EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
Dated as of March 21, 2003
by and among
LIFETIME HEALTHCARE SERVICES, INC.,
REDWOOD INVESTMENTS ASSOCIATES, L.P., and
NEW YORK MEDICAL, INC.
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement, dated as of March __, 2003, by and among LIFETIME
HEALTHCARE SERVICES, INC., a Delaware corporation with offices at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Purchaser"), REDWOOD INVESTMENTS
ASSOCIATES, L.P., a Delaware limited partnership with offices at Two ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ (the "Shareholder"), and NEW YORK MEDICAL, INC.,
a Delaware corporation with offices at Two ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇ (the "Company"). Certain capitalized terms used in this Agreement have the
meanings assigned to them in Article IX.
WHEREAS, the Shareholder owns the Shares and has approved, and deems it
advisable to consummate, the acquisition of such Shares by Purchaser;
WHEREAS, the Board of Directors of the Company has determined that the
performance of the obligations contained herein by Purchaser (including Section
5.12) is in the best interests of the Company.
WHEREAS, the Board of Directors of Purchaser has determined that the
acquisition of acquisition of the Shares is in the best interests of Purchaser.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
ARTICLE 1.1 Sale and Transfer of Shares. Subject to the terms and
conditions of this Agreement, at the Closing the Shareholder shall sell, convey,
assign, transfer and deliver to Purchaser, and Purchaser shall purchase, acquire
and receive, the Shares, free and clear of all Encumbrances, except for any
Encumbrance arising under the Securities Act or any applicable state securities
laws.
ARTICLE 1.2 The Purchase Price. Subject to the terms and conditions of this
Agreement, in consideration of the aforesaid sale, conveyance, assignment,
transfer and delivery to Purchaser of the Shares, Purchaser shall deliver to the
Shareholder the Note.
ARTICLE 2
THE CLOSING
ARTICLE 2.1 The Closing. The sale and transfer of the Shares by the
Shareholder to Purchaser shall take place at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Singer & ▇▇▇▇▇▇▇▇▇, LLP at 10:00 a.m., New York time, not to exceed five (5)
business days following the satisfaction and/or waiver of all conditions to
close set forth in Article VI (other than conditions which can be satisfied only
by the delivery of certificates, opinions or other documents at the Closing),
unless another date, time or place is agreed to in writing by each of the
parties hereto.
ARTICLE 2.2 Deliveries by the Shareholder. At the Closing, the Shareholder
shall deliver to Purchaser:
(a) certificates representing the Shares, each such certificate to be
duly and validly endorsed in favor of Purchaser or accompanied by a
separate stock power duly and validly executed by the Shareholder and
otherwise sufficient to vest in Purchaser good and marketable title to such
Shares;
(b) a document duly executed by the Shareholder reciting that such
document shall become effective simultaneously with the Closing and that
the Shareholder consents to (i) the appointment as directors of the Company
of those persons designated by notice given by Purchaser to the Shareholder
at least one day prior to the Closing and (ii) and effects the removal of
those officers and directors of the Company and each Company Subsidiary, if
applicable, as designated by Purchaser at least one day prior to the
Closing;
(c) the Employment Agreement (to be duly executed by ▇▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇") and the Purchaser);
(d) executed copies of the consents referred to in Section 5.3(c)
hereof;
(e) all of the books and records of the Shareholder relating to the
Company;
(f) the duly executed opinion of counsel referred to in Section 6.2(b)
hereof;
(g) the duly executed Officers' Certificate referred to in Section
6.2(c) hereof;
(h) a certification of non-foreign status for and duly executed by the
Shareholder in the form and manner which complies with the requirements of
Section 1445 of the Code and the regulations promulgated thereunder;
(i) any other certifications which may be required under applicable
law stating that no Taxes are due to any taxing authority for which
Purchaser would have liability to withhold and pay with respect to the
transfer of Shares to Purchaser pursuant to this Agreement;
(j) copies of all records, including all signature or authorization
cards, pertaining to the bank accounts listed in the Disclosure Schedule;
and
(k) all other previously undelivered documents required to be
delivered by the Shareholder to Purchaser at or prior to the Closing in
connection with the Transactions.
ARTICLE 2.3 Deliveries by Purchaser. At the Closing, Purchaser shall
deliver to the Shareholder:
(i) the Note duly executed by the Purchaser;
(ii) the Employment Agreement duly executed by Purchaser (an
original executed copy to also be delivered to ▇▇. ▇▇▇▇▇▇);
(iii) the duly executed opinion of counsel referred to in Section
6.3(c) hereof;
(iv) the duly executed Officers' Certificate referred to in
Section 6.3(d) hereof; and
(v) all other previously undelivered documents required to be
delivered by the Purchaser to the Shareholder at or prior to the
Closing in connection with the Transactions.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF THE SHAREHOLDER AND THE COMPANY
Except as specifically set forth in the Disclosure Schedule prepared and
signed by the Shareholder and Purchaser and delivered to Purchaser in accordance
with Section 5.13 hereof, the Shareholder and the Company, jointly and
severally, represent and warrant to Purchaser that all of the statements
contained in this Article III are true and complete as of the date of this
Agreement (or, if made as of a specified date, as of such date), and will be
true and complete as of the Closing Date as though made on the Closing Date.
Each exception set forth in the Disclosure Schedule and each other response to
this Agreement set forth in the Disclosure Schedule is identified by reference
to, or has been grouped under a heading referring to, a specific individual
section of this Agreement and, except as otherwise specifically stated with
respect to such exception, relates only to such section. In the event of any
inconsistency between statements in the body of this Agreement and statements in
the Disclosure Schedule (excluding exceptions expressly set forth in the
Disclosure Schedule with respect to a specifically identified representation or
warranty), the statements in the body of this Agreement shall control.
ARTICLE 3.1 Share Ownership. The Shareholder is the record and beneficial
owner of the Shares. Except for the Shares, the Shareholder does not own any
securities issued by, or other obligations of, the Company or any Company
Subsidiary.
ARTICLE 3.2 Legal Power; Organization; Qualification of the Shareholder.
The Shareholder is a duly organized limited liability company and has all
requisite power and authority to execute and deliver this Agreement and to
consummate the Transactions. No Person has any community property rights by
virtue of marriage or otherwise in any of the Shares.
ARTICLE 3.3 Binding Agreement. This Agreement has been duly executed and
delivered by the Shareholder and, assuming due and valid authorization,
execution and delivery by Purchaser, this Agreement constitutes a legal, valid
and binding obligation of the Shareholder, enforceable against such Shareholder
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar
laws of general application affecting enforcement of creditors' rights generally
and (ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought.
ARTICLE 3.4 No Shareholders Conflict or Default. Neither the execution and
delivery of this Agreement nor the consummation by the Shareholder of any of the
Transactions or performance of any obligations contained herein will result in a
violation of, or a default under, or conflict with, or require any consent,
approval or notice under, any contract, trust, commitment, agreement,
obligation, understanding, arrangement or restriction of any kind to which
Shareholder is a party or by which Shareholder is bound or to which the Shares
are subject. Consummation by the Shareholder of the Transactions will not
violate, or require any consent, approval or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable to
Shareholder or the Shares.
ARTICLE 3.5 Ownership and Possession of Shares. The Shares and the
certificates representing the Shares are now, and at all times up to and
including the Closing Date shall be, owned by the Shareholder and held by such
Shareholder, or by a nominee or custodian for the sole and exclusive benefit of
such Shareholder and such Shareholder's beneficiaries, free and clear of all
Encumbrances whatsoever, except for any Encumbrances created by this Agreement
and Encumbrances arising under the Securities Act or state securities laws.
ARTICLE 3.6 Good Title Conveyed. The stock certificates, stock powers,
endorsements, assignments and other instruments to be executed and delivered by
the Shareholder to Purchaser at the Closing will be valid and binding
obligations of the Shareholder, enforceable in accordance with their respective
terms, and will effectively vest in Purchaser good, valid and marketable title
to all the Shares to be transferred to Purchaser pursuant to and as contemplated
by this Agreement free and clear of all Encumbrances, except restrictions on
transfer imposed by the Securities Act and state securities laws.
ARTICLE 3.7 Authorization; Validity of Agreement; Company Action. The
Company has full corporate power and authority to execute and deliver this
Agreement, and to perform its obligations contained herein. The execution,
delivery and performance by the Company of this Agreement and the performance of
its obligations contained herein have been duly authorized by the Company Board
of Directors, and no other corporate action on the part of the Company is
necessary to authorize the execution and delivery by the Company of this
Agreement or the performance of its obligations contained herein. No vote of, or
consent by, the holders of any class or series of capital stock issued by the
Company is necessary to authorize the execution and delivery by the Company of
this Agreement or the performance of its obligations contained herein. This
Agreement has been duly executed and delivered by the Company and, assuming due
and valid authorization, execution and delivery thereof by Purchaser, this
Agreement is a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws of general application affecting enforcement of creditors'
rights generally and (ii) the availability of the remedy of specific performance
or injunctive or other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before which any
proceeding therefor may be brought.
ARTICLE 3.8 Other Board Approvals Regarding Transactions. The Company Board
of Directors has (i) duly and validly waived any rights the Company may have
under any agreement or otherwise to object to the transfer to Purchaser of the
Shares held by the Shareholder and (ii) duly and validly consented to the
transfer to Purchaser of all of the Shares, and none of the aforesaid actions by
the Company Board of Directors has been amended, rescinded or modified.
ARTICLE 3.9 Capitalization. (a) The authorized capital stock of the Company
consists of 3,000,000 shares, consisting of 2,000,000 shares of common stock,
$.01 par value, of which 550,000 shares are issued and outstanding, and
1,000,000 shares of Series A Convertible Preferred Stock, $.01 par value, of
which 450,000 shares are issued and outstanding and held by the ESOP. All of the
shares of the Company's capital stock are duly authorized, validly issued, fully
paid and non-assessable. Except as set forth above and except for the
Transactions, as of the date hereof, (i) there are no shares of capital stock of
the Company authorized, issued or outstanding; (ii) there are no existing
options, warrants, calls, pre-emptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the issued
or unissued capital stock of the Company or any Company Subsidiary, obligating
the Company or any Company Subsidiary to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock of, or other equity or
debt interest in, the Company or any Company Subsidiary or securities
convertible into or exchangeable for such shares or equity interests, or
obligating the Company or any Company Subsidiary to grant, extend or enter into
any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment, except as provided in the certificate of
incorporation of the Company with respect to the (x) conversion of shares of the
Company's Series A Convertible Preferred Stock into shares of the Company's
Common Stock and (y) any redemption or repurchase obligations of the Company
associated with the ESOP, and (iii) there are no outstanding contractual
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any Shares, or other capital stock of the Company, or any
Company Subsidiary or Affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Company Subsidiary or any other entity.
(b) There are no voting trusts or other agreements or understandings to
which the Shareholder, the Company or any Company Subsidiary is a party with
respect to the voting of the capital stock of the Company or any of the Company
Subsidiaries.
ARTICLE 3.10 Organization, Qualification of Company. The Company (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware; (ii) has full corporate power and authority to carry
on its business as it is now being conducted and to own the properties and
assets it now owns; and (iii) is duly qualified or licensed to do business as a
foreign corporation in good standing in every jurisdiction in which ownership of
property or the conduct of its business requires such qualification. The
Disclosure Schedule sets forth each jurisdiction where the Company (x) owns
property or conducts business and (y) is licensed as a foreign corporation. The
Company has heretofore delivered to Purchaser complete and correct copies of the
certificate of incorporation and by-laws of the Company as presently in effect.
ARTICLE 3.11 Subsidiaries and Affiliates. The Disclosure Schedule sets
forth the name, jurisdiction of incorporation and authorized and outstanding
capital of each Company Subsidiary and the jurisdictions in which each Company
Subsidiary is qualified to do business. All of the outstanding capital stock of
each Company Subsidiary is owned directly or indirectly by the Company free and
clear of all Encumbrances and all material claims or charges of any kind, and is
validly issued, fully paid and nonassessable. Each Company Subsidiary (i) is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation; (ii) has full corporate power and authority to
carry on its business as it is now being conducted and to own the properties and
assets it now owns; and (iii) is duly qualified or licensed to do business as a
foreign corporation in good standing in every jurisdiction in which ownership of
property or the conduct of its business requires such qualification. The Company
has heretofore delivered to Purchaser complete and correct copies of the
certificate of incorporation and by-laws of each Company Subsidiary as presently
in effect.
ARTICLE 3.12 Consents and Approvals; No Violations. None of the execution,
delivery or performance of this Agreement by the Company, the consummation by
the Company of any of the Transactions or compliance by the Company with any of
the provisions hereof will (i) conflict with or result in any breach of any
provision of the certificate of incorporation, the by-laws or similar
organizational documents of the Company or any Company Subsidiary, (ii) require
any filing with, or permit, authorization, consent or approval of, any
Governmental Entity or other Person (including consents required under any
licenses or permits issued to the Company and from parties to loans, contracts,
leases and other agreements to which the Shareholder, the Company or any Company
Subsidiary is a party), (iii) require any consent, approval or notice under, or
result in a violation or breach of, or constitute (with or without due notice or
the passage of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any Company Agreement, or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Company,
any Company Subsidiary or any of their properties or assets.
ARTICLE 3.13 Financial Statements. True and complete copies of the
Financial Statements, together with the related auditor's report are included in
the Disclosure Schedule. The Financial Statements have been prepared from, are
in accordance with and accurately reflect, the books and records of the Company
and the Company Subsidiaries, fully comply with applicable accounting
requirements, have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be stated in the notes
thereto), are true and correct and fairly present the consolidated financial
position and the consolidated results of operations and cash flows (and changes
in financial position, if any) of the Company and the Company Subsidiaries as of
the times and for the periods referred to therein (subject, in the case of
unaudited statements, to normally recurring year-end audit adjustments which are
not material either individually or in the aggregate).
ARTICLE 3.14 Books and Records. The books of account, minute books, stock
record books and other records of the Company and the Company Subsidiaries are
complete and correct in all material respects and have been maintained in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls. The minute books of the Company contain
accurate and complete records of all meetings of, and corporate action taken by,
the Company's shareholders, the Company Board of Directors and all committees of
the Company Board of Directors, and no meeting of the Company's shareholders,
the Company Board of Directors or such committees has been held for which
minutes have not been prepared and are not contained in such minute books. True
and complete copies of all minute books and all stock record books of the
Company and each Company Subsidiary have heretofore been delivered to Purchaser.
ARTICLE 3.15 No Undisclosed Liabilities. Except (a) as disclosed in the
Financial Statements and (b) for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice since the Balance
Sheet Date pursuant to the terms of this Agreement, neither the Company nor any
Company Subsidiary has any liability or obligation of any nature, whether or not
accrued, contingent or otherwise. The reserves reflected in the Financial
Statements are adequate, appropriate and reasonable and have been calculated in
a consistent manner.
ARTICLE 3.16 Accounts Receivable. All accounts receivable of the Company
and each Company Subsidiary, whether reflected in the Balance Sheet or
otherwise, represent sales or services actually made or rendered in the ordinary
course of business and are current and collectible except as otherwise indicated
on the Balance Sheet or in the notes thereto. Each such account receivable
either has been collected in full or is collectible in full, without any
set-off, within 120 days after the day on which it became due and payable, less
any reserves that have been accrued and are reflected on the face of the Balance
Sheet.
(i) Accounts Payable. As of the Closing Date, accounts payable,
including accounts payable in respect of legal and other fees and expenses
incurred in connection with the Transactions, for the Company shall not
exceed $100,000 (net of any of the Company's prepaid expenses).
(b) There are no unpaid invoices or bills representing amounts alleged
to be owed by the Company or alleged to be owed by any Company Subsidiary,
or other alleged obligations of the Company or any Company Subsidiary,
which the Company or any Company Subsidiary has disputed or determined to
dispute or refuse to pay.
ARTICLE 3.17 Prepayment of Company Debt. No Indebtedness of the Company or
any Company Subsidiary contains any restriction upon (i) the prepayment of any
Indebtedness of the Company or any Company Subsidiary, (ii) the incurrence of
Indebtedness by the Company or any Affiliate of the Company or (iii) the ability
of the Company or any Affiliate of the Company to grant any lien on the
properties or assets of the Company or any Company Subsidiary. The Disclosure
Schedule sets forth the amount of principal and unpaid interest outstanding
under each instrument evidencing Indebtedness of the Company and any Company
Subsidiaries, if any, that will accelerate or become due or result in a right on
the part of the holder of such Indebtedness (with or without due notice or lapse
of time) to require prepayment, redemption or repurchase as a result of the
execution of this Agreement or the consummation of any of the Transactions.
ARTICLE 3.18 Absence of Certain Changes. Since the Balance Sheet Date, the
Company and each Company Subsidiary has conducted its respective business only
in the ordinary and usual course and consistent with past practice, and neither
the Company nor any Company Subsidiary has:
(a) suffered any adverse change in its working capital, financial
condition, results of operation, assets, liabilities (absolute, accrued,
contingent or otherwise), reserves, business, operations or prospects;
(b) incurred any liability or obligation (absolute, accrued,
contingent or otherwise) except immaterial items incurred in the ordinary
course of business and consistent with past practice, none of which exceeds
$10,000 (counting obligations or liabilities arising from one transaction
or a series of similar transactions, and all periodic installments or
payments under any lease or other agreement providing for periodic
installments or payments, as a single obligation or liability), or
increased, or experienced any change in any assumptions underlying or
methods of calculating, any bad debt, contingency or other reserves;
(c) paid, discharged or satisfied any claim, liability or obligation
(whether absolute, accrued, contingent or otherwise) other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities and obligations reflected or
reserved against in the Balance Sheet or incurred in the ordinary course of
business and consistent with past practice since the Balance Sheet Date;
(d) permitted or allowed any of its property or assets (real, personal
or mixed, tangible or intangible) to be subjected to any mortgage, pledge,
lien, security interest, encumbrance, restriction or charge of any kind,
except for liens for current taxes not yet due;
(e) written off as uncollectible any accounts receivable, except for
immaterial write-offs in the ordinary course of business and consistent
with past practice;
(f) cancelled any debts or waived any claims or rights of substantial
value;
(g) sold, transferred, or otherwise disposed of any of its properties
or assets (real, personal or mixed, tangible or intangible), except in the
ordinary course of business and consistent with past practice;
(h) disposed of or permitted to lapse any rights to the use of any
Intellectual Property, or disposed of or disclosed to any Person other than
representatives of Purchaser any trade secret, formula, process, know-how
or other Intellectual Property not theretofore a matter of public
knowledge;
(i) granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension,
profit sharing or other plan or commitment) or any increase in the
compensation payable or to become payable to any officer or employee, and
no such increase is customary on a periodic basis or required by agreement
or understanding;
(j) made any single capital expenditure or commitment in excess of
$10,000 for additions to property, equipment or intangible capital assets
or made aggregate capital expenditures and commitments in excess of $50,000
for additions to property, equipment or intangible capital assets;
(k) declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of capital stock or
other securities of the Company or any Company Subsidiary;
(l) made any change in any method of accounting or accounting
practice;
(m) paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of
its officers or directors or any Affiliate of any of its officers or
directors except for compensation to officers at rates not exceeding the
rates of such fees and compensation paid during the year ended 2002; or
(n) agreed, whether in writing or otherwise, to take any action
described in this section.
ARTICLE 3.19 Title to Properties; Encumbrances. Each of the Company and
each Company Subsidiary has good, valid and marketable title to all the
properties and assets that it purports to own (tangible and intangible) free and
clear of all Encumbrances, including all the properties and assets reflected in
the Balance Sheet and all such properties and assets purchased by the Company or
any Company Subsidiary since the date of the Balance Sheet, which subsequently
acquired personal properties and assets are listed in the Disclosure Schedule.
All properties and assets reflected in the Balance Sheet have a fair market or
realizable value at least equal to the value thereof as reflected therein. The
rights, properties and other assets presently owned, leased or licensed by the
Company or the Company Subsidiaries and described elsewhere in this Agreement
include all such rights, properties and other assets necessary to permit the
Company and the Company Subsidiaries to conduct their respective businesses in
all material respects in the same manner as such businesses have been conducted
prior to the date hereof.
ARTICLE 3.20 Real Property. The Company does not own any Real Property.
ARTICLE 3.21 Leases. The Disclosure Schedule contains an accurate list of
each Lease. A true and complete copy of each Lease has heretofore been delivered
to Purchaser. Each Lease is valid, binding and enforceable in accordance with
its terms and is in full force and effect. The leasehold estate created by each
Lease is free and clear of all Encumbrances. There are no existing defaults by
the Company or any Company Subsidiary under any of the Leases. No event has
occurred that (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute a default under any Lease. The
Shareholder has not received any notice, or has any other reason to believe,
that any lessor under any Lease will not consent (where such consent is
necessary) to the consummation of the Transactions without requiring any
modification of the rights or obligations of the lessee thereunder.
ARTICLE 3.22 Equipment. The equipment owned or used by the Company and each
Company Subsidiary is structurally sound with no known defects and is in good
operating condition and repair and is adequate for the uses to which it is being
put. Such equipment is not in need of maintenance or repairs except for
ordinary, routine maintenance and repairs which are not material in nature or
cost.
ARTICLE 3.23 Environmental Matters.
(a) Each of the Company and the Company Subsidiaries is in full
compliance with all Environmental Laws. Such compliance includes, but
is not limited to, the possession by the Company and each of the
Company Subsidiaries of all permits and other governmental
authorizations required under all applicable Environmental Laws, and
compliance with the terms and conditions thereof. Each permit and
other governmental authorization currently held by the Company or any
Company Subsidiary pursuant to the Environmental Laws is specifically
identified in the Disclosure Schedule.
(b) Neither the Company nor any Company Subsidiary has received
any communication (written or oral), whether from a Governmental
Entity, citizens group, employee or otherwise, that alleges that the
Company or any Company Subsidiary is not in full compliance with any
Environmental Laws, and there are no circumstances that may prevent or
interfere with such full compliance in the future. The Company has
delivered to Purchaser prior to the execution of this Agreement all
information that is in the possession of or reasonably available to
the Shareholder, the Company or any Company Subsidiary regarding
environmental matters pertaining to, or the environmental condition
of, the businesses of the Company and the Company Subsidiaries or the
compliance (or noncompliance) by the Company or any Company Subsidiary
with any Environmental Laws.
(c) There is no Environmental Claim by any Person that is pending
or threatened against the Company or any Company Subsidiary, or
against any Person whose liability for any Environmental Claim the
Company or any Company Subsidiary has retained or assumed either
contractually or by operation of law.
(d) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including the release,
emission, discharge, presence or disposal of any Materials of
Environmental Concern, that could form the basis of any Environmental
Claim against the Company or any Company Subsidiary or, to the
Knowledge of the Shareholders, against any Person whose liability for
any Environmental Claim the Company or any Company Subsidiary has
retained or assumed either contractually or by operation of law.
(e) The Company has provided to Purchaser a copy of each
assessment, report, datum, result of investigations or audit, and
other information that is in the possession of or reasonably available
to the Company or any Company Subsidiary regarding environmental
matters pertaining to or the environmental condition of the Company or
the compliance (or noncompliance) by the Company or any Company
Subsidiary with any Environmental Laws.
(f) None of the Company nor any Company Subsidiary is subject to
any Environmental Laws requiring (i) the performance of site
assessment for Materials of Environmental Concern, (ii) the removal or
remediation of Materials of Environmental Concern, (iii) the giving of
notice to, or receiving the approval of, any Governmental Entity or
(iv) the recording or delivery to any other Person of any disclosure
document or statement pertaining to environmental matters by virtue of
the Transactions or as a condition to the effectiveness of any of the
Transactions.
ARTICLE 3.24 Contracts and Commitments.
(a) Neither the Company nor any Company Subsidiary has any
agreements, contracts, commitments or restrictions which are material
to its business, operations or prospects or which require the making
of any charitable contribution.
(b) No purchase contracts or commitments of the Company or any
Company Subsidiary continue for a period of more than 12 months.
(c) Neither the Company nor any Company Subsidiary has any
outstanding contracts with the Shareholder, directors, officers,
employees, agents, consultants, advisors, salesmen, sales
representatives, distributors or dealers that are not cancelable by it
on notice of not longer than 30 days and without liability, penalty or
premium or any agreement or arrangement providing for the payment of
any bonus or commission based on sales or earnings.
(d) Neither the Company nor any Company Subsidiary has any
employment agreement, or any other agreement that contains any
severance or termination pay liabilities or obligations.
(e) Neither the Company nor any Company Subsidiary is in default
under or in violation of, nor is there any valid basis for any claim
of default under or violation of, any contract, commitment or
restriction to which it is a party or by which it is bound. (f)
Neither the Company nor any Company Subsidiary is restricted by
agreement from carrying on its business anywhere in the world.
(g) Neither the Company nor any Company Subsidiary has
outstanding any agreement to acquire any debt obligations of others.
(h) Neither the Company nor any Company Subsidiary has any
outstanding loan owing to or due from any Person.
(i) Neither the Company nor any Company Subsidiary has any power
of attorney outstanding or any obligations or liabilities (whether
absolute, accrued, contingent or otherwise), as guarantor, surety,
co-signer, endorser, co-maker, indemnitor or otherwise in respect of
the obligation of any Person, corporation, partnership, joint venture,
association, organization or other entity.
(j) Neither the Company nor any Company Subsidiary has any
commitment or obligation to continue to utilize the services of, or
otherwise to do business with, any licensor, vendor, supplier or
licensee of the Company or any Company Subsidiary.
ARTICLE 3.25 Customers and Suppliers. There has not been any material
adverse change in the business relationship of the Company or any Company
Subsidiary with any customer who accounted for more than 1% of the Company's
sales during the period from January 1, 2002 to December 31, 2002, or any
supplier or contractor from whom the Company or the Company Subsidiaries
purchased more than 1% of the goods or services which it purchased during the
same period.
ARTICLE 3.26 Insurance. The Disclosure Schedule sets forth a true and
complete list and description of all insurance policies, and other insurance
arrangements in force on the date hereof with respect to the business or assets
of the Company or the Company Subsidiaries, together with a statement of the
aggregate amount of claims paid out, and claims pending, under each such
insurance policy or other arrangement for the period commencing January 1, 2000
through the date hereof. The Company and the Company Subsidiaries have policies
of insurance of the type and in amounts customarily carried by Persons
conducting businesses or owning assets similar to those of the Company and the
Company Subsidiaries. All such policies are in full force and effect, all
premiums due thereon have been paid by the Company or the Company Subsidiaries,
and the Company and the Company Subsidiaries are otherwise in compliance in all
material respects with the terms and provisions of such policies. Furthermore,
(a) neither the Company nor any Company Subsidiary has received any notice of
cancellation or non-renewal of any such policy or arrangement nor is the
termination of any such policies or arrangements threatened, (b) there is no
claim pending under any of such policies or arrangements as to which coverage
has been questioned, denied or disputed by the underwriters of such policies or
arrangements, (c) neither the Company nor any Company Subsidiary has received
any notice from any of its insurance carriers that any insurance premiums will
be increased in the future or that any insurance coverage presently provided for
will not be available to the Company or any Company Subsidiary in the future on
substantially the same terms as now in effect and (d) none of such policies or
arrangements provides for any retrospective premium adjustment or
experienced-based liability or loss sharing arrangement affecting the Company or
any Company Subsidiary.
ARTICLE 3.27 Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or threatened against or involving
the Company or any Company Subsidiary, or which questions or challenges the
validity of this Agreement or any action taken or to be taken by the Company or
any Company Subsidiary pursuant to this Agreement or in connection with the
Transactions; and to the Knowledge of the Shareholders, there is no valid basis
for any such action, proceeding or investigation. Neither the Company nor any
Company Subsidiary is subject to any judgment, order or decree which may have an
adverse effect on its business practices or on its ability to acquire any
property or conduct its business in any area.
(i) Compliance with Laws. The Company and the Company
Subsidiaries have complied in a timely manner and in all respects with
all laws, rules and regulations, ordinances, judgments, decrees,
orders, writs and injunctions of, and all licenses and permits issued
to the Company by, all United States federal, state, local, foreign
governments and agencies thereof that affect the business, properties
or assets of the Company or any Company Subsidiary, and no notice,
charge, claim, action or assertion has been received by the Company or
any Company Subsidiary or has been filed, commenced or, to the
Knowledge of the Shareholder, threatened against the Company or any
Company Subsidiary alleging any violation of any of the foregoing.
Without limiting the foregoing, neither the Company nor any Company
Subsidiary has practiced or could be deemed to have practiced
corporate medicine in violation of any applicable law, rule or
regulation.
(b) The Disclosure Schedule sets forth a complete and accurate
list of all licenses and permits issued to the Company. The Company
has all valid licenses and permits necessary for the conduct of its
business.
(c) Neither the Company nor any Company Subsidiary has received
notification that it is in violation of any applicable building,
zoning, health or other law, ordinance or regulation in respect of
their operations or the Real Property leased by the Company.
ARTICLE 3.28 Employee and Labor Matters; Benefit Plans.
(a) The Disclosure Schedule identifies each Plan.
(b) None of the Company or any Company Subsidiary maintains,
sponsors or contributes to, and none of the Company or any of Company
Subsidiary has at any time in the past maintained, sponsored or
contributed to, any Pension Plan, except for the ESOP.
(c) Except as set forth in the Disclosure Schedule, none of the
Company or any Company Subsidiary maintains, sponsors or contributes
to any: (i) Welfare Plan, or (ii) self-funded medical, dental or other
similar Plan. None of the Plans identified in the Disclosure Schedule
is a multiemployer plan (within the meaning of Section 3(37) of
ERISA).
(d) With respect to each Plan, the Company has delivered to
Purchaser: (i) an accurate and complete copy of such Plan (including
all amendments thereto); (ii) an accurate and complete copy of the
annual report, if required under ERISA, with respect to such Plan for
each of the last two years; (iii) an accurate and complete copy of the
most recent summary plan description, together with each summary of
material modifications, if required under ERISA, with respect to such
Plan, (iv) if such Plan is funded through a trust or any third party
funding vehicle, an accurate and complete copy of the trust or other
funding agreement (including all amendments thereto) and accurate and
complete copies the most recent financial statements thereof; (v)
accurate and complete copies of all Company Agreements relating to
such Plan, including service provider agreements, insurance contracts,
minimum premium contracts, stop-loss agreements, investment management
agreements, subscription and participation agreements and
recordkeeping agreements; and (vi) an accurate and complete copy of
the most recent determination letter received from the Internal
Revenue Service with respect to such Plan (if such Plan is intended to
be qualified under Section 401(a) of the Code).
(e) None of the Company or any Company Subsidiary is or has ever
been required to be treated as a single employer with any other Person
under Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o)
of the Code. None of the Company or any Company Subsidiary has ever
been a member of an "affiliated service group" within the meaning of
Section 414(m) of the Code. None of the Company or any Company
Subsidiary has ever made a complete or partial withdrawal from a
multiemployer plan, as such term is defined in Section 3(37) of ERISA,
resulting in "withdrawal liability," as such term is defined in
Section 4201 of ERISA (without regard to any subsequent reduction or
waiver of such liability under either Section 4207 or 4208 of ERISA).
(f) None of the Company or any Company Subsidiary has any plan or
commitment to create any Welfare Plan or any Pension Plan, or to
modify or change any existing Welfare Plan or Pension Plan (other than
to comply with applicable law) in a manner that would affect any
current or former employee or director of the Company or any Company
Subsidiary.
(g) No Plan provides death, medical or health benefits (whether
or not insured) with respect to any current or former employee or
director of the Company or any Company Subsidiary after any
termination of service of such employee or director (other than (i)
benefit coverage mandated by applicable law, including coverage
provided pursuant to Section 4980B of the Code, (ii) deferred
compensation benefits accrued as liabilities on the Balance Sheet, and
(iii) benefits the full cost of which are borne by current or former
employees or directors of the Company or any Company Subsidiary (or
their beneficiaries)).
(h) With respect to any Plan constituting a group health plan
within the meaning of Section 4980B(g)(2) of the Code, the provisions
of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, rules and
regulations, ordinances, judgments, decrees, orders, writs and
injunctions, including ERISA, the Code and applicable foreign laws,
rules and regulations, ordinances, judgments, decrees, orders, writs
and injunctions.
(j) Each of the Plans intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service, and the Company is not aware of any
reason why any such determination letter could be revoked.
(k) Except as set forth in the Disclosure Schedule, neither the
execution, delivery or performance of this Agreement, nor the
consummation of any of the Transactions will result in any bonus,
golden parachute, severance or other payment or obligation to any
current or former employee or director of any of the Company or any
Company Subsidiary (whether or not under any Plan), or materially
increase the benefits payable or provided under any Plan, or result in
any acceleration of the time of payment, provision or vesting of any
such benefits.
(l) The Disclosure Schedule identifies each employee of each of
the Company or any Company Subsidiary as of the date of this
Agreement, and correctly reflects the current salary and any other
compensation payable to such employee (including compensation payable
pursuant to bonus, deferred compensation or commission arrangements),
such employee's employer, date of hire and position and the principal
office of such employee. None of the Company or any Company Subsidiary
is a party to any collective bargaining contract or other Company
Agreement with a labor union involving any of its employees. All of
the employees of the Company or any Company Subsidiary are "at will"
employees.
(m) The Disclosure Schedule identifies each employee of the
Company or any Company Subsidiary who is not fully available to
perform work because of disability or other leave and sets forth the
basis of such disability or leave and the anticipated date of such
employee's return to full service.
(n) Each of the Company or any Company Subsidiary is in
compliance with all applicable laws, rules and regulations,
ordinances, judgments, decrees, orders, writs and injunctions and
Company Agreements relating to employment, employment practices,
wages, bonuses and terms and conditions of employment, including
employee compensation matters.
(o) Each of the Company and the Company Subsidiaries has good
labor relations, and the Company has no knowledge of any facts
indicating that (i) the consummation of any of the Transactions will
have a material adverse effect on the labor relations of any of the
Company or any Company Subsidiary, or (ii) any of the employees of the
Company and the Company Subsidiaries intends to terminate his or her
employment with such Company or the Company Subsidiaries.
(p) The ESOP has been duly adopted and is in full force and
effect and constitutes a qualified plan under Section 4975(e)(7) of
the Code and the regulations promulgated thereunder. The Shares
legally owned by the trust forming an integral part of the ESOP
constitute "employer securities" within the meaning of Section 409(d)
of the Code. All borrowings by and loans to the ESOP (whether direct
loans or on-loans from the Company) qualify for the prohibited
transaction exemption set forth in Section 408(b)(3) of ERISA and
Section 4975(d)(3) of the Code (and the regulations promulgated
thereunder). The ESOP has not given collateral to any party in
interest (within the meaning of Section 3(14) of ERISA) in respect of
any loan to the ESOP, except to the extent permitted by Section
408(b)(3) of ERISA. The ESOP and all loans to the ESOP (whether direct
lendings or on-loans) comply with all applicable requirements of
Treasury Regulation Sections 54.4975-7 and 54.4975-11. Neither this
Agreement, nor any of the Transactions contemplated by this Agreement
will result, or be reasonably likely to result, in (1) a
disqualification of the ESOP under Section 401(a) of the Code, (2) a
loss of the ESOP trust's tax-exempt status under Section 501(a) of the
Code, (3) any prohibited transaction under Section 4975 of the Code or
Section 406 of ERISA, (4) except as set forth on the Disclosure
Schedule as an "applicable excise tax," the imposition of any excise
tax under the Code or any penalty under ERISA on Purchaser, the
Company, any Company Subsidiary or any ERISA Affiliate of the Company,
or the ESOP or (5) a fiduciary violation under ERISA by any fiduciary
(within the meaning of Section 3(21) of ERISA) to the ESOP.
ARTICLE 3.29 Tax Matters. Except as specifically set forth on the
Disclosure Schedule:
(a) The Company and each of the Company Subsidiaries have duly
filed all Tax Returns that are required to be filed, and have duly
paid or caused to be duly paid in full all Taxes (as hereinafter
defined) for all periods or portions thereof ending through the date
hereof, whether or not reflected on such Tax Returns. All such Tax
Returns are correct and complete in all respects and accurately
reflect all liability for Taxes for the periods covered thereby.
(b) There are no liens for Taxes upon any property or assets of
the Company or any Company Subsidiary thereof, except for liens for
Taxes not yet due;
(c) Neither the Company nor any Company Subsidiary has made any
change in accounting methods, received a ruling from any taxing
authority or signed an agreement with respect thereto or signed any
closing agreement with respect to any Tax year;
(d) The Company and each Company Subsidiary have complied in all
respects with all applicable laws, rules and regulations relating to
the withholding and remittance of withheld Taxes and have, within the
time and the manner prescribed by law, withheld and paid over to the
proper taxing authorities all amounts required to be so withheld and
paid over under applicable laws;
(e) Neither the Company nor any Company Subsidiary is required to
include in income for any period following the Closing any adjustment
pursuant to Section 481 (a) of the Code by reason of any change in
accounting method (nor has any Governmental Entity proposed in writing
any such adjustment or change of accounting method);
(f) No federal, state, local or foreign audits, examinations,
investigations or other administrative proceedings or court
proceedings are presently threatened or pending with regard to any
Taxes or Tax Returns of the Company or any Company Subsidiary. There
are no threatened or pending Tax audits or proceedings concerning the
Company or any Company Subsidiary, and a list of all audits,
examinations or investigations commenced or completed with respect to
the Company or any Company Subsidiary with respect to taxable periods
ending after December 31, 1997;
(g) All Tax deficiencies that have been claimed, proposed or
asserted against the Company or any Company Subsidiary have been fully
paid or finally settled, and no issue has been raised in any
examination by any taxing authority that, by application of similar
principles, could reasonably be expected to result in the proposal or
assertion of a Tax deficiency for another year not so examined;
(h) There are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to
the assessment or collection of any Taxes or deficiencies against the
Company or any Company Subsidiary;
(i) No power of attorney is presently in effect with respect to
the Company or any Company Subsidiary with respect to any matter
relating to Taxes;
(j) Neither the Company nor any Company Subsidiary is a party to,
is bound by or has any obligation under any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement, and
neither the Company nor any Company Subsidiary has any potential
liability or obligation to any Person as a result of, or pursuant to,
any such agreement, contract or arrangement;
(k) None of the Company or any Company Subsidiary has been a
member of any affiliated group within the meaning of Section 1504(a)
of the Code, or any similar affiliated or consolidated group for tax
purposes under state, local or foreign law (other than a group the
common parent of which is the Company), or has any liability for Taxes
of any Person (other than the Company and the Company Subsidiaries)
under Treasury Regulation Section 1. 1502-6 or any similar provision
of state, local or foreign law as a transferee or successor, by
contract or otherwise.
(l) Neither the Company nor any Company Subsidiary is a party to
any agreement, plan, contract or arrangement (whether oral or in
writing) that could result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of
Section 280G of the Code;
(m) All transactions that could give rise to an understatement of
the federal income tax liability of the Company or any Company
Subsidiary with in the meaning of Section 6662(d) of the Code are
adequately disclosed on Tax Returns in accordance with Section
6662(d)(2)(B) of the Code if there is or was no substantial authority
for the treatment giving rise to such understatement;
(n) With respect to each Company Subsidiary that is a partnership
for United States federal income tax purposes, (A) each such
partnership has complied with all applicable requirements of the Code,
including the registration and investor list requirements applicable
to tax shelters, (B) all partnership allocations currently have and
have had substantial economic effect for United States federal income
tax purposes and otherwise satisfy or have satisfied the requirements
under the Code and (C) the capital accounts for no partner has a
deficit;
(o) The Company is not and has not been a U.S. real property
holding company (as defined in Section 897(c)(2) of the Code) during
the applicable period specified in Section 897(c)(1)(ii) of the Code;
(p) Other than any Tax Returns that have not yet been required to
be filed, the Company has made available to Purchaser true, correct
and complete copies of the United States federal income Tax Return and
any state, local or foreign Tax Return for any jurisdiction that
represents five percent or more of the aggregate taxable income of the
Company and the Company Subsidiaries for each of the taxable years
ending subsequent to December 31, 1997.
(q) The Company has delivered or made available to Purchaser
complete and accurate copies of each of (i) all audit reports, letter
rulings, technical advice memoranda and similar documents issued by a
Governmental Entity relating to the United States federal, state,
local or foreign Taxes due from or with respect to the Company or any
Company Subsidiary and (ii) all closing agreements entered into by the
Company or any Company Subsidiary with any taxing authority in each
case existing on the date hereof.
(r) Neither the Company nor any Company Subsidiary has any
liability for unpaid Taxes relating to periods prior to and through
the Balance Sheet Date in excess of the amounts that are reflected in
the Financial Statements as a reserve for Tax liability (rather than
as a reserve for deferred Taxes established to reflect timing
differences between book and tax income), and since the date of the
Financial Statements, none of the Company or any Company Subsidiary
has incurred any liability for Taxes, except with respect to
operations in the ordinary course of business after the Balance Sheet
Date. All Taxes owed and due by the Company and each Company
Subsidiary relating to operations on or prior to the Balance Sheet
Date (whether or not shown on any Tax Return) have been paid on a
timely basis.
(s) Neither the Company nor any Company Subsidiary has received
written notice of any claim made by an authority in a jurisdiction
where neither the Company nor any Company Subsidiary file Tax Returns,
that the Company is or may be subject to taxation by that
jurisdiction.
ARTICLE 3.30 Intellectual Property. Either the Company or a Company
Subsidiary owns, or is licensed or otherwise possesses legally enforceable
rights to use the Company Intellectual Property, and the consummation of the
Transactions will not alter or impair such ability in any respect. To the
Knowledge of the Shareholder, there are no oppositions, cancellations,
invalidity proceedings, interferences or re-examination proceedings presently
pending with respect to the Company Intellectual Property. To the Knowledge of
the Shareholder, the conduct of the business of the Company and the Company the
Company Subsidiary and the Company Intellectual Property does not infringe any
Intellectual Property rights or any other proprietary right of any Person, and
neither the Company nor any Company Subsidiary has received any written notice
from any other Person pertaining to or challenging the right of the Company or
any Company Subsidiary to use any of the Company Intellectual Property. Neither
the Company nor any Company Subsidiary has made any claim of a violation or
infringement by others of its rights to or in connection with the Company
Intellectual Property which is still pending.
ARTICLE 3.31 Potential Conflict of Interest. Neither the Shareholder nor,
to the Knowledge of the Shareholder, any officer or director of the Company or
any Company Subsidiary owns or holds, directly or indirectly, any interest in
(excepting holdings solely for passive investment purposes of securities of
publicly held and traded entities constituting less than 5% of the equity of any
such entity), or is an officer, director, employee or consultant of any Person
that is, a competitor, lessor, lessee, customer or supplier of the Company or
which conducts a business similar to any business conducted by the Company.
Neither the Shareholder nor any officer or director of the Company or any
Company Subsidiary (a) owns or holds, directly or indirectly, in whole or in
part, any Company Intellectual Property, (b) has any claim, charge, action or
cause of action against the Company or any Company Subsidiary, except for claims
for reasonable unreimbursed travel or entertainment expenses, accrued vacation
pay or accrued benefits under any employee benefit plan existing on the date
hereof, (c) has made, on behalf of the Company or any Company Subsidiary, any
payment or commitment to pay any commission, fee or other amount to, or to
purchase or obtain or otherwise contract to purchase or obtain any goods or
services from, any other Person of which either the Shareholder, or, to the
Knowledge of the Shareholder any officer or director of the Company or any
Company Subsidiary (or, to the Knowledge of the Shareholder, a relative of any
of the foregoing) is a partner or shareholder (except holdings solely for
passive investment purposes of securities of publicly held and traded entities
constituting less than 5% of the equity of any such entity), (d) owes any money
to the Company or any Company Subsidiary or (e) has any material interest in any
property, real or personal, tangible or intangible, used in or pertaining to the
business of the Company or any Company Subsidiary.
ARTICLE 3.32 Bank Accounts. The Disclosure Schedule sets forth the names
and locations of all banks, trust companies, savings and loan associations and
other financial institutions at which the Company or any Company Subsidiary
maintains safe deposit boxes, checking accounts or other accounts of any nature
the available balance of which customarily exceeds $5,000 and the names of all
Persons authorized to draw thereon, make withdrawals therefrom or have access
thereto. As of the Closing Date, aggregate cash and cash equivalents in such
accounts shall be at least $150,000.
ARTICLE 3.33 Information for Financing. None of the information supplied or
to be supplied by the Shareholder or the Company for the purpose of inclusion or
incorporation by reference in any syndication and other materials to be
delivered to potential financing sources in connection with the Transactions
contains any untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
ARTICLE 3.34 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any brokers'
or finder's fee or any other commission or similar fee in connection with any of
the Transactions.
ARTICLE 3.35 Full Disclosure. The Shareholder has not failed to disclose to
Purchaser any facts material to the business, results of operations, assets,
liabilities, financial condition or prospects of the Company or the Company
Subsidiaries. No representation or warranty by the Shareholder contained in this
Agreement and no statement contained in any document (including financial
statements and the Disclosure Schedule), certificate, or other writing furnished
or to be furnished by the Company to Purchaser or any of its representatives
pursuant to the provisions hereof or in connection with the Transactions,
contains or will contain any untrue statement of material fact or omits or will
omit to state any material fact necessary, in light of the circumstances under
which it was made, in order to make the statements herein or therein not
misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser represents and warrant to the Company and the Shareholder that:
ARTICLE 4.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has all
requisite corporate or other power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted. Purchaser has heretofore delivered to the Shareholder
complete and correct copies of the certificate of incorporation and by-laws of
Purchaser as presently in effect.
ARTICLE 4.2 Authorization; Validity of Agreement. Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
consummate the Transactions. The execution, delivery and performance by
Purchaser of this Agreement and the consummation of the Transactions have been
duly authorized by the Board of Directors of Purchaser, and no other corporate
action on the part of Purchaser is necessary to authorize the execution and
delivery by Purchaser of this Agreement or the consummation of the Transactions.
This Agreement has been duly executed and delivered by Purchaser, and, assuming
due and valid authorization, execution and delivery hereof by the Company and
the Shareholder, is a valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws of general application affecting enforcement
of creditors' rights generally and (ii) the availability of the remedy of
specific performance or injunctive or other forms of equitable relief may be
subject to equitable defenses and would be subject to the discretion of the
court before which any proceeding therefor may be brought.
ARTICLE 4.3 Consents and Approvals; No Violations. Except for the filings,
permits, authorizations, consents and approvals as may be required and filings,
permits, authorizations under, and other applicable requirements of, the
Exchange Act and state securities or blue sky laws and consents in connection
with any financing to be undertaken by Purchaser, none of the execution,
delivery or performance of this Agreement by Purchaser, the consummation by
Purchaser of the Transactions or compliance by Purchaser with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the certificate of incorporation or by-laws of Purchaser, (ii)
require any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Purchaser is a
party or by which it or any of its properties or assets may be bound, or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Purchaser or any of its properties or assets.
ARTICLE 4.4 Issuance of Purchaser Series A Preferred Stock. The shares of
Purchaser Common Stock issuable pursuant to the Note, if and when issued in
accordance with the Note, will be duly authorized, validly issued, fully paid
and nonassessable.
ARTICLE 4.5 Capitalization. Immediately prior to the Closing, the
authorized capital stock of Purchaser will consist of 50,000,000 shares,
consisting of 25,000,000 shares of preferred stock, no par value, and 25,000,000
shares of common stock, no par value, of which 11,000,000 shares will be issued
and outstanding. All of the outstanding shares of the Company's capital stock
are duly authorized, validly issued, fully paid and non-assessable. Except as
set forth above and except for the Transactions, as of the date hereof, (i)
there are no shares of capital stock of the Company authorized, issued or
outstanding; (ii) there are no existing options, warrants, calls, pre-emptive
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character, relating to the issued or unissued capital stock of Purchaser,
obligating Purchaser to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock of, or other equity or debt
interest in, Purchaser or securities convertible into or exchangeable for such
shares or equity interests, or obligating Purchaser to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment and (iii) there are no outstanding contractual
obligations of Purchaser to repurchase, redeem or otherwise acquire any capital
stock of Purchaser.
ARTICLE 4.6 No Assets, Liabilities or Operations. As of the date hereof,
Purchaser has no assets, material liabilities (excluding any liabilities in
connection with (a) the Transaction, (b) that certain of Letter of Intent with
respect to Premier Medical Group, Inc. and (c) the finder's fee referred to in
Section 4.7 hereof) or business operations.
ARTICLE 4.7 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any brokers'
or finder's fee or any other commission or similar fee in connection with any of
the Transactions, excluding any such fees that may become payable in connection
with any debt or equity financing of Purchaser or its successors and assigns.
ARTICLE 4.8 Full Disclosure. Purchaser has not failed to disclose to the
Shareholder any facts material to the business, results of operations, assets,
liabilities, financial condition or prospects of Purchaser. No representation or
warranty by Purchaser contained in this Agreement and no statement contained in
any document, certificate, or other writing furnished or to be furnished by
Purchaser to the Shareholder or any of its representatives pursuant to the
provisions hereof or in connection with the Transactions, contains or will
contain any untrue statement of material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not misleading.
ARTICLE 5
COVENANTS
ARTICLE 5.1 Interim Operations of the Company. The Shareholder shall use
its best efforts to ensure that, and the Company covenants and agrees that,
after the date hereof and prior to the Closing Date, except (i) as expressly
provided or contemplated by in this Agreement, (ii) as set forth in the
Disclosure Schedule, or (iii) as may be agreed in writing by Purchaser:
(a) the business of the Company and the Company Subsidiaries
shall be conducted in the same manner as heretofore conducted and only
in the ordinary course, and the Shareholder, the Company and the
Company Subsidiaries shall each use its best efforts to preserve the
business organization of the Company and the Company Subsidiaries
intact, keep available the services of the current officers and
employees of the Company and the Company Subsidiaries and maintain the
existing relations with customers, suppliers, creditors, business
partners and others having business dealings with the Company or the
Company Subsidiaries, to the end that the goodwill and ongoing
business of the Company and the Company Subsidiaries shall be
unimpaired at the Closing Date. Neither the Company nor any Company
Subsidiary shall institute any new methods of purchase, sale, lease,
management, accounting or operation or engage in any transaction or
activity other than minor changes in the ordinary course of business
and consistent with past practice or to conform with applicable law
(and as to which Purchaser shall be notified);
(b) neither the Company nor any Company Subsidiary shall: (i)
amend its certificate of incorporation or by-laws or similar
organizational documents, (ii) except to the extent legally obligated
under the terms of the Company's Series A Convertible Preferred Stock
in effect as of the date hereof, issue, sell, transfer, pledge,
dispose of or encumber any shares of any class or series of its
capital stock, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to
acquire, any shares of any class or series of its capital stock except
to the extent legally obligated under the terms of the Company's
Series A Convertible Stock, (iii) except to the extent legally
obligated under the terms of the Company's Series A Convertible
Preferred Stock in effect as of the date hereof, declare, set aside or
pay any dividend or other distribution payable in cash, stock or
property with respect to any shares of any class or series of its
capital stock; (iv) split, combine or reclassify any shares of any
class or series of its stock; or (v) except as legally obligated under
the terms of the Company's Series A Convertible Preferred Stock and
ERISA, redeem, purchase or otherwise acquire directly or indirectly
any shares of any class or series of its capital stock, or any
instrument or security which consists of or includes a right to
acquire such shares;
(c) neither the Company nor any Company Subsidiary shall organize
any new Subsidiary or acquire any capital stock or other equity
securities, or equity or ownership interest in the business, of any
other Person;
(d) neither the Company nor any Company Subsidiary shall modify,
amend or terminate any of its contracts or waive, release or assign
any rights or claims, except in the ordinary course of business and
consistent with past practice;
(e) neither the Company nor any of the Company Subsidiaries
shall: (i) incur or assume any long-term debt, or except in the
ordinary course of business, incur or assume short-term Indebtedness
exceeding $10,000 in the aggregate from the date hereof until the
Closing; (ii) pay, repay, discharge, purchase, repurchase or satisfy
any Indebtedness issued or guaranteed by the Company or any Company
Subsidiary, except as required by the terms thereof; (iii) modify the
terms of any Indebtedness or other liability, (iv) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person,
except as described in the Disclosure Schedule as being in the
ordinary course of business and consistent with past practice; (v)
make any loans, advances or capital contributions to, or investments
in, any other Person; (vi) enter into any material commitment or
transaction (including any capital expenditure or purchase, sale or
lease of assets or real estate); (vii) write off as uncollectible any
accounts receivable, (viii) dispose of or permit to lapse any rights
to any Intellectual Property or (ix) change any of the banking or safe
deposit arrangements described or referred to in the Disclosure
Schedule;
(f) neither the Company nor any Company Subsidiary shall lease,
license, mortgage, pledge or encumber any assets other than in the
ordinary and usual course of business and consistent with the past
practice or transfer, sell or dispose of any assets other than in the
ordinary and usual course of business and consistent with past
practice;
(g) neither the Company nor any Company Subsidiary shall make any
change in the compensation payable or to become payable to any of its
officers, directors, employees, agents or consultants (other than
normal recurring increases in the ordinary course of business of wages
payable to employees who are not officers or directors or Affiliates
of the Company) or to Persons providing management services, or enter
into or amend any employment, severance, consulting, termination or
other agreement with, or employee benefit plan for, or make any loan
or advance to, any of its officers, directors, employees, Affiliates,
agents or consultants or make any change in its existing borrowing or
lending arrangements for or on behalf of any of such Persons pursuant
to an employee benefit plan or otherwise;
(h) neither the Company nor any Company Subsidiary shall (i) pay
or make any accrual or arrangement for payment of any pension,
retirement allowance or other employee benefit pursuant to any
existing plan, agreement or arrangement to any officer, director,
employee or Affiliate or pay or agree to pay or make any accrual or
arrangement for payment to any officer, director, employee or
Affiliate of any amount relating to unused vacation days, except to
the extent the Company or a Company Subsidiary is unconditionally
obligated to do so on the date hereof, (ii) adopt or pay, grant,
issue, accelerate or accrue salary or other payments or benefits
pursuant to any pension, profit-sharing, bonus, extra compensation,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or
other employee benefit plan, agreement or arrangement, or any
employment or consulting agreement with or for the benefit of any
director, officer, employee, agent or consultant, whether past or
present, except to the extent the Company or a Company Subsidiary is
unconditionally obligated to do so on the date hereof, or amend in any
material respect any such existing plan, agreement or arrangement in a
manner inconsistent with the foregoing;
(i) neither the Company nor any Company Subsidiary shall permit
any insurance policy naming it as a beneficiary or a loss payable
payee to be cancelled or terminated other than any expiration of such
policies in accordance with the terms thereof, provided, that, in any
such event, the Company shall procure equivalent replacement coverage
at a comparable cost;
(j) neither the Company nor any of the Company Subsidiaries shall
enter into any contract or transaction relating to the purchase of
assets other than in the ordinary course of business and consistent
with past practice;
(k) neither the Company nor any Company Subsidiary shall pay,
repurchase, discharge or satisfy any of its claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice, of
claims, liabilities or obligations reflected or reserved against in,
or contemplated by, the Financial Statements or incurred since the
Balance Sheet Date in the ordinary course of business;
(l) neither the Company nor any of the Company Subsidiaries shall
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization
of the Company or any Company Subsidiary;
(m) neither the Company nor any Company Subsidiary shall (i)
change any of the accounting methods used by it unless required by
GAAP or (ii) make any election relating to Taxes, change any election
relating to Taxes already made, adopt any accounting method relating
to Taxes, change any accounting method relating to Taxes unless
required by GAAP, enter into any closing agreement relating to Taxes,
settle any claim or assessment relating to Taxes or consent to any
claim or assessment relating to Taxes or any waiver of the statute of
limitations for any such claim or assessment;
(n) neither the Company nor any of the Company Subsidiaries shall
take, or agree to or commit to take, any action that would or is
reasonably likely to result in any of the conditions to the Closing
set forth in Article VI not being satisfied, or would make any
representation or warranty of the Company contained herein inaccurate
in any respect at, or as of any time prior to, the Closing Date, or
that would materially impair the ability of the Company, Purchaser or
the Shareholder to consummate the Closing in accordance with the terms
hereof or materially delay such consummation; and
(o) neither the Company nor any of the Company Subsidiaries shall
enter into any agreement, contract, commitment or arrangement to do
any of the foregoing, or authorize, recommend, propose or announce an
intention to do, any of the foregoing.
ARTICLE 5.2 Access; Confidentiality.
(a) Between the date of this Agreement and the Closing, the
Company shall (i) afford Purchaser and its authorized representatives
reasonable access to all books, records, offices and other facilities
of the Company and each Company Subsidiary, (ii) permit Purchaser to
make such inspections and to make copies of such books and records as
it may reasonably require and (iii) furnish Purchaser with such
financial and operating data and other information as Purchaser may
from time to time reasonably request. Purchaser and its authorized
representatives shall conduct all such inspections in a manner that
will minimize disruptions to the business and operations of the
Company and the Company Subsidiaries. Between the date of this
Agreement and the Closing, Purchaser shall respond to any of the
Shareholder's reasonable requests for information regarding the
Purchaser and the status of Purchaser's financing efforts.
(b) Each of the parties agree (on behalf of itself and each of
its respective affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential,
in accordance with safe and sound banking practices, any non-public
information supplied to it by the other party, provided that nothing
herein shall limit the disclosure of any such information (i) to the
extent required by applicable Law, (ii) to counsel, or (iii) to the
extent that such information is already publicly known not as result
of any breach of this Section; provided, that unless specifically
prohibited by applicable law or court order, the disclosing party
shall notify the other party of any request by any Governmental Entity
for disclosure of any such non-public information prior to disclosure
of such information. The foregoing provisions shall not apply to
Purchaser after the Closing.
ARTICLE 5.3 Efforts and Actions to Cause Closing to Occur.
(a) Prior to the Closing, upon the terms and subject to the
conditions of this Agreement, Purchaser, the Shareholder and the
Company shall use their respective reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done and
cooperate with each other in order to do, all things necessary, proper
or advisable (subject to any applicable laws) to consummate the
Closing and the other Transactions, as promptly as practicable
including, but not limited to (i) the preparation and filing of all
forms, registrations and notices required to be filed to consummate
the Closing and the other Transactions and the taking of such actions
as are necessary to obtain any requisite approvals, authorizations,
consents, orders, licenses, permits, qualifications, exemptions or
waivers by any third party or Governmental Entity, and (ii) the
provision of information reasonably requested by Purchaser in order to
facilitate Purchaser's financing efforts. In addition, no party hereto
shall take any action after the date hereof that could reasonably be
expected to materially delay the obtaining of, or result in not
obtaining, any permission, approval or consent from any Governmental
Entity or other Person required to be obtained prior to Closing.
(b) Prior to the Closing, each party shall promptly consult with
the other parties hereto with respect to, provide any necessary
information with respect to, and provide the other parties (or their
respective counsel) with copies of, all filings made by such party
with any Governmental Entity or any other information supplied by such
party to a Governmental Entity in connection with this Agreement and
the Transactions. Each party hereto shall promptly provide the other
parties with copies of any written communication received by such
party from any Governmental Entity regarding any of the Transactions.
If any party hereto or Affiliate thereof receives a request for
additional information or documentary material from any such
Governmental Entity with respect to any of the Transactions, then such
party shall endeavor in good faith to make, or cause to be made, as
soon as reasonably practicable and after consultation with the other
parties, an appropriate response in compliance with such request. To
the extent that transfers, amendments or modifications of permits are
required as a result of the execution of this Agreement or
consummation of any of the Transactions, the Shareholder and the
Company shall use their best efforts to effect such transfers,
amendments or modifications.
(c) The Company and the Shareholder shall use their respective
best efforts to obtain, prior to the Closing, the unconditional
consent of any Person necessary to the consummation of the Closing and
the other Transactions, including consents from parties to loans,
contracts, leases or other agreements and consents from governmental
agencies, whether federal, state or local shall have been obtained.
All such consents shall be in writing and executed counterparts
thereof shall be delivered to Purchaser at or prior to the Closing.
(d) The Shareholder shall, and shall cause the Company and each
Company Subsidiary to, take all action reasonably requested by
Purchaser, including the preparation for delivery at the closing of
all notes, financing documents, mortgages, loan agreements, pledges,
filing statements contemplated by the Uniform Commercial Code and
officer's certificates as Purchaser may request for the purpose of
consummating Purchaser's financing of the Transactions; provided that,
except as expressly provided herein, none of the foregoing shall
require the Shareholder to take any action in its individual capacity.
ARTICLE 5.4 Notification of Certain Matters.
(a) From time to time prior to the Closing, the Company shall
promptly supplement or amend the Disclosure Schedule with respect to
any matter arising after the delivery thereof pursuant hereto that, if
existing at, or occurring on, the date of this Agreement, would have
been required to be set forth or described in the Disclosure Schedule.
No supplement to or amendment of the Disclosure Schedule made after
the delivery to Purchaser of the Disclosure Schedule in accordance
with Section 5.13 pursuant to this section or otherwise shall be
deemed to cure any breach of any representation of or warranty made
pursuant to this Agreement.
(b) Each party shall give notice to the other party promptly
after becoming aware of (i) the occurrence or non-occurrence of any
event whose occurrence or non-occurrence would be likely to cause
either (A) any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect at any time from
the date hereof to the Closing Date or (B) any condition set forth in
Article VI to be unsatisfied in any material respect at any time from
the date hereof to the Closing Date and (ii) any material failure of
any party or any officer, director, employee or agent thereof, to
comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that
(x) the delivery of any notice pursuant to this section shall not
limit or otherwise affect the remedies available hereunder to the
party receiving such notice and (y) the failure to give such notice
shall not be required from and after the time the party to whom such
notice is to be given has actual knowledge of the information required
to be included in such notice.
(c) The Company shall deliver to Purchaser copies of (i) all
audit reports, letter rulings, technical advice memoranda and similar
documents issued by a Governmental Entity relating to the United
States federal, state, local or foreign Taxes due from or with respect
to the Company or any Company Subsidiary and (ii) any closing
agreements entered into by the Company or any Company Subsidiary with
any taxing authority, which come into the possession of the Company
after the date hereof.
ARTICLE 5.5 No Solicitation of Competing Transaction.
(a) Until June 30, 2003, neither the Shareholder, the Company nor
any Company Subsidiary or Affiliate of the Company shall (and the
Company shall cause the officers, directors, employees,
representatives and agents of the Company, each Company Subsidiary and
each Affiliate of the Company, including investment bankers, attorneys
and accountants, not to), directly or indirectly, encourage, solicit,
initiate or participate in discussions or negotiations with, or
provide any information to, any Person or group (other than Purchaser,
any of its Affiliates or representatives) concerning any Acquisition
Proposal. None of the Shareholder, the Company or any Company
Subsidiary shall enter into any agreement with respect to any
Acquisition Proposal. Upon execution of this Agreement, the
Shareholder and the Company shall immediately cease any existing
activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing, and the Shareholder
and the Company shall request (or if any of them has the contractual
right to do so, demand) the return of all documents, analyses,
financial statements, projections, descriptions and other data
previously furnished to others in connection with the Shareholder's
efforts to sell the Company. The Company and the Shareholder shall
immediately notify Purchaser of the existence of any proposal or
inquiry received by the Company or the Shareholder, and the Company
and the Shareholder shall immediately communicate to Purchaser the
terms of any proposal or inquiry which any of them may receive (and
shall immediately provide to Purchaser copies of any written materials
received by the Company or any Shareholder in connection with such
proposal, discussion, negotiation or inquiry) and the identity of the
party making such proposal or inquiry.
(b) Subject to any applicable fiduciary duties of the Company, as
advised in writing by outside counsel to the Company, and without
limiting any rights of Purchaser hereunder, neither the Company's
Board of Directors nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to
Purchaser, the approval by such Board of Directors or any such
committee of this Agreement, (ii) approve or recommend or propose to
approve or recommend, any Acquisition Proposal or (iii) authorize the
Company to enter into any agreement with respect to any Acquisition
Proposal.
ARTICLE 5.6 Tax Matters. The following provisions shall govern the
allocation of responsibility as between Purchaser and the Shareholder for
certain tax matters following the Closing Date:
(a) Tax Periods Ending on or Before the Closing Date. Purchaser
shall prepare or cause to be prepared and file or cause to be filed
all Tax Returns for the Company and the Company Subsidiaries for all
periods ending on or prior to the Closing Date which are filed after
the Closing Date. Purchaser shall permit the Shareholder to review
each such Tax Return described in the preceding sentence prior to
filing and shall consider any reasonable comments of the Shareholder
thereto. To the extent permitted by applicable law and except for any
changes required in connection with the Company's change in accounting
methods, such returns shall be prepared in a manner consistent with
the returns filed for prior years. The Shareholder shall reimburse
Purchaser for Taxes of the Company and the Company Subsidiaries with
respect to such periods within fifteen (15) days after payment by
Purchaser or the Company and the Company Subsidiaries of such Taxes to
the extent such Taxes are not reflected in the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) shown on the
face of the Balance Sheet.
(b) Tax Periods Beginning Before and Ending After the Closing
Date. Purchaser shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns of the Company and the Company
Subsidiaries for Tax periods which begin before the Closing Date and
end after the Closing Date. Purchaser shall permit the Shareholder to
review each such Tax Return described in the preceding sentence prior
to filing and shall consider any reasonable comments of the
Shareholder thereto. To the extent permitted by applicable law and
except for any change in accounting methods, such returns shall be
prepared in a manner consistent with returns filed for prior years.
The Shareholder shall pay to Purchaser within fifteen (15) days after
the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the portion
of such Taxable period ending on the Closing Date to the extent such
Taxes are not reflected in the reserve for Tax Liability (rather than
any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) shown on the face of the
Balance Sheet. For purposes of this Section, in the case of any Taxes
that are imposed on a periodic basis and are payable for a Taxable
period that includes (but does not end on) the Closing Date, the
portion of such Tax which relates to the portion of such Taxable
period ending on the Closing Date shall (x) in the case of any Taxes
other than Taxes based upon or related to income or receipts, be
deemed to be the amount of such Tax for the entire Taxable period
multiplied by a fraction the numerator of which is the number of days
in the Taxable period ending on the Closing Date and the denominator
of which is the number of days in the entire Taxable period, and (y)
in the case of any Tax based upon or related to income or receipts be
deemed equal to the amount which would be payable if the relevant
Taxable period ended on the Closing Date. Any credits relating to a
Taxable period that begins before and ends after the Closing Date
shall be taken into account as though the relevant Taxable period
ended on the Closing Date. All determinations necessary to give effect
to the foregoing allocations shall be made in a manner consistent with
prior practice of the Company and the Company Subsidiaries.
ARTICLE 5.7 Transfer of the Shareholder's Shares. The Company hereby waives
any and all rights the Company may have under all agreements between the Company
and the Shareholder or otherwise to object to the transfer to Purchaser of any
Shares and hereby covenants not to consent to the transfer of any Shares to any
Person other than Purchaser.
ARTICLE 5.8 Subsequent Actions. If at any time after the Closing Purchaser
will consider or be advised that any deeds, bills of sale, instruments of
conveyance, assignments, assurances or any other actions or things are necessary
or desirable (i) to vest, perfect or confirm ownership (of record or otherwise)
in Purchaser, its right, title or interest in, to or under any or all of the
Shares, (ii) to vest, perfect or confirm ownership (of record or otherwise) in
the Company and each Company Subsidiary, any of its rights, properties or assets
or (iii) otherwise to carryout this Agreement, each Shareholder shall execute
and deliver all deeds, bills of sale, instruments of conveyance, powers of
attorney, assignments and assurances and take and do all such other actions and
things as may be reasonably requested by Purchaser in order to vest, perfect or
confirm any and all right, title and interest in, to and tender such rights,
properties or assets in Purchaser or the Company or any Company Subsidiary or
otherwise to carry out this Agreement.
ARTICLE 5.9 Publicity. Neither the Shareholder, the Company, Purchaser nor
any of their respective Affiliates shall issue or cause the publication of any
press release or other public announcement with respect to this Agreement or the
other Transactions without prior consultation with the other party, except as
may be required by law, rule or regulation.
ARTICLE 5.10 ESOP. Following the Closing, Purchaser shall take no action,
or cause the Company to take any action, which will result, or be reasonably
likely to result, in (1) a disqualification of the ESOP under Section 401(a) of
the Code, (2) a loss of the ESOP trust's tax-exempt status under Section 501(a)
of the Code, (3) any prohibited transaction under Section 4975 of the Code or
Section 406 of ERISA, (4) the imposition of any excise tax under the Code or any
penalty under ERISA on Purchaser, the Company, any Company Subsidiary or any
ERISA Affiliate of the Company, or the ESOP (other than any such excise tax or
penalty the cost of which is borne by Purchaser) or (5) a fiduciary violation
under ERISA by any fiduciary (within the meaning of Section 3(21) of ERISA) to
the ESOP.
ARTICLE 5.11 Post-Closing Cooperation. In case at anytime after the Closing
Date any further action is necessary, proper or advisable to carry out the
purposes of this Agreement, as soon as reasonably practicable, each party hereto
shall take, or cause its proper officers or directors to take, all such
necessary, proper or advisable actions.
ARTICLE 5.12 Loan to the Company. Purchaser shall lend or cause to be
loaned to the Company (a) within three (3) business days of the date of this
Agreement, $500,000 which amounts shall be applied to satisfy any amounts then
due and owing under the DVI Facility; and (b) within the earlier of (1) 45 days
after the date of this Agreement and (2) five days of the approval of the proxy
or information statement by the SEC with respect to any merger of Purchaser with
or into a company with a class of stock that is registered under Section 12 of
the Exchange Act or the date that Purchaser has been advised that there shall be
no review of such proxy or information statement by the SEC, a maximum of
$1,000,000 from time to time when and if needed to fund the day-to-day
operations of the Company, in each case, on terms and conditions satisfactory to
Purchaser in its good faith judgment. Purchaser may seek to enter into an
agreement with respect to and to consummate such a merger, however, the parties
acknowledge and agree that Purchaser is under no obligation to do so and has
made no representation or warranty to the Shareholder that Purchaser shall enter
into any such agreement or consummate such a merger.
ARTICLE 5.13 Disclosure Schedule. Within 20 days of the date of this
Agreement, the Shareholder shall deliver to Purchaser the Disclosure Schedule.
ARTICLE 5.14 Amendment to ▇▇▇▇▇▇ Note. The Company and the Shareholder
shall cause the ▇▇▇▇▇▇ Note to be amended to include the provisions contained on
Exhibit D hereto.
ARTICLE 6
CONDITIONS
ARTICLE 6.1 Conditions to Each Party's Obligation to Effect the Closing.
The respective obligation of each party to effect the Closing shall be subject
to the satisfaction at or prior to the Closing Date of each of the following
conditions:
(a) Statutes, Court Orders. No statute, rule or regulation shall
have been enacted or promulgated by any Governmental Entity which
prohibits the consummation of the Closing; and there shall be no order
or injunction of a court of competent jurisdiction in effect
precluding consummation of the Closing.
ARTICLE 6.2 Conditions to Obligations of Purchaser to Effect the Closing.
The obligations of Purchaser to consummate the Closing shall be subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions:
(a) Government Action. There shall not be threatened or pending
any suit, action or proceeding by any Governmental Entity
(i) seeking to restrain or prohibit the consummation of the
Closing or the performance of any of the other Transactions, or
seeking to obtain from the Company or Purchaser any damages that
are material in relation to the Company or the Company
Subsidiaries,
(ii) seeking to impose material limitations on the ability
of Purchaser, or rendering Purchaser unable, to accept for
payment or pay for or purchase some or all of the Shares or
consummate the Closing,
(iii) seeking to impose material limitations on the ability
of Purchaser effectively to exercise full rights of ownership of
the Shares, including the right to vote the Shares, or
(iv) which otherwise is reasonably likely to have a material
adverse affect on the prospects, consolidated financial
condition, businesses or results of operations of Purchaser, the
Company or any Company Subsidiary,
or there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated
or deemed applicable to the Transactions, or any other
action shall be taken by any Governmental Entity, that is
reasonably likely to result, directly or indirectly, in any
of the consequences referred to in clauses (i) through (iv)
above;
(b) Opinion of Company Counsel. The Company shall have delivered
to Purchaser at the Closing an opinion of Snow ▇▇▇▇▇▇ ▇▇▇▇▇▇, P.C.,
counsel to the Company, dated the Closing Date, substantially in the
form of Exhibit A hereto;
(c) Certificate of Company Officers. The Company shall have
delivered to Purchaser at the Closing a certificate signed by the
chief executive officer of the Company and by the chief financial
officer of the Company, dated the Closing Date, substantially in the
form of Exhibit B hereto, to the effect that, as of the Closing Date,
(w) all of the representations and warranties of the Company set forth
in this Agreement are true and complete in all material respects
except as provided on the Disclosure Schedule, (x) there has not
occurred any material adverse change (or any development that, insofar
as reasonably can be foreseen, is reasonably likely to result in any
material adverse change) in the financial condition, businesses,
results of operations or prospects of the Company and the Company
Subsidiaries, taken as a whole and (z) the Company has performed all
obligations required under this Agreement to be performed by it at or
prior to the Closing;
(d) Consents Obtained. All consents of any Person necessary for
the Shareholder or the Company consummate the Transactions or perform
any obligations contained herein, including consents from parties to
loans, contracts, leases or other agreements and consents from
governmental agencies, whether federal, state or local, shall have
been obtained, and a copy of each such consent shall have been
provided to Purchaser at or prior to the Closing;
(e) Material Adverse Change. There shall not have occurred any
material adverse change (or any development that, insofar as
reasonably can be foreseen, is reasonably likely to result in any
material adverse change) in the consolidated financial condition,
businesses, results of operations or prospects of the Company and the
Company Subsidiaries, taken as a whole;
(f) Investigations; Etc. Neither any investigation of the Company
or the Company Subsidiaries by Purchaser, nor any matter disclosed in
the Disclosure Schedule to be provided pursuant to Section 5.13
hereof, nor any other document delivered to Purchaser as contemplated
by this Agreement, shall have revealed any facts or circumstances
which, in the good faith judgment of Purchaser, reflect in a material
adverse way on the financial condition, assets, liabilities (absolute,
accrued, contingent or otherwise), business, operations or prospects
of the Company or any Company Subsidiary;
(g) Representations and Warranties. All of the representations
and warranties of the Shareholder and the Company set forth in this
Agreement shall be true and complete in all material respects except
as provided on the Disclosure Schedule, in each case as of the date of
this Agreement and as of the Closing Date;
(h) Shareholder Breach. The Shareholder shall have not failed to
perform in any material respect any obligation or to comply in any
material respect with any agreement or covenant to be performed or
complied with by such Shareholder under this Agreement.
(i) Company Breach. The Company shall not have failed to perform
in any material respect any material obligation or to comply in any
material respect with any Company Agreement or covenant of the Company
to be performed or complied with by it under this Agreement;
(j) DVI Facility. The DVI Facility shall be duly amended on terms
and conditions satisfactory to Purchaser and the Company shall be in
compliance with all terms and conditions of the DVI facility after
giving effect to the Transactions;
(k) Third Party Payors. The Company shall be in good standing in
all material respects with all third party payors and no material
suspension, litigation or violations of Federal, State or local law,
rule or regulation pertaining to the receipt of such payment or
ability to ▇▇▇▇ and receive such payment shall be materially
compromised or challenged by any payor of historical record;
(l) Foreign Status Certificate. Purchaser shall have received (i)
a certification of non-foreign status for the Shareholder in the form
and manner which complies with the requirements of Section 1445 of the
Code and the regulations promulgated thereunder and (ii) any other
certifications which maybe required under applicable law stating that
no Taxes are due to any taxing authority for which the Purchaser could
have liability to withhold and pay with respect to the transfer by
such Shareholder to Purchaser of Shares.
The foregoing conditions are for the sole benefit of Purchaser, may be waived by
Purchaser, in whole or in part, at any time and from time to time in the sole
discretion of Purchaser. The failure by Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
ARTICLE 6.3 Conditions to Obligations of the Shareholder to Effect the
Closing. The obligations of the Shareholder to consummate the Closing shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) Opinion of Purchaser Counsel. Purchaser shall have delivered
to the Shareholders at the Closing an opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer
& ▇▇▇▇▇▇▇▇▇, LLP, counsel to Purchaser, dated the Closing Date,
substantially in the form of Exhibit C hereto;
(b) Representations and Warranties. All of the representations
and warranties of Purchaser set forth in this Agreement shall be true
and complete in all material respects, in each case as of the date of
this Agreement and as of the Closing Date;
(c) Certificate of Purchaser Officers. The Purchaser shall have
delivered to the Shareholder at the Closing a certificate signed by
the chief executive officer of Purchaser and by the chief financial
officer of Purchaser, dated the Closing Date, substantially in the
form of Exhibit E hereto, to the effect that, as of the Closing Date,
(w) all of the representations and warranties of Purchaser set forth
in this Agreement are true and complete in all material respects, and
(x) Purchaser has performed all obligations required under this
Agreement to be performed by it at or prior to the Closing;
(d) Consents Obtained. All consents of any Person necessary to
the consummation of the Closing and the other Transactions by
Purchaser, including consents from parties to loans, contracts, leases
or other agreements and consents from governmental agencies, whether
federal, state or local, shall have been obtained, except for those
consents for which the failure to obtain would not, individually or in
the aggregate, have a material adverse effect on Purchaser's ability
to consummate the Closing and the other Transactions, and a copy of
each such consent shall have been provided to the Shareholder at or
prior to the Closing; and
(e) Purchaser Breach. Purchaser shall not have failed to perform
in any material respect any material obligation or to comply in any
material respect with any covenant of Purchaser to be performed or
complied with by it under this Agreement.
The foregoing conditions are for the sole benefit of the Shareholder, may be
waived by the Shareholder, in whole or in part, at any time and from time to
time in the sole discretion of the Shareholder. The failure by the Shareholder
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
ARTICLE 7
TERMINATION
ARTICLE 7.1 Termination. The Transactions may be terminated or abandoned at
any time prior to the Closing Date:
(a) By the mutual written consent of Purchaser and the
Shareholder.
(b) By Purchaser or the Shareholder if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action
(which order, decree, ruling or other action the parties hereto shall
use their reasonable efforts to lift), which permanently restrains,
enjoins or otherwise prohibits the acquisition by Purchaser of the
Shares and such order, decree, ruling or other action shall have
become final and non-appealable.
(c) By the Shareholder:
(i) if Purchaser shall have breached any representation,
warranty, covenant or other agreement contained in this Agreement
which would give rise to the failure of a condition set forth in
Article VI and which breach cannot be or has not been cured
within 30 days after the giving of written notice by the
Shareholder to Purchaser specifying such breach; or
(ii) on or after June 30, 2003, if the Closing shall not
have theretofore occurred and if the failure of the Closing to
occur is not the result of a breach of a representation, warranty
or covenant by the Shareholder or the Company.
(d) By Purchaser:
(i) if the Shareholder or the Company shall have breached
any representation, warranty, covenant or other agreement
contained in this Agreement which would give rise to the failure
of a condition set forth in Article VI and which breach cannot be
or has not been cured within 30 days after the giving of written
notice by Purchaser to the Shareholder or the Company specifying
such breach or Purchaser determines that any condition set forth
in Article VI is incapable of satisfaction or waiver; or
(ii) on or after June 30, 2003, if the Closing shall not
have theretofore occurred and if the failure of the Closing to
occur is not the result of a breach of a representation, warranty
or covenant by Purchaser.
ARTICLE 7.2 Effect of Termination. In the event of the termination or
abandonment of the Transactions by any party hereto pursuant to the terms of
this Agreement, written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to which such
termination or abandonment of the Transactions is made, and there shall be no
liability or obligation thereafter on the part of Purchaser, the Shareholder or
the Company except (a) for fraud or for breach of this Agreement prior to such
termination or abandonment of the Transactions and (b) as set forth in Section
10.1. The provisions of Section 5.2(b) and Section 10.1 shall survive any such
termination or abandonment.
ARTICLE 8
INDEMNIFICATION
ARTICLE 8.1 Indemnification; Remedies.
(a) The Shareholder Indemnifying Person shall indemnify, defend
and hold harmless the Purchaser Indemnified Persons from and against
and in respect of 100% of all Purchaser Losses.
(b) The Shareholder Indemnifying Person shall indemnify, defend
and hold harmless the Purchaser Indemnified Persons from and against
and in respect of 100% of any adverse consequences the Purchaser may
suffer resulting from, arising out of, relating to, in the nature of,
or caused by any liability of any of the Company (or the Company
Subsidiaries) (x) for any taxes of the Company or the Company
Subsidiaries with respect to any tax year or any portion thereof
ending on or before the Closing Date or for any tax year beginning
before and ending after the Closing Dates to the extent allocable
(determined in the manner consistent with Section 5.6 hereof) to the
portion of such period beginning before and ending on the Closing
Date, to the extent such taxes are not reflected in the reserve for
Tax liability (rather than any reserve for deferred taxes established
to reflect timing differences between book and tax income) shown on
the Balance Sheet (rather than in any notes thereto), as such reserve
is adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company and the
Company Subsidiaries in filing their tax returns and (y) for the
unpaid taxes of any person (other than the Company and the Company
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision of State, local or foreign law) as a transferee or
successor of the Company, by contract, or otherwise.
(c) The Shareholder Indemnifying Person's indemnification
obligations shall be subject to the following limitations:
(i) The Shareholder Indemnifying Person's indemnification
obligations relating to (A) Purchaser Losses (other than
Purchaser Losses that relate to any liability for Tax Claims)
shall survive only until the second anniversary of the Closing
Date and (B) Tax Claims shall survive until the expiration of the
applicable tax statute of limitations. No claim for the recovery
of any Purchaser Losses, or Tax Claims may be asserted by any
Purchaser Indemnified Person after the expiration of the
applicable indemnification period; provided, however, that claims
asserted in writing by any Purchaser Indemnified Person with
reasonable specificity prior to the expiration of the applicable
indemnification period shall not thereafter be barred by the
expiration of the applicable indemnification period; and
(ii) No reimbursement for Purchaser Losses asserted under
Section 8.1(a) shall be required unless and until the cumulative
aggregate amount of such Purchaser Losses exceeds $25,000, after
which time the Shareholder Indemnifying Person shall be liable in
full for all Purchaser Losses (including the first $25,000);
provided, however, that the limitations set forth in Section 8.1(c) (ii) shall
not apply to Purchaser Losses arising out of (w) any breach of any
representation or warranty contained in Section 3.1 through and including
Section 3.9, (x) any covenant to be performed by the Shareholder pursuant
hereto, (y) any Purchaser Losses that relate to any liability for Taxes, or (z)
any fraud, willful misrepresentation or misconduct on the part of the
Shareholder or which consist of reasonable attorney's fees and expenses incurred
by Purchaser in investigating or defending any third party claim.
ARTICLE 8.2 Notice of Claim; Defense. Purchaser shall give the Shareholder
Indemnifying Person prompt notice of any third-party claim that may give rise to
any indemnification obligation under this Article VIII, together with the
estimated amount of such claim, and the Shareholder Indemnifying Person shall
have the right to assume the defense (at the Shareholder Indemnifying Person's
expense) of any such claim through counsel of the Shareholder Indemnifying
Person's own choosing by so notifying Purchaser within 30 days of the first
receipt by the Shareholder Indemnifying Person of such notice from Purchaser;
provided, however, that any such counsel shall be reasonably satisfactory to
Purchaser. Failure to give such notice shall not affect the indemnification
obligations hereunder in the absence of actual and material prejudice. If, under
applicable standards of professional conduct, a conflict with respect to any
significant issue between any Purchaser Indemnified Person and the Shareholder
Indemnifying Person exists in respect of such third-party claim, the Shareholder
Indemnifying Person shall pay the reasonable fees and expenses of such
additional counsel as maybe required to be retained in order to resolve such
conflict. The Shareholder Indemnifying Person shall be liable for the fees and
expenses of counsel employed by Purchaser for any period during which the
Shareholder Indemnifying Person has not assumed the defense of any such
third-party claim (other than during any period in which Purchaser will have
failed to give notice of the third-party claim as provided above). If the
Shareholder Indemnifying Person assumes such defense, Purchaser shall have the
right to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the Shareholder Indemnifying
Person, it being understood that the Shareholder Indemnifying Person shall
control such defense. If the Shareholder Indemnifying Person chooses to defend
or prosecute a third-party claim, Purchaser shall cooperate in the defense or
prosecution thereof, which cooperation shall include, to the extent reasonably
requested by the Shareholder Indemnifying Person, the retention, and the
provision to the Shareholder Indemnifying Person, of records and information
reasonably relevant to such third-party claim, and making employees of Purchaser
and the Company available on a mutually convenient basis to provide additional
information and explanation of any materials provided hereunder. If the
Shareholder Indemnifying Person chooses to defend or prosecute any third-party
claim, Purchaser shall agree to any settlement, compromise or discharge of such
third-party claim that the Shareholder Indemnifying Person may recommend and
that, by its terms, discharges Purchaser and the Purchaser Affiliates from the
full amount of liability in connection with such third-party claim; provided,
however, that, without the consent of Purchaser, the Shareholder Indemnifying
Person shall not consent to, and Purchaser shall not be required to agree to,
the entry of any judgment or enter into any settlement that (i) provides for
injunctive or other non-monetary relief affecting Purchaser or any Affiliate of
Purchaser or (ii) does not include as an unconditional term thereof the giving
of a release from all liability with respect to such claim by each claimant or
plaintiff to each Purchaser Indemnified Person that is the subject of such
third-party claim.
ARTICLE 8.3 Survival of Indemnification Claims; Rights of Offset.
(a) The indemnification obligations set forth in this Article
VIII shall survive the Closing and may be satisfied, in whole or in
part, by offset against obligations of Purchaser under the Note as set
forth therein. Notwithstanding anything to the contrary contained
herein, Purchaser may, in accordance with Section 8.3(b) and the Note,
suspend or cause the company to suspend payment under the Note in the
aggregate amount of all events which Purchaser in good faith believes
may result in a Purchaser Loss or a Tax Claims in the future but which
have not theretofore resulted in any such losses or claims. Upon the
final adjudication, resolution or other conclusive determination of
the amount of any such Purchaser Loss or Tax Claim, Purchaser or the
Company, as the case may be, shall offset such amounts against the
then suspended amounts of the Note. To the extent such Purchaser Loss
or Tax Claim is less than any amounts suspended in accordance with
this Section 8.3, Purchaser or the Company, as the case may be, shall
pay, if and when due, any remaining amounts payable on the Note.
(b) In the event Purchaser wishes to exercise its rights of
offset, it shall notify the Shareholder of such intention, in
accordance with Section 10.3 hereof, which notice shall specify in
reasonable detail the basis for Purchaser's right to offset (an
"Offset Notice"). If the Shareholder does not provide Purchaser
notice, in accordance with Section 10.3 hereof, of disagreement of
Purchaser's right to offset, specifying in reasonable detail the basis
for such disagreement (a "Disagreement Notice"), within 10 days from
the date of receipt of such Offset Notice, then Purchaser shall be
entitled to exercise such right of offset in accordance with Section
8.3(a). If the Shareholder properly delivers a Disagreement Notice,
the parties shall negotiate in good faith to resolve the dispute. If
the parties are unable to resolve the dispute within 10 days of
receipt by Purchaser of a Disagreement Notice, the dispute shall be
resolved by binding arbitration. Arbitration proceedings shall be
conducted in New York and shall be governed by the Streamlined
Arbitration Rules and Procedures of JAMS. The party seeking
enforcement shall be entitled to an award of all costs, fees and
expenses, including attorneys' fees, to be paid by the party against
whom enforcement is ordered. Purchaser's right of offset shall apply
during the resolution of any such dispute. ARTICLE 8.4 Tax Effect of
Indemnification Payments. All indemnity payments made by the
Shareholder Indemnifying Person to Purchaser Indemnified Persons, or
by Purchaser Indemnified Persons, pursuant to this Agreement shall be
treated for all Tax purposes as adjustments to the consideration paid
with respect to the Shares.
ARTICLE 8.5 Effect of Investigation. The right to indemnification, payment
of Purchaser Losses or for other remedies based on any representation, warranty,
covenant or obligation of the Shareholder or the Company contained in or made
pursuant to this Agreement or the Closing Documents shall not be affected by any
investigation conducted with respect to, or any knowledge acquired (or capable
of being acquired) at any time, whether before or after the execution and
delivery of this Agreement or the date the Closing occurs, with respect to the
accuracy or inaccuracy of or compliance with, any such representation, warranty,
covenant or obligation (it being agreed and understood that any matter described
in reasonable detail on the Disclosure Schedule shall not be the subject of a
Tax Claim of Purchaser Loss unless otherwise agreed by the Purchaser). The
waiver of any condition to the obligation of Purchaser to consummate the
Transactions, where such condition is based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, shall not affect the right to indemnification, payment
of Purchaser Losses, or other remedy based on such representation, warranty,
covenant or obligation.
ARTICLE 8.6 Survival of Covenants, Representations and Warranties. Each of
the covenants, representations and warranties of the Shareholder in this
Agreement or in any schedule, instrument or other document delivered pursuant to
this Agreement shall survive the Closing Date and shall continue in force
thereafter except as limited by Section 8.1(c).
ARTICLE 8.7 Purchaser Indemnification. (a) Purchaser shall indemnify,
defend and hold harmless the Seller Indemnified Persons from and against and in
respect of 100% of all Seller Indemnified Persons Losses.
(b) Purchaser shall indemnify, defend and hold harmless the
Seller Indemnified Persons from and against and in respect of 100% of
any adverse consequences the Seller Indemnified Persons may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by any liability of any of the Company (or the Company
Subsidiaries) (x) for any taxes of the Company or the Company
Subsidiaries with respect to any tax year or any portion thereof
beginning after the Closing Date or for any tax year beginning before
and ending after the Closing Dates to the extent allocable (determined
in the manner consistent with Section 5.6 hereof) to the portion of
such period beginning after the Closing Date. (c) Purchaser's
indemnification obligations shall be subject to the following
limitations and procedures:
(i) Purchaser's indemnification obligations relating to (A)
Seller Indemnified Persons Losses shall survive only until the
second anniversary of the Closing Date and (B) Tax Claims shall
survive until the expiration of the applicable tax statute of
limitations. No claim for the recovery of any Seller Indemnified
Persons Losses, or Tax Claims may be asserted by any Seller
Indemnified Person after the expiration of the applicable
indemnification period; provided, however, that claims asserted
in writing by any Seller Indemnified Person with reasonable
specificity prior to the expiration of the applicable
indemnification period shall not thereafter be barred by the
expiration of the applicable indemnification period;
(ii) No reimbursement for Seller Indemnified Person Losses
asserted under Section 8.7(a) shall be required unless and until
the cumulative aggregate amount of such Seller Indemnified Person
Losses exceeds $25,000, after which time the Purchaser shall be
liable in full for all Seller Indemnified Person Losses
(including the first $25,000); provided, however, that the
limitations set forth in Sections 8.7(c)(ii) shall not apply to
Seller Indemnified Person Losses arising out of (w) any breach of
any representation or warranty contained in Section 4.1 through
and including Section 4.3, (x) any covenant to be performed by
the Purchaser pursuant hereto, (y) any Seller Indemnified Person
Losses that relate to any liability for Taxes, or (z) any fraud,
willful misrepresentation or misconduct on the Purchaser or which
consist of reasonable attorney's fees and expenses incurred by
the Shareholder Indemnified Persons in investigating or defending
any third party claim.
(iii) the provisions of Section 8.2 shall likewise apply to
any claim for indemnification by any Seller Indemnified Person.
ARTICLE 9
DEFINITIONS AND INTERPRETATION
ARTICLE 9.1 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context clearly requires otherwise:
"Acquisition Proposal" shall mean any proposal or offer made by any Person
other than Purchaser or any Subsidiary of Purchaser to acquire all or a
substantial part of the business, properties or assets of the Company or any
Company Subsidiary or any capital stock of the Company or any Company
Subsidiary, whether by merger, tender offer, exchange offer, sale of assets or
similar transactions involving the Company or any Subsidiary.
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under the Exchange Act.
"Agreement" or "this Agreement" shall mean this Stock Purchase Agreement,
together with the Exhibits and Appendices hereto and the Disclosure Schedule.
"Balance Sheet" shall mean the most recent balance sheet of the Company and
its consolidated subsidiaries included in the Financial Statements.
"Balance Sheet Date" shall mean the date of the Balance Sheet.
"Closing" shall mean the closing referred to in Section 2.1.
"Closing Date" shall mean the date on which the Closing occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean New York Medical, Inc., a Delaware corporation.
"Company Agreement" shall mean any Indebtedness in the principal amount of
$50,000 or more or which requires total payments equal to or in excess of such
sum, any Lease, lease of personal property calling for annual payments in excess
of $5,000 per annum, any material license, other material contract, or agreement
or other material instrument or obligation to which the Company or any Company
Subsidiary is a party or by which any of them or any of their properties or
assets may be bound.
"Company Board of Directors" shall mean the board of directors of the
Company.
"Company Intellectual Property" shall mean all Intellectual Property that
is currently used in the business of the Company or any Company Subsidiary or
that is necessary to conduct the business of the Company or the Company
Subsidiaries as presently conducted or as currently proposed to be conducted.
"Company Option" shall mean an option to purchase Shares which has been
granted by the Company.
"Company Subsidiary" shall mean each Person which is a Subsidiary of the
Company.
"Copyrights" shall mean U.S. and foreign registered and unregistered
copyrights (including those in computer software and databases), rights of
publicity and all registrations and applications to register the same.
"Disclosure Schedule" shall mean the disclosure schedule prepared and
signed by the Company and delivered to Purchaser in accordance with Section 5.13
hereof
"DVI Facility" shall mean the Company's loan facility with DVI.
"Employment Agreement" shall mean the employment agreement to be dated as
of the Closing Date providing for the employment of ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ by the
Company, substantially in the form of Exhibit F hereto.
"Encumbrances" shall mean any and all liens, charges, security interests,
options, claims, mortgages, pledges, proxies, voting trusts or agreements,
preemptive rights, obligations, understandings or arrangements or other
restrictions on title or transfer of any nature whatsoever.
"Environmental Claim" shall mean any claim, action, cause of action,
investigation or notice (written or oral) by any Person alleging actual or
potential liability for investigatory, cleanup or governmental response costs,
or natural resources or property damages, or personal injuries, attorney's fees
or penalties relating to (i) the presence, or release into the environment, of
any Materials of Environmental Concern at any location owned or operated by the
Company or any Company Subsidiary, now or in the past, or (ii) circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law.
"Environmental Law" shall mean each federal, state, local and foreign law
and regulation relating to pollution, protection or preservation of human health
or the environment including ambient air, surface water, ground water, land
surface or subsurface strata, and natural resources, and including each law and
regulation relating to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to the manufacturing,
processing, distribution, use, treatment, generation, storage, containment
(whether above ground or underground), disposal, transport or handling of
Materials of Environmental Concern, or the preservation of the environment or
mitigation of adverse effects thereon and each law and regulation with regard to
record keeping, notification, disclosure and reporting requirements respecting
Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any trade or business, whether or not
incorporated, that together with the Company would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA.
"ESOP" shall mean the New York Medical Employee Stock Ownership Plan and
Trust.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Financial Statements" shall mean (a) the consolidated balance sheets of
the Company and the Company's consolidated Subsidiaries as at December 31, 2001
together with consolidated statements of income, shareholders' equity and cash
flows for each of the years then ended, all certified by ▇▇▇▇▇▇ & Company,
independent certified public accountants, whose reports thereon are included
therein, and (b) management prepared consolidated balance sheet, income
statement and statements of cash flow and changes in shareholder's equity of and
for the fiscal quarters ended March 31, 2002, June 30, 2002 and September 30,
2002 and for the fiscal year ended December 31, 2002.
"GAAP" shall mean United States generally accepted accounting principles.
"Governmental Entity" shall mean a court, arbitral tribunal, administrative
agency or commission or other governmental or other regulatory authority or
agency.
"Indebtedness" shall mean (i) all indebtedness for borrowed money or for
the deferred purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (ii) any other indebtedness that is
evidenced by a note, bond, debenture or similar instrument, (iii) all
obligations under financing leases, (iv) all obligations in respect of
acceptances issued or created, (v) all liabilities secured by any lien on any
property and (vi) all guarantee obligations.
"Intellectual Property" shall mean all of the following: Trademarks,
Patents, Copyrights, Trade Secrets and Licenses.
"Knowledge of the Shareholder" concerning a particular subject, area or
aspect of the Company's business or affairs shall mean the knowledge of the
Shareholder and each of the officers and directors of the Company and all
knowledge which was or could have been obtained upon inquiry by such persons of
those employees of the Company whose duties would, in the normal course of the
Company's affairs, result in such employees having knowledge concerning such
subject, area or aspect.
"▇▇▇▇▇▇ Note" shall mean the Senior Subordinated Term Loan Promissory Note,
dated as of November 30, 2000, by and between New York Medical, Inc. and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as assigned to ▇▇▇▇▇▇ ▇▇▇▇▇▇.
"Lease" shall mean each lease pursuant to which the Company or any Company
Subsidiary leases any real or personal property (excluding leases relating
solely to personal property calling for rental or similar periodic payments not
exceeding $5,000 per annum).
"Licenses" shall mean all licenses and agreements pursuant to which the
Company has acquired rights in or to any Trademarks, Patents or Copyrights, or
licenses and agreements pursuant to which the Company has licensed or
transferred the right to use any of the foregoing.
"Materials of Environmental Concern" shall mean chemicals; pollutants;
contaminants; wastes; toxic or hazardous substances, materials and wastes;
petroleum and petroleum products; asbestos and asbestos-containing materials;
polychlorinated biphenyls; lead and lead-based paints and materials; and radon.
"Note" shall mean the convertible promissory note of the Company in the
principal amount of $5,500,000, in the form of Exhibit G attached hereto.
"Patents" shall mean issued U.S. and foreign patents and pending patent
applications, patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extension thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention and like statutory rights.
"Pension Plan" shall mean any employee pension benefit plan (as defined in
Section 3(2) of ERISA) or any similar pension benefit plan under the laws of any
foreign jurisdiction, whether or not excluded from coverage under specific
Titles or Merger Subtitles of ERISA, for the benefit of any current or former
employee or director of the Company or any Company Subsidiary.
"Person" shall mean a natural person, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity or organization.
"Plan" shall mean each salary, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance pay, termination pay,
hospitalization, medical, insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program or agreement maintained,
sponsored, contributed to or required to be contributed to by the Company or any
Company Subsidiary for the benefit of any current or former employee, director
or consultant of the Company or any Company Subsidiary.
"Purchaser" shall mean Lifetime Healthcare Services, Inc., a Delaware
corporation.
"Purchaser Common Stock" shall mean the common stock, no par value, of
Purchaser.
"Purchaser Indemnified Persons" shall mean Purchaser and each of its
Affiliates.
"Purchaser Losses" shall mean any and all actual losses, liabilities,
damages, judgments, settlements and expenses (including interest and penalties
recovered by a third party with respect thereto and reasonable attorneys' fees
and expenses and reasonable accountants' fees and expenses incurred in the
investigation or defense of any of the same or in asserting, preserving or
enforcing any of the rights of Purchaser arising under Article VIII) incurred by
the Company or any of the Purchaser Indemnified Persons that arise out of:
(i) any breach by the Shareholder of any of such Shareholder's
representations and warranties contained in or made by or pursuant to
this Agreement;
(ii) any breach by the Company of any of the Company's
representations and warranties contained in or made by or pursuant to
this Agreement;
(iii) any breach by the Shareholder of any of the Shareholder's
covenants in this Agreement that survive the Closing; or
(iv) any breach prior to the Closing by the Shareholder or the
Company of any covenants contained in this Agreement.
"Real Property" shall mean real property.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SEC" shall mean the United States Securities and Exchange Commission.
"Seller Indemnified Persons" shall mean the Company, the Shareholder and
each of their respective Affiliates.
"Seller Indemnified Persons Losses" shall mean any and all actual losses,
liabilities, damages, judgments, settlements and expenses (including interest
and penalties recovered by a third party with respect thereto and reasonable
attorneys' fees and expenses and reasonable accountants' fees and expenses
incurred in the investigation or defense of any of the same or in asserting,
preserving or enforcing any of the rights of the Company or Shareholder arising
under Article VIII) incurred by any of the Seller Indemnified Persons that arise
out of:
(i) any breach by Purchaser of any of Purchaser's representations
and warranties contained in or made by or pursuant to this Agreement;
(ii) any breach by Purchaser of any of such Purchaser's covenants
in this Agreement that survive the Closing; or
(iii) any breach prior to the Closing by Purchaser of any
covenants contained in this Agreement.
"Shareholder" shall mean Redwood Investment Associates, L.P.
"Shareholder Indemnifying Person" shall mean the Shareholder.
"Shares" shall mean 550,000 shares of common stock, $.01 par value, of the
Company owed of record and beneficially by the Shareholder.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other organization, whether incorporated or unincorporated, of which (a) at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries or (b) such Person or any other Subsidiary of such Person is a
general partner (excluding any such partnership where such Person or any
Subsidiary of such party does not have a majority of the voting interest in such
partnership).
"Tax" or "Taxes" shall mean all taxes, charges, fees, duties, levies,
penalties or other assessments imposed by any federal, state, local or foreign
governmental authority, including income, gross receipts, excise, property,
sales, gain, use, license, custom duty, unemployment, capital stock, transfer,
franchise, payroll, withholding, social security, minimum estimated, profit,
gift, severance, value added, disability, premium, recapture, credit,
occupation, service, leasing, employment, stamp and other taxes, and shall
include interest, penalties or additions attributable thereto or attributable to
any failure to comply with any requirement regarding Tax Returns.
"Tax Claim" shall mean a claim for indemnification or defense arising out
of Section 8.1(b) or Section 8.7(b), as the case may be, including reasonable
attorneys' fees and expenses and reasonable accountants' fees and expenses
incurred in the investigation or defense of any of the same or in asserting,
preserving or enforcing any of the rights of Purchaser arising under Section
8.1(b) or the rights of the Seller Indemnified Persons under Section 8.7(b), as
the case may be.
"Tax Return" shall mean any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any such
document prepared on a consolidated, combined or unitary basis and also
including any schedule or attachment thereto, and including any amendment
thereof.
"Title IV Plan" shall mean a Plan that is subject to Section 302 or Title
IV of ERISA or Section 412 of the Code.
"Trademarks" shall mean U.S. and foreign registered and unregistered
trademarks, trade dress, service marks, logos, trade names, corporate names and
all registrations and applications to register the same.
"Trade Secrets" shall mean all categories of trade secrets as defined in
the Uniform Trade Secrets Act including business information.
"Transactions" shall mean all the transactions provided for or contemplated
by this Agreement.
"Transfer Taxes" shall mean all sales (including bulk sales), use,
transfer, recording, ad valorem, privilege, documentary, gains, gross receipts,
registration, conveyance, excise, license, stamp, duties or similar Taxes and
fees.
"Transfer Tax Payer" shall mean the party which has primary legal
responsibility for the payment of any particular Transfer Tax.
"Welfare Plan" shall mean any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) or any similar welfare benefit plan under the laws of any
foreign jurisdiction, whether or not excluded from coverage under specific
Titles or Merger Subtitles of ERISA, for the benefit of any current or former
employee or director of the Company or any Company Subsidiary.
ARTICLE 9.2 Interpretation.
(a) When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of this
Agreement unless otherwise clearly indicated to the contrary.
(b) Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the
words "without limitation."
(c) The words "hereof", "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer
to this Agreement as a whole and not to any particular provision of
this Agreement, and article, section, paragraph, exhibit and schedule
references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified.
(d) The meaning assigned to each term defined herein shall be
equally applicable to both the singular and the plural forms of such
term, and words denoting any gender shall include all genders. Where a
word or phrase is defined herein, each of its other grammatical forms
shall have a corresponding meaning.
(e) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and
permitted assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or
re-enactment thereof, any legislative provision substituted therefor
and all regulations and statutory instruments issued thereunder or
pursuant thereto.
(g) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as
if drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
ARTICLE 10
MISCELLANEOUS
ARTICLE 10.1 Fees and Expenses. All costs and expenses incurred in
connection with this Agreement and the consummation of the Transactions shall be
paid by the party incurring such expenses, except as specifically provided to
the contrary in this Agreement and except as follows:
(a) All Transfer Taxes arising out of, in connection with or
attributable to the transfer of shares from the Shareholder to
Purchaser shall be borne and paid by the Shareholder. The Transfer Tax
Payor shall prepare and timely file all relevant Tax Returns required
to be filed in respect of such Transfer Tax, pay the Transfer Tax
shown on such Tax Return, and notify the other parties in writing of
the Transfer Tax shown on such Tax Return and how such Transfer Tax
was calculated, and if the Transfer Tax Payor is Purchaser or its
Affiliates (including the Company Subsidiaries after the Closing
Date), the Shareholder shall reimburse the Transfer Tax Payor for the
amount of such Transfer Tax in immediately available funds within ten
(10) business days of receipt of such notice.
ARTICLE 10.2 Amendment and Modification. This Agreement may be amended,
modified and supplemented in any and all respects, but only by a written
instrument signed by all of the parties hereto expressly stating that such
instrument is intended to amend, modify or supplement this Agreement.
ARTICLE 10.3 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given when mailed via certified mail, return
receipt requested, delivered personally, telecopied (which is confirmed) or sent
by an overnight courier service, such as Federal Express, to the parties at the
following addresses (or at such other address for a party as shall be specified
by such party by like notice):
if to Purchaser, to:
Lifetime Healthcare Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company, to:
New York Medical. Inc.
Two ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Snow ▇▇▇▇▇▇ ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Shareholder:
Redwood Investment Associates, L.P.
▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address for notices hereunder by written notice to
each other party hereunder. Each notice, request or other communication shall be
effective (a) if given by facsimile, when such facsimile is transmitted and
electronic confirmation is received, (b) if given by mail (registered or
certified), three (3) days after such communication is deposited in the mails
with registered first class postage prepaid, addressed as aforesaid or (c) if
given by any other acceptable means, when delivered at the address specified in
this Section 10.3.
ARTICLE 10.4 Counterparts. This Agreement maybe executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties.
ARTICLE 10.5 Entire Agreement; No Third Party Beneficiaries. This Agreement
and the Confidentiality Agreement (a) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof and (b) are
not intended to confer any rights or remedies upon any Person other than the
parties hereto and thereto.
ARTICLE 10.6 Severability. Any term or provision of this Agreement that is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending terms or provision in any other
situation or many other jurisdiction. If the final judgment of a court of
competent jurisdiction or other authority declares that any term or provision
hereof is invalid, void or unenforceable, the parties agree that the court
making such determination shall have the power to reduce the scope, duration,
area or applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void or unenforceable terms or provision
with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
ARTICLE 10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the principles of conflicts of law thereof
ARTICLE 10.8 Enforcement; Venue. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York or in New York state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of New York or
any New York state court in the event any dispute arises out of this Agreement
or any of the Transactions, (b) agrees that it shall not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (c) except as set forth in Section 8.3(b), agrees that it shall
not bring any action relating to this Agreement or any of the Transactions in
any court other than a Federal or state court sitting in the State of New York.
ARTICLE 10.9 Extension, Waiver. At any time prior to the Closing Date, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) waive compliance
by the other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
ARTICLE 10.10 Election of Remedies. Neither the exercise of nor the failure
to exercise a right of set-off or to give notice of a claim under this Agreement
will constitute an election of remedies or limit Purchaser or any of the
Purchaser Indemnified Persons in any manner in the enforcement of any other
remedies that may be available to any of them, whether at law or in equity.
ARTICLE 10.11 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
content of the other parties, except that Purchaser may assign, in its sole
discretion, any or all of its rights and interests hereunder to any Affiliate of
Purchaser. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
[Remainder of Page Left Intentionally Blank.]
IN WITNESS WHEREOF, Purchaser, the Company and the Shareholder have
executed this Agreement or caused this Agreement to be executed by their
respective officers thereunto duly authorized as of the date first written
above.
PURCHASER
LIFETIME HEALTHCARE SERVICES, INC.
By:/s/▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President & Secretary
THE COMPANY
NEW YORK MEDICAL, INC.
By:
--------------------------
Name:
Title:
THE SHAREHOLDER
REDWOOD INVESTMENT ASSOCIATES, L.P.
By:
---------------------------
Name:
Title:
TABLE OF CONTENTS
Page
ARTICLE I........................................................................................................1
PURCHASE AND SALE OF SHARES...................................................................................1
Section 1.1 Sale and Transfer of Shares......................................................................1
Section 1.2 The Purchase Price...............................................................................1
ARTICLE II.......................................................................................................1
THE CLOSING...................................................................................................1
Section 2.1 The Closing......................................................................................1
Section 2.2 Deliveries by the Shareholder....................................................................2
Section 2.3 Deliveries by Purchaser..........................................................................2
ARTICLE III......................................................................................................3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER AND THE COMPANY.............................................3
Section 3.1 Share Ownership..................................................................................3
Section 3.2 Legal Power; Organization, Qualification of the Shareholder......................................3
Section 3.3 Binding Agreement................................................................................3
Section 3.4 No Shareholder Conflict or Default...............................................................3
Section 3.5 Ownership and Possession of Shares...............................................................4
Section 3.6 Good Title Conveyed..............................................................................4
Section 3.7 Authorization; Validity of Agreement; Company Action.............................................4
Section 3.8 Other Board Approvals Regarding Transactions.....................................................4
Section 3.9 Capitalization...................................................................................4
Section 3.10 Organization, Qualification of Company..........................................................5
Section 3.11 Subsidiaries and Affiliates.....................................................................5
Section 3.12 Consents and Approvals; No Violations...........................................................5
Section 3.13 Financial Statements............................................................................6
Section 3.14 Books and Records...............................................................................6
Section 3.15 No Undisclosed Liabilities......................................................................6
Section 3.16 Accounts Receivable.............................................................................6
Section 3.17 Accounts Payable................................................................................6
Section 3.18 Prepayment of Company Debt......................................................................7
Section 3.19 Absence of Certain Changes......................................................................7
Section 3.20 Title to Properties; Encumbrances...............................................................8
Section 3.21 Real Property...................................................................................8
Section 3.22 Leases..........................................................................................8
Section 3.23 Equipment.......................................................................................9
Section 3.24 Environmental Matters...........................................................................9
Section 3.25 Contracts and Commitments......................................................................10
Section 3.26 Customers and Suppliers........................................................................10
Section 3.27 Insurance......................................................................................10
Section 3.28 Litigation.....................................................................................11
Section 3.29 Compliance with Laws...........................................................................11
Section 3.30 Employee and Labor Matters; Benefit Plans......................................................11
Section 3.31 Tax Matters....................................................................................14
Section 3.32 Intellectual Property..........................................................................16
Section 3.33 Potential Conflict of Interest.................................................................16
Section 3.34 Bank Accounts..................................................................................16
Section 3.35 Information for Financing......................................................................16
Section 3.36 Brokers or Finders.............................................................................17
Section 3.37 Full Disclosure................................................................................17
ARTICLE IV......................................................................................................17
REPRESENTATIONS AND WARRANTIES OF PURCHASER..................................................................17
Section 4.1 Organization....................................................................................17
Section 4.2 Authorization; Validity of Agreement............................................................17
Section 4.3 Consents and Approvals; No Violations...........................................................17
Section 4.4 Issuance of Purchaser Series A Preferred Stock..................................................18
Section 4.5 Capitalization..................................................................................18
Section 4.6 No Assets, Liabilities or Operations............................................................18
Section 4.7 Brokers or Finders..............................................................................18
Section 4.8 Full Disclosure.................................................................................18
ARTICLE V.......................................................................................................19
COVENANTS....................................................................................................19
Section 5.1 Interim Operations of the Company...............................................................19
Section 5.2 Access; Confidentiality.........................................................................21
Section 5.3 Efforts and Actions to Cause Closing to Occur...................................................22
Section 5.4 Notification of Certain Matters.................................................................22
Section 5.5 No Solicitation of Competing Transaction........................................................23
Section 5.6 Tax Matters.....................................................................................24
Section 5.7 Transfer of the Shareholder's Shares............................................................24
Section 5.8 Subsequent Actions..............................................................................24
Section 5.9 Publicity.......................................................................................25
Section 5.10 ESOP...........................................................................................25
Section 5.11 Post-Closing Cooperation.......................................................................25
Section 5.12 Loan to the Company............................................................................25
Section 5.13 Disclosure Schedule............................................................................25
Section 5.14 Amendment to ▇▇▇▇▇▇ Note.......................................................................25
ARTICLE VI......................................................................................................25
CONDITIONS...................................................................................................25
Section 6.1 Conditions to Each Party's Obligation to Effect the Closing.....................................26
Section 6.2 Conditions to Obligations of Purchaser to Effect the Closing....................................26
Section 6.3 Conditions to Obligations of the Shareholder to Effect the Closing..............................28
ARTICLE VII.....................................................................................................28
TERMINATION..................................................................................................28
Section 7.1 Termination.....................................................................................28
Section 7.2 Effect of Termination...........................................................................29
ARTICLE VIII....................................................................................................29
INDEMNIFICATION..............................................................................................29
Section 8.1 Indemnification; Remedies.......................................................................29
Section 8.2 Notice of Claim; Defense........................................................................30
Section 8.3 Survival of Indemnification Claims; Rights of Offset............................................31
Section 8.4 Tax Effect of Indemnification Payments..........................................................32
Section 8.5 Effect of Investigation.........................................................................32
Section 8.6 Survival of Covenants, Representations and Warranties...........................................32
Section 8.7 Purchaser Indemnification.......................................................................32
ARTICLE IX......................................................................................................33
DEFINITIONS AND INTERPRETATION...............................................................................33
Section 9.1 Definitions.....................................................................................33
Section 9.2 Interpretation..................................................................................38
ARTICLE X.......................................................................................................39
Section 10.1 Fees and Expenses..............................................................................39
Section 10.2 Amendment and Modification.....................................................................39
Section 10.3 Notices........................................................................................39
Section 10.4 Counterparts...................................................................................41
Section 10.5 Entire Agreement; No Third Party Beneficiaries.................................................41
Section 10.6 Severability...................................................................................41
Section 10.7 Governing Law..................................................................................41
Section 10.8 Enforcement; Venue.............................................................................41
Section 10.9 Extension, Waiver..............................................................................41
Section 10.10 Election of Remedies..........................................................................41
Section 10.11 Assignment....................................................................................42
Exhibit A - Form of Opinion of Company Counsel
Exhibit B - Form of Certificate of Company Officers
Exhibit C - Form of Opinion of Purchaser Counsel
Exhibit D - Amendment to ▇▇▇▇▇▇ Note
Exhibit E - Form of Certificate of Purchaser Officers
Exhibit F - Employment Agreement
Exhibit G - Form of Note
AMENDMENT to the Stock Purchase Agreement (the "Agreement"), dated March
21, 2003, by and among LIFETIME HEALTHCARE SERVICES, INC. ("Purchaser"), REDWOOD
INVESTMENT ASSOCIATES, L.P. (the "Shareholder") and NEW YORK MEDICAL, INC. (the
"Company").
WHEREAS, the parties desire to amend the Agreement in certain respects
immediately prior to the Closing to address certain matters raised by
Purchaser's due diligence investigation.
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Capitalized terms used but not defined herein shall have the
meanings given such terms in the Agreement.
2. Section 3.13 is hereby amended to add the following sentence to the
end thereof:
"The aggregate net profit of the Professional Corporations for
the fiscal year ended December 31, 2002 which was not paid to the
Company was approximately $150,000."
3. Section 3.9(a) is hereby amended to add the following sentence to
the end thereof:
"Each share of Series A Convertible Stock is currently
convertible into one (1) share of the Company's common stock and
no adjustment shall be required to be made to such conversion
rate as a result of the sale of the Shares."
4. Section 3.18 is hereby amended to add the following sentence to the
end thereof: "As of the date hereof, the amount of principal outstanding
under (x) the DVI Facility is $6,020,957, and (y) the ▇▇▇▇▇▇ Note is
$4,662,830.
5. Section 3.30(p) is hereby amended to add the following to the end
thereof: "As of the date hereof, the amount of principal outstanding under
that certain note of the ESOP made in favor of the Company is $10,089,000.
The Company has paid in the aggregate $3,757,000 in dividends on the Series
A Preferred Stock and $2,527,000 in contributions to the ESOP."
6. Section 3.38 shall be added as follows: "Section 3.38 Accredited
Investor. The Shareholder is an "accredited investor" (as such term is
defined under the rules and regulations promulgated by the Securities
Act)."
7. Section 3.39 shall be added as follows:
"Section 3.39 Management Agreements. (a) The Disclosure Schedule
sets forth a complete and correct list of all management
agreements in effect as of the date hereof (the "Management
Agreements"). A true and complete copy of each Management
Agreement (including all amendments and supplements thereto) has
been attached to the Disclosure Schedule.
(b) Each Management Agreement is valid, binding and enforceable
in accordance with its terms and is in full force and effect.
There are no existing defaults by the Company under any of the
Management Agreements. No event has occurred that (whether with
or without notice, lapse of time or the happening or occurrence
of any other event) would constitute a default under any
Management Agreement. No consent is required under any of the
Management Agreement to the consummation of the Transactions.
8. The first sentence of Section 4.5 is hereby amended and restated in its
entirety as follows:
"The authorized capital stock of Purchaser will consist of 1,500
shares of common stock, no par value per share, all of which is
issued and outstanding."
9. Section 5.15 shall be added as follows:
"Section 5.15 Foreign Qualification. Within 30 days after the
Closing, the Shareholder shall cause the Company to be qualified
as a foreign corporation in the State of New York. The Company
shall cooperate with the Shareholder in connection with the
preparation of and have the right to review and approve such
filing.
10. Section 8.1(b) shall be amended to add the following sentence at the
end thereof:
"Notwithstanding anything to the contrary contained herein, the
Shareholder shall not have any obligation to indemnify the
Purchaser Indemnified Persons for any interest and penalties that
may be payable by the Company or the Professional Corporations in
respect of payroll withholding taxes for the years 2001 and 2002
except for 55% of any such interest and penalties that exceed
$100,000. Any settlement with any Governmental Entity with
respect to the payment of such interest and penalties must
receive the prior approval of the parent company of Purchaser.
Notwithstanding anything to the contrary contained herein, the
Shareholder shall not have any obligation to indemnify the
Purchaser Indemnified Persons for any Purchaser Losses arising
out of any of the litigation disclosed on Section 3.28 of the
Disclosure Schedule except to the extent that such Purchaser
Losses (other than Purchaser Losses related to the ▇▇▇▇▇▇
lawsuit) shall exceed $50,000 (the Excess"), in which case the
Shareholder shall indemnify the Purchaser Indemnified Persons in
an amount equal to 55% of any such Excess.
11. The last sentence of Section 8.1 (c)(ii) is hereby amended to add to
the end of clause (x): the following language "except as set forth in Section
8.1(b)."
12. Section 9.1 is hereby amended as follows:
(a) The definition "Company Subsidiary" is hereby amended to add
the following to the end thereof:
"and each Professional Corporation."
(b) The definition "▇▇▇▇▇▇ Note" is hereby replaced by the
following:
"▇▇▇▇▇▇ Note" shall mean the Senior Subordinated Term Loan
Promissory Note by and between New York Medical, Inc. and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as assigned to ▇▇▇▇▇▇ ▇▇▇▇▇▇, in the
principal amount of $4,662,830, as amended and restated on
June 16, 2003.
(c) The definition "Note" is hereby replaced by the following:
"Note" shall mean the Convertible Subordinated Promissory
Note of the Company in the principal amount of $5,500,000,
attached to the Purchase Agreement as Exhibit G, as amended
and restated as of June 16, 2003.
(d) The following definition shall be added to Section 9.1:
"Professional Corporation" shall mean each and all of the
following entities: Eastern Medical Practice, P.C.; Valley
Medical Practice, P.C.; Atlantic Medical & Diagnostic, P.C.;
Summit Medical Services, P.C.; Birch Medical Diagnostic,
P.C.; MacIntosh Medical, P.C.; Spruce Medical & Diagnostic,
P.C.; Sound Medical, P.C.; and Empire Medical Services,
P.C."
(e) The definition of "Purchaser Losses" is amended to add the
language "55% of" after the words "'Purchaser Losses' shall mean"
and before the words "any and all actual losses."
13. Except as amended hereby, the Agreement shall remain unmodified and is
hereby ratified in all respects.
[the balance of this page is intentionally left blank]
IN WITNESS WHEREOF, Purchaser, the Shareholder and the Company have executed
this Amendment or caused this Amendment to be executed by their respective
officers therein to be duly authorized as of the 16th day of June 2003.
PURCHASER
LIFETIME HEALTHCARE SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇ ▇▇▇▇
President
THE COMPANY
NEW YORK MEDICAL, INC,
By: /s/ ▇▇▇▇▇▇ Ciaavarella
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, CFO
President
THE SHAREHOLDER
REDWOOD INVESTMENT ASSOCIATES, L.P.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, MD
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, MD
General Partner