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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
9
(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.
10
(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.
11
(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.
12
(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;
13
(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
14
(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,
15
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.
16
(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;
17
(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.
18
(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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