ASSET PURCHASE AGREEMENT

Exhibit 10.1

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the “ Agreement ”), is made as of this 25 ^th day of August, 2006, by and among LINCARE INC., a corporation duly organized and existing under the laws of the State of Delaware, having its principal place of business at 19387 U.S. 19 North, Clearwater, Florida 33764 (hereinafter referred to as “ Lincare ”); PEDIATRIC SERVICES OF AMERICA, INC., a corporation duly organized and existing under the laws of the State of Delaware, having its principal place of business at 310 Technology Parkway, Norcross, Georgia 30092-2929 and certain of Pediatric Services of America, Inc.’s affiliates listed on the signature page hereto (hereinafter collectively referred to as the “ Company ”).

WITNESSETH :

WHEREAS , the Company is engaged in the business of marketing, advertising, selling, leasing, renting, distributing or otherwise providing oxygen, oxygen equipment, aerosol inhalation therapy equipment and respiratory medications, nasal continuous positive airway pressure devices, infant monitoring equipment and services, home sleep studies-related therapy equipment, enteral, and other respiratory therapy and durable medical equipment, products, supplies and services to customers in their homes or other alternative site care facilities in the Territory (as defined in Section 1.1(f) hereof) and respiratory therapy staffing; and

WHEREAS , Lincare desires to acquire, and Company desires to sell to Lincare, substantially all of the Assets (as defined in Section 1.1(a) hereof) and Business (as defined in Section 1.1(b) hereof) (hereinafter, the “ Transaction ”).

NOW, THEREFORE , in consideration of the foregoing and the mutual covenants and agreements herein contained, the parties hereto agree and contract as follows:

Article 1 - DEFINITIONS

1.1 In this Agreement, the following terms shall mean the following:

(a) “ Assets ” shall mean and include all assets and properties owned, leased, rented, used or otherwise possessed by the Company for use in the Business of every kind, character and description, whether tangible or intangible, and wherever located, except for the Excluded Assets (as defined in Section 1.1(c) hereof). The Assets shall include, but shall not be limited to, the following:

(i) subject to Sections 1.1(c)(vii) and 1.1(c)(ix) hereof, all of Company’s rights with respect to the real property leased, rented, used or otherwise possessed by the Company, which are not identified on Schedule 4.5(a) as Excluded Assets, subject to the terms and conditions set forth in Schedule 4.5(a). For purposes of this Agreement, those Company facilities, in which Company’s Business is shared with other Company businesses, shall be referred to as the “ Shared Locations ”;

(ii) all of the oxygen equipment, aerosol inhalation therapy equipment, nasal continuous positive airway pressure devices, infant monitoring equipment, home sleep study and related therapy equipment, respiratory medications, enteral, and all other respiratory therapy and durable medical equipment, products and supplies owned, leased, rented, used or otherwise possessed by the Company’s Business regardless of the actual ownership thereof by the Company or otherwise (including, but not limited to, all of such items presently located with customers in their homes or alternative site care facilities), which are set forth in Schedule 4.5(c)(i) hereof;

(iii) all of the inventory, disposables, spare parts, materials, work-in-process and supply items owned, leased, rented, used or otherwise possessed by Company’s Business;

(iv) all other equipment, products, machines, furniture, fixtures, furnishings, parts, and supplies owned, leased, rented, used or otherwise possessed by Company’s Business, which are set forth in Schedule 4.5(c)(iii) hereof;

(v) all patents, trademarks, trade names, service marks, copyrights and applications therefor owned or licensed by Company’s Business, as set forth on Schedule 4.5(l) hereof;

(vi) the originals and all copies of: all Customer (as defined in Section 4.5(e)) files (including, but not limited to, the original certificates of medical necessity, the original physician orders and the original of any other evidence of

medical necessity related to equipment or services being rendered to any customer of the Business as of the Closing Date, and the original of any other information supporting the billing for such Customer), the current and historical referral list of the Business and, except for corporate records and minutes, all other documents, files and records of, or relating to, any of the Assets or the Business;

(vii) all of the rights and interests in and to the specific contracts, agreements and leases of the Business set forth on Schedules 4.5(a) and 4.5(b) attached hereto, but specifically excluding as Excluded Assets, subject to the provisions of Sections 3.4 and 4.5(b)(ii) and (iii) hereof, those contracts, agreements and leases designated on Schedules 4.5(a) and 4.5(b) hereof as Excluded Assets; provided, however, that if at any time it is determined that any contract, agreement or lease was omitted from such schedules after the Closing, the parties shall work together in good faith to determine whether such contract, agreement or lease shall be an Asset or Excluded Asset under this Agreement. However, Lincare, in its sole discretion shall determine if, for any such omitted contract pertaining to an Asset as defined herein, the Contract Asset Purchase Requirements (as defined in Section 3.4 hereof) of Sections 3.4 and 4.5(b)(iii) shall apply to any such contract, agreement or lease. The Contract Asset Purchase Requirement shall not apply to assets that are not Assets of the Business as defined herein. If Lincare does not expressly accept responsibility in writing for the contract, agreement or lease which is not included on Schedules 4.5(a) or 4.5(b), the obligations of that contract, agreement or lease remain the responsibility of the Company. If Lincare deems it necessary or appropriate to make payment under any such undisclosed contract, agreement or lease which it does not expressly accept, Lincare shall have, in addition to its other rights hereunder (including its right to indemnification pursuant to Article 7), the right to make such payment on behalf of Company without assuming any liability therefor, and to deduct such amount from its payment obligations under the Agreement in accordance with Section 7.2 hereof. Company agrees to amend promptly Schedule 4.5(a) or 4.5(b) hereof, as the case may be, after the Closing Date, to include all such additional contracts, agreements, and leases in accordance with the above determinations;

(viii) the sole and exclusive use of all regulatory licenses and permits owned, held, used, or otherwise possessed by the Company in respect of the Business, to the extent assignable;

(ix) all of the Business of Company;

(x) all funds, refunds, receivables, notes, security deposits, prepayments, evidences of indebtedness, credits, claims, deposits, debts and obligations of any kind due and owing to Company’s Business as of the Closing Date or which become due or owing to the Company’s Business on or after the Closing Date or which accrue to the Company’s Business on or after the Closing Date; provided, however, any security deposit related to either real estate or real estate lease that is not assumed by, or otherwise assigned to, Lincare shall be an Excluded Asset;

(xi) except for those telephone numbers set forth on Schedule 1.1(a)(xi), the exclusive use of the telephone numbers of the Company’s Business and all intangible personal property rights and goodwill relating to the Company’s Business;

(xii) the right to all billings for any equipment, products, supplies or services provided to any customers of Company’s Business after the Closing Date;

(xiii) all vehicles owned, leased, rented, used or otherwise possessed in the operation of the Business, which are set forth on Schedule 1.1(a)(xiii), free and clear of all liens and Encumbrances;

(xiv) all billed and unbilled accounts receivable, less credit balances related thereto, of Company’s Business as of the Closing Date (the “ Accounts Receivable ”) (other than receivables from governmental third party payors which by law may not be assigned) as well as the right to any deposits, security, or collateral related to the Accounts Receivable;

(xv) an amount equal to the value of all billed and unbilled receivables, less credit balances related thereto, of the Business related to Medicare, Medicaid and other third party claims due from beneficiaries or governmental third party payors in respect of services through the Closing Date which by law may not be assigned (“ Government Patient Receivables ,” or collectively with the Accounts Receivables, the “ Receivables ”) which shall be collected as set forth in Article 14 herein; and

(xvi) any interest or rights in the Company’s property located at 6861 West Park Avenue in Houma, Louisiana.

 

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(b) “ Business ” shall mean the entire business of Company’s Respiratory Therapy and Equipment Services Division, including but not limited to, the business of marketing, advertising, selling, leasing, renting, distributing or otherwise providing oxygen, oxygen equipment, aerosol inhalation therapy equipment and respiratory medications, enteral, nasal continuous positive airway pressure devices, infant monitoring equipment and services, home sleep studies-related therapy equipment, and other respiratory therapy and durable medical equipment, products, supplies and services to customers in their homes or other alternative site care facilities within the Territory and respiratory therapy staffing.

(c) “ Excluded Assets ” shall mean exclusively the following:

(i) the cash, cash equivalents and deposits in banks and other financial institutions on hand at the close of business on the day immediately prior to the Closing Date;

(ii) subject to the provisions of Sections 3.4 and 4.5(b)(ii) and (iii) hereof, the contracts, agreements and leases designated on Schedules 4.5(a) and 4.5(b) hereof as Excluded Assets;

(iii) all Medicare, Medicaid and other public or private insurance carrier provider numbers owned, held, used, or otherwise possessed by the Company;

(iv) any trademarks, trade name, service marks, copyrights, and applications therefor belonging or relating to Company or PSA Properties Corporation or relating to the names “Pediatric Services of America,” “PSA Healthcare,” or “Pharmacy Services of America”, including without limitation, those items set forth in Schedule 1.1(c)(iv);

(v) {intentionally left blank};

(vi) all books, records, and documents relating primarily to the Excluded Liabilities;

(vii) any interest or rights in the Company’s lease to the property located at 770 Baconsfield Drive, Building 1, in Macon, GA, except that Lincare shall be allowed to utilize the location for a period of up to ninety (90) days after the Closing Date for a transition period;

(viii) any security deposit related to either real estate and/or a real estate lease where such real estate or real estate lease is designated as a shared location of Schedule 4.5(a) hereof or where such real estate or real estate lease is not assumed by or otherwise assigned to Lincare; and

(ix) those assets listed on Schedule 1.1(c) hereto.

(d) “ Accepted Liabilities ” shall mean exclusively the following:

(i) all debts, liabilities and obligations of every kind whatsoever incurred in connection with or arising out of Lincare’s conduct of the Business or ownership of the Assets from and after the Closing Date;

(ii) pursuant to the provisions of Section 4.5(b)(ii) hereof, Lincare shall be responsible only for the liabilities, duties and obligations arising out of the contracts, agreements and leases listed on Schedules 4.5(a) and 4.5(b) hereof, (which are not otherwise designated as Excluded Assets on such schedules or which are expressly accepted by Lincare pursuant to Section 1.1(a)(vii)) which liabilities, duties and obligations arise and pertain to periods commencing on or after the Closing Date;

(iii) expenses associated with the administration of the Termination Plan as more fully described in Article 16 hereof; and,

(iv) liabilities related to inventory and supplies ordered by the Company in the ordinary course of business prior to the Closing Date, but not received prior to the Closing Date.

 

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(e) “ Excluded Liabilities ” shall mean and include all debts, liabilities and obligations of Company of every kind, character and description whatsoever, except for the Accepted Liabilities. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but shall not be limited to, the following:

(i) the obligation to pay all invoices which are dated before the Closing Date or which relate to goods or services consumed or used before the Closing Date;

(ii) the liabilities and obligations under all contracts, agreements and leases designated as Excluded Assets on Schedules 4.5(a) or 4.5(b) hereof;

(iii) the obligation to satisfy any claims and litigation against the Company, including, but not limited to, those claims and litigation listed on any Schedule hereto, and any claim or litigation, whether or not listed on a Schedule hereto, that arose prior to the Closing Date;

(iv) the obligation, in accordance with the provisions of Section 4.5(b)(iii) hereof, to pay off in full those certain leases and rental agreements expressly designated on Schedules 4.5(a) and 4.5(b) hereof as subject to this Section 1.1(e) or Sections 3.4 or 4.5(b)(iii), as well as any obligations pertaining to any lease or rental agreement which the Company failed to disclose but existed prior to the Closing Date unless expressly accepted by Lincare as provided in Section 1.1(a)(vii);

(v) the obligation to satisfy any refund or recoupment requests from any third party payor for dates of service prior to the Closing Date.

(f) “ Territory ” shall mean the United States of America.

1.2 In addition to the terms defined in Section 1.1 hereof, other terms defined elsewhere in this Agreement shall have the meanings set forth therein.

Article 2 - PURCHASE AND SALE OF ASSETS

Subject to the terms and conditions set forth in this Agreement, at Closing (as hereinafter defined) Company shall sell, convey, transfer, assign, and deliver to Lincare, and Lincare shall purchase and accept from Company, good and marketable title to the Assets, free and clear of any restrictions or conditions to transfer or assignment and free and clear of all liens, mortgages, pledges, encumbrances, agreements, leases, contracts, claims, security interests, taxes, conditions enforceable by any third party, covenants, conditions or restrictions of any kind or description (hereinafter referred to collectively as “ Encumbrances ”). Lincare and Company acknowledge and agree that the term “Encumbrances” shall not include the Accepted Liabilities described in Section 1.1(d) hereof.

Article 3 - PURCHASE PRICE AND METHOD OF PAYMENT

3.1 Purchase Price and Method of Payment . The aggregate purchase price (hereinafter referred to as the “ Purchase Price ”) for the Assets and the Business shall be Thirty-Five Million Two Hundred Thousand and no/100 Dollars ($35,200,000.00), payable to Company, or its designees, as follows:

(a) Thirty-One Million Two Hundred Thousand and no/100 Dollars ($31,200,000.00) shall be paid by wire transfer at the Closing (as such term is defined in Section 6.1 hereof);

(b) Two Million Five Hundred Thousand and no/100 Dollars ($2,500,000.00) shall be payable, without interest, six (6) months after the Closing Date, subject to the terms and conditions of this Agreement; and

(c) One Million Five Hundred Thousand and no/100 Dollars ($1,500,000.00) shall be payable, without interest, twelve (12) months after the Closing Date, subject to the terms and conditions of this Agreement.

3.2 Excluded Assets. Notwithstanding anything to the contrary contained in this Agreement, Lincare shall not acquire or receive hereunder any title to or interest in any of the Excluded Assets, which Excluded Assets shall remain the property of the Company.

 

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3.3 Accepted Liabilities . In connection with its purchase of the Assets hereunder, at Closing Lincare shall assume and be responsible for the Accepted Liabilities, including the assumption of, and responsibility for, the payment and/or satisfaction of the Accepted Liabilities in accordance with their terms.

3.4 Excluded Liabilities . Lincare shall not assume, nor be responsible for, any Excluded Liabilities. All Excluded Liabilities shall be retained by, and shall be the sole responsibility of, Company. If Lincare deems it reasonably necessary or appropriate to make payment of any Excluded Liability, Lincare shall have, in addition to its other rights hereunder (including its right to indemnification pursuant to Article 7), the right to make such payment on behalf of Company without assuming liability therefore, and to deduct such amounts from its payment obligations under this Agreement in accordance with Section 7.2 hereof. With respect to the obligations Company is required to satisfy pursuant to Section 1.1(e)(iv) of this Agreement, Company shall deliver to Lincare title to all such leased or rented Assets free and clear of any Encumbrances. Company’s obligations under the preceding sentence are referred to herein as the “ Contract Asset Purchase Requirements .” The Contract Asset Purchase Requirements shall include, but shall not be limited to, the payment of any purchase options, re-licensing fees, transfer fees, or other similar payments relating to any of such Assets.

3.5 Preliminary Purchase Price Allocation . The preliminary Purchase Price allocation is attached as Exhibit 3.5 hereto, though it is subject to change based on actual circumstances at the time of filing an allocation statement. Lincare and the Company shall file, in accordance with the Internal Revenue Code of 1986, as amended, an asset allocation statement on Form 8594 with its federal income tax return for the tax year in which the Closing Date occurs and shall contemporaneously provide the other parties with a copy of the Form 8594 being filed. Such allocations on Form 8594 shall be materially consistent with the preliminary allocation on Exhibit 3.5, and no party shall take a materially inconsistent position in reporting the allocation for any tax reporting purposes. The preliminary purchase price allocation set forth on Exhibit 3.5 shall also set forth an allocation by state where necessary to calculate applicable state sales or transfer taxes applicable to this transaction.

Article 4 - REPRESENTATIONS AND WARRANTIES OF COMPANY

The representations and warranties of Company set forth this Article shall be true and correct as of the date of this Agreement and true and correct as of the Closing Date as if made at and as of such dates, except with respect to representations and warranties which speak as to an earlier date, which shall be true and correct at and as of such date. Company represents, warrants, and covenants as follows:

4.1 Organization, Standing and Qualification of Company . Pediatric Services of America, Inc. is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all necessary corporate powers, governmental qualifications and authorizations to own its assets and to operate the Business in each jurisdiction in which such assets are now owned and such Business is now operated by it. Pediatric Services of America, Inc. d/b/a PSA HealthCare is a corporation duly organized, validly existing, and in good standing under the laws of the State of Georgia and has all necessary corporate powers, governmental qualifications, and authorizations to own its assets and to operate the Business in each jurisdiction in which such assets are now owned and such Business is now operated by it. PSA Capital Corporation is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all necessary corporate powers, governmental qualifications, and authorizations to own its assets and to operate the Business in each jurisdiction in which such assets are now owned and such Business is now operated by it.

4.2 Affiliates .

Except for those entities set forth on Schedule 4.2, Company does not own or control, directly or indirectly, in whole or in part, any other corporation, partnership, association, or organization, or any interest therein .

4.3 Financial Statements .

(a) Company has delivered to Lincare copies of the following financial statements for the Company, which are set forth in Schedule 4.3(a) hereof.

(b) All of the financial statements referenced in Section 4.3(a) above and otherwise set forth in Schedule 4.3(a) are hereinafter referred to collectively as the “ Financial Statements. ” The Financial Statements fairly present in all material respects the financial condition of the Company as of the dates stated and the operation of the Company for the periods stated. Company represents and warrants there has been no material adverse change in the assets, liabilities, financial performance or capitalization of the Company since October 1, 2005, except as set forth in Schedule 4.3(b).

 

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4.4 Taxes .

(a) Except as set forth on Schedule 4.4(a), Company has timely filed with the appropriate taxing authorities all tax returns in all jurisdictions in which tax returns are required to be filed, and such tax returns are correct and complete in all respects. Company is not the beneficiary of any extension of time within which to file any tax return. All taxes of Company (whether or not shown on any tax return) have been fully and timely paid. There are no liens for any taxes (other than a lien for current real property or ad valorem taxes not yet due and payable) on any of the Assets of Company. Except as set forth on Schedule 4.4(a), no claim has ever been made by an authority in a jurisdiction where Company does not file a tax return that Company may be subject to taxes by that jurisdiction.

(b) Except as set forth on Schedule 4.4(b), Company has never received any notice of assessment or proposed assessment in connection with any taxes, and there are no threatened or pending disputes, claims, audits or examinations regarding any taxes of Company or the assets of Company. No officer or employee responsible for tax matters of Company expects any taxing authority to assess any additional taxes for any period for which tax returns have been filed. Company has not waived any statute of limitations in respect of any taxes or agreed to a tax assessment or deficiency.

(c) Except as set forth on Schedule 4.4(c), Company has complied with all applicable laws, rules and regulations relating to the withholding of taxes and the payment thereof to appropriate authorities, including taxes required to have been withheld and paid in connection with amounts paid or owing to any employee or independent contractor, and taxes required to be withheld and paid pursuant to Sections 1441 and 1442 of the Internal Revenue Code or similar provisions under foreign law.

(d) Except as set forth on Schedule 4.4(d), the unpaid taxes of Company (i) did not, as of the most recent fiscal month end, exceed the reserve for tax liability (rather than any reserve for deferred taxes established to reflect timing differences between book and tax income) set forth on the face of the most recent balance sheet (rather than in any notes thereto) for Company and (ii) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with past custom and practice of Company in filing its tax returns.

(e) Except as set forth on Schedule 4.4(e), Company is not a party to any tax allocation or sharing agreement and Company has not been a member of an affiliated group filing a consolidated federal income tax return (other than a group the common parent of which is Parent) or has any tax liability of any person under Treasury Regulation Section 1.1502-6 or any similar provision of state, local or foreign Law (other than the other members of the consolidated group of which Parent is parent), or as a transferee or successor, by contract or otherwise.

(f) With respect to liabilities for any such taxes, assessments or other charges which are not yet due and payable, Company represents, warrants and covenants that Company will pay all such amounts when due, except as otherwise provided in Section 6.8(j) hereof. Subject to Section 6.8(j) hereof, any such unpaid liability of the Company for federal, state or local taxes (including, without limitation, interest and penalties) shall be the sole responsibility of Company. If the Internal Revenue Service or any other taxing authority seeks to collect any such liability from Lincare or from any other member of Lincare’s affiliated group, Company shall indemnify and hold harmless any such party for the entire amount of such liability pursuant to the provisions of Article 7 hereof. If Lincare deems it necessary or appropriate to make payment of any taxes due or payable for periods prior to the Closing Date, Lincare shall have, in addition to its other rights hereunder (including its right to indemnification pursuant to Article 7), the right to make such payment on behalf of Company without assuming any liability therefore and to deduct such amounts from its payment obligations under this Agreement in accordance with Section 7.2 hereof.

(g) With respect only to the Business, the Company has delivered to Lincare true and complete copies of the Company’s personal property and employment (including Forms 940 and 941, and the wage detail reports for such returns) tax returns filed for the fiscal years ending 2004 and 2005, as well as all such returns filed since December 31, 2005. The Company shall remain responsible for any tax liability which arises from an audit of any tax period prior to the Closing Date.

4.5 Schedules . Company has delivered to Lincare the following Schedules, which are true, complete and accurate:

(a) Real Estate . Schedule 4.5(a) is a complete list of all land, warehouses, office buildings, stores and other buildings and real property rented, leased, used, occupied or otherwise possessed by the Company in connection with the Company’s operation of the Business. Except as identified on Schedule 4.5(a), Company does not own, use, occupy or otherwise possess any real property used in connection with the operation of the Business. As to each such property rented,

 

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leased, used, occupied or otherwise possessed by the Company, Schedule 4.5(a) lists the location of the property; the name and address of lessor; the expiration date of such lease; and the monthly rent payable under the lease. Each such property rented or leased is held under a valid and enforceable lease, binding upon each of the parties thereto. Each such lease is in full force and effect in all material respects in accordance with its terms and there are no existing defaults or events of default under any such lease. Company has not given or received any notice of any claimed default or termination with respect to any such lease. Schedule 4.5(a) identifies all violations, of which Company knew or should have reasonably known, of any applicable law, statute, ordinance, code, rule, regulation or standard relating to any building rented, leased, used, occupied or otherwise possessed by the Company or the operations of the Company conducted therein. The facilities listed in Schedule 4.5(a) have been regularly and appropriately maintained in the normal course of business, to the best of Company’s knowledge, and the fixtures, mechanical systems (including electrical, plumbing, heating, ventilation and air conditioning), roof and structural systems of the facilities listed on Schedule 4.5(a) are in satisfactory working condition and in a satisfactory state of maintenance and repair. Subject to Section 6.8(j) hereof, Company represents that all rent and other use or maintenance fees or charges associated therewith (to the extent that any such fees or charges are due and payable) have been paid in full through the end of the calendar month in which the Closing occurs. Company further represents that all necessary third party consents to the transfer or assignment of Company’s right to use such properties have been obtained or will obtained within sixty (60) days after the Closing Date. If such consent is not obtained by Company within that period, Lincare shall have the right to seek any actual damages, including, but not limited to, moving, relocation, advertising, printing and utility hook up charges, resulting from Company’s failure to transfer the contract or agreement and shall deduct such damage from its payment obligations under the Agreement, in accordance with Section 7.2 hereof.

(b) Agreements and Contracts .

(i) Schedule 4.5(b) is a complete list of all contracts and agreements (including, without limitation, agreements relating to the purchase, sale, lease or rental of equipment, materials, products, supplies and services, preferred provider agreements, health maintenance organization agreements or any other managed care contracts or agreements, service contracts, employment and consulting agreements, covenants not to compete, distributorship agreements, leases of personal property, licenses of intellectual property rights, security agreements, and loan agreements) relating, in whole or part, to the Business or the Assets. Schedule 4.5(b) specifies the type of agreement and the names of the parties to such agreement. The agreements listed in Schedule 4.5(b) are valid, binding and enforceable upon the parties thereto. Except as indicated in Schedule 4.5(b), all contracts and agreements relating, in whole or in part, to the Business or the Assets are in full force and effect in accordance with their terms and, to Company’s best knowledge, there are no existing defaults or events of default under any such contract or agreement. The Company has not given or received any notice of any claimed default or termination with respect to any contract or agreement relating, in whole or in part, to the Business or the Assets. Except as disclosed on Schedule 4.5(b), neither this Agreement nor consummation of the transactions contemplated hereby shall result in a default under or breach of, or require the consent or approval of any party to any agreement listed on Schedule 4.5(b) with respect to the transfer and assignment of such contract or agreement to Lincare hereunder, except those specific agreements identified on Schedule 4.5(b) as requiring third party consent or approval prior to any such transfer or assignment.

With respect to each contract and agreement listed on Schedule 4.5(b) hereof (A) that is not designated as an Excluded Assets on said Schedule and is designated as requiring the consent or approval of a third party and (B) where the aggregate annual payments to be made by or to Company under such contract or agreement exceed Fifteen Thousand and no/100 Dollars ($15,000.00) (the “ Agreement Requiring Consent ”), Company shall obtain the consent or approval effective as of the Closing Date either prior to the Closing Date or within 45 days after the Closing Date. The Company shall be responsible for any reasonable out–of–pocket costs required to obtain the consents or approvals for each Agreement Requiring Consent. In the event any such consents or approvals are not obtained by the Closing Date, Lincare shall reasonably cooperate with Company during such 45-day period in obtaining the required consents or approvals for each Agreement Requiring Consent. If such consent or approval is not obtained by Company within that period, Lincare shall have the right to seek appropriate damages from Company for the failure to transfer the Agreement Requiring Consent effective as of the Closing Date and shall deduct such damage from its payment obligations under the Agreement, in accordance with Section 7.2 hereof. Company shall remain responsible for any contract, agreement or lease which is not disclosed on the Schedules hereto unless Lincare accepts responsibility for such contract in writing as provided in Section 1.1(a)(vii) hereof.

With respect to any contract and agreement relating, in whole or part, to the Business or the Assets; which is not listed on Schedule 4.5(b) hereof as of the Closing Date; for which Lincare does accept responsibility in writing as provided in Section 1.1(a)(vii) hereof; which requires the consent or approval of a third party; and where the aggregate annual payments to be made by or to Company under such contract or agreement exceed Fifteen Thousand and no/100 Dollars ($15,000.00), Company shall obtain the consent or approval effective as of the Closing Date from such third party as soon as practicable after receipt of Lincare’s written notice accepting responsibility; and if such consent or approval is not obtained within forty five (45) days after Lincare’s written notice, then Company shall be responsible for damages as provided above.

 

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With respect to each contract and agreement listed on Schedule 4.5(b) hereof (A) that is not designated as an Excluded Assets on said Schedule and is designated as requiring the consent or approval of a third party and (B) where the aggregate annual payments to be made by or to Company under such contract or agreement do not exceed Fifteen Thousand and no/100 Dollars ($15,000.00) or with respect to each contract or agreement relating, in whole or part, to the Business or the Assets; which is not listed on Schedule 4.5(b) hereof; for which Lincare does accept responsibility in writing as provided in Section 1.1(a)(vii) hereof; which requires the consent or approval of a third party; and where the aggregate annual payments to be made by or to Company under such contract or agreement do not exceed Fifteen Thousand and no/100 Dollars ($15,000.00), Company shall reasonably cooperate with Lincare in Lincare’s efforts in obtaining consent or approval to the contract’s or agreement’s assignment.

(ii) Schedules 4.5(a) and 4.5(b) contain each and every contract, agreement and lease of, or relating to, the operation of the Business or any of the Assets, and Schedules 4.5(a) and 4.5(b) list each of the contracts, agreements and leases which are included in the Assets, except those contracts, agreements and leases which are designated on such schedules as Excluded Assets. It is understood and agreed between the parties that Lincare shall assume the liabilities, duties and obligations of Company only under the contracts, agreements and leases listed on Schedules 4.5(a) or 4.5(b) which: (A) are not Excluded Assets; and (B) which liabilities, duties and obligations arise and pertain to periods commencing on or after the Closing Date. Company shall remain solely liable for all liabilities, duties and obligations under all contracts, agreements and leases which: (X) are Excluded Assets; (Y) are not Excluded Assets but which liabilities, duties and obligations arise or pertain to periods prior to the Closing Date; or (Z) were not disclosed to Lincare on any Schedule hereto, and Lincare has not expressly accepted in accordance with Section 1.1(a)(vii).

(iii) Notwithstanding anything to the contrary contained in this Agreement, Lincare shall obtain title to all Assets covered by: (X) those certain contracts, agreements and leases identified on Schedule 4.5(b) as Excluded Assets to which the Contract Asset Purchase Requirements pertain; and (Y) contracts, agreements or leases which were not disclosed on any Schedule hereto, and Company shall have completed the Contract Asset Purchase Requirements set forth in Section 3.4 of this Agreement with respect to the assets covered by such contracts, agreements and leases.

(c) Personal Property . Schedules 4.5(c)(i), 4.5(c)(ii), and 4.5(c)(iii) list by type and quantity the tangible personal property owned, rented, leased, used or otherwise possessed by Company in the operation of the Business and pertaining to the asset classes described below:

(i) Schedule 4.5(c)(i) lists, in summary form, the oxygen equipment, respiratory therapy equipment, and pharmacy equipment and other items of durable medical equipment and other tangible personal property owned, leased, rented, used or otherwise possessed by Company in the operation of the Business (including, but not limited to, all of such items currently located with customers in their homes or alternative site care facilities);

(ii) Schedule 4.5(c)(ii) lists, in summary form, the vehicles owned, leased, rented, used or otherwise possessed by the Company in the operation of the Business that are included among the Assets to be acquired by Lincare; and,

(iii) Schedule 4.5(c)(iii) lists, in summary form, all other personal property owned, leased, rented, used or otherwise possessed by the Company in the operation of the Business that are included among the Assets to be acquired by Lincare, such as phone systems, copiers, fax machines and other office equipment.

Except for those cylinders Company leased from TMGCO, LLC or Sky Oxygen, which have not been rendered free and clear of Encumbrances by the Closing Date and which are so designated in Schedule 4.5(c)(i) hereof (the “ Encumbered Cylinders ”), Company owns and has good and marketable title to all of the tangible personal property included in the Assets (whether or not any such Asset is included within the asset classes described in Sections 4.5(c)(i)-(iii) above), free and clear of any restrictions or conditions to transfer or assignment and free and clear of all Encumbrances. With respect to the personal property included on Schedule 4.5(c)(i), 4.5(c)(ii), and 4.5(c)(iii), if a claim is made by a third party that the property is not owned by Company and that there are rental or other charges owed for the property or any other Encumbrance on the property, the Company shall remain responsible for such charges (including demurrage if applicable) or Encumbrance. To the extent Lincare deems it necessary or appropriate to pay any amounts as a result of such claim, it shall have, in addition to its other rights hereunder (including its right to indemnification pursuant to Article 7), the right to make such payment on behalf of Company without assuming any liability therefore, and to deduct such amounts from its payment obligations under the Agreement in accordance with Section 7.2 hereof.

 

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Each item of personal property included in the Assets has been regularly and appropriately maintained and repaired in the normal course of business and substantially all of such items are in satisfactory working condition and in a satisfactory state of maintenance and repair as of the Closing Date. Each item of personal property included in the Assets is transferred with all applicable warranties, including, but not limited to, the manufacturers’ warranties to the extent such warranties are transferable to Lincare.

(d) Receivables . Schedule 4.5(d) contains a summary of the Receivables of or pertaining to the Company’s Business, including an aging of such Receivables in the manner described as follows: less than 120 days from the date of original invoice; less than 180 days from the date of original invoice; less than 240 days from the date of original invoice; less than 365 days from the date of original invoice; greater than 365 days from the date of original invoice; and, the total amount of all Receivables. Each of the Receivables listed: (i) arose from valid sales or rentals in the ordinary course of business; (ii) relates to equipment or products provided to customers covered under the Medicare, Medicaid or other third party public or private insurance program, or were provided on a direct bill basis, each of which customers were qualified under such programs to receive such products and services or were provided on a direct bill basis to customers who, to the Company’s best knowledge, were otherwise capable of paying for such products and services; (iii) relates to billings by or on behalf of the Company which were prepared and submitted with all the complete and correct forms, documents, test results and other information necessary to receive payment with respect to each such Receivables, evidence of which is maintained in the appropriate Customer file to the extent required by law, and which billings were prepared and submitted in conformity with all applicable laws, rules, regulations codes and guidelines of federal, state and local health care programs and in conformity with the requirements of each third party payor; and (iv) has been diligently pursued for payment in accordance with the requirements of the respective payors. Company has not received nor has it applied for any cash advances from any Medicare, Medicaid or third party public or private insurance program or carrier, whether or not any such cash advance has been repaid to or recouped by such insurance program or carrier. Except as already reflected in the amount of the Receivables shown on Schedule 4.5(d), no refunds, reimbursements, discounts or other adjustments are payable or anticipated to be made with respect to any of the Receivables. To the best of Company’s knowledge, there are no Encumbrances, or rights of setoff, recoupment or assignments with respect to or affecting the Receivables. Except as may be set forth in Schedule 4.5(d), the Receivables listed on Schedule 4.5(d) are owned, legally and beneficially, by the Company, and none of such Receivables is owned, legally or beneficially, by any other person or entity, or are being collected for, or are to be paid to, or for the benefit of, any other person or entity. Company guarantees the collection by Lincare of the Receivables to the extent as more fully described in Article 15 hereof. Insofar as Company cannot deliver to Lincare on the Closing Date an updated summary of the Receivables that are true and correct as of the Closing Date, Company may provide an updated Receivables listing within ten (10) days after the Closing Date, at which time such updated listing shall be deemed Schedule 4.5(d).

(e) Equipment, Products, and Services . Schedule 4.5(e) lists all equipment, products, and services currently supplied to each active customer (the “ Customer ”) of the Company’s Business as of the date of this Agreement. For each such Customer, Schedule 4.5(e) lists the Customer’s name and address, the Customer’s account number, and the equipment, products and services currently supplied to such Customer. Each Customer has been duly qualified under the Medicare, Medicaid or other third party public or private insurance program for reimbursement for services rendered by the Company, or is being provided services on a direct bill basis unless there is documentation of the Customer’s financial inability to pay for such services.

(f) Employment and Personnel Matters .

(i) Schedule 4.5(f)(i) sets forth the name of each of the employees of Company’s Business, and the current annual rate of compensation for each such person;

(ii) Schedule 4.5(f)(ii) sets forth all bonus, hospitalization, medical, life and disability insurance, vacation, termination, and IRS code sec. 401(k) plans in effect which provide benefits to present and past employees of Company’s Business;

(iii) Schedule 4.5(f)(iii) sets forth all claims and litigation asserted by or against Company in connection with the Business (or any director, officer or employee of Company’s Business in such representative capacity) arising from transactions and occurrences after June 1, 2001, or any claim or litigation, whenever arising, which is still pending as of the date hereof, which claims any right to workers compensation benefits, unpaid wages, commissions or other amounts asserted to be

 

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due or owing to any current or former officer, director, employee, contractor or agent of the Company in connection with the Business or alleges any claim relating to race discrimination, age discrimination, harassment, sex discrimination, sexual harassment, wrongful termination, violation of a confidentiality or non-competition agreement (whether or not Company is a party to such agreement), or any other personnel or employment matter. As to each such claim or litigation, Schedule 4.5(f) lists the identity of the claimant; a brief description of the matter; and the outcome or status of the matter. Whether listed or not on any Schedule hereto, Lincare does not assume the liability or responsibility for any such claim or litigation which has been asserted or which might be asserted and which arose from actions prior to the Closing Date;

(iv) Schedule 4.5(f)(iv) sets forth all collective bargaining agreements or other contracts with labor unions to which the Company is a party or is otherwise subject; and

(v) Schedule 4.5(f)(v) sets forth all employment agreements, consulting agreements, independent contractor agreements, and covenants not to compete of Company’s Business (including, but not limited to, covenants not to compete with any predecessors in interest of the Company or the Business) that are currently in effect.

Lincare does not assume the responsibilities or liabilities of any such agreement unless it is specifically listed on Schedule 4.5(f) as an Accepted Liability and the subject employee, contractor or agent has provided written consent to the assignment of the employment contract to Lincare prior to the Closing Date.

For those employees of the Company’s Business who are not subject to an employment agreement, Company represents that those employees are at-will employees and, for those Hired Employees (as defined in Section 16), Company shall have terminated those Hired Employees from employment prior to the Closing Date, and Company shall remain liable for any obligations owed to Company’s employees, including wages, benefits, bonuses or any other amount arising from employment with the Company, except that Lincare shall be liable for any administrative expenses associated with the Termination Plan as described in Article 16 hereof. If Lincare deems it necessary or appropriate to make payment to any employee of Company for amounts due by Company, Lincare shall have, in addition to its other rights hereunder (including its right to indemnification pursuant to Article 7), the right to make such payment on behalf of Company without assuming any liability therefor, and to deduct such amounts from its payment obligations under the Agreement in accordance with Section 7.2 hereof.

Company is in compliance in all material respects with all federal, state and local laws, statutes, ordinances, rules, regulations, codes and orders relating to conditions of employment, and Company has no knowledge of or has any reasonable grounds to anticipate any labor dispute. Company has not incurred any liability for any arrearage of wages or other payments in respect of employment and Company has made all contributions to employee benefit plans required by such plans to be made on or before the date hereof. All liabilities and expenses with respect to compensation or benefits applicable to all directors, officers and employees of the Company under any employee benefit plan shall remain the sole responsibility of Company.

The parties hereto agree that Company shall be solely responsible for providing any notices and otherwise complying with any requirements of the Worker Adjustment and Retraining Notification (“ WARN ”) Act, 29 U.S.C. § 2101 and any other like state or local law or rule, and that Lincare shall have no obligations under the WARN Act and no liability for any failure or alleged failure to comply with the Act with respect to any employment losses of Company. Company agrees to indemnify Lincare against any and all claims by any person or entity alleging failure to comply with the WARN Act in accordance with Article 7 hereof.

(g) Claims, Investigations and Litigation . Except as otherwise disclosed on Schedule 4.5(f), Schedule 4.5(g) lists all investigations (regardless of whether a claim has been filed), claims and litigation asserted by or against Company in connection with the Business of any nature whatsoever, arising from transactions and occurrences after June 1, 2003, or any such investigation, claim or litigation, whenever arising, which is still active, open or pending as of the date hereof, and any litigation, or to the best of Company’s knowledge, any investigation (including government investigations or audits) commenced after June 1, 2003, or whenever commenced, if still pending. Schedule 4.5(g) also lists each judgment, order, writ, corporate integrity agreement, settlement agreement, injunction and decree of any federal, state or local court or governmental authority to which Company is a party or by which it is bound or which relates to any of the ownership interests in the Business or the Assets. As to each such claim, investigation, audit or litigation, Schedule 4.5(g) lists the type of proceeding; the identity of the claimant or investigating agency; a brief description of the matter; the damages claimed or relief sought; and the outcome or status of the matter. Company also agrees to provide copies of any relevant documents relating to any claims, litigation or judgments listed on Schedule 4.5(g). Except as set forth in Schedule 4.5(g), there are no claims, lawsuits, arbitrations, government proceedings, investigations or audits pending relating to the Business to which Company or any of its directors, officers or employees is a party (as plaintiff, defendant or otherwise) or which relate to any of the ownership interests in the Business or the Assets. To the

 

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best of Company’s knowledge, there are no grounds for the filing or receipt of any other claim or the commencement of any other lawsuit, arbitration or proceeding by or against, or investigation of, Company in respect of the Business or involving the assets of, or equity interests in, the Business or the Assets except as set forth in Schedule 4.5(g). Whether listed or not on any Schedule hereto, Lincare does not assume the liability or responsibility for any such claim or litigation which has been asserted or which might be asserted and arose from actions prior to the Closing Date.

(h) Health Care Compliance . Schedule 4.5(h) lists, for the entire period of operation of Company, all claims, contact letters, subpoenas, statements, audits, suspensions or pre-pay review actions, pending negotiations and other matters (including, but not limited to, all correspondence or communications with governmental agencies, intermediaries or carriers) concerning or relating to any federal or state government funded health care program that involves, implies, relates to, or alleges: (A) any violation or irregularity with respect to any activity, practice or policy of Company in respect of the Business; or (B) any violation or irregularity with respect to any claim for payment or reimbursement made by Company in respect of the Business, or any payment or reimbursement paid to Company in respect of the Business. In addition, Schedule 4.5(h) lists all claims, statements and other matters (including, but not limited to, all correspondence or communications with any agency) concerning or relating to any federal or state regulatory agency, including the FDA, DOT, state or local licensure entities, investigation of the Company in respect of the Business or notice of irregularity to the Company in respect of the Business. Except as set forth on Schedule 4.5(h), there are no violations or irregularities nor to the knowledge of Company are there any reasonable grounds to anticipate the commencement of any investigation or inquiry, or the assertion of any claim or demand by any such government agency, intermediary or carrier against Company with respect to any of the activities, practices, policies or claims of the Business, or any payments or reimbursements received by Company in respect of the Business. Except as set forth in Schedule 4.5(h), Company is not currently subject to any outstanding audit by any such government agency, intermediary or carrier in respect of the Business, and to the best of Company’s knowledge, there are no reasonable grounds to anticipate any such audit of the Business in the foreseeable future. Specifically, Company represents that the Company in respect of the Business is not in violation of any federal or state false claims act or anti kick-back statutes. For any claim or investigation, whether listed or not on any Schedule hereto, which arose from actions prior to the Closing Date, the Company shall remain responsible for defending the claim and cooperating with the investigation. If Lincare deems it necessary or appropriate to expend monies to defend or resolve such investigations, it shall have, in addition to its other rights hereunder (including its right to indemnification pursuant to Article 7), the right to deduct such amounts from its payment obligations under the Agreement in accordance with Section 7.2 hereof.

Company represents that the Company has not (i) been heretofore excluded, debarred, suspended or been otherwise determined to be, or identified as, ineligible to participate in any governmental program (collectively, the “ Government Programs ”) nor is about to be excluded, debarred, suspended or otherwise determined to be, or identified as, ineligible to participate in any Government Program; (ii) received any information or notice, or become aware, by any means or methods, that it is the subject of any investigation or review regarding its participation in any Government Programs; and (iii) been convicted of any crime relating to any Government Program. The listing of Company on the Office of Inspector General’s (OIG) exclusion list or OIG’s website for excluded individuals/entities shall constitute a breach of this Section 4.5(h). If Lincare deems it necessary or appropriate to expend monies to defend or resolve any such investigations, or to the extent Lincare incurs any expenses, sanctions, penalties or fines which arose from acts prior to the Closing Date, it shall have, in addition to its other rights hereunder (including its right to indemnification pursuant to Article 7), the right to deduct such amounts from its payment obligations under the Agreement in accordance with Section 7.2 hereof.

(i) Licenses and Permits . Schedule 4.5(i) lists all governmental licenses, permits and authorizations which are held or used by Company in respect of the Business. With respect to each such license, permit or authorization, Schedule 4.5(i) contains a brief description of the license, permit or authorization; the identity of the issuing agency or authority; the license or permit number; and the expiration date of each such license, permit or authorization. Such licenses, permits and authorizations are the only governmental licenses, permits and authorizations currently required by Company for the operation of the Business and all such licenses, permits and authorizations are in effect as of the date hereof. Company has complied in all respects with all conditions or requirements imposed by such licenses, permits and authorizations. The Company has received no notice of, nor to the best of the Company’s knowledge, is there any reason to believe that any appropriate authority intends to cancel or terminate any of such licenses, permits or authorizations or that valid grounds for such cancellation or termination currently exist.

(j) Environmental Matters . Schedule 4.5(j) lists, for the entire period from June 1, 2000, to the Closing Date, any and all claims, suits, actions or proceedings (including government investigations and audits) relating to the release, discharge or emission of any pollutants or contaminants, or to the generation, treatment, storage or disposal of any wastes resulting from the operation of the Business or ownership of the Assets. With respect to each such pending or prior matter, Schedule 4.5(j) lists the date of the claim, suit, action or proceeding (including governmental investigations and audits); the

 

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claimant or investigating agency; the nature and a brief description of the matter; the damages claimed or relief sought; and the status, outcome or disposition of the matter. Except as set forth in Schedule 4.5(j), to the knowledge of Company, there are no claims, suits, actions, or proceedings (including governmental investigations and audits), asserted or threatened, relating to environmental matters of the types specified in this Section 4.5(j) or otherwise, to which Company, in respect of the Business, is a party; nor does Company know or have any reasonable grounds to know of any activity of Company or potential liability of Company in connection with Company’s operation or ownership of the Business or the Assets involving or relating to the release, discharge or emission of any pollutants or contaminants, or to the generation, treatment, storage or disposal of any wastes, or otherwise relating to the protection of the environment. For any claim or investigation, whether listed or not on any Schedule hereto, which arose from actions prior to the Closing Date, the Company shall remain responsible for defending the claim and cooperating with the investigation. If Lincare deems it necessary or appropriate to expend monies to defend or resolve such investigations, it shall have, in addition to its other rights hereunder (including its right to indemnification pursuant to Article 7), the right to deduct such amounts from its payment obligations under the Agreement in accordance with Section 7.2 hereof.

(k) Directors and Officers . Schedule 4.5(k) lists the officers and directors of Company in office as of the date hereof. Schedule 4.5(k) also lists all contracts, agreements, commitments, leases, instruments, debts, or obligations: (i) between Company and any of its directors, officers, or shareholders affecting the Business or the Assets; and (ii) among or between any directors, officers, or shareholders of Company affecting the Business or the Assets. With respect to each such contract, agreement, commitment, lease, instrument, debt, or obligation, Schedule 4.5(k) indicates the parties; their relationship to Company; and a general description of the subject matter thereof. If not expressly assumed by Lincare, Company shall remain responsible for such contract, agreement, commitment, lease, instrument, debt or other obligation, whether listed or not on any Schedule hereto.

(l) Intangible Property . Schedule 4.5(l) lists all corporate names, patents, trademarks, trade names, service marks, and applications therefor and all copyrights owned, held, used or otherwise possessed by Company in respect to the Business, and all patent, trademark and service mark licenses to which Company is a party as they relate to the Business. Company owns or possesses adequate licenses or other rights to use all corporate names, patents, trademarks, trade names, service marks and copyrights, if any, used in the conduct of its business as now operated. Schedule 4.5(l) lists each registration, application, license or other agreement to which Company is a party with respect to the use of any corporate name, trademark, trade name, service mark, copyright or patent and the expiration date of such registration or license, as it relates to the Business. The Company does not know, or have any reasonable grounds to know, of any claims asserted by third parties with respect to such rights.

(m) Changed Conditions . Except as listed in Schedule 4.5(m), since October 1, 2005 the business of the Business has been conducted in substantially the same manner as theretofore and there has not been any:

(i) transaction by Company relating to the Business except in the ordinary course of business as conducted on that date;

(ii) material adverse change in the condition (financial or otherwise) of the liabilities, assets, equity, properties, business, or prospects of the Business;

(iii) labor dispute, or other similar event or condition of any character, materially or adversely affecting the financial condition, business, assets, or prospects of the Business;

(iv) material change in business or accounting methods or practices (including, without limitation, any change in depreciation or amortization policies or rates) by Company in respect of the Business;

(v) revaluation by Company of any of the assets of the Business;

(vi) lease, sale or transfer of any tangible or intangible asset of the Business, except in the ordinary course of business and for fair market value;

(vii) entry into, or amendment or termination of, any contract, agreement, or license, except in the ordinary course of Business and upon fair market value, terms and conditions;

(viii) waiver or release of any right or claim of Company in respect of the Business, except in the ordinary course of business and upon fair market value, terms and conditions;

 

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(ix) other event or condition of any character that has, or might reasonably have, a material and adverse effect on the financial condition, business, or assets of the Business which are not otherwise reflected in the Financial Statements;

(x) amendment of Company’s Certificate of Incorporation or By-Laws materially affecting the Business or the Assets; or

(xi) agreement by Company to do any of the things described in the preceding clauses (i) through (x).

4.6 Title to Assets and Condition of Assets . Company has good and marketable title to, or holds by valid and enforceable agreement of lease or license, all of the tangible assets owned, leased, rented, licensed, used or otherwise possessed by it in respect of the Business, and such assets are free and clear of all Encumbrances.

4.7 No Violation . Neither this Agreement nor the consummation of the Transaction violate or will violate in any material respect any statute, law, regulation, rule, ordinance, code, standard, order, writ, judgment, injunction, decree, determination or award to which the Company is subject, or conflict with or constitute a default under Company’s Certificate of Incorporation or By-Laws or any indenture, mortgage, lease, lien, instrument or other agreement by which Company is bound, nor will it result in an event which, whether immediately or upon the giving of notice or lapse of time or both, will permit the acceleration of the maturity date of any obligation under any such indenture, mortgage, lease, lien, instrument or other agreement or the creation of any lien or Encumbrance on the Assets, nor will it enable any party to any agreement relating to the Business to which Company is a party to exercise a right to terminate or otherwise modify the terms thereof.

4.8 Compliance With Law . To the best of Company’s knowledge, Company has complied with, and is not in violation of any federal, state, or local statutes, laws, ordinances, rules, regulations, codes or standards (including, but not limited to, compliance with all statutes, laws, ordinances, rules, regulations relating to any federal or state government funded health care program and the federal fraud and abuse statutes, laws, rules, regulations or guidance). The Company has received no notice of any claimed violation of any federal, state or local statute, law, ordinance, rule, regulation, code, standard or order, nor, to the best of Company’s knowledge, has any such violation occurred.

4.9 Legal Power and Authority To Enter Transaction . Company has the full right, power, legal capacity, and authority to enter into and deliver this Agreement and to perform its obligations hereunder and the Transaction. The execution, delivery and performance of this Agreement and the Transaction have been duly authorized by Company, and a copy of such resolutions so authorizing the execution, delivery and performance of this Agreement, certified by Secretary of Company has been delivered to Lincare. This Agreement constitutes the valid and binding obligation of Company and is enforceable in accordance with its terms. Except as stated above, no approvals or consents of any persons or entities are required for Company to execute and deliver this Agreement or to perform its obligations hereunder and the Transaction.

4.10 Assets .

(a) The Assets sold, conveyed, transferred, assigned, and delivered to Lincare hereunder constitute all of the assets necessary for the operation of the Business, as currently and historically conducted (other than the Excluded Assets), and any person or entity having a direct or indirect ownership interest in the Company, does not currently provide nor has it, he, or she historically provided to Company any tangible or intangible assets whatsoever. The Assets sold, conveyed, transferred, assigned, and delivered to Lincare hereunder are all of the assets owned, leased, rented, used or otherwise possessed by the Company in respect of the Business, except for the Excluded Assets.

(b) Notwithstanding anything to the contrary contained in this Agreement, if an asset would otherwise be included in the Assets because it is owned, leased, rented, used or otherwise possessed by the Company in respect of the Business but such asset is in fact owned, leased, rented or otherwise possessed by a person or entity having a direct or indirect ownership interest in the Company, then such asset shall nevertheless be included in the Assets. Lincare shall assume no liabilities or debts associated with such assets, and any corresponding liabilities or debts shall be satisfied by the Company prior to the Closing Date.

4.11 Books and Records . The books and records of the Company, including, without limitation, the minute books, stock certificate books and stock ledger, accounting and service and billing records, are complete, true and correct in all material respects and fairly reflect the conduct of the Company and the Business.

 

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4.12 Disclosure . No representation or warranty made herein by Company, nor in any transaction documents furnished or to be furnished to Lincare pursuant to this Agreement, contains or will contain any untrue statement of fact, or omits or will omit to state a material fact necessary to make the statements contained therein not misleading. To the extent the Company fails to disclose any information which creates a liability attached to the Assets or to the Business or Lincare which Lincare did not expressly accept, that liability shall remain the responsibility of the Company, and if Lincare deems it necessary or appropriate to make payment of any such liability it shall have, in addition to its other rights hereunder (including its right to indemnification pursuant to Article 7), the right to make such payment on behalf of the Company without assuming any liability therefore, and to deduct such amount from its payment obligations under the Agreement in accordance with Section 7.2 hereof.

4.13 Billings and Collection . In acknowledgement of the fact that third party payors are billed in advance for the rental of equipment and services, and therefore, a portion of the pre Closing revenues will include revenues attributable to the rental of equipment and related services provided by Lincare on or after the Closing Date, Company represents that the Company has not billed for any equipment, products, supplies or services provided by the Company to any Customers of Company on and after the Closing Date, it being agreed that the right to all such billings on and after the Closing Date shall be included in the Assets purchased by Lincare and shall be for the sole benefit of Lincare. The billings of the Business were prepared and submitted with all the complete and correct forms, documents, test results (which were performed by a provider qualified to bill Medicare for the test, i.e . a Part A provider, a laboratory, an independent diagnostic testing facility or a physician) and other information necessary to receive payment for such bills and were prepared and submitted in conformity with all applicable laws, rules, regulations codes and guidelines of federal, state and local health care programs and in conformity with the requirements of each third party payor.

4.14 Filings . In respect of the Business, after Closing Company shall discontinue use of, and deactivate, all of its Medicare, Medicaid and other public or private insurance provider numbers upon the conclusion of its collections and/or write-offs of its accounts receivable.

4.15 Survival of Representations and Warranties . All representations, warranties, covenants and agreements made by Company in or pursuant to this Agreement or in any writing, certificate, schedule, exhibit, statement, list, report, instrument, or other document furnished or delivered to Lincare in connection with, or in contemplation of, this Agreement, or the purchase and sale of the Assets shall be true and correct as of the date of this Agreement and as of the Closing Date as if made at and as of such date, except with respect to representations and warranties which speak as to an earlier date which shall be at and as of such date, and shall survive the execution, delivery and performance of this Agreement and the Closing; provided, however, that the representations and warranties contained in Sections 4.1, 4.2, 4.3, 4.5 (a)-(f), (i), and (k)-(m), 4.6, 4.9, 4.10 and 4.11 of this Agreement shall survive only for a period of five (5) years after the Closing Date (the “ Survival Period ”), and the remaining representations and warranties (the “ Remaining Representations ”) shall survive until the expiration of all applicable statutes of limitation, subject to any tolling thereof, provided that any matter as to which a claim has been asserted with respect to any such Remaining Representations by Lincare’s notice to Company that is pending or unresolved at the end of any applicable limitation period shall remain subject to Company’s representations, warranties to and indemnification of Lincare, notwithstanding any applicable statute of limitations (which the parties hereby waive solely with respect to any such pending or unresolved claim) until such claim is finally terminated or resolved by the parties or by a court of competent jurisdiction and any amounts payable hereunder in respect thereof are finally determined and paid. Notwithstanding the above, in no event shall the duration of any of the Remaining Representations of Company be limited for a shorter period of time than the Survival Period. The representations in Section 4.12 as they relate to representations in other Sections shall survive to the extent set forth above for such other Sections.

Article 5 - REPRESENTATIONS AND WARRANTIES OF LINCARE

The representations and warranties of Lincare set forth this Article shall be true and correct as of the date of this Agreement and as of the Closing Date as if made at and as of such dates, except with respect to representations and warranties which speak as to an earlier date, which shall be at and as of such date. Lincare represents, warrants and covenants as follows:

5.1 Organization, Standing and Qualification . Lincare is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all necessary corporate powers, governmental qualifications and authorizations necessary to own its assets and to operate its business in each jurisdiction in which such assets are now owned and such business is now operated by it.

5.2 Legal Power and Authority To Enter Transaction . Lincare has the full right, power, legal capacity, and authority to enter into and deliver this Agreement and to perform its obligations hereunder and the Transaction. The execution,

 

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delivery and performance of this Agreement and the Transaction have been duly authorized by Lincare’s Board of Directors, a copy of such resolutions so authorizing the execution, delivery and performance of this Agreement, certified by the Secretary of Lincare, has been delivered to Company. This Agreement constitutes the valid and binding obligation of Lincare and is enforceable in accordance with its terms.

5.3 Survival of Representations and Warranties . All representations and warranties made by Lincare in or pursuant to this Agreement shall survive the execution, delivery and performance of this Agreement and the Closing; provided, however, that the representations and warranties contained in Article 5 of this Agreement shall survive only for a period of five (5) years after the Closing Date, provided, that any matter as to which a claim has been asserted with respect to such representations and warranties by Company’s notice to Lincare that is pending or unresolved at the end of said limitation period shall remain subject to Lincare’s representations, warranties to and indemnification of Company, notwithstanding any applicable statute of limitations (which the parties hereby waive) until such matter is finally terminated or resolved by the parties or by a court of competent jurisdiction and any amounts payable hereunder are finally determined and paid.

Article 6 - CLOSING

6.1 Access t