MEMBERSHIP INTEREST PURCHASE AGREEMENT
DATED
JUNE 6, 2002
AMONG
AIR METHODS CORPORATION,
(THE "BUYER")
ROCKY MOUNTAIN HOLDINGS, L.L.C.,
(THE "COMPANY")
ROCKY MOUNTAIN HOLDINGS, INC.,
AND
AMC HELICOPTERS, INC.
(THE "SELLERS")
TABLE OF CONTENTS
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Page
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ARTICLE I - SALE AND PURCHASE OF CERTAIN ASSETS . . . . . . . . . . . . . . 1
1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Agreement to Purchase and Sell . . . . . . . . . . . . . . . 1
(b) Payments to Sellers. . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Certain Definitions. . . . . . . . . . . . . . . . . . . . . 2
(c) Members Equity Adjustment Amount . . . . . . . . . . . . . . 2
(d) Maintenance Adjustment . . . . . . . . . . . . . . . . . . . 3
1.3 Payment of Cash Portion of Purchase Price . . . . . . . . . . . . 4
(a) Payment at Closing . . . . . . . . . . . . . . . . . . . . . 4
(b) Payments upon Determination of the Members Equity Adjustment
Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 Certain Payments. . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) 9-11 Receivable Amounts. . . . . . . . . . . . . . . . . . . 4
(b) Contingent Consideration . . . . . . . . . . . . . . . . . . 4
1.5 Allocation of Purchase Price. . . . . . . . . . . . . . . . . . . 6
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS. 6
2.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Absence of Changes or Events. . . . . . . . . . . . . . . . . . . 7
2.5 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Marketable Title . . . . . . . . . . . . . . . . . . . . . . 7
(b) Condition of Aircraft. . . . . . . . . . . . . . . . . . . . 7
(c) Machinery and Equipment. . . . . . . . . . . . . . . . . . . 7
(d) Inventories. . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Compliance with Licenses, Permits, Laws and Other Instruments . . 8
(a) Licenses and Permits . . . . . . . . . . . . . . . . . . . . 8
(b) Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Government Consent . . . . . . . . . . . . . . . . . . . . . 8
2.7 Contracts and Agreements. . . . . . . . . . . . . . . . . . . . . 8
2.8 Employment Contracts and Employee Plans . . . . . . . . . . . . . 9
(a) List of Employees. . . . . . . . . . . . . . . . . . . . . . 9
(b) Terminated Employees . . . . . . . . . . . . . . . . . . . . 9
(c) Employee Agreements. . . . . . . . . . . . . . . . . . . . . 9
(d) WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Employee Contracts Affecting Services. . . . . . . . . . . . 9
2.9 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 10
(b) Plan Documents . . . . . . . . . . . . . . . . . . . . . . . 10
ii
2.10 Labor Disputes; Compliance. . . . . . . . . . . . . . . . . . . . 11
(a) Labor Law Compliance . . . . . . . . . . . . . . . . . . . . 11
(b) Labor Relations. . . . . . . . . . . . . . . . . . . . . . . 11
2.11 Claims and Proceedings. . . . . . . . . . . . . . . . . . . . . . 11
2.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.13 Real Properties; Leases . . . . . . . . . . . . . . . . . . . . . 12
2.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.15 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . 13
2.16 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 13
2.17 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . 13
2.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 14
2.19 Capitalization of the Company . . . . . . . . . . . . . . . . . . 15
2.20 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III - BUYER'S REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . 15
3.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3 Material Adverse Change . . . . . . . . . . . . . . . . . . . . . 16
3.4 Federally Funded Programs . . . . . . . . . . . . . . . . . . . . 16
3.5 Financial Ability to Perform. . . . . . . . . . . . . . . . . . . 16
3.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV - SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 16
ARTICLE V - COVENANTS OF THE PARTIES. . . . . . . . . . . . . . . . . . . . 17
5.1 Conduct of Business Pending Closing . . . . . . . . . . . . . . . 17
5.2 Cooperation by the Company and Sellers. . . . . . . . . . . . . . 19
5.3 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Access to Records Before Closing. . . . . . . . . . . . . . . . . 19
5.5 Access to Records After Closing . . . . . . . . . . . . . . . . . 19
5.6 WARN Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.7 Federally Funded Programs . . . . . . . . . . . . . . . . . . . . 19
5.8 Severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI - CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE CLOSING. . . 20
6.1 Conditions to Buyer's Obligations . . . . . . . . . . . . . . . . 20
(a) Covenants, Representations and Warranties. . . . . . . . . . 20
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(c) Material Adverse Change. . . . . . . . . . . . . . . . . . . 20
(d) Release of Third Party Interests in the Company's Assets . . 20
(e) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 21
(f) Xxxx-Xxxxx-Xxxxxx. . . . . . . . . . . . . . . . . . . . . . 21
(g) Certain Customer Contracts . . . . . . . . . . . . . . . . . 21
6.2 Conditions to the Company's and Sellers' Obligations. . . . . . . 21
(a) Covenants, Representations and Warranties. . . . . . . . . . 21
(b) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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(c) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Xxxx-Xxxxx-Xxxxxx. . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII - CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2 Documents to be Delivered by the Company and Sellers. . . . . . . 22
(a) Assignment of Interests. . . . . . . . . . . . . . . . . . . 22
(b) Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Non-Competition Agreements . . . . . . . . . . . . . . . . . 22
(d) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . 22
(e) Certificate. . . . . . . . . . . . . . . . . . . . . . . . . 22
(f) Transfer of Records. . . . . . . . . . . . . . . . . . . . . 22
7.3 Obligations of Buyer. . . . . . . . . . . . . . . . . . . . . . . 22
(a) Wire Transfer. . . . . . . . . . . . . . . . . . . . . . . . 23
(b) Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . 23
(c) Non-Competition Agreements . . . . . . . . . . . . . . . . . 23
(d) Certificate. . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII - TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Sales, Use, Transfer and Other Taxes. . . . . . . . . . . . . . . 23
8.2 Tax Periods Ending on or before the Closing Date. . . . . . . . . 23
8.3 Cooperation on Tax Related Issues . . . . . . . . . . . . . . . . 23
8.4 Tax Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.5 Tax Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IX - INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 Indemnification of Sellers. . . . . . . . . . . . . . . . . . . . 24
9.2 Indemnification of Buyer. . . . . . . . . . . . . . . . . . . . . 25
(a) General. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Limitations. . . . . . . . . . . . . . . . . . . . . . . . . 25
9.3 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.4 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Claims for Money Damages . . . . . . . . . . . . . . . . . . 27
9.5 Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . 27
9.6 Prepayment Penalties. . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE X - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.1 Termination of Agreement. . . . . . . . . . . . . . . . . . . . . 28
10.2 Procedure Upon Termination. . . . . . . . . . . . . . . . . . . . 29
10.3 Specific Performance Upon Termination . . . . . . . . . . . . . . 30
10.4 Non-Refundable Deposit. . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XI - CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . 30
11.1 Confidentiality Covenants . . . . . . . . . . . . . . . . . . . . 30
11.2 Disclosure Pursuant to Legal Process. . . . . . . . . . . . . . . 31
11.3 Termination of Confidentiality Obligations. . . . . . . . . . . . 32
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ARTICLE XII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 32
12.1 Modifications; Waiver . . . . . . . . . . . . . . . . . . . . . . 32
12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.3 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.4 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.5 Binding Effect; Assignment; No Third Party Rights . . . . . . . . 34
12.6 No Strict Construction. . . . . . . . . . . . . . . . . . . . . . 34
12.7 Entire and Sole Agreement . . . . . . . . . . . . . . . . . . . . 34
12.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.9 Jurisdiction; Service Of Process; Waiver Of Trial By Jury . . . . 34
12.10 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . 35
12.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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LIST OF EXHIBITS, APPENDICES AND SCHEDULES
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EXHIBITS
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Exhibit A Form of Opinion of the Company and Sellers' Counsel
Exhibits B-1 & B-2 Forms of Non-Competition Agreements
Exhibit C Form of Escrow Agreement
Exhibit D Form of Certificate of the Company
Exhibit E Form of Certificate of Buyer
Exhibit F Form of Certificate of the Sellers
APPENDICES
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Appendix A Definitions & Index of Defined Terms
SCHEDULES
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Schedule 1.4(a) 9-11 Receivable Application
Schedule 1.4(b) Example of Calculation of CCP
Schedule 1.5 Allocation of Purchase Price
Schedule 2.2 Subsidiaries
Schedule 2.3 Authorizations
Schedule 2.4 Absence of Certain Changes
Schedule 2.5(a) Permitted Liens
Schedule 2.5(b) Condition of Aircraft
Schedule 2.5(c) Machinery and Equipment
Schedule 2.6(a) Licenses and Permits
Schedule 2.6(b) Conflicts
Schedule 2.6(c) Government Consents
Schedule 2.7 Contracts
Schedule 2.8(a) List of Employees
Schedule 2.8(b) Terminated Employees
Schedule 2.8(c) Employee Agreements
Schedule 2.9(a) Employee Benefit Plans
Schedule 2.10(a) Labor Law Compliance
Schedule 2.10(b) Labor Relations
Schedule 2.11 Proceedings
Schedule 2.12 Taxes
Schedule 2.13(a) Real Property
Schedule 2.13(b) Real Property Leases
Schedule 2.14 Insurance
Schedule 2.16 Financial Statements
Schedule 2.17 Accounts Receivable
Schedule 2.18 Environmental Matters
Schedule 2.19 Capitalization
vi
Schedule 2.20 Brokers
Schedule 5.1 Conduct of Business Pending Closing
Schedule 6.1(g) Certain Customer Contracts
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
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This Membership Interest Purchase Agreement (the "AGREEMENT") is entered
into as of June 6, 2002 among AIR METHODS CORPORATION, a Delaware corporation
(the "BUYER"), ROCKY MOUNTAIN HOLDINGS, L.L.C., a Delaware limited liability
company (the "COMPANY"), ROCKY MOUNTAIN HOLDINGS, INC., a Delaware corporation,
and AMC HELICOPTERS, INC., a Delaware corporation (each, a "SELLER" and
collectively, the "SELLERS"). All defined terms used, but not otherwise
defined, herein shall have their respective meanings set forth on Appendix A.
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RECITALS
A. The Company is engaged in the business of providing emergency air
medical transportation services in the United States (the "BUSINESS"), and owns
and leases certain assets and properties which are used by or useful to the
Company in the conduct of its Business.
B. Buyer is also engaged in the business of providing emergency air
medical transportation services in the United States.
C. Buyer desires to purchase from the Sellers, and Sellers desire to
sell to the Buyer, all of the issued and outstanding membership interests (the
"INTERESTS") of the Company on the terms and conditions set forth in this
Agreement, and substantially in accordance with that certain non-binding Letter
of Intent, dated April 4, 2002, entered into by and among Buyer, the Company,
and Sellers, as thereafter amended (the "LOI"), providing for such purchase and
sale.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
representations, warranties, covenants, agreements, terms and conditions set
forth below, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
SALE AND PURCHASE OF CERTAIN ASSETS
1.1 Purchase and Sale
(a) Agreement to Purchase and Sell. On the terms and subject to
the conditions contained in this Agreement, each Seller agrees to sell, convey,
assign, transfer, and deliver its respective Interests to Buyer, and Buyer
agrees to purchase the Interests from Sellers, on the Closing Date, effective as
of 11:59 p.m., Philadelphia, Pennsylvania time.
(b) Payments to Sellers. Notwithstanding any other provision
herein to the contrary, (i) any and all payments to be made under this Agreement
to the Sellers (including, without limitation, distributions under the Escrow
Agreement) shall be made to the Sellers, and (ii) any and all payments to be
made under this Agreement by the Sellers shall be the several obligations of the
Sellers, in each such case based on their respective ownership of 50% of the
Interests.
1.2 Purchase Price
(a) Purchase Price. The purchase price for the Interests (the
"PURCHASE PRICE") will be the sum of: (i) twenty-eight million dollars
($28,000,000.00), (ii) the Members Equity Adjustment Amount, to be calculated
and paid as specified in Sections 1.2(b)-(d); and (iii) the Contingent
Consideration Payment, to be calculated and paid as specified in Section 1.4(b).
(b) Certain Definitions.
(i) "MEMBERS EQUITY ADJUSTMENT AMOUNT" (which may be a
positive or negative number) will be equal to the amount determined by
subtracting the Estimated Total Members Equity from the Closing Total
Members Equity, subject to adjustment as set forth in Section 1.2(d)
below.
(ii) "PRELIMINARY MEMBERS EQUITY ADJUSTMENT AMOUNT" (which
may be a positive or negative number) will be equal to the amount
determined by subtracting the Estimated Total Members Equity from the
Pre-Closing Total Members Equity.
(iii) "TOTAL MEMBERS EQUITY" as of a given date shall be
calculated in the same manner as on the audited balance sheet of the
Company at December 31, 2001 (the "12/31/01 BALANCE SHEET"), other
than with respect to the account for "accrued aircraft maintenance,"
which shall be calculated in the same manner as the Company's
unaudited interim balance sheets using the deferral method of
accounting.
(iv) "ESTIMATED TOTAL MEMBERS EQUITY" is twenty-five million
five hundred eighty-nine thousand dollars ($25,589,000), as set forth
in paragraph 4 of the LOI.
(v) "PRE-CLOSING TOTAL MEMBERS EQUITY" shall be the Total
Members Equity shown on the unaudited balance sheet of the Company
dated as of the last day of the calendar month immediately preceding
the Closing Date (the "INTERIM BALANCE SHEET").
(vi) "CLOSING TOTAL MEMBERS EQUITY" shall be the Total
Members Equity as of the Closing Date.
(c) Members Equity Adjustment Amount. Promptly after the Closing,
the Company shall prepare a balance sheet of the Company dated as of the Closing
Date (the "CLOSING DATE BALANCE SHEET") on the same basis and applying the same
accounting principles, policies, and practices that were used in preparing the
12/31/01 Balance Sheet, other than with respect to the account for "accrued
aircraft maintenance," which shall be calculated in the same manner as, and on a
consistent basis with, the Company's unaudited interim balance sheets using
2
the deferral method of accounting. The Closing Date Balance Sheet shall be
audited by PricewaterhouseCoopers LLC ("PWC"), the Company's independent
accountants, and the fees and costs of PwC for such audit shall be shared
equally between Buyer, on the one hand, and the Sellers, on the other. The
Closing Total Members Equity shall be determined based upon the Closing Date
Balance Sheet. The Company shall deliver the Closing Date Balance Sheet and its
calculation of the Closing Total Members Equity to Sellers within sixty (60)
days following the Closing Date.
(ii) If, within thirty (30) days following delivery of the
Closing Date Balance Sheet and the Closing Total Members Equity
calculation, any Seller has not given Buyer written notice of its
objection as to the Closing Total Members Equity calculation (which
notice shall state the basis of such Seller's objection), then the
Closing Total Members Equity calculated by the Company, as audited by
PwC, shall be binding and conclusive on the parties and shall be used
in computing the Members Equity Adjustment Amount.
(iii) If any Seller duly gives Buyer such notice of
objection, and if Buyer and such Seller fail to resolve the issues
outstanding with respect to the Closing Date Balance Sheet and the
calculation of the Closing Total Members Equity within thirty (30)
days of Buyer's receipt of such Seller's objection notice, Sellers and
Buyer shall submit the issues remaining in dispute to Deloitte &
Touche LLP, independent public accountants (the "INDEPENDENT
ACCOUNTANTS"), for resolution applying the principles, policies and
practices referred to in Section 1.2(c)(i). If issues are submitted to
the Independent Accountants for resolution, (A) Sellers and Buyer
shall furnish or cause to be furnished to the Independent Accountants
such work papers and other documents and information relating to the
disputed issues as the Independent Accountants may reasonably request
and are available to that party or its agents, and Sellers and Buyer
shall be afforded the opportunity to present to the Independent
Accountants any material relating to the disputed issues and to
discuss such issues with the Independent Accountants; (B) the
determination by the Independent Accountants, as set forth in a notice
to be delivered to both Sellers and Buyer within sixty (60) days of
the submission to the Independent Accountants of the issues remaining
in dispute, shall be final, binding and conclusive on the parties and
shall be used in the calculation of the Closing Total Members Equity;
and (C) the non-prevailing party will bear the fees and costs of the
Independent Accountants for such determination.
(iv) Sellers or their designee will have the right to
participate in the Company's preparation of the Closing Date Balance
Sheet and calculation of the Closing Total Members Equity.
(d) Maintenance Adjustment. If the account for "accrued aircraft
maintenance" set forth on the Closing Date Balance Sheet and used in the
calculation of Closing Total Members Equity in accordance Section 1.2(c) exceeds
3
a debit balance of $500,000, then the Members Equity Adjustment Amount shall be
reduced dollar for dollar by the amount of such excess.
1.3 Payment of Cash Portion of Purchase Price.
(a) Payment at Closing. In accordance with Section 7.3, at the
Closing Buyer shall deliver to the Sellers an amount equal to twenty-eight
million dollars ($28,000,000), increased or decreased by the Preliminary Members
Equity Adjustment Amount. Two hundred fifty thousand dollars ($250,000) of such
payment shall be the amount previously paid by Buyer to Sellers in the form of a
good faith deposit on April 4, 2002 (the "DEPOSIT"); one million dollars
($1,000,000) (the"INDEMNIFICATION ESCROW AMOUNT") of such payment shall be
delivered to the Escrow Agent to be held in the Indemnification Escrow Account
and delivered in accordance with the terms of the Escrow Agreement and the
balance of such payment shall be delivered to the Sellers.
(b) Payments upon Determination of the Members Equity Adjustment
Amount. On or before the fifth (5th) business day following the final
determination of the Closing Total Members Equity pursuant to Section 1.2(c), an
amount equal to the difference between the Preliminary Members Equity Adjustment
Amount and the Members Equity Adjustment Amount shall be paid by Buyer to the
Sellers or by the Sellers to Buyer, as appropriate, so as to properly reflect
the correct adjustment amount as if the Members Equity Adjustment Amount were
known at Closing.
1.4 Certain Payments
(a) 9-11 Receivable Amounts. Immediately prior to the Closing,
the Company shall distribute to Sellers all of its right, title and interest in
and to any and all amounts to be received by the Company in connection with the
Company's application filed with the United States Department of Transportation
on or about May 22, 2002, as may thereafter be amended from time to time, for
compensation related to the events of September 11, 2001 (such amounts, the
"9-11 RECEIVABLE AMOUNTS"). From and after the Closing, Buyer, acting as agent
for Sellers, shall, and shall cause the Company to, (i) diligently pursue, and
keep the Sellers reasonably informed on the status of, the Company's application
described above, (ii) take any and all actions reasonably requested by Sellers,
and otherwise cooperate fully with Sellers' efforts, to obtain the 9-11
Receivable Amounts, and (iii) pay the Sellers the 9-11 Receivable Amounts within
five (5) days of receipt thereof by the Company. The aforementioned application
is attached hereto as Schedule 1.4(a).
(b) Contingent Consideration. Buyer shall pay the Sellers
additional cash consideration, calculated on the basis of incremental cash
receipts for Transports due to rate increases in applicable Medicare transport
rate schedules after December 31, 2001, subject to the terms of this Section
1.4(b) (the "CONTINGENT CONSIDERATION PAYMENT" or "CCP"). The Contingent
Consideration Payment shall be computed as follows:
CCP = Percentage * (Actual Cash Receipts minus Calculated Cash Receipts
minus $1,039,000 for each applicable Measurement Period)
where
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"PERCENTAGE" = twenty-five percent (25%)
"MEASUREMENT PERIOD" = a 12-month period beginning on the first day of the
month that includes the Closing Date (the "START
DATE") and ending on the first (1st) year anniversary
of the Start Date, and each consecutive 12-month
period thereafter
"ACTUAL CASH RECEIPTS" = cumulative actual cash receipts (including co-pays)
for all Transports that occurred during the
applicable Measurement Period, divided by the
number of actual Transports that occurred during
such period, and then multiplying that amount by
the lesser of (i) the number of actual Transports that
occurred during the twelve (12) months immediately
preceding the Start Date and (ii) the number of
actual Transports that occurred during the applicable
Measurement Period
"CALCULATED CASH RECEIPTS" = cumulative actual cash receipts (including co-pays)
for all Transports that occurred during the twelve
month period ending December 31, 2001, divided by the
number of actual Transports that occurred during the
same period, multiplied by the lesser of (i) the
number of actual Transports that occurred during the
twelve (12) months immediately preceding the Start
Date and (ii) the number of actual Transports that
occurred during the applicable Measurement Period
"TRANSPORTS" = Medicare transports done by Buyer or any affiliate
of Buyer in any geographic area serviced by the
Company through an independent program as of the
Closing Date
provided, however, that the aggregate CCP shall not exceed two million six
-------- -------
hundred thousand dollars ($2,600,000.00), and provided further that no payments
--- -------- ------- ----
shall be due to Sellers with respect to any Transports made after the ninth
(9th) anniversary of the Start Date. The Contingent Consideration Payment shall
be calculated and recalculated on an annual basis for each Measurement Period
until all cash has been received for all Transports occurring during each
applicable Measurement Period. Within thirty (30) days after each applicable
anniversary of the Start Date, Buyer shall provide Sellers with a report,
setting forth in reasonable detail, the manner in which the CCP is calculated
for each applicable Measurement Period, and during such 30-day period shall pay
the CCP, if any, owed to Sellers as set forth in each report. (For example,
within 30 days of the end of the third Measurement Period, the Buyer will
provide Sellers with the following reports: (i) a third report for the CCP for
the first Measurement Period; (ii) a second report for the CCP for the second
5
Measurement Period; and (iii) the first report for the CCP for the third
Measurement Period.) Buyer shall also provide Sellers such other information as
Sellers may reasonably request with respect to each such calculation and report.
If, at any time between the Closing Date and ninth (9th) anniversary of the
Start Date, any independent program under which Transports are being made is
converted or otherwise replaced with a hospital contract or other similar
program with the Buyer or any affiliate of Buyer, then the actual number of
Transports that occurred during the twelve months immediately preceding the
Start Date for a specific program should be added to the actual number of
Transports that occurred during the applicable Measurement Period, less the
actual number of Transports for that specific program that occurred during the
applicable Measurement Period for purposes of clause (ii) of "Actual Cash
Receipts" and "Calculated Cash Receipts." Attached hereto as Schedule 1.4(b) is
---------------
an example of the calculation of the CCP.
1.5 Allocation of Purchase Price. The Purchase Price shall be allocated
among the assets of the Company pursuant to an allocation to be mutually agreed
upon by Buyer and Sellers at or prior to Closing, which allocation shall be
prepared in accordance with Schedule 1.5 hereto, and all tax returns and
-------------
reports, financial information and other books and records each of Buyer, the
Company and Sellers with respect to the transactions contemplated by this
Agreement shall be consistent with such allocation. It is the intention of the
parties hereto that the Contingent Consideration Payment shall be allocated to
those assets of the Company, such as goodwill, that are eligible for installment
sale reporting under Section 453 of the Code.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS
The Company and the Sellers, severally and not jointly, represent and
warrant to Buyer that:
2.1 Due Organization. The Company is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all requisite power and authority to carry on the Business as
now conducted and to own, lease, and operate its assets.
2.2 Subsidiaries. Except as set forth on Schedule 2.2, the Company has
------------
no subsidiaries and does not conduct any operations, business, or activities
other than the operation of the Business.
2.3 Due Authorization. The Company and Sellers have all requisite
power and authority to execute, deliver, and perform this Agreement and to
perform the transactions contemplated hereby. The execution, delivery, and
performance by the Company and Sellers of this Agreement and the transactions
contemplated hereby have been duly and validly authorized by all necessary
action of the Company and Sellers. This Agreement has been duly and validly
executed and delivered by the Company and Sellers and constitutes the valid and
binding obligation of the Company and each Seller, respectively, enforceable
against the Company and each Seller, respectively, in accordance with its terms.
Except as set forth on Schedule 2.3 and, in the case of clauses (a)-(c) below,
------------
except for any such violations, conflicts, cancellations, defaults or
accelerations as would not have a Material Adverse Effect, the execution,
delivery, and performance of this Agreement (as well as all other instruments,
6
agreements, certificates, or other documents contemplated hereby) by the Company
or Sellers, does not (a) violate any federal, state, county, or local law, rule,
or regulation or any decree or judgment of any court or governmental authority
applicable to the Company or the Business, (b) violate or conflict with, or
permit the cancellation of, or constitute a default under, any agreement to
which the Company is a party, or by which the Company or the Business is bound,
(c) permit the acceleration of the maturity of any indebtedness of the Company
or Sellers, or the acceleration of any obligation of the Company or Sellers, or
(d) violate or conflict with any provision of the certificate of formation or
operating agreement, or equivalent constitutive documents, of the Company.
2.4 Absence of Changes or Events. Except as set forth in Schedule 2.4,
------------
since December 31, 2001, (i) the Company has conducted the Business in a manner
consistent with the requirements of Section 5.1 below and (ii) the Company has
not suffered any change, event, or condition which has had or would have a
Material Adverse Effect, as defined in this Section below.
As used in this Agreement, "MATERIAL ADVERSE EFFECT" means any material
adverse change in or effect on the financial condition or operations of the
Business, taken as a whole, whether attributable to a single circumstance or
event or an aggregation of circumstances or events, but does not include any
change or effect resulting or derived from (a) general economic conditions, (b)
changes generally affecting United States' securities markets, or (c) changes
generally affecting the health care, aviation or aeromedical services
industries.
2.5 Personal Property.
(a) Marketable Title. The Company has good title to (or valid
leasehold or contractual interests in) all personal property of the Company,
free and clear of all liens, claims, charges, set-offs, encumbrances or
restrictions of every kind ("LIEN"), except for the Liens disclosed in Schedule
2.5(a) ("PERMITTED LIENS").
(b) Condition of Aircraft. Except as set forth on Schedule 2.5(b),
all helicopters and rotable equipment thereon of the Company are maintained in
accordance with the Company's Federal Aviation Administration (the "FAA")
approved maintenance plan, and, since December 31, 2001, all aircraft parts have
been maintained in accordance with the Company's past practices.
(c) Machinery and Equipment. Except as set forth on Schedule
2.5(c), to the Company's Knowledge, all material machinery, equipment and
tangible assets of the Company (excluding aircraft) being used in the operation
of the Business are sufficient for the operation of the Business in accordance
with the Company's past practices and are maintained in accordance with the
Company's past practices.
(d) Inventories. The inventory of the Company has been booked in
accordance with GAAP consistent with the Company's past practices. Except for
items reflected in the allowance for excess and slow moving inventory as set
forth on the 12/31/01 Balance Sheet, the Interim Balance Sheet and the Closing
Date Balance Sheet, the quantities of each category of inventory are not
excessive based on the Company's past practices.
7
2.6 Compliance with Licenses, Permits, Laws and Other Instruments.
(a) Licenses and Permits. Attached hereto as Schedule 2.6(a) is a
list of all federal, state, county, and local governmental licenses,
certificates, and permits held or applied for by the Company which are material
to the conduct of the Business, including, but not limited to, all FAA licenses
and permits ("AUTHORIZATIONS"). The Company has complied in all material
respects with the terms and conditions of all such Authorizations, and no
material violation of any such Authorizations or the laws or rules governing the
issuance or continued validity thereof has occurred. No additional
Authorizations are required from any federal government agency or body thereof
or, to the Company's Knowledge, any state, county, or local government agency or
body thereof, in connection with the operation of the Business, except where the
failure to obtain such Authorization would not reasonably be expected to have a
Material Adverse Effect. Except as disclosed on Schedule 2.6(a), in the conduct
of the Business, the Company has not been issued any citations, notices or
orders of non-compliance under any law, rule, regulation, ordinance, order,
judgment, or decree (with respect to the Business) within two years of the
Closing Date.
(b) Conflicts. Except as disclosed on Schedule 2.6(b), the
conduct of the Business does not conflict with the rights of any other person,
firm, or corporation, violate or, with or without the giving of notice or the
passage of time, or both, will violate, conflict with or result in a default,
right to accelerate or loss of rights under, any terms or provisions of the
certificate of formation or operating agreement, or equivalent constitutive
documents, as presently in effect, of the Company, or any lien, encumbrance,
mortgage, deed of trust, lease, license, agreement, understanding, law,
ordinance, rule or regulation, or any order, judgment or decree to which the
Company is a party or by which the Company is bound, except for any such
violation, conflict, default, acceleration or loss that would not have a
Material Adverse Effect.
(c) Government Consent. To the Company's Knowledge, there is no
proposed law, governmental taking, condemnation or other proceeding which would
be applicable to the Business and which would have a Material Adverse Effect
either before or after the Closing. No consent, qualification, order, approval,
or authorization of, or filing with, any governmental authority, including,
without limitation, any filings or notices required by applicable bulk sales
law, if any, is required in connection with the Company's execution, delivery
and performance of this Agreement and the consummation of any transaction
contemplated hereby, except as set forth on Schedule 2.6(c) and except where the
failure to obtain such consent, qualification, order, approval or authorization
or to make such filing would not have a Material Adverse Effect.
2.7 Contracts and Agreements. Attached hereto as Schedule 2.7 is a
------------
list of all written or oral contracts, commitments, leases, and other agreements
(including, without limitation, promissory notes, loan agreements, and other
evidences of indebtedness, guarantees, agreements with distributors, suppliers,
dealers, franchisers and customers, and service agreements, but excluding
employment contracts, Employee Plans and Leases listed and described on
Schedules 2.8(c), 2.9(a) and 2.13(b), respectively) with respect to the Business
------------------------------------
to which the Company is a party and pursuant to which the obligations thereunder
of either party thereto are, or are contemplated as being, twenty-five thousand
dollars ($25,000.00) or more per annum, or the terms of which are in excess of
five years (collectively, the "CONTRACTS"). To the Company's Knowledge, the
Contracts are valid and enforceable and in full force and effect. Except as set
forth on Schedule 2.7, the Company is not, and to the Company's Knowledge, no
-------------
8
other party thereto is, in material default (and no event has occurred which,
with the passage of time or the giving of notice, or both, would constitute a
material default) under any of the Contracts, and has not waived any material
right under any of the Contracts. No consent, qualification, order, approval or
authorization of, or filing with, any person is required in connection with the
Company's execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, except as set forth on
Schedule 2.7 and except where the failure to obtain such consent, qualification,
------------
order, approval or authorization or to make such filing would not have a
Material Adverse Effect.
2.8 Employment Contracts and Employee Plans.
(a) List of Employees. Schedule 2.8(a) contains a complete and
accurate list of the following information for each employee of the Company as
of April 15, 2002, including each employee on leave of absence or layoff status:
name; process level; department; location; hire date; rate of pay; the date of
last increase or decrease in salary, together with the amount thereof and reason
therefor; expense account unit; and status.
(b) Terminated Employees. Schedule 2.8(b) contains a complete and
accurate list of each employee of the Company who has been terminated or laid
off, or whose hours of work have been reduced by more than fifty percent (50%)
by the Company, since September 30, 2001, as well as the date of such
termination, layoff or reduction in hours. Except as disclosed on Schedule
2.8(b), the Company has no obligations of any kind to any of such employees or
former employees.
(c) Employee Agreements. Except as listed and described on
Schedule 2.8(c),the Company has (i) no agreements with any employees, written or
oral, concerning term of employment, compensation, benefits, or severance and
(ii) no material written or oral employee policies, whether set forth in an
employee manual, employee statement of policy, work rules for any employee or
group of employees, or otherwise.
(d) WARN Act. The Company has not violated the Worker Adjustment
and Retraining Notification Act (the "WARN ACT") or any similar state or local
legal requirement. During the ninety (90) day period prior to the date of this
Agreement, the Company has terminated six employees.
(e) Employee Contracts Affecting Services. To the Company's
Knowledge, no employee or independent contractor of the Company is bound by any
contract that purports to limit his ability (i) to engage in or continue or
perform any conduct, activity, duties or practice relating to the Business or
(ii) to assign to the Company any rights to any invention, improvement, or
discovery made during the course of such employee's employment or such
independent contractor's engagement, as the case may be. To the Company's
Knowledge, no former or current employee of the Company is a party to, or is
otherwise bound by, any Contract that materially adversely affected, affects, or
will affect the ability of the Company or Buyer to conduct the Business as
presently conducted by the Company.
2.9 Employee Benefits.
9
(a) Employee Benefit Plans. Set forth in Schedule 2.9(a) is a
complete and correct list of all "employee benefit plans" as defined by Section
3(3) of the Employment Retirement Income Security Act ("ERISA"), all specified
fringe benefit plans as defined in Section 6039D of the Code, and all other
bonus, incentive-compensation, deferred-compensation, profit-sharing,
stock-option, stock-appreciation-right, stock-bonus, stock-purchase,
employee-stock-ownership, savings, severance, change-in-control,
supplemental-unemployment, layoff, salary-continuation, retirement, pension,
health, life-insurance, disability, accident, group-insurance, vacation,
holiday, sick-leave, fringe-benefit or welfare plan, and any other employee
compensation or benefit plan, agreement, policy, practice, commitment, contract
or understanding (whether qualified or nonqualified, currently effective or
terminated since September 30, 2001, written or unwritten) and any trust, escrow
or other agreement related thereto that (i) is maintained or contributed to by
the Company or any other corporation or trade or business controlled by,
controlling or under common control with the Company (within the meaning of
Section 414 of the Code or Section 4001(a)(14) or 4001(b) of ERISA) ("ERISA
AFFILIATE") and covers employees or former employees of the Company, is a
defined benefit pension plan subject to Title IV of ERISA or is a pension plan
subject to Section 412 of the Code and has been maintained or contributed to in
the last six (6) years by the Company or any ERISA Affiliate, or is a defined
benefit pension plan subject to Title IV of ERISA or is a pension plan subject
to Section 412 of the Code and with respect to which the Company or any ERISA
Affiliate has or may have any liability, and (ii) provides benefits, or
describes policies or procedures applicable to any current or former director,
officer, employee or service provider of, the Company, or the dependents of any
thereof, regardless of how (or whether) liabilities for the provision of
benefits are accrued or assets are acquired or dedicated with respect to the
funding thereof (collectively the "EMPLOYEE PLANS"). Schedule 2.9(a) identifies
as such any Employee Plan that is (w) a "Defined Benefit Plan" (as defined in
Section 414(l) of the Code); (x) a plan intended to meet the requirements of
Section 401(a) of the Code; (y) a "Multiemployer Plan" (as defined in Section
3(37) of ERISA); or (z) a plan subject to Title IV of ERISA, other than a
Multiemployer Plan. Also set forth on Schedule 2.9(a) is a complete and correct
list of all ERISA Affiliates of the Company during the last six (6) years.
(b) Plan Documents. The Company has made available to Buyer true,
accurate and complete copies of (i) the material documents comprising each
Employee Plan (or, with respect to any Employee Plan which is unwritten, a
written summary of eligibility, participation, benefits, funding arrangements,
assets and any other matters which relate to the obligations of the Company or
any ERISA Affiliate); (ii) all trust agreements, insurance contracts or any
other funding instruments related to the Employee Plans; (iii) all rulings,
determination letters, no-action letters or advisory opinions from the IRS, the
U.S. Department of Labor, the Pension Benefit Guaranty Corporation ("PBGC") or
any other governmental agency or body thereof that pertain to each Employee Plan
and any open requests therefor; (iv) the most recent actuarial and financial
reports (audited and/or unaudited) and the annual reports filed with any other
governmental agency or body thereof with respect to the Employee Plans during
the current year and each of the three preceding years; (v) all collective
bargaining agreements pursuant to which contributions to any Employee Plan(s)
have been made or obligations incurred (including both pension and welfare
benefits) by the Company or any ERISA Affiliate, and all collective bargaining
agreements pursuant to which contributions are being made or obligations are
owed by such entities; (vi) all securities registration statements filed with
respect to any Employee Plan; (vii) all contracts with third-party
administrators, actuaries, investment managers, consultants and other
10
independent contractors that relate to any Employee Plan, (viii) with respect to
Employee Plans that are subject to Title IV of ERISA, the Form PBGC-1 filed for
each of the three most recent plan years; and (ix) all summary plan
descriptions, summaries of material modifications and memoranda, employee
handbooks and other material written communications regarding the Employee
Plans.
2.10 Labor Disputes; Compliance.
(a) Labor Law Compliance. Except as set forth in Schedule
2.10(a), the Company has complied with all legal requirements relating to
employment practices, terms and conditions of employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, occupational safety and health, and other requirements under
applicable federal and state laws, except where the failure to comply would not
have a Material Adverse Effect. Except as set forth in Schedule 2.10(a), the
Company is not liable for the payment of any taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any of the foregoing
legal requirements.
(b) Labor Relations. Except as disclosed in Schedule 2.10(b), (i)
the Company has not within the past five years been, and is not now, a party to
any collective bargaining agreement or other labor contract; (ii) since
September 30, 2001, there has not been, there is not presently pending or
existing, and to Company's Knowledge there is not threatened, any strike,
slowdown, picketing, work stoppage or material employee grievance process
involving the Company; (iii) to the Company's Knowledge, no event has occurred
or circumstance exists that could provide a reasonable basis for any work
stoppage or other material labor dispute; (iv) there is not pending or, to the
Company's Knowledge, threatened against or affecting the Company any Proceeding
relating to the alleged violation of any legal requirement pertaining to labor
relations or employment matters, including any charge or complaint filed with
the National Labor Relations Board or any comparable governmental agency or body
thereof, and, to the Company's Knowledge, there is no organizational activity or
other labor dispute against or affecting the Company or the facilities that
would have a Material Adverse Effect; (v) no application or petition for an
election of or for certification of a collective bargaining agent is pending;
(vi) no grievance or arbitration Proceeding exists that would have a Material
Adverse Effect; (vii) there is no lockout of any employees by the Company, and
no such action is contemplated by the Company; and (viii) to the Company's
Knowledge, there has been no charge of discrimination filed against or
threatened against the Company with the Equal Employment Opportunity Commission
or similar governmental agency or body.
2.11 Claims and Proceedings. Except as set forth in Schedule 2.11,
-------------
there are no claims, actions, suits, legal or administrative proceedings or
investigations ("PROCEEDINGS") pending or, to the Company's Knowledge,
threatened, against or relating to the Business or the transactions contemplated
by this Agreement that would have a Material Adverse Effect, and to the
Company's Knowledge, there is no reasonable basis for the same. In particular,
and without limiting the generality of the preceding sentence, there are no
Proceedings, and to the Company's Knowledge, no reasonable basis for any
Proceeding, arising out of any alleged impropriety in charging, billing or
receiving payment for services rendered by the Company to patients prior to
Closing.
11
2.12 Taxes. Except as disclosed on Schedule 2.12, all federal, state,
-------------
local and foreign tax returns and reports of the Company required by law to be
filed on or before the Closing and which the failure to file would have a
Material Adverse Effect have been duly filed or duly extended to a date in the
future, all such returns and reports were true and correct in all material
respects, and all federal, state, local, foreign and any other taxes (including
additions to tax, interest and penalties), assessments, fees, withholding taxes
and other governmental charges with respect to the properties, assets, income,
sales, use or franchises of the Company relating to the Business and due on or
prior to the Closing have been paid. The Company has at all times qualified as
a partnership for federal income tax purposes, and no election has been made by
or for the Company to cause the Company to be treated as a corporation or an
association taxable as a corporation for federal income tax purposes. Sellers
have made available to Buyer true and complete copies of all federal, state and
local income tax returns filed for the Company for all tax years beginning on or
after January 1, 1998.
2.13 Real Properties; Leases.
(a) Schedule 2.13(a) sets forth a list containing a description of
----------------
all interests in Real Property presently owned, leased or otherwise used or
occupied by the Company (the "REAL PROPERTY"). With respect to all Real
Property owned by the Company, (i) each parcel of such owned Real Property is
owned in fee simple with good and marketable title, free and clear of all Liens,
except as described in Schedule 2.5(a) or Schedule 2.13(a) or those that do not
--------------- ----------------
materially adversely interfere with the use of such Real Property as currently
used, (ii) there are no material leases, subleases, licenses, concessions or
other agreements (written or oral) granting to any person the right to use or
occupy such owned Real Property or any portion thereof, and (iii) there are no
outstanding options, rights of first offer or rights of first refusal or any
other agreements pursuant to which the Company would be required to sell the
owned Real Property or any portion thereof or interest therein, or purchase any
other real property. The Company has made available to Buyer complete and
accurate copies of all material documents and information of the Company
concerning such owned Real Property.
(b) Attached hereto as Schedule 2.13(b) is a list setting forth
----------------
all leases under which the Company possesses or uses real property (the "REAL
PROPERTY LEASES") and all leases under which the Company possesses or uses items
of tangible personal property that are material to conduct of the Company's
business (the "PERSONAL PROPERTY LEASES"). True, correct and complete copies of
the Real Property Leases and Personal Property Leases (collectively, the
"LEASES") have been made available to Buyer. To the Company's Knowledge, the
Leases are in full force and effect and the Company is not in material default
thereunder. To the Company's Knowledge, (i) the other parties to the Leases are
not in default thereunder and (ii) no facts or circumstances have occurred
which, with the passage of time or the giving of notice, or both, would
constitute a default by the Company or to the Company's Knowledge, the other
parties, under any of the Real Property Leases or the Personal Property Leases.
(c) To the Company's Knowledge, (i) all structures and facilities
on the real properties listed on Schedule 2.13(a) and Schedule 2.13(b) are
---------------- ----------------
equipped in substantial conformity with laws and governmental regulations
applicable to the Company, (ii) the zoning of each parcel of Real Property
permits the presently existing improvements and continuation of the business
presently conducted thereon by the Company, and (iii) no zoning changes, and no
12
condemnation or similar proceedings, are pending or threatened against any of
the Real Property listed on Schedule 2.13(a) or Schedule 2.13(b), except in each
---------------- ----------------
such case as would not have a Material Adverse Effect.
2.14 Insurance. Schedule 2.14 contains a listing of all policies of
--------------
fire, general liability, worker's compensation, errors and omissions,
malpractice and other types of insurance maintained by or on behalf of the
Company, to provide insurance protection for the assets and Business of the
Company. Except as set forth in Schedule 2.14 hereto, all of such policies are
-------------
now in full force and effect and those policies or other policies covering the
same risks and in substantially the same amounts have been in full force and
effect continuously for the past three (3) years, and provide coverage for the
properties, assets, and operations of the Company in the amounts and against the
risks required to comply with all applicable laws and regulations. The Company
has not received any notice of cancellation or material amendment of any such
policies; and to the Company's Knowledge, all material claims thereunder have
been filed in a timely fashion. The activities and operations of the Company
have been conducted in a manner so as to conform in all material respects to all
applicable provisions of such insurance policies.
2.15 Books and Records. The books of account and other financial
records of the Company as they relate to Business are complete and correct in
all material respects, and there have been no material transactions involving
the Business which properly should have been set forth therein and which have
not been accurately so set forth in all material respects.
2.16 Financial Statements. The Company (a) has delivered to Buyer
December 31, 2001; December 31, 2000; and December 31, 1999 balance sheets and
statements of operations and statements of cash flows for the fiscal years then
ended and (b) an unaudited balance sheet as of March 31, 2002 (the "3/31/02
BALANCE SHEET"), and statement of operations, and statement of cash flows for
the three months ended March 31, 2002. Except as set forth in Schedule 2.16,
-------------
all of such financial statements have been prepared from the books and records
of the Company in accordance with GAAP, consistently applied (other than with
respect to "accrued aircraft maintenance," for which the Company used the
deferral method of accounting for its interim financial statements and the
direct expense method of accounting for its year-end financial statements) and
maintained throughout the periods indicated, and fairly present in all material
respects the financial condition of the Company and results of operations as of
their respective dates and for the periods indicated. As of the dates of the
12/31/01 Balance Sheet, the 3/31/02 Balance Sheet and the Interim Balance Sheet,
the Company had or will have no material liabilities, whether absolute or
contingent, liquidated or unliquidated in amounts, known or unknown, that would
be required to be reflected on such balance sheets in accordance with GAAP but
that were not so reflected.
2.17 Accounts Receivable. All trade accounts receivable that are
reflected on the 12/31/01 Balance Sheet, the 3/31/02 Balance Sheet, or the
Interim Balance Sheet and on the accounting records of the Company as of the
Closing have been booked in accordance with GAAP, consistent with the Company's
past practices. Schedule 2.17 contains a complete and accurate list of all
--------------
accounts receivable as of April 30, 2002 and such schedule shall be updated to
the date of the Interim Balance Sheet, and delivered to Buyer with, or promptly
after delivery of the Interim Balance Sheet. Each such list shall set forth the
aging of each such account receivable.
13
2.18 Environmental Matters. As of the date of this Agreement, except
as set forth in Schedule 2.18 and except as to matters described in this Section
-------------
2.18 which individually and in the aggregate would not have a Material Adverse
Effect, to the Company's Knowledge:
(a) The Company has obtained all permits, licenses and other
authorizations which are required under applicable Environmental Laws for the
ownership, use and operation of the Real Property, all such permits, licenses
and authorizations are in effect, no appeal nor any other action is pending to
revoke or modify in a manner adverse to the Company any such permit, license or
authorization, and the Company has complied and is in compliance with all terms
and conditions of all such permits, licenses and authorizations.
(b) The Company and the Real Property have complied and are in
compliance with all Environmental Laws including, without limitation, all
restrictions, conditions, standards, limitations, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws or
contained in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder.
(c) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter which would reasonably be expected to result in liability that
is existing or pending, or to the Company's Knowledge threatened, relating to
the Company, the Real Property or any other property or facility previously
owned, operated or leased by the Company relating in any way to the
Environmental Laws or any regulations, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder.
(d) Neither the Company nor any other person has released, placed,
stored, buried or dumped or arranged for disposal of any Hazardous Substances or
any other substances produced by, or resulting from, any business, commercial or
industrial activities, operations or processes, on or beneath the Real Property
except for inventories of such substances to be used, and wastes generated
therefrom, in the ordinary course of business of the Company provided that such
excepted inventories and wastes, if any, were and are stored, handled and
disposed of in accordance with applicable laws and regulations and in a manner
such that there has been no release of any such substances into the environment
in violation of the Environmental Laws or in a manner that would give rise to
costs or liability under any Environmental Law.
(e) No releases have occurred at the Real Property, which could
result in the assertion or creation of a Lien on the Real Property by any
governmental body or agency with respect thereto, nor has any such assertion of
a Lien been made by any governmental body or agency with respect thereto.
(f) None of the following exists at any Real Property: materials
or equipment containing friable asbestos or polychlorinated biphenyl; landfills,
surface impoundments or disposal areas.
(g) Any underground and above-ground storage tanks currently owned
or operated by the Company or located on or beneath the Real Property are
described on Schedule 2.18 and have been properly registered, constructed (or
--------------
upgraded), operated and (if now out of service) closed and removed in compliance
with all applicable laws and requirements.
14
(h) "HAZARDOUS SUBSTANCE" means any toxic or hazardous materials,
wastes or substances, defined as, or included in the definition of, "hazardous
substances," "hazardous wastes," hazardous materials" or "toxic substances"
under any Environmental Law, including, but not limited to, asbestos, buried
contaminants, regulated chemicals, flammable or explosive materials, radioactive
materials, polychlorinated biphenyl, petroleum and petroleum products.
(i) "ENVIRONMENTAL LAWS" means any statute, law, ordinance,
regulation, rule, judgment, decree or order of any governmental entity relating
to any matter of pollution, protection of the environment, environmental
regulation or control regarding Hazardous Substances.
2.19 Capitalization of the Company. Each Seller owns 50% of the
Interests. Except as set forth in Schedule 2.19, no person or entity other than
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the Sellers has any right granted by either Seller or the Company to purchase,
receive, acquire, control the right to vote of, or receive the economic benefit
of any equity security or evidence of ownership in the Company, including, but
not limited to, by way of exercise or conversion of any option, warrant or other
security or rights. Each Seller will transfer title to its Interests to Buyer
at Closing, free and clear of all Liens.
2.20 Brokers. Except as set forth on Schedule 2.20, neither the
--------------
Company nor Sellers has engaged, or caused to be incurred any liability for any
brokerage or finders' fees or agents' commissions or like payments to, any
finder, broker, or sales agent in connection with the origin, negotiation,
execution, delivery, or performance of this Agreement or the transactions
contemplated hereby, and all compensation of any kind payable to any such party
shall be the sole responsibility of Sellers, and Buyer shall have no
responsibility therefor.
ARTICLE III
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to the Sellers as follows:
3.1 Due Organization. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to enter into and perform this
Agreement and the related agreements referred to herein and, following the
Closing, to operate the Business and own the Interests.
3.2 Due Authorization. The execution, delivery and performance of this
Agreement has been duly authorized by all requisite corporate action of Buyer,
and this Agreement has been duly and validly executed and delivered by Buyer and
constitutes the valid and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms. The execution, delivery, and performance of this
Agreement (as well as all other instruments, agreements, certificates or other
documents contemplated hereby) by Buyer, will not (a) violate any federal,
state, county, or local law, rule, or regulation or any decree or judgment of
15
any court or governmental authority applicable to Buyer or its property; (b)
violate or conflict with, or permit the cancellation of, or constitute a default
under any agreement to which Buyer is a party or by which it or its property is
bound; (c) permit the acceleration of the maturity of any indebtedness of, or
any indebtedness secured by the property of, Buyer; or (d) violate or conflict
with any provision of the certificate of incorporation or bylaws of Buyer.
3.3 Material Adverse Change. Since December 31, 2001, there has been
no material adverse change in or effect on the financial condition or operations
of the Buyer, taken as a whole, whether attributable to a single circumstance or
event or an aggregation of circumstances or events.
3.4 Federally Funded Programs Buyer has not, and at no time has been,
excluded from participation in any federally funded health care program,
including Medicare or Medicaid. Buyer has reviewed all applicable statutes,
regulations and rules pertaining to Medicaid and Medicare, including, but not
limited to, the Anti-Kickback Statutes (42 U.S.C. Sec.1320a-7(b) and the Federal
False Claims Act (31 U.S.C. Sec.3729)), and Buyer is in compliance with
Medicaid/Medicare statutes, rules and regulations.
3.5 Financial Ability to Perform Buyer has enforceable financing
commitments for all funds necessary to consummate the transactions contemplated
hereby, and on the Closing Date, Buyer will have sufficient funds to pay the
Purchase Price on the terms and conditions contemplated by this Agreement.
3.6 Brokers. Buyer has not engaged, or caused to be incurred any
liability for any brokerage or finders' fees or agents' commissions or like
payments to, any finder, broker or sales agent in connection with the origin,
negotiation, execution, delivery, or performance of this Agreement or the
transactions contemplated hereby.
ARTICLE IV
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Sellers set forth in this
Agreement or in the Closing Certificates shall terminate on the second (2nd)
anniversary of the Closing Date, except that the representations and warranties
contained in Section 2.12, to the limited extent related to the Sellers' filing
of federal income tax returns and payment of federal income taxes for periods
ending on or before the Closing, and Section 2.19 shall survive the Closing for
the statutory limitations period applicable to the filing of tax returns and
payment of income taxes under the Internal Revenue Code of 1986, as amended and
in effect on the date of this Agreement (the "CODE"). The representations and
warranties of the Company set forth in this Agreement or in the Closing
Certificates shall terminate at Closing and the Sellers release the Company, as
of the Closing, from all claims arising out of this Agreement and the
transactions contemplated by this Agreement based on indemnification or
contribution. The representations and warranties of the Buyer set forth in this
Agreement or the Closing Certificates shall survive the Closing for the
statutory limitations period under Delaware law that is applicable to written
contracts.
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ARTICLE V
COVENANTS OF THE PARTIES
5.1 Conduct of Business Pending Closing. From the date of this
Agreement to the Closing Date, the Company shall use commercially reasonable
efforts to preserve substantially intact the Company's business organization and
present relationships with its customers, suppliers and employees. Except as
permitted under this Agreement, the Company will not, and Sellers will not cause
or permit the Company to, take any action that would reasonably be expected to
have a Material Adverse Effect or a material adverse effect on the transactions
contemplated by this Agreement, or to engage in any practice, take any action,
or enter into any transaction outside the ordinary course of the Business as
conducted prior to the date of this Agreement, in each such case without the
prior written consent of Buyer, which consent shall not be unreasonably
withheld. Without limiting the generality of the foregoing, except as set forth
in Schedule 5.1:
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(a) The Company will not sell, lease, transfer, or assign any
assets, tangible or intangible, other than for a fair consideration in the
ordinary course of business.
(b) The Company will not enter into any agreement, contract,
lease, (or license or series of related agreements, contracts, leases and
licenses) outside the ordinary course of business.
(c) The Company will not accelerate, terminate or cancel any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases and licenses) involving more than twenty-five thousand dollars
($25,000) to which the Company is a party or by which it is bound.
(d) The Company will not impose any Lien upon any of its assets,
tangible or intangible, other than Permitted Liens.
(e) The Company will not make any capital investment in, any loan
to, or any acquisition of the securities or assets of, any other person outside
the ordinary course of business.
(f) The Company will not issue any note, bond, or other debt
security or create, incur, assume, or guarantee any indebtedness for borrowed
money or capitalized lease obligation involving more than twenty-five thousand
dollars ($25,000) individually or one hundred thousand dollars ($100,000) in the
aggregate, other than under its existing agreements or arrangements.
(g) The Company will not merge with any other company, consolidate
or sell or consent to the sale of any of the material assets of the Company or
acquire any material assets outside the ordinary course of business.
(h) The Company will not increase the compensation or benefits
payable to its employees other than increases in the ordinary course of business
consistent with the Company's past practices.
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(i) The Company will not make any change in its accounting
practices, collection practices or payment practices.
(j) The Company will maintain insurance consistent with its past
practices and, unless comparable insurance is substituted therefor or is not
generally available to businesses of the type conducted by the Company, not take
any action to terminate or modify, or permit the lapse or termination of, the
present insurance policies and coverages of the Company as set forth in Schedule
--------
2.14.
----
(k) The Company will promptly notify Buyer of any lawsuit or other
legal proceeding that is commenced, or that is threatened in writing, against
the Company and that relates to or arises out of the Business and, if adversely
determined against the Company, would reasonably be expected to have a Material
Adverse Effect.
(l) The Company will not settle any action or proceeding on terms
that are expected to have a Material Adverse Effect, nor release, settle,
compromise or relinquish any claims, causes of action or rights involving more
than fifty thousand dollars ($50,000), individually, or one hundred thousand
dollars ($100,000) in the aggregate which the Company may have against any other
persons including, without limitation, claims or rights to reimbursement or
payment for services rendered by the Company.
(m) The Company will maintain its assets consistently with its
past practices.
(n) The Company will maintain its inventories of parts, supplies
and other assets consistently with its past practices.
(o) The Company will use commercially reasonable efforts to obtain
and maintain all Authorizations, the absence or loss of which is expected to
have a Material Adverse Effect.
(p) The Company will not take any action which would be expected
to result in a violation of or in the noncompliance with any laws or regulations
applicable to the Company, except where any such violation or non-compliance
would not reasonably be expected to have a Material Adverse Effect.
(q) The Company will cooperate with Buyer and render to Buyer such
assistance as Buyer may reasonably request, at Buyer's sole expense, in
obtaining such governmental approvals as Buyer considers necessary or
appropriate.
(r) The Company will pay, when due, and prior to the imposition or
assessment of any interest, penalties or liens by reason of the nonpayment of,
all taxes due or assessed against it, except for any taxes being contested in
good faith and for which reserves have been established by the Company.
(s) The Company shall give prompt notice to Buyer of any notice of
material default received by the Company subsequent to the date of this
Agreement under any material instrument, contract, or agreement, or any Material
Adverse Effect occurring prior to the Closing.
18
5.2 Cooperation by the Company and Sellers. The Company shall, at the
request of Buyer, give reasonable assistance to the Buyer, and cause its
personnel to provide reasonable assistance to and cooperation with the Buyer in
(i) obtaining all governmental and regulatory authorizations, consents and
permits required to conduct the Business as presently conducted following the
Closing and (ii) contacting customers, suppliers, lenders and others with whom
the Company has business relationships, provided, however, that in no event
--------- -------- ----
shall Buyer have any contact with any such customer, supplier, lender or other
person or entity with whom the Company has business relationships without first
notifying the Company and allowing the Company, if it so requests within a
reasonable period of time after such notice, to participate in the discussions
between Buyer and such person or entity.
5.3 Further Assurances. In case at any time after Closing any further
action is necessary to complete the transfer of the Interests to Buyer, or
otherwise to carry out the intent and purposes of this Agreement, the proper
officers of each party hereto shall take all such further action as any such
party may reasonably request without any further consideration therefor.
5.4 Access to Records Before Closing. Prior to the Closing, the
Company shall give, or cause to be given, to Buyer and its Representatives
reasonable access, upon reasonable notice, to the Company's assets, properties,
titles, operations, contracts, corporate minute and other books, records, files
and documents of the Company to review and to make copies of all such materials.
The Company will provide Buyer reasonable opportunities to meet with key
employees of the Business and to visit facilities of the Business. All
materials copied by Buyer shall be returned to the Company if the Closing of the
transactions contemplated hereunder fails to occur, and shall be maintained in
confidence by Buyer prior to the Closing in accordance with the terms hereof and
of the Confidentiality Agreement.
5.5 Access to Records After Closing. After the Closing Date, Buyer, on
the one hand, and Sellers, on the other, will give, or cause to be given, to the
other party and their respective successors and Representatives, during normal
business hours and at the requesting party's expense, such reasonable access to
the properties, titles, contracts, books, records, files and documents of Buyer,
the Company or the Sellers, as the case may be, as is reasonably necessary to
allow the requesting party to obtain information in the other party's possession
with respect to any claims, demands, audits, suits, taxes, payments due under
Sections 1.2 and 1.4 or matters of a similar nature made by or against the
requesting party as the previous or new owner and operator of the Business, as
the case may be, and to make copies of such information to the extent reasonably
necessary.
5.6 WARN Act. From and after the Closing Date, Buyer shall not, and
shall cause the Company not to, take any action that would result in a violation
of the WARN Act or any similar state or local legal requirement.
5.7 Federally Funded Programs. Until the earlier of (a) the date on
which the maximum aggregate amount of the Contingent Consideration Payment is
made and (b) the eleventh (11th) anniversary of the Start Date, Buyer shall
operate its business in compliance with the Medicaid/Medicare statutes, rules
and regulations and shall immediately notify Sellers of any act or omission on
the part of Buyer or any affiliate of Buyer that would reasonably be expected to
19
constitute a breach of the representations and warranties set forth in Section
3.4 or of any threatened, proposed, or actual exclusion from any federally
funded health care program.
5.8 Severance. From the Closing Date until the eighteenth month
anniversary thereof, Buyer and the Company shall honor and keep in full force
and effect the Company's severance program, which provides (i) severance for
certain employees of the Company identified on the spreadsheet entitled "Rocky
Mountain Holdings, L.L.C. Proposed Executive Management Severance Package
Impact," attached to Schedule 2.8(c), in the amounts set forth thereon and (ii)
---------------
severance for the remainder of the Company's employees equal to one month's
salary plus one week's salary for each year of service. To the extent that the
employment of any such employee is terminated by the Company during such
eighteen-month period for any reason other than one of the seven reasons set
forth on the first page of the document entitled, "Rocky Mountain Holdings,
L.L.C. Human Resource Non-Represented Severance Guidelines - Draft," attached to
Schedule 2.8(c), the Company shall, and Buyer shall cause the Company to, pay
----------------
such employee severance in accordance with the Company's severance program
described above.
ARTICLE VI
CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE CLOSING
6.1 Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to
satisfaction on or prior to the Closing of the following conditions (any of
which may be waived by Buyer in writing):
(a) Covenants, Representations and Warranties. The Company and
Sellers shall have performed in all material respects all obligations and
agreements and complied in all material respects with all covenants contained in
this Agreement to be performed and complied with by each of them prior to or at
the Closing. The representations and warranties of the Company and Sellers set
forth in Article II of this Agreement shall be accurate in all material respects
at and as of the Closing with the same force and effect as though made on and as
of the Closing.
(b) Consents. All statutory requirements for the valid
consummation by the Company and Sellers of the transactions contemplated by this
Agreement shall have been fulfilled and all authorizations, consents, waivers
and approvals of all federal, state, local and foreign governmental agencies and
regulatory authorities required to be obtained (as reasonably determined by
Buyer) in order to permit Buyer to acquire the Interests shall have been
obtained in form and substance reasonably satisfactory to Buyer.
(c) Material Adverse Change. There shall have been no Material
Adverse Effect since December 31, 2001.
(d) Release of Third Party Interests in the Company's Assets.
Except to the extent disclosed on Schedules hereto, or as otherwise consented to
in writing by Buyer, any liens, encumbrances and/or security interests evidenced
by financing statements currently of record to perfect a security interest in
the assets of the Company in accordance with the Uniform Commercial Code or duly
recorded on title certificates of aircraft pursuant to regulations of the FAA
shall be released.
20
(e) Litigation. No action, suit or proceeding shall have been
instituted before, or by, any governmental body, to restrain, modify or prevent
the consummation of the transactions contemplated hereby, or to seek damages in
connection with such transactions, or that has or may be expected to have, a
material adverse effect on Buyer's right to own, operate, or control the
Business.
(f) Xxxx-Xxxxx-Xxxxxx. All filings and notices required pursuant
to the Xxxx-Xxxxx-Xxxxxx Act, if any, shall have been made, and the waiting
period applicable to the consummation of the transactions contemplated b this
Agreement under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or been terminated.
(g) Certain Customer Contracts. With respect to the contracts
identified on Schedule 6.1(g), the Company and the Sellers shall not have
received written notices prior to the Closing Date from the other parties to
such contracts representing an aggregate of $1.0 million of "contribution" for
such contracts, as reflected on Schedule 6.1(g), that such notifying parties (i)
in the case of the Company's contracts with Vanderbilt University Medical Center
and HealthNet, Inc., do not consent to the consummation of the transactions
contemplated by this Agreement, (ii) intend to terminate such contracts during
the one-year period immediately following the Closing Date prior to their
natural termination or expiration and as a direct result of the transactions
contemplated by this Agreement, or (iii) in the case of the contracts with the
hospitals located in Denver, Colorado or Des Moines, Iowa, do not waive any
non-competition provisions set forth in such contracts; provided, however, that
if the Company and the Sellers shall have also received written notices prior
to the Closing Date from any such notifying party that it intends or otherwise
is willing to enter into an independent program with the Buyer or an affiliate
of Buyer, such contract shall not be considered for purposes of determining
whether the aforementioned $1.0 million threshold has been reached.
6.2 Conditions to the Company's and Sellers' Obligations. The
obligation of the Sellers to consummate the transactions contemplated hereby is
subject to satisfaction on or prior to the Closing of the following conditions
(any of which may be waived by Sellers in writing):
(a) Covenants, Representations and Warranties. Buyer shall have
performed in all material respects all obligations and agreements and complied
in all material respects with all covenants contained in this Agreement to be
performed and complied with by Buyer prior to or at the Closing. The
representations and warranties of Buyer set forth in Article III of this
Agreement shall be accurate in all material respects, at and as of the Closing,
with the same force and effect as though made on and as of the Closing.
(b) Consents. All statutory requirements for the valid
consummation by Buyer of the transactions contemplated by this Agreement shall
have been fulfilled and all authorizations, consents and approvals of all
federal, state, local and foreign governmental agencies and regulatory
authorities required to be obtained in order to permit the consummation by Buyer
of the transactions contemplated hereby shall have been obtained.
21
(c) Litigation. No action, suit or proceeding shall have been
instituted before, or by, any governmental body, to restrain, modify or prevent
the consummation of the transactions contemplated hereby, or to seek damages in
connection with such transactions.
(d) Xxxx-Xxxxx-Xxxxxx. All filings and notices required pursuant
to the Xxxx-Xxxxx-Xxxxxx Act, if any, shall have been made, and the waiting
period applicable to the consummation of the transactions contemplated by this
Agreement under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or been terminated.
ARTICLE VII
CLOSING
7.1 Closing. The closing of the transactions contemplated hereby (the
"CLOSING") shall occur at the offices of Xxxx Xxxxx LLP, 2500 One Liberty Place,
Philadelphia, Pennsylvania 19103-7301 (or such other place as the parties may
agree) on the date that is five (5) business days following the satisfaction or
waiver of the conditions set forth in Article VI, or on such other date as the
parties mutually agree (the "CLOSING DATE"), at 10:00 a.m., Philadelphia,
Pennsylvania time or at such other time as the parties mutually agree.
7.2 Documents to be Delivered by the Company and Sellers. The
following documents shall be delivered to Buyer at the Closing by the Company
and Sellers:
(a) Assignment of Interests. An assignment of the Interests to
Buyer, duly executed by each Seller;
(b) Opinion. Opinion of Xxxx Xxxxx LLP, counsel to the Company
and each Seller, dated the Closing Date, substantially in the form attached
hereto as Exhibit A;
(c) Non-Competition Agreements. Non-competition agreements
substantially in the forms attached hereto as Exhibits B-1 and B-2, duly
executed by each Seller (the "NON-COMPETITION AGREEMENTS");
(d) Escrow Agreement. An escrow agreement substantially in the
form attached hereto as Exhibit C, executed by the Company, each Seller, and the
Escrow Agent (the "ESCROW AGREEMENT");
(e) Certificate. A certificate executed by an executive officer
of the Company and each Seller dated as of the Closing Date, in substantially
the forms attached hereto as Exhibit D and Exhibit F; and
(f) Transfer of Records. All contracts, files, documents, data,
records and information of the Company relating to the Business.
7.3 Obligations of Buyer. The following shall be delivered to the
Sellers at the Closing by Buyer:
22
(a) Wire Transfer. The amount of cash payment at Closing provided
for in Section 1.3 in immediately available funds by wire transfer to the
accounts specified by Sellers in writing delivered to Buyer at least one (1)
business day prior to the Closing Date;
(b) Escrow Agreement. The Escrow Agreement, duly executed by
Buyer and the Escrow Agent, together with the delivery of one million dollars
($1,000,000.00) to the Escrow Agent, by wire transfer to an account specified by
the Escrow Agent;
(c) Non-Competition Agreements. The Non-Competition Agreements,
duly executed by Buyer; and
(d) Certificate. A certificate executed by an executive officer
of Buyer, dated the Closing Date, in substantially the form attached as Exhibit
E hereto.
ARTICLE VIII
TAXES
8.1 Sales, Use, Transfer and Other Taxes. Sales and use taxes imposed
on the purchase, sale, use or transfer of the Interests or any of the assets of
the Company as a result of the transactions contemplated hereby shall be borne
solely by Buyer.
8.2 Tax Periods Ending on or before the Closing Date. The Company
shall, at Sellers' expense, prepare and file, or cause to be prepared and filed,
all tax returns for the Company for all periods ending on or before the Closing
Date which are filed after the Closing Date. The Company will retain Xxxxx
Xxxxxxx to prepare and file the tax returns for the periods ending on or before
Closing consistent with past practice and applicable law and utilizing existing
software provided by an affiliate of AMC Helicopters, Inc. The Company and
Buyer shall prepare and provide each such tax return described in the preceding
sentence to the Sellers no less than 30 days prior to its due date, as such due
date may be extended, and permit Sellers to review and approve each such tax
return prior to filing. Except as otherwise provided herein and subject to
Sellers' review and approval of tax returns as set forth above, to the extent
permitted by applicable law, Sellers shall include any income, gain, loss,
deduction or other tax items for such periods on their tax returns in a manner
consistent with the Schedule K-1s prepared by the Company for such periods.
8.3 Cooperation on Tax Related Issues. Buyer, Sellers and Company
shall cooperate fully, as and to the extent reasonably requested by the other
party, in connection with the filing of tax returns pursuant to this Section and
any audit, litigation or other proceeding with respect to taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to prepare and assist in the preparation of such tax
returns and the Schedule K-1s prepared by the Company for such periods and to
provide additional information and explanation of any material provided
hereunder. To the extent consistent with applicable law, Buyer and Sellers
shall agree to the "closing of the books" as of the Closing Date with respect to
the transactions contemplated by this Agreement for federal, state and local
purposes.
23
8.4 Tax Audit.
(a) Sellers shall have the right to defend, at their sole cost,
any tax audit of the Company with respect to Pass-Through Items for any taxable
year ending on or prior to the Closing Date and shall have the right to defend
all tax issues arising in any such year. The Sellers shall be entitled to make
any decision relating to any such audit, including the right to settle any
issue, so long as the Buyer or the Company are not materially adversely affected
by such decision; provided, however, that Sellers shall be entitled to settle
any issue that would materially adversely effect Buyers or the Company with the
prior written consent of Buyer, which consent shall not be unreasonably
withheld. To the extent necessary to implement the foregoing, Buyer and the
Company shall execute upon the reasonable request of Sellers after the Closing a
power of attorney in favor of Seller's counsel or independent accountants, in
either case reasonably acceptable Buyer, to conduct any and all of the foregoing
activities on behalf of the Company, and Buyer will not, and will cause the
Company not to, revoke such power of attorney during the pendency of any audit
contemplated by this Section 8.4(a). The term "Pass-Through Items" shall refer
to (i) tax items of the Company that pass through to, and are separately
reportable to the applicable tax authority by, the members of the Company, and
shall include, without limitation, federal income tax items of the Company for
the period that the Company qualifies as a partnership for federal income tax
purposes or (ii) any tax items of the Company that, under applicable law or the
Agreement, Sellers would be liable for or be required to indemnify any Buyer
Indemnified Party against.
(b) As to any tax audit of the Company for any taxable period
ending on or prior to the Closing Date other than with respect to Pass-Through
Items, Buyer shall exercise sole control over such audit.
(c) Buyer and Sellers shall (and Buyer shall cause the Company to)
cooperate in any manner reasonably requested by the other, by providing all
requested information in its possession, and signing any documents or forms
relating to any audit, in order to implement the provisions of this Section 8.4.
Buyer and Sellers shall (and Buyer shall cause the Company to) keep the other
fully informed of all material developments in any audit described in Section
8.4(a).
8.5 Tax Reporting. The parties shall report the sale of Interests
under this Agreement in accordance with the principles of Revenue Ruling 99-6,
1999-1 C.B. 187.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification of Sellers. Buyer agrees that notwithstanding the
Closing and regardless of any investigation made at any time by or on behalf of
the Sellers or of any information Sellers may have in respect of such
investigation, Buyer will indemnify and hold harmless the Sellers and each
officer, director and affiliate of each Seller (collectively, the "SELLER
24
INDEMNIFIED PARTIES") from and against any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs and expenses (including
court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) (such amounts, net
of any insurance proceeds and net of any tax benefits associated with the
payment of any such amounts, collectively being referred to herein as
"INDEMNIFIABLE COSTS"), that any Seller Indemnified Party may sustain or to
which any of the Seller Indemnified Parties may be subjected, arising out of (a)
any misrepresentation, breach or default by Buyer of or under any of the
representations and warranties, covenants, agreements or other provisions of
this Agreement or any agreement or document executed in connection herewith; or
(b) any failure by the Buyer duly to perform or observe any term, provision,
covenant or agreement in this Agreement on the part of the Buyer to be performed
or observed.
9.2 Indemnification of Buyer.
(a) General. The Sellers agree that notwithstanding the Closing
and regardless of any investigation made at any time by or on behalf of Buyer or
of any information Buyer may have in respect of such investigation, the Sellers,
severally and not jointly, will indemnify and hold harmless Buyer and each
officer, director and affiliate of Buyer (collectively, the "BUYER INDEMNIFIED
PARTIES") from and against any and all Indemnifiable Costs, that any of the
Buyer Indemnified Parties may sustain, or to which any of the Buyer Indemnified
Parties may be subjected, arising out of (i) any misrepresentation, breach or
default by the Company or the Sellers of or under any of the representations and
warranties, covenants, agreements or other provisions of this Agreement or any
agreement or document executed in connection herewith; or (ii) any failure by
the Company or the Sellers duly to perform or observe any term, provision,
covenant or agreement in this Agreement on the part of the Company or the
Sellers to be performed or observed.
(b) Limitations. The liability of the Sellers to Buyer under
Section 9.2(a) shall be subject to the following limitations:
(i) Deductible. Sellers shall not be liable for an
----------
Indemnifiable Costs unless the aggregate amount of Indemnifiable Costs
incurred by the Buyer Indemnified Parties exceeds the sum of two
hundred fifty thousand dollars ($250,000) (the "DEDUCTIBLE") prior to
the expiration of the Applicable Limitations Period, hereinafter
defined, and then only to the extent of such excess (but subject to
Sections 9.2(b)(ii) and (iii) below.
(ii) General Liability Ceiling; Limitations on Recovery. The
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aggregate liability of the Sellers for Indemnifiable Costs shall not
exceed the sum of (A) the Indemnification Escrow Amount, plus (B) the
first five hundred thousand dollars ($500,000) of the Contingent
Consideration Payment. Further, except as provided in the next
sentence, Buyer Indemnified Parties shall be entitled to recover
Indemnifiable Costs solely and exclusively from (A) the funds held in
the Indemnification Escrow Account and (B) the amounts, if any, that
may become due from Buyer to the Sellers pursuant to Section 1.4(b) as
to which the right of setoff is provided for in Section 9.3. Except as
aforesaid, Buyer shall not have any recourse to any funds of the
25
Sellers. The limitation set forth in the preceding sentence shall not
apply to indemnification for damages arising out of a breach of the
representations and warranties contained in Section 2.12, to the
limited extent they relate to the Sellers' filing of federal income
tax returns and payment of federal income taxes for periods ending on
or before the Closing, and Section 2.19. Following any Buyer
Indemnified Party's recovery of Indemnifiable Costs from the funds
held in the Indemnification Escrow Account, no other Buyer Indemnified
Party shall have any right or recourse against Sellers as a result of
the decrease in the funds thereafter available for indemnification for
Indemnifiable Costs from the Indemnification Escrow Account.
(iii) Time Limitations. No claim for indemnification of
-----------------
Indemnifiable Costs may be asserted against any Seller unless a Buyer
Indemnified Party gives written notice (a "NOTICE OF CLAIM") of the
claim to Sellers, which notice shall specify in reasonable detail the
basis for such claim and shall be accompanied by documentation
supporting the claim, by no later than the expiration of the
Applicable Limitation Period and, to the extent that indemnification
for Indemnifiable Costs is sought from the Indemnification Escrow
Account, no later than the one-year anniversary of the Closing Date.
"APPLICABLE LIMITATION PERIOD" shall mean two (2) years, ending on the
second anniversary of the Closing Date, except that the "Applicable
Limitation Period" for claims for indemnification arising from a
material breach of the representations and warranties contained in
Section 2.12, to the limited extent related to the Sellers' filing of
federal income tax returns and payment of federal income taxes for
periods ending on or before the Closing, shall mean the statutory
limitations period applicable to the filing of tax returns and payment
of income taxes under the Code. If the Buyer Indemnified Party
asserting any such claim for Indemnifiable Costs timely makes such a
claim, then, subject to the Deductible and the provisions of Section
9.2(b)(ii) and (iii) and any other applicable conditions to recovery,
neither the expiration of the Applicable Limitations Period nor the
expiration of such one-year period shall, by itself, prevent such
Buyer Indemnified Party from recovering the full amount of such
Indemnifiable Costs.
9.3 Right of Setoff. At the time that Buyer sends a Notice of Claim
with respect to Indemnifiable Costs, Buyer may, by further written notice to
Sellers, set off the amount of such Indemnifiable Costs against payment of the
Contingent Consideration Payment to the extent that such payments are subject to
recovery by Buyer Indemnified Parties pursuant to Section 9.2(b)(ii). The
exercise of such right of setoff by Buyer in good faith, whether or not
ultimately determined to be justified, shall not constitute an event of default
under this Agreement. Sellers reserve the right to dispute and contest any such
setoff and to recover any amounts improperly set off. Any such dispute will
pursued in accordance with Section 12.9, and the non-prevailing party will bear
the costs and expenses (including court costs and reasonable attorneys' fees and
expenses incurred in investigating and preparing for any litigation or
proceeding) of the prevailing party.
26
9.4 Cooperation.
(a) Notice. Any party seeking indemnification under this Article
IX (each, an "INDEMNIFIED PARTY") will give prompt written notice to the party
or parties from whom it seeks indemnification (collectively, the "INDEMNITOR")
of any assertion, claim or demand which such Indemnified Party discovers or of
which notice is received after the Closing and which might give rise to a claim
by such Indemnified Party against the Indemnitor under this Article IX, stating
in reasonable detail the nature, basis and amount thereof.
(b) Claims for Money Damages. In case of any claim for money
damages by a third party, any suit for money damages, any claim for money
damages by any governmental body, or any legal, administrative or arbitration
proceeding with respect to which the Indemnitor may have liability for money
damages under the indemnity agreements contained in this Article IX, the
Indemnitor shall be entitled to participate therein, and to the extent desired,
to assume the defense thereof, and after notice from the Indemnitor of its
election so to assume the defense thereof, the Indemnitor will not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof, other than
reasonable costs of investigation, unless the Indemnitor does not actually
assume the defense thereof following notice of such election. Buyer or Sellers
shall make available to the other and its attorneys and accountants, at all
reasonable times, all books and records relating to such suit, claim or
proceeding, and Buyer and Sellers will render to each other such assistance as
may reasonably be required of each other in order to insure proper and adequate
defense of any such suit, claim or proceeding. No Indemnified Party will make
any settlement of any claim which might give rise to liability of the Indemnitor
hereunder for money damages under the indemnity agreements contained in this
Article IX without the consent of the Indemnitor, which consent shall not be
unreasonably withheld. If the Indemnitor shall desire and be able to effect a
monetary compromise or settlement of any such claim which settlement or monetary
compromise shall fully and finally relieve the Indemnitor of any liability in
connection with such cause of action and claim and the Indemnified Party shall
refuse to consent to such compromise or settlement (to the extent it relates to
money damages), then the liability of the Indemnitor to the Indemnified Party
with respect to settlement of such claim shall be limited to the amount so
offered in compromise or settlement.
9.5 Exclusive Remedy. Buyer hereby agrees that (a) the rights and
remedies of Buyer and the Buyer Indemnified Parties contained in this Article IX
to recover Indemnifiable Costs (subject to the limitations set forth herein)
shall be the sole and exclusive rights and remedies that they shall have against
the Company, either Seller or any other Seller Indemnified Party arising out of,
relating to or resulting from this Agreement or the transactions contemplated
hereby, including, without limitation, for (i) any misrepresentation, breach or
default by the Company or the Sellers of or under any of the representations and
warranties, covenants, agreements or other provisions of this Agreement or any
agreement or document executed in connection herewith; or (ii) any failure by
the Company or the Sellers duly to perform or observe any term, provision,
covenant or agreement in this Agreement on the part of the Company or the
Sellers to be performed or observed; (b) Buyer, for itself and the Buyer
Indemnified Parties, including its and their respective successors and assigns,
hereby waives and agrees that it or they will not assert or seek to enforce any
other rights or remedies, whether available under statute, at common law or
otherwise, that Buyer would otherwise have against the Company, either Seller or
27
any other Seller Indemnified Party arising out of, relating to or resulting from
this Agreement or the transactions contemplated hereby, including, without
limitation, (i) any misrepresentation, breach or default by the Company or the
Sellers of or under any of the representations and warranties, covenants,
agreements or other provisions of this Agreement or any agreement or document
executed in connection herewith; or (ii) any failure by the Company or the
Sellers duly to perform or observe any term, provision, covenant or agreement in
this Agreement on the part of the Company or the Sellers to be performed or
observed (collectively, "OTHER REMEDIES"); and (c) except as provided in the
next sentence, Buyer shall hold harmless and indemnify the Company and the
Seller Indemnified Parties and their respective heirs, representatives,
successors and assigns from and against any claims, demands, actions, suits or
other proceedings brought against any of them, and any liabilities, damages,
costs and expenses, including, without limitation, reasonable attorneys' fees,
incurred by the Company or the Seller Indemnified Parties or any of their
respective heirs, representatives, successors or assigns, arising out of any
attempt or any efforts (successful or unsuccessful) by any Buyer Indemnified
Party to assert or exercise any of the Other Remedies. Notwithstanding the
foregoing, the provisions of this Article IX with respect to the exclusive
rights and remedies of the Buyer Indemnified Parties shall not apply to any
breach of representation or warranty of a Seller contained in this Agreement (as
the same has been modified by the Schedules), if a court or arbitrator having
jurisdiction has found that such Seller committed fraud and such finding has
become final and is no longer appealable, provided, however, that the foregoing
-------- -------
exception to the exclusive rights and remedies of the Buyer Indemnified Parties
hereunder shall apply solely to such Seller found to have committed fraud; and
provided, further, that the Deductible shall nevertheless continue to apply
-------- -------
notwithstanding any such finding or findings.
9.6 Prepayment Penalties. If the Company's lenders and lessors (other
than lessors under the Company's operating leases) do not permit the
continuation of the Company's debt after Closing and, as a result, the Company
incurs any prepayment penalties related to such debt, then such prepayment
penalties shall be the responsibility of Buyer and the Sellers as follows:
(a) the first $500,000 of aggregate prepayment penalties shall be
the sole responsibility of Buyer;
(b) the next $500,000 of aggregate prepayment penalties shall be
borne equally by the Buyer, on the one hand, and the Sellers, on the other hand;
and
(c) any prepayment penalties exceeding $1,000,000 in the aggregate
shall be the sole responsibility of Buyer.
ARTICLE X
TERMINATION
10.1 Termination of Agreement. This Agreement may, by written notice
given at or prior to Closing in the manner hereinafter provided, be terminated
or abandoned:
(a) By mutual consent of Buyer, the Company and Sellers;
28
(b) By Sellers jointly if the Closing has not occurred on or
before August 30, 2002 due to a failure of any of the conditions specified in
Section 6.2 (other than Section 6.2(d));
(c) By Sellers jointly if there has been a material default or
breach by Buyer with respect to the performance of any of Buyer's material
covenants and agreements contained herein, or with respect to the correctness of
any of Buyer's material representations and warranties contained herein (each, a
"MATERIAL BUYER DEFAULT") and such default or breach persists for 10 business
days of more after written notice thereof is given;
(d) By Buyer if the Closing has not occurred on or before August
30, 2002 due to a failure of any of the conditions specified in Section 6.1
(other than Section 6.1(f));
(e) By Buyer if there has been a material default or breach by the
Company or a Seller with respect to the performance of any of the Company's or a
Seller's material covenants and agreements contained herein, or with respect to
the correctness of any of the Company's or a Seller's material representations
and warranties contained herein (each, a "MATERIAL SELLER DEFAULT") and such
default or breach persists for 10 business days of more after written notice
thereof is given; or
(f) By Buyer, or by Sellers jointly if the Closing has not
occurred on or before August 30, 2002; provided, however, that such date shall
-------- ------- ----
be extended for such additional time as may be necessary (but in no event beyond
October 31, 2002) (i) to comply with the requirements of the Xxxx-Xxxxx-Xxxxxx
Act, (ii) to obtain any authorization, consent, waiver and approval of any
federal, state, local and foreign governmental agency or regulatory authority
required to be obtained (as reasonably determined by Buyer) in order to permit
Buyer to acquire the Interests or (iii) to arrange additional financing should a
substantial portion of the Company's lenders and lessors not permit the
continuation of the Company's debt after the Closing. Notwithstanding the
foregoing, if the party seeking to exercise its termination right is in breach
of any of its respective material obligations under this Agreement, such party
shall not be entitled to exercise its termination right during the continuance
of such breach.
10.2 Procedure Upon Termination. In the event of termination of this
Agreement by Buyer, the Company, or Sellers jointly pursuant to Section 10.1,
written notice thereof shall forthwith be given to the other parties hereto and
the transactions contemplated herein shall be abandoned without further action
by Buyer, the Company, or the Sellers. In addition, if this Agreement is
terminated as provided herein:
(a) Each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same.
(b) All Confidential Information shall continue to be subject to
the provisions of Article XI of this Agreement, which provisions shall survive
any such termination, as well as the provisions of the Confidentiality
Agreement.
(c) Upon a termination of this Agreement pursuant to Section
10.1(a), the respective obligations of the parties hereto under this Agreement
(other than under Sections 10.2(a) and (b) above) shall terminate and no party
shall have any liability whatsoever to any other party hereto by reason of such
29
termination. Any termination of this Agreement by Buyer pursuant to Section
10.1(d) or (e) due to a Material Seller Default, or by Sellers pursuant to
Section 10.1(b) or (c) due to a Material Buyer Default, shall not relieve
Sellers or the Buyer (as the case may be) of its liability hereunder to the
non-defaulting party. If, notwithstanding a Material Seller Default or a
Material Buyer Default, the Buyer (in the case of a Material Seller Default), or
Sellers (in the case of a Material Buyer Default) closes the transactions
contemplated hereby, such action by the non-defaulting party or parties shall
constitute a waiver of such Material Seller Default or Material Buyer Default,
as the case may be. Notwithstanding anything to the contrary contained herein,
in no event shall the Sellers be liable to Buyer by reason of a material breach
of this Agreement by the Sellers for any consequential damages, special damages
or lost profits or lost business opportunities arising from such breach.
10.3 Specific Performance Upon Termination. Buyer, on the one hand, and
the Company and Sellers, on the other hand, acknowledge that because an award of
monetary damages would be inadequate for any breach of this Agreement by the
other party, Buyer, the Company and Sellers, as the case may be, shall be
entitled, without the requirement of posting a bond or other security, to
equitable relief, including injunctive relief and specific performance. Such
remedy is not exclusive, but in addition to all other remedies available to such
parties at law or equity, as such remedies may be limited hereunder.
10.4 Non-Refundable Deposit. Notwithstanding any other provision of
this Agreement to the contrary, the Deposit shall be non-refundable unless Buyer
shall have terminated this Agreement under Section 10.1(e) due to a Material
Seller Default, in which event Sellers shall cause the Deposit to be refunded to
Buyer, with interest, within 5 business days following such termination.
ARTICLE XI
CONFIDENTIALITY
11.1 Confidentiality Covenants Buyer, the Company and Sellers each
acknowledge that they may have received access to Confidential Information (as
hereinafter defined) of the others in the course of investigations and
negotiations prior to Closing. Each party who receives any Confidential
Information (a "RECEIVING PARTY") from any other party hereto (the "DISCLOSING
PARTY"), may disclose any such Confidential Information to such party's
employees, attorneys, accountants, financial advisors or agents or
representatives that have a need to know such Information to facilitate or
assist with the consummation of the transactions contemplated hereby
(collectively, "REPRESENTATIVES"). Subject to the foregoing exception, and the
exception hereinafter set forth in Section 11.2 below, (i) a Receiving Party
shall keep, and shall cause its Representatives to keep, all Confidential
Information received from a Disclosing Party hereunder strictly confidential and
shall not disclose, and shall cause its Representatives not to disclose, any
such Confidential Information to any third party; and (ii) any Receiving Party
and its Representatives shall not make any uses of Confidential Information
received from a Disclosing Party except to facilitate or assist with the
consummation of the transactions contemplated hereby. "CONFIDENTIAL
INFORMATION" shall include any business, financial, technical or other
information, including, but not limited to, business plans, forecasts, marketing
plans or initiatives, customer, client and vendor lists, training materials
30
developed by the Disclosing Party, information regarding the identities,
qualifications and compensation being paid to key employees, information
received from customers, vendors or clients with the expectation, whether
explicit or implicit, that such information would be protected from disclosure
or dissemination to third parties, and other information the value of which to
the Disclosing Party is dependent on the non-disclosure of such information;
provided, however, that it shall not include information that, although
-------- -------
disclosed or made available by a Disclosing Party or any of its Representatives
to a Receiving Party or any of its Representatives, (i) can be obtained by
persons not subject to confidentiality or use restrictions from public sources,
including periodicals, government and industry publications and other media that
is readily accessible to the public or competitors of the Disclosing Party, (ii)
has been disclosed by the Disclosing Party or any of its Representatives to any
unaffiliated third parties without the imposition of any restrictions or
prohibitions on disclosure or use thereof and has been, as a result, disclosed
by that third party to other third parties, or (iii) information that the
Receiving Party can demonstrate convincingly was in its possession prior to its
disclosure to the Receiving Party by the Disclosing Party or any of its
Representatives; provided, however, that the Receiving Party had not obtained
-------- -------
possession of such Confidential information from any one that the Receiving
Party knew or should have known was subject to restrictions on its right to
disclose such information to the Receiving Party, either pursuant to an
agreement or by reason of his position or relationship with the Disclosing
Party.
11.2 Disclosure Pursuant to Legal Process. If a Receiving Party is
required by subpoena or other legal process, or by laws applicable to it, to
disclose or produce any Confidential Information belonging to a Disclosing
Party, then, the Receiving Party shall (i) provide the Disclosing Party prompt
notice thereof and copies, if possible, and, if not, a description, of the
Confidential Information requested or required to be produced so that Disclosing
Party may seek an order to quash such subpoena or other legal process or an
appropriate protective order or may elect to waive compliance with the
provisions of this Article XI as to any portion or all of such Confidential
Information; (ii) consult with the Disclosing Party as to the advisability of
taking legally available steps to quash or narrow such request, and (iii)
provide such reasonable cooperation as the Disclosing Party may request in
connection with efforts by the Disclosing Party to quash the subpoena or other
legal process or to obtain a protective order with respect to the Confidential
Information being sought. If, in the absence of a protective order or the
receipt of a waiver hereunder, a Receiving Party is nonetheless, in the opinion
of his legal counsel, compelled to disclose or produce any such Confidential
Information of the Disclosing Party to any tribunal legally authorized to
request and entitled to receive such Confidential Information or to any
government agency with which the Receiving Party is required by law to file any
such Information or otherwise stand liable for contempt or suffer other censure
or penalty or liability, the Disclosing Party may disclose or produce such
Confidential Information to such tribunal or government agency, notwithstanding
the fact that such information may, as a result become available to the public,
without incurring liability hereunder to the Disclosing Party; provided,
--------
however, that the Receiving Party shall give the Disclosing Party written notice
of the Confidential Information to be so disclosed or produced as far in advance
of its disclosure or production as is practicable and shall use his commercially
reasonable efforts to obtain, to the greatest extent practicable, an order or
other reliable assurance that confidential treatment will be accorded to such
Confidential Information so required to be disclosed or produced.
Notwithstanding the foregoing, the parties agree that the Buyer may file a
report on Form 8-K with the Securities and Exchange Commission regarding the
31
transactions contemplated by this Agreement and file as exhibits thereto, this
Agreement and all schedules and exhibits hereto without requesting confidential
treatment for such documents.
11.3 Termination of Confidentiality Obligations. The obligations of
Buyer under this Article XI shall terminate at the Closing with respect to the
Confidential Information of the Company. The obligations of the Buyer hereunder
with respect to the Confidential Information of the Sellers and the obligations
of each Seller hereunder, which shall be several and not joint, with respect to
Confidential Information of the Company or Buyer, shall in each case survive the
Closing for a period of two (2) years thereafter. In the event of a termination
of this Agreement, the respective obligations of the Company and Sellers with
respect to Confidential Information of Buyer and the obligations of Buyer with
respect to Confidential Information of the Company and Sellers shall survive for
a period of two (2) years from the date of such termination.
ARTICLE XII
MISCELLANEOUS
12.1 Modifications; Waiver. Any amendment, change or modification of
this Agreement shall be void unless in writing and signed by all parties hereto.
No failure or delay by any party hereto in exercising any right, power or
privilege hereunder, and no course of dealing between or among any of the
parties, shall operate as a waiver of any such right, power or privilege. No
waiver of any default on any one occasion shall constitute a waiver of any
subsequent or other default. No single or partial exercise of any such right,
power or privilege shall preclude the further or full exercise thereof.
12.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when personally
delivered, mailed by certified mail, return receipt requested, or via Federal
Express or similar overnight courier service, or by facsimile. Such notices or
other communications shall be sent to the following addresses, unless other
addresses are subsequently specified in writing:
Buyer:
Air Methods Corporation
0000 X. Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President and CEO
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
32
with a copy to:
Xxxxx Xxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
Company:
Rocky Mountain Holdings, L.L.C.
000 Xxxxx 0000 Xxxx
Xxxxx, XX 00000
Attention: President
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
Sellers:
Rocky Mountain Holdings, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
AMC Helicopters, Inc.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
in case of notice to the Company or Sellers, with a copy to:
Xxxx Xxxxx LLP
2500 One Liberty Place
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
12.3 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
counterparts collectively shall constitute one instrument. Signatures may be
33
exchanged by facsimile, with original signatures to follow. Each party hereto
agrees that it will be bound by its own signature and that it accepts the
facsimile signatures of the other parties hereto.
12.4 Expenses. Except as specifically set forth elsewhere in this
Agreement, each of the parties hereto will bear all costs, charges and expenses
incurred by such party in connection with this Agreement and the consummation of
the transactions contemplated herein.
12.5 Binding Effect; Assignment; No Third Party Rights. This Agreement
shall be binding upon and inure to the benefit of Buyer, the Company, Sellers
and their respective representatives, successors, and permitted assigns;
provided, however, that no party may assign his, her or its rights or
-------- -------
obligations under this Agreement or transfer such rights or obligations by
operation of law as a result of any change of control transaction involving any
such entity without the prior written consent of the other parties. Nothing
expressed or referred to in this Agreement shall be construed to give any person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to this Section 12.5.
12.6 No Strict Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied against any party
hereto.
12.7 Entire and Sole Agreement. This Agreement, together with the
Schedules and the agreements and documents referred to herein, constitute the
entire agreement between the parties hereto and supersedes all prior agreements,
negotiations, representations, warranties, statements, promises, information,
arrangements and understandings, whether oral or written, express or implied,
with respect to the subject matter hereof, including the LOI, but specifically
excluding the Confidentiality Agreement, which shall survive the execution of
this Agreement in accordance with its terms.
12.8 Governing Law. This Agreement and its validity, construction,
enforcement, and interpretation shall be governed by the substantive laws of the
State of Delaware.
12.9 Jurisdiction; Service Of Process; Waiver Of Trial By Jury.
(a) Any proceeding arising out of or relating to this Agreement
may be brought in the courts of the State of Delaware, or, if it has or can
acquire jurisdiction, in the United States District Court for Delaware, and each
of the parties irrevocably submits to the exclusive jurisdiction of each such
court in any such proceeding, waives any objection it may now or hereafter have
to venue or to convenience of forum, agrees that all claims in respect of the
proceeding shall be heard and determined only in any such court and agrees not
to bring any proceeding arising out of or relating to this Agreement in any
other court. The parties agree that either or both of them may file a copy of
this paragraph with any court as written evidence of the knowing, voluntary and
bargained agreement between the parties irrevocably to waive any objections to
venue or to convenience of forum. Process in any proceeding referred to in the
first sentence of this section may be served on any party anywhere in the world.
34
(b) THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF
THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE
KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO
WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO
THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS SHALL INSTEAD BY TRIED IN
A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
12.10 Invalid Provisions. If any provision of this Agreement is deemed
or held to be illegal, invalid or unenforceable, this Agreement shall be
considered divisible and inoperative as to such provision to the extent it is
deemed to be illegal, invalid or unenforceable, and in all other respects this
Agreement shall remain in full force and effect; provided, however, that if any
-------- -------
provision of this Agreement is deemed or held to be illegal, invalid or
unenforceable there shall be added hereto automatically a provision as similar
as possible to such illegal, invalid or unenforceable provision so as to make
such provision legal, valid and enforceable. Further, should any provision
contained in this Agreement ever be reformed or rewritten by any judicial body
of competent jurisdiction, such provision as so reformed or rewritten shall be
binding upon all parties hereto.
12.11 Headings. The descriptive section headings are for convenience
of reference only and shall not control or affect the meaning or construction of
any provision of this Agreement.
* * * *
Remainder of page intentionally left blank
35
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed as of the date and year first above written.
BUYER:
AIR METHODS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: CEO
COMPANY:
ROCKY MOUNTAIN HOLDINGS, L.L.C.
By: /s/ X. Xxxxxxx Spray
----------------------------------
Name: X. Xxxxxxx Spray
Title: Chairman and CEO
SELLERS:
ROCKY MOUNTAIN HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
AMC HELICOPTERS, INC.
By: /s/ Xxxx X. Yajlenski, Jr.
----------------------------------
Name: Xxxx X. Yajlenski, Jr.
Title: Vice President
36
APPENDIX A
DEFINITIONS & INDEX OF DEFINED TERMS
The following capitalized terms are used but not otherwise defined in this
Agreement:
"CLOSING CERTIFICATES" means the certificates to be delivered by Buyer, the
Company and Sellers pursuant to Section 7.2(e) and 7.3(d).
"COMPANY'S KNOWLEDGE" means the actual knowledge, without independent
investigation, of X. Xxxxxxx Spray, Xxxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxxx,
Xxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxx.
"CONFIDENTIALITY AGREEMENT" means the letter agreement, dated January 24,
2002, by and among The AMC Group, LLC, Dimeling Xxxxxxxxx & Park and Buyer.
"ESCROW AGENT" shall have the meaning given such term in the Escrow
Agreement.
"GAAP" means United States generally accepted accounting principles.
"INDEMNIFICATION ESCROW ACCOUNT" shall have the meaning given such term in
the Escrow Agreement.
"SCHEDULES" shall mean the schedules to this Agreement.
The following is an index of capitalized terms defined in the body of the
Agreement:
TERM SECTION
---- -------
"3/31/02 BALANCE SHEET" Section 2.16
"9-11 RECEIVABLE AMOUNTS" Section 1.4(a)
"12/31/01 BALANCE SHEET" Section 1.2(b)(iii)
"ACTUAL CASH RECEIPTS" Section 1.4(b)
"AGREEMENT" Introductory paragraph
"APPLICABLE LIMITATION PERIOD" Section 9.2(b)(iii)
"AUTHORIZATIONS" Section 2.6(a)
"BUSINESS" Recitals
"BUYER" Introductory paragraph
"BUYER INDEMNIFIED PARTIES" Section 9.2(a)
"CALCULATED CASH RECEIPTS" Section 1.4(b)
"CLOSING" Section 7.1.
"CLOSING DATE" Section 7.1.
"CLOSING DATE BALANCE SHEET" Section 1.2(c)
"CLOSING TOTAL MEMBERS EQUITY" Section 1.2(b)(vi)
"CODE" Article IV
"COMPANY" Introductory paragraph
"CONFIDENTIAL INFORMATION" Section 11.1
"CONTINGENT CONSIDERATION PAYMENT" or "CCP" Section 1.4(b)
"CONTRACTS" Section 2.7
"DEDUCTIBLE" Section 9.2(b)(i)
"DEPOSIT" Section 1.3(a)
"DISCLOSING PARTY" Section 11.1
"EMPLOYEE PLANS" Section 2.9(a)
"ENVIRONMENTAL LAWS" Section 2.18(i)
"ERISA" Section 2.9(a)
"ERISA AFFILIATE" Section 2.9(a)
"ESCROW AGREEMENT" Section 7.2(d)
"ESTIMATED TOTAL MEMBERS EQUITY" Section 1.2(b)(iv)
"FAA" Section 2.5(b)
"HAZARDOUS SUBSTANCE" Section 2.18(h)
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"INDEMNIFIABLE COSTS" Section 9.1
"INDEMNIFICATION ESCROW AMOUNT" Section 1.3(a)
"INDEMNIFIED PARTY" Section 9.4(a)
"INDEMNITOR" Section 9.4(a)
"INDEPENDENT ACCOUNTANTS" Section 1.2(c)(iii)
"INTERESTS" Recitals
"INTERIM BALANCE SHEET" Section 1.2(b)(v)
"LEASES" Section 2.13(b)
"LIEN" Section 2.5(a)
"LOI" Recitals
"MATERIAL ADVERSE EFFECT" Section 2.4
"MATERIAL BUYER DEFAULT" Section 10.1(c)
"MATERIAL SELLER DEFAULT" Section 10.1(e)
"MEASUREMENT PERIOD" Section 1.4(b)
"MEMBERS EQUITY ADJUSTMENT AMOUNT" Section 1.2(b)(i)
"NON-COMPETITION AGREEMENTS" Section 7.2(c)
"NOTICE OF CLAIM" Section 9.2(b)(v)
"OTHER REMEDIES" Section 9.5
"PBGC" Section 2.9(b)
"PERCENTAGE" Section 1.4(b)
"PERMITTED LIENS" Section 2.5(a)
"PERSONAL PROPERTY LEASES" Section 2.13(b)
"PRE-CLOSING TOTAL MEMBERS EQUITY" Section 1.2(b)(v)
3
"PRELIMINARY MEMBERS EQUITY ADJUSTMENT AMOUNT" Section 1.2(b)(ii)
"PROCEEDINGS" Section 2.11
"PURCHASE PRICE" Section 1.2(a)
"PWC" Section 1.3(c)(i)
"REAL PROPERTY" Section 2.13(a)
"REAL PROPERTY LEASES" Section 2.13(b)
"RECEIVING PARTY" Section 11.1
"REPRESENTATIVES" Section 11.1
"SELLER" and "SELLERS" Introductory paragraph
"SELLER INDEMNIFIED PARTIES" Section 9.1
"START DATE" Section 1.4(b)
"TOTAL MEMBERS EQUITY" Section 1.2(b)(iii)
"TRANSPORTS" Section 1.4(b)
"WARN ACT" Section 2.8(d)
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