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STOCK PURCHASE AGREEMENT

Stock Purchase Agreement

STOCK PURCHASE AGREEMENT | Document Parties: CRITICAL HOMECARE SOLUTIONS, INC | DEACONESS ASSOCIATIONS, INC | Deaconess Enterprises, Inc You are currently viewing:
This Stock Purchase Agreement involves

CRITICAL HOMECARE SOLUTIONS, INC | DEACONESS ASSOCIATIONS, INC | Deaconess Enterprises, Inc

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Title: STOCK PURCHASE AGREEMENT
Governing Law: Ohio     Date: 10/10/2007
Law Firm: Brownstein Hyatt;Dinsmore Shohl    

STOCK PURCHASE AGREEMENT, Parties: critical homecare solutions  inc , deaconess associations  inc , deaconess enterprises  inc
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Exhibit 2.5

 


STOCK PURCHASE AGREEMENT

BY AND AMONG

CRITICAL HOMECARE SOLUTIONS, INC.,

THE DEACONESS ASSOCIATIONS, INC.

AND

DEACONESS ENTERPRISES, INC.

DECEMBER 20, 2006

 


 


STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “ Agreement ”) is entered into as of December 20, 2006, by and among Critical Homecare Solutions, Inc. , a Delaware corporation (“ Buyer ”), The Deaconess Associations, Inc., an Ohio non-profit corporation (“ Seller ”), and Deaconess Enterprises, Inc. , an Ohio corporation (“ Company ”). Buyer, Seller and Company are referred to collectively herein as the “ Parties .”

Seller owns all of the outstanding capital stock of Company.

This Agreement contemplates a transaction in which Buyer will purchase from Seller, and Seller will sell to Buyer, all issued and outstanding shares of Company.

Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.

§1. Definitions .

Accreditations ” shall mean collectively all accreditations, approvals or other rights issued by any health care accrediting agency including Joint Commission on Accreditation of Healthcare Organizations, Accreditation Commission for Health Care, National Quality Forum and Community Health Accreditation Program.

Adjusted Purchase Price ” has the meaning set forth in §2(f)(i).

Adverse Consequences ” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses.

Affiliate ” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act.

Affiliated Group ” means any affiliated group within the meaning of Code §1504(a) or any similar group defined under a similar provision of state, local or foreign law.

Antitrust Law ” means the Sherman Act, as amended, the Clayton Act, as amended, the Hart-Scott-Rodino Act, the Federal Trade Commission Act, as amended, and all other federal, state and foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines, and other laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization, price fixing or restraint of trade or fair dealing.

Business ” means Company and its Subsidiaries’ business of providing (i) infusion services and corresponding clinical pharmacy, nursing and disease management services, and (ii) home healthcare services, including skilled nursing, physical, occupational and speech therapy, wound care, private duty nursing and hospice care.

Buyer ” has the meaning set forth in the preface above.

Cash ” means cash and cash equivalents (including marketable securities and short-term investments) calculated in accordance with GAAP applied on a basis consistent with the preparation of the Financial Statements.

Closing ” has the meaning set forth in §2(i) below.

 


“Closing Date” has the meaning set forth in §2(i) below.

Closing Working Capital ” has the meaning set forth in §2(g)(vii).

CMS ” shall mean Centers for Medicare and Medicaid Services of the U.S. Department of Health and Human Services.

Code ” means the Internal Revenue Code of 1986, as amended.

Company ” has the meaning set forth in the preface above.

Company Shares ” means all of the issued and outstanding shares of common stock, no par per share, of Company.

Competing Transaction ” means any business combination or recapitalization involving any of Company or its Subsidiaries (other than the Excluded Entities) or any acquisition or purchase of all or a significant portion of the assets of, or any equity interest in, any of Company or Subsidiaries (other than the Excluded Entities) or any other similar transaction with respect to any of Company and its Subsidiaries (other than the Excluded Entities) involving any Person or entity other than Buyer or its Affiliates.

Confidential Information ” means any information concerning the business and affairs of Company and its Subsidiaries that is not already generally available to the public.

DHI ” has the meaning set forth in §4(bb).

Disclosure Schedule ” has the meaning set forth in §4 below.

Draft Working Capital Closing Statement ” has the meaning set forth in §2(g)(i).

Effective Date ” means 12:01 a.m. on January 1, 2007.

Employee Benefit Plan ” means any “employee benefit plan” (as such term is defined in ERISA §3(3)); any nonqualified deferred compensation, equity compensation or retirement plan or arrangement; any fringe benefit plan as defined in Section 6039D of the Code; any employment, consulting, retirement, bonus, profit-sharing, incentive, severance, retention, vacation, employee benefit or compensatory plan, arrangement, agreement, policy, practice or program; and any other material employee benefit plan, program or arrangement., in each case, whether written or unwritten, funded or unfunded, formal or informal, and whether or not subject to ERISA that Seller, Company or ERISA Affiliate sponsors, maintains, ever has maintained or been obligated to maintain or to which any of them contributes, ever has contributed or ever has been obligated to contribute, at any time since January 1, 2002, or with respect to which Seller, Company or ERISA Affiliates has or could have any liability (whether direct or indirect, known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, and due or to become due), including any liability for taxes. Notwithstanding the foregoing, the term “Employee Benefit Plan” shall not include any payment received as a stay bonus, success fee, severance or other similar arrangement as a result of the consummation of the transactions contemplated by this Agreement.

Employee Pension Benefit Plan ” has the meaning set forth in ERISA §3(2).

Employee Welfare Benefit Plan ” has the meaning set forth in ERISA §3(1).

 

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Encumbrance ” means any lien, charge, security interest, mortgage, pledge or other encumbrance of any nature whatsoever.

Enforceability Exceptions ” has the meaning set forth in §3(a)(ii).

Environmental, Health, and Safety Requirements ” means all federal, state, local, and foreign statutes, regulations, and ordinances concerning public health and safety, worker health and safety, pollution, or protection of the environment, including all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances, or wastes, as such requirements are enacted and in effect on or prior to the date of this Agreement.

ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate ” means each entity that is treated as a single employer with Seller or Company pursuant to Code §414.

Estimated Working Capital Statement ” has the meaning set forth in §2(f)(ii).

Excluded Entities ” means the Subsidiaries of Company set forth on Schedule 1(a) , which shall be distributed to the Seller on or prior to the Closing Date.

Excluded Liabilities ” means the following liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) of Company or Seller relating to any period prior to the Effective Date, including without limitation: (i) with respect to the Excluded Entities, including without limitation, any residual liability related to the sale or disposition of any interest in the Excluded Entities or the businesses conducted or formerly conducted by the Excluded Entities, (ii) with respect to any indebtedness for borrowed money and capital lease obligations, including any unpaid interest, fees, prepayment penalties and expenses thereon and including the outstanding balance on capital leases, (iii) with respect to any Taxes relating to any period prior to the Effective Date, or (iv) the fees and expenses of Sellers and Company incurred in connection with the transactions contemplated hereby (to the extent not paid out of the Purchase Price or included in the Working Capital Closing Statement).

Financial Statements ” has the meaning set forth in §4(g) below.

GAAP ” means U.S. generally accepted accounting principles as in effect from time to time, consistently applied.

Governmental Authority ” means any (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature, or any political subdivision thereof, (b) federal, state, local, municipal, foreign or other government, or (c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, organization, body or other entity and any court, arbitrator or other tribunal).

Hart-Scott-Rodino Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Income Tax ” means any federal, state, local, or foreign income Tax measured by or imposed on net income, including any interest, penalty, or addition thereto, whether disputed or not.

Income Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Income Taxes, including any schedule or attachment thereto including any amendment thereto.

 

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Indemnified Party ” has the meaning set forth in §9(d)(i) below.

Indemnifying Party ” has the meaning set forth in §9(d)(i) below.

Intellectual Property ” means all patents, trademarks, service marks, copyrights, trade names, corporate names, Internet domain names, material computer software items, and all registrations and applications and renewals for any of the foregoing and all goodwill associated therewith.

Knowledge of Company ” means the actual knowledge after reasonable inquiry of the executive officers and directors of Seller, Company and its Subsidiaries.

Laws ” means any statute, law, ordinance, regulation, order or rule of any Governmental Authority, including those covering environmental, energy, safety, health, transportation, bribery, record keeping, zoning, antidiscrimination, antitrust, wage and hour, and price and wage control matters, as well as any applicable principle of common law.

Leased Real Property ” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures, or other interest in real property that is used in Company’s or any of its Subsidiaries’ business.

Leases ” means all leases, subleases, licenses, concessions and other agreements (written or oral), including all amendments, extensions, renewals, guaranties, and other agreements with respect thereto, pursuant to which Company or any of its Subsidiaries holds any Leased Real Property.

Lien ” means any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) liens for taxes not yet due and payable or for taxes that the taxpayer is contesting in good faith through appropriate proceedings and in either case for which adequate reserves have been established on the financial statements of Company, (b) purchase money liens and liens securing rental payments under capital lease arrangements, and (c) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money, that do not materially and adversely affect the occupancy, use and value of the affected assets.

Material Adverse Effect ” or “ Material Adverse Change ” means any effect or change that would be materially adverse to the business of Company and its Subsidiaries, taken as a whole, or to the ability of any Party to consummate timely the transactions contemplated hereby; provided that none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Effect or Material Adverse Change: (a) any adverse change, event, development, or effect arising from or relating to (1) general business or economic conditions, (2) national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the U.S., or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the U.S., (3) financial, banking, or securities markets (including any disruption thereof and any decline in the price of any security or any market index), (4) changes in U.S. generally accepted accounting principles, or (5) the taking of any action contemplated by this Agreement and the other agreements contemplated hereby, and (b) any adverse change in or effect on the business of Company and its Subsidiaries that is cured by Seller before the Closing.

Materiality Terms ” has the meaning set forth in §9(b)(iii).

Medicare Provider Agreement ” shall mean an agreement entered into between a health care facility, home health agency, hospice, rehabilitation facility or clinic (or equivalent), pharmacy, clinical laboratory, durable medical equipment supplier, orthotics and/or prosthetics supplier, respiratory therapy

 

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provider, wholesaler, physician, practitioner or other health care provider or supplier and CMS or any federal or state agency or other entity administering Medicare in such state, or other grant of authority by CMS or any federal or state agency or other entity administering Medicare in such state, under which such health care facility, home health agency, hospice, rehabilitation facility or clinic (or equivalent), pharmacy, clinical laboratory, durable medical equipment supplier, orthotics and/or prosthetics supplier, respiratory therapy provider, wholesaler, physician, practitioner or other health care provider or supplier is authorized to provide medical goods and services to Medicare patients and to be reimbursed by Medicare for such goods and services.

Most Recent Financial Statements ” has the meaning set forth in §4(g) below.

Most Recent Fiscal Month End ” has the meaning set forth in §4(g) below.

Multiemployer Plan ” has the meaning set forth in ERISA §3(37).

Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

Owned Real Property ” means all land, together with all buildings, structures, improvements, and fixtures located thereon, and all easements and other rights and interests appurtenant thereto, owned by Company or any of its Subsidiaries and used in the business of Company and its Subsidiaries.

Party ” has the meaning set forth in the preface above.

PBGC ” means the Pension Benefit Guaranty Corporation.

Permits ” means material governmental authorizations that are held or owned by or are otherwise issued to Company or its Subsidiaries, including, without limitation, all local, state and federal licenses, permits, registrations, certificates, consents, accreditations and approvals necessary for Company and its Subsidiaries to occupy, operate and conduct the Business.

Permitted Encumbrances ” means with respect to each parcel of Owned Real Property: (a) real estate taxes, assessments and other governmental levies, fees, or charges imposed with respect to such Owned Real Property that are (i) not due and payable as of the date of this Agreement or (ii) being contested by appropriate proceedings, and in either case for which adequate reserves have been established on the financial statements of Company; (b) mechanics liens and similar liens for labor, materials, or supplies provided with respect to such Owned Real Property incurred in the Ordinary Course of Business for amounts that are (i) not delinquent and would not, in the aggregate, have a Material Adverse Effect or (ii) being contested by appropriate proceedings; (c) zoning, building codes, and other land use laws regulating the use or occupancy of such Owned Real Property or the activities conducted thereon that are imposed by any governmental authority having jurisdiction over such Owned Real Property; (d) easements, covenants, conditions, restrictions, and other similar matters affecting title to such Owned Real Property and other title defects that do not or would not materially impair the use or occupancy of such Owned Real Property in the operation of the business of Company and its Subsidiaries taken as a whole; and (e) any lien that will be extinguished upon the payment by Company at the Closing of a portion of the Purchase Price to the lien holder.

Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity or a governmental entity (or any department, agency, or political subdivision thereof).

Pre-Closing Restructuring ” means the transactions that are being undertaken by Seller in order to satisfy the Closing conditions set forth in § 7(xiv) hereof.

 

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Purchase Price ” has the meaning set forth in §2(e) below.

Reimbursement Agreement ” means the Reimbursement Agreement between Seller and Company substantially in the form attached hereto as Exhibit B , which agreement shall be subject to the approval of Seller’s administrator of the Deaconess Hospital Medical Benefits Plan.

Reimbursement Approvals ” shall mean any and all certifications, provider or supplier numbers, provider or supplier agreements (including Medicare Provider Agreements and Medicaid Provider Agreements), participation agreements, Accreditations and/or any other agreements with or approvals by Medicare, Medicaid, CHAMPUS, CHAMPVA, TRICARE, Veteran’s Administration and any other Governmental Authority, or quasi-public agency, Blue Cross, Blue Shield, any and all managed care plans and organizations, including Medicare Advantage plans, Medicare Part D prescription drug plans, health maintenance organizations and preferred provider organizations, private commercial insurance companies, employee assistance programs and/or any other governmental or third party arrangements, plans or programs for payment or reimbursement in connection with health care services, products or supplies.

Securities Act ” means the Securities Act of 1933, as amended.

Securities Exchange Act ” means the Securities Exchange Act of 1934, as amended.

Seller ” has the meaning set forth in the preface above.

Seller Plans ” means (a) all Employee Benefit Plans of Seller and its ERISA Affiliates (including the Excluded Entities but excluding Company and its Subsidiaries set forth on Schedule 4(f) ) for which none of the employees of Company and its Subsidiaries set forth on Schedule 4(f) participate in or receive any benefit therefrom, (b) the South Mississippi Home Health Pension Trust, (c) the Elk Valley Professional Affiliates Retirement Plan, (d) Deaconess Home Care Benefits Trust, and (e) The Deaconess Hospital Retirement Plan.

Subsidiary ” means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.

Tax ” or “ Taxes ” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, capital gain, intangible, environmental (including taxes under Code §59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax Liability of any other Person in respect of the foregoing. The term “ Tax Liability ” shall mean any liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated, and whether due or to become due) with respect to Taxes.

 

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Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

Third-Party Claim ” has the meaning set forth in §9(d)(i) below.

Trademark Assignment Agreement ” means the Trademark Assignment Agreement between Seller, Company and Buyer in the form attached hereto as Exhibit C .

Transaction Expenses ” means (i) all expenses of Seller, Company and its Subsidiaries incurred in connection with the preparation or execution of this Agreement and the Closing of the transactions contemplated hereby that have not been paid as of the Closing Date, including all brokerage commissions, fees and disbursements of McDonald Investments, Inc., and (ii) all fees and disbursements of attorneys, accountants and other advisors and service providers retained by Seller, Company and its Subsidiaries in connection therewith.

Transition Services Agreement ” means the Transition Services Agreement between Seller, Company and Buyer substantially in the form attached hereto as Exhibit D .

Working Capital ” means the difference between the value of current assets and current liabilities (excluding current maturities of long-term debt) of Company and its Subsidiaries, in each case determined in accordance with GAAP and consistent with Schedule 2(f) .

Working Capital Target Adjustments ” has the meaning set forth in §2(f)(ii).

Working Capital Target ” has the meaning set forth in §2(f)(i).

§2. Purchase and Sale of Company Shares .

(a) Basic Transaction . On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell to Buyer, all of its Company Shares for the consideration specified below in this §2.

(b) Transfer of Capital Stock . On the Closing Date, upon the terms and subject to the conditions of this Agreement, Seller shall sell, convey, transfer, assign and deliver to Buyer all of its right, title and interest in and to the Company Shares, free and clear of all Liens, and at the Closing, Buyer shall acquire the Company Shares.

(c) Excluded Entities . Buyer, Company and Seller acknowledge and agree that the Excluded Entities shall be transferred and distributed by Company to Seller on or prior to the earlier of the Closing Date or the Effective Date.

(d) Excluded Liabilities . Notwithstanding the purchase of the Company Shares by Buyer, Buyer and Seller acknowledge and agree that it is the intent of the Parties that Seller shall be responsible for all Excluded Liabilities and Seller agrees to fully and timely pay all Excluded Liabilities.

(e) Purchase Price . Upon the terms and subject to the conditions contained herein, as consideration for the purchase of the Company Shares and in consideration for the agreements contained herein, at the Closing, Buyer agrees to pay to Seller at the Closing an aggregate of $150,000,000 (the “ Purchase Price ”) in cash or other immediately available funds by wire transfer (subject to adjustment as provided herein), less the sum of (x) such amount as required to repay the principal and interest and any other obligation to pay fees and expenses owing under the terms of the indebtedness for borrowed money and capital leases set forth on Schedule 2(e) (the “ Outstanding Debt ”), and (y) the Transaction Expenses.

 

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(f) Purchase Price Adjustment . The Purchase Price shall be adjusted as follows:

(i) At Closing, the Purchase Price shall be increased or decreased (as adjusted, the “ Adjusted Purchase Price ”), as the case may be, on a dollar for dollar basis by the amount by which the Working Capital, calculated as of the Effective Date, as set forth on the Estimated Working Capital Statement, is greater or less than $7,988,616 (the “ Working Capital Target ”).

(ii) As soon as practicable (but in any event at least five days prior to Closing), Company shall prepare and deliver to Buyer an estimated calculation of the Working Capital as of the Effective Date (the “ Estimated Working Capital Statement ”). The Estimated Working Capital Statement shall be prepared in accordance with the rules set forth on Schedule 2(f) and the working capital adjustments described on Schedule 2(f)(ii) (the “ Working Capital Target Adjustments ”).

(g) The Adjusted Purchase Price shall be subject to adjustment, if any, after the Closing Date as specified in this §2(g).

(i) As soon as practicable following the Closing, Buyer shall prepare a statement of the Working Capital as of the Effective Date (the “ Draft Working Capital Closing Statement ”). The Draft Working Capital Closing Statement shall be prepared in conformity with GAAP and in accordance with the rules set forth on Schedule 2(f) . Buyer will deliver the Draft Working Capital Closing Statement to Seller not later than 90 calendar days following the Closing Date.

(ii) The Draft Working Capital Closing Statement shall be final and binding upon the Parties, and shall be deemed to be the Working Capital Closing Statement, unless, within 30 calendar days of receipt of the Draft Working Capital Closing Statement from Buyer, Seller shall provide to Buyer a report indicating its objections, if any, to the Draft Working Capital Closing Statement. Any such objections shall be set forth in reasonable detail in a report (the “ Seller’s Report ”) that shall indicate the grounds upon which Buyer disputes that the Draft Working Capital Closing Statement has been drawn up in accordance with GAAP and as adjusted in accordance with Schedule 2(f) .

(iii) Within 30 calendar days of the receipt by Buyer of the Seller’s Report, Seller and Buyer shall endeavor to agree on any matters in dispute.

(iv) If Buyer and Seller are unable to agree on any matters in dispute within 30 calendar days after receipt by Buyer of the Seller’s Report, the matters in dispute will be submitted for resolution to the office of Ernst & Young in Cincinnati, Ohio or such other nationally recognized, independent accounting firm as may be mutually acceptable to Seller and Buyer (the “ Independent Accounting Firm ”), which shall within 30 calendar days of such submission determine and issue a written report to Seller and Buyer regarding such disputed items and such written decision shall be final and binding upon the Parties. Company, Seller and Buyer shall cooperate with each other and each other’s representatives to enable the Independent Accounting Firm to render a written decision as promptly as possible. Buyer and Seller shall bear the fees and disbursements of the Independent Accounting Firm equally.

(v) The working capital statement incorporating the resolution of matters in dispute with respect to Working Capital (or, if a Seller’s Report is not provided within the time prescribed in §2(g)(ii), the Draft Working Capital Statement) is referred to as the “ Working Capital Closing Statement . ” The Working Capital Closing Statement shall have the legal effect of an arbitral award and shall be final, binding and conclusive on the Parties.

(vi) In acting under this Agreement, the Independent Accounting Firm shall be entitled to the privileges and immunities of arbitrators.

 

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(vii) If the Working Capital calculated by reference to the Working Capital Closing Statement (the “ Closing Working Capital ”) is less than the Working Capital as shown on the Estimated Working Capital Statement, the Adjusted Purchase Price shall be reduced by an amount equal to such shortfall (the “ Purchase Price Reduction ”). Seller shall pay to Buyer the amount of the Purchase Price Reduction. If the Closing Working Capital is more than the Working Capital as shown on the Estimated Working Capital Statement, the Adjusted Purchase Price shall be increased by an amount equal to such excess (the “ Purchase Price Increase ”). Buyer shall pay the amount of such Purchase Price Increase to Seller.

(viii) Any payments to be made pursuant to this §2(g) shall be made in cash within 10 calendar days after the date of receipt by Buyer and Seller of the Working Capital Closing Statement as finally established pursuant to this §2(g).

(h) Net Cash Payment to Seller . Immediately prior to the earlier of the Closing Date or the Effective Date, Seller shall cause Company to pay Seller an aggregate amount (and may cause each Subsidiary of Company to pay to Company any necessary component thereof) equal to Seller’s good faith estimate of the excess (if any) of (i) the consolidated Cash of Company and its Subsidiaries as of the Effective Date over (ii) the aggregate amount of Cash necessary (which shall include any restricted Cash (such as with respect to the Bowling Green acquisition)) required to be left in Company or its Subsidiaries in order for Seller to meet the Working Capital Target. Seller may cause (A) Company to make any such payment to them in the form of a dividend and (B) any Subsidiary of Company to make any such payment to Company in the form of a dividend or an intercompany loan.

(i) Closing . Subject to §7, the closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Dinsmore & Shohl LLP, in Cincinnati, Ohio commencing at 9:00 a.m. local time, on the later of (i) December 29, 2006 or (ii) three (3) business days after the satisfaction or waiver of all conditions to closing contained in §7 or such other time and/or place as the Parties otherwise agree (the “ Closing Date ”). Notwithstanding the date on which the Closing occurs, all of the incidents of economic ownership attributable to Company shall be deemed transferred to Buyer on the Effective Date, and all prorations and allocations required by this Agreement shall be determined as of the Effective Date.

(j) Deliveries at Closing .

(i) At the Closing, Seller will deliver to Buyer the following:

(A) stock certificates representing all of its Company Shares, endorsed in blank or accompanied by duly executed assignment documents and stock powers;

(B) the Trademark Assignment Agreement duly executed by Seller and Company;

(C) the Reimbursement Agreement duly executed by Seller;

(D) the Transition Services Agreement duly executed by Seller;

(E) all consents and approvals from the governmental authorities and other third parties required or necessary as a result of the transactions contemplated hereby;

(F) payoff letters in form reasonably satisfactory to Buyer for the Outstanding Debt set forth on Schedule 2(e) ;

(G) invoices for all Transaction Expenses to be paid at Closing; and

 

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(H) all other documents required to be delivered pursuant to §7 not specifically mentioned in this §2(j)(i).

(ii) At the Closing, Buyer will deliver and tender or cause to be delivered and tendered, the following:

(A) to Seller, the Adjusted Purchase Price (less the amounts paid to Company pursuant to subsection (B) and (C) below in accordance with §2(e) and §2(f)), by wire transfer of immediately available funds;

(B) to Company, cash in immediately available funds in an amount sufficient to repay the Outstanding Debt;

(C) to Company, cash in immediately available funds in an amount sufficient to pay all Transaction Expenses for which invoices were delivered pursuant to §2(j);

(D) the Trademark Assignment Agreement duly executed by Buyer;

(E) all other documents required to be delivered pursuant to §7 and not specifically mentioned above in this §2(j)(ii).

(k) The parties acknowledge that any amounts owed Company or its subsidiaries by affiliates of Seller that conduct the Pediatric Business will be cancelled on or prior to the distribution of the Excluded Entities to Sellers, which shall occur prior to the earlier of the Effective Date or the Closing Date.

§3. Representations and Warranties Concerning Transaction .

(a) Seller’s Representations and Warranties . As a material inducement to Buyer to enter into this Agreement and to consummate the transactions contemplated hereunder, Seller hereby represents and warrants to Buyer, except as set forth in Annex I hereto, as follows:

(i) Organization of Seller . Seller is duly organized, validly existing, and in good standing under the laws of Ohio.

(ii) Authorization of Transaction . Seller has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms and conditions, except to the extent that the enforceability thereof may be limited by: (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws from time to time in effect affecting generally the enforcement of creditors’ rights and remedies; and (ii) general principles of equity (the exceptions set forth in (i) and (ii), the “ Enforceability Exceptions ”). Seller need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. The execution, delivery and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by Seller.

(iii) Non-contravention . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Authority, or court to which Seller is subject or, any provision of its charter, bylaws, regulations, or other governing documents, (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Seller is a party or by which he, she, or it is bound or to which any of his, her, or its assets is subject, or (C) result in the imposition or creation of a Lien upon or with respect to Company Shares.

 

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(iv) Brokers’ Fees . Seller has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement other than to McDonald Investments, Inc.

(v) Company Shares . Seller holds of record and owns beneficially the number of Company Shares set forth in §4(b), free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), taxes, Liens, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. Seller is not a party to any option, warrant, purchase right, or other contract or commitment (other than this Agreement) that could require Seller to sell, transfer, or otherwise dispose of any capital stock of Company. Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of Company.

(b) Buyer’s Representations and Warranties . As a material inducement to Seller to enter into this Agreement and to consummate the transactions contemplated hereunder, Buyer hereby represents and warrants to Buyer, except as set forth in Annex II attached hereto, as follows:

(i) Organization of Buyer . Buyer is a corporation duly organized, validly existing, and in good standing under the laws of Delaware.

(ii) Authorization of Transaction . Buyer has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and conditions, except to the extent that the enforceability thereof may be limited by the Enforceability Exceptions. Buyer need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. The execution, delivery and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by Buyer.

(iii) Non-contravention . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Authority, or court to which Buyer is subject or any provision of its charter, bylaws, regulations or other governing documents or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Buyer is a party or by which it is bound or to which any of its assets is subject.

(iv) Brokers’ Fees . Buyer has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Seller will have any liability following the Closing.

(v) Investment . Buyer is not acquiring the Company Shares with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act.

§4. Representations and Warranties Concerning Company and Its Subsidiaries . As a material inducement to Buyer to enter into this Agreement and to consummate the transactions contemplated hereunder, each of Seller and Company, jointly and severally, hereby make the representations and warranties set forth in this §4, subject to the information disclosed in the disclosure schedule delivered by Seller to Buyer on the date hereof (the “ Disclosure Schedule ”). For purposes of this §4, except where specifically noted, all references to the Subsidiaries of Company contained in this §4 shall be deemed to be referring to the Subsidiaries of Company other than the Excluded Entities.

 

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(a) Organization, Qualification, Corporate Power, and Authorization of Transaction .

(i) Each of Company and its Subsidiaries are corporations or other business entities duly organized, validly existing, and in good standing under the laws of the jurisdiction of their incorporation. Each of Company and its Subsidiaries are duly authorized to conduct business and are in good standing under the laws of each jurisdiction where such qualification is required, except where the lack of such qualification would not have a Material Adverse Effect.

(ii) Each of Company and its Subsidiaries have full corporate or other power and authority to carry on the business in which they are engaged and to own and use the properties owned and used by them. Schedule 4(a) lists the directors and officers of Company and each of its Subsidiaries.

(iii) Company has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Company, enforceable in accordance with its terms and conditions, except to the extent that the enforceability thereof may be limited by the Enforceability Exceptions. Company need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement other filings required to be made pursuant to the Hart Scott Rodino Act and the approvals required as listed on Schedule 4(a)(iii) . The execution, delivery and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by Company.

(b) Capitalization . The entire authorized capital stock of Company consists of 750 Company Shares, of which 100 Company Shares are issued and outstanding and zero Company Shares are held in treasury. All of the issued and outstanding Company Shares have been duly authorized, are validly issued, fully paid, and non-assessable, and are held of record by the Seller. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require Company to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to Company.

(c) Non-contravention . Except as set forth on Schedule 4(c) , neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Authority, or court to which Company or any of its Subsidiaries are subject or any provision of the charter or bylaws of Company and any of its Subsidiaries except where the violation would not have a Material Adverse Effect, or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any contract required to be set forth on Schedule 4(n) to which any of Company or its Subsidiaries is a party or by which it is bound or to which any of its assets is subject. Neither Company nor any of its Subsidiaries needs to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority in order for the Parties to consummate the transactions contemplated by this Agreement, except where the failure to give such notice, to file, or to obtain any authorization, consent, or approval would not have a Material Adverse Effect.

(d) Brokers’ Fees . Neither Company nor any of its Subsidiaries has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement. None of Company or any of its Subsidiaries is bound by any agreement or commitment for the provision of investment banking or financial advisory services with respect to any recapitalization, issuance of debt or equity securities or other capital or financing transactions involving Company or its Subsidiaries.

 

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(e) Title to Tangible Assets . Company and its Subsidiaries have good and marketable title to, or a valid leasehold interest in, the material tangible assets they use in the conduct of the Business, free and clear of all Liens. The machinery, equipment, vehicles and other tangible assets of Company and its Subsidiaries have been maintained in good working condition (normal wear and tear excepted) and are sufficient for the conduct of the Business as presently conducted. Seller does not own any of the assets currently utilized in the Business.

(f) Subsidiaries . Schedule 4(f) sets forth for each Subsidiary of Company (i) its name and jurisdiction of incorporation, (ii) the number of authorized shares for each class of its capital stock, (iii) the number of issued and outstanding shares of each class of its capital stock, the names of the holders thereof, and the number of shares held by each such holder, and (iv) the number of shares of its capital stock held in treasury. All of the issued and outstanding shares of capital stock of each Subsidiary of Company have been duly authorized and are validly issued, fully paid, and non-assessable. One of Company and its Subsidiaries holds of record and owns beneficially all of the outstanding shares of each Subsidiary of Company as set forth in Schedule 4(f) . Except for the Subsidiaries set forth in Schedule 4(f) , neither Company nor any of its Subsidiaries owns or has any right to acquire, directly or indirectly, any outstanding capital stock of, or other equity interests in, any Person.

(g) Financial Statements . Attached hereto as Exhibit A are the following financial statements (collectively the “ Financial Statements ”): (i) audited consolidated balance sheets and statements of income, changes in stockholders’ equity, and cash flow as of and for the fiscal years ended December 31, 2005, December 31, 2004, and December 31, 2003 for Company and its Subsidiaries; and (ii) unaudited consolidated balance sheets and statements of income, changes in stockholders’ equity, and cash flow (the “ Most Recent Financial Statements ”) as of and for the ten months ended October 31, 2006 (the “ Most Recent Fiscal Month End ”) for Company and its Subsidiaries. The Financial Statements (including the notes thereto) have been prepared in accordance with GAAP throughout the periods covered thereby and present fairly the financial condition of Company and its Subsidiaries as of such dates and the results of operations of Company and its Subsidiaries for such periods; provided, however , that the Most Recent Financial Statements are subject to normal year-end adjustments and lack footnotes and other presentation items. Notwithstanding anything to the contrary, the Parties acknowledge and agree that Buyer shall not be entitled to make any claims for indemnification with respect to the specific adjustments to Working Capital and the specific underlying assumptions related thereto set forth on the Working Capital Target Adjustments.

(h) Events Subsequent to September 30, 2006 . Since September 30, 2006, there has not been any Material Adverse Change. Without limiting the generality of the foregoing, since that date:

(i) neither Company nor any of its Subsidiaries has sold, leased, transferred, or assigned any material assets, tangible or intangible, outside the Ordinary Course of Business;

(ii) neither Company nor any of its Subsidiaries has entered into any agreement, contract, lease, or license, which involves consideration in excess of $100,000, outside the Ordinary Course of Business;

(iii) no party (including Company or any of its Subsidiaries) has accelerated, terminated, made material modifications to, or canceled any material agreement, contract, lease, or license to which Company or any of its Subsidiaries is a party or by which any of them is bound;

(iv) neither Company nor any of its Subsidiaries has imposed any Lien upon any of its assets, tangible or intangible;

 

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(v) neither Company nor any of its Subsidiaries has made any material capital expenditures outside the Ordinary Course of Business;

(vi) neither Company nor any of its Subsidiaries has made any material capital investment in, or any material loan to, any other Person outside the Ordinary Course of Business;

(vii) Company and its Subsidiaries have not created, incurred, assumed, or guaranteed more than $250,000 in aggregate indebtedness for borrowed money and capitalized lease obligations;

(viii) neither Company nor any of its Subsidiaries has transferred, assigned, or granted any license or sublicense of any material rights under or with respect to any Intellectual Property;

(ix) there has been no change made or authorized in the charter or bylaws of Company or any of its Subsidiaries;

(x) neither Company nor any of its Subsidiaries has issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock except for a distribution or sale of the Excluded Entities;

(xi) neither Company nor any of its Subsidiaries has declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock;

(xii) neither Company nor any of its Subsidiaries has experienced any material damage, destruction, or loss (whether or not covered by insurance) to its property;

(xiii) neither Company nor any of its Subsidiaries has made any loan to, or entered into any other transaction with, any of its directors, officers, and employees;

(xiv) neither Company nor any of its Subsidiaries has entered into or terminated any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement;

(xv) neither Company nor any of its Subsidiaries has granted any increase in the base compensation of any of its directors, officers, and employees outside the Ordinary Course of Business;

(xvi) neither Company nor any of its Subsidiaries has adopted, amended, modified, or terminated any bonus, profit sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan);

(xvii) neither Company nor any of its Subsidiaries has made any other material change in employment terms for any of its directors, officers, and employees outside the Ordinary Course of Business;

(xviii) neither Company nor any of its Subsidiaries has made any loans or advances of money;

(xix) neither Company nor any of its Subsidiaries has had any Permit, Company Accreditation or any Company Reimbursement Approval suspended, revoked or terminated (whether due to nonrenewal or otherwise); and

 

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(xx) neither Company nor any of its Subsidiaries has committed to any of the foregoing.

(i) Undisclosed Liabilities . Neither Company nor any of its Subsidiaries has any material liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes), except for (i) liabilities set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) liabilities that have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business.

(j) Legal Compliance . Company and each Subsidiary is in compliance in all material respects with all Laws of any Governmental Authority applicable to its business or operations, including all Laws with respect to employment of professionals by non-professionals and those with respect to the payment for, or the referral of, services to be covered by, as well as other requirements for participation in, all federal and state health care programs (e.g., Medicare and Medicaid). Except as set forth on Schedule 4(j) , neither Company nor any Subsidiary has received any written or other notice or been charged with the violation of any Laws. To the Knowledge of Company, neither Company nor any Subsidiary is under investigation with respect to the violation of any Laws and, to the Knowledge of Company, there are no facts or circumstances which could form the basis for any such violation. Company and each Subsidiary currently has all Permits which are required for the operation of the business as presently conducted except for such Permits the failure of which to possess will not materially and adversely effect the ability of any of Company or its Subsidiaries to conduct its business as presently conducted, and all such Permits are valid and in full force and effect and will remain so immediately after consummation of the transactions contemplated hereby. No challenge, revocation, suspension, cancellation or termination of any of such Permits, to the Knowledge of Company, is threatened, other than expiration in accordance with the terms thereof. Company is in compliance with its obligations under such Permits. Company and each Subsidiary is, and at all times during the past 12 months has been, in material compliance with respect to its obligations under the rules and regulations of all applicable accrediting and similar bodies. Neither Company nor any of its Subsidiaries is in default or violation (and no event has occurred which, with notice or lapse of time or both, would constitute a default or violation) of any term, condition or provision of the certificate of incorporation and the by-laws of Company or such Subsidiary, as the case may be.

(k) Tax Matters .

(i) Each of Company and its Subsidiaries has filed all Tax Returns that they were required to file prior to the Closing Date under applicable laws and regulations. All such Tax Returns were correct and complete in all material respects and were prepared in substantial compliance with all applicable laws and regulations. Except for items being disputed in good faith by proceedings in accordance with applicable law (and for which appropriate reserves have been established in the Financial Statements), all Taxes due and owing by Company or any of its Subsidiaries have been paid. Neither Company nor any of its Subsidiaries currently is the beneficiary of any extension of time within which to file any Tax Return. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of Company or any of its Subsidiaries.

(ii) Each of Company and its Subsidiaries has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

(iii) No Seller or director or officer (or employee responsible for Tax matters) of Company or any of its Subsidiaries expects any authority to assess any additional Taxes for any period for which Tax Returns have been filed. No foreign federal, state or local tax audits or administrative or judicial Tax proceedings are pending or being conducted (for which notice has been provided to Company or its Subsidiaries) with respect to Company or any of its Subsidiaries. Neither Company nor any of its Subsidiaries has received from any foreign, federal,

 

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state or local taxing authority (including jurisdictions where Company or its Subsidiaries have not filed Tax Returns) and (i) notice indicating an intent to open an audit or other review, (ii) request for information related to Tax matters, or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted or assessed by any taxing authority against Company or any of its Subsidiaries. Schedule 4(k)(iii) of the Disclosure Schedule lists all federal, state, local and foreign income Tax Returns filed with respect to any of Company or its Subsidiaries for taxable periods ended on or after December 31, 2001, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. Seller has delivered (or will deliver as soon as practical following the date hereof and in any event no later than 5 Business Days prior to the Closing Date) to Buyer complete copies of all income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by Company or any of its Subsidiaries filed or received since December 31, 2001.

(iv) Neither Company nor any of its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

(v) Neither Company nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or could result, separately or in the aggregate, in the payment of (i) any “excess parachute payment” within the meaning of Code §280G (or any corresponding provision of state, local or foreign Tax law) and (ii) any amount that will not be fully deductible as a result of Code §162(m) (or any corresponding provision of state, local or foreign Tax law). Neither Company nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Code §897(c)(2) during the applicable period specified in Code §897(c)(1)(A)(ii). Each of Company and its Subsidiaries has disclosed on their federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code §6662. Neither Company nor any of its Subsidiaries is a party to or bound by any Tax allocation or sharing agreement. Neither Company nor any of its Subsidiaries has been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group, the common parent of which was Company), or (B) has any Tax Liability for the Taxes of any Person (other than Company or any of its Subsidiaries) under Reg. §1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise.

(vi) Schedule 4(k)(vi) of the Disclosure Schedule sets forth the following information as of the most recent practicable date (as well as on an estimated pro forma basis as of the Closing giving effect to the consummation of the transactions contemplated hereby): (A) the basis of Company and its Subsidiary in its assets; (B) the basis of the stockholder(s) of each direct and indirect Subsidiary of Company (including each of the Excluded Entities) in its stock (or the amount of any excess loss account); (C) the amount of any net operating loss, net capital loss, unused investment or other credit, unused foreign tax, or excess charitable contribution allocable to Company or its Subsidiary (including the Excluded Entities); and (D) the amount of any deferred gain or loss allocable to Company or its Subsidiary (including the Excluded Entities) arising out of any intercompany transaction.

(vii) The unpaid Taxes of Company and its Subsidiaries (A) did not, as of the date of the Most Recent Financial Statements, 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 Financial Statements (rather than in any notes thereto) and (B) do not exceed that reserve as adjusted for the passage of time through the Effective Date in accordance with the past custom and practice of Company and its Subsidiaries in filing their Tax Returns. Since the date of the Most Recent Financial Statements, neither Company nor any of its Subsidiaries has incurred any liability for Taxes arising from extraordinary gains or losses, as that term is used in GAAP, outside the ordinary course of business consistent with past custom and practice.

 

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(viii) Neither Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) “closing agreement” as described in Code §7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (iii) intercompany transaction or excess loss account described in Treasury Regulations under Code §1502 (or any corresponding or similar provision of state, local or foreign income Tax law); (iv) installment sale or open transaction disposition made on or prior to the Closing Date; or (v) prepaid amount received on or prior to the Closing Date.

(ix) Neither Company nor any of its Subsidiaries has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Code §355 or Code §361.

(x) Company has not engaged in or otherwise participated in any reportable transaction “or” “listed transaction” as defined in Section 6707A of the Code.

(l) Real Property .

(i) Schedule 4(l)(i) sets forth the address and description of each parcel of Owned Real Property. With respect to each parcel of Owned Real Property:

(A) Company or one of its Subsidiaries has good and marketable fee simple title, free and clear of all Liens, except Permitted Encumbrances;

(B) except as set forth in Schedule 4(l)(i)(B) , neither Company nor any of its Subsidiaries has leased or otherwise granted to any Person the right to use or occupy such Owned Real Property or any portion thereof; and

(C) there are no outstanding options, rights of first offer or rights of first refusal to purchase such Owned Real Property or any portion thereof or interest therein.

(ii) Schedule 4(l)(ii) sets forth the address of each parcel of Leased Real Property, and a true and complete list of all Leases for each such Leased Real Property (including the date and name of the parties to such Lease document). Seller has delivered to Buyer a true and complete copy of each such Lease document, and in the case of any oral Lease, a written summary of the material terms of such Lease. Except as set forth in Schedule 4(l)(ii) , with respect to each of the Leases:

(A) such Lease is legal, valid, binding, enforceable and in full force and effect;

(B) the transactions contemplated by this Agreement do not require the consent of any other party to such Lease (except for those Leases for which Lease Consents (as hereinafter defined) are obtained), will not result in a breach of or default under such Lease, and will not otherwise cause such Lease to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing;

(C) none of Company’s or any of its Subsidiaries’ possession and quiet enjoyment of the Leased Real Property under such Lease has been disturbed and, to the Knowledge of Company, there are no disputes with respect to such Lease;

 

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(D) neither Company, nor any of its Subsidiaries nor, to the Knowledge Company, any other party to the Lease is in breach of or default under such Lease, and, to the Knowledge of Company, no event has occurred or circumstance exists that, with the delivery of notice, the passage of time or both, would constitute such a breach or default, or permit the termination, modification or acceleration of rent under such Lease;

(E) no security deposit or portion thereof deposited with respect to such Lease has been applied in respect of a breach of or default under such Lease that has not been redeposited in full;

(F) neither Company nor any of its Subsidiaries owes, or will owe in the future, any brokerage commissions or finder’s fees with respect to such Lease;

(G) the other party to such Lease is not an affiliate of, and otherwise does not have any economic interest in, Company or any of its Subsidiaries;

(H) neither Company nor any of its Subsidiaries has subleased, licensed or otherwise granted any Person the right to use or occupy the Leased Real Property or any portion thereof; and

(I) neither Company nor any of its Subsidiaries has collaterally assigned or granted any other Lien in such Lease or any interest therein.

(iii) The Owned Real Property identified in Schedule 4(l)(i) , and the Leased Real Property identified in Schedule 4(l)(ii) (collectively, the “ Real Property ”) comprise all of the real property used or intended to be used in the business of Company and its Subsidiaries; and neither Company nor any of its Subsidiaries is a party to any agreement or option to purchase any real property or interest therein.

(iv) There are no pending or, to the Knowledge of Company, contemplated, zoning changes, “floor area ratio” changes, variances, special zoning exceptions, conditions or agreements which have or would reasonably be expected to have a Material Adverse Effect. Public utilities currently serve all utility requirements necessary for the current use of all Real Property. All of the Real Property are currently zoned in the zoning category which permits operation of such properties as now used, operated and maintained for the operation of the Business, and none of such Real Property nor its respective use is in violation of any local governmental rule, ordinance, regulation or building code.

(v) Neither Company nor any of its Subsidiaries has received written notice of any condemnation, expropriation or other proceeding in eminent domain affecting any parcel of Real Property or any portion thereof or interest therein. To the Knowledge of Company, there is no injunction, decree, order, writ or judgment outstanding, or any claim, litigation, administrative action or similar proceeding, pending or threatened, relating to the ownership, lease, use or occupancy of the Real Property or any portion thereof, or the operation of the Business.

 

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(m) Intellectual Property .

(i) Since January 1, 2002, Company and its Subsidiaries have not interfered with, infringed upon, misappropriated, or violated any Intellectual Property rights of third parties, and Seller and the directors and officers of Company and its Subsidiaries have not received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation which is pending (including any claim that Company or any of its Subsidiaries must license or refrain from using any Intellectual Property rights of any third party). To the Knowledge of Company, no third party has interfered with, infringed upon, misappropriated, or violated any Intellectual Property rights of Company or any of its Subsidiaries.

(ii) Schedule 4(m)(ii) sets forth a complete and correct list of all Intellectual Property owned or used by Company and its Subsidiaries. Except as set forth on Schedule 4(m)(ii) , Company and its Subsidiaries owns and possesses all right, title and interest in and to, or has a written and enforceable license to use, all Intellectual Property set forth on Schedule 4(m)(ii) , free and clear of all Encumbrances (other than Permitted Encumbrances) and (i) Company and its Subsidiaries have taken commercially reasonable measures to protect the proprietary nature of all Intellectual Property that they own or possess the exclusive rights to license or transfer, including such commercially reasonable measures to maintain in confidence all trade secrets and confidential information that they presently own or use, and (ii) Company and its Subsidiaries have made the necessary filings and recordations and have paid all required fees to record and maintain their ownership of all registrable Intellectual Property.

(iii) Schedule 4(m)(ii) lists, as of the date hereof, all licenses to which Company or any of its Subsidiaries is a party and pursuant to which any Person has been granted any right to use any Intellectual Property of Company or any of its Subsidiaries. To the Knowledge of Company, no event has occurred which with notice or lapse of time would constitute a breach or default by Company and its Subsidiaries or any other party to such licenses, or permit the termination, modification or acceleration of any rights thereunder by any party thereto.

(iv) No item of Intellectual Property listed on Schedule 4(m)(ii) belonging to, or licensed to, Company or any of its Subsidiaries is subject to any outstanding judgment, order, decree, stipulation or injunction to which Company or any of its Subsidiaries is a party or has been specifically named.

(v) Seller has delivered to Buyer correct and complete copies of all such patents, registrations, applications, licenses, sublicenses, agreements, and permissions (as amended to date). Except as set forth on Schedule 4(m)(v), all Intellectual Property set forth on Schedule 4(m)(ii) will be owned by or available for use by the Buyer immediately following the Closing on identical terms and conditions as currently owned or used.

(vi) Neither Company nor any of its Subsidiaries have received any notice of any claim by any third party contesting the validity, enforceability, use or ownership of any Intellectual Property owned or used by Company or any of its Subsidiaries, nor to the Knowledge


 
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