EXHIBIT 10(v)
STOCK PURCHASE AGREEMENT
BY AND AMONG
HANGER ORTHOPEDIC GROUP, INC.,
HANGER PROSTHETIC & ORTHOTICS, INC.,
XXXXXX PROSTHETICS-ORTHOTICS, INC.
AND
XXX XXXXXX
Dated as of November 3, 1997
TABLE OF CONTENTS
Page
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ARTICLE I SALE AND PURCHASE OF SHARES................................... 1
SECTION 1.1. SALE OF SHARES............................................ 1
SECTION 1.2. PURCHASE PRICE, PAYMENT AND ADJUSTMENTS................... 1
SECTION 1.3. DELIVERIES AT CLOSING; STOCK TRANSFER BOOKS............... 3
ARTICLE II CLOSING; CLOSING DATE.......................................... 3
ARTICLE III REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY......... 4
SECTION 3.1. ORGANIZATION AND QUALIFICATION............................ 4
SECTION 3.2. CERTIFICATE OF INCORPORATION AND BY-LAWS.................. 4
SECTION 3.3. CAPITALIZATION............................................ 4
SECTION 3.4. AUTHORITY................................................. 5
SECTION 3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS................ 5
SECTION 3.6. PERMITS; COMPLIANCE....................................... 5
SECTION 3.7. FINANCIAL STATEMENTS...................................... 6
SECTION 3.8. NO UNDISCLOSED LIABILITIES................................ 6
SECTION 3.9. ABSENCE OF CERTAIN CHANGES OR EVENTS...................... 6
SECTION 3.10. ABSENCE OF LITIGATION.................................... 8
SECTION 3.11. BROKERS.................................................. 8
SECTION 3.12. TAX MATTERS.............................................. 9
SECTION 3.13. REAL PROPERTY............................................ 10
SECTION 3.14. INTELLECTUAL PROPERTY.................................... 11
SECTION 3.15. TANGIBLE ASSETS.......................................... 13
SECTION 3.16. INVENTORY................................................ 13
SECTION 3.17. CONTRACTS................................................ 13
SECTION 3.18. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE................. 14
SECTION 3.19. POWERS OF ATTORNEY....................................... 15
SECTION 3.20. INSURANCE................................................ 15
SECTION 3.21. EMPLOYEES................................................ 15
SECTION 3.22. EMPLOYEE BENEFITS........................................ 16
SECTION 3.23. GUARANTIES............................................... 17
SECTION 3.24. ENVIRONMENT, HEALTH AND SAFETY........................... 17
SECTION 3.25. CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY.......... 18
SECTION 3.26. DELIVERY OF INFORMATION.................................. 18
SECTION 3.27. PRODUCT AND SERVICE WARRANTIES........................... 18
SECTION 3.28. PRODUCT AND SERVICE LIABILITY............................ 18
SECTION 3.29. CERTAIN BUSINESS PRACTICES............................... 19
SECTION 3.30. DISCLOSURE............................................... 19
ARTICLE IIIA REPRESENTATIONS AND WARRANTIES OF SOLE STOCKHOLDER........... 19
SECTION 3.1A. AUTHORIZATION OF TRANSACTION............................ 19
SECTION 3.2A. NONCONTRAVENTION........................................ 19
SECTION 3.3A. BROKERS' FEES........................................... 20
SECTION 3.4A. COMPANY SHARES.......................................... 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF HANGER AND BUYER............. 20
SECTION 4.1. ORGANIZATION AND QUALIFICATION............................ 20
SECTION 4.2. AUTHORITY................................................. 20
SECTION 4.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS................ 21
SECTION 4.4. LIMITATION ON REPRESENTATIONS AND WARRANTIES.............. 21
SECTION 4.5. REPORTS; FINANCIAL STATEMENTS............................. 21
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SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS...................... 22
SECTION 4.7. OWNERSHIP OF BUYER........................................ 22
SECTION 4.8. BROKERS................................................... 22
ARTICLE V COVENANTS....................................................... 22
SECTION 5.1. AFFIRMATIVE COVENANTS OF THE COMPANY...................... 22
SECTION 5.2. NEGATIVE COVENANTS OF THE COMPANY......................... 23
SECTION 5.3. NEGATIVE COVENANTS OF HANGER AND BUYER.................... 24
SECTION 5.4. ACCESS AND INFORMATION.................................... 25
ARTICLE VI ADDITIONAL AGREEMENTS.......................................... 25
SECTION 6.1. APPROPRIATE ACTION; CONSENTS; FILINGS..................... 25
SECTION 6.2. TRANSFER OF CERTAIN COMPANY ASSETS PRIOR TO THE
CLOSING DATE......................................................... 26
SECTION 6.3. PAYMENT BY COMPANY OF CERTAIN OUTSTANDING
OBLIGATIONS PRIOR TO THE CLOSING DATE................................ 26
SECTION 6.4. EMPLOYMENT AND NON-COMPETITION AGREEMENTS................. 26
SECTION 6.5. LANDLORD APPROVALS........................................ 27
SECTION 6.6. Contract ASSIGNMENTS/NOVATIONS............................ 27
SECTION 6.7. BEST EFFORTS.............................................. 27
SECTION 6.8. PUBLIC ANNOUNCEMENTS...................................... 27
SECTION 6.9. TAIL INSURANCE............................................ 27
SECTION 6.10. NO COMPETING TRANSACTION................................. 27
SECTION 6.11. TAX TREATMENT AS STOCK PURCHASE......................... 27
ARTICLE VII CLOSING CONDITIONS............................................ 28
SECTION 7.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER
THIS AGREEMENT....................................................... 28
SECTION 7.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF BUYER
AND/OR HANGER........................................................ 28
SECTION 7.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE
COMPANY AND THE SOLE STOCKHOLDER..................................... 29
ARTICLE VIII TERMINATION, AMENDMENT, WAIVER AND INDEMNIFICATION........... 30
SECTION 8.1. TERMINATION............................................... 30
SECTION 8.2. INVESTIGATION............................................. 31
SECTION 8.3. AMENDMENT................................................. 31
SECTION 8.4. WAIVER.................................................... 31
SECTION 8.5. FEES, EXPENSES AND OTHER PAYMENTS......................... 31
SECTION 8.6. INDEMNIFICATION........................................... 31
ARTICLE IX GENERAL PROVISIONS............................................. 33
SECTION 9.1. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS........................................................... 33
SECTION 9.2. NOTICES................................................... 33
SECTION 9.3. CERTAIN DEFINITIONS....................................... 34
SECTION 9.4. HEADINGS; CONSTRUCTION.................................... 39
SECTION 9.5. SEVERABILITY.............................................. 39
SECTION 9.6. ENTIRE AGREEMENT AND MODIFICATION......................... 40
SECTION 9.7. ASSIGNMENT................................................ 40
SECTION 9.8. PARTIES IN INTEREST....................................... 40
SECTION 9.9. WAIVER; REMEDIES CUMULATIVE............................... 40
SECTION 9.10. FURTHER ASSURANCES....................................... 40
SECTION 9.11. GOVERNING LAW............................................ 41
SECTION 9.12. JURISDICTION; SERVICE OF PROCESS......................... 41
SECTION 9.13. COUNTERPARTS............................................. 41
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Exhibits Description
-------- -----------
Exhibit A Promissory Note
Exhibit B-1 Form of Xxx Xxxxxx Employment Agreement
Exhibit B-2 Form of Key Employee Employment Agreement
Exhibit C Form of Sole Stockholder Non-Competition Agreement
Exhibit D Legal Opinion of Counsel to the Company
Exhibit E Legal Opinion of Counsel to Hanger
Schedule
Number Description
-------- -----------
1.1 Purchased Shares
3.2 Officers and Directors; Certificate of
Incorporation and By-Laws; Minutes; Stock
Certificates and Transfer Books
3.5 Filings and Consents
3.7 Financial Statements
3.8 Liabilities
3.9 Certain Changes or Events of the Company
3.10 Litigation Matters
3.11 Brokers
3.12(c) Tax Returns
3.12(f) Additional Tax Matters
3.13(a) Real Property Owned
3.13(b) Real Property Leased or Subleased
3.14(c) Intellectual Property Owned
3.14(d) Intellectual Property Licensed, Sublicensed,
Agreements or Permission
3.15 Tangible Assets
3.16 Inventory
3.17 Contracts
3.20 Insurance Policies
3.21 Employees
3.22 Employee Benefit Plans
3.24 Environmental Matters
3.25 Certain Business Relationships with the Company
3.27 Standard Sale, Lease and Performance Terms and
Conditions
5.2 Negative Covenants
7.2(c) Contracts or Agreements Requiring Consents or
Waivers
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of November 3, 1997 (this
"AGREEMENT"), by and among Hanger Orthopedic Group, Inc., a Delaware
corporation ("HANGER"); Hanger Prosthetics & Orthotics, Inc., a Delaware
corporation ("BUYER") and a wholly-owned subsidiary of Hanger; Xxxxxx
Prosthetics-Orthotics, Inc., a Texas corporation (the "COMPANY"); and Xxx
Xxxxxx, the sole stockholder of the Company (the "SOLE STOCKHOLDER").
W I T N E S S E T H:
WHEREAS, the Sole Stockholder is the sole owner of all the issued and
outstanding shares (all of such shares being collectively referred to as the
"SHARES") of the common stock, par value $___, of the Company (the "COMPANY
COMMON STOCK"), and the Sole Stockholder now desires to sell, and the Buyer
wishes to purchase (the "PURCHASE"), all of the shares of Company Common Stock
upon the terms and subject to the conditions of this Agreement; and
WHEREAS, Hanger and the Company are made a party hereto for the purposes
as set forth herein; and
WHEREAS, certain capitalized terms used in this Agreement are defined in
Section 9.3.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
SECTION 1.1 SALE OF SHARES. Sole Stockholder agrees to sell the Shares
to Buyer and Buyer agrees to purchase the Shares, as set forth on SCHEDULE
1.1, from Sole Stockholder for the purchase price provided in Section 1.2(a),
payable in accordance with Section 1.2, subject to adjustment in accordance
with Section 1.2(c), and subject to the terms and conditions and based upon
the representations and warranties contained herein.
SECTION 1.2 PURCHASE PRICE, PAYMENT AND ADJUSTMENTS.
(a) PURCHASE PRICE AND PAYMENT. Buyer agrees to pay to the Sole
Stockholder at the Closing a total of Three Million Five Hundred Thousand
Dollars ($3,500,000) ("PURCHASE PRICE") for the Shares by delivery of: (i) One
Million Seven Hundred Fifty Thousand Dollars ($1,750,000) in cash payable by
wire transfer or delivery of other immediately available funds; and (ii) a
subordinated promissory note in the principal amount of One Million Seven
Hundred Fifty Thousand Dollars ($1,750,000) in the form attached hereto as
EXHIBIT A (the "NOTE"), having a term of five (5) years and bearing interest
at the rate of seven and one-half percent (7.5%) per annum, with equal
payments of interest and principal being payable on an annual basis on each
anniversary date of the Closing Date. The Note shall be guaranteed by Hanger.
The Purchase Price shall be subject to pre-Closing and post-Closing
adjustments as set forth in Section 1.2(c) below.
(b) PRE-CLOSING TRANSFERS. Notwithstanding anything contained
herein to the contrary, prior to the Closing Date in accordance with Sections
6.2 and 6.3 hereof, the Company shall transfer, distribute and/or dispose of
the following items to the Sole Stockholder or to a third party at the
direction of the Sole Stockholder, all with the effect that the following
items shall not be owned by the Company, nor assumed by Buyer, at the Closing
Date: (i) any notes or accounts receivable due to the Company from its
officers, directors or the Sole Stockholder, or due from the Company to its
officers, directors or the Sole Stockholder; (ii) any real property owned by
the Company (and any fixtures located thereon) and any mortgages, deeds of
trust or other indebtedness on or relating to such real property for which the
Company is liable in any manner whatsoever; (iii) any automobiles or vehicles
leased or owned by the Company that are used for personal purposes by the Sole
Stockholder or any employee of the Company, and any leases or indebtedness on
or relating to such automobiles or vehicles for which the Company is liable in
any manner whatsoever; (iv) all life insurance policies on the life of the
Sole Stockholder; (v) all long-term indebtedness, including but not limited to
all bank debt, and all indebtedness relating to prior acquisitions by the
Company; and (vi) any cash in excess of the amount necessary to fully cover
all checks issued by the Company up to and through the Closing Date. Any Taxes
generated in connection with such transfers, distributions or disposals shall
be borne solely by the Sole Stockholder or shall be reimbursed to the Buyer by
the Sole Stockholder. Furthermore, prior to the Closing Date, the Company
shall fully pay all outstanding pension plan and profit sharing contributions
due from the Company, if any.
(c) PURCHASE PRICE ADJUSTMENT.
(i) Notwithstanding anything contained in this Agreement
to the contrary, the Sole Stockholder guarantees that the Company's adjusted
working capital measured as of the close of business on the Closing Date (the
"ADJUSTED WORKING CAPITAL") shall equal or exceed $300,000, and shall consist
of the following components: (i) cash on hand; (ii) Accounts Receivable; (iii)
Inventory; (iv) prepaid expenses; (v) deposits; (vi) accounts payable
("ACCOUNTS PAYABLE"); (vii) accrued salaries and expenses ("ACCRUED
EXPENSES"); and (viii) income taxes payable. If Adjusted Working Capital is
less than $300,000 on the Closing Date, then the cash portion of the Purchase
Price payable pursuant to Section 1.2(a) shall be reduced by the aggregate
amount of such deficiency.
(ii) On the date that is one year after the Closing Date
(the "POST-CLOSING DATE ADJUSTMENT DATE"), any shortfall in the amount of the
Accounts Receivable of the Company at the Closing Date and the amount of such
Accounts Receivable actually collected by Buyer within such one-year period
(the "SHORTFALL") shall reduce the Purchase Price and shall be deducted from
the then outstanding principal amount of the Note. Buyer shall assign to the
Sole Stockholder any Accounts Receivable that remain uncollected on the
Post-Closing Date Adjustment Date, and Buyer shall execute such other
instruments or documents at that time to complete such assignment to the Sole
Stockholder. On the Post-Closing Date Adjustment Date, in the event the amount
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of the Adjusted Working Capital exceeds $300,000, then such excess shall be
paid by the Buyer to the Sole Shareholder.
(iii) Hanger or Buyer may hire, at its sole cost, an
independent certified public accounting firm to certify the accuracy of the
calculation of Adjusted Working Capital and the components thereof and the
Shortfall, which certification shall be conclusive and binding upon Hanger,
Buyer and the Sole Stockholder.
(d) CANCELLATION OF TREASURY STOCK. Each share of Company Common
Stock held in the treasury of the Company, if any, immediately prior to the
Closing Date shall be canceled and extinguished and no payment shall be made
with respect thereto.
SECTION 1.3 DELIVERIES AT CLOSING; STOCK TRANSFER BOOKS.
(a) At the Closing, (i) the Sole Stockholder shall deliver to
the Buyer the various certificates, instruments, and documents referred to in
Sections 7.1 and 7.2 hereof, (ii) the Buyer shall deliver to the Sole
Stockholder the various certificates, instruments, and documents referred to
in Sections 7.1 and 7.3 hereof, (iii) the Sole Stockholder shall deliver to
the Buyer stock certificates representing all of the outstanding shares of the
Company, endorsed in blank or accompanied by duly executed assignment
documents, and (iv) the Buyer shall deliver to the Sole Stockholder the
consideration specified in Section 1.2(a) hereof, subject to adjustment as
provided in Section 1.2(c).
(b) On the date of the Agreement, the stock transfer books of
the Company shall be closed and there shall be no further registration of
transfers of shares of Company Common Stock thereafter on the records of the
Company. On and after the Closing Date, any certificates representing shares
of Company Common Stock shall thereafter only represent the right to receive a
pro rata portion of the Purchase Price and such certificates, upon
presentation to Hanger or Buyer, shall be converted into the Purchase Price
consideration.
ARTICLE II
CLOSING; CLOSING DATE
The closing of the transactions contemplated by this Agreement (the
"CLOSING") shall take place at the offices of Buyer's attorneys, Freedman,
Levy, Xxxxx & Xxxxxxx, Xxxxx 000, 0000 Xxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx,
X.X. 00000, on or before November 3, 1997, or at such other location and on
such other date as the Buyer and the Sole Stockholder may mutually agree in
writing; PROVIDED, HOWEVER, that the Closing shall take place no later than
November 3, 1997 (the "CLOSING DATE").
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
Each of the Company and the Sole Stockholder hereby represents and
warrants, jointly and severally, to Hanger and Buyer as follows as of the date
of this Agreement and as of the Closing Date:
SECTION 3.1 ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, has all
requisite corporate or other power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, and is
duly qualified and in good standing to do business in each jurisdiction in
which the nature of the business conducted by it or the ownership or leasing
of its properties makes such qualification necessary. The Company has no
Subsidiaries, and does not, directly or indirectly, own or control any
investment or interest (whether in the form of debt or equity) in any other
Person.
SECTION 3.2 CERTIFICATE OF INCORPORATION AND By-Laws. SCHEDULE 3.2
contains (i) a list of the officers and directors of the Company, (ii)
complete and correct copies of the Company's Certificate of Incorporation and
By-Laws or equivalent organizational documents, in each case as amended or
restated, as in effect as of the Closing Date, (iii) the minute books relating
to all meetings of stockholders, board of directors and committees of the
Company, (iv) stock certificate books the Company and (v) stock transfer books
of the Company. The Company is not in violation of any of the provisions of
its Certificate of Incorporation or By- Laws or equivalent organizational
documents, in each case as amended or restated. In addition, the minute books
(containing the record of meetings of the stockholders, the board of directors
and any committees of the board of directors), the stock certificate books and
the stock transfer books of the Company are correct and complete.
SECTION 3.3 CAPITALIZATION. The authorized capital stock of the
Company consists of Ten Thousand (10,000) shares of Company Common Stock, of
which One Thousand (1,000) Shares are issued and outstanding as of the date of
this Agreement, and (a) all of which Shares are duly authorized, validly
issued, fully paid and non-assessable and not subject to preemptive rights
created by statute, the Company's Certificate of Incorporation or By-Laws or
any agreement to which the Company is a party or bound, (b) no shares of
Company Common Stock were held in treasury of the Company and (c) all of the
issued and outstanding shares of Company Common Stock are owned by and held in
the name of the Sole Stockholder. There are no bonds, debentures, notes or
other indebtedness, issued or outstanding, having the right to vote on any
matters on which the Company's stockholders may vote. There are no options,
warrants, calls or other rights (including subscription rights or registration
rights), agreements, proxies, voting rights agreements, voting trusts,
arrangements or commitments of any character, presently outstanding, which (i)
obligate the Company to issue, deliver or sell shares of its capital stock or
debt securities, (ii) obligate the Company to grant, extend or enter into any
such option, warrant, call or other such right, agreement, arrangement or
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commitment, (iii) obligate the Company to repurchase, redeem or otherwise
acquire any shares of Company Common Stock, or (iv) relate to the issued or
unissued capital stock of, or other equity interests in, the Company.
SECTION 3.4 AUTHORITY. The Company has all requisite corporate power
and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action and no other corporate proceeding on the part of the Company
is necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
the Company and, assuming the due authorization, execution and delivery
thereof by the Sole Stockholder, Hanger and Buyer, constitutes the legal,
valid and binding obligation of the Company enforceable in accordance with its
terms.
SECTION 3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in SCHEDULE 3.5, the execution and
delivery of this Agreement by the Company does not, and the performance of
this Agreement by the Company will not (i) conflict with or violate the
Company's Certificate of Incorporation or By-Laws or equivalent organizational
documents, in each case as amended or restated, (ii) conflict with or violate
any federal, state, foreign or local law, statute, ordinance, rule,
regulation, order, judgment or decree (collectively, "LAWS") and applicable to
the Company or by which any of its properties is bound or subject to, or (iii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or require
payment under, or result in the creation of an Encumbrance on, any of the
properties or Assets of the Company pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company is a party or by which the
Company or any of its properties is bound or subject.
(b) The execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not,
require the Company to obtain any consent, approval, authorization or permit
of, or to make any filing with or notification to, any governmental or
regulatory authority, domestic or foreign ("GOVERNMENTAL ENTITIES") based on
Laws and other requirements of Governmental Entities.
SECTION 3.6 PERMITS; COMPLIANCE. The Company is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own,
lease and operate its properties and to carry on its business as it is now
being conducted (collectively, the "COMPANY PERMITS"), and there is no action,
proceeding or investigation pending or threatened regarding suspension or
cancellation of any of the Company Permits. The Company is not in conflict
with, or in default or violation of (a) any Law applicable to the Company or
which any of its properties is bound by or subject to or (b) any of the
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Company Permits. The Company has not received from any Governmental Entity any
written notification with respect to possible conflicts, defaults or
violations of Laws.
SECTION 3.7 FINANCIAL STATEMENTS. SCHEDULE 3.7 contains true, correct
and complete copies of the compilation balance sheet of the Company as of July
31, 1997 (the "BALANCE SHEET"), and the income statement as of July 31, 1997,
each as prepared by Xxxxxx X. Xxxxxxx, C.P.A. (collectively, the "FINANCIAL
STATEMENTS"). The Financial Statements are attached hereto as SCHEDULE 3.7 and
have been prepared from books and records of the Company on a basis consistent
with preceding years and throughout the periods involved (except as otherwise
noted therein). The Financial Statements fairly present the financial
condition of the Company at the dates thereof and for the periods indicated in
the Financial Statements. No financial statement of any Person other than the
Company is required by GAAP to be included in the Financial Statements.
SECTION 3.8 NO UNDISCLOSED LIABILITIES. Except as set forth on
SCHEDULE 3.8, the Company has no liabilities or other obligations of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise ("LIABILITY" or "LIABILITIES"), and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a Liability, other than Liabilities fully reflected or reserved
against on the face of the Balance Sheet as adjusted for Liabilities incurred
in the Ordinary Course of Business since June 30, 1997 through the Closing
Date.
SECTION 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1997,
there has not been any adverse change in the business, financial condition,
operations, results of operations or future prospects of the Company. Without
limiting the generality of the foregoing, since that date and except as
otherwise disclosed in SCHEDULE 3.9:
(a) the Company has not sold, leased, transferred, or assigned
any of its Assets, tangible or intangible, other than sales to its customers
for fair consideration in the Ordinary Course of Business;
(b) the Company has not entered into any agreement, contract,
lease or license (or series of related agreements, contracts, leases and
licenses) outside the Ordinary Course of Business;
(c) no party (including the Company) has accelerated,
terminated, modified or canceled any agreement, contract, lease or license (or
series of related agreements, contracts, leases and licenses) to which the
Company is a party or by which the Company is bound;
(d) the Company has not imposed, granted, allowed or consented
to any Security Interest upon any of its Assets;
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(e) the Company has not made any capital expenditure (or series
of related capital expenditures) either involving more than an aggregate of
Five Thousand Dollars ($5,000.00) or outside the Ordinary Course of Business;
(f) the Company has not made any capital investment in, any loan
to, or any acquisition of the securities or Assets of, any other Person (or
series of related capital investments, loans, and acquisitions);
(g) the Company has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation;
(h) the Company has not delayed or postponed the payment of
Accounts Payable, Accrued Expenses or other Liabilities outside the Ordinary
Course of Business;
(i) the Company has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims);
(j) the Company has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(k) there has been no change made or authorized in the Company's
Certificate of Incorporation or By-Laws or equivalent organizational
documents, in each case as amended or restated prior to February 8, 1988;
(l) the Company has not issued, sold or otherwise disposed of
any of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of
its capital stock;
(m) the Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether
in cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(n) the Company has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its Assets;
(o) the Company has not made any loan to, or entered into any
other transaction with, any of its directors, officers and employees;
(p) the Company has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
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(q) the Company has not granted any increase in the compensation
of any of its directors, officers and employees;
(r) the Company has not adopted, amended, modified or terminated
any bonus, profit-sharing, incentive, severance or other plan, contract or
commitment for the benefit of any of its directors, officers and employees (or
taken any such action with respect to any other Employee Benefit Plan);
(s) the Company has not made any other change in employment
terms for any of its directors, officers and employees outside the Ordinary
Course of Business;
(t) the Company has not made or pledged to make any charitable
or other capital contribution;
(u) the Company has not done any act, or failed to do any act
which it had a duty or obligation to perform, which has or could result in a
breach of any obligation of the Company;
(v) there has not been any other occurrence, event, incident,
action, failure to act or transaction outside the Ordinary Course of Business
involving the Company; and
(w) the Company has not committed to any of the foregoing.
SECTION 3.10 ABSENCE OF LITIGATION. Except as set forth on SCHEDULE
3.10, (a) there is no claim, action, suit, litigation, proceeding, arbitration
or investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), pending or threatened against the
Company or any properties or rights of the Company, and (b) the Company is not
subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with or continuing investigation by, any court
or Governmental Entity, or any judgment, order, writ, injunction, decree or
award of any court, Governmental Entity or arbitrator. In respect of the
matters relating to or arising in connection with the actions set forth in
SCHEDULE 3.10, there is no fact, event, condition, circumstance or other
matter which either has, or is reasonably likely to have resulted in, an event
or determination having a Company Material Adverse Effect. The Company has
delivered to Hanger or Buyer copies of all pleadings, correspondence and other
documents relating to each matter disclosed in SCHEDULE 3.10.
SECTION 3.11 BROKERS. Except as set forth on SCHEDULE 3.11, no broker,
finder or investment banker is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
Company has heretofore furnished to Hanger a correct copy of all agreements
between the Company and any broker, finder or investment adviser pursuant to
which such firm or individual would be entitled to any payment relating to the
Purchase. The Purchase Price shall be reduced to reflect the payment of such
8
fees by the Company in the event any such fees are not paid by the Sole
Stockholder or by the Company prior to the Closing Date.
SECTION 3.12 TAX MATTERS.
(a) The Company has filed all Tax Returns in a timely manner
that it was required to file. All such Tax Returns were correct and complete
in all respects. All Taxes owed by the Company (whether or not shown on any
Tax Return) have been paid. The Company is not currently the beneficiary of
any extension of time within which to file any Tax Return. No claim has ever
been made by an authority in a jurisdiction where the Company does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction.
There are no Security Interests on any of the Assets of the Company that arose
in connection with any failure (or alleged failure) to pay any Tax or file any
Tax Return.
(b) The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party.
(c) There is no dispute or claim concerning any Liability for
Taxes of the Company claimed or raised by any Governmental Entity. SCHEDULE
3.12(c) lists all federal, state, local, and foreign income Tax Returns filed
with respect to the Company for taxable periods ended on or after December 31,
1993, and indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit. The Company has
delivered to Hanger correct and complete copies of all federal income Tax
Returns, examination reports and statements of deficiencies assessed against
or agreed to by the Company since December 31, 1993.
(d) The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(e) The Company has not filed any consent under Section 341(f)
of the Code concerning collapsible corporations. The Company has not made any
payments, or is not obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Code. The
Company has not been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. The Company is not a party
to any Tax allocation or sharing agreement. The Company (i) has not been a
member of an Affiliated Group filing a consolidated federal income Tax Return
(other than a group the common parent of which was the Company) and (ii) has
no Liability for the Taxes of any Person (other than the Company) under Treas.
Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor by contract, or otherwise.
9
(f) SCHEDULE 3.12(f) sets forth the following information with
respect to the Company as of the most recent practicable date: (A) the
adjusted tax basis of the Company in its Assets; (B) the amount of any net
operating loss, net capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution allocable to the Company; and
(C) the amount of any inter-company items or any deferred gain or loss
allocable to the Company with respect to any inter-company transaction.
(g) The unpaid Taxes of the Company (i) do not exceed the
reserve for Liability for Taxes (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set
forth on the face of the Balance Sheet (rather than in any notes thereto) and
(ii) do not exceed that reserve as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the
Company in filing its Tax Returns.
SECTION 3.13 REAL PROPERTY.
(a) SCHEDULE 3.13(a) lists and describes all real property owned
by the Company. The Company represents and warrants that no Lien or
Encumbrance exists with respect to any such property, except as fully
described on SCHEDULE 3.13(a). The Company will not own any real property as
of the Closing Date.
(b) SCHEDULE 3.13(b) lists and describes briefly all real
property leased or subleased to the Company. The Company has delivered to
Buyer correct and complete copies of the leases and subleases listed in
SCHEDULE 3.13(b). With respect to each lease and sublease listed in SCHEDULE
3.13(b):
(i) the lease or sublease is legal, valid, binding,
enforceable and in full force and effect;
(ii) the lease or sublease will continue to be legal,
valid, binding, enforceable and in full force and effect on identical terms
following the consummation of the transactions contemplated by this Agreement;
(iii) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(iv) no party to the lease or sublease has repudiated any
provision thereof;
(v) there are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
10
(vi) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold;
(vii) all facilities leased or subleased thereunder have
received all approvals of Governmental Entities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules, and
regulations; and
(viii) all facilities leased or subleased thereunder are
supplied with functional utilities and other services necessary for the normal
and usual operation of said facilities.
SECTION 3.14 INTELLECTUAL PROPERTY.
(a) The Company owns or has the right to use pursuant to
license, sublicense, agreement or permission all Intellectual Property
necessary for the operation of the Company's business as presently conducted.
Each item of Intellectual Property owned or used by the Company is owned or
available for use by the Company on identical terms and conditions immediately
subsequent to the Closing Date. The Company has taken all reasonably necessary
and desirable action to maintain and protect each item of Intellectual
Property that it owns or uses.
(b) The Company has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of any third party. The Sole Stockholder and none of the
directors and officers (and employees with responsibility for Intellectual
Property matters) of the Company has ever received any oral or written charge,
complaint, claim, demand or notice alleging any such interference,
infringement, misappropriation or violation (including any claim that the
Company must license or refrain from using any Intellectual Property rights of
any third party). To the Company's Knowledge, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with
any Intellectual Property rights of the Company.
(c) SCHEDULE 3.14(c) identifies each patent or trademark and
copyright registration which has been issued to the Company or any Affiliate
of the Company with respect to any of its Intellectual Property, identifies
each pending patent application or application for registration which the
Company or any Affiliate of the Company has made with respect to any of its
Intellectual Property, and identifies each license, agreement, or other
permission which the Company or any Affiliate of the Company has granted to
any third party with respect to any of its Intellectual Property (together
with any exceptions). The Company has delivered to Buyer correct and complete
copies of all such patents, registrations, applications, licenses, agreements
and permissions (as amended to date). SCHEDULE 3.14(c) also identifies each
trade name or unregistered trademark used by the Company or any Affiliate of
the Company in connection with any of its businesses. With respect to each
item of Intellectual Property required to be identified in SCHEDULE 3.14(c):
11
(i) the Company possesses all right, title, and interest
in and to the item, free and clear of any Security Interest, license, or other
restriction;
(ii) no royalty or other remuneration of any type is
payable with respect to any such item of Intellectual Property;
(iii) such item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge;
(iv) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or threatened which challenges
the legality, validity, enforceability, use or ownership of such item; and
(v) the Company has never agreed to indemnify any Person
for or against any interference, infringement, misappropriation or other
conflict with respect to such item.
(d) SCHEDULE 3.14(d) identifies each item of Intellectual
Property that any third party owns and that the Company or any Affiliate of
the Company uses pursuant to license, sublicense, agreement or permission,
other than shrink-wrap licenses for personal computer software. The Company
has delivered to Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect to
each item of Intellectual Property required to be identified in SCHEDULE
3.14(d):
(i) the license, sublicense, agreement or permission
covering such item is legal, valid, binding, enforceable and in full force and
effect;
(ii) the license, sublicense, agreement or permission will
continue to be legal, valid, binding, enforceable and in full force and effect
on identical terms following the Closing Date;
(iii) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default or permit
termination, modification or acceleration thereunder;
(iv) no party to the license, sublicense, agreement or
permission has repudiated any provision thereof;
(v) no royalty or other remuneration of any type is
payable with respect to any such item of Intellectual Property;
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(vi) with respect to each sublicense, the representations
and warranties set forth in items (i) through (iv) above are true and correct
with respect to the underlying license;
(vii) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree, ruling or
charge;
(viii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or threatened which challenges
the legality, validity or enforceability of the underlying item of
Intellectual Property; and
(ix) the Company has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or permission.
(e) Neither the Sole Stockholder nor any of the directors and
officers (nor any employees with responsibility for Intellectual Property
matters) of the Company has any Knowledge of any new products, inventions,
procedures or methods of manufacturing or processing that any competitors or
other third parties have developed which reasonably could be expected to
supersede or make obsolete any product or process of the Company.
SECTION 3.15 TANGIBLE ASSETS. SCHEDULE 3.15 lists all the tangible
Assets of the Company. Except as set forth on SCHEDULE 3.15, the Company owns
and has good and marketable title to all the tangible property and Assets
necessary for the conduct of its business as presently conducted and as
proposed to be conducted, including, but not limited to, those Assets listed
on SCHEDULE 3.15. Each tangible Asset is free from defects, has been
maintained in accordance with normal industry practice and is in good
operating condition and repair. There are no Security Interests on any of the
Assets of the Company.
SECTION 3.16 INVENTORY. SCHEDULE 3.16 lists all the inventory
("Inventory") of the Company as of September 8, 1997. The Inventory of the
Company consists of raw materials and supplies, manufactured and purchased
parts, goods/work in process and finished goods, all of which is merchantable
and fit for the purpose for which it was procured or manufactured, and none of
which is slow-moving, obsolete, damaged or defective, subject only to the
reserve for inventory writedown set forth on the face of the Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the
Company. There are no Security Interests on any of the Inventory of the
Company.
SECTION 3.17 CONTRACTS. SCHEDULE 3.17 lists the following Contracts and
other agreements to which the Company is a party as of the date hereof:
(a) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease payments of any
amount or for a term of more than one (1) year;
13
(b) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products or other
personal property, or for the furnishing or receipt of services of any amount
or which has a term of any duration;
(c) any partnership or joint venture agreement;
(d) any agreement (or group of related agreements) under which
it has created, incurred, assumed or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in any amount, or under which it
has imposed a Security Interest on any of its Assets, tangible or intangible;
(e) any agreement concerning confidentiality or non-competition;
(f) any agreement with the Sole Stockholder or Affiliates of the
Sole Stockholder;
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance or other material plan or
arrangement (including any Employee Benefit Plan) for the benefit of its
current or former directors, officers and employees;
(h) any collective bargaining agreement;
(i) any agreement for the employment of any individual on a
full-time, part-time, consulting or other basis;
(j) any agreement under which the consequences of a default or
termination could have a Company Material Adverse Effect; or
(k) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of One Thousand Dollars
($1,000.00).
The Company has delivered to Buyer a correct and complete copy of each
written agreement listed in SCHEDULE 3.17 and a written summary setting forth
the terms and conditions of each oral agreement referred to in SCHEDULE 3.17.
With respect to each such agreement: (i) such agreement is legal, valid,
binding, enforceable and in full force and effect; (ii) such agreement will
continue to be legal, valid, binding, enforceable and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby; (iii) no party is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default, or
permit termination, modification or acceleration, under such agreement; and
(iv) no party has repudiated any provision of such agreement.
SECTION 3.18 NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE. All notes
receivable and accounts receivable (collectively, "ACCOUNTS RECEIVABLE") of
the Company are reflected properly on its books and records and are valid
14
receivables subject to no setoffs or counterclaims, are current and
collectible and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Balance Sheet (rather than in any notes thereto) as adjusted for
the passage of time through the Closing Date in accordance with the past
custom and practice of the Company. On the Closing Date, there are no Accounts
Receivable due from the Sole Stockholder or any of the Company's officers or
directors.
SECTION 3.19 POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of the Company.
SECTION 3.20 INSURANCE. SCHEDULE 3.20 sets forth the following
information with respect to each current insurance policy (including policies
providing property, casualty, liability and workers' compensation coverage and
bond and surety arrangements) to which the Company has been a party, a named
insured, or otherwise the beneficiary of coverage:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder and
the name of each covered insured;
(c) the policy number, the period of coverage and the amount of
the annual premiums payable;
(d) the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(e) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (i) such policy is legal, valid,
binding, enforceable and in full force and effect; (ii) such policy will
continue to be legal, valid, binding, enforceable and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby; (iii) neither the Company nor any other party to the policy is in
breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse
of time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under such policy; and (iv) no party to the
policy has repudiated any provision thereof. The Company has been covered
during the past three (3) years by insurance in scope and amount customary and
reasonable for the business in which it has engaged during the aforementioned
period. SCHEDULE 3.20 also describes any self-insurance arrangements affecting
the Company.
15
SECTION 3.21 EMPLOYEES. SCHEDULE 3.21 sets forth a true and complete
list of all employees of the Company, their respective positions, locations,
salaries or hourly wages and severance arrangements, each as of the date
hereof and as of the Closing Date. To the Knowledge of the Sole Stockholder
and the directors and officers (and employees with responsibility for
employment matters) of the Company, no executive, key employee or group of
employees has any plans to terminate employment with the Company. Except as
set forth in SCHEDULE 3.21, each employee of the Company is employed on an "at
will" basis and has no right to any material compensation following
termination of employment. Each employee of the Company has executed a
proprietary information and inventions agreement in the form provided to
counsel for Hanger and Buyer. The Company is not a party to or bound by any
collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes. The Company has not committed any unfair labor practice. There is no
organizational effort presently being made or threatened by or on behalf of
any labor union with respect to employees of the Company.
SECTION 3.22 EMPLOYEE BENEFITS.
(a) Except as set forth on SCHEDULE 3.22, with respect to all
employees, former employees, directors and independent contractors of the
Company and their dependents and beneficiaries, neither the Company nor any
ERISA Affiliate presently maintains, contributes to or has any Liability under
or with respect to any Employee Benefit Plan. The plans, programs and
arrangements set forth on SCHEDULE 3.22 are herein referred to as the "COMPANY
EMPLOYEE BENEFIT PLANS." Each Company Employee Benefit Plan (and each related
trust, insurance contract or other funding arrangement) complies in form and
in operation in all material respects with the applicable requirements of
ERISA, the Code, other applicable Laws and governing documents and agreements.
With respect to each Company Employee Benefit Plan, there has been no act or
omission by the Company or any ERISA Affiliate that would impair the right or
ability of the Company or any ERISA Affiliate to unilaterally amend in whole
or part or terminate such Company Employee Benefit Plan at any time, subject
to the terms of any insurance contract or other contractual arrangements with
third parties, and the Company has delivered to Buyer true and complete copies
of: (i) the plan documents, including any related trust agreements, insurance
contracts or other funding arrangements, or a written summary of the terms and
conditions of the plan if there is no written plan document; (ii) the most
recent IRS Form 5500; (iii) the most recent financial statement and, if
applicable, actuarial valuation; (iv) all correspondence with the Internal
Revenue Service, the Department of Labor and other governmental agencies with
respect to the past three (3) plan years other than IRS Form 5500 filings; and
(v) the most recent summary plan description.
(b) Neither the Company nor any of its directors, officers or
employees has any Liability with respect to any Company Employee Benefit Plan
for failure to comply with ERISA, the Code, any other applicable Laws or any
governing documents or agreements.
(c) No Company Employee Benefit Plan is an Employee Pension
Benefit Plan, and no Company Employee Benefit Plan has any unfunded Liability.
With respect to the Company Employee Benefit Plans, all applicable
16
contributions and premium payments for all periods ending prior to the Closing
Date (including periods from the first day of the then current plan year to
the Closing Date) shall be made prior to the Closing Date in accordance with
past practice.
(d) Neither the Company nor any ERISA Affiliate maintains,
maintained, contributes to, or has any Liability (including, but not limited
to, current or potential withdrawal Liability) with respect to any
Multiemployer Plan or Employee Pension Benefit Plan.
(e) With respect to all employees and former employees of the
Company, neither the Company nor any ERISA Affiliate presently maintains,
contributes to or has any Liability under any funded or unfunded medical,
health or life insurance plan or arrangement for present or future retirees or
present or future terminated employees except as required by the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, or state continuation
coverage laws. There has been no act or acts which would result in a
disallowance of a deduction or the imposition of a tax pursuant to Section
4980B, or any predecessor provision, of the Code or any related regulations.
No event has occurred with respect to which the Company or any Affiliates
could be liable for a material Tax imposed by any of Sections 4972, 4976,
4977, 4979 or 4980 of the Code, or for a material civil penalty under Section
502(c) of ERISA.
(f) There is no pending, or to the Knowledge of the Company,
threatened legal action, proceeding, audit, examination or investigation
against or involving any Company Employee Benefit Plan maintained by the
Company or any ERISA Affiliate (other than routine claims for benefits). To
the Knowledge of the Company, there is no basis for, and there are no facts
which could give rise to, any such condition, legal action, proceeding or
investigation. Any bonding required with respect to any Company Employee
Benefit Plans in accordance with applicable provisions of ERISA has been
obtained and is in full force and effect.
SECTION 3.23 GUARANTIES. The Company is not a guarantor or otherwise is
liable for any Liability or obligation (including indebtedness) of any other
Person.
SECTION 3.24 ENVIRONMENT, HEALTH AND SAFETY.
(a) Except as set forth on SCHEDULE 3.24, the Company has
complied with all Environmental, Health and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against the Company alleging any failure so to
comply. Without limiting the generality of the preceding sentence, the Company
has obtained and been in compliance with all of the terms and conditions of
all permits, licenses, and other authorizations which are required under, and
has complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which are
contained in, all Environmental, Health and Safety Laws. The Company has
provided Buyer with correct and complete copies of all reports and studies
within the possession or control of the Company or the Sole Stockholder with
respect to past or present environmental conditions or events at any real
17
property presently or previously owned or leased by the Company.
(b) Except as set forth on SCHEDULE 3.24, the Company has no
Liability (and the Company has not handled or disposed of any substance,
arranged for the disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated any property or
facility in any manner that could form the basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against the Company giving rise to any Liability) for damage to any
site, location, or body of water (surface or subsurface), for any illness of
or personal injury to any employee or other individual, or for any reason
under any Environmental, Health and Safety Law.
(c) All properties owned (previously or currently) or leased and
equipment used in the business of the Company, and its predecessors and
Affiliates, have been free of asbestos, PCB's, underground storage tanks,
methylene chloride, trichloroethylene, 1,2- transdichloroethylene, dioxins,
dibenzofurans, polychlorinated biphenyls, landfills, surface impoundments,
disposal areas and Extremely Hazardous Substances.
SECTION 3.25 CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY. Except as
described in SCHEDULE 3.25, neither the Sole Stockholder nor any Affiliates of
the Sole Stockholder has been involved in any business arrangement or
relationship with the Company within the past twelve (12) months (other than
employment by the Company), and neither the Sole Stockholder nor any
Affiliates of the Sole Stockholder owns any Asset which is used in the
business of the Company.
SECTION 3.26 DELIVERY OF INFORMATION. The Sole Stockholder acknowledges
the receipt and review by the Sole Stockholder of the most recent filings made
by Hanger with the SEC under the Securities Act and the Exchange Act.
SECTION 3.27 PRODUCT AND SERVICE WARRANTIES. Each product sold, leased
or delivered, and each service performed, by the Company has been in
conformity with all applicable contractual commitments and all express and
implied warranties, and the Company has no Liability (and there is no Basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand against any of them giving rise to any
Liability) for the replacement or repair of any product, the substandard
performance of any service, or other damages in connection with the product
sold or services provided by the Company, subject only to the reserve for
product and service warranty claims set forth on the face of the Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the
Company. No product sold, leased or delivered, or service performed, by the
Company is subject to any guaranty, warranty or other indemnity beyond the
applicable standard terms and conditions of sale, lease or performance.
SCHEDULE 3.27 includes copies of the standard terms and conditions of sale,
lease or performance for the Company (containing applicable guaranty, warranty
and indemnity provisions).
18
SECTION 3.28 PRODUCT AND SERVICE LIABILITY. The Company has no
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
the Company giving rise to any Liability) arising out of any injury or damages
(whether actual or alleged) to any Person or its property or its business
operations or prospects as a result of the ownership, possession or use of (i)
any product sold, leased or delivered by the Company or (ii) any service
performed by the Company.
SECTION 3.29 CERTAIN BUSINESS PRACTICES. Neither the Company nor any
director, officer, stockholder, agent or employee of the Company has (i) used
any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other
unlawful payment.
SECTION 3.30 DISCLOSURE. No representation or warranty made by the
Company or the Sole Stockholder, nor any document, written information,
statement, financial statement, certificate, schedule or exhibit prepared and
furnished or to be prepared and furnished by the Company or its
representatives pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to
make the statements of facts contained herein or therein not misleading in
light of the circumstances under which they were furnished.
ARTICLE IIIA
REPRESENTATIONS AND WARRANTIES OF SOLE STOCKHOLDER
Sole Stockholder hereby represents and warrants to Hanger and Buyer
as follows:
SECTION 3.1A AUTHORIZATION OF TRANSACTION. Sole Stockholder has full
power and authority to execute and deliver this Agreement and to perform all
obligations hereunder and thereunder required to be performed by the Sole
Stockholder. This Agreement constitutes the valid and legally binding
obligation of Sole Stockholder, enforceable in accordance with its terms and
conditions. Sole Stockholder is a natural person, is over 21 years of age and
has not had a legal representative appointed by a court of law or otherwise
act in behalf of Sole Stockholder or with respect to any property of Sole
Stockholder. Sole Stockholder is not required to give any notice to, make any
filing with, or obtain any authorization, consent or approval of any
Governmental Entity in order to consummate the transactions contemplated by
this Agreement.
SECTION 3.2A NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby and thereby, will (a) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge or other restriction
19
of any government, Governmental Entity, or court to which Sole Stockholder is
subject or (b) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
Sole Stockholder is a party, by which Sole Stockholder is bound or to which
any Assets of Sole Stockholder is subject.
SECTION 3.3A BROKERS' FEES. Except as set forth on SCHEDULE 3.11, Sole
Stockholder has no Liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement.
SECTION 3.4A COMPANY SHARES. Sole Stockholder holds of record and owns
beneficially all the outstanding shares of Company Common Stock, free and
clear of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Encumbrances, Security Interests,
options, warrants, purchase rights, contracts, commitments and/or other rights
whatsoever. Sole Stockholder is not a party to any option, warrant, purchase
right or other contract or commitment whatsoever that could require Sole
Stockholder to sell, transfer or otherwise dispose of any capital stock of the
Company (other than this Agreement). Sole Stockholder is not a party to any
voting trust, proxy, voting rights agreement or other agreement or
understanding with respect to the voting of any capital stock of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HANGER AND BUYER
Hanger and Buyer hereby represent and warrant, jointly and severally,
to the Company and the Sole Stockholder that:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Each of Hanger and Buyer
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, and each of Hanger and
Buyer is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary,
except for such failures to be so qualified or licensed and in good standing
as would not, individually or in the aggregate, have a Hanger Material Adverse
Effect.
SECTION 4.2 AUTHORITY. Each of Hanger and Buyer has all requisite
corporate power and authority to execute and deliver this Agreement, to
perform its respective obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
20
authorized by all necessary corporate action and no other corporate proceeding
on the part of Hanger or Buyer is necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Hanger and Buyer and, assuming the due
authorization, execution and delivery thereof by the Sole Stockholder and the
Company, constitutes the legal, valid and binding obligations of Hanger and
Buyer enforceable in accordance with its terms.
SECTION 4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Hanger and
Buyer do not, and the performance of this Agreement by Hanger and Buyer will
not, (i) conflict with or violate the Certificate of Incorporation or By-Laws
of Hanger or Buyer, (ii) conflict with or violate any Laws in effect as of the
date of this Agreement applicable to Hanger or Buyer or by which any of their
respective properties is bound, or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would become
a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or require payment under, or result in the
creation of a lien or encumbrance on, any of the properties or Assets of
Hanger or Buyer pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Hanger or Buyer is a party or by which Hanger or Buyer or any of
their respective properties is bound by or subject to, except for breaches,
defaults, events, rights of termination, amendment, acceleration or
cancellation, payment obligations or Liens or Encumbrances that would not have
a Hanger Material Adverse Effect.
(b) The execution and delivery of this Agreement by Hanger and
Buyer do not, and the performance of this Agreement by Hanger and Buyer will
not, require Hanger or Buyer to obtain any consent, approval, authorization or
permit of, or to make any filing with or notification to, any Governmental
Entities, except (i) for applicable requirements, if any, of the Securities
Act and the Exchange Act and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not, either individually or in the aggregate, prevent
Hanger or Buyer from performing its obligations under this Agreement.
SECTION 4.4 LIMITATION ON REPRESENTATIONS AND WARRANTIES.
(a) Neither Hanger nor Buyer makes any other representation or
warranty to the Company or the Sole Stockholder, or any of the Company's or
the Sole Stockholder's employees, agents, consultants or representatives
except as expressly provided in this Agreement.
(b) Neither Hanger nor Buyer make any representation or warranty
to the Company or the Sole Stockholder regarding the probable success or
profitability of Buyer or Hanger.
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SECTION 4.5 REPORTS; FINANCIAL STATEMENTS.
(a) Hanger is current in all forms, reports, statements and
other documents required to be filed with the SEC (collectively, the "HANGER
SEC REPORTS"). The Hanger SEC Reports, including all Hanger SEC Reports filed
after the date of this Agreement and prior to the Closing Date, were or will
be prepared in all material respects in accordance with the requirements of
applicable Law (including, the Securities Act and the Exchange Act, as the
case may be, and the rules and regulations of the SEC thereunder applicable to
such Hanger SEC Reports). As of their respective dates, the Hanger SEC Reports
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading.
(b) Each of the financial statements (including, in each case,
any related notes thereto) contained in the Hanger SEC Reports filed prior to,
on or after the date of this Agreement (i) have been or will be prepared in
accordance with, and complied or will comply as to form with, the published
rules and regulations of the SEC and GAAP applied on a consistent basis
throughout the periods involved (except as otherwise noted therein) and (ii)
fairly present or will fairly present the financial position of Hanger as of
the respective dates thereof and the results of its operations and cash flows
for the periods indicated, except that any unaudited interim financial
statements were or will be subject to normal and recurring year-end
adjustments.
SECTION 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as and to the
extent disclosed in the Hanger SEC Reports filed prior to the date of this
Agreement or as contemplated in this Agreement, since the end of the calendar
period for which Hanger filed its most recent Hanger SEC Report, there has not
been (a) a Hanger Material Adverse Effect or (b) any significant change by
Hanger in its accounting methods, principles or practices.
SECTION 4.7 OWNERSHIP OF BUYER. All of the outstanding capital stock
of Buyer is owned directly by Hanger.
SECTION 4.8 BROKERS. There is no broker, finder or investment banker
which is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Hanger or Buyer.
ARTICLE V
COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS OF THE COMPANY. The Company hereby
covenants and agrees that, prior to the Closing Date, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Hanger,
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the Company will: (a) operate only in the Ordinary Course of Business; (b) use
its best efforts to (1) preserve and/or maintain, in all material respects and
consistent with past custom and practice, its business and properties,
including its present operations, physical facilities, working conditions and
relationships with its present employees and Persons having significant
business relations with it, including, without limitation, suppliers and
customers, (2) maintain and keep its properties and Assets in as good repair
and condition as at present, ordinary wear and tear excepted, (3) keep in full
force and effect insurance and bonds comparable in amount and scope of
coverage to that currently maintained, and (4) at the request of Hanger or
Buyer, obtain pre-clearance certificates and file such instruments and
documents as are necessary to permit Buyer to merge with the Company or
liquidate the Company and distribute the Company's Assets and Liabilities in
liquidation to the Buyer on the Closing Date or immediately following the
Closing Date; and (c) transfer, distribute and/or dispose of the items set
forth in Sections 1.2(b) and 6.2 to the Sole Stockholder or to a third party
at the direction of the Sole Stockholder, as further described therein.
SECTION 5.2 NEGATIVE COVENANTS OF THE COMPANY. Except as expressly
contemplated by this Agreement or as previously disclosed to Buyer or Hanger
in writing on SCHEDULE 5.2, or otherwise consented to in writing by Buyer or
Hanger, from the date of this Agreement until the Closing Date, the Company
shall not, directly or indirectly through any Affiliate or otherwise (and the
Sole Stockholder shall not and shall not cause the Company to), and shall not
permit any Affiliate to directly or indirectly, do any of the following:
(a) (i) increase the compensation payable to, or to become
payable to, any employee, director or executive officer; (ii) grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any director, officer or employee; (iii) establish, adopt,
enter into, amend, modify or terminate any Employee Benefit Plan or
arrangement except as may be required by applicable Law; or (iv) hire any
person;
(b) declare or pay any dividend on or make any other
distribution in respect of, outstanding shares of its capital stock, except
for the items set forth in Sections 1.2(b);
(c) (i) redeem, purchase or otherwise acquire any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or any options, warrants or
conversion or other rights to acquire any shares of its capital stock or any
such securities or obligations; (ii) effect any reorganization or
recapitalization; or (iii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its capital stock;
(d) (i) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale (including the grant of
any Security Interests, Liens, claims, pledges, limitations in voting rights,
charges or other Encumbrances) of, any shares of any class of its capital
stock (including shares held in treasury), any securities convertible into or
exercisable or exchangeable for any other shares, or any rights, warrants or
options to acquire, any such shares; and (ii) amend or otherwise modify the
23
terms of any such rights, warrants or options the effect of which shall be to
make such terms more favorable to the holders thereof;
(e) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in, all or a portion of the Assets of,
or by any other manner, any corporation, partnership, association or other
business, organization or division thereof, or otherwise acquire or agree to
acquire any Assets of any other Person (other than the purchase of Assets from
suppliers or vendors in the Ordinary Course of Business) which are material,
individually or in the aggregate, to the Company;
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of its material Assets;
(g) propose or adopt any amendments to its Certificate of
Incorporation or its By-Laws;
(h) (i) change any of its methods of accounting in effect on the
date of the Balance Sheet, or (ii) make or rescind any material election
relating to Taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
Taxes, or change in any material respect any of its methods of reporting
income or deductions for federal income tax purposes from those employed in
the preparation of the federal income Tax Return for the taxable year ended
December 31, 1997, except, in the case of clause (i) or clause (ii), as may be
required by Law or GAAP;
(i) enter into any Contract outside the Ordinary Course of
Business;
(j) create, or permit the creation of, any Lien upon any Assets
outside the Ordinary Course of Business;
(k) enter into any employment Contract or collective bargaining
agreement, or modify the terms of any existing such Contract or agreement;
(l) sell, lease, transfer or assign any Assets;
(m) make any capital expenditures other than in the Ordinary
Course of Business, or make any capital expenditures which in the aggregate
exceed Five Thousand Dollars ($5,000.00);
(n) amend or renew, or enter into any Contract involving
operations outside of the United States; or
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(o) take or agree to take any action that would or is reasonably
likely to result in any representations and warranties of the Company or the
Sole Stockholder set forth in this Agreement being untrue or in any of the
conditions to the Purchase not being satisfied.
SECTION 5.3 NEGATIVE COVENANTS OF HANGER AND Buyer. Except as
expressly contemplated by this Agreement or otherwise consented to in writing
by the Company, from the date of this Agreement until the Closing Date, Hanger
and Buyer will not take or agree to take any action that would or is
reasonably likely to result in any representations and warranties of Hanger or
Buyer set forth in this Agreement being untrue or in any of the conditions to
the Purchase not being satisfied.
SECTION 5.4 ACCESS AND INFORMATION. The Company shall (i) provide
Hanger, Buyer and their officers, directors, employees, agents, counsel,
accountants, financial advisors, consultants and other representatives
(collectively, the "HANGER REPRESENTATIVES"), with full access, upon
reasonable prior notice, to all officers, employees and accountants of the
Company and to their assets, properties, Contracts, books, records and all
such other information and data concerning the business and operations of the
Company as Hanger, Buyer or any of the Hanger Representatives reasonably may
request in connection with such investigation. Such investigation will
involve, among other things, Hanger's or Buyer's review and confirmation of
the Company's Financial Statements, the legal review of the Company's
Contracts and leases, the review of the Company's patient, client and referral
lists and reference checks of the Company. Hanger will provide the Sole
Stockholder with all information reasonably requested by the Sole Stockholder
to enable the Sole Stockholder to evaluate the merits of the Purchase.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 APPROPRIATE ACTION; CONSENTS; FILINGS.
(a) The Company, Hanger and Buyer shall each use its best
efforts to: (i) take, or cause to be taken, all appropriate action, and do, or
cause to be done, all things necessary, proper or advisable under applicable
Law or otherwise to consummate and make effective the transactions
contemplated by this Agreement; (ii) obtain from any Governmental Entities any
consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by Hanger, Buyer or the Company in connection
with the authorization, execution and delivery of this Agreement and the
consummation of the transactions contemplated herein, including, without
limitation, the Purchase; (iii) make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement and the
liquidation of the Company into the Buyer as of the Closing Date or
immediately following the Closing Date required under the federal securities
laws and the rules and regulations thereunder, if any, and any other
applicable federal or state securities laws, and (B) any other applicable Law;
provided that Hanger, Buyer and the Company shall cooperate with each other in
connection with the making of all such filings, including providing copies of
25
all such documents to the non-filing party and its advisors prior to filing
and, if requested, accepting all reasonable additions, deletions or changes
suggested in connection therewith. The Company, Hanger and Buyer shall furnish
all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable Law in connection with
the transactions contemplated by this Agreement.
(b) (i) Each of the Company, Hanger and Buyer shall give any
notices to third parties, and use its best efforts to obtain any third party
consents (A) necessary, proper or advisable to consummate the transactions
contemplated in this Agreement, (B) disclosed or required to be disclosed in
the schedules contained herein, (C) otherwise required under any Contracts,
licenses, leases or other agreements in connection with the consummation of
the transactions contemplated herein or (D) required to prevent a Company
Material Adverse Effect from occurring prior to or after the Closing Date or a
Hanger Material Adverse Effect from occurring prior to or after the Closing
Date.
(ii) In the event that any party shall fail to obtain any
third party consent described in subsection (b) (i) above, such party shall
use its best efforts, and shall take any such actions reasonably requested by
the other party hereto, to minimize any adverse effect upon the Company,
Hanger and Buyer and their respective businesses resulting, or which could
reasonably be expected to result after the Closing Date, from the failure to
obtain such consent.
SECTION 6.2 TRANSFER OF CERTAIN COMPANY ASSETS PRIOR TO THE CLOSING
DATE. The Company and the Sole Stockholder shall do all acts necessary to
transfer, distribute and/or dispose of the following items to the Sole
Stockholder or to a third party at the direction of the Sole Stockholder, all
with the effect that the following items shall not be owned by the Company,
nor assumed by Buyer, at the Closing Date: (i) any notes or accounts
receivable due to the Company from its officers, directors or the Sole
Stockholder, or due from the Company to its officers, directors or the Sole
Stockholder; (ii) any real property owned by the Company (and any fixtures
located thereon) and any mortgages, deeds of trust or other indebtedness on or
relating to such real property for which the Company is liable in any manner
whatsoever; (iii) any automobiles or vehicles leased or owned by the Company
that are used for personal purposes by the Sole Stockholder or any employee of
the Company, and any leases or indebtedness on or relating to such automobiles
or vehicles for which the Company is liable in any manner whatsoever; (iv) all
life insurance policies on the life of the Sole Stockholder; (v) all long-term
indebtedness, including but not limited to all bank debt, and all indebtedness
relating to prior acquisitions by the Company; and (vi) any cash in excess of
the amount necessary to fully cover all checks issued by the Company up to and
through the Closing Date. Any Taxes generated in connection with such
transfers, distributions or disposals shall be borne solely by the Sole
Stockholder or shall be reimbursed to the Buyer by the Sole Stockholder.
SECTION 6.3 PAYMENT BY COMPANY OF CERTAIN OUTSTANDING OBLIGATIONS
PRIOR TO THE CLOSING DATE. Prior to the Closing Date, the Company and the Sole
Stockholder shall do all acts necessary to cause the Company to fully pay all
26
outstanding pension plan and profit sharing contributions due from the
Company, if any.
SECTION 6.4 EMPLOYMENT AND NON-COMPETITION AGREEMENTS. Prior to the
Closing Date, the Sole Stockholder shall do all acts necessary (i) to cause
Sole Stockholder and all employees of the Company designated by Hanger or the
Buyer to execute the form of Employment and Non-Competition Agreements
attached hereto as EXHIBITS B-1 and B-2, and to deliver all such
fully-executed Employment and Non-Competition Agreements to Hanger and Buyer
prior to the Closing Date; and (ii) to cause Sole Stockholder to also execute
the Non-Competition Agreement attached hereto as EXHIBIT C and deliver such
fully-executed Non- Competition Agreement to Hanger and Buyer prior to the
Closing Date.
SECTION 6.5 LANDLORD APPROVALS. Prior to the Closing Date, the Company
and the Sole Stockholder shall do all acts necessary to cause all landlords to
issue their written consent, if necessary, to the change in the tenant from
the Company to the Buyer without any charge or cost and without any material
change in the terms of the applicable lease or other arrangement previously
existing between such party and the Company or the Sole Stockholder.
SECTION 6.6 Contract ASSIGNMENTS/NOVATIONS. Prior to the Closing Date
or such reasonable time after the Closing Date as may be required, the Company
and the Sole Stockholder agree to use their best efforts do all acts
reasonably necessary to cause all parties to all material contracts with the
Company to issue their written consent, if necessary, to the assignment and
novation of all such contracts from the Company to the Buyer without any
charge or cost and without any material change in the terms of the applicable
contract or other arrangement previously existing between such party and the
Company or the Sole Stockholder, with such consents to be set forth on
Schedule 7.2(c) hereto.
SECTION 6.7 BEST EFFORTS. The parties hereto shall use their best
efforts to consummate the Purchase and the other transactions contemplated
hereby as promptly as practicable.
SECTION 6.8 PUBLIC ANNOUNCEMENTS. The parties hereto agree that only
Hanger may make any public announcement of the existence of this Agreement
and/or the transactions contemplated hereby, including but not limited to the
Purchase.
SECTION 6.9 TAIL INSURANCE. The Sole Stockholder shall purchase, at
the sole cost and expense of the Sole Stockholder a Discontinued Products and
Operations Coverage liability insurance policy to cover the three (3) year
period immediately following the Closing Date, with such policy to provide for
the same insurance coverage as the Company's existing liability policies.
SECTION 6.10 NO COMPETING TRANSACTIONS. The Sole Stockholder and/or the
Company shall not have engaged in any Competing Transaction since the
execution of any letter of intent or memorandum of understanding relating to
the transactions contemplated by this Agreement or from and after the date on
27
which the first draft of this Agreement was delivered to counsel for the
Company, whichever is earlier. The Company and the Sole Stockholder agree that
they shall not, individually or in the aggregate, engage in or conduct any
discussions relating to any Competing Transaction.
SECTION 6.11 TAX TREATMENT AS STOCK PURCHASE. The parties to this
Agreement agree that they will treat the Purchase as a purchase of the Sole
Stockholder's stock for federal and state income tax purposes, and that they
will not make any election or take any position on any Tax Return that would
cause the Purchase to be treated as a sale of Assets by the Company to the
Buyer or in any manner that is inconsistent with this Section 6.11.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS
AGREEMENT. The respective obligations of each party to effect the Purchase and
the other transactions contemplated herein shall be subject to the
satisfaction at or prior to the Closing Date of the following conditions, any
or all of which may be waived, in whole or in part, to the extent permitted by
applicable Law:
(a) NO ORDER. No Governmental Entity or federal or state court
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in effect
and which has the effect of making the Purchase illegal or otherwise
prohibiting consummation of the Purchase.
(b) CONSENTS AND APPROVALS. All material consents, approvals and
authorizations legally required to be obtained to consummate the Purchase
shall have been obtained from all required Governmental Entities.
SECTION 7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF BUYER AND/OR
HANGER. The obligations of Hanger and Buyer to effect the Purchase and the
other transactions contemplated herein are also subject to the following
conditions, each of which may be waived, in whole or in part, to the extent
permitted by applicable Law, by Hanger or Buyer:
(a) REPRESENTATIONS AND WARRANTIES.
(i) Each of the representations and warranties of the
Company contained in this Agreement shall be true and correct when made and on
and as of the Closing Date, as if made on and as of such date, individually or
in the aggregate, and except that those representations and warranties which
address matters only as of a particular date shall remain true and correct as
28
of such date. Hanger or Buyer shall have received a certificate of the
President of the Company to such effect; and
(ii) Each of the representations and warranties of the
Sole Stockholder contained in this Agreement shall be true and correct when
made and on and as of the Closing Date, as if made on and as of such date,
except that those representations and warranties which address matters only as
of a particular date shall remain true and correct as of such date.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed
or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior
to the Closing Date. Hanger or Buyer shall have received a certificate of the
President or Chief Financial Officer of the Company to that effect.
(c) THIRD PARTY CONSENTS AND WAIVERS. The Company shall have
obtained consents and waivers, in form and substance reasonably satisfactory
to Hanger or Buyer, in respect of the contracts or agreements set forth on
SCHEDULE 7.2(C).
(d) COMPANY MATERIAL ADVERSE EFFECT. The Company shall not have
become subject to any action or event which resulted in or may likely result
in a Company Material Adverse Effect.
(e) LEGAL OPINION. Hanger or Buyer shall have received the legal
opinion of Xxxxx Xxxxxxx, counsel for the Company and the Sole Stockholder,
covering the matters set forth on EXHIBIT D hereto.
(f) EMPLOYMENT AND NON-COMPETITION AGREEMENTS. Each of Xxx
Xxxxxx and such other employees of the Company as shall be identified by
Hanger and the Buyer shall execute employment and non-competition agreements
(collectively, the "EMPLOYMENT AGREEMENTS") in the forms attached hereto as
EXHIBITS B-1 AND B-2, respectively.
(g) NON-COMPETITION AGREEMENT. Sole Stockholder shall execute
and deliver to Hanger and Buyer a non-competition agreement in the form
attached hereto as EXHIBIT C.
(h) UCC FORMS. The Company and the Sole Stockholder shall
execute and deliver to Hanger and Buyer such UCC forms as may be necessary in
the opinion of the counsel for Hanger and Buyer to evidence that all the
Assets of the Company are free and clear of any Liens.
(i) TAIL INSURANCE. The Sole Stockholder shall deliver to Hanger
and Buyer evidence of the purchase by Sole Stockholder, at the sole cost and
expense of Sole Stockholder of a Discontinued Products and Operations Coverage
liability insurance policy to cover the three (3) year period immediately
following the Closing Date, with such policy to provide for the same insurance
coverage as the Company's existing liability policies.
29
SECTION 7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY AND
THE SOLE STOCKHOLDER. The obligations of the Company and/or the Sole
Stockholder to effect the Purchase and the other transactions contemplated in
this Agreement is subject to the following conditions, each of which may be
waived, in whole or in part, to the extent permitted by applicable Law, by the
Company or the Sole Stockholder on behalf of both such parties:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of Hanger and Buyer contained in this Agreement shall be true
and correct when made and on and as of the Closing Date as if made on and as
of such date, except where the failure to be so true and correct would not
have a Hanger Material Adverse Effect, and except that those representations
and warranties which address matters only as of a particular date shall remain
true and correct as of such date, except where the failure to be so true and
correct would not have a Hanger Material Adverse Effect. Solely for purposes
of this section and in determining compliance with the conditions set forth
herein, any representation and warranty made by Hanger in this Agreement shall
be read and interpreted as if the qualification stated therein with respect to
materiality or Hanger Material Adverse Effect were not contained therein. The
Company shall have received a certificate of the President of Hanger to such
effect.
(b) AGREEMENTS AND COVENANTS. Hanger and Buyer shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it or
them on or prior to the Closing Date. The Company shall have received a
certificate of the President of Hanger to that effect.
(c) HANGER MATERIAL ADVERSE EFFECT. Hanger shall not have become
subject to any action or event which resulted in or may likely result in a
Hanger Material Adverse Effect.
(d) LEGAL OPINION. The Company shall have received the legal
opinion of Freedman, Levy, Xxxxx & Xxxxxxx, counsel to Hanger and the Buyer,
covering the matters set forth on EXHIBIT E.
ARTICLE VIII
TERMINATION, AMENDMENT, WAIVER AND INDEMNIFICATION
SECTION 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by mutual consent of Hanger or Buyer and the Company;
(b) by Hanger or Buyer, upon a material breach of any covenant
or agreement on the part of the Company or the Sole Stockholder as set forth
in this Agreement;
30
(c) by the Company, upon a material breach of any covenant or
agreement on the part of Hanger or Buyer as set forth in this Agreement;
(d) by either Hanger, Buyer or the Company, if there shall be
any order of a Governmental Entity which is final and non-appealable
preventing the consummation of the Purchase;
(e) by Hanger or Buyer if Hanger or Buyer is not satisfied with
the results of its continuing due diligence review regarding the Company;
(f) by either Hanger, Buyer or the Company, if the Closing shall
not have occurred on or before November 3, 1997 (unless the failure to
consummate the Purchase by such date shall be due to the action or failure to
act of the party seeking to terminate this Agreement).
SECTION 8.2 INVESTIGATION. Notwithstanding any of the foregoing, the
right of any party hereto to terminate this Agreement pursuant to Section 8.1
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any party hereto, any Person controlling
any such party or any of their respective officers or directors, whether prior
to or after the execution of this Agreement.
SECTION 8.3 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by all the parties hereto.
SECTION 8.4 WAIVER. At any time prior to the Closing Date, any party
hereto may (a) extend the time for the performance of any of the obligations
or other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed
by the party or parties to be bound thereby.
SECTION 8.5 FEES, EXPENSES AND OTHER PAYMENTS. Hanger, Buyer, the
Company and the Sole Stockholder each shall bear its and his own respective
costs and expenses which are incurred in connection with the preparation,
negotiation and performance of this Agreement (including any prior memorandum
of understanding or letter of intent relating hereto) and the transactions
contemplated hereby, including all due diligence expenses and fees and
expenses of agents, representatives, counsel and accountants.
SECTION 8.6 INDEMNIFICATION.
(a) The Sole Stockholder shall indemnify and defend each of
Hanger and the Buyer, and hold it harmless, from and against any and all
losses, damages, Liabilities, claims, demands, judgments, settlements, costs
and expenses of any nature whatsoever (including reasonable attorneys' fees)
(collectively, "LOSS"), resulting from or arising out of any: (i) breach of
31
any representation or warranty or agreement of the Company or the Sole
Stockholder contained herein; or (ii) Liability of the Company, whether or not
addressed by a representation or warranty, which was created, incurred or
arose from facts, events, conditions or circumstances existing on or before
the Closing Date, to the extent that, but only to the extent that, such
Liability was not reflected or reserved against on the face of the Balance
Sheet (rather than in any notes thereto) as adjusted for Liabilities incurred
in the Ordinary Course of Business since the date of the Balance Sheet
(provided that the items listed on SCHEDULE 3.8 shall be deemed to be incurred
in the Ordinary Course of Business unless otherwise objected to by Hanger or
Buyer prior to the Closing Date). No claim for indemnification pursuant to
this Section 8.6(a) may be made subsequent to the date three (3) years after
the Closing Date or in respect of a Loss for which Hanger or Buyer has
otherwise been previously reimbursed by the Sole Stockholder. Without limiting
any other rights of Hanger or Buyer, any such Loss may be deducted by Hanger
or Buyer from the outstanding principal amount of the Note portion of the
Purchase Price consideration.
(b) (i) If any third party shall notify Hanger or Buyer with
respect to any third party claim (a "THIRD PARTY CLAIM") that may give rise to
a Loss, then Hanger or Buyer shall promptly notify the Sole Stockholder
thereof in writing; PROVIDED, HOWEVER, that no delay on the part of Hanger or
Buyer in notifying the Sole Stockholder shall relieve the Sole Stockholder
from any obligation hereunder unless (and then solely to the extent) the Sole
Stockholder is prejudiced by such delay.
(ii) The Sole Stockholder will have the right to defend
Hanger and Buyer against the Third Party Claim with counsel selected by Sole
Stockholder and reasonably satisfactory to Hanger or Buyer, so long as: (A)
the Sole Stockholder so notifies Hanger and Buyer in writing within fifteen
(15) days of the Third Party Claim becoming known to the Sole Stockholder,
acknowledging that such claim is in respect of a Loss described in Section
8.6(a); (B) the Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief; (C) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith
judgment of Hanger or Buyer, likely to establish a precedential custom or
practice materially adverse to the continuing business interests of Hanger or
Buyer; and (D) the Sole Stockholder conducts the defense of the Third Party
Claim actively and diligently.
(iii) So long as the Sole Stockholder is conducting the
defense of the Third Party Claim in accordance with Section 8.6(b)(ii), (A)
Hanger or Buyer may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim; (B) Hanger or Buyer
will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Sole Stockholder (which consent will not be withheld unreasonably); and (C)
the Sole Stockholder will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of Hanger or Buyer (which consent will not be withheld
unreasonably).
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(iv) In the event that any of the conditions in Section
8.6(b)(ii) is or becomes unsatisfied, (A) Hanger or Buyer may defend against
the Third Party Claim in any manner it reasonably may deem appropriate;
PROVIDED, HOWEVER, that Hanger shall not consent to the entry of any judgment
or enter into any settlement or agreement to settle a Third Party Claim
without the prior written consent of the Sole Stockholder, which consent shall
not be unreasonably withheld; (B) Hanger or Buyer shall be reimbursed by Sole
Stockholder, or Hanger or Buyer may deduct such amounts from the next
payment(s) due to Sole Stockholder under the Note portion of the Purchase
Price consideration, promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses); and (C) the Sole Stockholder will remain responsible for any Loss
that Hanger or Buyer actually suffers resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the fullest extent
provided in this Section 8.6.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS.
(a) Except as set forth in Section 9.1(b), the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any Person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement.
(b) The representations, warranties and agreements in this
Agreement shall terminate on the date which is three (3) years after the
Closing Date, except that the representations, warranties and agreements set
forth in Section 3.3, and Article IIIA, and Section 6.6, Section 6.7, and
Article VIII and Article IX shall not so terminate.
SECTION 9.2 NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested), or delivered by
overnight delivery service (e.g., Federal Express), to the parties at the
following addresses (or at such other address for a party as shall be
specified by like changes of address) or sent by electronic transmission to
the fax number specified below:
(a) If to Hanger or Buyer:
Hanger Orthopedic Group, Inc.
0000 Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
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ATTENTION: President
ATTENTION: Chief Financial Officer
Fax No.: (000) 000-0000
with a copy to:
Freedman, Levy, Xxxxx & Xxxxxxx
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
ATTENTION: Xxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
(b) If to the Company or the Sole Stockholder:
Xxx Xxxxxx
000 Xxxxxxxxxx
Xxxxxxxxx, Xxxxx 00000
Fax No.: ______________
with a copy to:
Xxxxx Xxxxxxx, Esq.
0000 Xxxxxxxxxx
Xxxxxxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
SECTION 9.3 CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
"ACCOUNTS PAYABLE" as defined in Section 1.2(c)(i);
"ACCOUNTS RECEIVABLE" as defined in Section 3.18;
"ACCRUED EXPENSES" as defined in Section 1.2(c)(i);
"ADJUSTED WORKING CAPITAL" as defined in Section 1.2(c)(i);
"AFFILIATE" means a Person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned Person;
"AFFILIATED GROUP" means any affiliated group within the meaning of
Section 1504 of the Code or any similar group defined under a similar
provision of state, local or foreign law;
"AGREEMENT" as defined in the Preamble;
34
"ASSETS" means any and all properties and assets (real, personal or
mixed, tangible or intangible) of any Person;
"BALANCE SHEET" as defined in Section 3.7;
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence;
"BUYER" as defined in the Preamble;
"CLOSING" and "CLOSING DATE" as defined in Article II;
"CODE" means the Internal Revenue Code of 1986, as amended;
"COMPANY" as defined in the Preamble;
"COMPANY COMMON STOCK" as defined in the Preamble;
"COMPANY EMPLOYEE BENEFIT PLAN" as defined in Section 3.22;
"COMPANY MATERIAL ADVERSE EFFECT" means any change or effect that,
individually or when taken together with all other such changes or effects, is
or is reasonably likely to be materially adverse to the business, properties,
Assets, condition (financial or otherwise), liabilities, operations or
prospects of the Company at the time of such change or effect. A Company
Material Adverse Effect shall be deemed to exist if there shall occur any
event which causes or may reasonably be expected to cause or result in
estimable monetary loss which, individually or when aggregated with all other
events, exceeds Five Thousand Dollars ($5,000.00);
"COMPANY PERMITS" as defined in Section 3.6;
"COMPETING TRANSACTION" means any of the following involving the Company
or any Subsidiary or Affiliate of the Company: (i) any merger, consolidation,
share exchange, business combination, or other similar transaction (other than
the transactions contemplated by this Agreement); (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of twenty-five
percent (25%) or more of the Assets of the Company in a single transaction or
series of transactions; (iii) any offer (whether cash or securities) for
twenty-five percent (25%) or more of the outstanding shares of capital stock
of the Company; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing;
"CONTRACT" of any Person means any contract, agreement or instrument of
any type whatsoever (i) to which such Person is a party and by which such
Person either has made a binding undertaking to perform an obligation or is
35
entitled to any property or right, or (ii) by which any of the Assets of such
Person is bound;
"CONTROL" (including the terms "CONTROLLED," "CONTROLLED by" and "UNDER
COMMON CONTROL WITH") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of stock or
as trustee or executor, by Contract or credit arrangement or otherwise;
"EMPLOYEE BENEFIT PLAN" means (a) any bonus, incentive compensation,
profit sharing, retirement, pension, group insurance, death benefit, group
health, medical expense reimbursement, workers' compensation, dependent care,
flexible benefits or cafeteria, stock option, stock purchase, stock
appreciation rights, savings, deferred compensation, consulting, severance pay
or termination pay, vacation pay, life insurance, disability, welfare or other
employee benefit or fringe benefit plan, program or arrangement; or (b) any
plan, program or arrangement which is an Employee Pension Benefit Plan,
Employee Welfare Benefit Plan or Multiemployer Plan.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2);
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1);
"EMPLOYMENT AGREEMENTS" as defined in Section 7.2(f);
"ENCUMBRANCES" means any Security Interests, Liens, claims, pledges,
agreements, limitations on voting rights, charges or other encumbrances of any
nature whatsoever;
"ENVIRONMENTAL, HEALTH AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments (and
all agencies thereof), concerning pollution or protection of the environment,
public health and safety, or employee health and safety, including laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or
wastes;
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended;
"ERISA AFFILIATE" means each person (as defined in Section 3(9) of
ERISA) that together with the Company (or any person whose liabilities the
Company has assumed or is otherwise subject to) would be considered or has
been a single employer under Section 4001(b) of ERISA or would be considered
36
or has been a member of the same "controlled group," under common control, a
member of the same affiliated service group or otherwise a single employer
within the meaning of Section 414(b), (c), (m) and (o) of the Code (PROVIDED,
HOWEVER, that when the subject of the provision is a Multiemployer Plan only
subsections (b) and (c) of Section 414 of the Code shall be taken into
account).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended;
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Section 302
of the Emergency Planning and Community Right-to-Know Act of 1986, as amended;
"FINANCIAL STATEMENTS" as defined in Section 3.7;
"GAAP" means United States generally accepted accounting principles as
in effect from time to time;
"GOVERNMENTAL ENTITIES" as defined in Section 3.5(b);
"HANGER" as defined in the Preamble;
"HANGER MATERIAL ADVERSE EFFECT" shall mean any change or effect that,
individually or when taken together with all such other changes or effects, is
or is reasonably likely to be materially adverse to the business, properties,
Assets, condition (financial or otherwise), liabilities, operations or
prospects of Hanger and its Subsidiaries, taken as a whole at the time of such
change or effect. A Hanger Material Adverse Effect shall be deemed to exist if
there shall occur any event which causes or may reasonably be expected to
cause or result in estimable monetary loss which, individually or when
aggregated with all other events, exceeds $500,000;
"HANGER REPRESENTATIVES" as defined in Section 5.4;
"HANGER SEC REPORTS" as defined in Section 4.5(a);
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations- in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks, service
marks, trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection therewith, (d)
all mask works and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data,
designs, drawings, specifications, customer and supplier lists, pricing and
cost information, and business and marketing plans and proposals), (f) all
37
computer software (including data and related documentation), (g) all other
proprietary rights, and (h) all copies and tangible embodiments thereof (in
whatever form or medium);
"INVENTORY" as defined in Section 3.16;
"KNOWLEDGE" or "KNOWN" means, with respect to a particular fact or other
matter, that (i) an individual is actually aware of such fact or other matter
or (ii) a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter; a Person (other than an individual) will be deemed to have "Knowledge"
of a particular fact or other matter if any individual who is serving, or who
has at any time served, as a director, officer, partner, executor or trustee
of such Person (or in any similar capacity) has, or at any time had, Knowledge
of such fact or other matter;
"LAWS" as defined in Section 3.5(a);
"LIABILITY" OR LIABILITIES" as defined in Section 3.8;
"LIEN" means any lien, charge, encumbrance, mortgage, conditional sale
agreement, title retention agreement, financing lease, pledge or Security
Interest of any kind or type and whether arising by Contract or under Law;
"LOSS" as defined in Section 8.6(a);
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37);
"NOTE" as defined in Section 1.2(b);
"ORDINARY COURSE OF BUSINESS" with respect to any entity, means the
ordinary course of business consistent with past custom and practice
(including with respect to quantity and frequency) of that entity;
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a Governmental Entity (or any
department, agency, or political subdivision thereof) or any other entity;
"POST-CLOSING DATE ADJUSTMENT DATE" as defined in Section 1.2(d)(ii);
"PURCHASE" as defined in the Preamble;
"PURCHASE PRICE" as defined in Section 1.2(a);
38
"SEC" means the U.S. Securities and Exchange Commission;
"SECURITIES ACT" means the Securities Act of 1933, as amended;
"SECURITY INTEREST" means any mortgage, pledge, Lien, Encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar Liens, (b) Liens for Taxes not yet due and payable, (c) purchase
money Liens and Liens securing rental payments under capital lease
arrangements, and (d) other Liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money;
"SHARES" as defined in the Preamble;
"SHORTFALL" as defined in Section 1.2(d)(ii);
"SOLE STOCKHOLDER" as defined in the Preamble;
"SUBSIDIARY" or "SUBSIDIARIES" of the Company, Hanger, the Buyer or any
other Person, means any corporation, partnership, joint venture or other legal
entity of which the Company, Hanger, the Buyer or such other Person, as the
case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, fifty percent (50%) or more of the capital stock
or other equity interests which the holders thereof are generally entitled to
vote for the election of the board of directors or other governing body of
such corporation or other legal entity;
"TAX" or "TAXES" shall mean any and all taxes, charges, fees or levies,
payable to any federal, state, local or foreign taxing authority or agency,
including, without limitation, (i) income, franchise, profits, gross receipts,
minimum, alternative minimum, estimated, AD VALOREM, value added, sales, use,
service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall
profits, transfer and capital gains taxes, (ii) custom duties, imposts,
charges, levies or other similar assessments of any kind, and (iii) interest,
penalties and additions to tax imposed with respect thereto;
"TAX RETURN" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof;
"THIRD PARTY CLAIM" as defined in Section 8.6(b).
SECTION 9.4 HEADINGS; CONSTRUCTION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. All words used in this Agreement
will be construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the word "including" does not limit the
preceding words or terms.
39
SECTION 9.5 SEVERABILITY. If any term or other provision of this
Agreement is determined to be invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties
hereto as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.6 ENTIRE AGREEMENT AND MODIFICATION. This Agreement
(together with the exhibits and schedules) constitutes the entire agreement of
the parties and supersedes all prior agreements and undertakings, both written
and oral, between the parties hereto, or any of them, with respect to the
subject matter hereof. This Agreement may not be amended except by a written
agreement executed by the party to be charged with the amendment.
SECTION 9.7 ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 9.8 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.9 WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of any party hereto in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or acquiescence in, any breach
of any representation, warranty or agreement herein, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof
or of any other right. To the maximum extent permitted by applicable law, (a)
no claim or right arising out of this Agreement or the documents referred to
in this Agreement can be discharged by one party, in whole or in part, by a
waiver or renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement. All rights and remedies existing
under this Agreement are in addition to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 9.10 FURTHER ASSURANCES. The parties hereto agree (a) to
furnish upon request to each other such further information, (b) to execute
and deliver to each other such other documents, and (c) to do such other acts
and things, all as another party hereto may reasonably request for the purpose
40
of carrying out the intent of this Agreement and the documents referred to in
this Agreement.
SECTION 9.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS
OF LAW.
SECTION 9.12 JURISDICTION; SERVICE OF PROCESS. ANY ACTION OR PROCEEDING
SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY RIGHT ARISING OUT OF,
THIS AGREEMENT MAY BE BROUGHT AGAINST ANY OF THE PARTIES HERETO IN THE COURTS
OF THE STATE OF TEXAS, COUNTY OF GALVESTON, OR, IF IT HAS OR CAN ACQUIRE
JURISDICTION, IN THE UNITED STATES DISTRICT COURT FOR THE GALVESTON DISTRICT
OF TEXAS, AND EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF SUCH
COURTS (AND OF THE APPROPRIATE APPELLATE COURTS) IN ANY SUCH ACTION OR
PROCEEDING AND WAIVES ANY OBJECTION TO VENUE LAID THEREIN. PROCESS IN ANY
ACTION OR PROCEEDING REFERRED TO IN THE PRECEDING SENTENCE MAY BE SERVED ON
ANY PARTY HERETO ANYWHERE IN THE WORLD.
SECTION 9.13 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
[The next page is the signature page.]
41
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the date first written above by their
respective officer thereunto duly authorized:
HANGER ORTHOPEDIC GROUP, INC.
By: ________________________________
Name: Xxxx X. Xxxxx
Title: President
HANGER PROSTHETICS & ORTHOTICS, INC.
By: ________________________________
Name: Xxxx X. XxXxxxx
Title: President
XXXXXX PROSTHETICS-ORTHOTICS, INC.
By: ________________________________
Name: Xxx Xxxxxx
Title: President
SOLE STOCKHOLDER
____________________________________
Xxx Xxxxxx, As the Sole Stockholder
of Xxxxxx Prosthetics-Orthotics, Inc.
42
