MEMBERSHIP INTEREST PURCHASE AGREEMENT

Exhibit 10.1

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

by and between

 

HORIZON HEALTH CORPORATION

 

as Seller,

 

and

 

CAREERSTAFF UNLIMITED, INC.

 

as Buyer

 

Dated as of August 22, 2005

TABLE OF CONTENTS

 

 

 

 

 

EXHIBITS AND SCHEDULES

 

EXHIBITS

 

 

SCHEDULES

 

 

TABLE OF DEFINED TERMS

 

 

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

In exchange for the promises set forth below, Horizon Health Corporation, a Delaware corporation (“Seller”), and CareerStaff Unlimited, Inc., a Delaware corporation (“Buyer”), enter into this Membership Interest Purchase Agreement (“Agreement”), dated as of August 22, 2005 (the “Execution Date”), and agree as follows (Buyer and Seller may be referred to individually as a “Party” and collectively as the “Parties”):

 

WHEREAS, ProCare One Nurses, LLC, a Delaware limited liability company (the “Company”), is engaged in the business of providing specialized temporary nurse staffing services to acute care hospitals and specialty clinics (the “Business”); and

 

WHEREAS, Seller is the Manager and the sole member of the Company and, subject to the terms of this Agreement, desires to sell its membership interest in the Company to Buyer and Buyer desires to purchase Seller’s membership interest in the Company; and

 

WHEREAS, the Parties desire to document the terms and conditions under which such purchase and sale shall occur.

 

NOW, THEREFORE, in consideration of the premises and of the respective representations, warranties, covenants, agreements and conditions contained herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby contract and agree as follows:

 

Section 1. Definitions .

 

Section 1.1 Definitions . For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires,

 

(a) The defined terms used in this Agreement shall include the plural as well as the singular.

 

(b) All accounting terms not otherwise defined herein have the meanings assigned under GAAP.

 

(c) All references in this Agreement to designated “Sections” and other subdivisions are to the designated Sections and other subdivisions of the body of this Agreement.

 

(d) Pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms.

 

(e) The words “including” and “include” shall be deemed to mean in each instance “including, without limitation,” except as stated otherwise herein.

 

(f) The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole, including the Exhibits and Schedules attached hereto, and not to any particular Article, Section or other subdivision.

 

(g) “Disclosure Schedules“ shall mean the schedules attached to and constituting a part of this Agreement.

 

(h) “Knowledge of Buyer,” and similar variations thereof, shall mean the actual knowledge, as of the relevant date, of Rick Peranton, Richard Kopecky, Teresa Reinhardt and Gay Kelley, after reasonable inquiry of employees or agents of Buyer who were involved in Buyer’s due diligence review of Seller and the Business; provided, however, Buyer shall not be deemed to have knowledge of any matter that was not disclosed by Seller to Buyer in writing prior to the Closing.

 

(i) “Knowledge of Seller,” and similar variations thereof, shall mean the actual knowledge, as of the relevant date and after reasonable inquiry of senior employees of the Company responsible for the relevant matters, of any of the following officers of Seller: John E. Pitts – CFO, Frank J. Baumann, SVP Operations, David K. Meyercord – SVP Administration and General Counsel, Donald W. Thayer – SVP – Acquisitions & Development, Peter Kavanaugh – VP – Acquisitions & Development, and Dana Hallberg – President of ProCare One Nurses, LLC.

 

(j) “Material Adverse Change” or “Material Adverse Effect,” when used with respect to the Company shall mean any material adverse change which, has had or could reasonably be expected to have an adverse effect on the financial condition, business, operations or assets of Company taken as a whole or the Business taken as a whole, other than changes or effects that are or result from occurrences relating to the United States economy generally or the United States health care industry generally.

 

(k) Any reference in this Agreement to an “Affiliate” shall mean any Person directly or indirectly controlling, controlled by or under common control with a second Person. The term “Control” (including the terms “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. A “Person” shall mean any natural person, partnership, corporation, limited liability company, association, trust or other legal entity.

 

Capitalized terms used in this Agreement shall have the definitions assigned to such terms elsewhere in this Agreement. For ease of reference, the Section containing the definition of each such capitalized term is set forth in the table of defined terms included elsewhere as a part of this Agreement.

 

Section 2. Purchase and Sale .

 

Section 2.1 Interests . At Closing (defined below), Seller shall irrevocably and forever sell, assign, and transfer to Buyer and its successors and assigns, and Buyer shall buy and accept from Seller, all of Seller’s rights, title, and interests in and to all of the issued and outstanding membership interests of the Company (collectively, the “Interests”), free and clear of any and all liens, encumbrances, and claims of ownership, in exchange for the Purchase Price (as defined in Section 2).

 

Section 2.2 Seller Assumed Liabilities . Seller and Buyer acknowledge and agree that Buyer is unwilling to purchase the Interests unless Seller assumes certain liabilities of the Company prior to or contemporaneously with the Closing. Seller shall execute and deliver an Assumption Agreement in the form of Exhibit 2.2 to be delivered at Closing and pursuant to which Seller shall assume any and all liabilities not identified in Working Capital (as defined in Section 4.3 below), and arising or incurred prior to the Closing Date or based on the operations of the Company or of the Business prior to the Closing Date, including but not limited to the following: (i) all of the Company’s payables for periods prior to the Closing Date (as defined in Section 4.1) excluding, however, all payables that were accounted for in the calculation of Working Capital, (ii) any and all tax obligations arising prior to the Closing Date or related to income allocable to periods prior to the Closing Date, including any deferred Federal and State taxes, (iii) any income tax liability resulting from cancellation or nonpayment of the Intercompany Receivable as described in Section 2.3 below, (iv) obligations arising under any bonus payable to Dana Hallberg or any other employee of Seller or Company as a result of the transfer of the ownership of the Company, (v) obligations under Seller’s Stock Options previously granted to any Company employees, (vi) bonuses earned by Dana Hallberg and Jeannie Eliott or any other employees of the Company for fiscal years ending on or before August 31, 2005, (vii) a pro rata portion, i.e., 28/31sts, of the monthly bonuses for the month of August 2005, earned pursuant to plans identified on Schedule 2.2 (the “August Bonuses”), (viii) workers compensation claims related to periods prior to the Closing Date, (ix) professional liability claims related to periods prior to the Closing Date, (x) group health insurance costs related to periods prior to the Closing Date, (xi) obligations under any of the Contracts (as defined in Section 6.12 below), except to the extent such obligations relate to Buyer’s operation of the Business on or after the Effective Time, (xii) obligations under any Employee Contracts, (xiii) payroll and welfare benefits through the Effective Time for all employees of the Company and for the Schedule 6.20 Employees, (ix) litigation arising out of or related to the operations of the Company or of the Business prior to the Closing Date (collectively, “Seller Assumed Liabilities”). The August Bonuses will not be included in the calculation of Working Capital and payment thereof shall be handled as set forth in the Transition Services Agreement, which is to be entered into by Buyer, Seller and the Company effective as of the Closing Date.

 

Section 2.3 Intercompany Receivable . Seller and Buyer acknowledge and agree that there is an intercompany account receivable (the “Intercompany Receivable”) that is owed to the Company by Seller, but that, immediately prior to the Closing Date, the Intercompany Receivable shall be canceled and Seller shall not be required to pay such account receivable to the Company, provided that Seller shall be responsible for any tax liability of Seller or the Company resulting from such nonpayment.

 

Section 3. Purchase Price . The Purchase Price shall be Eight Million Three Hundred Thousand and NO/100 Dollars ($8,300,000), except as may be adjusted pursuant to Section 4.3, and shall be payable as follows:

 

Section 3.1 Cash at Closing . Four Million Two Hundred Thousand and NO/100 Dollars ($4,200,000) shall be payable to Seller by wire transfer of immediately available funds at Closing.

 

Section 3.2 Note A . Two Million One Hundred Thousand and NO/100 Dollars ($2,100,000) shall be payable by Buyer’s execution and delivery at Closing of Buyer’s Promissory Note in the face amount thereof (“Note A”). Note A shall not bear interest and shall be due and payable in full six months after the Closing Date. Note A shall be in form and substance substantially the same as Exhibit 3.2 hereto.

 

Section 3.3 Note B . Two Million and NO/100 Dollars ($2,000,000) shall be payable by Buyer’s execution and delivery at Closing of Buyer’s Promissory Note in the face amount thereof (“Note B”). Note B shall bear interest at a floating rate of interest equal to the lesser of (i) the Prime Rate as set forth in The Money Rates Section of The Wall Street Journal, as it may be adjusted from time to time, or (ii) the maximum lawful rate of interest permitted to be charged thereon under the laws of the State of Texas (the “Maximum Rate”). Note B shall provide for twelve (12) quarterly payments of principal each in the amount of One Hundred Sixty Six Thousand Six Hundred Sixty Six and 66/100 Dollars ($166,666.66), together with interest on the unpaid principal balance calculated as provided in Note B. The first payment of interest and principal shall be due and payable on the first day of the first month after the Closing Date and the last such payment due thirty-six months after the Closing Date. Note B shall be in form and substance substantially the same as Exhibit 3.3 hereto.

 

Section 3.4 Sun Guaranty . Each of Note A and Note B shall be guaranteed by Buyer’s parent, Sun Healthcare Group, Inc. (“Sun”) pursuant to a guaranty in form and substance substantially the same as that attached hereto as Exhibit 3.4 (the “Sun Guaranty”).

 

Section 3.5 Purchase Price Allocation . Buyer and Seller shall cooperate in a commercially reasonable manner to agree upon a purchase price allocation within thirty (30) days after the Closing.

 

Section 4. Closing .

 

Section 4.1 Escrow Date and Closing Date . On or before August 22, 2005 (the “Escrow Date”), all of the items set forth in Section 4.2 shall be delivered to Strasburger & Price, LLP, Attention: Patrick Owens, Esq., 901 Main Street, Suite 4400, Dallas, Texas 75202 (the “Escrow Agent”) to be held in escrow and released on August 29, 2005 (the “Closing Date”) upon satisfaction of the items in Section 4.3. The closing of the purchase of the Interests contemplated hereby (the “Closing”) shall be effective at 12:01 a.m. on the Closing Date (the “Effective Time”).

 

Section 4.2 Escrow Transactions . On or before the Escrow Date the following documents (collectively, the “Escrowed Documents”), all of which shall provide they are effective as of the Closing Date, shall be delivered to Escrow Agent to be held until the Closing date and then released to the other party, subject to the provisions of Section 4.3:

 

(a) Buyer and Seller shall each deliver four (4) executed copies of this Agreement.

 

(b) Seller shall deliver any certificates then held by Seller evidencing the Interests duly endorsed for transfer to the Buyer or, if such certificates do not exist, an Assignment of Membership Interest in the form attached hereto as Exhibit 4.2(b) .

 

(c) Buyer shall deliver Note A duly executed by Buyer.

 

(d) Buyer shall deliver Note B duly executed by Buyer.

 

(e) Buyer shall deliver the Sun Guaranty duly executed by Sun.

 

(f) Seller shall deliver copies of the written resignations effective as of the Closing Date of each of the officers of the Company.

 

(g) Seller shall deliver an executed a Non-Competition and Non-Solicitation Agreement in the form attached hereto as Exhibit 4.2(g) .

 

(h) Seller shall deliver a certified copy of the Certificate of Formation of Company and a good standing certificate for Company dated no earlier than thirty (30) days prior to the Closing Date issued by the Delaware Secretary of State or other applicable governmental authority.

 

(i) Seller shall provide any other documentation that effectuates this Agreement or any amendment hereto, as Buyer may request, including proof that all taxes, assessments, wages, and insurance premiums have been paid in full or will be paid in full as of the Closing Date.

 

(j) Buyer and Seller shall each deliver a signed Transition Services Agreement in the form of Exhibit 4.2(j) , providing for Seller to provide certain services to Buyer after the Closing Date.

 

(k) Seller shall deliver documentation in the form attached hereto as Exhibit 4.2(k) evidencing that the Company’s lock box has been assigned to Buyer, effective as of the Closing, and that the assignment has been accepted by the bank at which the lock box is maintained.

 

(l) Seller shall deliver the executed consents (the “Third Party Consents”) for the Contracts identified on Schedule 4.2(l) .

 

(m) Seller shall deliver a release of the Pledge of the Membership Interests to JPMorgan Chase Bank N.A. (“JPMorgan”) as agent for various banks, executed on behalf of JPMorgan.

 

(n) Seller shall deliver UCC Financing Statement Amendments executed by JPMorgan as agent for the secured parties, terminating the UCC-1 financing statements filed with the Secretary of State of Delaware on 7/8/02 as document numbers 21652662 and 21653157 and naming the Company as the debtor.

 

(o) Buyer, Seller and Company shall each deliver four (4) executed copies of the Assumption Agreement in the form attached hereto as Exhibit 2.2 .

 

Section 4.3 Closing Date . On the Closing Date, upon Escrow Agent’s receipt of all of the following, Escrow Agent shall release the Escrowed Documents to Buyer or Seller, as appropriate:

 

(a) Seller shall deliver an executed Certificate in the form of Exhibit 4.3(a) , affirming that all representations and warranties made by Seller in this Agreement are true and correct as of the Closing Date, and that the Seller’s Conditions to Close in Section 5.2 have been satisfied or waived;

 

(b) Buyer shall deliver an executed Certificate in the form of Exhibit 4.3(b) , affirming that all representations and warranties made by Buyer in this Agreement are true and correct as of the Closing Date, and that the Buyer’s Conditions to Close in Section 5.1 have been satisfied or waived; and

 

(c) Buyer shall have wired to Seller Four Million Two Hundred and No/100 Dollars ($4,200,000.00), which constitutes the portion of the Purchase Price due to Seller in cash at Closing.

 

If all of the foregoing does not occur by 5:00 p.m. Central time on the Closing Date, Escrow Agent shall return the Escrowed Documents to the party who delivered them to Escrow Agent.

 

Section 4.4 Working Capital Settlement.

 

(a) As used herein, the term “Working Capital” shall mean the “Net, Accounts Receivable”, “Other Receivables – Other”, and “Prepaids – Rent-Leased Space” less the “Liabilities – Accrued Expenses – Other” as of the Closing Date, as determined in accordance with generally accepted accounting principles, consistently applied (“GAAP“), including the methods and practices as historically applied by the Company prior to the Closing. Notwithstanding the foregoing, the “Net, Accounts Receivable” for purposes of calculating Working Capital shall only include those accounts receivable that were outstanding on the Closing Date and were collected by the Company on or before December 31, 2005. Seller will retain “Cash and Current Assets-Other” and will pay all liabilities that relate to a period of time ending on or before the Effective Time. If the Company gets an invoice after the Effective Time that covers a period that includes the Effective Time, Horizon would be liable for and pay its prorata portion of the invoice relating to the period prior to the Effective Time.

 

(b) Buyer agrees to use commercially reasonable good faith efforts to collect all outstanding accounts receivable on the Closing Date and shall use reasonable efforts to notify Seller if any account debtors dispute any of these receivables. All collections after the Closing Date shall be applied first to the oldest outstanding invoice of the payor that was included in accounts receivable on the Closing Date unless (i) the payor has objected in writing to any specific invoice, or (ii) it is clear that the payor intends the payment to apply to a specific invoice, either because the payor has designated the invoice in writing or because the amount of the payment matches the amount of an invoice. Buyer acknowledges that the Company’s accounts receivable include amounts for services that have been provided by the Company but which have not yet been invoiced.

 

(c) Any accounts receivable that were outstanding on the Closing Date and remain outstanding on December 31, 2005 shall be assigned to Seller. Seller recognizes that some of the account debtors on these accounts may be ongoing customers of the Company, and Seller agrees to use only those collection efforts that it uses for its current customers. Buyer agrees to cause the Company to provide Seller with reasonable access to or copies of information reasonably required by Seller to respond to disputes raised by account debtors on the assigned accounts.

 

(d) On or before January 10, 2006, Buyer shall deliver to Seller its determination of Working Capital. Each Party shall have full access to the financial books and records pertaining to the Company to confirm or audit Working Capital computations. Should Seller disagree with Buyer’s determination of Working Capital, Seller shall notify Buyer in writing within fifteen (15) days after Buyer’s delivery of its determination of Working Capital and state the basis for its disagreement. If Seller and Buyer fail to agree within thirty (30) days after Seller’s delivery of notice of disagreement on the amount of Working Capital, such disagreement shall be resolved in accordance with the procedures set forth in Section 4.3(d), which shall be the sole and exclusive remedy for resolving disputes relative to the determination of Working Capital. The Purchase Price shall be increased or decreased based on the difference between the amount of the Working Capital and Two Million Four Hundred Twenty-Three Thousand Eight Hundred Twenty-Eight and No/100 Dollars ($2,423,828.00) (the “Base Amount”). Within five (5) business days after determination thereof, any excess of actual Working Capital over the Base Amount shall be paid in cash to Seller, and any deficiency in Working Capital to the Base Amount shall be paid in cash to Buyer, in either case without interest on such amount.

 

(e) Any liability reflected in Working Capital shall remain a liability of the Company (the “Company Liabilities”) and Seller shall have no liability therefor. No liability shall be included in the Working Capital unless such liability would have been included in the Company’s balance sheet using the methods and practices of the Company as historically applied by the Company prior to the Closing.

 

(f) In the event that Seller and Buyer are not able to agree on the actual Working Capital within thirty (30) days after Seller’s delivery of notice of disagreement in accordance with Section 4.3(b) hereof, Seller and Buyer shall each have the right to require that such disputed determination be submitted to the Dallas office of Ernst & Young, LLP, or if Ernst & Young, LLP is not available for any reason or does not maintain its independent status, such other independent certified public accounting firm as Seller and Buyer may then promptly mutually agree upon in writing (the “Accounting Firm”) for computation or verification in accordance with the provisions of this Agreement. The Accounting Firm shall review the matters in dispute and, acting as arbitrators, shall promptly decide the proper amounts of such disputed entries (which decision shall also include a final calculation of Working Capital). The submission of the disputed matter to the Accounting Firm shall be the exclusive remedy for resolving disputes relative to the determination of Working Capital. The Accounting Firm’s determination shall be binding upon Seller and Buyer. The Accounting Firm’s fees and expenses shall be borne equally by Seller and Buyer.

 

Section 5. Conditions to Closing .

 

Section 5.1 Buyer’s Conditions . The obligation of Buyer to consummate the transaction provided for herein is subject to the fulfillment of, or to the Buyer’s written waiver or extension or modification thereof, of each of the following conditions to Closing:

 

(a) All representations and warranties of Seller shall be true, correct, and complete as of the Closing Date.

 

(b) Seller shall have performed all of its obligations hereunder that are required to be performed as of the Closing Date.

 

(c) Buyer shall have received all consents, approvals, certifications and licenses as may be necessary to own the Interests and to operate the Business.

 

(d) Buyer shall be satisfied that there has been no Material Adverse Change to the Business or any of the Company’s assets or the Company’s liabilities.

 

(e) The Company shall not be in default under any of the Contracts or any other contract, lease or other agreement or instrument affecting or relating to the Company’s assets, the Company’s liabilities or the Business, where in Buyer’s good faith judgment such default would reasonably be expected to have a Material Adverse Effect on the Business or the Company either prior to or after Closing.

 

(f) Seller shall have made satisfactory arrangements with Buyer for the delivery of all of the books and records of the Company, including corporate record books.

 

(g) Seller shall have made satisfactory arrangements with Buyer for delivering full physical possession of the assets of the Company to Buyer.

 

(h) Seller shall have obtained a release satisfactory to Buyer of any obligations of the Company to JPMorgan, and the executed release shall have been delivered to Escrow Agent prior to the Closing Date to be delivered to Buyer at Closing.

 

(i) Buyer’s lender has completed its loan documentation related to this transaction and is ready to fund the loan.

 

(j) Buyer shall have approved the Schedules, which approval may be granted or denied by Buyer in its sole discretion.

 

Section 5.2 Seller’s Conditions . The obligation of Seller to consummate the transaction provided for herein is subject to the fulfillment, or to the Seller’s written waiver or extension or modification thereof, on or prior to the specific time provisions set forth below between the date hereof and the Closing Date, of each of the following conditions to Closing:

 

(a) All representations and warranties of Buyer shall be true, correct and complete as of the Closing Date.

 

(b) Buyer shall have performed all of its obligations hereunder that are required to be performed as of the Closing Date.

 

Section 6. Representations by Seller . As of the date hereof and as of the Closing Date, Seller represents and warrants to Buyer that all of the following statements are true:

 

Section 6.1 Interests . Seller has the power and authority to enter into this Agreement, to sell the Interests to Buyer and to undertake and perform all of its other duties and obligations hereunder. There is no contract or any other obligation that prevents Seller from entering into this Agreement, prevents Seller from selling the Interests to Buyer, or prevents Seller from undertaking or performing all of Seller’s other duties and obligations hereunder. Other than the Third Party Consents, there is no consent or approval required from, and there is no notice that must be given to, any governmental agency or other third party in order for Seller to enter into this Agreement, for Seller to sell the Interests to Buyer, or for Seller to undertake and perform all of its other duties and obligations hereunder. Seller owns and has exclusive good and indefeasible title to all of the Interests, free and clear of any and all liens, encumbrances, and other claims of ownership, except restrictions on transfer under applicable securities laws. Seller has not sold, assigned, or transferred any of Seller’s rights, title, or interests in and to any of the Interests, except as contemplated by this Agreement. The Interests are not subject to any pending or threatened proceeding, litigation, bankruptcy, or adverse claim. Except for this Agreement, no person has any right or option to acquire any of the Interests. As a result of this Agreement and as of the Closing Date, Seller will no longer own any Interests and Buyer shall be the sole member of the Company.

 

Section 6.2 Company . The Company is a limited liability company duly organized and validly existing under the laws of the State of Delaware. Exhibit 6.2 is a copy of the Company’s Certificate of Formation and the Company’s Operating Agreement. The Company is qualified to do business in the jurisdictions identified on Schedule 6.2 , which include every jurisdiction in which Company is required to be qualified based on the nature of its business or ownership of its assets except where the failure to so qualify would not have a Material Adverse Effect on the Company. Seller is the sole member of the Company. The officers of the Company are also listed on Schedule 6.2 . The Company is a disregarded entity for federal and state income tax purposes and no election has been made to treat the Company as a corporation for federal or state income tax purposes.

 

Section 6.3 Subsidiaries, Etc. The Company (i) has no subsidiaries, (ii) does not own shares of stock in any corporation (other than shares in publicly traded companies held for investment purposes), (iii) is not a member of any limited liability company, (iv) is not a general or limited partner in any partnership, and (v) is not a participant in any joint ventures.

 

Section 6.4 No Proceedings . There is no pending or threatened legal or administrative action by any governmental entity that would result in the dissolution of the Company or otherwise limit the Company’s right to perform its obligations under this Agreement.

 

Section 6.5 Authority . Seller has full power and authority to execute and deliver this Agreement and all related documents and to carry out the transactions contemplated herein.

 

This Agreement is valid, binding, and enforceable against Seller in accordance with its terms. The execution of this Agreement and the consummation of the transactions contemplated herein do not breach any of the terms and conditions of nor constitute a default under or violation of Seller’s Certificate of Incorporation or of the Company’s Certificate of Formation or Operating Agreement or, subject to the Third Party Consents, of any applicable law, regulation, court order, mortgage, note, bond, indenture, agreement, license, or other instrument or obligation to which Seller or the Company is now a party or by which the Company or any of its assets may be bound or affected.

 

Section 6.6 Litigation and Incident Reports . Except as set forth on Schedule 6.6 , there are no actions, suits, investigations, or proceedings pending or threatened by or before any court, administrative agency, or other governmental authority or any arbitrator against or relating to the Interests, the Company, or the Business. To Seller’s knowledge, Seller has provided Buyer with a list of all incident reports received by Seller since June 1, 2005.

 

Section 6.7 Compliance .

 

(a) The Company and the Company’s assets and business are in compliance with all applicable municipal, county, state, and federal laws, regulations, statutes, ordinances, standards, and orders and all administrative or court rulings and with all municipal, health, building, land use, and zoning laws and regulations, where any failure to comply therewith could have a Material Adverse Effect on the Company’s business, property, condition (financial or otherwise) or operations;

 

(b) There are no outstanding deficiencies or work orders of any authority having jurisdiction over the Company’s business or the premises requiring conformity to any applicable statute, regulation, ordinance, or bylaw;

 

(c) There are no outstanding claims, requirements, or demands of any licensing or certifying agency supervising or having authority over the Company’s business to rework or redesign any aspect thereof or to provide additional furniture, fixtures, equipment, or inventory so as to conform to or comply with any existing law, code, or standard;

 

(d) There has been no notice from any governmental body claiming a violation of any building, zoning, environmental, or other law or ordinance;

 

(e) The Company is not in default or in violation of, and no condition exists that with notice or lapse of time or both would constitute a default or violation of (i) any loan, contract, note, instrument, or agreement, or (ii) law, rules or regulations applicable to the Company or the Business and there are no orders, judgments, injunctions, decrees by any governmental body rendered against or affecting the Company or the Business; and

 

(f) Neither the execution and the delivery of this Agreement nor the consummation of the transactions contemplated hereby will: (i) violate any applicable constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court; (ii) except as disclosed in Schedule 6.7 , require consent from any third party; (iii) except as disclosed in Schedule 6.7 , conflict with, result in a breach of, constitute a default under, result in the acceleration of, create

 

in any person the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Seller or the Company is a party or by which Seller or the Company is bound or to which any of Seller’s or Company’s assets is subject; or (iv) result in the imposition of any lien or security interest upon any of the Company’s assets other than the lien in favor of Buyer on the Interests specifically contemplated by the terms hereof.

 

Section 6.8 Property . Except as shown on Schedule 6.8 , the Company has good, clear, marketable, and exclusive title to all of the Company assets free and clear of any and all debts, liens, encumbrances, claims, demands, third party rights, obligations, liabilities, security i