Exhibit 10.1
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STOCK PURCHASE AGREEMENT
among
PSS WORLD MEDICAL, INC.,
IMAGING ACQUISITION CORPORATION
and
PLATINUM EQUITY, LLC
Dated as of October 28, 2002
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Table of Contents
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Page
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SECTION 1. DEFINITIONS....................................................1
SECTION 2. PURCHASE AND SALE OF SHARES....................................8
SECTION 2.1...Agreement to Sell and to Purchase.......................8
SECTION 2.2...Closing.................................................8
SECTION 2.3...Purchase Price..........................................8
SECTION 2.4...Purchase Price Adjustment...............................8
SECTION 2.5...Net Cash Adjustment....................................10
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER..................12
SECTION 3.1...Organization...........................................12
SECTION 3.2...Qualification to Do Business...........................12
SECTION 3.3...Authority..............................................13
SECTION 3.4...No Conflict or Violation...............................13
SECTION 3.5...Consents and Approvals.................................13
SECTION 3.6...Capitalization of Company..............................14
SECTION 3.7...Subsidiaries...........................................14
SECTION 3.8...Financial Statements...................................14
SECTION 3.9...Absence of Certain Changes or Events...................15
SECTION 3.10..Absence of Undisclosed Liabilities.....................16
SECTION 3.11..Tax Matters............................................17
SECTION 3.12..Real Property..........................................17
SECTION 3.13..Personal Property......................................18
SECTION 3.14..Assets of the Company..................................19
SECTION 3.15..Intellectual Property..................................19
SECTION 3.16..Licenses and Permits...................................19
SECTION 3.17..Compliance with Law....................................20
SECTION 3.18..Litigation.............................................20
SECTION 3.19..Contracts..............................................21
SECTION 3.20..Employee Plans.........................................22
SECTION 3.21..Insurance..............................................24
SECTION 3.22..Transactions with Seller and Affiliates................25
SECTION 3.23..Labor Matters..........................................25
SECTION 3.24..Environmental Matters..................................26
SECTION 3.25..Customers and Suppliers................................26
SECTION 3.26..Prior Acquisitions.....................................26
SECTION 3.27..Accounts Receivable; Inventory.........................26
SECTION 3.28..Bank Accounts, Letters of Credit and Powers of
Attorney...............................................27
SECTION 3.29..Certain Payments.......................................27
SECTION 3.30..Books and Records......................................27
SECTION 3.31..No Brokers.............................................27
SECTION 3.32..SEC Reports............................................27
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER...................27
SECTION 4.1...Corporate Organization.................................27
SECTION 4.2...Authorization..........................................28
SECTION 4.3...No Conflict or Violation...............................28
SECTION 4.4...Consents and Approvals.................................28
SECTION 4.5...Sufficient Funds.......................................28
SECTION 4.6...No Brokers.............................................28
SECTION 5. COVENANTS OF THE SELLER.......................................29
SECTION 5.1...Conduct of Business Before the Closing Date............29
SECTION 5.2...Company Intellectual Property and Other Assets
Necessary to the Business of the Company or a
Subsidiary but Owned, Licensed or Leased by
the Seller.............................................30
SECTION 5.3...Consents and Approvals.................................31
SECTION 5.4...Access to Properties and Records.......................32
SECTION 5.5...Negotiations...........................................33
SECTION 5.6...Commercially Reasonable Efforts........................33
SECTION 5.7...Notice of Breach; Updating Schedules...................33
SECTION 5.8...Certain Pre-Closing Transactions.......................33
SECTION 5.9...Covenant Not to Compete................................34
SECTION 5.10..Non-Solicitation of Employees..........................34
SECTION 5.11..Confidentiality........................................34
SECTION 5.12..Employee Matters.......................................34
SECTION 5.13..Noncompetition and Employment Agreements...............34
SECTION 5.14..Lien Searches..........................................35
SECTION 5.15..Books and Records......................................35
SECTION 5.16..Covenants to Resolve Certain Disputes..................35
SECTION 5.17..Decommissioning of Certain Premises....................35
SECTION 5.18..Seller Domain Names....................................36
SECTION 5.19..Responsibility for Certain Insured Claims..............36
SECTION 5.20..Assistance With Certain Employee Benefit
Post-Closing...........................................36
SECTION 5.21..Amendment of Fleet Lease...............................36
SECTION 6. COVENANTS OF THE BUYER........................................36
SECTION 6.1...Actions Before Effective Date..........................36
SECTION 6.2...Consents and Approvals.................................36
SECTION 6.3...Commercially Reasonable Efforts........................37
SECTION 6.4...Notice of Breach.......................................37
SECTION 6.5...Employees and Employee Benefits........................38
SECTION 6.6...Confidentiality........................................38
SECTION 6.7...Decommissioning of Certain Premises; Cooperation
with Respect to Environmental Matters..................39
SECTION 6.8...Finance Cooperation....................................39
SECTION 7. TAXES.........................................................39
SECTION 7.1...Indemnification for Income Taxes.......................39
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SECTION 7.2...Tax Covenants..........................................40
SECTION 7.3...338(h)(10) Election....................................40
SECTION 7.4...Cooperation............................................42
SECTION 7.5...Contest Provisions.....................................42
SECTION 7.6...Transfer Taxes.........................................43
SECTION 8. INDEMNIFICATION...............................................43
SECTION 8.1...Survival...............................................43
SECTION 8.2...Indemnification by the Seller..........................44
SECTION 8.3...Indemnification by the Buyer...........................45
SECTION 8.4...Procedures for Indemnification.........................45
SECTION 8.5...Exclusive Remedy; Character of Payments................46
SECTION 8.6...Mitigation.............................................46
SECTION 8.7...Limitation on Losses...................................46
SECTION 9. CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER.............46
SECTION 9.1...Representations and Warranties of the Buyer............46
SECTION 9.2...Performance of the Obligations of the Buyer............47
SECTION 9.3...Consents and Approvals.................................47
SECTION 9.4...Transitional Services Agreement........................47
SECTION 9.5...No Violation of Orders.................................47
SECTION 10. CONDITIONS PRECEDENT TO PERFORMANCE BY THE BUYER..............47
SECTION 10.1..Representations and Warranties of the Seller...........47
SECTION 10.2..Performance of the Obligations of the Seller...........47
SECTION 10.3..Consents and Approvals.................................48
SECTION 10.4..Transitional Services Agreement........................48
SECTION 10.5..No Violation of Orders.................................48
SECTION 10.6..Resignations...........................................48
SECTION 10.7..Termination of Liens and Guarantees....................48
SECTION 10.8..New Fleet Lease........................................49
SECTION 11. TERMINATION...................................................49
SECTION 11.1..Conditions of Termination..............................49
SECTION 11.2..Effect of Termination..................................50
SECTION 12. MISCELLANEOUS.................................................50
SECTION 12.1..Successors and Assigns.................................50
SECTION 12.2..Governing Law, Jurisdiction............................50
SECTION 12.3..Expenses...............................................50
SECTION 12.4..Severability...........................................50
SECTION 12.5..Notices................................................50
SECTION 12.6..Amendments; Waivers....................................52
SECTION 12.7..Public Announcements...................................52
SECTION 12.8..Guarantee..............................................52
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SECTION 12.9..Entire Agreement.......................................52
SECTION 12.10.Parties in Interest....................................53
SECTION 12.11.Section and Paragraph Headings.........................53
SECTION 12.12.Counterparts; Facsimile Signatures.....................53
SECTION 12.13.Payments...............................................53
SECTION 12.14.Effectiveness of Agreement.............................53
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INDEX TO SCHEDULES
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Schedule
Number Schedule Name
I Example Net Assets Calculation
3.2 Foreign Qualifications
3.5 Consents and Approvals
3.6 Title Liens
3.7 Subsidiaries
3.8 Financial Statements
3.9 Absence of Certain Changes or Events
3.10 Undisclosed Liabilities
3.11 Tax Matters
3.12(a) Owned Real Property
3.12(b) Leased Real Property
3.12(d) Real Property Used But Not Owned or Leased by the Company
3.12(f) Vacated and Decommissioned Premises
3.13 Leased Personal Property
3.14 Assets Used But Not Owned by the Company
3.15(a) Company Intellectual Property Used But Not Owned or Licensed by the
Company
3.15(b) IP Infringement Claims against the Company
3.15(d) Listed Intellectual Property
3.16 Licenses and Permits
3.17 Compliance with Laws
3.18 Litigation
3.19 Contracts
3.20(a) Employee Plans
3.21 Insurance
3.22 Affiliate Agreements
3.23(a) Labor Matters
3.23(b) EEOC Claims
3.24 Environmental Matters
3.25 Customer and Supplier Disputes
3.26 Prior Acquisition Obligations
3.28 Bank Accounts, Letters of Credit, Powers of Attorney
5.1 Conduct of Business Before the Closing Date
5.2 Company Intellectual Property and Other Assets Necessary to the
Business of the Company or a Subsidiary but Owned, Licensed or
Leased by the Seller
5.3(b) Assigned Contracts
5.13(a) Employment Agreements
5.13(b) Employment Agreements for which the Seller Shall Assume Certain
Obligations
6.5(b) Seller Benefit Plans
8.2 Indemnification by the Seller
9.3 Consents and Approvals Precedent to Seller Performance
10.3 Consents and Approvals Precedent to buyer Performance
INDEX TO EXHIBITS
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Exhibit A Transitional Services Agreement
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of October 28, 2002,
by and among PSS World Medical, Inc., a Florida corporation (the "Seller"),
Imaging Acquisition Corporation, a Delaware corporation (the "Buyer"), and
Platinum Equity, LLC, a Delaware limited liability company (the "Guarantor").
W I T N E S S E T H:
WHEREAS, the Seller owns all the outstanding shares of capital stock of
Diagnostic Imaging, Inc., a Florida corporation (the "Company"); and
WHEREAS, the Buyer desires to purchase all of the outstanding shares (the
"Shares") of common stock, par value $.01 per share, of the Company (the "Common
Stock") from the Seller, and the Seller desires to sell the Shares to the Buyer,
in each case upon the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective covenants and agreements hereinafter contained, the parties hereby
agree as follows:
SECTION 1. DEFINITIONS.
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As used in this Agreement, the following terms shall have the following
meanings:
"Action" -- See Section 3.18;
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"Actual Net Assets as of the Closing Date" -- See Section 2.4(e);
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"Actual Net Cash as of the Closing Date" -- See Section 2.5(e);
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"Affiliates" shall mean, with respect to a Person, any Person directly or
indirectly, controlling, controlled by or under common control with the Person
specified;
"Agreement" -- See the Preamble hereto;
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"Assigned Contracts" -- See Section 5.3(b);
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"Benefit Plans" -- See Section 3.20(a);
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"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which banks in the State of New York are not required or authorized to close;
"Buyer" -- See the Preamble hereto;
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"Buyer Indemnitees" -- See Section 8.2(a);
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"Buyer Plans" -- See Section 6.5(b);
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"Closing" -- See Section 2.2;
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"Closing Date" -- See Section 2.2;
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"COBRA" -- See Section 3.20(j);
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"Code" shall mean the Internal Revenue Code of 1986, as amended;
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"Common Stock" -- See the recitals hereto;
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"Company" -- See the recitals hereto;
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"Company Employee" -- See Section 3.20(a);
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"Company Intellectual Property" -- See Section 3.15(a);
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"Company Vehicles" - See Section 5.21;
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"Confidentiality Agreement" -- See Section 5.11;
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"Consents" -- See Section 3.5;
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"Contracts" -- See Section 3.19(c);
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"Credit Agreement" shall mean that certain Credit Agreement, dated as of
May 24, 2001, by and among the Seller, each of the Seller's subsidiaries named
therein, the lenders from time to time party thereto, Bank of America, N.A., as
agent, and Banc of America Securities LLC, as arranger, as amended.
"Decommission" and any other variations thereof shall mean those steps
required by Law or by the respective lease to vacate a facility and includes
removal of equipment, unused reagents and chemicals, and any other fixtures or
improvements.
"Decommissioned Premises" -- See Section 3.12
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"Employment Agreements" -- See Section 5.13;
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"Environmental Laws" shall mean all Federal, state, and local laws, rules
and regulations, orders, decrees, directives, permits and licenses relating to
Releases or threatened Releases of Hazardous Materials or otherwise relating to
the generation, treatment, storage, transport or handling of Hazardous Materials
or the protection of the environment;
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended;
"ERISA Affiliate" -- See Section 3.20(a);
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"Estimated Net Assets as of the Closing Date" -- See Section 2.4(a);
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"Financial Statements" -- See Section 3.8;
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"Fleet Lessor" - See Section 5.21;
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"GAAP" shall mean U.S. generally accepted accounting principles;
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"Guarantor" -- See the Preamble hereto;
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"Governmental Entity" shall mean any federal, state, municipal or foreign
governmental, regulatory or other public body, agency or authority (including
self-regulatory organizations), domestic or foreign;
"Hazardous Materials" shall mean any dangerous, toxic or hazardous
pollutant, contaminant, chemical, waste, material or substance as defined in or
governed by any federal, state or local law, statute, code, ordinance,
regulation, rule or other requirement relating to such substance or otherwise
relating to the environment or human health or safety, including without
limitation any petroleum and petroleum products, asbestos and asbestos
containing products or PCBs or other matter which might subject the Company or
any Subsidiary of the Company to any imposition of costs or liability under any
Environmental Law;
"Income Tax" or "Income Taxes" shall mean all Taxes based upon, measured
by, or calculated with respect to (i) gross or net income or gross or net
receipts or profits (including, but not limited to, any capital gains, minimum
taxes and any Taxes on items of tax preference, but not including sales, use,
goods and services, real or personal property transfer or other similar Taxes),
(ii) multiple bases (including, but not limited to, corporate franchise, doing
business or occupation Taxes) if one or more of the bases upon which such Tax
may be based upon, measured by, or calculated with respect to, is described in
clause (i) above, or (iii) withholding taxes measured by, or calculated with
respect to, any payments or distributions (other than wages).
"Indenture" - shall mean that certain Indenture, dated as of October 7,
1997, by and among the Seller, the Subsidiary Guarantors as named therein and
SunTrust Bank (f/k/a SunTrust Bank, Central Florida, National Association), as
trustee (the "Trustee"), as amended;
"Indemnitee" -- See Section 8.4;
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"Indemnitor" -- See Section 8.4;
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"Independent Accounting Firm" -- See Section 2.4(d);
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"Initial Cash Payment" -- See Section 2.3(a);
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"Initial Net Asset Statement" -- See Section 2.4(b);
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"Initial Net Cash Statement" -- See Section 2.5(b);
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"Initial Taxation Valuation" -- See Section 7.3(c);
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"Intellectual Property" shall mean all of the following: (i) trademarks and
service marks, trade dress, trade names and other indications of origin,
applications or registrations in any jurisdiction pertaining to the foregoing
and all goodwill associated therewith; (ii) inventions, discoveries,
improvements, ideas, formula methodology, processes, technology, computer
software (including password unprotected interpretive code or source code,
object code, development documentation, programming tools, drawings,
specifications and data, but excluding off-the-shelf software) and applications
and patents in any jurisdiction pertaining to the foregoing, including
re-issues, continuations, divisions, continuations in part, renewals or
extensions; (iii) trade secrets, including confidential information and the
right in any jurisdiction to limit the use or disclosure thereof; (iv)
copyrighted works, mask works or other works, applications or registrations in
any jurisdiction for the foregoing; (v) database rights; (vi) Internet Web sites
and associated content and data, domain names and applications and registrations
pertaining thereto and all intellectual property used in connection with or
contained in all versions of the Web sites of the Company; (vii) rights under
any agreements relating to the foregoing; and (viii) claims or causes of action
arising out of or related to past, present or future infringement or
misappropriation of the foregoing;
"Interim Balance Sheet" -- See Section 3.8(b);
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"Jointly Used Intellectual Property" -- See Section 5.2(b);
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"Leased Real Property" -- See Section 3.12(b);
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"Leases" -- See Section 3.12(b);
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"Liability Cap" -- See Section 8.2(b)(iv);
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"Licenses and Permits" -- See Section 3.16;
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"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien, easement, right-of-way, restriction or claim;
"Listed Intellectual Property" -- See Section 3.15(d);
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"Losses" shall mean any damages, liabilities, losses, expenses (including
all reasonable attorneys', accountants' and experts' fees and interest and
penalties) or costs; provided, however, in no event shall Losses include any
special or punitive damages;
"Master Fleet Lease" - See Section 5.21;
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"Material Adverse Effect" -- See Section 3.2;
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"Material Customer" shall mean the top 100 customers, by dollar volume, of
the Company and its Subsidiaries taken as a whole during the last fiscal year;
"Material Supplier" shall mean the top 20 suppliers, by dollar expenditure,
of the Company and its Subsidiaries taken as a whole during the last fiscal
year;
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"Multiemployer Plan" -- See Section 3.20(b);
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"Net Assets" shall mean the amount equal to (i) the total consolidated
assets of the Company other than (a) intercompany receivables, (b) income tax
related assets, (c) deferred compensation assets and (d) net cash and cash
equivalents minus (ii) the total consolidated liabilities of the Company other
than (a) intercompany payables,(b) income tax related liabilities, (c) deferred
compensation and 401(k) plan liabilities of the Company and its Subsidiaries,
and (d) indebtedness of the Company and its Subsidiaries (excluding any trade
payables but including, without limitation, funded debt, notes payable, capital
lease obligations, payment obligations under the Noncompetition Agreements and
any outstanding checks that were issued by the Company on or prior to the
Closing Date that have not cleared as of the Closing Date) as of the Closing in
each case determined as of the close of business on the Closing Date in
accordance with GAAP, but without giving effect to purchase accounting
adjustments related to the consummation of the transactions contemplated hereby;
provided, however, that in computing Net Assets (and for such purposes only) (i)
any assets transferred to the Company or any Subsidiary of the Company as
required by this Agreement (other than cash and cash equivalents it being
understood that such cash and cash equivalents shall be excluded in computing
Net Assets as provided in Clause (d) above), including without limitation
Section 5.2, shall be deemed to have a book value of zero (0), (ii) if either or
both of the matters listed in Paragraphs 1 or 2 of Schedule 5.1 have been
settled prior to the Closing, (A) the accrual for "legal and professional fees"
for the purposes of computing Net Assets shall be reduced only by the lesser of
$175,000 or the amount paid in such settlement(s) and (B) no asset shall be
recorded as the result of any such settlement, (iii) no amount shall be included
with respect to cash held in the escrow account listed in Schedule 3.28. For the
purposes of illustration only, an example of the application of the definition
of Net Assets is attached as Schedule I hereto, calculated as of September 27,
2002;
"Net Asset Acceptance Notice" -- See Section 2.4(c);
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"Net Asset Proposed Adjustments" -- See Section 2.4 (b);
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"Net Asset Review Period" -- See Section 2.4(b);
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"Net Asset Target Amount" shall mean $122,220,460;
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"Net Cash" shall mean net cash and cash equivalents (excluding cash held in
the escrow account listed in Schedule 3.28) of the Company as of the close of
business on the Closing Date in accordance with GAAP;
"Net Cash Acceptance Notice" -- See Section 2.5(c);
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"Net Cash Proposed Adjustments" -- See Section 2.5(b);
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"Net Cash Review Period" -- See Section 2.5(b);
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"Net Cash Target Amount" shall mean $11,000,000;
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"New Net Asset Target Amount" -- see Section 2.4(e);
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"New Net Cash Target Amount" -- see Section 2.5(e);
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"Noncompetition Agreements" means any covenant not to compete,
noncompetition agreement or similar agreement (i) to which the Company or any of
its Subsidiaries is a party, (ii) to which the Seller is a party and that
benefits the Company or any of its Subsidiaries, or (iii) to the extent that the
ongoing payment obligations under such agreement have been recorded as
consolidated liabilities of the Company on the Interim Balance Sheet;
"Organizational Documents" -- See Section 3.1;
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"Owned Real Property" -- See Section 3.12(a);
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"Pension Plans" -- See Section 3.20(a);
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"Permitted Liens" shall mean (a) Liens relating to personal property
leases, (b) mechanics', carriers', workmen's, repairmen's or similar Liens
arising or incurred in the ordinary course of business which involve obligations
that are not due and payable, (c) Liens for Taxes, assessments and other
governmental charges which are not due and payable and (d) Liens, which in the
aggregate, do not impair in any material respects, the use or value of the
assets or property in question;
"Person" shall mean any individual, corporation, company, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Entity or other entity;
"Personal Property Lease" -- See Section 3.13(a);
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"Pre-Closing Tax Period" -- shall mean all taxable periods ending on or
before the Closing Date and the portion of any Straddle Period ending on the
Closing Date;
"Purchase Price" -- See Section 2.3;
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"Recipient" -- See Section 7.5(a);
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"Release" shall mean the spilling, leaking, disposing, discharging,
emitting, depositing, ejecting, leaching, escaping or any other release or
threatened release of any Hazardous Materials;
"Section 338 Forms" -- See Section 7.3(b);
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"Section 338(h)(10) Election" -- See Section 7.3(a);
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"Seller" -- See Preamble hereto;
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"Seller's Insurance" -- See Section 3.21;
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"Seller's knowledge", "knowledge of the Seller", and other similar phrases
shall mean the actual knowledge of any of the following persons: Xxxx Xxxxxx,
Xxxx Xxxxxxx, Xxx
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Xxxxxx, Xxxxx Xxxxxx, Xxxxx X'Xxxxx, Xxx Xxxxxx, Xxxx Xxxxxxx, Xxxxx Xxxxx,
Xxxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxx and Xxxx
Xxxxxxxx;
"Seller Plans" -- See Section 6.5(b);
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"Shares" -- See the recitals hereto;
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"Straddle Period" shall mean a taxable period that begins on or prior to
the Closing Date and ends after the Closing Date;
"Subsidiaries" shall mean, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock or other equity interest entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereto is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof;
"Tax" or "Taxes" shall mean all federal, state, local or foreign taxes,
including, without limitation, income, gross income, gross receipts, production,
excise, employment, sales, use, transfer, ad valorem, profits, license, capital
stock, franchise, severance, stamp, withholding, Social Security, employment,
unemployment, disability, worker's compensation, payroll, utility, windfall
profit, custom duties, personal property, real property, registration,
value-added, alternative or add-on minimum, estimated and other taxes, or like
charges of any kind whatsoever, including any interest, penalties or additions
thereto, imposed by any Governmental Entity ("Taxing Authority");
"Tax Claim" -- See Section 7.5(a);
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"Tax Return" shall mean any report, return, information return, exhibit,
filing, claim for refund or other information, including any schedules or
attachments thereto, and any amendments to any of the foregoing required to be
supplied to a Taxing Authority by the Company or any of its Subsidiaries in
connection with Taxes;
"Taxation Proposed Adjustments" -- See Section 7.3(d);
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"Taxation Review Period" -- See Section 7.3(c);
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"Taxation Valuation Acceptance Notice" -- See Section 7.3(e);
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"Transaction Documents" shall mean this Agreement, the Transitional
Services Agreement and the Distribution Agreement;
"Transfer Taxes" -- See Section 7.6;
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"Transitional Services Agreement" -- See Section 9.4;
"Vacated Premises" - See Section 3.12; and
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"Valuation" -- See Section 7.3(c).
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SECTION 2. PURCHASE AND SALE OF SHARES.
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SECTION 2.1. Agreement to Sell and to Purchase. Subject to the terms and
conditions set forth in this Agreement, at the Closing, the Seller shall sell,
assign, transfer, convey and deliver the Shares to the Buyer, and the Buyer
shall purchase and accept the Shares from the Seller.
SECTION 2.2. Closing. The closing (the "Closing") for the consummation of
the transactions contemplated by this Agreement shall take place as soon as
reasonably practicable after satisfaction or waiver of all of the conditions set
forth in Section 9 and Section 10 at the offices of Xxxxxxx Xxxx & Xxxxxxxxx at
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m., or at such other
place and at such time as may be mutually agreed to by the parties hereto (such
date, the "Closing Date"). At the Closing, the Seller shall deliver to the Buyer
a certificate or certificates representing the Shares, duly executed for
transfer, against payment by the Buyer to the Seller of the Initial Cash
Payment.
SECTION 2.3. Purchase Price. The purchase price for the Shares being
purchased hereunder shall be Forty-Five Million Dollars ($45,000,000), minus any
Net Asset Reduction and any Net Cash Reduction (such amount, as so adjusted, the
"Initial Cash Payment"), and subject to further adjustment in accordance with
Sections 2.4(e) and 2.5(e) below (such amount, as so further adjusted, the
"Purchase Price"), with the Initial Cash Payment to be paid by the Buyer to the
Seller at the Closing by wire transfer of immediately available funds to such
account as the Seller shall, not less than two (2) Business Days prior to the
Closing Date, designate in writing to the Buyer.
SECTION 2.4. Purchase Price Adjustment. The Purchase Price shall be subject
to adjustment as follows:
(a) Estimated Net Assets as of the Closing Date. No later than five (5)
Business Days prior to the anticipated Closing Date, the Seller shall prepare
and deliver to the Buyer a written estimate of the Net Assets as of the Closing
Date (the "Estimated Net Assets as of the Closing Date"), prepared in good
faith, in accordance with GAAP and on a reasonable basis using the Seller's then
available financial information as of such date. The Buyer shall review such
written estimate and the parties shall use commercially reasonable efforts to
resolve in good faith any disagreements concerning such estimate no later than
two (2) Business Days prior to the anticipated Closing Date. If the parties are
unable to resolve any such disagreements, Seller's written estimate shall be
utilized for the purposes of the calculations set forth in this Section 2.4(a).
To the extent that the Estimated Net Assets as of the Closing Date is less than
the Net Asset Target Amount, the amount of such difference shall be the "Net
Asset Reduction."
(b) The Initial Net Asset Statement; The Buyer's Review. No later than
sixty (60) days following the Closing Date, the Seller shall prepare and deliver
to the Buyer an Initial Net Asset Statement of the Net Assets as of the Closing
Date, together with a detailed analysis of the line items included therein (the
"Initial Net Asset Statement"). The Buyer shall make available to the Seller all
relevant books and records of the Company and its Subsidiaries in the
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Buyer's possession or control and all personnel with knowledge of information
relevant to the determination of the Net Assets as of the Closing Date to
facilitate the Seller's preparation of the Initial Net Asset Statement. The
Buyer shall have a period equal to the longer of sixty (60) days from the
receipt of the Initial Net Asset Statement or one-hundred twenty (120) days from
the Closing Date (the " Net Asset Review Period") to review the Initial Net
Asset Statement, during which period the Seller shall make available to the
Buyer all relevant books and records of the Company and its Subsidiaries in the
Seller's possession or control and all personnel with knowledge of information
relevant to the determination of the Net Assets as of the Closing Date. If as a
result of such review, the Buyer disagrees with any items contained in the
Initial Net Asset Statement, the Buyer shall deliver to the Seller a written
notice of disagreement setting forth those items to which the Buyer takes
exception and the Buyer's proposed adjustment (the "Net Asset Proposed
Adjustments") prior to the expiration of the Net Asset Review Period.
(c) Acceptance; Failure to Respond. If the Buyer does not take exception
with any of the items contained in the Initial Net Asset Statement, the Buyer
shall deliver a written statement to the Seller within the Net Asset Review
Period accepting the Initial Net Asset Statement (an "Net Asset Acceptance
Notice"), in which case the Seller's determination of the Net Assets as of the
Closing Date as shown on the Initial Net Asset Statement shall be final and
binding on the parties, effective as of the date on which the Seller receives
the Net Asset Acceptance Notice. If the Buyer does not deliver a notice of Net
Asset Proposed Adjustments or an Net Asset Acceptance Notice within the Net
Asset Review Period, then the Seller's determination of the Net Assets as of the
Closing Date as shown on the Initial Net Asset Statement shall be final and
binding on the parties, effective as of the first business day after the
expiration of the Net Asset Review Period.
(d) Resolution of Disputes. If the Buyer delivers a notice of Net Asset
Proposed Adjustments to the Seller in a timely manner, then the Buyer and the
Seller shall attempt in good faith to resolve such dispute within thirty (30)
days from the date of the notice of the Net Asset Proposed Adjustments. If the
Buyer and the Seller cannot reach agreement within such thirty (30) day period
(or such longer period as they may mutually agree), then the dispute shall be
promptly referred to an independent accounting firm of national reputation
mutually acceptable to the Buyer and the Seller, or if the parties are unable to
agree on such a firm within ten (10) days (or such longer period as they may
mutually agree) to PricewaterhouseCoopers (provided that no one from such firm
who has previously worked for or with one of the parties shall be selected to
resolve the dispute without the consent of the other party) (the "Independent
Accounting Firm") for binding resolution. The Independent Accounting Firm may
conduct such proceedings as the Independent Accounting Firm, in its sole
discretion, determines will assist in resolving the disputed exceptions and
shall, within sixty (60) calendar days following its selection, deliver to the
Buyer and the Seller a written report setting forth its determination of such
disputed exceptions calculated in accordance with this Agreement, and its
determinations will be conclusive and binding upon the parties thereto for the
purposes of any Purchase Price adjustment under Section 2.4(e) hereof. The
Seller, on the one hand, and the Buyer, on the other hand, shall each be
responsible for one-half of the costs and expenses of the Independent Accounting
Firm, and each of the parties shall bear its own legal, accounting and other
fees and expenses of participating in such dispute resolution procedure.
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(e) Final Settlement. As used in this Section 2.4, (i) the Net Assets as of
the Closing Date, as finally determined pursuant to clause (c) or clause (d) of
this Section 2.4, are referred to as the "Actual Net Assets as of the Closing
Date" and (ii) the amount equal to the lesser of the Estimated Net Assets as of
the Closing Date and the Net Asset Target Amount is referred to as the "New Net
Asset Target Amount." If the Actual Net Assets as of the Closing Date are less
than the New Net Asset Target Amount, then the Seller shall, within five (5)
Business Days of the date of such final determination, pay to the Buyer the
amount of the difference between the Actual Net Assets as of the Closing Date
and the New Net Asset Target Amount, together with interest on the amount of
such difference at the rate of seven percent (7%) per annum from the Closing
Date to the date of payment, such payment to be made by wire transfer of
immediately available funds to such bank account as the Buyer may designate (or
in the absence of any such designation, by corporate check mailed to the Buyer).
If the Actual Net Assets as of the Closing Date are greater than the New Net
Asset Target Amount, then the Buyer shall, within five (5) business days from
the date of such final determination, refund to the Seller the amount, if any,
equal to the lesser of (x) the difference between the New Net Asset Target
Amount and the Actual Net Assets as of the Closing Date and (y) the difference
between the New Net Asset Target Amount and the Net Asset Target Amount (which
difference shall be zero (0) if there was no reduction in the amount to be paid
to the Seller at the Closing pursuant to Section 2.4(a)), together with interest
thereon at the rate of seven percent (7%) per annum from the Closing Date to the
date of payment, such payment to be made by wire transfer of immediately
available funds to such bank account as the Seller may designate (or, in the
absence of any such designation, by corporate check mailed to the Seller).
(f) Character of Payments. Any payments made pursuant to this Section 2.4
shall be treated by both parties as adjustments to the Purchase Price for all
purposes.
SECTION 2.5. Net Cash Adjustment. The Purchase Price shall be subject to
adjustment as follows:
(a) Estimated Net Cash as of the Closing Date. No later than five (5)
Business Days prior to the anticipated Closing Date, the Seller shall prepare
and deliver to the Buyer a written estimate of the Net Cash as of the Closing
Date (the "Estimated Net Cash as of the Closing Date"), prepared in good faith,
in accordance with GAAP and on a reasonable basis using the Seller's then
available financial information as of such date. The Buyer shall review such
written estimate and the parties shall use commercially reasonable efforts to
resolve in good faith any disagreements concerning such estimate no later than
two (2) Business Days prior to the anticipated Closing Date. If the parties are
unable to resolve any such disagreements, Seller's written estimate shall be
utilized for the purposes of the calculations set forth in this Section 2.5(a).
To the extent that the Estimated Net Cash as of the Closing Date is less than
the Net Cash Target Amount, the amount of such difference shall be the "Net Cash
Reduction."
(b) The Initial Net Cash Statement; The Buyer's Review. No later than
thirty (30) days following the Closing Date, the Seller shall prepare and
deliver to the Buyer an Initial Net Cash Statement of the Net Cash as of the
Closing Date, together with a detailed analysis of the line items included
therein (the "Initial Net Cash Statement"). The Buyer shall make available to
the Seller all relevant books and records of the Company and its Subsidiaries in
the Buyer's possession or control and all personnel with knowledge of
information relevant to the
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determination of the Net Cash as of the Closing Date to facilitate the Seller's
preparation of the Initial Net Cash Statement. The Buyer shall have a period
equal to the longer of thirty (30) days from the receipt of the Initial Net Cash
Statement or sixty (60) days from the Closing Date (the "Net Cash Review
Period") to review the Initial Net Cash Statement, during which period the
Seller shall make available to the Buyer all relevant books and records of the
Company and its Subsidiaries in the Seller's possession or control and all
personnel with knowledge of information relevant to the determination of the Net
Cash as of the Closing Date. If as a result of such review, the Buyer disagrees
with any items contained in the Initial Net Cash Statement, the Buyer shall
deliver to the Seller a written notice of disagreement setting forth those items
to which the Buyer takes exception and the Buyer's proposed adjustment (the "
Net Cash Proposed Adjustments") prior to the expiration of the Net Cash Review
Period.
(c) Acceptance; Failure to Respond. If the Buyer does not take exception
with any of the items contained in the Initial Net Cash Statement, the Buyer
shall deliver a written statement to the Seller within the Net Cash Review
Period accepting the Initial Net Cash Statement (a "Net Cash Acceptance
Notice"), in which case the Seller's determination of the Net Cash as of the
Closing Date as shown on the Initial Net Cash Statement shall be final and
binding on the parties, effective as of the date on which the Seller receives
the Net Cash Acceptance Notice. If the Buyer does not deliver a notice of Net
Cash Proposed Adjustments or a Net Cash Acceptance Notice within the Net Cash
Review Period, then the Seller's determination of the Net Cash of the Closing
Date as shown on the Initial Net Cash Statement shall be final and binding on
the parties, effective as of the first business day after the expiration of the
Net Cash Review Period.
(d) Resolution of Disputes. If the Buyer delivers a notice of Net Cash
Proposed Adjustments to the Seller in a timely manner, then the Buyer and the
Seller shall attempt in good faith to resolve such dispute within fifteen (15)
days from the date of the notice of the Net Cash Proposed Adjustments. If the
Buyer and the Seller cannot reach agreement within such fifteen (15) day period
(or such longer period as they may mutually agree), then the dispute shall be
promptly referred to an independent accounting firm of national reputation
mutually acceptable to the Buyer and the Seller, or if the parties are unable to
agree on such a firm within ten (10) days (or such longer period as they may
mutually agree) to the Independent Accounting Firm for binding resolution. The
Independent Accounting Firm may conduct such proceedings as the Independent
Accounting Firm, in its sole discretion, determines will assist in resolving the
disputed exceptions and shall, within forty-five (45) calendar days following
its selection, deliver to the Buyer and the Seller a written report setting
forth its determination of such disputed exceptions calculated in accordance
with this Agreement, and its determinations will be conclusive and binding upon
the parties thereto for the purposes of any Purchase Price adjustment under
Section 2.5(e) hereof. The Seller, on the one hand, and the Buyer, on the other
hand, shall each be responsible for one-half of the costs and expenses of the
Independent Accounting Firm, and each of the parties shall bear its own legal,
accounting and other fees and expenses of participating in such dispute
resolution procedure.
(e) Final Settlement. As used in this Section 2.5, (i) the Net Cash as of
the Closing Date, as finally determined pursuant to clause (c) or clause (d) of
this Section 2.5, are referred to as the "Actual Net Cash as of the Closing
Date" and (ii) the amount equal to the lesser of the Estimated Net Cash as of
the Closing Date and the Net Cash Target Amount is referred to
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as the "New Net Cash Target Amount." If the Actual Net Cash as of the Closing
Date is less than the New Net Cash Target Amount, then the Seller shall, within
five (5) Business Days of the date of such final determination, pay to the Buyer
the amount of the difference between the Actual Net Cash as of the Closing Date
and the New Net Cash Target Amount, together with interest on the amount of such
difference at the rate of seven percent (7%) per annum from the Closing Date to
the date of payment, such payment to be made by wire transfer of immediately
available funds to such bank account as the Buyer may designate (or in the
absence of any such designation, by corporate check mailed to the Buyer). If the
Actual Net Cash as of the Closing Date is greater than the New Net Cash Target
Amount, then the Buyer shall, within five (5) business days from the date of
such final determination, refund to the Seller the amount, if any, equal to the
lesser of (x) the difference between the New Net Cash Target Amount and the
Actual Net Cash as of the Closing Date and (y) the difference between the New
Net Cash Target Amount and the Net Cash Target Amount (which difference shall be
zero (0) if there was no reduction in the amount to be paid to the Seller at the
Closing pursuant to Section 2.5(a)), together with interest thereon at the rate
of seven percent (7%) per annum from the Closing Date to the date of payment,
such payment to be made by wire transfer of immediately available funds to such
bank account as the Seller may designate (or, in the absence of any such
designation, by corporate check mailed to the Seller).
(f) Character of Payments. Any payments made pursuant to this Section 2.5
shall be treated by both parties as adjustments to the Purchase Price for all
purposes.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller hereby represents and warrants to the Buyer as follows:
SECTION 3.1. Organization. Seller, the Company and each Subsidiary of the
Company is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has all requisite corporate,
liability company, partnership or other equivalent power (as the case may be) to
own its properties and assets and to conduct its business as now conducted. True
and complete copies of the Articles of Incorporation and By-laws (or other
comparable documents) of the Company and its Subsidiaries (collectively, the
"Organizational Documents") have been furnished or made available to the Buyer
or its representatives.
SECTION 3.2. Qualification to Do Business. Except as set forth in Schedule
3.2, each of the Company and its Subsidiaries is duly qualified to do business
as a foreign corporation, limited liability company or partnership, as the case
may be, and is in good standing in every jurisdiction in which the character of
the properties owned or leased by it or the nature of the business conducted by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect (as
defined below). Schedule 3.2 sets forth a complete and correct list of each
jurisdiction in which the Company is qualified as a foreign corporation and, for
each of the Company's Subsidiaries, a complete and correct list of each
jurisdiction in which such Subsidiary is qualified as a foreign corporation. As
used in this Agreement, any reference to any event, change or effect having a
"Material Adverse Effect" means such event, change or effect that, individually
or in the aggregate, is materially adverse to the business, condition (financial
or other) or results of operations of the Company
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and its Subsidiaries, taken as a whole, except in each case for (i) any such
effects directly resulting from this Agreement or the transactions contemplated
by this Agreement or the announcement hereof, (ii) any occurrence or condition
generally affecting the industry in which the Company and its Subsidiaries
operate that do not directly and adversely affect the business, properties,
condition (financial or other) or results of operations of the Company and its
Subsidiaries taken as a whole, and (iii) any changes in general economic,
regulatory or political conditions that do not directly and adversely affect the
business, properties, condition (financial or other) or results of operations of
the Company and its Subsidiaries taken as a whole.
SECTION 3.3. Authority. The Seller has all requisite corporate authority
and power to execute and deliver the Transaction Documents to which it is a
party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of such Transaction Documents and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all required corporate action on the part of the Seller and no
other corporate proceedings on the part of the Seller are necessary to authorize
such Transaction Documents or to consummate the transactions contemplated hereby
and thereby. Such Transaction Documents have been (or, to the extent executed as
of the Closing, will be at the Closing) duly and validly executed and delivered
by the Seller and, assuming such Transaction Documents have been duly
authorized, executed and delivered by the Buyer, such Transaction Documents
constitute (or will constitute as of the Closing) valid and binding agreements
of the Seller, enforceable against the Seller in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally, including the effect of statutory and
other laws regarding fraudulent conveyances and preferential transfers and
subject to the limitations imposed by general equitable principles (regardless
whether such enforceability is considered in a proceeding at law or in equity).
SECTION 3.4. No Conflict or Violation. The execution, delivery and
performance by the Seller of the Transaction Documents to which it is a party,
assuming receipt of the Consents, do not (i) violate any provision of any
Organizational Document, (ii) violate any provision of law, or any order,
judgment or decree of any court or other governmental or regulatory authority
applicable to any of the Seller, the Company or any of the Company's
Subsidiaries, (iii) violate, result in a material breach of or constitute (with
due notice or lapse of time or both) a default under, result in the acceleration
of any performance required by, create a right of acceleration, termination,
modification or other remedy under, any material contract, lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement or
instrument to which any of the Seller, the Company or any of the Company's
Subsidiaries is a party or is bound or to which any of its properties or assets
is subject, or (iv) result in the creation or imposition of any Lien upon any of
the assets, properties or rights of any of the Seller (including the Common
Stock), the Company or any of the Company's Subsidiaries, except in the case of
clauses (ii) or (iv), for such violations, breaches, defaults or Liens that
would not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.5. Consents and Approvals. Schedule 3.5 (which Schedule 3.5 may
be supplemented by the Seller and provided to the Buyer as soon as reasonably
practicable but in no event later than two (2) business days following the date
hereof and which supplement shall be deemed to be an amendment to Schedule 3.5
notwithstanding Section 5.7 below) sets forth a
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true and complete list of each material consent, waiver, authorization or
approval (each a "Consent") of any Governmental Entity, or of any other Person,
that is (i) required in connection with the execution and delivery of the
Transaction Documents by the Seller, (ii) the performance by the Seller of its
obligations hereunder, (iii) the consummation of the transactions contemplated
hereby or (iv) necessary to enable the Company and its Subsidiaries to conduct
their respective businesses after the Closing Date in substantially the same
manner as such businesses are being conducted as of the date hereof.
SECTION 3.6. Capitalization of Company. The authorized capital stock of the
Company consists of 1000 shares of Common Stock, of which only 100 shares are
outstanding. All of the issued shares of Common Stock are duly authorized,
validly issued, fully paid and non-assessable and free of any preemptive rights
in respect thereto. As of the date hereof, the Seller has valid title to all of
the Shares, free and clear of any Liens other than as set forth in Schedule 3.6.
At the Closing, the Seller will have and the Buyer will receive good, valid and
marketable title to the Shares, free and clear of all Liens. There are no
outstanding (a) securities convertible into or exchangeable for the capital
stock of the Company, (b) options, warrants or other rights to purchase or
subscribe for capital stock of the Company or (c) contracts, commitments,
agreements, understandings or arrangements of any kind relating to the issuance
of any capital stock of the Company, any such convertible or exchangeable
securities or any such options, warrants or rights, pursuant to which, in any of
the foregoing cases, the Company is subject or bound. There are no voting
trusts, stockholders' agreements or other similar instruments restricting or
relating to the rights of holders of Common Stock to vote, transfer or receive
dividends with respect to the Common Stock.
SECTION 3.7. Subsidiaries. Schedule 3.7 lists each Subsidiary of the
Company and the authorized and outstanding capital stock of each of the
Subsidiaries. Except for the interests in the Subsidiaries listed on Schedule
3.7, the Company does not directly or indirectly own, or hold any rights to
acquire, any capital stock or any other securities, interests or investments in
any other Person other than equity investments that constitute cash or cash
equivalents. All issued and outstanding shares of capital stock of each of the
Subsidiaries are duly authorized, validly issued, fully paid and non-assessable,
and are owned, directly or indirectly, by the Company, free and clear of all
Liens other than Permitted Liens. There are no outstanding (i) securities
convertible into or exchangeable for the capital stock of the Subsidiaries of
the Company, (ii) options, warrants or other rights to purchase or subscribe for
capital stock of the Subsidiaries of the Company or (iii) contracts,
commitments, agreements, understandings or arrangements of any kind relating to
the issuance of any capital stock of the Subsidiaries, any such convertible or
exchangeable securities or any such options, warrants or rights, pursuant to
which, in any of the foregoing cases, any of the Subsidiaries of the Company is
subject or bound. There are no voting trusts, stockholders' agreements or other
similar instruments restricting or relating to the rights of holders of capital
stock of any Subsidiary of the Company to vote, transfer or receive dividends
with respect to such capital stock. No Subsidiary of the Company has any
ownership interest in any other Person.
SECTION 3.8. Financial Statements. Attached as Schedule 3.8 are the
following:
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(a) the unaudited consolidated balance sheet of the Company, derived from
the audited consolidated balance sheet of the Seller, for the fiscal year ended
March 29, 2002 and the related, consolidated statements of operations and cash
flows of the Company for the year ended March 29, 2002; and
(b) the unaudited consolidated balance sheet of the Company as of September
27, 2002 (the "Interim Balance Sheet"), and the unaudited consolidated
statements of operations, and cash flow for the six month period ended on such
date.
The financial statements described in clauses (a) and (b) of this Section
3.8 are referred to herein collectively as the "Financial Statements." The
Financial Statements have been prepared in accordance with GAAP and present
fairly in all material respects the consolidated financial position and results
of operations of the Company and its Subsidiaries as of the dates indicated
therein and for the periods included therein.
SECTION 3.9. Absence of Certain Changes or Events.
------------------------------------
(a) Since March 29, 2002, there has not been:
(i) any Material Adverse Effect;
(ii) any material loss, damage, destruction or other casualty to the
material assets or properties of the Company or any of its Subsidiaries
(whether or not covered by insurance); provided, however, that, for the
purposes of satisfying the condition set forth in Section 10.1 with respect
to this representation and warranty set forth in this Section 3.9(a)(ii),
if such representation and warranty is rendered untrue as of the Closing
Date by an event occurring after the date hereof, the condition set forth
in Section 10.1 as to such representation and warranty shall be deemed
satisfied if (i) the Company has received an insurance award that fully
compensates the Company, or has received notice from any insurer accepting
coverage to fully compensate the Company, for such loss, damage,
destruction or casualty, (ii) the Seller agrees to amend the provisions of
Section 2.4 so that such insurance award does not increase the Actual Net
Assets as of the Closing Date to an amount greater that the amount of Net
Assets as of the Closing Date that would have been computed had there been
no such loss, damage, destruction or casualty, and (iii) it can be
reasonably anticipated that such loss, damage, destruction or casualty
(taking into account the receipt of any insurance awards) will not
materially and adversely affect the Company's operations or its anticipated
revenues, cash flow or profits following the Closing Date; or
(iii) any change in any method of accounting or accounting practice of
the Company or any of its Subsidiaries.
(b) Since March 29, 2002, each of the Company and its Subsidiaries has
operated in the ordinary course of its business consistent with past practice
and, except as set forth in Schedule 3.9 hereto, has not:
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(i) incurred any obligation or liability (whether absolute, accrued,
contingent or otherwise) except in the ordinary course of business,
consistent with past practice;
(ii) failed to discharge or satisfy any material Lien or pay or
satisfy any material obligation or liability (whether absolute, accrued,
contingent or otherwise), other than liabilities being contested in good
faith and for which adequate reserves have been provided, Liens for Taxes
not yet due and payable and Liens arising in the ordinary course of
business that do not, individually or in the aggregate, interfere in any
material respect with the use or operation of any of its material assets,
properties or rights in the ordinary course of business, consistent with
past practice;
(iii) mortgaged, pledged or subjected to any Lien any of its material
assets, properties or rights, except for mechanics' Liens and Liens for
Taxes not yet due and payable and Liens arising in the ordinary course of
business that do not, individually or in the aggregate, interfere in any
material respect with the use or operation of any of its material assets,
properties or rights in the ordinary course of business, consistent with
past practice;
(iv) sold or transferred any of its material assets or canceled any
material debts or claims or waived any material rights, except in the
ordinary course of business, consistent with past practice;
(v) defaulted on any material obligation;
(vi) made any capital expenditure that is in excess of $100,000, or
additions to property, plant and equipment used in its operations other
than ordinary repairs and maintenance;
(vii) terminated or rescinded any material Contract;
(viii) made any material tax election or settled or compromised any
material income tax liability;
(ix) acquired any material assets or properties, other than in the
ordinary course of business consistent with past practice;
(x) increased the salary or other compensation or paid or agreed to
pay any bonus compensation payable to any officer, director or employee of
the Company other than time, grade or other increases and payments in the
ordinary course of business and consistent with past practice, or agreed to
pay any severance payment or golden parachute to any director or employee
of the Company; or
(xi) entered into any agreement or made any commitment to do any of
the foregoing.
SECTION 3.10. Absence of Undisclosed Liabilities. Except as set forth in
Schedule 3.10, the Company and its Subsidiaries do not have any material
indebtedness or
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liability other than (i) as shown or provided for on the Interim Balance Sheet
and (ii) other than liabilities incurred or accrued in the ordinary course of
business consistent with past practice since the date of the Interim Balance
Sheet.
SECTION 3.11. Tax Matters. Except as disclosed in Schedule 3.11, (i) the
Company and its Subsidiaries have filed, or joined in the filing of, when due
(taking into account all applicable extensions) all Tax Returns required by
applicable law to be filed with respect to the Company and each of its
Subsidiaries, all such Tax Returns are correct and complete and all Taxes shown
to be due on such Tax Returns have been paid; (ii) all Taxes relating to periods
ending on or before the Closing Date owed by the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries are liable under
Treasury Regulations ss. 1.1502-6 by virtue of having been a member of any
affiliated group of corporations (within the meaning of Section 1504(a) of the
Code) of which the Seller is the common parent, if required to have been paid,
have been paid; (iii) there is no action, suit, proceeding, investigation, audit
or claim now pending or, to the best knowledge of the Seller, threatened,
against the Company or any of its Subsidiaries for Taxes of the Company or any
of its Subsidiaries; (iv) any liability of the Company or any of its
Subsidiaries for Taxes that are not yet due and payable, or which are being
contested in good faith, have been provided for on the Financial Statements of
the Company and its Subsidiaries in accordance with GAAP; (v) there are no
Liens, other than Permitted Liens, affecting any of the assets, properties or
rights of the Company or any of its Subsidiaries that arose in connection with
any failure or alleged failure to pay any Tax; (vi) the Company and each of its
Subsidiaries has withheld and paid all Taxes required to be withheld in
connection with any amounts paid or owing to any employee, creditor, independent
contractor or other Person; (vii) there has been no waiver or extension of any
applicable statute of limitations for the assessment or collection of any Taxes
of the Company or any of its Subsidiaries; (viii) neither the Company nor any of
its Subsidiaries is a party to any agreement, contract, arrangement or plan that
has resulted or could result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code
or any similar provision of foreign, state or local law; and (ix) neither the
Company nor any of its Subsidiaries is a party to any joint venture,
partnership, or other arrangement or contract which would be treated as a
partnership for federal income tax purposes.
SECTION 3.12. Real Property.
-------------
(a) Schedule 3.12(a) sets forth all of the real property owned by the
Company or any of its Subsidiaries (the "Owned Real Property"). The Company and
its Subsidiaries have good and valid title to all of the Owned Real Property,
and such properties are owned free and clear of all Liens (other than Permitted
Liens).
(b) Schedule 3.12(b) sets forth a list of all leases and subleases,
together with all amendments thereto, with respect to all real properties in
which either of the Company or one of its Subsidiaries has a leasehold interest,
whether as lessor or lessee (each a "Lease" and, collectively, the "Leases"; the
real property covered by the Leases under which either of the Company or its
Subsidiaries is a lessee is referred to herein as the "Leased Real Property").
No option has been exercised under any Lease by the Company or its Subsidiaries
or, to the Seller's knowledge, by any other party thereto, except options whose
exercise has been evidenced by a
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written document, a true, complete and accurate copy of which has been delivered
to the Buyer with the corresponding Lease. All of the Leases are valid and in
full force and effect.
(c) No party to any Lease has given the Seller, the Company or its
Subsidiaries written notice of or made a written claim with respect to any
breach or default of such Lease by either of the Company or its Subsidiaries.
(d) Except as set forth on Schedule 3.12(d), neither the Company nor any
Subsidiary occupies or otherwise uses any real property.
(e) None of the Leased Real Property or the Owned Real Property is subject
to any sublease, license or other agreement granting to any Person or entity any
right to the use, occupancy or enjoyment of such property or any portion
thereof.
(f) As soon as reasonably practicable after the date hereof, and in any
event no later than November 1, 2002, the Seller shall deliver to the Buyer a
Schedule (which shall be attached hereto as Schedule 3.12(f) and shall have the
same force and effect as if attached hereto as of the date hereof) setting forth
a true and correct list of all Leased Real Property and all real property
occupied or used by the Company and its Subsidiaries which (i) have been vacated
by the Company or a Subsidiary of the Company (the "Vacated Premises") or (ii)
are being Decommissioned or are planned to be Decommissioned (the
"Decommissioned Premises"). The Seller shall update Schedule 3.12(f) through the
Closing Date to add any additional properties that become Vacated Premises or
Decommissioned Premises and such updates to Schedule 3.12(f) shall be deemed an
amendment of Schedule 3.12(f) notwithstanding Section 5.7.
SECTION 3.13. Personal Property.
-----------------
(a) True and correct copies of all leases for personal property (except
miscellaneous leases of office machinery, medical equipment, or any leases
having future minimum lease payments of less than $15,000 in any twelve-month
period and which in the aggregate equal less than $1,000,000 during such
twelve-month period) used or employed by the Company or any of its Subsidiaries
are listed on Schedule 3.13 and copies thereof have been provided or made
available to the Buyer. Each material lease for personal property used or
employed by the Company or any of its Subsidiaries (each a "Personal Property
Lease") is in full force and effect on the date hereof, except as the validity
of such leases may be affected by actions, events or conditions affecting the
other party thereto, none of which actions, events or conditions exists or has
occurred to the knowledge of the Company. No default under any of the terms or
conditions set forth in any Personal Property Lease or any document or
instrument related thereto has been asserted or, to the knowledge of the
Company, occurred by any party. Except as disclosed on Schedule 3.13, the
continuation, validity and effectiveness of each Personal Property Lease will
not be affected in any way by the transactions contemplated by this Agreement.
Except as disclosed on Schedule 3.13, neither the Company nor any of its
Subsidiaries lease any personal property as lessor. For purposes of Section 8.2,
the word "material" in the second sentence of this subsection shall be
disregarded.
(b) All material items of personal property and leasehold improvements used
in the business of the Company are owned or leased by the Company or any of its
Subsidiaries
-18-
and are shown on or reflected in the Interim Balance Sheet contained in the
Financial Statements, are in satisfactory operating condition and in a state of
reasonable maintenance and repair, consistent with the uses to which they are
being put.
SECTION 3.14. Assets of the Company.
---------------------
(a) Except as set forth in Schedule 3.14, the assets, properties and rights
of the Company and its Subsidiaries constitute all of the assets and rights
which are necessary or required for the conduct of their businesses as currently
conducted.
(b) Each of the Company and its Subsidiaries has good and valid title, free
and clear of any Liens (other than Permitted Liens), to, or a valid leasehold
interest in, or other right to use, all of its material assets, properties and
rights.
SECTION 3.15. Intellectual Property.
---------------------
(a) Except as set forth in Schedule 3.15(a), the Company and its
Subsidiaries own all right, title and interest in and to, or have a valid
license to use all the Intellectual Property necessary for the conduct of their
respective businesses as currently conducted (the "Company Intellectual
Property"), and upon Closing the Company and its Subsidiaries will continue to
own all right, title and interest in and to, or have a valid license or right to
use, the Company Intellectual Property.
(b) Except as set forth in Schedule 3.15(b), (i) there are no bona fide
claims that (x) the Company or any of its Subsidiaries does not own or have the
right to use any Company Intellectual Property or (y) the use of any Company
Intellectual Property by the Company or any of its Subsidiaries infringes upon
the intellectual property rights of a third party, and (ii) to the knowledge of
the Seller, (x) there is no valid basis for any such claim and (y) the use of
the Company Intellectual Property by the Company and its Subsidiaries as
currently used does not, and the use of the Company Intellectual Property by the
Buyer after the Closing in the same manner will not, infringe upon the
intellectual property rights of any person under any laws and (iii) neither the
Company nor any of its Subsidiaries is in material default, and to the Seller's
knowledge, no third party is in material default under, any license, sublicense
or agreement by which the Company or any of its Subsidiaries holds or has given
to others the right to use any Company Intellectual Property.
(c) To the knowledge of the Seller, no third party is infringing any
Company Intellectual Property.
(d) Schedule 3.15(d), sets forth a complete and current list of all
registrations, patents, and applications pertaining to Company Intellectual
Property owned by the Company and its Subsidiaries ("Listed Intellectual
Property"). Except as set forth in Schedule 3.15(d), all Listed Intellectual
Property is owned by the Company and its Subsidiaries free and clear of all
Liens (other than Permitted Liens). To the knowledge of the Seller, the Company
and each Subsidiary of the Company have taken commercially reasonable steps to
protect the trade secrets and other confidential information of the Company and
its Subsidiaries.
SECTION 3.16. Licenses and Permits.
--------------------
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(a) Schedule 3.16(a) (which Schedule 3.16(a) may be supplemented by the
Seller and provided to the Buyer as soon as reasonably practicable but in no
event later than the close of business November 1, 2002 and which supplement
shall be deemed to be an amendment to Schedule 3.16(a) notwithstanding Section
5.7 below) sets forth a true and complete list of all material licenses,
permits, franchises, authorizations and approvals issued or granted to the
Company or any of its Subsidiaries by any Governmental Entity (the "Licenses and
Permits"), and all pending applications therefor. Each License and Permit is
valid and in full force and effect, and is not subject to any pending or, to
Seller's knowledge, threatened administrative or judicial proceeding to revoke,
cancel, suspend or declare such License and Permit invalid in any material
respect.
(b) Except as set forth in Schedule 3.16(b), the Company and its
Subsidiaries hold all licenses, permits, franchises, authorizations and
approvals that are material to the business of the Company and its Subsidiaries,
and, to Seller's knowledge, the Company and its Subsidiaries are in compliance
in all material respects with the terms and conditions thereof.
(c) Except as set forth in Schedule 3.16(c) (which Schedule 3.16(c) may be
supplemented by Seller and provided to Buyer as soon as reasonably practicable
but in no event later than November 1, 2002 and which supplement shall be deemed
to be an amendment to Schedule 3.16(c) notwithstanding Section 5.7 below), the
consummation of the transactions contemplated by this Agreement will not result
in the termination or suspension of any License or Permit. The Seller has
delivered or otherwise made available to the Buyer copies of all Licenses and
Permits.
SECTION 3.17. Compliance with Law. Except as set forth in Schedule 3.17,
the operations of the businesses of each of the Company and its Subsidiaries is
conducted in material compliance with all applicable laws, regulations and
orders of all Governmental Entities having jurisdiction over such entity and its
assets, properties and operations, except where the failure to so be in
compliance could not be reasonably expected to, individually or in the
aggregate, result in a material liability to the Company or any Subsidiary of
the Company. Except as set forth in Schedule 3.17, neither the Company nor its
Subsidiaries has received written notice or, to the Seller's knowledge, has
otherwise been advised of any material violation of any such law, regulation or
order that could give rise to an obligation or liability of the Company or any
of its Subsidiaries or that has not been resolved in all respects as of the date
hereof, and neither the Company nor its Subsidiaries is in default in any
material respect with respect to any order, writ, judgment, award, injunction or
decree of any Governmental Entity or arbitrator, material to the operations of
its business.
SECTION 3.18. Litigation. Except as set forth in Schedule 3.18, there are
no claims, actions, suits or proceedings (each, an "Action") pending or, to the
knowledge of the Seller, threatened before any Governmental Entity or before any
arbitrator of any nature, brought by or against any of the Seller, any Affiliate
of the Seller, the Company or any Subsidiary of the Company or any of their
respective employees, involving or relating to the Company
-20-
or its Subsidiaries, the assets, properties or rights of any of the Company or
its Subsidiaries or the transactions contemplated by this Agreement. Except as
set forth in Schedule 3.18, to the knowledge of the Seller, there are no
investigations pending or threatened before any Governmental Entity or before
any arbitrator of any nature involving or relating to the Company or its
Subsidiaries, the assets, properties or rights of any of the Company or its
Subsidiaries or the transactions contemplated by this Agreement. There is no
order, writ, judgment, award, injunction or decree of any Governmental Entity or
arbitrator binding on the Seller, any Affiliate of the Seller, the Company or
any Subsidiary of the Company or any of their respective assets, properties or
rights, that is material to the conduct of the businesses of, or the assets,
properties or rights of, the Company or any of its Subsidiaries, or that would
materially impair the Seller's ability to consummate the transactions
contemplated by this Agreement.
SECTION 3.19. Contracts.
---------
(a) Schedule 3.19 sets forth a complete and correct list of all Contracts
(as defined below) except that for purposes of Schedule 3.19 and Section 10.1:
(i) Subsection (c)(vii) shall be read to include "that (A) is not
terminable by the Company or any of its Subsidiaries on not more than
ninety (90) days' notice by the Company or (B) involves the payment (net of
any rebates or vendor incentive programs) by the Company or any of its
Subsidiaries (or any combination of such payments) of amounts in excess of
$2,000,000 during any twelve (12) month period" at the end thereof; and
(ii) Subsection (c)(viii) shall be read to include ", with group
purchasing organizations" at the end thereof.
(b) Except as set forth on Schedule 3.19, each Contract is valid, binding
and enforceable against each of the Company or its Subsidiaries which is a party
thereto in accordance with its terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws, now or hereafter in effect, relating to or limiting
creditors' rights generally, and (ii) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity).
Each of the Contracts is in full force and effect. Except as set forth on
Schedule 3.19, each of the Company or its Subsidiaries has performed in all
material respects all obligations required to be performed by it to date under,
and is not in material default under any Contract which it is a party to, and,
to Seller's knowledge, no event has occurred which, with due notice or lapse of
time or both, would constitute such a default. To the Seller's knowledge, no
other party to any Contract is in material default in respect thereof, and no
event has occurred which, with due notice or lapse of time or both, would
constitute such a default. The Seller has delivered or otherwise made available
to the Buyer or its representatives true and complete copies of all written
Contracts.
(c) A "Contract" means any agreement, contract or commitment to which the
Company or any of its Subsidiaries is a party or by which it or any of its
assets are bound constituting:
(i) a mortgage, indenture, security agreement, guaranty, pledge or
other agreement or instrument relating to the borrowing of money or
extension of credit;
(ii) an employment, severance or consulting agreement, excluding
representation agreements entered into in the ordinary course of business;
-21-
(iii) a joint venture, partnership or limited liability company
agreement;
(iv) a non-competition agreement or any other agreement or obligation
which purports to limit in any material respect the manner in which, or the
localities in which, the business of the Company or its Subsidiaries may be
conducted;
(v) a Lease;
(vi) an agreement limiting or restricting the ability of the Company
or its Subsidiaries to make distributions in respect of its capital stock;
(vii) a distributor, reseller, sales or vendor or similar agreement;
(viii) an agreement which (A) provides for the performance of services
by the Company or any of its Subsidiaries for its customers or (B) the sale
of products by the Company or any of its Subsidiaries,
(ix) an agreement to make a capital expenditure (as defined in GAAP
and which in no event shall include investments purchased in the ordinary
course of business) in excess of $100,000;
(x) a material license pertaining to Company Intellectual Property;
(xi) any capitalized leases; or
(xii) any other material agreement not in the ordinary course of the
business of the Company or its Subsidiaries.
SECTION 3.20. Employee Plans.
--------------
(a) Schedule 3.20(a) sets forth (i) all "employee benefit plans", as
defined in Section 3(3) of ERISA, and all other material employee benefit
arrangements, programs, policies or payroll practices (other than stock
purchase, stock option, phantom stock or other equity based compensation plans),
including, without limitation, severance pay, sick leave, vacation pay, salary
continuation for disability, retirement, deferred compensation, bonus,
hospitalization, medical insurance, cafeteria, life insurance, tuition
reimbursement and scholarship programs maintained by the Seller, the Company or
any Subsidiary of the Company and to which contributions are made by the Seller,
the Company or a Subsidiary of the Company on behalf of current or former
employees of the Company or its Subsidiaries (such employees are collectively
referred to as "Company Employees") (such plans, arrangements, programs,
policies and payroll practices collectively, the "Benefit Plans") and (ii) all
employee pension plans, as defined in Section 3(2) of ERISA, maintained by the
Seller, the Company, the Subsidiaries of the Company or any trade or business
(whether or not incorporated) which is or has ever been under control or treated
as a single employer with the Seller or the Company under Section 414(b), (c),
(m) or (o) of the Code ("ERISA Affiliate") or to which the Seller, the Company
or any ERISA Affiliate has contributed (the "Pension Plans").
-22-
(b) None of the Benefit Plans or Pension Plans is a "multiemployer plan",
as defined in Section 3(37) of ERISA ("Multiemployer Plan"). None of the
Company, its Subsidiaries or any ERISA Affiliate has incurred any liability due
to a complete or partial withdrawal from a Multiemployer Plan or due to the
termination or reorganization of a Multiemployer Plan, except for any such
liability which has been satisfied in full, and no events have occurred and no
circumstances exist that could reasonably be expected to result in any such
liability to the Company, its Subsidiaries or any ERISA Affiliate.
(c) None of the Benefit Plans or Pension Plans is subject to Title IV of
ERISA and none of the Company, its Subsidiaries or any ERISA Affiliate has any
liability with respect to any plan subject to Title IV of ERISA.
(d) With respect to each Benefit Plan that is intended to qualify under
Code Section 401(a), such Benefit Plan, and its related trust, has received, has
an application pending or remains within the remedial amendment period for
obtaining, a determination letter from the IRS that it is so qualified and that
its trust is exempt from tax under Section 501(a) of the Code and, to the
Seller's knowledge, no facts or set of circumstances exist that could reasonably
be expected to cause such plan and related trust to be disqualified or to be so
non-exempt from tax.
(e) All costs of administering and contributions with respect to the
Company Employees (including all employer contributions and employee
contributions) required to have been made under the Benefit Plans or by law to
any funds or trusts established thereunder or in connection therewith have been
made by the due date thereof (including any valid extension). All other amounts
that should be accrued to date as material liabilities of the Company or the
Subsidiary under or with respect to each Benefit Plan (including administrative
expenses and incurred but not reported claims) for the current plan year of each
Benefit Plan have been recorded on the books of the Company or a Subsidiary.
(f) There has been no violation of ERISA or the Code with respect to the
filing of applicable documents, notices or reports (including, but not limited
to, annual reports filed on IRS Form 5500) regarding the Benefit Plans with the
Department of Labor and the Internal Revenue Service, or the furnishing of such
required documents to the participants or beneficiaries of the Benefit Plans
that would result in a material liability to the Company or any Subsidiary of
the Company.
(g) True, correct and complete copies of the following documents relating
to each of the Benefit Plans, to the extent applicable, have been delivered or
made available to the Buyer: (i) the plan and its related trust document,
including any amendments thereto; (ii) the most recent IRS Forms 5500 filed with
the Internal Revenue Service; (iii) summary plan descriptions; (iv) the most
recent actuarial report relating to the plans; and (v) the most recent Internal
Revenue Service determination letter (or other ruling indicating its
tax-qualified status), if any, for each Benefit Plan that is intended to qualify
for favorable income tax treatment under Section 401(a) or Section 501(c)(9) of
the Code.
(h) There are no pending material actions, claims or lawsuits which have
been asserted, instituted or, to the knowledge of the Seller, threatened,
against the Benefit Plans, the assets of any of the trusts under the Benefit
Plans or the sponsor or the administrator of the
-23-
Benefit Plans, or, to the Seller's knowledge, against any fiduciary of the
Benefit Plans with respect to the operation of the Benefit Plans (other than
routine benefit claims).
(i) The Benefit Plans have been administered and maintained, in all
material respects, in accordance with their express terms and with all
provisions of ERISA, the Code (including rules and regulations thereunder) and
other applicable federal and state laws and regulations, and neither the
Company, any Subsidiary of the Company nor, to the knowledge of the Seller, any
"party in interest" or "disqualified person" with respect to the Benefit Plans
has engaged in a "prohibited transaction", as defined in Section 4975 of the
Code or Section 406 of ERISA, or taken any actions, or failed to take any
actions, which could result in any material liability to the Company or any of
its Subsidiaries under ERISA or the Code.
(j) The Company and each ERISA Affiliate that maintains a "group health
plan", as defined in Section 4980B of the Code, has complied in all material
respects with the notice and coverage continuation requirements of Section 4980B
of the Code and Section 601 of ERISA, and the regulations thereunder ("COBRA").
None of the Benefit Plans provide health or life insurance benefits after
termination of employment to any employee or dependent except as may be required
by COBRA (or any applicable state law) or at the expense of the participant or
the participant's beneficiary.
(k) There will be no material liability of the Company or any Subsidiary of
the Company (i) with respect to any Benefit Plan that has previously been
terminated or (ii) under any insurance policy or similar arrangement procured in
connection with any Benefit Plan in the nature of a retroactive rate adjustment,
loss sharing arrangement, or other liability arising wholly or partially out of
events occurring before the Closing.
(l) None of the persons performing services for the Company or any
Subsidiary of the Company has been improperly classified prior to the Closing
Date as being independent contractors or leased employees rather than employees,
except to the extent that such misclassification will not result in a material
liability of the Company or any Subsidiary of the Company.
(m) None of the Benefit Plans provides any benefits that become payable to
or become vested in any Company Employee solely as a result of the consummation
of the transactions contemplated by this Agreement (other than benefits payable
because an employee terminates employment covered by the Benefit Plan) with
respect to which the Company or any Subsidiary of the Company will have any
liability, and the consummation of the transactions contemplated hereby will not
require the funding (whether formal or informal) of any Benefit Plan with
respect to which the Company or any Subsidiary of the Company will have any
liability.
SECTION 3.21. Insurance. Schedule 3.21 lists all policies of liability,
fire, casualty, business interruption, workers' compensation and other forms of
insurance insuring the Company and its Subsidiaries and their respective assets,
properties and operations (indicating for each such policy (i) the type of
policy, (ii) the name of the insurer, (iii) the owner of the policy, (iv) the
coverage limits, (v) whether such policy is a "claims made" or "occurrence"
based policy, and (vi) the applicable deductibles). All such policies are in
full force and effect.
-24-
Neither the Seller, the Company nor any Subsidiary of the Company has received
notice of cancellation or adverse modification of any such insurance. Neither
the Seller, the Company nor any Subsidiary of the Company is in material default
under any provisions of any such policy of insurance. All insurance policies and
programs (including self insurance programs) insuring the Company and its
Subsidiaries and their respective assets, properties, employees and operations
that are owned by the Seller or an Affiliate of the Seller other than the
Company or one of the Company's Subsidiaries are referred to herein as "Seller's
Insurance."
SECTION 3.22. Transactions with Seller and Affiliates. Except as set forth
in Schedule 3.22, neither the Company nor any of its Subsidiaries is a party to
any agreements or arrangements with the Seller or any Affiliate of the Seller,
including, but not limited to any agreement or arrangement under which the
Company or a Subsidiary of the Company: (i) leases any real or personal property
(either to or from such Person); (ii) licenses technology (either to or from
such Person); (iii) is obligated to purchase any tangible or intangible asset
from or sell such asset to such Person; (iv) purchases products or services from
such Person; or (v) pays or receives commissions, rebates or other payments.
SECTION 3.23. Labor Matters.
-------------
(a) Schedule 3.23(a) sets forth a complete and accurate list of (i) the
general title and current compensation levels of all salaried employees of the
Company or any of its Subsidiaries and of any of Seller's salaried employees
that perform services in whole or in part for the Company or any of its
Subsidiaries, and indicates in each case the entity by which such individual is
employed, and (ii) any employment agreement (not terminable at will), severance,
bonus or similar agreement not set forth in Schedule 3.20(a), to which the
Company or any Subsidiary of the Company and any employee is a party. True and
complete copies of such agreements have been furnished to the Buyer.
(b) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to its
employees. To the knowledge of the Seller, no executive, key employee of the
Company or its Subsidiaries or significant group of employees of the Company or
its Subsidiaries plans to terminate employment with the Company or a Subsidiary
of the Company. The Company and its Subsidiaries are in compliance in all
material respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours pertaining to
the employees of the Company and its Subsidiaries, and neither the Company nor
its Subsidiaries are engaged in any unfair labor practice within the meaning of
Section 8 of the National Labor Relations Act. There is no unfair labor
practice, charge or complaint or any other matter against or involving the
Company or its Subsidiaries pending or, to the knowledge of the Seller,
threatened before the National Labor Relations Board or any court or other
governmental agency. There is no labor strike, dispute, slowdown or stoppage
pending or, to the knowledge of the Seller, threatened against the Company or
any Subsidiary of the Company. To the best of the Seller's knowledge, no
certification question or organizational drive exists or has existed within the
past two (2) years with respect to the unionizing of the employees of the
Company or any of its Subsidiaries. Except as set forth in Schedule 3.23(b),
there are no charges, investigations, administrative proceedings or formal
complaints of employment discrimination (including discrimination based upon
sex, age, marital status, race, national
-25-
origin, sexual preference, handicap or veteran status) pending or, to the
knowledge of the Seller, threatened before the Equal Employment Opportunity
Commission or any federal, state or local agency or court against the Company or
any Subsidiary of the Company pertaining to any employee of the Company or any
of its Subsidiaries. The Seller is not aware of any basis for any such charge,
investigation, administrative proceeding or complaint.
SECTION 3.24. Environmental Matters. Except as set forth on Schedule 3.24,
without limiting the generality of Section 3.17: (i) the Company and its
Subsidiaries have conducted their respective businesses, and each of the Company
and its Subsidiaries is, in material compliance with all, and neither the
Company nor its Subsidiaries have any material liability under, any, applicable
Environmental Laws; (ii) neither the Company nor any Subsidiary of the Company
has received written notice alleging in any manner that the Company or any
Subsidiary of the Company is responsible for any material Release of Hazardous
Materials or any material costs or liabilities arising under or material
violation of Environmental Laws; (iii) no material Release has occurred at any
Seller Owned Real Property, Company Owned Real Property or any Leased Real
Property related to or affecting the businesses of the Company or its
Subsidiaries; (iv) the Seller has made available to the Buyer, copies of all
material current environmental audits or other studies or reports in its
possession relating to any environmental conditions with respect to any Company
Owned Real Property, Leased Real Property or the businesses of the Company or
its Subsidiaries; and (v) the Company and its Subsidiaries have obtained all
necessary Licenses and Permits and approvals and have maintained and filed all
material records required by, all applicable Environmental Laws and the Company
and its Subsidiaries have conducted their respective businesses (including, but
not limited to, air emissions, waste water discharges, and waste generation,
storage and disposal) in compliance in all material respects with, all such
Licenses and Permits and approvals and all applicable Environmental Laws. For
the purposes of Section 8.2, (i) the word "material" as used throughout this
Section 3.24, and (ii) Schedule 3.24, shall be disregarded.
SECTION 3.25. Customers and Suppliers. Except as set forth in Schedule
3.25, there are no outstanding material disputes with any Material Customer or
Material Supplier, and no Material Customer or Material Supplier has provided
notice that it intends to cancel or materially modify its relationship with the
Company or any of its Subsidiaries.
SECTION 3.26. Prior Acquisitions. Except as set forth on Schedule 3.26,
neither Seller, the Company nor any Subsidiary of the Company is obligated to
make any payment or perform any service under any acquisition agreement pursuant
to which the Company or any of its Subsidiaries acquired any other Person or
business (whether by stock purchase, merger or asset purchase), and neither
Seller, the Company nor any Subsidiary of the Company has any liability or
obligation to any third party relating pursuant to any such acquisitions.
SECTION 3.27. Accounts Receivable; Inventory. The accounts receivable of
the Company and its Subsidiaries arose from the provision of services or the
sale of goods in the ordinary course of business and are not subject to any
counterclaim or set-off. All inventory of the Company and its Subsidiaries is of
a quality and quantity usable in the ordinary course of business, except for
obsolete items, damaged items and materials at below standard quality, all of
which have been written off or written down to net realizable value on the
Interim Balance Sheet.
-26-
SECTION 3.28. Bank Accounts, Letters of Credit and Powers of Attorney.
Schedule 3.28 sets forth a complete and accurate list of (i) all bank accounts,
lock boxes and safe deposit boxes relating to the business and operations of the
Company and its Subsidiaries (including the name of the bank or other
institution where such account or box is located and the name of each authorized
signatory thereto), (ii) all outstanding letters of credit issued by financial
institutions for the account of the Company and its Subsidiaries (setting forth,
in each case, the financial institution issuing such letter of credit, the
maximum amount available under such letter of credit, the terms (including the
expiration date) of such letter of credit and the party or parties in whose
favor such letter of credit was issued), and (iii) the name and address of each
person who has a power of attorney to act on behalf of the Company or any of its
Subsidiaries. The Seller has delivered or otherwise made available to the Buyer
true and complete copies of all such letters of credit and powers of attorney.
SECTION 3.29. Certain Payments. None of the Seller, the Company and the
Subsidiaries of the Company have, nor to Seller's knowledge, has any other
person or entity, directly or indirectly, on behalf of or with respect to the
Company or its Subsidiaries or their respective businesses (i) made or received
any payment which was not legal to make or receive, including without
limitation, payments prohibited under applicable federal and state "fraud and
abuse" or anti-kickback statutes, (ii) made an illegal political contribution or
(iii) engaged in any conduct constituting a violation of the Foreign Corrupt
Practices Act of 1977.
SECTION 3.30. Books and Records. The Company and its Subsidiaries have made
and kept the books and records of account related to their respective businesses
in reasonable detail, and such books and records of account accurately and
fairly reflect the activities and transactions of the Company's and its
Subsidiaries' respective businesses.
SECTION 3.31. No Brokers. Other than Xxxxxxx Xxxxx & Company, no broker,
finder or similar intermediary has acted for or on behalf of, or is entitled to
any broker's, finder's or similar fee or other commission from the Seller or the
Company in connection with this Agreement or the transactions contemplated
hereby. Neither the Seller nor the Company has taken any action that would give
rise to a claim by any broker, finder or similar intermediary against the Buyer
for any broker's, finder's or similar fee or other commission in connection with
this Agreement or the transactions contemplated hereby.
SECTION 3.32. SEC Reports. All disclosures made by the Seller with respect
to the businesses of the Company and its Subsidiaries in any forms, reports,
schedules, statements and other documents required to be filed by the Seller
with the United States Securities and Exchange Commission at the time filed, did
not contain any untrue statement of a material fact.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
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The Buyer hereby represents and warrants to the Seller as follows:
SECTION 4.1. Corporate Organization. The Buyer is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate, company or other equivalent power
(as the case may be) to own its properties
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and assets and to conduct its business as now conducted, and has all requisite
power and authority to own its properties and assets and to conduct its
businesses as now conducted.
SECTION 4.2. Authorization. The Buyer has all requisite corporate power and
authority to enter into the Transaction Documents and to carry out its
obligations hereunder and thereunder. The execution and delivery of the
Transaction Documents and the performance of the Buyer's obligations hereunder
and thereunder have been duly authorized by all necessary corporate action by
the governing body of the Buyer, and no other proceedings on the part of the
Buyer are necessary to authorize such execution, delivery and performance. The
Transaction Documents have been duly executed by the Buyer, and, assuming such
Transaction Documents have been duly authorized, executed and delivered by the
other persons party thereto, constitute the Buyer's valid and binding
obligations, enforceable against the Buyer in accordance with their terms,
except that such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or hereafter
in effect, relating to or limiting creditors' rights generally, and (ii) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
SECTION 4.3. No Conflict or Violation. The execution, delivery and
performance by the Buyer of the Transaction Documents do not (i) violate any
provision of the Certificate of Incorporation, By-laws or any other
organizational document of the Buyer, (ii) violate any provision of law, or any
order, judgment or decree of any court or other governmental or regulatory
authority, or (iii) violate nor result in a breach of or constitute (with due
notice or lapse of time or both) a default under any material contract, lease,
loan agreement, mortgage, security agreement, trust indenture or other agreement
or instrument to which the Buyer is a party or by which it is bound or to which
any of its properties or assets is subject, except in the cases of clause (ii)
for violations, breaches or defaults that would not, individually or in the
aggregate, have a material adverse affect on the ability of the Buyer to
consummate the transaction contemplated hereby.
SECTION 4.4. Consents and Approvals. The execution, delivery and
performance of the Transaction Documents on behalf of the Buyer do not require
the consent or approval of, or filing with, any Governmental Entity or Person,
except for such consents, approvals and filings, of which the failure to obtain
or make would not, individually or in the aggregate, have a material adverse
effect on the ability of the Buyer to consummate the transactions contemplated
hereby.
SECTION 4.5. Sufficient Funds. As of the Closing, the Buyer will have
sufficient funds available to consummate the transactions contemplated hereby on
the terms set forth in this Agreement.
SECTION 4.6. No Brokers. The Buyer has not taken any action that would give
rise to a claim by any broker, finder or similar intermediary against the Seller
for any broker's, finder's or similar fee or other commission in connection with
this Agreement or the transactions contemplated hereby.
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SECTION 5. COVENANTS OF THE SELLER.
-----------------------
The Seller covenants as follows:
SECTION 5.1. Conduct of Business Before the Closing Date.
-------------------------------------------
(a) Without the prior written consent of the Buyer (which shall not be
unreasonably withheld), between the date hereof and the Closing Date, the Seller
shall not permit the Company nor its Subsidiaries to, except as set forth in
Schedule 5.1 or as otherwise required or expressly permitted pursuant to the
terms hereof:
(i) make any material change in the conduct of its businesses or enter
into any material transaction other than in the ordinary course of business
consistent with past practices;
(ii) make any change in any Organizational Document, issue any
additional equity securities or grant any option, warrant or right to
acquire any equity securities or issue any security convertible into or
exchangeable for such securities;
(iii) make any sale, assignment, transfer or other conveyance of its
material assets, properties or rights, other than in the ordinary course of
business, consistent with past practice, except transactions pursuant to
the existing contracts;
(iv) extend the term of or arrange for a replacement lease for any
Real Property Lease;
(v) subject any of its assets, properties or rights or any part
thereof, to any Lien, other than Permitted Liens;
(vi) redeem, retire, purchase or otherwise acquire, directly or
indirectly, equity interests of the Company or declare, set aside or pay
any non-cash dividends or other non-cash distributions in respect of such
interests;
(vii) acquire any material assets or properties, other than in the
ordinary course of business consistent with past practice;
(viii) enter into any new (or amend any existing) employee benefit
plan, program or arrangement or any new (or amend any existing) employment,
severance or consulting agreement, grant any general increase in the
compensation of officers or employees (including any such increase pursuant
to any bonus, pension, profit-sharing or other plan or commitment) or grant
any increase in the compensation payable or to become payable to any
employee, except as required by law, in accordance with pre-existing
contractual provisions or consistent with past practice;
(ix) make or commit to make any capital expenditure that is in excess
of $100,000;
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(x) pay, lend or advance any amount to, or sell, transfer or lease any
properties or assets to, or enter into any agreement or arrangement with,
any of its Affiliates, other than (x) the payment of salary, bonus and
fringe benefits to the directors, officers and employees of the Company or
of its Subsidiaries pursuant to existing arrangements, (y) cash dividends
or other distributions with respect to the Shares or (z) as contemplated by
this Agreement or as disclosed in Schedule 3.22;
(xi) take any other action that would result in a material breach of
any of the representations and warranties made by the Seller in this
Agreement;
(xii) make any change in any method of accounting or accounting
principle, method, estimate or practice except for any such change required
by reason of a concurrent change in GAAP;
(xiii) settle, release or forgive any material claim or litigation or
waive any right thereto; or
(xiv) commit to do any of the foregoing.
In the event that the Company or any of its Subsidiaries desires to take
any of the actions set forth in clauses (i) through (xiii) of this Section
5.1(a) requiring the consent of the Buyer, the Seller shall provide prior
written notice to the Buyer, which notice shall specify in reasonable detail the
desired action. The Buyer shall respond to any such request from the Seller
promptly following receipt of such written notice, and shall be deemed to have
consented to the action requested by the Seller in the event that the Buyer has
not responded to the Seller within five (5) Business Days after such written
notice is received by the Buyer.
(b) From and after the date hereof and through the Closing Date, the Seller
shall use its commercially reasonable efforts to cause each of the Company and
the Company's Subsidiaries to:
(i) continue to maintain, in all material respects, its assets,
properties, rights and operations in accordance with present practice in a
condition suitable for their current use;
(ii) keep available the services of its employees consistent with past
practice; and
(iii) continue to conduct its business in the ordinary course
consistent with past practice.
SECTION 5.2. Company Intellectual Property and Other Assets Necessary to
the Business of the Company or a Subsidiary but Owned, Licensed or Leased by the
Seller.
(a) Certain Seller Software Licenses and Assets to Be Assigned. At Closing,
the Seller shall assign to the Company or any Subsidiary designated by the
Company (i) the Seller's rights in the software license set forth in Schedule
5.2(a) and (ii) the assets set forth in Schedule 5.2(a).
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(b) Assistance in Connection With Certain Seller Software Licenses and
Leases. Prior to Closing, the Seller shall use its commercially reasonable
efforts to assign to the Company or any Subsidiary designated by the Company, or
obtain from the licensor or lessor of the licenses or leases, equivalent rights
for the Company or the applicable Subsidiaries of the Company, following the
Closing as those rights enjoyed by the Company or the applicable Subsidiary of
the Company prior to the Closing, for all licenses and leases set forth in
Schedule 5.2(b). To the extent the Seller is unable to assign to the Company, or
obtain from the licensor or lessor equivalent rights for the Company, relating
to any such license or lease, as of the Closing Date, the Seller shall make
available to the Company the benefits of such lease and licenses following the
Closing Date and shall continue to use its commercially reasonable efforts to
assign to the Company or obtain equivalent rights from the licensor or lessor
for the Company relating to such lease or license. To the extent such assignment
has not been obtained prior to the 75th day following the Closing Date, the
Seller shall pay to the Company the amount set forth opposite such lease or
license on Schedule 5.2(b) and the Seller's obligation to make the benefits
thereof available to the Company shall terminate.
(c) Treatment of Remaining Company Intellectual Property Owned, Licensed or
Leased by the Seller. Schedule 5.2(c) sets forth a list of all licenses for
Company Intellectual Property for which the Buyer shall be responsible for
obtaining a separate license in the name of the Company or a Subsidiary
designated by the Company or rights equivalent to those currently enjoyed by the
Company or the applicable Subsidiary of the Company under the existing license.
SECTION 5.3. Consents and Approvals.
----------------------
(a) The Seller shall, and shall cause the Company and its Subsidiaries to,
in each case at the Seller's sole cost and expense, use commercially reasonable
efforts to obtain all necessary Consents of all Governmental Entities, and of
all other Persons required to be obtained by the Seller (other than Consents
related to Company Intellectual Property) to effect the transactions
contemplated by this Agreement prior to Closing; provided, however, that, except
for the Consent listed in item 1 on Schedule 10.3 or contemplated pursuant to
Section 5.2, the Seller shall not have any obligation to pay any fee or offer or
grant other financial or other accommodation to any third party for the purpose
of obtaining any Consent or any costs and expenses of any third party resulting
from the process of obtaining such Consent in excess of $25,000 in the
aggregate.
(b) At or prior to the Closing and effective as of the Closing Date, the
Seller shall assign to the Company all of its rights under the agreements set
forth on Schedule 5.3(b) (the "Assigned Contracts"). Notwithstanding the
foregoing, no Assigned Contract shall be assigned contrary to law or the terms
of such Assigned Contract and, with respect to Assigned Contracts that cannot be
assigned to the Company at the Closing Date, the performance obligations of the
Seller thereunder shall, unless not permitted by such Assigned Contract, be
deemed to be subleased or subcontracted to the Company until such Assigned
Contract has been assigned. The Seller shall (i) use its commercially reasonable
efforts to obtain all necessary consents, and (ii) cooperate with the Buyer in
any arrangement designed to provide to the Company the benefits (including the
exercise of rights) under any such Assigned Contracts, including enforcement for
the benefit of the Company (and at the Company's expense) of any
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and all rights of the Seller against a third party thereto arising out of the
breach or cancellation by such third party or otherwise.
(c) The Seller shall, at the Seller's sole cost and expense, make or cause
to be made all filings and submissions under laws applicable to it as may be
required for the consummation of the transactions contemplated by this
Agreement. Notwithstanding the foregoing, in the event the parties receive a
request for additional information or documentary material from a Governmental
Entity, and to the extent the parties hereto jointly engage counsel to
facilitate a response to such request, the parties shall share equally the fees
and expenses of such counsel incurred in such joint representation.
(d) The Seller shall, with respect to any threatened or pending preliminary
or permanent injunction or other order, decree or ruling or statute, rule,
regulation or executive order that would adversely affect the ability of the
Seller to consummate the transactions contemplated hereby, use, and cause its
Affiliates over which it exercises control to use, their commercially reasonable
best efforts to prevent the entry, enactment or promulgation thereof, as the
case may be, including the entering into a divestiture, hold-separate, business
limitation or similar agreement or undertaking relating to the business of the
Company; provided, however, that the Seller may not enter into a divestiture,
hold-separate, business limitation or similar agreement or undertaking with
respect to the Company and its Subsidiaries without the Buyer's written consent.
(e) The Seller shall promptly inform the Buyer of any material
communication from any Governmental Entity regarding any of the transactions
contemplated hereby. If the Seller receives a request for additional information
or documentary material from any Governmental Entity with respect to the
transactions contemplated hereby, then the Seller shall endeavor in good faith,
as soon as reasonably practicable and after consultation with the Buyer, to
comply, or to cause the compliance, with such request. The Seller shall advise
the Buyer promptly in respect of any understandings, undertakings or agreements
(oral or written) that the Seller proposes to make or enter into with any
Governmental Entity in connection with the transactions contemplated hereby.
SECTION 5.4. Access to Properties and Records. The Seller shall, subject to
the provisions of Section 6.6, cause the Company and its Subsidiaries to afford
to the Buyer, and to the accountants, counsel and representatives of the Buyer,
reasonable access during normal business hours throughout the period prior to
the Closing Date (or the earlier termination of this Agreement pursuant to
Section 11) to all properties, assets, books, Contracts, and files and records
of the Company and its Subsidiaries and, during such period, shall furnish
promptly to the Buyer all other information concerning the Company and its
Subsidiaries, properties and personnel as the Buyer may reasonably request;
provided, however, that (i) the Buyer and its representatives shall take such
action as is deemed necessary in the reasonable judgment of the Seller to
schedule such access and visits in such a way as to avoid disrupting the normal
business of the Seller, and (ii) the Seller shall not be required to take any
action that would constitute a waiver of the attorney-client or other privilege.
From and after the Closing Date, the Seller shall cooperate with and assist the
Buyer, at the Buyer's request and expense, in connection with any review,
analysis or audit of the financial statements of the Company and its
Subsidiaries and shall use commercially reasonable efforts at the Buyer's
request and expense to cause the
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Seller's independent accountants to assist the Buyer and the Buyer's independent
accountants in conducting such review, analysis or audit.
SECTION 5.5. Negotiations. From and after the date hereof and until the
earlier to occur of the Closing Date or the termination of this Agreement
pursuant to Section 11 hereof, the Seller shall not, and shall use reasonable
efforts to cause the officers and directors of the Company and its Subsidiaries
and any Persons acting on behalf of the Seller or the Company or its
Subsidiaries not to, directly or indirectly solicit, engage in discussions or
negotiations with, or provide any information to, any Person or group (other
than the Buyer or its representatives) concerning any merger, sale of
substantial assets, purchase or sale of shares or similar transaction involving
the Company or its Subsidiaries.
SECTION 5.6. Commercially Reasonable Efforts. Upon the terms and subject to
the conditions of this Agreement, the Seller will at any time before or after
the Closing, use, and shall cause each of the Company and its Subsidiaries to
use, their commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, or advisable
consistent with applicable law to consummate and make effective in an
expeditious manner the transactions contemplated hereby, including without
limitation, (i) the execution, acknowledgement and delivery of any documents and
instruments reasonably requested by the Buyer.
SECTION 5.7. Notice of Breach; Updating Schedules. Through the Closing
Date, the Seller shall promptly give written notice with particularity to the
Buyer upon having knowledge of any matter that constitutes a breach of any
representation, warranty, agreement or covenant contained in this Agreement. If
any event, condition, fact or circumstance that is required to be disclosed
pursuant to this Agreement requires any change in the schedules hereto, or if
any such event, condition, fact or circumstance would require such a change
assuming the Seller's schedules hereto were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Seller shall promptly deliver to the Buyer an update to
the Seller's schedules hereto specifying such change. No such written notice or
update shall be deemed to supplement or amend this Agreement, the other
Transaction Documents or any exhibits or schedules hereto for the purpose of (i)
determining the accuracy of any of the representations and warranties made by
the Seller in this Agreement or (ii) determining whether any conditions
precedent to the Buyer's performance of its obligations hereunder have been
satisfied.
SECTION 5.8. Certain Pre-Closing Transactions. On or prior to the Closing
Date, the Seller shall settle (by payment or otherwise) (i) all amounts owed by
the Company or any of its Subsidiaries, on the one hand, to the Seller or any of
its Affiliates (other than the Company and its Subsidiaries) on the other hand,
and (ii) all amounts owed to the Company or any of its Subsidiaries, on the one
hand, by the Seller or any of its Affiliates (other than the Company and its
Subsidiaries) on the other hand. On or prior to the Closing Date, the Seller
shall cause the Company and its Subsidiaries to assign to Seller, and Seller
shall assume all (i) income tax related assets and liabilities of the Company
and its Subsidiaries, (ii) deferred compensation assets and liabilities of the
Company and its Subsidiaries, (iii) 401(k) plan liabilities of the Company and
its Subsidiaries, (iv) indebtedness of the Company and its Subsidiaries
(excluding any trade payables, but including without limitation funded debt,
notes
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payable, capital lease obligations and payment obligations under the
Non-Competition Agreements) and (v) any liability to pay outstanding checks that
were issued by the Company on or prior to the Closing Date that have not cleared
as of the Closing Date. At the Closing, the Seller shall (i) assign to the Buyer
all of the branch depository accounts listed on Schedule 3.28 and any corporate
depository account of the Company or its Subsidiaries, (ii) terminate any
instructions relating to "cash sweeping" out of any corporate depository account
of the Company or its Subsidiaries to any other account and (iii) execute any
required documents as may be reasonably necessary to consummate the foregoing.
SECTION 5.9. Covenant Not to Compete. For a period of three (3) years
following the Closing Date, Seller shall not, and shall not permit any of its
Affiliates over which it exercises control to, directly or indirectly, engage in
any business that competes with the businesses of the Company and its
Subsidiaries as conducted on the Closing Date. The foregoing notwithstanding,
this covenant not to compete shall not require the Seller or any of its
Affiliates to discontinue any of their respective business operations, including
without limitation the sale of film and chemistry to the physician market,
following the sale of the Company as contemplated hereby, to the extent such
business operations are being conducted by the Seller or such any such Affiliate
as of the date hereof and are not included in the businesses being sold pursuant
hereto.
SECTION 5.10. Non-Solicitation of Employees. For a period of two (2) years
following the Closing Date, Seller, without first obtaining the consent of the
Buyer, shall not, and shall not permit any of its Affiliates over which it
exercises control to, directly or indirectly encourage, induce, or solicit any
employee of the Company or of any of its Subsidiaries to terminate his or her
relationship with the Company or such Subsidiary, other than general
solicitations of employment not specifically directed towards employees of the
Company or its Subsidiaries (such as general media advertisements).
SECTION 5.11. Confidentiality. Until the Closing, the Seller shall hold,
and shall cause the Company, its Subsidiaries and each of its and their
respective employees, agents, Affiliates, consultants, representatives and
advisors to hold, any information which it or they receive in connection with
the activities and transactions contemplated by this Agreement in strict
confidence in accordance with and subject to the terms of the previously
executed Confidentiality Agreement, between the Seller and the Buyer (the
"Confidentiality Agreement").
SECTION 5.12. Employee Matters. The Seller shall retain any and all
obligations and liability with respect to any stock purchase, stock option,
phantom stock or other equity or equity-based awards pursuant to which employees
of the Company or any of its Subsidiaries have been granted the right to
purchase equity securities of the Seller.
SECTION 5.13. Noncompetition and Employment Agreements. The Seller shall
retain any and all payment obligations and liability under the Noncompetition
Agreements. To the extent any Noncompetition Agreement runs to the benefit of
the Seller or an Affiliate of the Seller other than the Company or one of its
Subsidiaries, the Seller shall either assign the rights under such
Noncompetition Agreement to the Company at or prior to the Closing and effective
as of the Closing Date, or cooperate with the Company in enforcing any such
rights in the name of the Seller or such Affiliate, but at the Company's sole
cost and expense. At or prior to the
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Closing and effective as of the Closing Date, the Seller shall assign its rights
under the employment agreements listed on Schedule 5.13(a) (the "Employment
Agreements") to the Company; provided that, notwithstanding the foregoing, the
Seller shall be responsible for, and indemnify and hold the Buyer harmless from
any and all obligations pursuant to the employment agreements listed on Schedule
5.13(b) other than the obligation to pay compensation and benefits provided
pursuant to paragraph 5 of each such agreement.
SECTION 5.14. Lien Searches. Between the date hereof and the Closing Date,
the Seller shall conduct a search for, and deliver to the Buyer copies of, any
UCC-1 filings, federal Tax liens and state Tax liens on file in the office of
the Secretary of State of each State in which the Seller conducts business.
SECTION 5.15. Books and Records. To the extent it has such materials in its
possession, the Seller shall deliver to the Buyer the minute books, stock
transfer records and all other corporate, business, accounting and operating
records and documents relating to the Company or any of its Subsidiaries (in
whatever form or medium), including all personnel records, customer lists,
prospects lists, supplier lists and archived data.
SECTION 5.16. Covenants to Resolve Certain Disputes. The Seller shall use
commercially reasonable efforts to settle the matters listed in paragraphs 1 and
2 of Schedule 5.1 prior to the Closing. If the Seller is not able to settle
either or both matters on or prior to the Closing, the Seller shall be
responsible for and shall pay and indemnify the Buyer from and against such
matter(s) subject to the following limitations: (i) the Buyer shall be
responsible for amounts paid to resolve such matters up to the amount equal to
$175,000 minus the amount, if any, by which the accrual for "legal and
professional fees" as of the Closing Date was reduced pursuant to clause (ii) of
the penultimate sentence in the definition of Net Assets, and (iii) the Buyer
shall cooperate with the Seller in resolving such matters and will not settle
any such matter for an amount in excess of the amounts set forth for such matter
in Paragraph 1 or Paragraph 2 of Schedule 5.1, as the case may be, without the
Seller's prior written consent, which consent shall not be unreasonably
withheld.
SECTION 5.17. Decommissioning of Certain Premises
-----------------------------------
(a) On or prior to the Closing, Seller shall assume and shall cause the
Company to assign to the Seller, all obligations of the Company in connection
with the Vacated Premises, and shall indemnify and hold the Buyer harmless from
any and all liabilities and obligations, including without limitation, liability
for any lease payments, directly relating to the Vacated Premises.
(b) Following the Closing Date, the Seller shall continue or commence, the
administration of the Decommissioning of the Decommissioned Premises in
accordance with its current decommissioning plan. During the Decommissioning of
the Decommissioned Premises, the Seller shall reasonably cooperate with the
Buyer and shall furnish reasonably promptly to the Buyer all other information
concerning the Decommissioning as it relates to the Company and its
Subsidiaries, properties and personnel as the Buyer may reasonably request.
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SECTION 5.18. Seller Domain Names. For a period of twenty-four (24) months
following the Closing Date, the Seller shall redirect Internet website visitor
traffic received at any website address maintained by the Seller or any of its
Subsidiaries currently related to the Company or any of its Subsidiaries to
another Internet website address designated by the Buyer.
SECTION 5.19. Responsibility for Certain Insured Claims. Except as
otherwise provided in Section 5.20, the Seller shall be responsible for and pay,
and shall indemnify the Buyer, the Company and the Subsidiaries of the Company
from, any liability or obligation arising from an occurrence prior to the
Closing if such occurrence is covered by Seller's Insurance; provided, however,
that with respect to any Seller's Insurance that provides coverage on a "claims
made" basis, such occurrence shall be deemed "covered by Seller's Insurance" for
the purposes of this Section 5.19 to the extent such occurrence would have been
covered if such "claims made" policy provided coverage on an "occurrence" basis.
To the extent the Seller pays any amounts pursuant to this Section 5.19 with
respect to claims covered by the Seller's health plans, the Buyer shall
reimburse the Seller upon request for such amounts up to an aggregate amount
equal to the "incurred but not reported" accrual included in the Net Assets as
finally determined pursuant to Section 2.4.
SECTION 5.20. Assistance With Certain Employee Benefit Post-Closing. The
Seller shall cooperate with the Buyer to establish for the Company, effective
prior to or as of the Closing Date, health plans that substantially mirror the
comparable Seller Plans and shall assist the Company in administering, or
arranging for the administration of such plans following the Closing until such
time as the Company establishes new Benefit Plans. If the Seller is unable to
establish such plans, the Seller will cooperate with the Company to make
continuation coverage available to the Company's employees after the Closing
under COBRA until such time as the Company establishes new Benefit Plans.
SECTION 5.21. Amendment of Fleet Lease. The parties acknowledge that
certain vehicles used by the Company and its subsidiaries (the "Company
Vehicles") are leased pursuant to a master lease (the "Master Fleet Lease") with
PHH Vehicle Management Services Corporation (the "Fleet Lessor") to which the
Company is not a party. The Seller shall, and shall cause the Company to, use
commercially reasonable efforts (which shall not require the Seller or the
Company to make additional payments) to amend the Master Fleet Lease, or to
cause the Fleet Lessor to enter into a new lease with the Company in either
case, pursuant to which the Company will lease the Company Vehicles from the
Fleet Lessor on the same terms and conditions as provided in the Master Fleet
Lease.
SECTION 6. COVENANTS OF THE BUYER.
----------------------
SECTION 6.1. Actions Before Effective Date. Between the date hereof and the
Closing Date, the Buyer shall not take any action which causes it to be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement.
SECTION 6.2. Consents and Approvals.
----------------------
(a) The Buyer shall, at the Buyer's sole cost and expense, use its
reasonable efforts to obtain all necessary Consents of all Governmental
Entities, and of all other Persons
-36-
required to be obtained by the Buyer to effect the transactions contemplated by
this Agreement prior to Closing; provided, however, that, any provision hereof
to the contrary notwithstanding, the Buyer shall not have any obligation to pay
any fee or offer or grant other financial or other accommodation to any third
party for the purpose of obtaining any Consent or any costs and expenses of any
third party resulting from the process of obtaining such Consent in excess of
$25,000 in the aggregate.
(b) The Buyer shall, at the Buyer's sole cost and expense, make or cause to
be made all filings and submissions under laws applicable to it as may be
required for the consummation of the transactions contemplated by this
Agreement. Notwithstanding the foregoing, in the event the parties receive a
request for additional information or documentary materials from a Governmental
Entity, and to the extent the parties hereto jointly engage counsel to
facilitate a response to such request, the parties shall share equally the fees
and expenses of such counsel incurred in such joint representation.
(c) The Buyer shall, with respect to any threatened or pending preliminary
or permanent injunction or other order, decree or ruling or statute, rule,
regulation or executive order that would adversely affect the ability of the
Buyer to consummate the transactions contemplated hereby, use, and cause its
Affiliates to use, their commercially reasonable best efforts to prevent the
entry, enactment or promulgation thereof, as the case may be, including the
entering into a divestiture, hold-separate, business limitation or similar
agreement or undertaking, but only if such divestiture, hold-separate, business
limitation or similar agreement or undertaking would not, in the judgment of the
board of directors of the Buyer, materially and adversely impact the Buyer's
business, the economic or business benefits to the Buyer of the transactions
contemplated by this Agreement or the ability of the Buyer to conduct the
Company's business after the Closing Date substantially in the manner as such
business has been conducted prior to the date of this Agreement.
(d) The Buyer shall promptly inform the Seller of any material
communication from any Governmental Entity regarding any of the transactions
contemplated hereby. If the Buyer receives a request for additional information
or documentary materials from any Governmental Entity with respect to the
transactions contemplated hereby, then the Buyer shall endeavor in good faith,
as soon as reasonably practicable and after consultation with the other party,
to comply, or cause the compliance, with such request. The Buyer shall advise
the Seller promptly in respect of any understandings, undertakings or agreements
(oral or written) that the Buyer proposes to make or enter into with any
Governmental Entity in connection with the transactions contemplated hereby.
SECTION 6.3. Commercially Reasonable Efforts. Upon the terms and subject to
the conditions of this Agreement, the Buyer shall use commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable consistent with applicable law
to consummate and make effective in the most expeditious manner practicable the
transactions contemplated hereby.
SECTION 6.4. Notice of Breach. Through the Closing Date, the Buyer shall
promptly give written notice with particularity to the Seller upon having
knowledge of any
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matter that may constitute a breach of any of its representation, warranty,
agreement or covenant contained in this Agreement.
SECTION 6.5. Employees and Employee Benefits.
-------------------------------
(a) Effective as of the Closing Date, the employees of the Company and its
Subsidiaries shall continue their employment without interruption at the same
base annual salary or hourly wage rate, as applicable, and a comparable position
as pertained to such employees immediately prior to the Closing Date. Except as
may be specifically required by applicable law or the terms of any employment
agreement relating to the employees of the Company and its Subsidiaries, neither
the Company nor any of its Subsidiaries shall have any obligation to continue
any employment relationship with any employees for any specific period of time
after the Closing Date.
(b) As of the Closing Date, the Company and each of its Subsidiaries shall
withdraw from and shall cease to participate in all Benefit Plans sponsored by
the Seller set forth in Schedule 6.5(b) hereto (the "Seller Plans"). As of the
Closing Date, the Buyer shall have established, and shall cause each employee of
the Company and its Subsidiaries whose participation in the Seller Plans is
discontinued on the Closing Date to become a participant in, employment benefit
plans and arrangements sponsored by the Buyer or its Affiliates that provide
comparable benefits, in the aggregate, to the Seller Plans in which
participation has ceased (the "Buyer Plans"); provided, however, that to the
extent that the benefits of any such plans and arrangements are provided for
under the Transitional Services Agreement, any plan established for the Company
as contemplated by Section 5.20 or COBRA, the Buyer shall not be required to
establish such plans until such benefits are no longer so provided; provided
further, that nothing in this Agreement shall require the Buyer to provide any
deferred compensation benefits that are not qualified pursuant to Section 401(a)
of the Code or any equity-based benefits to any such employee. Participation in
the Buyer Plans shall provide that (i) such participants shall receive full
credit for all service with the Company and its Affiliates prior to the Closing
Date, including, but not limited to, recognition of service for eligibility,
vesting and, to the extent not duplicative of benefits received under any such
arrangement, the amount of benefits, (ii) the Buyer shall waive, or cause its
insurance carriers to waive, all limitations as to pre-existing and at-work
conditions, if any, with respect to participation and coverage requirements
applicable to the participants under the Buyer's welfare plans (except for
limitations or waiting periods that are already in effect and that have not been
satisfied with respect to such participants), and (iii) the Buyer shall provide
credit to the participants for any co-payments and deductibles paid by such
participants under the Seller Plans. At or prior to the Closing and effective as
of the Closing Date, Subject to Section 5.13, the Buyer shall assume from the
Seller all of the Seller's obligations under the Employment Agreements and the
Buyer shall indemnify the Seller for any liabilities arising under the
Employment Agreements at or after Closing.
SECTION 6.6. Confidentiality. Until the Closing, the Buyer shall hold, and
shall cause its employees, agents, Affiliates, consultants, representatives and
advisors to hold, any information which it or they receive in connection with
the activities and transactions contemplated by this Agreement in strict
confidence in accordance with and subject to the terms of the Confidentiality
Agreement.
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SECTION 6.7. Decommissioning of Certain Premises; Cooperation with Respect
to Environmental Matters. The Buyer shall reimburse the Seller for its expenses
incurred, up to a maximum of $15,000 for each facility, in connection with the
Decommissioning process and Seller shall be responsible for any amounts in
excess of $15,000. Buyer shall continue to pay all outstanding lease obligations
for the Decommissioned Premises through the current expiration date of such
leases, but shall not be responsible for any lease payments following such
expiration. During the Decommissioning of the Decommissioned Premises, the Buyer
shall reasonably cooperate with the Seller and shall furnish reasonably promptly
to the Seller all other information concerning the Decommissioning as it relates
to the Company and its Subsidiaries, properties and personnel as the Seller may
reasonably request.
SECTION 6.8. Finance Cooperation. From and after the Closing Date, the
Buyer shall cooperate with and assist Seller, at the Seller's request and
expense, in connection with any review, analysis or audit of the historical
financial statements of the Company and its Subsidiaries for any date or period
prior to the Closing Date and shall use commercially reasonable efforts at the
Seller's request and expense to cause the Buyer's independent accountants to
assist the Seller and the Seller's independent accountants in conducting such
review, analysis or audit.
SECTION 7. TAXES.
-----
SECTION 7.1. Indemnification for Income Taxes.
--------------------------------
(a) The Seller shall indemnify and hold harmless the Company and its
Subsidiaries for (i) any Taxes imposed upon or assessed against the Company or
any of its Subsidiaries relating to the Pre-Closing Tax Period, (ii) any
liability of the Company or any of its Subsidiaries for Income Taxes by reason
of the Company or any of its Subsidiaries being a member, on or prior to the
Closing Date, of a consolidated group of affiliated corporations (within the
meaning of Section 1504(a) of the Code) of which Seller is the common parent,
and (iii) any breach of the representations and warranties of the Seller made in
Section 3.11 of this Agreement.
(b) Any claim for indemnity under this Section 7.1 may be made at any time
prior the expiration of the applicable Tax statute of limitation with respect to
the relevant taxable period (including all periods of extension) and payment
shall be made within thirty (30) calendar days of written notification of any
such claim. Any dispute with respect to any claim under Section 7.1 or 7.2 shall
be resolved by an Independent Accounting Firm, and the party that does not
substantially prevail with respect to such dispute shall bear all the costs and
expense of resolving such dispute.
(c) To the extent any determination of Income Tax liability of the Company
or any of its Subsidiaries, whether as the result of an audit or examination, a
claim for refund, the filing of an amended return or otherwise, results in any
refund of Income Taxes relating to Pre-Closing Tax Periods for which the Seller
is liable pursuant to this Section 7.1, the Buyer shall notify the Seller of
such refund and any such refund, together with any interest paid on such amount,
shall belong to the Seller, but only to the extent such refund is not included
as an asset
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in the determination of the Actual Net Assets as of the Closing Date. The Buyer
shall promptly pay to the Seller, upon receipt, any such refund and the interest
actually received thereon.
(d) Notwithstanding Section 8.2, the indemnification provided for in this
Section 7 is the sole remedy for any breach of any covenant or agreement
relating to Taxes of the Company or any of its Subsidiaries.
SECTION 7.2. Tax Covenants.
-------------
(a) The Seller shall prepare and file when due, or cause to be prepared and
filed when due, all Tax Returns of the Company and any of its Subsidiaries or,
in the case of consolidated income Tax Returns under federal, state or foreign
law, that include the Company or any of its Subsidiaries, for all Tax periods
ending on or prior to the Closing Date. The Buyer shall cooperate with and
assist, and shall cause the Company, the Company's Subsidiaries and their
respective officers, employees and representatives to cooperate with and assist,
the Seller with respect to the preparing and filing of Tax Returns for all
periods ending on or prior to the Closing Date.
(b) The Company shall prepare and file when due, or cause to be prepared
and filed when due, all Tax Returns required to be filed by the Company and any
of its Subsidiaries relating to (i) any Straddle Period and (ii) any taxable
period beginning after the Closing Date, and the Company shall remit (or cause
to be remitted) any Taxes due in respect of such Tax Returns; provided, however,
that the Seller shall remit any Taxes for Pre-Closing Tax Periods that are not
included as a liability in the determination of the Actual Net Assets as of the
Closing Date.
(c) Seller will cause any Tax sharing agreement, Tax indemnity agreement or
similar arrangement between the Company and the Seller or any of its Affiliates
to be terminated, effective as of the Closing Date, to the extent that any such
agreement relates to the Company or any of its Subsidiaries, and after the
Closing Date neither the Company nor any of its Subsidiaries shall have any
obligation under any such agreement or arrangement for any past, present or
future period.
(d) The Seller, the Buyer, the Company, the Subsidiaries of the Company and
their Affiliates shall consistently treat any and all payments under Section
7.1, Section 8.2 and Section 8.3 as an adjustment to the Purchase Price for
Income Tax purposes.
SECTION 7.3. 338(h)(10) Election.
-------------------
(a) The Seller and the Buyer shall jointly make an election as described in
Section 338(h)(10) of the Code, and any corresponding election under state or
local law pursuant to which a separate election is permissible, with respect to
the Buyer's acquisition of the Shares pursuant to this Agreement (the "Section
338(h)(10) Election"). The Buyer and the Seller agree to report all transfers
pursuant to this Agreement consistent with the Section 338(h)(10) Election and
shall take no position contrary thereto unless required to do so by applicable
tax law pursuant to a determination as defined in Section 1313(a) of the Code.
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(b) The Seller shall be responsible for the preparation and filing of all
returns, documents, statements and other forms that are required to be submitted
to any Tax Authority in connection with the making of the Section 338(h)(10)
Election, including, without limitation, any "statement of section 338 election"
and IRS Form 8023 (together with any schedules or attachments thereto) that are
required pursuant to the Treasury Regulations promulgated under Section 338 of
the Code (collectively, the "Section 338 Forms"). The Seller shall deliver each
Section 338 Form to the Buyer at least 30 days prior to the date such Section
338 Form is required to be filed. The Buyer shall execute and deliver to the
Seller such documents or forms (including executed Section 338 Forms) as are
requested and are required by any laws in order to properly complete the Section
338 Form at least 20 days prior to the date such Section 338 Form is required to
be filed. The Buyer shall provide the Seller with such information as the Seller
reasonably requests in order to prepare the Section 338 Forms by the later of 30
days after the Seller's request for such information or 30 days prior to the
date on which the Seller is required to deliver such forms to the Buyer.
(c) The Purchase Price, liabilities of the Company and other relevant items
shall be allocated in accordance with Section 338(b)(5) of the Code and the
Treasury Regulations promulgated thereunder. Within 90 days following the
determination of the Actual Net Assets as of the Closing Date pursuant to
Section 2.4, the Seller shall prepare and provide to the Buyer a schedule that
sets forth the fair market value of the assets of the Company (the "Initial
Taxation Valuation"). The allocations set forth in the Initial Taxation
Valuation shall be reasonably determined by the Seller and shall be binding on
the Buyer and the Seller unless the Buyer, within 15 days of delivery to the
Buyer of the Initial Taxation Valuation, concludes in good faith that the
Initial Taxation Valuation is unreasonable (the "Taxation Review Period").
(d) If Buyer concludes in good faith that the Initial Taxation Valuation is
unreasonable, the Buyer shall deliver to the Seller a written notice of
disagreement setting forth those items to which the Buyer takes exception and
the Buyer's proposed adjustment (the "Taxation Proposed Adjustments") prior to
the expiration of the Taxation Review Period.
(e) If the Buyer does not take exception with any of the items contained in
the Initial Taxation Valuation, the Buyer shall deliver a written statement to
the Seller within the Taxation Review Period accepting the Initial Taxation
Valuation Notice (an "Taxation Valuation Acceptance Notice"), in which case the
Seller's determination of the fair market value of the assets of the Company as
shown on the Initial Taxation Valuation shall be final and binding on the
parties, effective as of the date on which the Seller receives the Taxation
Valuation Acceptance Notice. If the Buyer does not deliver a notice of Taxation
Proposed Adjustments or an Taxation Valuation Acceptance Notice within the
Taxation Review Period, then the Seller's determination of the fair market value
of the assets of the Company as shown on the Initial Taxation Valuation shall be
final and binding on the parties, effective as of the first business day after
the expiration of the Taxation Review Period.
(f) If the Buyer delivers a notice of Taxation Proposed Adjustments to the
Seller in a timely manner, then the Buyer and the Seller shall attempt in good
faith to resolve such dispute within fifteen (15) days from the date of the
notice of the Taxation Proposed Adjustments. If the Buyer and the Seller cannot
reach agreement within such period (or such longer period as they may mutually
agree), then the dispute shall be promptly referred to an
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independent accounting firm of national reputation mutually acceptable to the
Buyer and the Seller, or if the parties are unable to agree on such a firm
within ten (10) days (or such longer period as they may mutually agree) to the
Independent Accounting Firm for binding resolution. The Independent Accounting
Firm may conduct such proceedings as the Independent Accounting Firm, in its
sole discretion, determines will assist in resolving the disputed exceptions and
shall, within sixty (60) calendar days following its selection, deliver to the
Buyer and the Seller a written report setting forth its determination of such
disputed exceptions calculated in accordance with this Agreement, and its
determinations will be conclusive and binding upon the parties thereto for the
purposes of any Taxation Valuation pursuant to this Section 7.3. The Seller, on
the one hand, and the Buyer, on the other hand, shall each be responsible for
one-half of the costs and expenses of the Independent Accounting Firm, and each
of the parties shall bear its own legal, accounting and other fees and expenses
of participating in such dispute resolution procedure.
(g) All allocations contained in the Taxation Valuation, as determined in
accordance with this Section 7.3, shall be used by each party in preparing the
Section 338 Forms and all other relevant Tax Returns, subject to adjustment to
reflect (i) the Seller's selling expenses as a reduction of sales proceeds and
(ii) the Buyer's acquisition expenses as an addition to the Purchase Price,
except as otherwise required by law.
(h) Notwithstanding anything contained in this Section 7.3, if the parties
are unable to agree on the fair market value of the assets of the Company prior
to the date that is 30 days prior to the date that any Section 338 Form is
required to be filed, then the Seller may file such Section 338 Form based on
the Seller's determination of the fair market value of the assets of the
Company; provided, however, that in any such event the parties shall continue to
determine the fair market value of the assets of the Company as contemplated
hereby and, in the event of any material differences between Seller's
determination as reflected in the filed 338 Forms and the final determination
reached pursuant hereto, then Seller and the Buyer, to the extent permitted by
applicable law, shall amend such 338 Forms to be consistent with such
determination.
SECTION 7.4. Cooperation. The Seller and the Buyer shall cooperate in good
faith, and shall cause their respective Affiliates, officers, employees, agents,
auditors and representatives to cooperate in good faith, in connection with (i)
the preparation and filing of all Tax Returns relating to the Company or any of
its Subsidiaries, (ii) the determination of the Seller, the Buyer or their
respective Affiliates, as the case may be, of any liability for any Taxes
relating to the Company or any of its Subsidiaries, (iii) any audit, dispute or
other examination or assessment by any Taxing Authority with respect to such
Taxes, or (iv) any judicial or administrative proceeding relating to liability
for such Taxes. From and after the Closing Date, the Buyer shall provide
representatives of the Seller with reasonable access to all records and files
relating to Taxes of the Company for periods ending on or prior to the Closing
Date. The Buyer shall retain such records and files for a period of six (6)
years after the Closing Date.
SECTION 7.5. Contest Provisions.
------------------
(a) Each of the Buyer, on the one hand, and the Seller, on the other hand
(the "Recipient"), shall notify each of the other parties in writing within
fifteen (15) calendar days of
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receipt by the Recipient of written notice of any pending or threatened audits,
notice of deficiency, proposed adjustment, assessment, examination or other
administrative or court proceeding, suit, dispute or other claim (a "Tax Claim")
which could affect the liability for Taxes of such other party. If the Recipient
fails to give such prompt notice to the other party it shall not be entitled to
indemnification for any Taxes arising in connection with such Tax Claim if and
to the extent that such failure to give notice materially and adversely affects
the other party's right to participate in the Tax Claim.
(b) The Seller shall have the sole right to represent the Company's
interests in any Tax Claim relating to taxable periods ending on or before the
Closing Date, so long as the Seller acknowledges its indemnification obligation
to the Buyer and its Subsidiaries, and to employ counsel of its choice at its
expense. In the case of a Straddle Period, the Seller shall be entitled to
participate at its expense in any Tax Claim relating in any part to Taxes
attributable to the portion of such Straddle Period deemed to end on or before
the Closing Date. None of the Buyer, the Company, nor any of their Affiliates
may settle or otherwise dispose of any Tax Claim for which any Seller may have a
liability under this Agreement, or which may result in an increase in Seller's
liability under this Agreement, without the prior written consent of the Seller,
which consent may be withheld in the discretion of the Seller, unless the Buyer
fully indemnifies the Seller in writing with respect to such liability in a
manner satisfactory to the Seller. None of the Seller or any of its Affiliates
may settle or otherwise dispose of any Tax Claim for which the Buyer may have a
liability under this Agreement, or which may result in an increase in Buyer's
liability under this Agreement, without the prior written consent of the Buyer,
which consent may be withheld in the discretion of the Buyer, unless the Seller
fully indemnify the Buyer in writing with respect to such liability in a manner
satisfactory to the Buyer.
SECTION 7.6. Transfer Taxes. All excise, sales, use, value added, transfer
(including real property transfer or gains), stamp, documentary, filing,
recordation and other similar taxes, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or
penalties, resulting directly from the transactions contemplated by this
Agreement (the "Transfer Taxes"), shall be shared equally by the parties.
Notwithstanding Section 7.2, which shall not apply to Tax Returns relating to
Transfer Taxes, any Tax Returns that must be filed in connection with Transfer
Taxes shall be prepared and filed when due by the party primarily or customarily
responsible under the applicable local law for filing such Tax Returns, and such
party will use its reasonable efforts to provide such Tax Returns to the other
party at least 10 calendar days prior to the due date for such Tax Returns.
SECTION 8. INDEMNIFICATION.
---------------
SECTION 8.1. Survival. Each of the representations and warranties set forth
in this Agreement or in any certificate delivered in connection with the Closing
shall survive the Closing for a period terminating on the date eighteen (18)
months after the Closing Date; provided, however, that (i) the representations
and warranties set forth in Section 3.11 (Tax Matters) shall survive through the
applicable statute of limitations and all extensions thereof, (ii) the
representations and warranties set forth in Section 3.24 (Environmental Matters)
shall survive for a period of sixty (60) months after the Closing, and (iii) the
representations and warranties set forth in Sections 3.3 (Authority), 3.6
(Capitalization of Company), 3.7 (Subsidiaries) and 4.2 (Authorization) shall
survive without limitation as to time. No claim or action arising out of or
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related to a breach of a representation or warranty under this Agreement shall
be asserted by any Indemnitee after the expiration of the applicable time
period, if any, unless notice of such claim or action is given to the Indemnitor
in accordance with Section 8.4 prior to the expiration of such applicable time
period.
SECTION 8.2. Indemnification by the Seller.
-----------------------------
(a) Notwithstanding the Closing, the Seller shall indemnify and agree to
save and hold the Buyer, its Affiliates, directors, officers, employees and
agents (and, after the Closing, the Company and its Subsidiaries and their
respective Affiliates, directors, officers, employees and agents) (collectively,
the "Buyer Indemnitees"), harmless against, and shall reimburse the Buyer
Indemnitees for, any Losses incurred by any Buyer Indemnitee after the Closing,
to the extent such losses arise out of or result from any one or more of the
following:
(i) any breach of any representation or warranty of the Seller
contained in this Agreement or in any certificate delivered to the Buyer in
connection with the Closing;
(ii) any breach of or default in the performance of any covenant or
agreement of the Seller contained in this Agreement (other than those
contained in Section 7) or in any certificate delivered to the Buyer in
connection with the Closing;
(iii) any stock purchase, stock option, phantom stock or other equity
or equity-based awards pursuant to which employees of the Company or any of
its Subsidiaries have been granted the right to purchase equity securities
of the Seller; or
(iv) any of the liabilities listed in Schedule 8.2.
(b) Notwithstanding anything in this Section 8.2 to the contrary:
(i) the Seller shall not have any liability under Section 8.2(a)(i)
unless the aggregate of all Losses relating thereto for which the Seller
would, but for this Section 8.2(b)(i), be liable exceeds on a cumulative
basis an amount equal to One Million Two Hundred Fifty Thousand Dollars
($1,250,000) and then only to the extent of any such excess (except with
respect to Losses resulting from any breaches by the Seller of its
representations and warranties set forth in Section 3.24 (Environmental
Matters) which are addressed in Section 8.2(b)(iv));
(ii) the Seller shall not have any liability under Section 8.2(a) for
any liability to the extent (and only to such extent) that such liability
is included in the determination of the Actual Net Assets as of the Closing
Date;
(iii) the maximum amount for which the Seller shall be liable with
respect to matters covered by Section 8.2(a) (whether such liability would
be pursuant to such sections or under any other theory of liability) shall
not exceed in the aggregate Thirty Million Dollars ($30,000,000) (the
"Liability Cap"). Any reduction in the Purchase Price effected pursuant to
Sections 2.4 and 2.5 shall reduce the Liability Cap by an amount equal to
33% of such reduction; and
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(iv) the Seller shall not have any liability under Section 8.2(a)(i)
with respect to Losses resulting from any breach by the Seller of its
representations and warranties set forth in Section 3.24 (Environmental
Matters) unless any such claim or related group of claims exceeds an amount
equal to Fifteen Thousand Dollars ($15,000) and then only to the extent of
any such excess.
SECTION 8.3. Indemnification by the Buyer. Notwithstanding the Closing, the
Buyer shall indemnify and agree to save and hold the Seller harmless against,
and shall reimburse the Seller for, any Losses incurred by the Seller after the
Closing, to the extent such Losses arise out of or result from, any one or more
of the following:
(a) any breach of any representation or warranty of the Buyer contained in
this Agreement or in any certificate delivered to the Seller in connection with
the Closing;
(b) any breach of or default in the performance of any covenant or
agreement of the Buyer contained in this Agreement or in any certificate
delivered to the Seller in connection with the Closing; or
(c) any act, omission or occurrence related to the Buyer's ownership of the
Company, the operations of the Company and its business or the transactions
contemplated by this Agreement and first occurring after the Closing.
SECTION 8.4. Procedures for Indemnification.
------------------------------
(a) If a party entitled to indemnification under this Section 8 (an
"Indemnitee") asserts that a party obligated to indemnify it under this Section
8 (an "Indemnitor") has become obligated to such Indemnitee pursuant to Section
8.2 or 8.3, or if any suit, action, investigation, claim or proceeding is begun,
made or instituted as a result of which the Indemnitor may become obligated to
an Indemnitee hereunder, such Indemnitee shall give prompt written notice
thereof to the Indemnitor; provided, however, that the failure of the Indemnitee
to give prompt notice to the Indemnitor shall not release the Indemnitor of its
indemnification obligations hereunder, except to the extent the Indemnitor shall
have been prejudiced by such lack of timely and adequate notice. The Indemnitor
shall have the right, but not the obligation, to defend, contest or otherwise
protect the Indemnitee against any such suit, action, investigation, claim or
proceeding at its sole cost and expense. If the Indemnitor so elects to defend,
contest or otherwise protect the Indemnitee, the Indemnitee shall (i) make
available to the Indemnitor all relevant books and records in its possession and
(ii) cooperate and assist the Indemnitor to the extent reasonably possible. The
Indemnitee shall have the right, but not the obligation, to participate at its
own expense in the defense thereof by counsel of the Indemnitee's choice. If the
Indemnitor fails to defend, contest or otherwise protect against such suit,
action, investigation, claim or proceeding, the Indemnitee shall have the right
to do so, including, without limitation, the right to make any compromise or
settlement thereof, and the Indemnitee shall be entitled to recover the entire
cost thereof from the Indemnitor, including, without limitation, reasonable
attorneys' fees, disbursements and amounts paid as the result of such suit,
action, investigation, claim or proceeding; provided that the Indemnitee shall
not compromise or settle any such suit, action, investigation, claim or
proceeding without the prior written consent of the Indemnitor, which consent
shall not be unreasonably withheld.
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(b) The Seller's liability for Losses in connection with any and all
matters arising under Section 3.24 (Environmental Matters) of this Agreement
shall be limited by the following provisions: (i) Buyer shall not engage any
consultant, contractor or similar professional without the prior consent of the
Seller, which consent shall not be unreasonably withheld; and (ii) any response
by the Buyer to a Release of Hazardous Materials, including without limitation,
investigation and remediation, shall be conducted in a commercially reasonable
manner designed to meet, but not exceed, the minimum applicable requirements of
Environmental Laws and shall, to the extent commercially feasible, employ
risk-based corrective action; provided, however, that the Buyer shall not be
required to employ such risk-based corrective action if as a result thereof
either: (A) title to the subject real property will contain a restriction on its
use (other than for residential purposes) or (B) the use of the subject real
property will be restricted (other than for residential purposes). The Buyer
shall provide an accounting of all indemnified amounts at least once every six
months. Such accounting shall include a description of work conducted during the
relevant period in form and substance that enables Seller to verify Buyer's
compliance with Section 8.2 hereunder.
SECTION 8.5. Exclusive Remedy; Character of Payments. Notwithstanding any
provision of this Agreement to the contrary, absent fraud on the part of any
party, indemnification claims brought in accordance with and subject to this
Section 8 shall be the exclusive remedy of any Indemnitee after the Closing with
respect to, arising out of or resulting from the subject matter of this
Agreement. Any payments made pursuant to this Section 8 shall be treated by both
parties as adjustments to the Purchase Price for all purposes.
SECTION 8.6. Mitigation. Each Indemnitee shall make commercially reasonable
efforts to mitigate any claim or liability that such Indemnitee asserts under
this Section 8 or Section 7. In the event that an Indemnitee shall fail to make
such commercially reasonable efforts to mitigate any claim or liability, then
notwithstanding anything else to the contrary contained herein, the Indemnitor
shall not be required to indemnify such Indemnitee for that portion of any Loss
that could reasonably be expected to have been avoided if such Indemnified had
made such efforts.
SECTION 8.7. Limitation on Losses. Notwithstanding anything in this
Agreement to the contrary, the amount of any Losses shall be reduced (i) to the
extent of an Indemnitee's insurance coverage for such Losses and (ii) to give
effect to any Tax benefits to the Indemnitee resulting from any such Losses, but
only to the extent that such Tax benefits are actually utilized within twelve
months of the date the amount of such Loss is finally determined.
SECTION 9. CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER.
-------------------------------------------------
The obligations of the Seller to consummate the transactions contemplated
by this Agreement are subject to the fulfillment, at or before the Closing Date,
of the following conditions, any one or more of which may be waived by the
Seller in its sole discretion:
SECTION 9.1. Representations and Warranties of the Buyer. All
representations and warranties made by the Buyer in this Agreement shall be true
and correct in all material respects, in each case as of the date hereof, and,
except to the extent such representations and warranties refer to a specific
date, as of the Closing Date as though made by the Buyer on and as
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of the Closing Date. The Seller shall have received a certificate to that effect
dated the Closing Date and signed by an executive officer of the Buyer.
SECTION 9.2. Performance of the Obligations of the Buyer. The Buyer shall
have performed all obligations required under this Agreement to be performed by
it on or before the Closing Date, and the Seller shall have received a
certificate to that effect dated the Closing Date and signed by an executive
officer of the Buyer.
SECTION 9.3. Consents and Approvals. The Consents set forth in Schedule 9.3
shall have been obtained or granted by the Closing Date.
SECTION 9.4. Transitional Services Agreement. The Buyer and the Company
shall have executed the Transitional Services Agreement, in the form which is
attached as Exhibit A hereto (the "Transitional Services Agreement"); provided,
that, to the extent the Buyer has requested prior to the Closing Date that a
Service (as defined in the Transitional Services Agreement) be deleted from
Exhibit A to the Transitional Services Agreement, the Transitional Services
Agreement shall be amended to reflect such deletion.
SECTION 9.5. No Violation of Orders. No preliminary or permanent injunction
or other order issued by any court or other governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any Governmental Entity that declares
this Agreement invalid or unenforceable in any respect or which prevents the
consummation of the transactions contemplated hereby shall be in effect; and no
action or proceeding before any court or regulatory authority, domestic or
foreign, shall have been instituted or threatened by any Governmental Entity or
by any other Person, which seeks to prevent the consummation of the transactions
contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement, and which in any such case has a reasonable
likelihood of success in the opinion of counsel to the Seller.
SECTION 10. CONDITIONS PRECEDENT TO PERFORMANCE BY THE BUYER.
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The obligations of the Buyer to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, at or before the Closing Date, of
the following conditions, any one or more of which may be waived by the Buyer in
its sole discretion:
SECTION 10.1. Representations and Warranties of the Seller. All
representations and warranties made by the Seller shall be true and correct in
all material respects, in each case as of the date hereof, and, except to the
extent such representations and warranties refer to a specific date, as of the
Closing Date. The Buyer shall have received a certificate to that effect dated
the Closing Date and signed by an executive officer of the Seller.
SECTION 10.2. Performance of the Obligations of the Seller. The Seller
shall have performed all obligations required under this Agreement to be
performed by it on or before the Closing Date (including, without limitation,
the obligations set forth in Sections 5.2 and 5.8), and the Buyer shall have
received a certificate to that effect dated the Closing Date and signed by an
executive officer of the Seller.
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SECTION 10.3. Consents and Approvals. The Consents set forth in Schedule
10.3 (which may be supplemented by the Buyer to reflect any material consent
disclosed pursuant to any supplement to Schedules 3.16 (a-c) and Schedule 3.5 as
permitted hereby) shall have been obtained or granted by the Closing Date;
provided, however, that to the extent any Consent listed in Items 2 through 11
of Schedule 10.3 has not been satisfied or waived as of the date that is four
months after the date hereof, the requirement that such Consent be obtained
shall be deemed waived.
SECTION 10.4. Transitional Services Agreement. The Seller shall have
executed the Transitional Services Agreement.
SECTION 10.5. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any Governmental Entity, which
declares this Agreement invalid in any respect or prevents the consummation of
the transactions contemplated hereby shall be in effect; and no action or
proceeding before any court or governmental or regulatory authority, domestic or
foreign, shall have been instituted or threatened by any Governmental Entity or
by any other Person which seeks to prevent the consummation of the transactions
contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement, and which in either such case has a reasonable
likelihood of success in the opinion of counsel to the Buyer.
SECTION 10.6. Resignations. The Buyer shall have received the resignations,
effective as of the Closing Date, of each of the directors of the Company and of
each of its Subsidiaries, except to the extent the Buyer has expressly requested
that such director not submit such a resignation.
SECTION 10.7. Termination of Liens and Guarantees. The Seller shall have
delivered to the Buyer (i) UCC termination statements or any other documents
required to terminate any Liens on the Shares or any Liens on the Company's or
its Subsidiaries' assets and/or properties evidencing security interests that
were granted to secure the performance of the Seller's and its Subsidiaries
obligations under the Credit Agreement (or to secure any guaranty thereof) or
otherwise evidencing security interests that were granted to secure obligations
of the Seller or any of its Subsidiaries (other than obligations solely of the
Company and its Subsidiaries incurred in the ordinary course of business,
including, without limitation, Liens of equipment lessors, with respect to which
no Liens and no obligations shall be terminated or be required to be terminated
hereunder) except for Liens which in the aggregate do not exceed $20,000 and
(ii) evidence of the termination of any guarantees or any similar obligations of
the Company or any of its Subsidiaries with respect to obligations of the Seller
and its Affiliates under the Credit Agreement and the Indenture; provided,
however, that notwithstanding anything otherwise to the contrary nothing shall
require, or be deemed to affect the termination of, any Lien or obligation of
the Company or any Subsidiary of the Company as to which they are the primary
obligor or a guarantor of a primary obligation of the Company. If at Closing,
there are any Liens on the assets and/or properties of the Company or any of its
Subsidiaries (other than obligations solely of the Company and its Subsidiaries
incurred in the ordinary course of business, including, without limitation,
Liens of equipment lessors), the Seller shall indemnify
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and hold the Buyer, the Company and any Subsidiaries of the Company harmless
from any and all liabilities related thereto.
SECTION 10.8. New Fleet Lease. The Company shall have entered into a new
lease or an amendment with respect to the Company Vehicles as contemplated by
Section 5.21; provided, however, that if the Seller is unable to cause this
condition to be satisfied after using commercially reasonable efforts (which
shall not require the Seller or the Company to make additional payments) as
required by Section 5.21, the Seller shall so notify the Buyer in writing and
this condition shall terminate and cease to have any force or effect 45 days
after the delivery of such written notice to the Buyer.
SECTION 11. TERMINATION.
-----------
SECTION 11.1. Conditions of Termination. Notwithstanding anything to the
contrary contained herein, this Agreement may be terminated at any time before
the Closing:
(a) By mutual consent of the Seller and the Buyer;
(b) By the Buyer, if the Seller has breached any representation, warranty,
covenant or agreement contained in this Agreement and has not, in the case of a
breach of a covenant or agreement, cured such breach within ten (10) Business
Days after written notice to the Seller (provided that the Buyer is not then in
material breach of the terms of this Agreement, and provided further, that no
cure period shall be required for a breach which by its nature cannot be cured)
such that the conditions set forth in Section 10.1 or Section 10.2 hereof, as
the case may be, will not be satisfied;
(c) By the Seller, if the Buyer has breached any representation, warranty,
covenant or agreement contained in this Agreement and has not, in the case of a
breach of a covenant or agreement, cured such breach within ten (10) Business
Days after written notice to the Buyer (provided that the Seller is not then in
material breach of the terms of this Agreement, and provided further that no
cure period shall be required for a breach which by its nature cannot be cured)
such that the conditions set forth in Section 9.1 or Section 9.2 hereof, as the
case may be, will not be satisfied;
(d) By the Seller or the Buyer if: (i) there shall be a final,
non-appealable order of a federal or state court in effect preventing
consummation of the transactions contemplated hereby; or (ii) there shall be any
final action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the transactions contemplated
hereby by any Governmental Entity which would make consummation of the
transactions contemplated hereby illegal; or
(e) By the Seller or the Buyer if the Closing shall not have been
consummated by June 30, 2003; provided that the right to terminate this
Agreement under this Section 11.1(e) shall not be available to any party whose
failure to fulfill any material obligation under this Agreement has been both
willful and the cause of, or resulted in, the failure of the Closing to occur on
or before such date.
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SECTION 11.2. Effect of Termination. In the event of the termination of
this Agreement as provided in Section 11.1 hereof, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of the Seller or the Buyer, or their respective officers, directors,
stockholders, partners, option holders or other Persons under their control,
except to the extent that such termination results from the willful breach by a
party hereto of any of its representations, warranties, covenants or agreements
set forth in this Agreement; provided, however, that any termination of this
Agreement pursuant to Section 11.1(b) or Section 11.1(c) shall not relieve the
defaulting or breaching party from any liability to the non-defaulting or
non-breaching party; and provided further, that the provisions of Sections 6.6
(Confidentiality), 11 (Termination) and 12 (Miscellaneous) hereof shall remain
in full force and effect and survive any termination of this Agreement.
SECTION 12. MISCELLANEOUS.
-------------
SECTION 12.1. Successors and Assigns. No party hereto shall assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the other parties hereto and any such attempted assignment without
such prior written consent shall be void and of no force and effect.
Notwithstanding the foregoing, the Buyer may at any time, without the consent of
the Seller, whether before or after the Closing, assign any or all of its
rights, interests and obligations hereunder to one or more of its Affiliates,
and following the Closing the Buyer may, without the consent of the Seller, (i)
make a collateral assignment of any rights or benefits hereunder to any lender
or (ii) assign any or all of its rights, interests or obligations hereunder in
connection with any sale of the Buyer or of all or substantially all of the
assets of the Buyer. This Agreement shall inure to the benefit of and shall be
binding upon the successors and permitted assigns of the parties hereto.
SECTION 12.2. Governing Law, Jurisdiction. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the laws
of the State of New York, without giving effect to the conflict or choice of law
rules thereof. The parties hereto irrevocably elect as the sole judicial forum
for the adjudication of any matters arising under or in connection with this
Agreement, and consent to the jurisdiction of, the courts of the County of New
York, State of New York or the United States of America for the Southern
District of New York.
SECTION 12.3. Expenses. Except as otherwise expressly provided in this
Agreement, all of the fees, expenses and costs incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
hereto incurring such fees, expenses and costs.
SECTION 12.4. Severability. In the event that any part of this Agreement is
declared by any court or other judicial or administrative body to be null, void
or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Agreement shall remain in full
force and effect.
SECTION 12.5. Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is to be given;
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(ii) on the day of transmission if sent via facsimile transmission to the
facsimile number given below, and telephonic confirmation of receipt is obtained
promptly after completion of transmission; (iii) on the day after delivery to
Federal Express or similar overnight courier or the Express Mail service
maintained by the United States Postal Service; or (iv) on the fifth calendar
day after mailing, if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, postage prepaid and properly
addressed, to the party as follows:
If to the Seller:
PSS World Medical, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
Telecopy: (000) 000-0000
Copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Xx., Esq.
Telecopy: (000) 000-0000
If to the Buyer:
Imaging Acquisition Corporation
c/o Platinum Equity, LLC
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
Copy to:
Xxxxxxx & XxXxxxxx
000 Xxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Loss, Esq.
Telecopy: (000) 000-0000
If to the Guarantor:
Platinum Equity, LLC
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
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Copy to:
Xxxxxxx & XxXxxxxx
000 Xxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Loss, Esq.
Telecopy: (000) 000-0000
Any party may change its address for the purpose of this Section by giving
the other party written notice of its new address in the manner set forth above.
SECTION 12.6. Amendments; Waivers. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance. Any
waiver by any party of any condition, or of the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, in any one or
more instances, shall not be deemed to be nor construed as a further or
continuing waiver of any such condition, or of the breach of any other
provision, term, covenant, representation or warranty of this Agreement.
SECTION 12.7. Public Announcements. The parties agree that after the
signing of this Agreement, the Seller shall not, and shall not permit the
Company and its Subsidiaries to, and the Buyer shall not, and shall not permit
any of its Affiliates to, make any press release or public announcement
concerning this transaction without the prior written approval of the other
party, unless a press release or public announcement is required by applicable
law, regulation or requirement of any securities exchange. Before a party makes
any such announcement or other disclosure required by law, regulation or
requirement of any securities exchange, such party agrees to give the other
party prior notice and an opportunity to comment on the proposed disclosure.
SECTION 12.8. Guarantee. The Guarantor hereby agrees to be responsible for
the performance by the Buyer of, and to cause the Buyer to perform, all of its
obligations under this Agreement that are to be performed by the Buyer on or
prior to the Closing Date, including, without limitation, payment of the Initial
Cash Payment, as provided herein, to the same extent as if the Guarantor were
the Buyer hereunder. The obligations of the Guarantor pursuant to this
undertaking shall terminate and be of no further force or effect immediately
upon the Closing. The Guarantor hereby further represents and warrants to the
Seller that it has the authority and power to provide this guarantee to the
Seller, that this Agreement has been duly and validly executed and delivered by
the Guarantor, and that this Agreement constitutes a valid and binding agreement
of the Guarantor, enforceable against the Guarantor in accordance with its
terms.
SECTION 12.9. Entire Agreement. This Agreement shall not constitute or
evidence a binding agreement between the parties until it has been executed and
delivered by the parties. This Agreement, the Transaction Documents and the
Confidentiality Agreement contain the entire understanding among the parties
hereto with respect to the transactions contemplated hereby and supersede and
replace all prior and contemporaneous agreements and understandings, oral or
written, with regard to such transactions. All Exhibits and schedules hereto and
any
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documents and instruments delivered pursuant to any provision hereof are
expressly made a part of this Agreement, as fully as though completely set forth
herein.
SECTION 12.10. Parties in Interest. Nothing in this Agreement is intended
to confer any rights or remedies under or by reason of this Agreement on any
Persons other than parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement is intended to relieve or discharge the
obligations or liability of any third persons to the Seller or the Buyer. No
provision of this Agreement shall give any third parties any right of
subrogation or action over or against the Seller or the Buyer.
SECTION 12.11. Section and Paragraph Headings. The section and paragraph
headings in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
SECTION 12.12. Counterparts; Facsimile Signatures. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which shall constitute the same instrument. This Agreement, any Transaction
Document and any other document or agreement executed in connection herewith
(other than any document for which an originally executed signature page is
required by law) may be executed by delivery of a facsimile copy of an executed
signature page with the same force and effect as the delivery of an originally
executed signature page. In the event any party delivers a facsimile copy of a
signature page to this Agreement, any Transaction Document or any other document
or agreement executed in connection herewith, such party shall deliver an
originally executed signature page within three (3) business days of delivering
such facsimile signature page or at any time thereafter upon request; provided,
however, that the failure to deliver any such originally executed signature page
shall not affect the validity of the signature page delivered by facsimile,
which has and shall continue to have the same force and effect as the originally
executed signature page.
SECTION 12.13. Payments. Except as otherwise expressly provided herein, any
amounts required to be paid by either party pursuant hereto (for example,
payments under Section 5.19 or Section 6.7) shall be paid within thirty (30)
days of receipt of written request for such payment.
SECTION 12.14. Effectiveness of Agreement. This Agreement shall become
effective and binding on the parties upon the earlier to occur of (i) the
receipt by the Seller of a fairness opinion with respect to the transaction
contemplated hereby in form and substance reasonably acceptable to the Seller
and (ii) the approval of this Agreement by the Board of Directors of the Seller
in the absence of delivery of such fairness opinion. The Seller shall promptly
notify the Buyer in writing of the satisfaction of the condition set forth in
this Section 12.14. If the condition set forth in this Section 12.14 has not
been satisfied by the close of business on October 30, 2002 then this Agreement
will not become effective.
[The remainder of this page has been intentionally left blank -
Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
PSS WORLD MEDICAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
IMAGING ACQUISITION CORPORATION
By: /s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
PLATINUM EQUITY, LLC
By: /s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
