
Agreement.
12.11 Confidentiality and Announcements. Except as and to the
extent
required by Law, without the prior written consent of the other
party, neither
Buyer nor the Selling Parties shall, and each will direct its
respective
representatives not to make, directly or indirectly, any public
comment,
statement or communication with respect to, or otherwise disclose
or to permit
the disclosure of, the terms of the transaction contemplated by
this Agreement.
If any party, in the opinion of outside legal counsel to such
party, is required
by Law or the rules of any exchange or the listing rules of the
Nasdaq Capital
Market or any other applicable market, to make any such disclosure,
such party
must first provide the other party the content of the proposed
disclosure, the
reasons that such disclosure is required by Law and the time and
place that the
disclosure will be made. The parties agree to consult with each
other to prepare
a mutually acceptable press release to be issued immediately
following the
Closing.
[signature page follows]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
ALMOST FAMILY, INC.
CARETENDERS VISITING SERVICES OF COOK
COUNTY, LLC
CARETENDERS VISITING SERVICES OF
SOUTHERN ILLINOIS, LLC
CARETENDERS VISITING SERVICES OF
ST. LOUIS, LLC
NATIONAL HEALTH INDUSTRIES, INC.
By /s/ William B. Yarmuth
------------------------------------------
William B. Yarmuth, Chief Executive Officer
HEALTH MANAGEMENT CONSULTANTS, INC.
By: /s/ David Nesslein
-------------------------------------------
David Nesslein
Title:
Secretary/Treasurer
----------------------------------------
UNITED HOME HEALTH SERVICES OF COOK
COUNTY, INC. d/b/a MEDERI
By: /s/ David Nesslein
-------------------------------------------
David Nesslein
Title:
Secretary/Treasurer
---------------------------------------
<PAGE>
UNITED HOME HEALTH SERVICE OF
ST. LOUIS, INC.
By /s/ David
Nesslein
-------------------------------------------
David Nesslein
Title:
Secretary/Treasurer
-----------------------------------------
/s/ David Nesslein
-----------------------------------------------
David Nesslein
/s/
Sandra Vazquez
------------------------------------------------
Sandra Vazquez
<PAGE>
LIST OF ATTACHMENTS AND SCHEDULES
TO
HEALTH MANAGEMENT
CONSULTANTS/ALMOST FAMILY
ASSET PURCHASE AGREEMENT
Attachment A
Noncompetition Agreement
Attachment B
Purchase Notes
Attachment C
Registration Rights Agreement
Attachment D
Indemnification Agreement
Attachment E
Additional Transition Matters
Schedule 1.1(a) Purchased
Assets
Schedule 1.1(b) Excluded
Assets
Schedule 1.3(a) Assumed
Contracts
Schedule 1.3(b) Assumed
Leases
Schedule 1.7
Miami Home Office Employees - Terms of
Transitional Employment
Schedule 2.1(a)(iv)
Contingent Consideration
Schedule 2.2 Allocation of
Purchase Price
Schedule 4.1
Authority
Schedule 4.2
Licenses, Permits and Payment Programs
Schedule 4.7
Insurance
Schedule 4.9
Governmental Approvals & Licenses
Schedule 4.10
Healthcare Regulatory Compliance
Schedule 4.11
Contracts
Schedule 4.12
Violations of Law
Schedule 4.13
Litigation
Schedule 4.15
Employment Contracts
Schedule 4.16
ERISA Matters
Schedule 4.18
Worker's Compensation Compliance
Schedule 4.19
Adverse Actions
Schedule 4.20
Consents
Schedule 4.21
Commissions
Schedule 8.9
List of Employees
<PAGE>
ATTACHMENT A
to
HEALTH MANAGEMENT CONSULTANTS/ALMOST FAMILY
ASSET PURCHASE AGREEMENT
CONFIDENTIALITY, NONSOLICITATION AND
NONCOMPETITION AGREEMENT
This is a Confidentiality, Nonsolicitation and Noncompetition
Agreement dated as
of December 3, 2006,
among (i) Almost Family, Inc. and Caretenders Visitings
Services of
Ocala, LLC, a Florida limited liability company, Caretenders
Visiting Services of Southwest Florida, Inc., a Florida
corporation, Caretenders
Visiting Services
of Orlando, LLC, a Florida limited liability company,
Caretenders Visiting
Services of District
7, LLC, a Florida limited liability
company,
Pro-Care Home
Health of Broward, Inc., a Florida corporation,
Caretenders Visiting Services of Southeast Florida, Inc., a Florida
corporation,
Caretenders Visiting
Services of Hernando County, LLC, a Florida limited
liability company,
Cartenders
Visiting Services of
District 6, LLC, a Florida
limited liability
company, Caretenders Visiting Services of Pinellas
County,
LLC, a Florida limited liability company, Caretenders Visiting Services of
Cook
County, LLC,
an Illinois limited liability company, Caretenders Visiting
Services of Southern
Illinois, LLC, an
Illinois limited liability company,
Caretenders Visiting
Services of St. Louis,
LLC, a Missouri
limited liability
company, National Health Industries, Inc., a Kentucky corporation
(collectively,
the "Buyer")
(collectively, the
"Protected Parties"),
and (ii) Mederi,
Inc.,
Health Management
Consultants, Inc.,
Mederi of Collier County, Inc., Mederi of
Manatee County, Inc., Mederi of Pinellas County, Inc., Mederi of
Alachua County,
Inc., Mederi of Palm Beach County, Inc., Mederi of Orange County,
Inc., Mederi
of Brevard County,
Inc., United Home
Health Service of St. Louis, United Home
Health Services, Inc.
d/b/a Mederi of Illinois, United Home Health Services of
Cook County, Inc. d/b/a Mederi of Cook County and (iv) David
Nesslein and Sandra
Vazquez (each a "Selling Party" and collectively, the "Selling
Parties").
Recitals
A. Pursuant to Asset Purchase Agreements dated as of November 15,
2006
(the "Purchase Agreements") among (i) Almost Family, Inc., a
Delaware
corporation, Caretenders Visiting Services of Ocala, LLC, a Florida
limited
liability company, Caretenders Visiting Services of Southwest
Florida, Inc., a
Florida corporation, Caretenders Visiting Services of Orlando, LLC,
a Florida
limited liability company, Caretenders Visiting Services of
District 7, LLC, a
Florida limited liability company, Pro-Care Home Health of Broward,
Inc., a
Florida corporation, Caretenders Visiting Services of Southeast
Florida, Inc., a
Florida corporation, Caretenders Visiting Services of Hernando
County, LLC, a
Florida limited liability company, Caretenders Visiting Services of
District 6,
LLC, a Florida limited liability company, Caretenders Visiting
Services of
Pinellas County, LLC, a Florida limited liability company,
Caretenders Visiting
Services of Cook County, LLC, an Illinois limited liability
company, and
<PAGE>
National Health Industries, Inc., a Kentucky corporation, Mederi,
Inc., a
Florida corporation, Mederi of Collier County, Inc., a Florida
corporation,
Mederi of Manatee County, Inc., a Florida corporation, Mederi of
Pinellas
County, Inc., a Florida corporation, Mederi of Alachua County,
Inc., a Florida
corporation, Mederi of Palm Beach County, Inc., a Florida
corporation, Mederi of
Orange County, Inc., a Florida corporation d/b/a Mederi of Brevard
County, Inc.,
and United Home Health Services, Inc. d/b/a Mederi of Illinois, an
Illinois
corporation, David Nesslein and Sandra Vazquez (the "First APA")
and (ii) Almost
Family, Inc., a Delaware corporation, Caretenders Visiting Services
of Cook
County, LLC, an Illinois limited liability company, Caretenders
Visiting
Services of Southern Illinois, LLC, an Illinois limited liability
company,
Caretenders Visiting Services of St. Louis, LLC, a Missouri limited
liability
company, and National Health Industries, Inc., a Kentucky
corporation, Health
Management Consultants, Inc., a Delaware corporation, United Home
Health
Services of Cook County, Inc. d/b/a Mederi of Cook County, an
Illinois
corporation, and United Home Health Service of St. Louis, Inc.
d/b/a Mederi, a
Missouri corporation, David Nesslein and Sandra Vazquez (the
"Second APA"), the
Protected Parties are purchasing certain assets used in the
operation of a home
health agencies in Florida, Illinois and Missouri (the
"Territory"). The
agreement by the Selling Parties to the terms of this Agreement was
material to
the decision of the Buyer to enter into the transactions described
in the
Purchase Agreements. Capitalized terms not otherwise defined in
this Agreement
shall have the meanings given to them in the Purchase
Agreements.
B. For purposes of this Agreement, "Proprietary Information" means
as
it relates to the Business, patient lists, referral sources,
business
relationships, business records and financial records, all of which
have been
acquired by the Protected Parties in connection with the purchase
of the
Business. The Protected Parties have expressly or impliedly
protected such
information from unrestricted use by persons not associated with
the Protected
Parties.
C. For purposes of this Agreement, "Restriction Period" mean the
period
commencing on the date of this Agreement, and terminating on the
fifth
anniversary date of this Agreement.
THE PARTIES, INTENDING TO BE LEGALLY BOUND, AGREE AS FOLLOWS:
1.
Confidential Information.
(a) Each Selling Party agrees that it shall (i) maintain the
strict confidence of, undertake all necessary steps to avoid
divulging or
disclosing, and preserve and protect the Proprietary Information,
trade secrets,
customer lists, business records, and financial records of the
Business
(collectively, the "Trade Secrets") from disclosure to, or access
or use by, any
person or entity, including any competitor or potential competitor
of the
Business, and (ii) not use the Trade Secrets to compete, directly
or indirectly,
with the Business, nor attempt to otherwise take commercial
advantage of the
Trade Secrets. Each Selling Party acknowledges that the Trade
Secrets constitute
valuable, special and unique property of the Business being
acquired by the
Protected Parties.
<PAGE>
(b) Each Selling Party represents and warrants to the
Protected Parties that it has returned and delivered to the
Protected Parties
any and all papers, books, records, documents, memoranda and
manuals, including
all copies thereof, whether hard or digital copies, belonging or
relating to the
Business, or containing any Proprietary Information or Trade
Secrets.
(c) Each Selling Party agrees that, if at any time after the
date of this Agreement, the Selling Party determines that it has
any Proprietary
Information or Trade Secrets in its possession or control, the
Selling Party
shall immediately return all such Proprietary Information or Trade
Secrets to
the Protected Parties, including all copies or portions
thereof.
2. Employee Solicitation. Each Selling Party agrees that it shall
not,
during the Restriction Period, directly or indirectly, induce,
encourage or
solicit any employee of the Business to leave the employ of the
Protected
Parties or become employed by the Selling Parties, or, directly or
indirectly,
hire any former employees of the Business, except with the prior
written consent
of the Protected Parties.
3.
Noncompetition Covenant.
(a) Each Selling Party agrees that it shall not, during the
Restriction Period, directly or indirectly, individually, or
through any person,
partnership, joint venture, corporation or other entity in which
any Selling
Party has any interest, including, without limitation, as a
shareholder, owner,
member, partner, investor, director, officer, employee or
consultant, or
otherwise, (i) engage in the home health business in the States of
Florida,
Illinois or Missouri, or (ii) solicit the past, present or future
patients or
referral sources of the Business.
(b) All of the restrictive covenants in this Agreement shall
be construed as an agreement independent of any provision of the
Purchase
Agreement, and the existence of any claim or cause of action of a
Selling Party
against a Protected Party shall not constitute a defense to the
enforcement by
the Protected Party of such restrictive covenants. It is
specifically agreed
that the periods during which the covenants of the Selling Parties
shall be
effective shall be computed by excluding from such computation any
time during
which the Selling Parties are in violation of any provision of this
Agreement.
4. Consideration. The Selling Parties acknowledge that the
consideration for the covenants in this Agreement is the Purchase
Price
consideration paid at the Closing and $200,000.00 payable at
Closing to each of
David
