EXHIBIT 10.42
ASSET PURCHASE AGREEMENT
dated as of November 1, 2002
by and between
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.,
INTEGRAIL ACQUISITION CORP.
HEALTH SOLUTIONS, LTD
and
THE OTHER PERSONS NAMED HEREIN
ASSET PURCHASE AGREEMENT, dated as of November 1, 2002, by and between
National Medical Health Card Systems, Inc., a Delaware corporation ("NMHC"),
Integrail Acquisition Corp., a Delaware corporation ("Purchaser") Health
Solutions, LTD., a New York corporation (together with it predecessors
"Sellers") and ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
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▇▇▇▇▇▇▇▇▇▇ (each, an "Owner" and, collectively, the "Owners".
W I T N E S S E T H:
WHEREAS, Purchaser desires to purchase, and Seller desires to sell, all of
the assets of Seller that are used in connection with the Business (except as
otherwise provided herein) all upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in reliance upon the covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"AAA" has the meaning ascribed to such term in Section 10.10(a) hereof.
"Accounts Receivable" has the meaning ascribed to such term in Section
2.01(b) hereof.
"Act" has the meaning ascribed to such term in Section 2.06 hereof.
"Action" means any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority or arbitration panel.
"Additional Closing Amount" has the meaning ascribed to such term in
Section 2.05(a) hereof.
"Affiliate" means, with respect to any specified Person, any other Person
that, directly or indirectly through one or more intermediaries, Controls, is
Controlled by or is under common Control with such specified Person.
"Agreement" means this Agreement, including the Disclosure Schedule, the
other Schedules and the Exhibits and all amendments hereto and thereto.
"Ancillary Agreements" means the ▇▇▇▇ of Sale, the Employment Agreement,
the Real Property Lease, and the Escrow Agreement.
"Assets" has the meaning ascribed to such term in Section 2.01 hereof.
"Assumed Contracts" has the meaning ascribed to such term in Section
2.01(i) hereof.
"Assumed Liabilities" has the meaning ascribed to such term in Section 2.03
hereof.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act or transaction that forms or could reasonably be expected to form
the basis for any specified consequence.
"▇▇▇▇ of Sale" means the ▇▇▇▇ of sale and assignment, substantially in the
form attached hereto as Exhibit A, to be delivered by Seller to NMHC and
Purchaser at the Closing.
"Business" means Seller's health information management business of (i)
software development of decision support tools for health care in connection
with software manufactured by Seller; (ii) providing on line analytical
processing (OLAP) of data in connection with software manufactured by Seller;
(iii) the analysis of health care data elements such as clinical (medical and
pharmacy) data, provider characteristics, patient characteristics and health
care characteristics and creates different types of reports based upon the
analysis in connection with software manufactured by Seller; (iv) providing
consulting services in connection with software manufactured by Seller for
analyzing, reporting on, interpreting and using health care data elements; (v)
providing data mapping, data conversion, electronic access, data warehousing,
application linking, integration of web applications and cross integration in
connection with software manufactured by Seller; and (vi) providing drug and
drug category analysis information to the biotech and pharmaceutical industry in
connection with software manufactured by Seller.
"Business Day" means any day that is not a Saturday, a Sunday or other day
on which banks are required or authorized by Law to be closed in the City of New
York.
"Business Employees" has the meaning ascribed to such term in Section
3.15(a) hereof.
"Closing" means the completion of the sale and purchase of the Assets
pursuant to this Agreement.
"Closing Amount" has the meaning ascribed to such term in Section 2.05(a)
hereof.
"Closing Balance Sheets" has the meaning ascribed to such term in Section
6.14 hereof.
"Closing Date" has the meaning ascribed to such term in Section 2.07
hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the Business
that is not generally known to the public and proprietary to be kept in
confidence by a party, including, without limitation, information, knowledge or
data of an industrial, intellectual or technical nature that relates to a
party's business plans, business opportunities, projections and costs, pricing
or marketing data, finances, products, designs, processes, know-how and
personnel.
"Contract" means any oral or written agreement, lease, License or
sublicense, evidence of indebtedness, mortgage, indenture, security agreement,
deed of trust or other contract, commitment, arrangement or obligation.
"Control" means, as to any Person, the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by Contract or otherwise. The term "Controlled"
shall have a correlative meaning.
"Copyrights" means copyrightable works, copyrights (whether or not
registered), and registrations and applications for registration therefor, and
all rights provided by international treaties or conventions with respect to the
foregoing.
"Disclosure Schedule" means the disclosure schedule delivered by Seller to
Purchaser on the date hereof and initialed by the parties hereto.
"Employment Agreement" means the employment agreement, substantially in the
form attached hereto as Exhibit B, to be entered into pursuant to Section 6.08.
"Employee Plan" has the meaning ascribed to such term in Section 3.15(a)
hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" shall be ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
"Escrow Agreement" means the escrow agreement, substantially in the form
attached hereto as Exhibit C, to be entered into pursuant to Section 6.09.
"Escrowed Cash" has the meaning ascribed to such term in Section 2.05(b)
hereof.
"Escrow Release Date" has the meaning ascribed to such term in Section
2.05(b) hereof.
"Exchange Act" has the meaning ascribed to such term in Section 4.07
hereof.
"Excluded Assets" has the meaning ascribed to such term in Section 2.02
hereof.
"Excluded Liabilities" has the meaning ascribed to such term in Section
2.04 hereof.
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means any United States federal, state or local or
any foreign government, governmental, regulatory or administrative authority,
agency or commission or court, tribunal or judicial body.
"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"Indemnified Party" has the meaning ascribed to such term in Section
8.03(a) hereof.
"Indemnifying Party" has the meaning ascribed to such term in Section
8.03(a) hereof.
"Independent Accounting Firm" means (a) an independent certified public
accounting firm in the United States of national recognition mutually acceptable
to Seller and Purchaser or (b) if Seller and Purchaser are unable to agree upon
such a firm, then each party's independent accountants shall select a firm,
unaffiliated with either Seller or Purchaser, in which event "Independent
Accounting Firm" shall mean such firm.
"Intellectual Property" means (a) all United States, international, and
foreign patents, patent applications and statutory invention registrations,
including reissuances, divisions, continuations, continuations in part,
extensions and reexaminations thereof, all inventions, all rights provided by
international treaties or conventions with respect to the foregoing, and all
improvements thereto, (b) Trademarks, (c) Copyrights, (d) Confidential
Information, (e) computer software (including source codes, data and related
documentation), and (f) all other proprietary rights, in each case, whether
owned or licensed.
"Knowledge of Purchaser" means the actual knowledge of the Purchaser.
"Knowledge of Seller" means the actual knowledge of each of ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
"Law" means any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code, order or other requirement or rule of law.
"Leased Real Property" has the meaning ascribed to such term in Section
3.12(b) hereof.
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, filings, qualifications, privileges,
franchises and similar consents granted or issued by any Person.
"Lien" means any mortgage, deed of trust, pledge, hypothecation, security
interest, encumbrance, claim, lien or charge of any kind, or any conditional
sales Contract, title retention Contract or other Contract to create any of the
foregoing (it being understood that a Contract which permits a purchaser to
return items purchased thereunder shall not be deemed to constitute a Lien
solely by virtue thereof).
"Loss" has the meaning ascribed to such term in Section 8.01(a) hereof.
"NMHC" has the meaning ascribed to such term in the preamble hereof.
"NMHC Financial Statements" has the meaning ascribed to such term in
Section 4.07 hereof.
"Nonassignable Contract" has the meaning ascribed to such term in Section
2.01 hereof.
"Operational Milestones" means that (i) for the period beginning on the
Closing Date and ending on the first anniversary thereof, Purchaser shall (A)
maintain sixty-percent (60%) of Seller's annual revenue as indicated on the
Seller's Closing Balance Sheets (and 9/30/02 income statements) or Post-Closing
Financial Statement, whichever is greater and (B) maintain at least three of
Seller's customers listed on Schedule 3.16(a) for services, and (ii) Seller
shall deliver to Purchaser and NMHC the Post-Closing Financial Statements in
accordance with the time period set forth in Section 5.14 hereof.
"Owners" has the meaning ascribed to such term in the preamble hereof.
"Permitted Liens" means the following Liens: (a) Liens for Taxes,
assessments or other governmental charges or levies that are not yet due or
payable, (b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and repairmen and other Liens imposed by Law for amounts
not yet due, (c) Liens incurred or deposits made in the ordinary course of
business of the Business consistent with past practice in connection with
worker's compensation, unemployment insurance or other types of social security,
and (d) Liens not created by Seller which affect the underlying fee interest of
any Leased Real Property (as defined herein).]
"Person" means any natural person, general or limited partnership, trust,
corporation, limited liability company, firm, association, Governmental
Authority or other legal entity.
"Post-Closing Financial Statement" has the meaning ascribed to such term in
Section 5.14 hereof.
"Purchaser" has the meaning ascribed to such term in the preamble hereof.
"Purchaser Indemnified Parties" has the meaning ascribed to such term in
Section 8.02(a) hereof.
"Purchaser Material Adverse Effect" means any event, change, occurrence or
development that has or could be reasonably expected to have a material adverse
effect on (a) the business, assets, results of operations, prospects or
condition (financial or otherwise) of Purchaser and its Subsidiaries and parent
taken as a whole or (b) NMHC and Purchaser's ability to perform their
obligations under this Agreement.
"Purchase Price" has the meaning ascribed to such term in Section 2.05(a)
hereof.
"Real Property Lease" means the real property lease substantially in the
form attached hereto as Exhibit D, to be delivered by Seller and NMHC at the
Closing.
"Registration Statement" has the meaning ascribed to such term is Section
2.06 hereof.
"SEC" has the meaning ascribed to such term in Section 2.05(b) hereof.
"SEC Documents" has the meaning ascribed to such term in Section 4.07
hereof.
"Seller" has the meaning ascribed to such term in the preamble hereof.
"Seller Balance Sheet" has the meaning ascribed to such term in Section
3.07(a) hereof.
"Seller Financial Statements" has the meaning ascribed to such term in
Section 3.07(a) hereof.
"Seller Indemnified Parties" has the meaning ascribed to such term in
Section 8.01(a) hereof.
"Seller Intellectual Property" has the meaning ascribed to such term in
Section 3.22 hereof.
"Seller Material Adverse Effect" means any event, change, occurrence or
development that has had or could have a material adverse effect on (a) the
assets, results of operations, prospects or condition (financial or otherwise)
of the Business, taken as a whole or (b) the ability of Seller or the Owners to
perform their obligations under this Agreement.
"Seller's Current Assets" means, as of a specified date, current assets on
the books of Seller determined in accordance with GAAP.
"Seller's Current Liabilities" means, as of a specified date, current
liabilities on the books of Seller determined in accordance with GAAP.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust, estate or other Person of which (or
in which) more than 50% of (a) the issued and outstanding capital stock or other
equity interests having ordinary voting power to elect a majority of the board
of directors of such corporation or Persons performing similar functions of any
other Person (irrespective of whether at the time capital stock or other equity
interests of any other class or classes of such corporation or other Person
shall or might have voting power upon the occurrence of any contingency), (b)
the interest in the capital or profits of such partnership, joint venture or
limited liability company or other Person, or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries.
"Tax" or "Taxes" means all income, excise, gross receipts, ad valorem,
sales, use, employment, franchise, profits, gains, property, transfer, payroll,
withholding, severance, occupation, social security, unemployment compensation,
alternative minimum, value added, intangibles or other taxes, fees, stamp taxes,
duties, charges, levies or assessments of any kind whatsoever (whether payable
directly or by withholding), together with any interest and any penalties,
fines, additions to tax or additional amounts imposed by any Governmental
Authority with respect thereto.
"Tax Return" or "Tax Returns" has the meaning ascribed to such term in
Section 3.09(a) hereof.
"Third Party Claim" has the meaning ascribed to such term in Section
8.03(b) hereof.
"Trademarks" means trademarks, service marks, trade dress, logos,
proprietary icons, trade names, corporate names, internet domain names and other
source identifiers (whether or not registered) including all common law rights
therein, and registrations and applications for registration therefor, all
rights provided by international treaties or conventions with respect to the
foregoing, and all reissuances, extensions and renewals of any of the foregoing
and all goodwill associated therewith.
"Uncollected Accounts" has the meaning ascribed to such term in Section
5.12(b) hereof.
SECTION 1.02 Terms Generally. Words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other gender as the context requires, the terms "hereof", "herein"
and "herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement 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 to this Agreement
unless otherwise specified, and the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation", unless
otherwise specified.
ARTICLE II
PURCHASE AND SALE OF ASSETS
SECTION 2.01 Purchase and Sale of Assets. At the Closing, on the terms and
subject to the conditions contained herein, Seller shall sell, transfer, convey,
assign and deliver to Purchaser, and Purchaser shall purchase and accept from
Seller, all of Seller's right, title and interest in and to all assets and
properties that are owned, leased or licensed by Seller and used in connection
with the Business, free and clear of any Liens, other than the Excluded Assets
(collectively, the "Assets"), including, without limitation:
(a) all of Seller's trade and other accounts receivable arising from the
conduct of the Business ("Accounts Receivable");
(b) all rights of Seller in and to Seller Intellectual Property;
(c) the goodwill and going concern value of the Business, including without
limitation the right to use the name "Integrail";
(d) all prepaid expenses arising from the conduct of the Business;
(e) any other asset that would be classified as a current asset under GAAP
arising from the conduct of the Business;
(f) all property, plant and equipment, supplies, furniture, automobiles,
fixtures, computers, computer files, books and records and other items of
personal property used in connection with the Business;
(g) all deposits and other noncurrent assets allocated to the Business as
reflected on Seller Balance Sheet and all deposits made and noncurrent assets
acquired for the Business since the date of Seller Balance Sheet as reflected on
Seller's closing date balance sheet;
(h) all rights of and benefits accruing to Seller under Contracts related
to the Business (including Nonassignable Contracts (defined herein)), including
rights to assert claims and take other rightful actions in respect of breaches,
defaults and other violations of such Contracts, including the Contracts listed
on Schedule 3.16(a) (the "Assumed Contracts);
(i) all Licenses of Seller relating to the Business, including the Licenses
listed on Schedule 2.01(j);
(j) all agreements with vendors of Seller relating to the Business listed
on Schedule 2.01(k); and
(k) all operating data and records of Seller relating to the Business,
including, without limitation, customer lists and records, vendor lists,
equipment logs, operating guides and manuals, telephone numbers and connections,
purchasing materials and records, correspondence and other similar documents and
records, including enforcement of rights thereunder at the cost and for the
account of Purchaser.
Notwithstanding the foregoing, to the extent that assignment hereunder by
Seller to Purchaser of any Assumed Contract or License is not permitted or is
not permitted without the consent of any third party (collectively the
"Nonassignable Contracts"), this Agreement will not be deemed to be an
assignment of the same or to constitute an undertaking to assign the same if
such consent is not given or if such an assignment or undertaking to assign
otherwise would constitute a breach of or cause a loss of benefits thereunder.
Seller will use reasonable commercial efforts to obtain any and all such third
party consents. If any such third party consent is not obtained, Seller will
cooperate with Purchaser in any reasonable arrangement designed to provide to
Purchaser after the Closing the benefits under the applicable Assumed Contract
or License, including enforcement of rights thereunder at the cost and for the
account of Purchaser, and Purchaser shall pay or satisfy any liabilities with
respect to such Assumed Contract or License as and when they are due, to the
extent Purchaser would have been responsible therefor hereunder if such consent
or approval had been obtained.
SECTION 2.02 Excluded Assets. Anything to the contrary in Section 2.01
notwithstanding, the Assets shall not include, and Purchaser shall not purchase,
those items described on Schedule 2.02 hereto (collectively, the "Excluded"
Assets").
SECTION 2.03 Assumption of Liabilities. On the terms and subject to the
conditions contained herein, Purchaser shall assume and agree to pay, perform
and discharge in accordance with their terms only the following obligations,
debts and liabilities of Seller relating to the Business (collectively, the
"Assumed Liabilities"): (a) except as provided in Section 2.04, the accrued
current liabilities relating to the Business as of at Closing, which totaled
$431,485.06 at August 31, 2002, as increased or decreased by transactions
conducted in the ordinary course of conduct of Seller between September 1, 2002
and Closing;
(b) all of Seller's obligations (other than obligations arising as a result
of breaches by Seller) arising or continuing after the Closing under the Assumed
Contracts and Licenses; and
(c) all operating and/or capital leases relating to the Business.
SECTION 2.04 Excluded Liabilities. It is understood and agreed that
Purchaser is not hereby assuming any liabilities of Seller other than the
Assumed Liabilities (such liabilities other than the Assumed Liabilities being
referred to herein as the "Excluded Liabilities"). In addition, anything
contained in this Agreement to the contrary notwithstanding (other than as set
forth below), the Assumed Liabilities do not include and, accordingly, the
Excluded Liabilities include, without limitation, the following liabilities:
(a) any obligation of Seller for Taxes, including without limitation any
Taxes arising from the operation of the Business or the ownership of the Assets
as of the Closing or arising out of the consummation of the transactions
contemplated hereby (for purposes of this section 2.04(a), all real property
Taxes, personal Property Taxes and similar ad valorem obligations levied with
respect to the Assets for a tax period that includes (but does not end on) the
Closing Date shall be apportioned between Seller and Purchaser based upon the
number of days of such period included in the period before (and including) the
Closing Date and the number of days of such tax period after the Closing Date);
in accordance with New York law, any sales taxes due as a result of the
transactions contemplated hereby shall be collected by Seller from Purchaser in
addition to the Purchase Price and shall be remitted to the appropriate taxing
authorities.
(b) all borrowings on life insurance;
(c) all long-term debt of Seller, except for any operating and/or capital
leases relating to the Business;
(d) any liabilities or obligations of any Owner;
(e) the liabilities and obligations of Seller arising under this Agreement
or any of the Ancillary Agreements;
(f) any liabilities of Seller under any Contract pursuant to which Seller
or any predecessor of Seller acquired the Business or any part thereof from a
third party;
(g) any liability or obligation, including, without limitation, any
liability for Seller's attorney's fees or expenses, resulting from any
litigation disclosed pursuant to Section 3.10;
(h) any liability or obligations arising under or in connection with any
pension, insurance, bonus, profit-sharing or other Employee Plan (as defined in
Section 3.15(a)) or any obligation relating to salaries, bonuses, vacation or
severance pay, or any obligation under any Law, including, without limitation,
ERISA and 4980B of the Code;
(i) any liability, Contract or other obligation of Seller, known or
unknown, fixed or contingent, the existence of which constitutes or will
constitute a breach of any representation or warranty of Seller contained in or
made pursuant to this Agreement or which Purchaser is not assuming hereunder;
(j) any liabilities or obligations of Seller under any Contracts relating
to the Excluded Assets;
(k) any violation of any Law;
(l) other than liabilities set forth in Section 2.03(a), any liability or
obligation of Seller arising out of the conduct of the Business prior to the
Closing Date, including, without limitation, liabilities and obligations arising
out of transactions entered into prior to the Closing Date (including, without
limitation, liabilities or obligations arising out of any breach by Seller of
any provision of any Assumed Contract, including, but not limited to,
liabilities or obligations arising out of Seller's failure to perform as
required under any Contract in accordance with its terms prior to the Closing),
any action or inaction prior to the Closing Date or any state of facts existing
prior to the Closing Date (regardless of when asserted) not expressly assumed by
Purchaser pursuant to this Agreement;
(m) all legal fees and expenses incurred by Seller or for which Seller is
otherwise liable; and
(n) all accounting fees and expenses incurred by Seller or for which Seller
is otherwise liable, except as otherwise provided in Section 10.02.
SECTION 2.05 Purchase Price; Allocation of Purchase Price.
(a) The aggregate purchase price to be paid by Purchaser for the Assets
(the "Purchase Price") shall be one million four hundred thousand ($1,400,000)
in cash (the "Closing Amount").
(b) At the Closing, seven hundred thousand dollars ($700,000) of the
Closing Amount (the "Escrowed Cash") shall be deposited with the Escrow Agent
pursuant to the terms of the Escrow Agreement. The Escrowed Cash shall be held
in the escrow account pursuant to the Escrow Agreement until such time as
determined in accordance with the terms of the Escrow Agreement (the "Escrow
Release Date"). Subject to Section 8.02(c) and Purchaser's satisfaction of the
Operational Milestones, on the Escrow Release Date the Escrowed Cash will be
delivered to Seller.
(c) The Purchase Price shall be allocated to the Assets as set forth on
Schedule 2.05(c). Seller and Purchaser shall report the federal, state, local
and foreign Tax consequences of the transaction contemplated by this Agreement
in a manner consistent with such allocation. Seller and Purchaser further
covenant and agree not to take a position with respect to Taxes that is
inconsistent with such allocation on any Tax Return or otherwise, except as may
be required by Law; provided, however, that if any Tax authority makes or
proposes an allocation with respect to the Purchase Price which differs
materially from such allocation, each of NMHC, Purchaser and Seller shall have
the right, at its election and expense, to contest such Tax authority's
determination. Each party shall provide the other party with all notices and
information reports filed with Tax authorities and agencies with respect to the
allocation of the Purchase Price.
SECTION 2.06 Closing. Subject to the terms and conditions of this
Agreement, the Closing shall take place at the offices of NMHC, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ commencing at 9:00 a.m. on the second Business
Day following the satisfaction or waiver of all conditions to the obligations of
the parties to consummate the transactions contemplated hereby (other than
conditions with respect to the certificates, opinions and agreements to be
delivered at the Closing); provided, however, that date of the Closing shall be
no later than November 1, 2002 (the date on which the Closing takes place being
the "Closing Date"), unless extended by mutual consent of NMHC or Purchaser and
Seller. The Closing shall be deemed effective as of the opening of business on
the Closing Date. Each party hereto agrees to use its or his reasonable efforts
to satisfy promptly the conditions to the obligations of the respective parties
hereto in order to expedite the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to NMHC and Purchaser that the statements
contained in this Article III are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III), except as set forth in the Disclosure
Schedule. Nothing in the Disclosure Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made herein, however,
unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Article III.
SECTION 3.01 Organization, Etc. Seller is a corporation, duly organized,
validly existing and in good standing under the laws of the State of New York.
Seller is duly qualified or licensed to do business, and is in good standing, as
a foreign company in each jurisdiction where the character of the Assets or the
nature of its activities in connection with the Business makes such
qualification or licensing necessary, except where the failure to so qualify or
be licensed would not have a Seller Material Adverse Effect, all of which
jurisdictions are set forth in Schedule 3.01. Seller has full power and
authority to conduct the Business as it is now being conducted and to own,
operate or lease the Assets. Seller has heretofore delivered to NMHC and
Purchaser true and correct copies of its certificate of incorporation and bylaws
as in effect on the date hereof. Seller has all requisite power and authority to
enter into this Agreement and each of the Ancillary Agreements to which it is a
party, to carry out its obligations under this Agreement and each of the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby.
SECTION 3.02 Subsidiaries. Except as set forth on Schedule 3.02, Seller
does not own of record or beneficially, directly or indirectly, (i) any shares
of capital stock of securities convertible into capital stock of any other
corporation or (ii) any ownership interest in any partnership, joint venture or
other non-corporate business enterprise and does not control, directly or
indirectly, any other entity. Seller is the record and beneficial owners of all
outstanding shares or other ownership interests of each of the entities set
forth on Schedule 3.02, free and clear of any Liens, claims, charges,
encumbrances or other restrictions on transfer (other than restrictions under
applicable securities laws), which entities are all of the Subsidiaries of
Seller. All of the issued and outstanding shares of capital stock or equity
interests of each Subsidiary of Seller are duly authorized, validly issued,
fully paid, non-assessable and free of preemptive rights. Each of Seller's
Subsidiaries is duly qualified or licensed to do business, and is in good
standing, as a foreign company in each jurisdiction such qualification or
licensing is necessary except where the failure to so qualify or be licensed
would not have a Seller Material Adverse Effect, all of which jurisdictions are
set forth on Schedule 3.02. Seller has heretofore delivered to NMHC and
Purchaser true and correct copies of the certificate of incorporation and bylaws
(or similar organizational documents) of each of its Subsidiaries in effect on
the date hereof.
SECTION 3.03 Capitalization. The authorized, issued and outstanding capital
stock of Seller are as set forth in Schedule 3.03. All of the issued and
outstanding shares of Seller are owned, of record and beneficially, by the
Owners. None of such capital stock has been issued in violation of any
preemptive rights, rights of first refusal or similar rights. There are no
outstanding options, warrants, convertible securities, calls, rights,
commitments, preemptive rights or agreements or instruments or understandings of
any character to which Seller is a party or by which Seller is bound, obligating
Seller to issue, deliver or sell, or cause to be issued, delivered or sold,
contingently or otherwise, additional capital stock or any securities or
obligations convertible into or exchangeable for such capital stock or to grant,
extend or enter into any such option, warrant, convertible security, call,
right, commitment, preemptive right or agreement. There are no voting trust
agreements or other Contracts or understandings restricting or otherwise
relating to voting, dividend or other rights with respect to the capital stock
of Seller.
SECTION 3.04 Authorization. The execution and delivery by Seller of this
Agreement and the Ancillary Agreements to which it is a party, the performance
by Seller of its obligations hereunder and thereunder and the consummation by
Seller of the transactions contemplated hereby and thereby have been duly
authorized by all requisite action on the part of Seller and its shareholders.
This Agreement has been, and each Ancillary Agreement to which Seller or any
Owner is a party will be, duly executed and delivered by Seller and each of the
Owners, as applicable, and (assuming due authorization, execution and delivery
by NMHC and Purchaser) this Agreement is, and each Ancillary Agreement, when
duly executed and delivered will be, a legal, valid and binding obligation of
Seller and each of the Owners, as applicable, enforceable against it or him in
accordance with its terms (except as the enforceability thereof may be limited
by any applicable bankruptcy, insolvency or other Laws affecting creditors'
rights generally or by general principles of equity, regardless of whether such
enforceability is considered in equity or at law).
SECTION 3.05 No Violation. The execution, delivery and performance of this
Agreement and the Ancillary Agreements do not and will not (i) violate or
conflict with the certificate of incorporation or bylaws of Seller, (ii)
conflict with or violate any Law or Governmental Order applicable to the
Business, Seller or any Owner, or (iii) result in any breach of, or constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to any Person any rights of termination,
amendment, acceleration or cancellation of, or give to any Person any additional
rights or entitlement to increased, additional, accelerated or guaranteed
payments under, or result in the loss of any benefit under or result in the
creation of any Lien on any of the Assets pursuant to, any Contract, License or
other instrument to which Seller is a party or by which any of the Assets are
bound or affected, except for Liens created by or through NMHC and Purchaser or
any of their Affiliates.
SECTION 3.06 Approvals. The execution and delivery of this Agreement and
the Ancillary Agreements by Seller and each of the Owners do not, and the
performance of this Agreement and the Ancillary Agreements by Seller and each of
the Owners will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any Governmental Authority or
other Person under any Law or Contract other than such filings or registrations
with, or authorizations, consents or approvals of Governmental Authorities the
failure of which to make or obtain would not have a Seller Material Adverse
Effect.
SECTION 3.07 Financial Statements and Other Information.
(a) Seller has delivered to NMHC and Purchaser true, correct and complete
copies of Seller's audited balance sheet for the Business as of December 31,
2001 and the related statements of operations and cash flows for the fiscal year
ended December 31, 2001 and the unaudited balance sheets as of September 30,
2002 and related statements of operations and cash flows for the nine months
ended September 2002 together with the notes to such financial statements
(collectively, the "Seller Financial Statements"). The balance sheet of Seller
at December 31, 2001 is referred to as the "Seller Balance Sheet".
(b) The Seller Financial Statements are in accordance with the books and
records of Seller and have been prepared in accordance with GAAP consistently
applied throughout the periods covered thereby, and the balance sheets included
therein present fairly as of their respective dates the financial condition of
Seller. All liabilities and obligations, whether absolute, accrued, contingent
or otherwise, whether direct or indirect, and whether due or to become due,
which existed at the date of such Seller Financial Statements have been
disclosed in the balance sheets included in the Seller Financial Statements or
in notes to the Seller Financial Statements to the extent such liabilities were
required, under GAAP, to be so disclosed. The Seller Balance Sheet specifically
identifies the assets and liabilities which, if the Closing had been held on
December 31, 2002, would have been transferred to or assumed by NMHC or
Purchaser in accordance herewith. The statements of operations and cash flows
included in the Seller Financial Statements present fairly the results of
operations and cash flows of Seller for the periods indicated, and the notes
included in the Seller Financial Statements present fairly the information
purported to be shown thereby. The statements of operations included in the
Seller Financial Statements do not contain any material items of special or
non-recurring income or other income not earned, or omit any expenses incurred,
in the ordinary course of business except as expressly specified therein. The
statements of operations and cash flows included in the Seller Financial
Statements do not reflect any operations or business not intended to constitute
part of the Business following consummation of the transactions contemplated
hereby and reflect all costs that have historically been incurred by the
Business. The Business has not been conducted through any Person other than
Seller.
(c) [Reserved]
(d) The accounts receivable of Seller arising from the Business as set
forth on the latest balance sheet included in the Seller Financial Statements or
arising since the date thereof are valid and genuine; have arisen solely out of
bona fide sales and deliveries of goods, performance of services and other
business transactions in the ordinary course of business consistent with past
practice; are not subject to valid defenses, set-offs or counterclaims; and,
except as set forth in the Disclosure Schedule, are collectible at the full
recorded amount thereof (less, in the case of accounts receivable appearing on
the balance sheet, the recorded allowance for collection losses on the balance
sheet) over the period of usual trade terms (by use of Seller's normal
collection methods without resort to litigation or reference to a collection
agency). The allowance for collection losses on the latest balance sheet
included in the Seller Financial Statements has been determined in accordance
with GAAP consistent with past practice.
(e) Except as set forth in the notes to the Seller Financial Statements or
in the Disclosure Schedule, the liabilities on the latest balance sheet included
in the Seller Financial Statements consist solely of accrued obligations and
liabilities incurred by the Business in the ordinary course of business to
Persons which are not Affiliates of Seller. There are no liabilities of the
Business of any kind whatsoever, whether or not accrued and whether or not
contingent or absolute, determined or determinable or otherwise, including,
without limitation, documentary or standby letters of credit, bid or performance
bonds, or customer or third party guarantees, and no existing condition,
situation or set of circumstances that could reasonably result in such a
liability, other than (i) liabilities disclosed in the Seller Financial
Statements, (ii) liabilities relating solely to the Excluded Assets and (iii)
liabilities which have arisen after the date of the latest balance sheet
included in the Seller Financial Statements in the ordinary course of business
and consistent with past practice (none of which is a liability for breach of
contract, breach of warranty (other than charge backs incurred in the ordinary
course of business and consistent with past practice), tort, infringement claim
or lawsuit) which, individually or in the aggregate, could not reasonably be
expected to have a Seller Material Adverse Effect.
(f) The books, records and accounts of Seller maintained with respect to
the Business accurately and fairly reflect, in reasonable detail, the
transactions and the assets and liabilities of Seller with respect to the
Business. Seller has not engaged in any transaction with respect to its
business, maintained any bank account for its business or used any of the funds
of Seller in the conduct of the Business except for transactions, bank accounts
and funds which have been and are reflected in the normally maintained books and
records of the Business.
(g) Schedule 3.07(g) lists the name and address of every bank and other
financial institution in which Seller or its Affiliates maintain an account
(whether checking, savings or otherwise), lock box or safe deposit box for the
Business, and the account numbers and names of persons having signing authority
or other access thereto.
SECTION 3.08 Absence of Certain Changes or Events. (a) Since December 31,
2001, except as contemplated by this Agreement, Seller and the Business have
been conducted in all material respects in the ordinary course consistent with
past practice. Since December 31, 2001, there has been (i) no material adverse
change in the Assets or liabilities, or in the business, condition (financial or
otherwise), results of operations or prospects, of the Business, whether as a
result of any legislative or regulatory change, revocation of any License or
right to do business, fire, explosion, accident, casualty, labor trouble, flood,
drought, riot, storm, condemnation or act of God or otherwise, and (ii) no
adverse change in the Assets or Liabilities or in the business or condition
(financial or otherwise) of the Business except in the ordinary course of
business; and, to the Knowledge of Seller, no fact or condition exists or is
contemplated or threatened which could reasonably be anticipated to cause such a
change in the future.
(b) Without limiting the generality of the foregoing, since December 31,
2001, except as contemplated by this Agreement, Seller has not:
(i) except in the ordinary course of business of the Business consistent
with past practice, granted any Lien (other than a Permitted Lien) on any Asset;
(ii) except in the ordinary course of business of the Business consistent
with past practice, granted or agreed to grant any bonus to any Business
Employee or made any increase in the rate of salary or compensation or benefits
of any Business Employee except as set forth, in Schedule 3.08(b);
(iii) except for sales of inventory in the ordinary course of business of
the Business and consistent with past practice of the Business, sold, assigned,
transferred, leased or otherwise disposed of any of the Assets having a value
individually or in the aggregate exceeding $10,000;
(iv) except as required by GAAP, made any material change in any method of
accounting or accounting practice relating to the Business;
(v) failed to pay or discharge when due any liability or obligation;
(vi) made any material change in the manner of the Business or its
operations;
(vii) paid or declared any dividend or other distribution with respect to
any capital stock, other than to the extent necessary to fund the Owners' Tax
liabilities arising from the operation of the Business;
(viii) issued any shares of its capital stock or other security (including,
without limitation, securities convertible into or rights to acquire capital
stock of Seller);
(ix) borrowed any amount or incurred or become subject to any liability
(absolute, accrued or contingent), except current liabilities incurred,
liabilities under Contracts entered into, borrowings under the banking
facilities of Seller disclosed in Schedule 3.08(ix) and liabilities in respect
of letters of credit issued under such banking facilities, all of which were in
the ordinary course of business;
(x) suffered any loss of any Asset or waived any right of substantial value
relating to the Business whether or not in the ordinary course of business;
(xi) suffered any adverse change in its relations with, or any loss or
threatened loss of, any of the suppliers or customers of Seller disclosed in
Schedule 3.21;
(xii) delayed or postponed the payment of accounts payable and other
liabilities outside the ordinary course of business;
(xiii) entered into any transaction affecting the Assets except in the
ordinary course of business; and
(xiv) except as contemplated by this Agreement, entered into any commitment
or Contract to do any of the foregoing.
SECTION 3.09 Taxes. Except as set forth in Schedule 3.09: (a) all Tax
returns, forms, statements and reports (herein referred to collectively as "Tax
Returns" or singularly as a "Tax Return") required to be filed by or on behalf
of Seller have been filed in a timely manner with the appropriate Governmental
Authorities in all jurisdictions in which such Tax Returns are required to be
filed (taking into account all extensions) and all Taxes shown to be due and
payable on such Tax Returns have been paid in full;
(b) all such Tax Returns and the information and data contained therein
have been properly and accurately compiled and completed, fairly present the
information purported to be shown therein and reflect all liabilities for Taxes
for the periods covered by such Tax Returns;
(c) none of such Tax Returns relating to the Business or the Assets are now
under audit or examination by any Governmental Authority, there are no
agreements, waivers or other arrangements providing for an extension of time
with respect to the assessment or collection of any Tax or deficiency of any
nature with respect to any such Tax Return, nor is any Action now pending or, to
the Knowledge of Seller, threatened against Seller with respect to any Tax
relating to the Business or the Assets, and, to the Knowledge of Seller, there
is no Basis for such an Action;
(d) there is no Tax Lien imposed by any Governmental Authority outstanding
against any of the Assets or the Business;
(e) (1) neither Seller nor any of its Affiliates has made with respect to
any Assets of the Business any consent under Section 341 of the Code, (2) none
of the Assets is "tax exempt use property" within the meaning of Section 168(h)
of the Code, and (3) none of the Assets is a lease made pursuant to Section
168(f)(8) of the Internal Revenue Code of 1954; and
(f) Seller does not have any liability for Taxes of any other taxpayer as a
transferee, successor, by Contract or otherwise.
SECTION 3.10 Litigation. Except as set forth in Schedule 3.10, there are no
Actions pending or, to the Knowledge of Seller, threatened against Seller, or to
the Knowledge of Seller, any Basis in fact therefor known to Seller, relating to
the Business or to which any of the Assets are subject. With respect to each
Action described in such Schedule, copies of all pleadings, filings,
correspondence with opposing parties and their counsel, opinions of counsel,
results of studies, judgments, orders, attachments, impositions of or recordings
of Liens and other documents have been furnished to NMHC and Purchaser. Neither
the Business nor Seller is subject to any outstanding injunction, judgment,
order, decree, ruling or charge which could reasonably be expected to have a
Seller Material Adverse Effect.
SECTION 3.11 Compliance with Laws. The Business has been conducted by
Seller in compliance in all material respects with all Laws and Governmental
Orders applicable to Seller, the Business or any Asset. No investigation or
review by any Governmental Authority with respect to the Business or the Assets
is pending or, to the Knowledge of Seller, threatened, nor has any Governmental
Authority indicated in writing to Seller an intention to conduct the same.
Neither Seller nor, to the Knowledge of Seller, any director, officer,
consultant or employee of Seller (in their capacity as such), is in default in
any material respect with respect to any Governmental Order known to or served
upon Seller by any Governmental Authority. There is no existing Law which would
prohibit or materially restrict or otherwise materially adversely affect the
conduct of the Business in any jurisdiction in which it is now being conducted
or in which the Business is currently proposed to be conducted.
SECTION 3.12 Real Property. (a) Seller owns no real property.
(b) Schedule 3.12 identifies each real property leased or subleased by
Seller and used in the Business (the "Leased Real Property"). None of the leases
and subleases with respect to such Leased Real Property are subject to Liens,
except Permitted Liens.
(c) True and complete copies of the leases affecting any Leased Real
Property have been made available to NMHC and Purchaser by Seller. Subject to
the terms of the respective leases affecting any Leased Real Property, Seller
has a valid and subsisting leasehold or subleasehold estate in each Leased Real
Property and each lease is in full force and effect and neither Seller nor, to
the knowledge of Seller, any other party to any such lease is in default
thereunder.
SECTION 3.13 Compliance with Environmental Laws.
(a) Seller and its Subsidiaries have at all times owned, used and operated
the Business and the Assets in compliance in all material respects with all
applicable limitations, restrictions, conditions, standards, prohibitions,
requirements and obligations of the Licenses and Environmental Laws and related
Governmental Orders.
(b) There are not any pending or, to the Knowledge of Seller, threatened
Actions by or before any Governmental Authority directed against Seller or any
of its Subsidiaries which pertain or relate to (i) any response, removal or
remedial costs or obligations under any applicable Environmental Law, (ii)
violations by Seller or any of its Subsidiaries of any Environmental Law, or
(iii) personal injury or property damage claims relating to a release of
chemicals or Hazardous Materials by Seller or any of its Subsidiaries.
(c) Seller is not aware of any Environmental remediation costs which are
required or have been planned for which Seller reasonably anticipates payment or
accrual by Seller or its Subsidiaries.
SECTION 3.14 Condition of the Assets and Related Matters. The Assets will,
as of the Closing Date, constitute all of the assets (other than people
resources) necessary for the conduct of the Business in all material respects as
currently conducted by Seller, and none of the Excluded Assets are material to
the Business.
(a) Except for (i) Permitted Liens and (ii) Liens created by or through
NMHC or Purchaser or any of their Affiliates, Seller has, and upon payment
therefor, Purchaser will have good and indefeasible title to the Assets (except
for leased or licensed Assets, as to which Seller has, and Purchaser will have,
valid leaseholds or licenses and subject to obtaining required consents with
respect to the Nonassignable Contracts), free and clear of all Liens.
(b) The Assets are in good operating condition, ordinary wear and tear
excepted, are usable in the ordinary course of business, are adequate and
suitable for the uses to which they are being put and conform in all material
respects to all applicable Laws relating to their construction, use and
operation. None of the Assets are in need of maintenance or repairs other than
ordinary routine maintenance and repairs which are not material, individually or
in the aggregate, in nature or cost. The Assets do not include any equity
interests in any other Person.
SECTION 3.15 Employee and Labor Matters and Plans.
(a) Schedule 3.15(a) lists each "employee benefit plan," as defined in
Section 3(3) of ERISA, whether or not subject to ERISA, and each other
employment, severance, consulting, confidentiality, deferred, incentive, fringe
benefit, change in control, retention, stock option or other equity based or
other compensatory or benefit plan, policy, agreement or arrangement (including,
without limitation, any collective bargaining agreement) that is, with respect
to Seller's own employees, (i) maintained, administered, contributed to or
required to be contributed to by Seller, or any entity that, together with
Seller, would be treated as a single employer under Section 414 of the Code (an
"ERISA Affiliate") or to which Seller or any ERISA Affiliate is a party, and
(ii) covers any employee or former employee of Seller or any of its ERISA
Affiliates who provides or has provided services to or in connection with the
Business (the "Business Employees"). Each such plan, policy, agreement or
arrangement is referred to herein as an "Employee Plan".
(b) Seller has delivered or made available to NMHC and Purchaser true,
correct and complete copies of the following documents with respect to each
Employee Plan (where applicable): (i) all plan documents and agreements, as well
as collective bargaining agreements and amendments of same; and (ii) the most
recent copies of all summary plan descriptions and booklets distributed to plan
participants.
(c) With respect to any funded employee pension plan within the meaning of
Section 3(2) of ERISA, (i) there has been no accumulated funding deficiency
within the meaning of Section 302(a)(2) of ERISA or Section 412 of the Code,
which has resulted or could result in the imposition of a Lien upon any of the
Assets; and (ii) no event has occurred and no circumstance exists under which
Seller or any of its Affiliates has incurred or may incur, directly or
indirectly, any liability under the provisions of Title IV of ERISA which could
become a liability of NMHC or Purchaser. Seller neither is nor ever was
obligated to contribute or is otherwise a party to any employee welfare benefit
plan or employee pension benefit plan which is a multiemployer plan within the
meaning of Section 3(37) of ERISA.
(d) Each Employee Plan has been maintained in compliance with its terms and
applicable Law. With respect to each Employee Plan which is a group health plan
within the meaning of Section 5000(b)(1) of the Code, (i) Seller has complied in
all material respects with the provisions of Section 4980B of the Code; and (ii)
no event has occurred and no circumstance exists under which Seller has incurred
or may incur, direct or indirect liability under the provisions of Section 4980B
of the Code which could become a liability of NMHC or Purchaser or which has
resulted or could result in the imposition of a Lien upon any of the Assets.
(e) Schedule 3.15(e) contains a true and complete list of all Business
Employees who are employed or performing services in the Business on the date
hereof, the title and rate of compensation of each Business Employee, and the
amount of any accrued bonuses, vacation, sick leave, maternity leave and other
leave for such personnel as of the date of this Agreement. All accrued salary
and bonuses, and accrued amounts for vacation, sick leave, maternity leave and
other leave shall be paid by Seller on or prior to the Closing Date. Seller is
not in default with respect to any withholding or other employment Taxes or
payments with respect to accrued vacation or severance pay on behalf of any
employee or independent contractor for which it is obligated on the date hereof,
and Seller will maintain and continue to make all such necessary payments or
adjustments arising through the Closing Date. Seller has not instituted any
"freeze" of, or delayed or deferred the grant of, any cost-of-living or other
salary adjustment for any Business Employee. Seller has not engaged in any
unfair labor practice or discriminated on the basis of race, color, religion,
sex, national origin, age, disability or handicap in its employment conditions
or practices. No employee or independent contractor has filed or, to Seller's
Knowledge, threatened any claims, and there is no reasonable Basis for a claim
against Seller relating to employment or similar matters (including, without
limitation, compensation and benefits) with Seller. There are not in existence
or, to Seller's Knowledge, threatened any (i) work stoppages respecting
employees or independent contractors of Seller or (ii) unfair labor practice
complaints against Seller. Seller is not a party to any collective bargaining
agreement applicable to any Business Employees. No representation question
exists respecting the Business Employees and no collective bargaining agreement
is currently being negotiated by Seller covering its employees, nor is any
grievance procedure or arbitration proceeding pending under any collective
bargaining agreement and no claim therefor has been asserted. Seller has not
received notice from any union or the Business Employees setting forth demands
for representation, elections or for present or future changes in wages, terms
of employment or working conditions. There have been no audits of the equal
employment opportunity practices of Seller, and, to the Knowledge of Seller, no
Basis for such audit exists. Seller does not have any severance agreement or
other arrangement with respect to severance with any Business Employee. True and
complete copies of the current written personnel policies, manuals and/or
handbooks of Seller have previously been delivered to NMHC and Purchaser.
SECTION 3.16 Contracts. (a) Schedule 3.16(a) lists each currently effective
Contract of Seller relating to the Business, the Business Employees and the
Assets. True and correct copies of all the Assumed Contracts have been furnished
to NMHC and Purchaser. Except as indicated in Schedule 3.16(a), all of the
foregoing Contracts are Assumed Contracts. With respect to each Assumed Contract
(whether or not listed on the Disclosure Schedule): (i) the agreement is legal,
valid, binding, enforceable and in full force and effect; (ii) subject to
obtaining required consents with respect to the Nonassignable Contracts, the
agreement will continue to be legal, valid, binding, enforceable and in full
force and effect on identical terms immediately following the consummation of
the transactions contemplated hereby; (iii) neither Seller nor, to Seller's
Knowledge, any other party thereto, is in breach or default in any material
respect, and no event has occurred which with notice or lapse of time would
constitute a breach or default in any material respect, or permit termination,
modification or acceleration, under the agreement; and (iv) neither Seller nor,
to Seller's Knowledge, any other party thereto has repudiated any provision of
the agreement. There are no material liabilities of Seller or, to Seller's
Knowledge, any other party to any of the Assumed Contracts arising from any
breach of or default in any provision thereof, nor has there occurred any breach
or default thereof by Seller which would permit the acceleration of any
obligation of any party thereto or the creation of a Lien upon any of the
Assets. There are no negotiations pending or in progress to revise any material
terms of such Assumed Contracts.
(b) Except as set forth on Schedule 3.16(b), no consent or approval of any
Person is required in connection with the execution, delivery and performance of
this Agreement, including the assignment of the Assumed Contracts.
SECTION 3.17 Insurance Policies. Schedule 3.22, (i) contains a correct and
complete description of all insurance agreements and policies maintained by
Seller, including any and all insurance agreements and policies covering the
Assets and the Business, and the type and amounts of coverage thereunder, and
(ii) reflects all such insurance required by Law or that Seller deems necessary
and adequate, in type and amount, to protect it and its financial condition
against the risks involved in the conduct of the Business. Such agreements and
policies are in full force and effect, Seller is not delinquent with respect to
any premium payments thereon, and Seller has not received any notice of
cancellation or termination with respect to any such policy. Except as set forth
in Schedule 3.17, since 1997, Seller has not been refused insurance coverage,
nor has any insurer otherwise reserved rights, in connection with the Business,
nor has any claim in excess of $10,000 been made in respect of any such
agreement or policy. Seller has not failed to give any notice or present any
claim under any such insurance policy or agreement in due and timely fashion.
There are no pending claims against such insurance agreements and policies by or
on behalf of Seller. All retroactive premium adjustments under any worker's
compensation policy of Seller have been recorded in the Financial Statements in
accordance with GAAP and are reflected in the Financial Statements.
SECTION 3.18 Records. Seller has records that accurately and validly
reflect its transactions and accounting controls sufficient to insure that such
transactions are (i) in all material respects executed in accordance with its
management's general or specific authorization and (ii) recorded in conformity
with GAAP.
SECTION 3.19 [Reserved.]
SECTION 3.20 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller, the Owners or their respective Affiliates.
SECTION 3.21 Suppliers and Customers
(a) Schedule 3.21 lists (i) all suppliers of the Business to which Seller
made payments during the year ended December 31, 2001, or expects to make
payments during the year ending December 31, 2002, in excess of two percent of
Seller's cost of sales as reflected on Seller's statement of operations for such
year and (ii) all customers of the Business that paid Seller during the year
ended December 31, 2001 or that Seller expects will pay to Seller during the
year ending December 31, 2002, more than two percent of Seller's sales revenues
relating to the Business as reflected on Seller's statement of operations for
such year.
(b) Seller has no information which might reasonably indicate that any of
the customers or suppliers of the Business listed on Schedule 3.21 intend to
cease purchasing from, selling to or dealing with the Business, nor has any
information been brought to Seller's attention which might reasonably lead
Seller to believe any such customer or supplier intends to alter in any material
respect the amount of such purchases or sales or the extent of dealings with the
Business or would alter in any material respect such purchases, sales or
dealings in the event of the consummation of the transactions contemplated by
this Agreement.
(c) Neither Seller, nor, to the Knowledge of Seller, any of its officers,
directors or Affiliates, nor any relative or spouse (or relative of such spouse)
of any such officer, director or Affiliate, nor any entity controlled by one of
more of the foregoing:
(i) owns, directly or indirectly, any interest in (excepting less than 2%
stock holdings for investment purposes in securities of publicly held and traded
companies), or is an officer, director, employee or consultant of, any Person
which is, or is engaged in business as, a competitor, lessor, lessee, supplier,
distributor, sales agent, customer or client of the Business;
(ii) owns, directly or indirectly, in whole or in part, any tangible or
intangible property that the Business uses in the conduct of business; or
(iii) has any cause of action or other claim whatsoever against, or owes
any amount to, the Business, except for claims in the ordinary course of
business such as for accrued vacation pay, accrued benefits under employee
benefit plans, and similar matters and agreements existing on the date hereof.
SECTION 3.22 Intellectual Property. (a) Schedule 3.22 contains an accurate
and complete list of all Copyrights, Trademarks, patents, and other Intellectual
Property owned (in whole or in part), licensed to any extent or used or
anticipated to be used in the conduct of the Business as currently conducted,
whether in the name of Seller, any employee or otherwise (collectively, the
"Seller Intellectual Property"). Seller owns or has the valid right to use, in
each case as and to the extent currently used in the Business, all Seller
Intellectual Property that is material to the operation of the Business as
currently operated by Seller. Each item constituting part of Seller Intellectual
Property in which Seller has an ownership or license interest has been, to the
extent indicated on the Disclosure Schedule, duly registered with, filed in or
issued by, as the case may be, the United States Patent and Trademark Office or
such other Governmental Authorities, domestic or foreign, as are indicated on
the Disclosure Schedule and such registrations, filings and issuances remain in
full force and effect. To the Knowledge of Seller, Seller Intellectual Property
and the use thereof in the operation of the Business as currently conducted by
Seller, do not infringe any Copyright, Trademark or other Intellectual Property
right of any Person. No claim, written or oral, has been asserted or, to the
Knowledge of Seller, could be asserted, which threatens or, to the Knowledge of
Seller, could threaten, that the use of such Seller Intellectual Property in a
manner consistent with past practice does or may infringe upon the Intellectual
Property rights of any Person. No Person is engaging in any activity that
infringes in any material respect upon Seller Intellectual Property or Seller's
rights in or to any Seller Intellectual Property. Neither Seller nor any of its
Affiliates is in breach of, or default under, any term of any Contract relating
to Seller Intellectual Property, and, to Seller's Knowledge, no other party to
any such Contract is in breach thereof or default thereunder. Without limiting
any other provisions hereof, Seller has not granted any license, franchise or
permit to any Person to use any of Seller Intellectual Property and no other
Person (including, without limitation, Seller) has the right to use the same
Trademarks used by Seller or any similar Trademarks likely to lead to confusion.
(b) Seller has not conducted the Business under any corporate, trade or
fictitious name. Schedule 3.22(b) sets forth all Trademark and Copyright
registrations and applications relating to the Business abandoned by Seller.
SECTION 3.23 Licenses. Seller holds all Licenses necessary for the
operation of the Business as currently operated, all of which Licenses are set
forth on Schedule 3.23 of such Licenses are in full force and effect in all
material respects, Seller is in compliance in all material respects with the
terms of such Licenses, and no Action is pending nor, to the Knowledge of
Seller, is threatened to revoke or terminate any License or declare any License
invalid in any material respect. Seller has taken all necessary action to
maintain such Licenses. All such Licenses are assignable by Seller to Purchaser.
SECTION 3.24 No Illegal or Improper Transactions. Neither Seller, the
Owners, nor any director, officer or employee of Seller has, directly or
indirectly, used funds or other assets of Seller, or made any promise or
undertaking in such regards, for (i) illegal contributions, gifts, entertainment
or other expenses relating to political activity, (ii) illegal payments to or
for the benefit of governmental officials or employees, whether domestic or
foreign, (iii) illegal payments to or for the benefit of any Person, or any
director, officer, employee, agent or representative thereof, or (iv) the
establishment or maintenance of a secret or unrecorded fund, and there have been
no false or fictitious entries made in the books or records of Seller.
SECTION 3.25 Owners' Representations. The Owners have no actual knowledge
of any information that any of the customers or suppliers of Seller or its
Subsidiaries relating to the Business listed on the Disclosure Schedule intends,
or is considering, ceasing or altering, in any material adverse respect, their
purchasing from, selling to or dealing with Seller or its Subsidiaries, by
reason of the consummation of the transactions contemplated by this Agreement,
or otherwise.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NMHC AND PURCHASER
NMHC and Purchaser jointly and severally represent and warrant to Seller
and the Owners that the statements contained in this Article IV are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article IV).
SECTION 4.01 NMHC Organization, Etc. NMHC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
NMHC is duly qualified or licensed to do business, and is in good standing, as a
foreign corporation in each jurisdiction where the character of its business or
the nature of its properties makes such qualification or licensing necessary,
except where the failure to so qualify or be licensed would not have a Purchaser
Material Adverse Effect. NMHC has full corporate power and authority to conduct
its business as it is now being conducted and to own, operate or lease the
properties and assets it currently owns, operates or holds under lease. NMHC has
heretofore made available to Seller true and correct copies of its certificate
of incorporation and bylaws as in effect on the date hereof. NMHC has all
requisite corporate power and authority to enter into this Agreement and each of
the Ancillary Agreements to which it is a party, to carry out its obligations
under this Agreement and each of the Ancillary Agreements to which it is a
party, Agreements to which it is a party, and to consummate the transactions
contemplated hereby and thereby.
SECTION 4.02 Purchaser Organization, Etc. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Purchaser is duly qualified or licensed to do business, and is in good
standing, as a foreign corporation in each jurisdiction where the character of
its business or the nature of its properties makes such qualification or
licensing necessary, except where the failure to so qualify or be licensed would
not have a Purchaser Material Adverse Effect. Purchaser has full power and
authority to conduct its business as it is now being conducted and to own,
operate or lease the properties and assets it currently owns, operates or holds
under lease. Purchaser has heretofore made available to Seller true and correct
copies of its organizational documents as in effect on the date hereof.
Purchaser has all requisite power and authority to enter into this Agreement and
each of the Ancillary Agreements to which it is a party, to carry out its
obligations under this Agreement and each of the Ancillary Agreements to which
it is a party, and to consummate the transactions contemplated hereby and
thereby.
SECTION 4.03 Authorization. The execution and delivery by NMHC and
Purchaser of this Agreement and the Ancillary Agreements to which they are a
party, the performance by NMHC and Purchaser of their obligations hereunder and
thereunder and the consummation by NMHC and Purchaser of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of NMHC and Purchaser. This Agreement has been, and
each Ancillary Agreement to which NMHC and Purchaser is a party will be, duly
executed and delivered by NMHC and Purchaser, and (assuming due authorization,
execution, and delivery by Seller and the Owners parties thereto) this Agreement
is, and each Ancillary Agreement, when duly executed and delivered, will be a
legal, valid and binding obligation of NMHC and Purchaser, enforceable against
NMHC and Purchaser in accordance with its terms (except as the enforceability
thereof may be limited by any applicable bankruptcy, insolvency or other Laws
affecting creditors' rights generally or by general principles of equity,
regardless of whether such enforceability is considered in equity or at law).
SECTION 4.04 No Violation. The execution, delivery and performance of this
Agreement and the Ancillary Agreements do not and will not (a) violate or
conflict with the certificate of incorporation or bylaws of NMHC or of Purchaser
or any Subsidiary of NMHC or Purchaser, (b) conflict with or violate any Law or
Governmental Order applicable to NMHC and Purchaser or any Subsidiary of NMHC or
Purchaser, or (c) result in any breach of, or constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, or give to any Person any rights of termination, amendment,
acceleration or cancellation of, or give to any Person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments under,
or result in the creation of any Lien on any of the assets or properties of NMHC
or Purchaser or any Subsidiary of NMHC or Purchaser pursuant to, any Contract,
License or other instrument to which NMHC and Purchaser or any Subsidiary of
NMHC or Purchaser is a party or by which any of the assets or properties of NMHC
or Purchaser or any Subsidiary of NMHC or Purchaser are bound or affected, which
breach or default would have a Purchaser Material Adverse Effect.
SECTION 4.05 Approvals. The execution and delivery of this Agreement and
the Ancillary Agreements by NMHC and Purchaser do not, and the performance of
this Agreement and the Ancillary Agreements by NMHC and Purchaser will not,
require any consent, approval, authorization or other action by, or filing with
or notification to, any Governmental Authority or other Person under any Law or
Contract, other than such filings or registrations with, or authorizations,
consents or approvals of Governmental Authorities the failure of which to make
or obtain would not have a Purchaser Material Adverse Effect.
SECTION 4.06 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser or NMHC or their respective Affiliates.
SECTION 4.07 Financial Statements and Other Information. To the knowledge
of Purchaser and NMHC, NMHC has filed with the SEC all required reports under
the Securities Exchange Act of 1934 (the "Exchange Act") since January 1, 2000
(the "SEC Documents"). The financial statements of NMHC included in the SEC
Documents (the "NMHC Financial Statements") comply as to form in all material
respects with the applicable accounting requirements and the published rules and
regulations of the SEC, and have been prepared in accordance with GAAP (except
in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
consistently applied (except as may be indicated in the notes thereto)
throughout the periods covered thereby, and the balance sheets included therein
present fairly as of their respective dates the consolidated financial position
of NMHC and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end
adjustments). All liabilities and obligations of NMHC and its subsidiaries,
whether absolute, accrued, contingent or otherwise, whether direct or indirect,
and whether due or to become due, which existed at the date of such NMHC
Financial Statements have been disclosed in the balance sheets included in the
NMHC Financial Statements or in notes to the NMHC Financial Statements to the
extent such liabilities were required, under GAAP, to be so disclosed.
SECTION 4.08 Absence of Certain Changes or Events. To the knowledge of
Purchaser and NMHC, since December 31, 2001, except as contemplated by this
Agreement, NMHC's business has been conducted in all material respects in the
ordinary course consistent with past practice. To the knowledge of Purchaser,
since December 31, 2001, there has been no material adverse change in NMHC and
its subsidiaries taken as a whole.
SECTION 4.09. Compliance with Laws. To the knowledge of NMHC and Purchaser,
NMHC has conducted its business in compliance in all material respects with all
Laws and Governmental Orders applicable to it, except for any non-compliance
which could not be reasonably be expected to have a material adverse effect on
NMHC and its subsidiaries, taken as a whole.
ARTICLE V
COVENANTS
SECTION 5.01 General. Each of the parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Articles VI and VII below).
SECTION 5.02 Access to Premises and Information. NMHC, Purchaser and their
Affiliates, counsel, accountants, and other representatives will have reasonable
access during normal business hours to the Business and to all properties,
books, accounts and records, Contracts and documents of or relating to the
Business. Seller will furnish or cause to be furnished to Purchaser and its
representatives all data and information within Seller's reasonable possession
or control concerning the business, finances, and properties of Seller and the
Business that may be requested.
SECTION 5.03 Non-Competition; Non-Solicitation. (a) Seller and each of the
Owners agrees that neither Seller nor any of the Owners will, for a period of
two years from the Closing Date directly or indirectly (i) build, invest in,
assist in the development of, or have any management or advisory role in another
business that competes with the Business, (ii) solicit for employment any
employee of NMHC or Purchaser or any of their Affiliates or (iii) interfere
with, entice away, disrupt or attempt to disrupt the relationship between NMHC,
Purchaser and their Affiliates and any of their lessors, lessees, licensors,
licensees, customers or suppliers.
(b) Each Owner and Seller acknowledges and agrees that the agreements and
covenants contained in this Section 5.03 are essential to protect the Assets
being acquired by NMHC and Purchaser hereunder, that NMHC and Purchaser would
not consummate the transactions contemplated hereby but for such agreements and
covenants, and that a legally sufficient consideration will be paid to the
Owners and Seller for the non-competition provisions of this Section 5.03, and
each of the Owners and Seller expressly waives any right to assert inadequacy of
consideration as a defense to enforcement of the non-competition provisions of
this Section 5.03 should such enforcement ever become necessary. The Owners and
Seller acknowledge that a remedy at Law for any breach or attempted breach of
this Section 5.03 will be inadequate and further agrees that any breach of this
Section 5.03 will result in irreparable harm to the Assets and the Business; and
each of the Owners and Seller covenants and agrees not to oppose any demand for
specific performance and injunctive and other equitable relief in case of any
such breach or attempted breach. Whenever possible, each provision of this
Section 5.03 shall be interpreted in such manner as to be effective and valid
under applicable Law but if any provision of this Section 5.03 shall be
prohibited by or invalid under applicable Law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Section 5.03. If any provision of this Section 5.03 shall, for any reason, be
judged by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Section 5.03 but shall be confined in its operation to the provision of this
Section 5.03 directly involved in the controversy in which such judgment shall
have been rendered. In the event that the provisions of this Section 5.03 should
ever be deemed to exceed the time or geographic limitations permitted by
applicable Law, then such provision shall be reformed to the maximum time or
geographic limitations permitted by applicable Law.
SECTION 5.04 Consents. Seller, NMHC and Purchaser, as promptly as
practicable (i) will make, or cause to be made, all filings and submissions
under laws, rules and regulations applicable to it, or to its subsidiaries and
Affiliates, as may be required for any party hereto to consummate the
transactions contemplated hereby, (ii) will use their respective reasonable
efforts to obtain, or cause to be obtained, all authorizations, approvals,
consents and waivers from all Persons and Governmental Authorities necessary to
be obtained by either of them in order to consummate such transactions,
including any consent of any Person listed in Schedules 3.16(b) and (iii) will
use their respective best efforts to take, or cause to be taken, all other
actions necessary, proper or advisable in order for each of them to fulfill
their respective obligations hereunder. Seller, the Owners, NMHC and Purchaser
will coordinate and cooperate with one another in exchanging information and
supplying such reasonable assistance as may be reasonably requested by each in
connection with the foregoing. SECTION 5.05 Public Announcements. Unless and to
the extent required by Law, each party hereto will agree in advance prior to the
issuance by any of them of any press release or the making of any public
statement with respect to this Agreement and the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement without the agreement of the other parties. In the event that any
party is required to issue a press release or make a public statement by Law, it
or he will use its or his reasonable efforts to notify the other parties of the
contents thereof in advance of the issuance or making thereof.
SECTION 5.06 Confidentiality Obligations of the Parties. (a) Each party
shall keep all information obtained from any other party either before or after
the date of this Agreement confidential, in accordance with the terms of that
certain Confidentiality Agreement, dated as of August 30, 2002, between NMHC and
Seller.
(b) From and after the Closing Date, each of the Owners and Seller will,
and will cause their Affiliates to, treat and hold as confidential, and not
disclose any of the Confidential Information to any Person. In the event that
Seller, the Owners or their Affiliates are requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand or similar process or as
otherwise required by law) to disclose any Confidential Information, Seller will
notify NMHC and Purchaser promptly of the request or requirement so that NMHC
and Purchaser may seek an appropriate protective order or waive compliance with
the provisions of this Section 5.06. If, in the absence of a protective order or
the receipt of a waiver hereunder, Seller, the Owners or their Affiliates are,
on the advice of counsel, compelled to disclose any Confidential Information to
any tribunal or else stand liable for contempt, they may disclose the
Confidential Information to the tribunal; provided, however, that Seller shall
use its reasonable best efforts to obtain, at the request of NMHC and Purchaser,
an order or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as NMHC and
Purchaser shall designate. The foregoing provisions shall not apply to any
information which is generally available to the public immediately prior to the
time of disclosure.
(c) Notwithstanding anything herein to the contrary, neither NMHC nor
Purchaser shall have any obligation with respect to Confidential Information of
the Business after the Closing Date.
SECTION 5.07 Discharge of Liabilities. Following the Closing Date,
Purchaser agrees to discharge in accordance with their terms the Assumed
Liabilities and Seller agrees to discharge in accordance with their terms all
Excluded Liabilities. Purchaser acknowledges and agrees that immediately
following the Closing, it will not be subject to any restriction in its ability
to discharge the Assumed Liabilities.
SECTION 5.08 Employee Matters. (a) No term of this Agreement shall be
deemed to create any contract between NMHC, Purchaser and any current employee
of Seller which gives the employee the right to be retained in the employment of
NMHC or Purchaser, or any related employer, or to interfere with NMHC and
Purchaser's right to terminate employment of any employee at any time or to
change its policies regarding salaries, benefits and other employment matters at
any time or from time to time, other than pursuant to the terms of the
Employment Agreements. The representations, warranties, covenants and agreements
contained herein are for the sole benefit of the parties hereto, and employees
are not intended to be and shall not be construed as beneficiaries hereof.
(b) Except as specifically provided herein, Purchaser does not and will not
assume the sponsorship of, the responsibility for contributions to, or any
liability in connection with, any Employee Plan. Without limiting the foregoing,
Seller shall be liable for any continuation coverage (including any penalties,
excise taxes or interest resulting from the failure to provide continuation
coverage) with respect to any Business Employee (or covered dependent of such
Business Employee) required by Section 4980B of the Code due to qualifying
events which occur on or before the Closing Date, and Purchaser will in no event
be deemed to be a successor employer (within the meaning of Treasury Regulation
ss.54.4980B-2) of Seller for purposes of applying the provisions of Section
4980B of the Code.
(c) No provision of this Agreement shall create any third party beneficiary
or other rights in any employee or former employee (including any beneficiary or
dependent thereof) of Seller in respect of employment with Purchaser in respect
of any benefits that may be provided, directly or indirectly, under any employee
benefit plan, agreement, policy or arrangement which may be established by
Purchaser. No provision of this Agreement shall constitute a limitation on
rights to amend, modify or terminate after the Closing Date any such plans,
agreements, policies or arrangements of Purchaser.
SECTION 5.09 Maintenance of Books and Records; Right of Access. Each of
Seller and Purchaser shall preserve until the seventh anniversary of the Closing
Date all records possessed or to be possessed by such party relating to any of
the Assets prior to the Closing Date. After the Closing Date, where there is a
legitimate purpose, such party shall provide the other party with access, upon
prior reasonable written request specifying the need therefor, during regular
business hours, to (i) the officers and employees of such party or the former
officers and directors of such party and (ii) the books of account and records
of such party, but, in each case, only to the extent relating to the Assets or
Assumed Liabilities prior to the Closing Date, and the other party and its
representatives shall have the right to make copies of such books and records;
provided, however, that the foregoing right of access shall not be exercisable
in such a manner as to interfere unreasonably with the normal operations and
business of such party; and provided further that, as to so much of such
information as constitutes trade secrets or confidential business information of
such party, the requesting party and its officers, directors and representatives
will use due care to not disclose such information except (x) as required by
Law, (y) with the prior written consent of such party, which consent shall not
be unreasonably withheld, or (z) where such information becomes available to the
public generally, or becomes generally known to competitors of such party,
through sources other than the requesting party, its Affiliates or its officers,
directors or representatives. Such records may nevertheless be destroyed by a
party if such party sends to the other party written notice of its intent to
destroy records, specifying with particularity the contents of the records to be
destroyed. Such records may then be destroyed after the 30th day after such
notice is given unless another party objects to the destruction in which case
the party seeking to destroy the records shall deliver such records to the
objecting party.
SECTION 5.10 Bulk Sales Law. Purchaser hereby waives compliance by Seller
with all applicable bulk sales Laws.
SECTION 5.11 Risk of Loss. The risk of loss or damage to any of the Assets
shall remain with Seller until the Closing and Seller shall maintain its
insurance policies covering the Assets through the Closing. All insurance
proceeds attributable to the damage, destruction, or casualty loss of any of the
Assets prior to the Closing Date shall be assigned by Seller to Purchaser at the
Closing.
SECTION 5.12 Collection of Accounts Receivable.
(a) For a period of six months from the Closing, Purchaser shall utilize
the same efforts it uses in collecting its own receivables in attempting to
collect the Accounts Receivable acquired by Purchaser at Closing. At or as soon
as reasonably practicable following Closing, Seller shall provide to Purchaser
an Accounts Receivable aging schedule as of October ___, 2002. Thereafter,
Purchaser's personnel shall be responsible for maintaining records related to
the Accounts Receivable collected, including recording cash receipts, offsets
and adjustments which Purchaser deems appropriate (provided, however, that
Purchaser shall not settle any Account Receivable for less than 100% without the
written consent of Seller, which shall not be unreasonably withheld), and
Purchaser shall provide Seller with an updated aging schedule for the Accounts
Receivable on each of the 60th, 120th, and 180th day anniversaries of the
Closing Date. Notwithstanding the above, in the event that following Closing,
Purchaser receives payment from a customer which is both a historical customer
of Seller and a continuing customer of Purchaser following Closing, and such
payment does not otherwise indicate or specify an invoice for which such payment
is intended, such payment shall be deemed to relate to the oldest Seller Account
Receivable of such customer, unless such Seller Account Receivable is the
subject of a dispute between Purchaser and such customer, in which case such
payment shall be applied to the next most recent account receivable.
(b) On or after the six month anniversary of the Closing Date, Purchaser
shall have no further obligations with respect to collection efforts related to
the Accounts Receivable and shall be entitled to draw from the escrow account,
the balance of any remaining uncollected Accounts Receivable ("Uncollected
Accounts"), in exchange for the assignment of such uncollected Accounts
Receivable back to Seller; provided, however, if after such period Purchaser
thereafter receives a payment which by its terms clearly relates to an Account
Receivable reassigned to Seller, Purchaser shall promptly forward such payment
pursuant to instructions provided by Seller at the end of the such six month
period.
SECTION 5.13 NMHC Guarantee. NMHC hereby unconditionally guarantees the
full and timely performance of each and all of the obligations of Purchaser owed
to Seller and the Owners under this Agreement as though each such obligation
were the joint and several obligation of Purchaser and NMHC and Seller and
Owners may enforce this obligation against NMHC without having to pursue or
exhaust any remedy against Purchaser.
SECTION 5.14 Financial Matters. Within sixty (60) days following Closing,
Seller shall deliver to Purchaser and NMHC audited financial statements of
Seller through September 30, 2002 (the "Post-Closing Financial Statements"). If
the net book value of Seller on the Post-Closing Financial Statements reflects a
greater than ten percent (10%) variance from the net book value of Seller on its
Closing Balance Sheets Purchaser shall deduct from the Escrowed Cash an amount
in cash equal to the dollar equivalent of such variance.
SECTION 5.15. Consents. Seller and the Owners shall take all action
necessary to obtain any authorization, consent, waiver, approval, order,
registration, qualification, designation, declaration, filing or other action,
not taken prior to the Closing, required with or from any Governmental Authority
(including, without limitation, receipt of Licenses to own and operate the
Business as currently conducted) or third party (including, without limitation,
all parties to each of the Assumed Contracts (including the Nonassignable
Contracts)) and all other requirements of Law in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF NMHC AND PURCHASER
The obligations of Purchaser under this Agreement are subject to the
satisfaction, at or before the Closing, of all the conditions set forth below.
Purchaser may waive any or all of these conditions in whole or in part without
prior notice; provided, however, that no such waiver of a condition shall
constitute a waiver by Purchaser of any of its other rights or remedies, at law
or in equity, if Seller and/or any of the Owners is in default of any of the
representations, warranties or covenants contained in this Agreement, except to
the extent that such defaults are expressly waived.
SECTION 6.01 Accuracy of Representations and Warranties. All
representations and warranties by Seller and the Owners contained in this
Agreement or in any agreement or written statement delivered by Seller or any of
the Owners to Purchaser pursuant to this Agreement that are qualified as to
materiality will be true and correct in all respects and those not so qualified
shall be true and correct in all material respects on and as of the Closing Date
as though such representations and warranties were made on and as of that date.
SECTION 6.02 Performance. Seller will have performed, satisfied and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it on or before the Closing Date.
SECTION 6.03 No Material Adverse Change. There shall have been no material
adverse change in the Assets, tangible property, condition, results of
operations or prospects of the Business since the date of this Agreement.
SECTION 6.04 Certification by Seller. Purchaser will have received a
certificate, dated the Closing Date, signed by the President of Seller, on
behalf of Seller, certifying that the conditions specified in Sections 6.01,
6.02 and 6.03 hereof have been fulfilled in all respects, including, but not
limited to, certified copies of all documentation of Seller pertaining to
authorization of the execution, delivery and performance of this Agreement and
the Ancillary Agreements.
SECTION 6.05 Absence of Litigation. No Action by or before any Governmental
Authority pertaining to the transactions contemplated by this Agreement or to
their consummation will have been instituted or threatened on or before the
Closing Date.
SECTION 6.06 Legal Prohibition. On the Closing Date, no Governmental Order
shall be in effect prohibiting consummation of the transactions contemplated
hereby or which would make the consummation of such transactions unlawful and no
Action shall have been instituted and remain pending before a Governmental
Authority to restrain or prohibit the transactions contemplated by this
Agreement and no adverse decision shall have been made by any such Governmental
Authority which could materially and adversely affect the Business. No Law shall
have been enacted the effect of which would be to prohibit, restrict, impair or
delay the consummation of the transactions contemplated hereby or restrict or
impair the ability of Purchaser to own or conduct the Business.
SECTION 6.07 Consents, Approvals, Permits, Licenses, etc. All material
authorizations, consents, waivers, approvals, orders, registrations,
qualifications, designations, declarations, filings or other action required
with or from any Governmental Authority (including, without limitation, receipt
of Licenses to own and operate the Business as currently conducted) or third
party (including, without limitation, all parties to each of the Assumed
Contracts) and all other requirements of Law in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly obtained and shall be
reasonably satisfactory to NMHC and Purchaser and their counsel. No such consent
or approval (I) shall be conditioned on the modification, cancellation or
termination of any Assumed Contract, or (II) shall impose on NMHC and Purchaser
any material condition, provision or requirement with respect to the Business or
its operation that is more restrictive than or different from the conditions
imposed upon such operation prior to Closing, unless NMHC and Purchaser give
their prior written approval. Notwithstanding the foregoing, no such consent or
approval with respect to a Nonassignable Contract shall be a condition to
closing, provided that nothing in this Section 6.07 shall be interpreted to
limit the obligations of the parties as set forth in the last paragraph of
Section 2.01.
SECTION 6.08 Employment Agreement. . NMHC shall have received from Seller a
duly executed Employment Agreement from each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇▇.
SECTION 6.09 Escrow Agreement. NMHC and the Owners shall have entered into
the Escrow Agreement.
SECTION 6.10 Closing Matters. All proceedings to be taken by Seller in
connection with the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in form and
substance to Purchaser and their counsel.
SECTION 6.11 Supplemental Disclosure. If Seller shall have delivered,
supplemented or amended any Schedule pursuant to its obligations set forth in
Section 5.04 hereof, NMHC and Purchaser shall not have given notice to Seller
that, as a result of information provided to NMHC and Purchaser in connection
with any or all of such amendments or supplements, NMHC and Purchaser have
determined not to proceed with the consummation of the transactions contemplated
hereby.
SECTION 6.12 Opinion. NMHC and Purchaser shall have received a legal
opinion, dated the Closing Date, from counsel to Seller substantially in the
form attached hereto as Exhibit ___.
SECTION 6.13 Due Diligence. NMHC and Purchaser shall have
completed its due diligence review of the Business and the Assets and shall be
reasonably satisfied with the results thereof.
SECTION 6.14 Delivery of Financial Statements. Seller shall have prepared
and delivered to NMHC and Purchaser such financial statements, prepared in
accordance with generally accepted accounting principles covering such periods
as NMHC and Purchaser may request. Notwithstanding the foregoing, at Closing,
Seller shall deliver to Purchaser and NMHC balance sheets and income statements
of Seller as of September 30, 2002 (the "Closing Balance Sheets").
SECTION 6.15 Real Property Lease. Seller shall have delivered the Real
Property Lease duly executed by B/A Airport Park Solutions, LLC to Purchaser.
SECTION 6.16 ▇▇▇▇ of Sale. Seller shall have executed and delivered the
▇▇▇▇ of Sale to Purchaser.
SECTION 6.17 Additional Deliveries. Seller shall deliver to NMHC and
Purchaser such other certificates and documents Purchaser or its counsel may
reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the
satisfaction, at or before the Closing, of all the conditions set forth below.
Seller may waive any or all of these conditions in whole or in part without
prior notice; provided, however, that no such waiver of a condition shall
constitute a waiver by Seller of any of its other rights or remedies, at law or
in equity, if NMHC or Purchaser is in default of any of the representations,
warranties or covenants contained in this Agreement, except to the extent that
such defaults are expressly waived.
SECTION 7.01 Accuracy of Representations and Warranties. All
representations and warranties by NMHC and Purchaser contained in this Agreement
or in any agreement or written statement delivered by NMHC and Purchaser to
Seller or any of the Owners pursuant to this Agreement that are qualified as to
materiality will be true and correct in all respects and those not so qualified
will be true and correct in all material respects on and as of the Closing Date
as though such representations and warranties were made on and as of that date.
SECTION 7.02 Performance. NMHC and Purchaser will have performed, satisfied
and complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it on or before the Closing Date.
SECTION 7.03 Certification by Purchaser. Seller will have received a
certificate, dated the Closing Date, signed by the President of NMHC, on behalf
of NMHC and Purchaser, certifying that the conditions specified in Sections 7.01
and 7.02 hereof have been fulfilled in all respects, including, but not limited
to, certified copies of all documentation of Purchaser pertaining to
authorization of the execution, delivery and performance of this Agreement and
the Ancillary Agreements.
SECTION 7.04 Employment Agreement. Purchaser shall have duly executed and
delivered the Employment Agreement.
SECTION 7.05 Real Property Lease. Purchaser shall have duly executed and
delivered the Real Property Lease.
SECTION 7.06 ▇▇▇▇ of Sale. Purchaser shall have executed and delivered the
▇▇▇▇ of Sale to Seller.
SECTION 7.07 Closing Amount; Escrowed Cash. Purchaser shall deliver to (i)
Seller, the Closing Amount, less the Escrowed Cash and (ii) the Escrow Agent,
the Escrowed Cash.
SECTION 7.08 Additional Deliveries. Purchaser shall deliver to Seller such
other certificates and documents Seller or its counsel may reasonably request
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 Indemnification by NMHC and Purchaser. (a) Subject to
paragraph (b)(iii) below and Section 8.05 in the case of subclause (i) below,
NMHC and Purchaser shall indemnify, defend and hold harmless each of the Owners,
Seller, its Affiliates and its employees, officers, directors and stockholders
(collectively, the "Seller Indemnified Parties") against, and reimburse any
Seller Indemnified Party for, any and all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including in respect of any
Action brought by any Governmental Authority or any other Person) including
reasonable attorneys' and consultants' fees and expenses and other legal costs
and expenses reasonably incurred in prosecution, investigation, remediation,
defense or settlement (collectively, "Losses"), that such Seller Indemnified
Party may at any time suffer or incur, or become subject to, as a result of or
in connection with:
(i) the inaccuracy of any representations and warranties made by NMHC and
Purchaser in this Agreement (without regard to any materiality qualifier
contained in such representation or warranty);
(ii) any failure by NMHC and Purchaser to perform any of their covenants or
agreements under this Agreement or any of the Ancillary Agreements; and
(iii) any Assumed Liability.
(b) Notwithstanding any other provision in this Agreement to the contrary,
neither NMHC nor Purchaser shall be required to indemnify, defend or hold
harmless any Seller Indemnified Party against or reimburse any Seller
Indemnified Party for any Losses pursuant to Section 8.01(a) unless:
(i) such Seller Indemnified Party has notified NMHC and Purchaser in
writing in accordance with Section 8.03(a) of a claim with respect to such
matters within the applicable survival period set forth in Section 8.05;
(ii) the aggregate Losses resulting from, arising out of, relating to or in
the nature of or caused by the breach (or alleged breach) of any representation
or warranty of NMHC and Purchaser exceeds $25,000, at which point NMHC and
Purchaser will be obligated to indemnify such Seller Indemnified Party from and
against all Losses in excess of such threshold; and
(iii) NMHC and Purchaser's maximum aggregate liability hereunder shall not
exceed the Purchase Price.
SECTION 8.02 Indemnification by Seller and the Owners. (a) Subject to
paragraph (b)(iii) below and Section 8.05 hereof in the case of subclause (i)
below, Seller and the Owners, collectively,shall indemnify, defend and hold
harmless NMHC and Purchaser, their Affiliates and their respective employees,
officers, directors and stockholders (collectively, the "Purchaser Indemnified
Parties") against, and reimburse any Purchaser Indemnified Party for, any and
all Losses that such Purchaser Indemnified Party may at any time suffer or
incur, or become subject to, as a result of or in connection with:
(i) the inaccuracy of any representations and warranties made by Seller in
this Agreement (without regard to any materiality qualifier contained in such
representation and warranty);
(ii) any failure by Seller to perform any of its covenants or agreements
under this Agreement or any of the Ancillary Agreements;
(iii) any Excluded Liability;
(iv) uncollected Accounts; and
(v) any litigation or threatened litigation, but only insofar as such
losses, claims, damages, liabilities or actions arise out of, or are based upon,
(i) any untrue statement, or alleged untrue statement, of a material fact
contained in a Registration Statement, any preliminary or final prospectus, or
any amendment or supplement thereto (or in any application or document filed in
connection therewith) or document executed by NMHC based upon written
information furnished by or on behalf of the Owners filed in any jurisdiction in
order to register or qualify the NMHC Shares under the securities laws thereof
or the omission, or alleged omission, to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances under which they were made, or (ii) the employment
by the Owners of any device, scheme or artifice to defraud, or the engaging by
the Owners in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in which
the Owners shall participate, in connection with the issuance and sale of any of
the NMHC Shares; provided, however, that this indemnity shall not extend to NMHC
if any such losses, claims, damages, liabilities or actions arising out of, or
based upon, any such untrue statement or alleged untrue statement, or any such
omission, or alleged omission, if such statement or omission was based upon and
made in conformity with information furnished in writing to NMHC by a selling
Owner of NMHC Shares specifically for use in connection with the preparation of
such Registration Statement, any preliminary or final prospectus, or any such
amendment or supplement thereto.
(b) Notwithstanding any other provision in this Agreement to the contrary,
Seller and the Owners shall not be required to indemnify, defend or hold
harmless any Purchaser Indemnified Party against or reimburse any Purchaser
Indemnified Party for any Losses pursuant to Section 8.02(a)(i) unless:
(i) such Purchaser Indemnified Party has notified Seller in writing in
accordance with Section 8.03(a) of a claim with respect to such matters within
the applicable survival period set forth in Section 8.05; and
(ii) the aggregate Losses resulting from, arising out of, relating to or in
the nature of or caused by the breach (or alleged breach) of any representation
or warranty of Seller exceed $25,000, at which point Seller and the Owners will
be obligated to indemnify such Purchaser Indemnified Party from and against all
Losses in excess of such threshold.
(c) Notwithstanding any other provision in this Agreement to the contrary,
the obligation of Seller and all Owners in the aggregate to indemnify NMHC and
Purchaser under Section 8.02(a) shall be limited to two hundred thousand dollars
($200,000) and, in the case of each of the Owners, such Owner's contribution for
such indemnity shall be based on the percentage attributable to each such Owner
as shown on the signature page thereto, except in the case of Seller's or
Owner's fraud, intentional misrepresentation or willful misconduct, in which
case Seller's and any such Owners' liability shall not be so limited. If Seller
and the Owners have an obligation to indemnify NMHC or Purchaser under Section
8.02(a) and Purchaser meets the Operational Milestones, such obligation shall be
satisfied from the Escrowed Cash on the Escrow Release Date prior to delivery of
the Escrowed Cash to Seller. If Seller and the Owners have an obligation to
indemnify NMHC or Purchaser under Section 8.02(a) and Purchaser does not meet
the Operational Milestones, such obligation shall be payable by Seller and the
Owners to NMHC and/or Purchaser.
SECTION 8.03 Notification of Claims.
(a) A party that may be entitled to be indemnified pursuant to Section 8.01
or 8.02 (the "Indemnified Party") shall promptly notify the party liable for
such indemnification (the "Indemnifying Party") in writing of any pending or
threatened claim or demand which the Indemnified Party has determined has given
or could give rise to a right of indemnification under this Agreement (including
a pending or threatened claim or demand asserted by a third party against the
Indemnified Party), describing in reasonable detail, to the extent known by the
Indemnified Party, the facts and circumstances with respect to the subject
matter of such claim or demand; provided, however, that the failure to provide
such notice shall not release the Indemnifying Party from any of its obligations
under this Article VIII except and only to the extent the Indemnifying Party is
prejudiced by such failure.
(b) If the Indemnified Party shall notify the Indemnifying Party of any
claim or demand pursuant to Section 8.03(a), and if (i) such claim or demand
relates to a pending or threatened claim or demand asserted by a third party (a
"Third Party Claim") against the Indemnified Party which the Indemnifying Party
acknowledges is a claim or demand as to which it must indemnify, defend and hold
harmless the Indemnified Party against or reimburse the Indemnified Party for
under Section 8.01 or 8.02, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, (iii) the
Third Party Claim involves only money damages and does not seek an injunction or
other equitable relief, (iv) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice adverse to the
continuing business interests of the Indemnified Party, and (v) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently,
then the Indemnifying Party shall have the right to defend such claim or demand
and if it elects to defend such claim or demand, it shall employ counsel
reasonably acceptable to the Indemnified Party to defend such claim or demand
asserted against the Indemnified Party. The Indemnified Party and the
Indemnifying Party shall each have the right to participate in the defense of
any claim or demand for which it is not controlling the defense, at its own
expense; provided, that the reasonable fees and expenses of counsel for the
Indemnified Party shall be borne by the Indemnifying Party if (i) the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it which are different from or in addition to those
available to any other party defending such claim or demand and (ii) counsel
have advised that a conflict of interest exists between the Indemnifying Party
and another party. The Indemnifying Party shall notify the Indemnified Party in
writing, as promptly as possible (but in any case at a time sufficiently before
the due date for the answer or response to a claim so as to allow the
Indemnified Party reasonable time to answer or respond in the event the
Indemnifying Party fails to assume the defense of such action) after the date of
the notice of claim given by the Indemnified Party to the Indemnifying Party
under Section 8.03(a), of its election to defend in good faith any such third
party claim or demand. So long as the Indemnifying Party is actively and
diligently defending in good faith any such claim or demand asserted by a third
party against the Indemnified Party, the Indemnified Party shall not settle or
compromise such claim or demand and, in any event, shall not enter into any such
settlement or compromise without giving at least five Business Days' prior
written notice thereof to the Indemnifying Party. The Indemnified Party shall
make available to the Indemnifying Party or its agents all records and other
materials in the Indemnified Party's possession reasonably required by the
Indemnifying Party for its use in defending any third party claim or demand.
Whether or not the Indemnifying Party elects to defend any such claim or demand,
the Indemnified Party shall have no obligations to do so. The Indemnifying Party
shall not settle or compromise any such claim or demand, unless the Indemnified
Party is given a full, complete and unconditional release of any and all
liability by all relevant parties relating thereto.
(c) Within 30 days after a party obtains knowledge that it has sustained
any Losses not involving a Third Party Claim which such party reasonably
believes may give rise to a claim for indemnification from another party
hereunder, such Indemnified Party shall deliver notice of such claim to the
Indemnifying Party, together with a brief description of the facts and data
which support the claim for indemnification; provided, however, that failure to
so notify the Indemnifying Party shall not relieve the Indemnifying Party of its
indemnification obligations hereunder, except to the extent that the
Indemnifying Party is actually prejudiced thereby. Any such notice must be made
to the Indemnifying Party not later than the expiration of the applicable
survival period specified in Section 8.05 below. If the Indemnifying Party does
not notify the Indemnified Party within 45 days following its receipt of such
notice that the Indemnifying Party disputes its liability to the Indemnified
Party under this Article VIII, such claim specified by the Indemnified Party in
such notice shall be conclusively deemed a liability of the Indemnifying Party
under this Article VIII and the Indemnifying Party shall pay the amount of such
claim to the Indemnified Party on demand or, in the case of any notice in which
the amount of the claim (or any portion thereof) is estimated, on such later
date when the amount of such claim (or such portion thereof) becomes finally
determined. If the Indemnifying Party has timely disputed its liability with
respect to such claim, as provided above, the Indemnifying Party and the
Indemnified Party shall proceed in good faith to negotiate a resolution of such
dispute and, if not resolved through negotiations, such dispute shall be
resolved in accordance with the provisions of Section 10.10 hereof.
SECTION 8.04 Certain Adjustments. For all purposes of this Article VIII,
"Losses" shall be net of (i) any insurance benefits actually paid to the
Indemnified Party from insurance policies in connection with the facts giving
rise to the right of indemnification (net of any insurance premiums paid on the
policy related thereto) and (ii) if subsequent to receiving any indemnification
payment as provided in this Article VIII, any Indemnified Party receives any
insurance benefits in connection with the relevant Losses, it shall promptly pay
to the Indemnifying Party the amount of such insurance benefits, but in any
event not exceeding the amount of such indemnification payment. The Indemnified
Party shall use its reasonable efforts to make insurance claims relating to any
claim for which it is seeking indemnification pursuant to this Article VIII;
provided that the Indemnified Party shall not be obligated to make such an
insurance claim if the Indemnified Party in its reasonable judgment believes
that the cost of pursuing such an insurance claim together with any
corresponding increase in insurance premiums or other charge backs to the
Indemnified Party, as the case may be, would exceed the value of the claim for
which the Indemnified Party is seeking indemnification.
SECTION 8.05 Survival of Representations and Warranties. All of the
representations and warranties contained in this Agreement shall survive the
Closing hereunder and continue in full force and effect for a period of fifteen
(15) months thereafter, regardless of any investigation made by Purchaser or
Seller or on their behalf, except as to any matters with respect to which a bona
fide written claim shall have been made or an action at law or in equity shall
have commenced before such date, in which event survival shall continue (but
only with respect to, and to the extent of, such claim) until the final
resolution of such claim or action, including all applicable periods for appeal.
SECTION 8.06 Other Indemnification Provisions. The remedies provided herein
shall be the exclusive remedies of each of the parties hereto with respect to
any Losses arising out of the transactions contemplated hereby; provided,
however, that (i) the parties hereto shall be entitled to an injunction or other
equitable relief to prevent breaches of this Agreement, to enforce specifically
the terms and provisions of this Agreement or to seek any other remedy to which
they are entitled in equity; and (ii) nothing herein shall preclude a party from
bringing an action for fraud.
SECTION 8.07 Escrow Agreement. Seller and each of the Owners agree that the
Escrowed Cash shall be deposited with the Escrow Agent in accordance with the
terms of the Escrow Agreement to serve the indemnification obligations of Seller
and each of the Owners under this Agreement. The Escrowed Cash shall be released
from escrow and distributed to Seller in accordance with the terms of the Escrow
Agreement.
ARTICLE IX
TERMINATION
SECTION 9.01 Termination of Agreement. The parties may terminate this
Agreement as provided below:
(a) Purchaser, NMHC, the Owners and Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) NMHC and Purchaser may terminate this Agreement by giving written
notice to Seller and the Owners at any time prior to the Closing (i) in the
event Seller or any Owner has breached any representation, warranty or covenant
contained in this Agreement in any respect (in the case of any representation or
warranty qualified by materiality) or in any material respect (in the case of
any representation or warranty without any materiality qualification), Purchaser
has notified Seller of the breach, and the breach has continued without cure for
a period of five (5) days after the notice of breach or (ii) if the Closing
shall not have occurred on or before November 15, 2002, or such later date as
the parties may agree, other than through a failure of NMHC and Purchaser to
fulfill their obligations hereunder; and
(c) Seller may terminate this Agreement by giving written notice to NMHC
and Purchaser at any time prior to the Closing (i) in the event NMHC and
Purchaser have breached any representation, warranty or covenant contained in
this Agreement in any respect (in the case of any representation or warranty
qualified by materiality) or in any material respect (in the case of any
representation or warranty without a materiality qualifier), Seller has notified
NMHC and Purchaser of the breach, and the breach has continued without cure for
a period of five (5) days after the notice of breach or (ii) if the Closing
shall not have occurred on or before November 15, 2002, or such later date as
the parties may agree, other than through a failure of Seller to fulfill its
obligations hereunder.
SECTION 9.02 Effect of Termination. If any party terminates this Agreement
pursuant to Section 9.01 above, all rights and obligations of the parties
hereunder shall terminate without any liability of any party to any other party
(except for any liability of any party then in breach).
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Effect of Due Diligence. . No investigation by or on behalf
of NMHC and Purchaser into the business, operations, prospects, assets or
condition (financial or otherwise) of the Business shall diminish in any way the
effect of any representations or warranties made by Seller and Owners in this
Agreement or shall relieve Seller or any of the Owners of any of its or his
obligations under this Agreement.
SECTION 10.02 Expenses. Except as may be otherwise specified herein, all
costs and expenses, including fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses, whether or not the Closing shall have occurred. Notwithstanding
the above, Purchaser and Seller shall each pay fifty-percent (50%) of all fees
incurred by an accounting firm which has been engaged to audit the financial
statements of Seller in connection with this Agreement, or the transactions
contemplated hereby; provided, however, that any such fees that exceed one
hundred thousand dollars ($100,000) shall be payable solely by Seller.
SECTION 10.03 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by overnight courier service, by facsimile (followed by delivery of a
copy via overnight courier service) or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 10.03):
(a) if to Seller or the Owners:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
with a copy to (which shall not constitute notice):
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Lombardi, Reinhard, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C.
III ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(b) if to NMHC and Purchaser:
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to (which shall not constitute notice):
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SECTION 10.04 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.05 Severability. . If any term or other provision of this
Agreement is held invalid, illegal or incapable of being enforced by any Law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
SECTION 10.06 Entire Agreement. This Agreement and the Ancillary Agreements
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof, and supersede all prior agreements and
undertakings, both written and oral, between the parties with respect to the
subject matter hereof, including, without limitation, any purported or actual
summary of terms that may have been provided by one party to another.
SECTION 10.07 Assignment. This Agreement shall not be assigned by operation
of Law or otherwise.
SECTION 10.08 No Third-Party Beneficiaries. Except as provided in Article
VIII, this Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 10.09 Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by holding a majority of the
outstanding shares of capital stock of Seller, NMHC and Purchaser.
SECTION 10.10 Arbitration, Governing Law; Submission to Jurisdiction,
Waivers.
(a) Arbitration. In the event that any dispute, disagreement or controversy
arises out of or relates to or concerns any rights, obligations or other aspect
of this Agreement, either party may notify the other in writing within 30 days
of the circumstances giving rise to such dispute. If Purchaser and Seller are
not able to resolve such dispute within 30 days of the applicable party's
receipt of notice of such dispute hereunder, such dispute shall promptly be
submitted to arbitration in New York City (if a claim is made by Seller or an
Owner) or in Albany, New York (if a claim is made by Purchaser or NMHC), in all
cases before the American Arbitration Association (the "AAA") in accordance with
the commercial arbitration rules of the AAA. Following the determination of the
venue of an arbitration proceeding in accordance with the preceding sentence,
any other claim asserted by a party hereunder at or about the time of the
original claim shall be arbitrated in the same venue. The arbitration tribunal
shall be composed of three arbitrators, one of which shall be appointed by
Purchaser within 10 business days of the end of the 30-day period referred to
above, one of which shall be appointed by Seller within 10 business days of the
end of the 30-day period referred to above, and the third to be appointed by the
other two arbitrators. The arbitrators will be directed to resolve such dispute,
disagreement or controversy. The award of the arbitrator shall be enforceable in
any court of competent jurisdiction. Notwithstanding the foregoing, any party
shall be entitled to seek injunctive relief or other equitable remedies from any
court of competent jurisdiction.
(b) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflict of laws.
SECTION 10.11 Recovery of Litigation Expenses. In connection with any
Action between Seller, the Owners, NMHC and/or Purchaser and their respective
Affiliates arising out of or related to this Agreement or any of the Ancillary
Agreements, the prevailing party in such Action shall be entitled to recover all
of its costs and expenses in connection with such Action or proceeding,
including all costs and expenses in investigating and prosecuting or defending
such Action, including the reasonable fees and expenses of counsel, auditors and
other consultants.
SECTION 10.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 10.13 Construction. 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 of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
parties intend that each representation, warranty and covenant contained herein
shall have independent significance. If any party has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty or covenant.
SECTION 10.14 Specific Performance. Each party acknowledges and agrees that
the other party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each party agrees that the other party
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the parties and the matter,
in addition to any other remedy to which they may be entitled, at law or in
equity.
IN WITNESS WHEREOF, Seller, NMHC and Purchaser have caused this Agreement
to be executed by their respective officers thereunto duly authorized, and the
Owners have executed this agreement, as of the date first written above.
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
By:
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Name:
Title:
INTEGRAIL ACQUISITION CORP.
By:
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Name:
Title:
HEALTH SOLUTIONS, LTD.
By:
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Name:
Title:
OWNERS:
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