TABLE OF CONTENTS

 

Article 1 DEFINITIONS AND INTERPRETATION				1
1.1		Certain Definitions		1
1.2		Other Defined Terms		4
Article 2 SALE AND TRANSFER OF ASSETS				4
2.1		Sale and Purchase of Assets		4
2.2		Excluded Assets		5
2.3		Assumed Liabilities		6
2.4		Excluded Liabilities		7
2.5		Instrument of Transfer		7
2.6		Completion of Transfers		7
Article 3 CLOSING				8
Article 4 PURCHASE PRICE				8
4.1		Payment of Purchase Price		8
4.2		Purchase Price Allocation		8
Article 5 REPRESENTATIONS AND WARRANTIES OF SELLERS				8
5.1		Organization and Related Matters		8
5.2		Authorization		9
5.3		No Conflicts		9
5.4		No Brokers or Finders		9
5.5		Title to Purchased Assets		9
5.6		Payment to Creditors		9
5.7		Third Party Providers and Payors		9
Article 6 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLERS				9
6.1		Legal Proceedings		9
6.2		Compliance with Laws		9
6.3		Financial Information		10
6.4		Tax and Other Returns and Reports		10
6.5		Assumed Contracts and Leases		10
6.6		Licenses and Permits		10
6.7		Insurance		11
6.8		Labor Matters		11
6.9		Employee Benefits		11
6.10		Government Payment Programs		12
6.11		Absence of Certain Changes		12
6.12		Transactions With Affiliates		12
6.13		Litigation		12
6.14		Undisclosed Liabilities		13
6.15		Environmental		13
Article 7 REPRESENTATIONS AND WARRANTIES OF BUYERS				13
7.1		Organization and Related Matters		13

7.2		Authorization		13
7.3		No Conflicts		13
7.4		Legal Proceedings		13
7.5		Ability to Perform; Solvency		14
7.6		No Brokers or Finders		14
Article 8 BUYERS’ CONDITIONS PRECEDENT TO CLOSING				14
8.1		Representations and Warranties to be True and Correct		14
8.2		Supporting Documents		14
8.3		Undertakings and Agreements		15
8.4		Pay-off Letters		15
8.5		Schedules		15
Article 9 SELLERS’ CONDITIONS PRECEDENT TO CLOSING				15
9.1		Representations and Warranties to be True and Correct		15
9.2		Supporting Documents		15
9.3		Undertakings and Agreements		15
9.4		Pay-off Letters		15
9.5		Purchase Price		15
Article 10 ADDITIONAL COVENANTS AND AGREEMENTS				16
10.1		Employment Matters		16
10.2		Access to Information; Preservation of Records; Cooperation		16
10.3		Confidentiality		17
10.4		No Intent to Induce Referrals		17
10.5		Patient Notification; Publicity		18
10.6		DEA Notification		18
10.7		Tax Matters; Prorations		18
10.8		Patient File Delivery		18
10.9		Use of Computers		18
10.10		Phone System and Phone Numbers		19
10.11		Ordinary Course		19
Article 11 RESTRICTIVE COVENANTS				19
11.1		Restrictions on Sellers’ Competitive Activities		19
11.2		Successors		20
11.3		Special Remedies and Enforcement		20
Article 12 SURVIVAL; INDEMNIFICATION				20
12.1		Survival		20
12.2		Obligations of Sellers and Parent		21
12.3		Obligations of Buyers		21
12.4		Procedure		22
12.5		Survival		22
12.6		Threshold		23
Article 13 TERMINATION				23
13.1		Termination of Agreement		23

 

 

13.2		Effect of Termination		23
Article 14 ARBITRATION				24
Article 15 MISCELLANEOUS				24
15.1		Amendments; Waivers		24
15.2		Entire Agreement		25
15.3		Applicable Law		25
15.4		Headings		25
15.5		Counterparts		25
15.6		Parties in Interest		25
15.7		Notices		25
15.8		Expenses		26
15.9		Assignments		26
15.10		Remedies; Waiver		26
15.11		Further Assurances		27
15.12		Representation by Counsel; Interpretation		27
15.13		Severability		27

 

The following schedules to the Procare Pharmacy, Inc. Asset Purchase Agreement have been omitted. Curative Health Services, Inc. will furnish any such schedules to the Commission as supplemental information upon request:

 

Schedules

 

Schedule 1.1(e)		Sellers’ Locations
Schedule 2.1(b)		Licenses and Permits
Schedule 2.1(c)		Assumed Contracts and Leases
Schedule 2.1(d)		Phone and Fax Numbers
Schedule 2.2(p)		Additional Excluded Assets
Schedule 4.2		Purchase Price Allocation
Schedule 5.5		Encumbrances
Schedule 5.7		Third Party Providers and Payors
Schedule 6.3		Business Financials
Schedule 6.5		Required Consents
Schedule 6.8		Labor Matters
Schedule 6.10		Government Payment Programs
Schedule 6.11		Absence of Certain Changes
Schedule 6.12		Transactions with Affiliates
Schedule 6.13		Litigation
Schedule 6.14		Undisclosed Liabilities
Schedule 10.1(a)		Seller’s Employees to Whom Buyer May Offer Employment

 

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “ Agreement ”) is entered into as of the 1st day of December, 2005, by and among CURATIVE HEALTH SERVICES OF NEW YORK, INC. , a New York corporation (“ Curative-NY ”), APEX THERAPEUTIC CARE, INC. , a California corporation (“ Apex ”), MEDCARE, INC. , a Delaware corporation which does business as Curative Pharmacy Services, Inc. (“ MedCare ”), (Curative-NY, Apex, and MedCare are collectively referred to as “ Sellers ” and each individually is referred to as a “ Seller ”), CURATIVE HEALTH SERVICES, INC., a Minnesota corporation and the sole shareholder of each Seller (“ Parent ”), and PROCARE PHARMACY, INC., a Rhode Island corporation (“ PC Pharmacy ”), and PROCARE PHARMACY DIRECT, INC. , an Ohio corporation (“ PC Pharmacy Direct ”) (PC Pharmacy and PC Pharmacy Direct are collectively referred to as “ Buyers ” and each individually is referred to as a “ Buyer ”).

 

WHEREAS , Buyers desire to purchase from Sellers and Sellers desire to sell to Buyers certain of the assets, properties and rights of Sellers relating to the Business on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE , in consideration of the above and the mutual representations, warranties, covenants and agreements set forth herein, the parties hereby agree as follows:

 

ARTICLE 1
DEFINITIONS AND INTERPRETATION

 

1.1                                  Certain Definitions . In this Agreement, the following terms have the meanings specified or referred to in this Section 1.1, which shall be equally applicable to both the singular and plural forms.

 

(a)                                   “ Accounts Receivable ” means all accounts, notes, interest and other receivables of Sellers, and all claims, rights, interests and proceeds related thereto, including all accounts and other receivables, in any case arising from the rendering of services to patients of the Business, billed and unbilled, recorded and unrecorded, for services provided by any Seller whether payable by private pay patients, private insurance, third party payors, Medicare, Medicaid, or by any other source.

 

(b)                                  “ Action ” means any action, complaint, petition, investigation, suit or other proceeding, whether civil or criminal, in law or in equity, or before any arbitrator or Governmental Entity.

 

(c)                                   “ Affiliate ” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified Person. For purposes of this definition, “ control ” means the possession, directly or indirectly, of the power to elect at least 50% of the governing board of such Person or to direct to cause the direction of the management and policies of the Person, whether through ownership of voting securities, partnership or limited liability interests, nonprofit membership, contract or otherwise.

 

(d)                                  “ Approval ” means any approval, authorization, assignment or consent, or any waiver of any of the foregoing, required to be obtained from, or any notice, statement or

 

 

other communication required to be filed with or delivered to any Person, the receipt of which is necessary to the continued operation of the Business as it has been operated prior to the Closing Date.

 

(e)                                   “ Business ” means, with respect to a specified Seller or the Sellers collectively, the business of providing specialty injectable and oral medications, including, without limitation, those relating to oncology, RA/Derm, Hepatitis C, transplants and respiratory illnesses (including Synagis) from the specific locations listed on Schedule 1.1(e) to patients and providers as conducted by Sellers immediately prior to the Closing Date in Sellers’ current service areas in and around Albany, New York, Birmingham, Alabama, Lake Charles, Louisiana; Hurricane, West Virginia and Columbus Mississippi; provided, however, that nothing herein shall be construed to include in the term “Business” any home infusion or other business conducted by any Seller or any Affiliate of any Seller, including in Birmingham, Alabama.

 

(f)                                     “ Code ” means the Internal Revenue Code of 1986, as amended.

 

(g)                                  “ Consent ” means a duly executed, written consent to the assignment to Buyer of an Assumed Contract or Lease which, under the terms of such Assumed Contract or Lease, is required to be obtained from a party or parties other than Buyer or any Seller in connection with such assignment.

 

(h)                                  “ Encumbrance ” means any claim, charge, easement, encumbrance, lease, covenant, security interest, lien, option, pledge, rights of others, or restriction (whether on sale, transfer, disposition or otherwise), whether imposed by agreement, understanding, law, equity or otherwise.

 

(i)                                      “ ERISA ” means the U.S. Employee Retirement Income Security Act of 1974, as amended, and the related regulations and published interpretations.

 

(j)                                      “ Government Payment Program ” means Medicare, TRICARE, Medicaid, and all other government-sponsored healthcare reimbursement and payment programs.

 

(k)                                   “ Governmental Entity ” means any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.

 

(l)                                      “ Indemnified Party ” means the Buyer Indemnified Party or Seller Indemnified Party who is entitled to indemnity hereunder.

 

(m)                                “ Indemnifying Party ” means the party obligated to provide indemnification hereunder.

 

(n)                                  “ Knowledge of Buyer ” means the actual knowledge of the General Managers for the branches, based upon due inquiry. No constructive or imputed knowledge shall be attributed by virtue of any position held, relationship to any other Person, or for any other reason, except to the extent due inquiry was not conducted.

 

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(o)                                  “ Knowledge of Sellers ” means the actual knowledge of Eric Krause and Drew Walk, based upon due inquiry. No constructive or imputed knowledge shall be attributed by virtue of any position held, relationship to any other Person, or for any other reason, except to the extent due inquiry was not conducted.

 

(p)                                  “ Law ” means any constitutional provision, statute or other law, rule, or regulation of any Governmental Entity and any Order.

 

(q)                                  “ Leased Real Property ” means the premises at the MedCare Columbus, Mississippi branch.

 

(r)                                     “ Loss ” means any cost, damage, disbursement, expense, liability, judgment, claim, demand, loss, deficiency, diminution in value, obligation, penalty, fine, assessment or settlement of any kind or nature, whether foreseeable or unforeseeable, including, but not limited to, interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses incurred in the investigation, collection, prosecution and defense of claims, actual or threatened, inquiries, hearings or other reasonable legal or administrative proceedings, and amounts paid in settlement, that may be imposed on or otherwise incurred or suffered by the specified Person; provided, however, that “ Loss ” shall not include any amount that is received by such specified Person under a valid and collectible insurance policy.

 

(s)                                   “ Order ” means any decree, injunction, judgment, order, ruling, assessment or writ by a Governmental Entity.

 

(t)                                     “ Ordinary Course ” means the ordinary and usual course of the conduct of the Business by Sellers consistent with past custom and practice of Sellers.

 

(u)                                  “ Person ” means an association, a corporation, an individual, a partnership, a limited liability company, a trust or any other entity or organization, including a Governmental Entity.

 

(v)                                  “ Tax Return ” means a report, return or other information required to be supplied to a Governmental Entity with respect to Taxes including, where permitted or required, combined or consolidated returns for any group of entities.

 

(w)                                “ Tax ” means all taxes, charges, fees, levies, or other like assessments, including without limitation income, sales and use, excise, franchise, real and personal property, transfer, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, severance, ad valorem, value added, premium, license or withholding tax or charge imposed by any Governmental Entity, and any interest, fines, penalties (civil or criminal), assessments, or additions to tax resulting from or related thereto or to the non-payment thereof, and any Loss in connection with the determination, settlement or litigation of any tax liability.

 

(x)                                    “ Territory ” means a one hundred (100) mile radius of each branch location of a Seller reflected on Schedule 1.1(e) .

 

(y)                                  “ Trade Names ” means all trade names, logos, designs, symbols, emblems, insignias and slogans, whether or not registered or capable of registration, which are used by any Seller or any Affiliates of any Seller, including, without limitation, the following:

 

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Critical Care Systems, Inc., Curative Health Services, Inc., Curative Critical Care Systems, Curative Health Services Co., Curative Pharmacy Services, Wound Care Center, and Wound Management Program, or any derivation or acronym thereof.

 

1.2                                  Other Defined Terms. The following terms have the meanings defined for such terms in the locations set forth below:

 

Term		Location
Agreement		Introductory Paragraph
Anti-kickback Statute		Section 10.4
Apex		Introductory Paragraph
Assumed Contracts and Leases		Section 2.1(c)
Assumed Liabilities		Section 2.3
Benefit Plan		Section 6.9
Bill of Sale		Section 2.5
Business Financials		Section 6.3
Buyer		Introductory Paragraph
Buyer Indemnified Party		Section 12.2
Closing		Article 3
Closing Date		Article 3
Confidential Information		Section 10.3
Curative-NY		Introductory Paragraph
DEA		Section 10.6
Dispute		Article 14
Effective Time		Article 3
Excluded Assets		Section 2.2
Inventory		Section 2.2(b)
Licenses and Permits		Section 2.1(b)
MedCare		Introductory Paragraph
Notice		Section 12.4(a)
Patient Files		Section 2.1(e)
Personal Property		Section 2.1(a)
Preferred Provider Agreement		Section 11.1(b)
Purchase Price		Section 4.1
Purchased Assets		Section 2.1
Seller Indemnified Party		Section 12.3
Seller or Sellers		Introductory Paragraph
Third Party Claim		Section 12.4(a)

 

ARTICLE 2
SALE AND TRANSFER OF ASSETS

 

2.1                                  Sale and Purchase of Assets. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing on the Closing Date, but effective as of the Effective Time, the applicable Seller shall sell, convey, assign, transfer and deliver to the applicable Buyer, and the applicable Buyer shall purchase, receive and accept from the applicable Seller, as set forth on

 

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Schedule 1.1(e) , free and clear of any Encumbrances, such Seller’s right, title and interest in and to those assets of such Seller, real, personal or mixed, tangible and intangible, used in or for the benefit of the Business, whether tangible, intangible, real, personal or mixed, described below (but excluding the Excluded Assets) (the “ Purchased Assets ”):

 

(a)                                   the tangible personal property owned by MedCare with respect to the operation of MedCare’s Business at the Leased Real Property, including all equipment, furniture, fixtures, machinery, office furnishings, freezers, coolers, computer hardware, and leasehold improvements located at the Leased Real Property (collectively, the “ Personal Property ”);

 

(b)                                  all of MedCare’s rights, to the extent assignable or transferable in the context of the transaction contemplated hereby, to the pharmacy licenses, permits, approvals, franchises, accreditations and registrations and other governmental licenses, permits or approvals issued to MedCare with respect to the operation of MedCare’s Business at the Leased Real Property and listed at Schedule 2.1(b) (collectively, the “ Licenses and Permits ”);

 

(c)                                   all of MedCare’s interest in and to those commitments, contracts, leases and agreements with respect to the operation of MedCare’s Business listed at Schedule 2.1(c) including the lease for the Leased Real Property (collectively, the “ Assumed Contracts and Leases ”);

 

(d)                                  to the extent transferable, all telephone and facsimile numbers and lines of the Business, including, without limitation, all toll-free numbers and lines, local numbers and lines and doctor lines, all of which are set forth on
Schedule 2.1(d) ;

 

(e)                                   all patient files, medical documentation, insurance verification, patient records, prescription records and related documentation of Sellers’ Businesses for patients receiving services as of the Closing Date and going back no less than seven (7) years (or such shorter period if Sellers have not operated for seven (7) years), including all hard copies and electronic data related thereto in any form or format maintained by Sellers (the “ Patient Files ”), provided however, that Sellers may retain copies of any such materials that are necessary for purposes of resolving unbilled or outstanding Accounts Receivable and subject to all applicable confidentiality obligations;

 

(f)                                     all goodwill associated with the Purchased Assets relating to MedCare’s Business at the Leased Real Property; and

 

(g)                                  any and all other assets of MedCare used exclusively for MedCare’s Business at the Leased Real Property, i.e., not otherwise used by MedCare in its infusion or other business and not otherwise used by MedCare in its Hurricane, West Virginia branch.

 

2.2                                  Excluded Assets . Buyer is not purchasing the following (“ Excluded Assets ”):

 

(a)           all tangible personal property owned by Curative-NY and Apex, including all equipment, furniture, fixtures, machinery, office furnishings, and leasehold improvements;

 

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(b)          all of Curative-NY’s and Apex’s rights to the pharmacy licenses, permits, approvals, franchises, accreditations and registrations and other governmental licenses, permits or approvals issued to Curative-NY and Apex;

 

(c)           all of Curative-NY’s and Apex’s interest in and to commitments, contracts, leases and agreements;

 

(d)          all goodwill associated with Curative-NY’s and Apex’s Businesses;

 

(e)           all infusion pumps, pharmacy hoods and other equipment, contracts and leases (other than the Lease for the Leased Real Property) used by any Seller in connection with the operations of its infusion business;

 

(f)             all inventories of supplies, drugs, janitorial and office supplies and other disposables and consumables owned by Sellers, related to the operation of Sellers’ Business (collectively, the “ Inventory ”);

 

(g)          all software licensed to and/or owned by Sellers or their Affiliates, including Jazz Rx and CPR+ software;

 

(h)          all bank accounts of Sellers;

 

(i)              all cash, cash equivalents and short-term investments of Sellers;

 

(j)              all Trade Names, except that PC Pharmacy may reference the names “MedCare” and “Critical Care Systems” as the prior operator for a three (3) month period following Closing in order to transition to the PC Pharmacy name;

 

(k)           any assets or rights that relate to employee benefit plans; all books and records relating to employees; and unemployment compensation, workers’ compensation and other credits, reserves or deposits with applicable Governmental Entities relating to employees;

 

(l)              all claims, rights, interests and proceeds with respect to Tax refunds resulting from periods prior to the Closing Date, and the right to pursue appeals of same;

 

(m)        the corporate charter, taxpayer and other identification numbers, corporate seals, minute books, and other documents relating to the organization, maintenance, and existence of each Seller;

 

(n)          all vendor rebates payable to Sellers that relate to periods prior to the Effective Time;

 

(o)          all Accounts Receivable; and

 

(p)          any other asset of Sellers listed on Schedule 2.2(p) or otherwise not specifically referenced herein as a Purchased Asset.

 

2.3                                  Assumed Liabilities . As of the Effective Time, Buyers shall be responsible for all liabilities and obligations arising after the Effective Time with respect to Buyers’ operation of the

 

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Business and the Purchased Assets (and for obligations arising and accruing after the Effective Time under the Assumed Contracts and Leases (collectively, the “ Assumed Liabilities ”).

 

2.4                                  Excluded Liabilities . Except for the Assumed Liabilities, which shall be liabilities and obligations of Buyer, Buyer shall not assume any liabilities or obligations of any kind or nature, whether absolute, contingent, accrued, known or unknown, of Sellers or any Affiliate of a Seller or the Business.

 

2.5                                  Instrument of Transfer . The sale of the Assets and the assumption of the Assumed Liabilities as herein provided shall be effected at Closing by the Assignment, Assumption and Bill of Sale Agreement in the form attached hereto as Exhibit 2.5 (“ Bill of Sale ”).

 

2.6                                  Completion of Transfers.

 

(a)                                   The entire beneficial interest in and to, and the risk of loss with respect to, the Purchased Assets and the Assumed Liabilities shall, regardless of when legal title thereto shall be transferred to Buyer, pass to Buyer at Closing as of the Effective Time. All operations of the Business shall be for the account of Sellers up to the Effective Time and shall be for the account of Buyers thereafter. In the event legal title to any of the Purchased Assets or the Assumed Liabilities is not transferred at Closing, Seller shall hold such Purchased Assets or Assumed Liabilities as nominee for Buyers until completion of such transfers.

 

(b)                                  In the event that the legal interest in any of the Purchased Assets or the Assumed Liabilities to be sold, assigned, transferred or conveyed pursuant to this Agreement, or any claim, right or benefit arising thereunder or resulting therefrom cannot be sold, assigned, transferred or conveyed hereunder as of the Effective Time because any waiting or notice period has not expired or any Consents or Approvals required for such sale, assignment, transfer or conveyance have not been obtained or waived, the legal interest in such Purchased Assets or Assumed Liabilities shall not be sold, assigned, transferred or conveyed unless and until such waiting or notice period shall have expired or until Approval, Consent or waiver thereof is obtained. In such event, at Buyers’ option, Buyers may elect to waive the condition to Closing requiring such Consent or Approval and proceed with the Closing or delay Closing until such Consent or Approval is obtained by Sellers and delivered to Buyer. If such Consent or Approval has not been obtained by December 9, 2005, Sellers may elect to terminate this Agreement. During any such period, Sellers shall at their expense, use reasonable diligent efforts to seek to obtain such Consents, Approvals or waivers as may be necessary to complete such transfers as soon as practicable. Buyers will cooperate with Sellers efforts with respect thereto at Buyers’ expense. Notwithstanding the foregoing, to the extent a landlord or lessor under an Assumed Contract or Lease requires that a reasonable administrative, processing, expediting or legal fee be paid in connection with obtaining Consent or Approval for assignment, Seller shall pay any such fee.

 

(c)                                   In the event Buyers elect to close prior to obtaining such Consent or Approval, (i) Sellers shall hold any such non-assigned, non-conveyed and non-transferred Purchased Assets or Assumed Liabilities for the benefit and at the risk of Buyers and shall cooperate with Buyers in any lawful and reasonable arrangements designed to provide the benefits of ownership thereof to Buyers; and (ii) Sellers shall not be deemed to be in breach of

 

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any representation, warranty or covenant contained herein as a result of not obtaining such Consent or Approval.

 

ARTICLE 3
CLOSING

 

Unless the parties hereto otherwise agree in writing, the actions contemplated to consummate the transactions under this Agreement (the “ Closing ”) shall take place by facsimile transmission of documents including counterpart signature pages (with hard copy to follow) on December 2, 2005 or as otherwise agreed by the parties (the “ Closing Date ”). The Closing shall occur at a time mutually determined by the parties or in such other manner as mutually determined by the parties (including, without limitation, through the exchange of counterpart signature pages by the parties by facsimile or other electronic means), and shall be deemed effective at 11:59 p.m. Eastern Time on the Closing Date (the “ Effective Time ”).

 

ARTICLE 4
PURCHASE PRICE

 

4.1                                  Payment of Purchase Price . The total purchase price (“ Purchase Price ”) payable by Buyers to Sellers shall be equal to One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00). The payment of the Purchase Price shall be made by Buyers on the Closing Date in readily available funds via wire transfer to accounts designated by each of Sellers.

 

4.2                                  Purchase Price Allocation . The Purchase Price shall be allocated among the Assets purchased hereunder in accordance with Section 1060 of the Code and as set forth on Schedule 4.2 attached hereto. Buyers and Sellers each hereby covenant and agree that none of them will take a position on any income tax return, before any governmental agency, or in any judicial proceeding that is in any way inconsistent with the allocation set forth on Schedule 4.2 . Buyer and Sellers agree to make all filings required under Section 1060 of the Code consistent with the allocation of such consideration as set forth on Schedule 4.2 . Each party shall duly and timely file Form 8594 with its appropriate tax returns.

 

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLERS

 

Sellers hereby severally represent and warrant to Buyer that:

 

5.1                                  Organization and Related Matters . Curative-NY is a corporation duly organized, validly existing and in good standing under the laws of the State of New York and is qualified to do business and in good standing in Alabama. Apex is a corporation duly organized, validly existing and in good standing under the laws of the State of California and is qualified to do business and in good standing in New York and Louisiana. MedCare is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business and is in good standing in Alabama, West Virginia and Mississippi. Sellers have all necessary corporate power and authority to conduct the Business as now conducted. Sellers have the necessary corporate power and authority to execute, deliver and perform this Agreement and any related agreements to which they are a party.

 

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5.2                                  Authorization . The execution, delivery and performance of this Agreement and any related agreements by Sellers have been duly and validly authorized by all necessary corporate action on the part of each Seller. This Agreement constitutes the legal, valid and binding obligation of Sellers, enforceable against Sellers in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws and equitable principles relating to or limiting creditors’ rights generally.

 

5.3                                  No Conflicts . The execution, delivery and performance of this Agreement by Sellers will not (with notice or passage of time, or both) violate the provisions of, or constitute a breach or default under, (a) the charter documents or bylaws of Sellers; or (b) any Law to which Sellers are subject, or (c) any material contract or agreement to which Sellers are a party.

 

5.4                                  No Brokers or Finders . No agent, broker, finder, or investment or commercial banker, or other Person or firm engaged by or acting on behalf of Sellers or any Affiliate of Sellers in connection with the negotiation, execution or performance of this Agreement or the transactions contemplated by this Agreement, is or will be entitled to any broker’s or finder’s or similar fee or other commission as a result of this Agreement or such transactions.

 

5.5                                  Title to Purchased Assets . Sellers have good and marketable title to the Purchased Assets free and clear of all Encumbrances, except as set forth on Schedule 5.5 .

 

5.6                                  Payment to Creditors . Sellers will supply Buyers with a complete and accurate list of secured creditors with respect to the Purchased Assets. Sellers will either pay all such amounts due or obtain releases of collateral prior to Closing and provide Buyers with satisfactory evidence thereof.

 

5.7                                  Third Party Providers and Payors . Attached as Schedule 5.7 is a list of Sellers’ provider agreements, including the Preferred Provider Agreement, third party prescription payors and providers with provider numbers.

 

ARTICLE 6
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLERS

 

Sellers hereby severally represent and warrant to Buyer that with respect to the Business of the respective Seller:

 

6.1                                  Legal Proceedings . (i) There are no claims, proceedings or investigations pending or, to the Knowledge of Seller, threatened against Seller with respect to any aspect of the Business; (ii) there are no payments owing from Seller to any third-party payor other than overpayments being processed in the Ordinary Course; and (iii) there has not been, for the past three years, any dispute or Action with any person who was a patient of Seller’s Business or with any third party payor that relates to matters other than routine payment adjustments or reconciliations in the Ordinary Course.

 

6.2                                  Compliance with Laws . Seller has not been charged with or given notice of, and is in compliance with all applicable material Laws and Orders by any Governmental Entity relating to the Business.

 

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6.3                                  Financial Information . Seller has provided Buyer with the pro forma financial schedules prepared by Seller and related to the Business and attached at Schedule 6.3 (the “ Business Financials ”). Except as set forth on Schedule 6.3 , the Business Financials fairly present the financial status of Seller with respect to the Business. The Business Financials are unaudited and have been prepared from the books and records of Seller maintained in the Ordinary Course, and are accurate in all material respects.

 

6.4                                  Tax and Other Returns and Reports . All required Tax Returns have been timely and properly filed by or on behalf of Seller and Seller has paid all Taxes due with respect to the Business and the Purchased Assets used in connection with the Seller’s Business for all periods ending on or before the Closing Date. There are no Encumbrances with respect to Taxes upon any of the Purchased Assets used in connection with the Business, except Encumbrances for current Taxes not yet due. All required Tax Returns relating to the Seller’s Business, including amendments to date, have been prepared in good faith by or on behalf of Seller and, to the Knowledge of Seller, are complete and accurate in all material respects. All Taxes Seller is required by Law to withhold or to collect for payment in connection with the Business have been duly withheld and collected and have been paid or accrued on Seller’s books. There is no extension or waiver of the period for assertion of any Taxes against Seller affecting the Purchased Assets used in connection with Seller’s Business.

 

6.5                                  Assumed Contracts and Leases . Seller has performed all material obligations under each Assumed Contract and Lease and is not in breach or default, nor do circumstances exist which, with or without notice or lapse of time or both, would constitute a breach or default under any Assumed Contract or Lease by Seller (or, to the Knowledge of Seller, any other party or obligor with respect thereto). None of the Assumed Contracts and Leases contain covenants that in any way purport to restrict the business activity or limit the freedom of Seller to engage in any line of business or to compete with any person. Except as disclosed on Schedule 6.5 , (a) none of the Assumed Contracts and Leases requires the Consent of any third party prior to the consummation by the parties of the transactions contemplated by this Agreement; (b) the Assumed Contracts and Leases are valid and effective in accordance with their terms; (c) provided that necessary Consents and Approvals to assignment are obtained, the continuation, validity and effectiveness of the Assumed Contracts and Leases will not be affected by the transactions contemplated hereunder; and (d) such transactions will, subject to obtaining the requisite Consent of another party thereunder, not result in a breach of, or default under any of the Assumed Contracts and Leases. There is no actual or, to the Knowledge of Seller, threatened termination, cancellation or limitation of any Assumed Contract and Lease. Regardless of whether a Consent requirement is disclosed on Schedule 6.5 , Seller will obtain such Consent prior to Closing except as otherwise permitted by a written waiver from a Buyer.

 

6.6                                  Licenses and Permits . Seller holds all licenses and permits that are necessary to conduct its Business as now conducted, and all such licenses and permits are valid and in full force and effect. No notice from any authority with respect to the suspension, revocation, or termination of any license or permit has been received by Seller and, to the Knowledge of Seller, there is no proposed or threatened issuance of any such notice. Sellers will cooperate with Buyers in the application for new licenses and permits with respect to the operation of MedCare’s business at the Leased Real Property. In furtherance of the foregoing, MedCare will execute a Power of Attorney in the form attached as Exhibit 6.6 attached hereto.

 

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6.7                                  Insurance . Seller is insured or self-insured against risks normally insured against by similar businesses under similar circumstances, including but not limited to professional liability coverage and workers’ compensation insurance, which coverage will remain in full force and effect in accordance with policy terms with respect to all events occurring prior to the Effective Time, regardless of whether the claim is asserted before or after the Effective Time.

 

6.8                                  Labor Matters . Except as set forth on Schedule 6.8 :

 

(a)                                   Neither Seller nor Seller’s Business is a party to or bound by any collective bargaining, works council, union representation or similar agreement or arrangement;

 

(b)                                  There is no controversy existing, pending or, to the Knowledge of Seller, threatened with any association or union or collective bargaining representative of the employees of Seller pertaining to the Business;

 

(c)                                   There is no charge or complaint relating to unfair labor practices pending against Seller’s Business, nor is there any labor strike, work stoppage, labor grievance or other labor dispute pending or, to the Knowledge of Seller, threatened against Seller with respect to the Business;

 

(d)                                  Sellers are neither engaging nor have engaged in any unfair labor practice;

 

(e)                                   There is no labor strike, dispute, slowdown or stoppage pending or, to the Knowledge of Seller, threatened against Seller with respect to the Business;

 

(f)                                     No right of representation exists respecting Seller’s employees who are employed in the Business;

 

(g)                                  No collective bargaining agreement is currently being negotiated and no organizing effort is currently being made with respect to Seller’s employees who are employed in connection with the Business; and

 

(h)                                  To the Knowledge of Seller, no current or former employee of Seller in connection with the Business has any claim against Seller on account of or for (i) overtime pay, other than overtime pay for the current payroll period, (ii) wages or salary (excluding current bonus accruals and amounts accruing under pension and profit sharing plans) for any period other than the current payroll period, (iii) vacation, time off or pay in lieu of vacation or time off, other than that earned in respect of the current fiscal year, or (iv) any violation of any Law relating to minimum wages or maximum hours of work.

 

6.9                                  E