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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:
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.
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.
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.
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.
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.
6.1 Access to Information prior to Closing . Company
shall afford to Lincare access to Company’s information
relating to the Business for purposes of Lincare’s due
diligence review of Company’s Business as set forth in that
certain letter of intent executed by Lincare and Company and dated
May 24, 2006 (the " LOI ").
6.2 Date, Time and Place . The closing under this
Agreement (herein referred to as the " Closing ") shall take
place via telecopy on the second business day after the conditions
set forth in Section 6.3 hereof shall have been satisfied or
waived or at such other time and date as shall be fixed by
agreement by the parties hereto (said date shall herein be referred
to as the " Closing Dat
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