J&P Michigan Evaluation Group, Inc. 26400 Lahser Road Southfield, MI 48034 Attention: Mr. Phillip Lewis, President Dear Mr. Lewis:
EXHIBIT 32.3 COPIES
OF ASSET PURCHASE AGREEMENTS WITH RESPECT TO THE SALE OF THE CLAIMS EVALUATION
XXXXXXX
June 30, 2008
J&P
Michigan Evaluation Group, Inc.
00000
Xxxxxx Xxxx
Southfield,
MI 48034
Attention: Xx.
Xxxxxxx Xxxxx, President
Dear Xx.
Xxxxx:
This letter, when countersigned by you,
will constitute a definitive asset purchase agreement between Xxxxxx
Evaluations, Inc., a New York corporation (“Seller”), and J&P Michigan
Evaluation Group, Inc., a Michigan corporation (“Buyer”).
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1.
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Sale and Purchase of
Assets; Purchase Price; Liabilities;
Closing
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a. Sale and
Purchase. Seller shall sell to Buyer, and Buyer shall purchase
from Seller, all of Seller’s assets relating to its independent medical
evaluation business known as “Michigan Evaluation Group” (the “Business”),
including, without limitation, all medical equipment and other tangible personal
property, including leased property, located at Xxxxx 000, 00000
Xxxxxx Xxxx, Xxxxxxxxxx XX 00000 (the “Premises”); all accounts receivable; all
authorizations, permits, licenses, and registrations of Seller; all trade
secrets, service marks (other than the names “Xxxxxx Xxxxxx” and “Xxxxxx
Evaluations”), and intangible assets, including, without limitation, internet
addresses and registrations; the name “Michigan Evaluation Group, Inc.” and any
related assumed names, all customer lists and physicians lists; all telecopy and
telephone numbers at the Premises; all files, books and records, invoices, sales
and other data; the goodwill of the Business; the lease with respect to the
Premises; and all agreements and contracts related to the Business (the
“Acquired Assets”). All cash balances with respect to the Business as
of the close of business on June 30, 2008 shall belong to Seller and be excluded
from the Acquired Assets. Xxxx accruing after June 30, 2008,
including, without limitation, proceeds from the collection of accounts
receivable, shall belong to Buyer and be deemed part of the Acquired
Assets.
b. Purchase
Price. As full consideration for the aforementioned assets,
Buyer shall pay to Seller $125,000 by wire transfer of immediately available
funds on the Closing Date (as hereinafter defined) and shall deliver a
promissory note for $500,000 bearing interest at a rate of 0% per annum, which
shall be payable in six equal installments of $83,333.33 commencing on the last
business day of the month following the Closing Date and continuing thereafter
on the last business day of the five succeeding months. On the
Closing Date, the promissory note shall be guaranteed by Xxxx X. Xxxxx and
Xxxxxx Xxxxx in form acceptable to Seller.
c. Assumed and Retained
Liabilities. On the Closing Date Buyer assumes all outstanding
liabilities of Seller arising in the ordinary course of the Business prior to
June 30, 2008 (the “Assumed Liabilities”); provided, however that all debts,
obligations, and liabilities of the Seller or its affiliates, including, without
limitation, amounts due to Miller, Xxxxxxxx, Xxxxxxx & Xxxxx, P.L.C.,
arising out of or related to the pending matter of Xxxxxx Evaluations x.
Xxxxxxxxxx et
al, United States District Court for the Eastern District of Michigan
Case No. NO5:08-cv-11617 (the “Litigation”) shall remain the sole responsibility
of and shall be retained, paid, performed and discharged solely by Seller, as
and when due. The debts, obligations, and liabilities of Seller (i)
arising out of or related to the Litigation and (ii) not arising in the ordinary
course of the Business, if any, shall be referred to as the “Retained
Liabilities.” The Retained Liabilities shall be the only liabilities
retained by Seller with respect to the Business.
d. Closing. The
closing of the transactions contemplated by this agreement is taking place
simultaneously with the execution hereof. The date of the closing
shall sometimes be referred to as the “Closing Date.”
e. Reimbursement of Seller for
July 2008 Lease Payment. Seller shall make the lease payment
with respect to the Premises for the month of July, 2008 on or before July 1,
2008, on behalf of Buyer and, on the Closing Date, Buyer shall pay to Seller
$10,600, to reimburse Seller for such expense.
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2.
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Seller’s
Representations, Warranties and
Covenants
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a. Organization &
Authority; Authorization; Consents. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York and has the full power and authority to enter into and perform
its obligations under this agreement and to carry on the Business as it is
currently being conducted. The execution, delivery and performance of
this agreement by Seller have been duly authorized by all requisite action of
Seller. The execution, delivery and performance of this agreement by
the Company will not (i) conflict with Seller’s organizational documents, (ii)
constitute a violation of any agreement, law or regulation to which Seller may
be bound, or (iii) result in the creation of any lien or encumbrance on any of
the Acquired Assets. The Company has registered to do business in the
State of Michigan, and such registration is in good standing.
b. Title to Acquired
Assets. Seller has, and at the closing Buyer will receive,
valid title to all of the Acquired Assets, free and clear of any claim, lien or
encumbrance, except for the lien, if any, of taxes not yet due and
payable.
c. Taxes. Seller
has timely filed all federal, state and other tax returns with respect to the
Business required by law to be filed by it and has paid all taxes reflected on
such returns. Each such tax return is true and correct in all
material respects. There are no claims pending or, to the best of
Seller’s knowledge, threatened against Seller for past due taxes with respect to
the Business. All taxes with respect to the Business that are or were
required by law to be withheld or collected by Seller have been duly withheld or
collected and paid to the proper taxing authority.
d. Litigation; Compliance with
Law. There is no litigation, proceeding or governmental
investigation pending, and there is no order, injunction or decree outstanding
against, or relating to Seller with respect to the Business or any of the assets
being sold to Buyer pursuant to this agreement other than the Litigation and the
matter of
Xxxxx x. Xxxxxx
Xxxxxx, et al., Xxxxxx County Circuit Court case no.
07-000436-nm-c30. . To the best of Seller’s knowledge,
Seller is not in violation of any applicable law, regulation, or any other
requirement of any governmental body or court relating to the Business, and no
notice has been received by Seller alleging any such violation.
e. Brokers. Seller
has not employed any broker or finder in connection with the transactions
contemplated by this agreement.
f. Seller represents that it
has paid all account payables arising in the ordinary course of the Business
prior to the Closing Date in a manner consistent with its past practices with
regard to the timing of paying such payables.
3. Buyer’s Representations and
Warranties
a. Organization &
Authority; Authorization; Consents. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Michigan and has the full power and authority to enter into and perform
its obligations under this agreement. The execution, delivery and
performance of this agreement by Xxxxx have been duly authorized by all
requisite action of Buyer. The execution, delivery and performance of
this agreement by Buyer will not (i) conflict with Xxxxx’s organizational
documents, or (ii) constitute a violation of any agreement, law or regulation to
which Buyer may be bound.
b. Brokers. Xxxxx
has not employed any broker or finder in connection with the transactions
contemplated by this agreement.
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4.
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Further Agreements of
the Parties
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a. Covenants Against
Competition and Solicitation. To accord to Buyer the full
value of its purchase, for a period of two years after the Closing Date neither
Seller, its parent-company, Xxxxxx Xxxxxx, Inc. (“HHI”), nor any affiliate
thereof, shall, directly or indirectly, engage (as an owner, consultant, or
employee), or be interested in any business or entity that engages, on its or
his own behalf or on behalf of any third party, in the independent medical
evaluation business anywhere in the State of Michigan.
For a period of two years after the
Closing Date, neither Seller, HHI nor any affiliate thereof shall, directly or
indirectly, employ or solicit for employment or consulting, on its own behalf or
on behalf of any other person or entity, or otherwise encourage the resignation
of, any person who is then, or at any time within the immediately preceding
twelve (12) months has been, an employee of the Business.
Seller and HHI acknowledge that the
remedy at law for breach of the provisions of this section 4 a. will be
inadequate and that, in addition to any other remedy Buyer may have, it shall be
entitled to an injunction restraining any breach or threatened breach, without
any bond or other security being required and without the necessity of showing
actual damages. If any court construes any covenant in this section 4
a. to be unenforceable in any respect, the court may reduce the duration or area
to the extent necessary so that the provision is enforceable, and the provision,
as reduced, shall then be enforceable.
b. Indemnification. Each
party shall indemnify the other against any loss, cost or expense (including,
without limitation, reasonable attorneys’ fees) incurred by such other party in
connection with the indemnifying party’s breach of any of its representations
and warranties in this agreement. In addition, Seller shall indemnify
Buyer against any loss cost or expense (including, without limitation,
reasonable attorneys’ fees) incurred by Buyer in connection with any third-party
claim related to matters that occurred prior to the Closing Date, except with
respect to any such claims of which Xxxx X. Xxxxx or Xxxxxxx X. Xxxxx had actual
knowledge prior to the Closing Date. Each party’s indemnification
obligations shall (i) survive until the one-year anniversary of the Closing Date
and (ii) be capped at $100,000. In addition, Seller’s obligation to
indemnify Buyer for pre-closing matters other than Retained Liabilities shall be
subject to a basket of $25,000.
c. Access. For
a period of two years after the Closing Date, each party shall provide the other
party with commercially reasonable access during normal business hours to its
books, records and other information relating to the Business to the extent that
they relate to the condition or operation of the Business prior to the closing
and are requested by the party to prepare its tax returns, to respond to third
party claims, or for any other legitimate purpose specified in
writing. Each party shall have the right, at its own expense, to make
copies of any such books and records.
d. Further
Assurances. At any time and from time to time after the
Closing Date each party shall, without further consideration, execute and
deliver to the other such other instruments of transfer and assumption and shall
take such other commercially reasonable action as the other may reasonably
request to carry out the transactions contemplated by this
agreement.
5. Closing
Deliveries.
a. Seller
shall deliver the following at Closing:
(1) Bill of
Sale. Seller shall have delivered to Buyer (i) a bill of sale
with warranty of title for all Acquired Assets to be transferred Seller
hereunder, (ii) assignments of the Premises leases and any other leased Acquired
Assets; and (iii) any other documents necessary or desirable in the opinion of
Buyer’s counsel in connection with the transfer, which documents shall warrant
title to Buyer and shall in all respects be in such form as may be reasonably
required by Buyer or its counsel.
(2) Termination of
Noncompetition. Seller shall have terminated, in a form
suitable to Buyer, all rights of the Seller under the Employment Agreements or
Noncompetition Agreement executed by Xxxxxxx X. Xxxxx and Xxxx X. Xxxxx dated as
of April 30, 2004.
(3) Notices and
Consents. Any notices required to be given to third- parties
as to the assignment of any of the Acquired Assets to Buyer, and such
third-party consents as must be obtained prior to the assignment of any of the
Acquired Assets to Buyer.
(4) Assignment of Settlement
Agreement. Seller shall have delivered an assignment, in form
acceptable to Buyer, which assigns to Buyer all of Seller’s rights under the
Settlement Agreement with respect to the Litigation by and among Xxxxxx
Evaluations, Inc., Xxxxxxx X. Xxxxxxxxxx, Xxxx X. Xxxxxxxx, Xxxx-Xxxxxxx
Xxxxxxxxxx, Xxxxx Xxxxx, M.D. and Michigan Comprehensive Medical Evaluations,
PLLC, dated June 23, 2008 (the “Settlement Agreement”), provided, however, that
Seller shall retain the right to receive the monetary payments set forth in
Sections 1 and 5 of the Settlement Agreement.
b. The
Buyer shall deliver the following at Closing:
(1) Purchase
Price. The portion of the Purchase Price which is due and
payable to the Seller under the terms of this Agreement at Closing, which shall
be payable at Closing by wire transfer in immediately available funds to an
account of Seller or another party designated by Seller to receive such
funds.
(2) Resignation of Welsh and
Xxxxx. The resignation of Xxxx X. Xxxxx and Xxxxxxx X. Xxxxx,
in form acceptable to Seller, as employees and officers of the
Seller. Seller shall pay all amounts due to Xxxx X. Xxxxx and Xxxxxxx
X. Xxxxx as employees to the Closing Date, together with all accrued vacation or
similar pay, on Seller’s first regularly scheduled payroll date following the
Closing Date.
(3) Promissory
Note. A promissory note in a form reasonably acceptable to the
Seller evidencing the obligation of the Buyer to pay the deferred portion of the
Purchase Price set forth in Section 1(b) herein together with the Guaranty of
such promissory note by Xxxx X. Xxxxx and Xxxxxx Xxxxx.
6. Employees. As
a condition precedent to Xxxxx’s obligation to pay the Purchase Price, Seller
shall have terminated all employees of the Business. Buyer shall have
no obligation to hire any employees of Seller, provided, however, that Buyer
shall be free to negotiate with and hire any of such employees.
7. Confidential
Information. Seller recognizes and acknowledges that it has
certain confidential and proprietary information and trade secrets of the
Business including, without limitation, customer information, pricing
information, financial plans, business plans, business concepts, supplier
information, know-how and intellectual property and materials related thereto
(the “Confidential Information”). Seller agrees that it will not,
directly or indirectly, take commercial or proprietary advantage of or profit
from any Confidential Information, other than through its existing operations in
the states of New York and New Jersey or disclose Confidential Information to
any Person (other than Buyer) for any reason or purpose whatsoever, except as is
required to be disclosed by law; provided, that the party required to make such
disclosure shall provide to Buyer prompt notice of any such disclosure and shall
use commercially reasonable efforts to limit the extent of such
disclosure.
8. Transition Services; Use of
Software. Xxxxxx and Xxxxx agree to cooperate and exchange
information in order to facilitate a transition of the Business to
Buyer. For a period of three months following the Closing Date,
Seller shall, without additional consideration, provide information and
technical support with respect to software systems and other programs used in
connection with the Business or with respect to the transition from such systems
to other systems or programs used by the Buyer.
9. Treatment of Litigation and
Proceeds. The Seller shall have the right, at its cost and
expense, to pursue the Litigation and, subject to the consent of the Buyer,
which consent will not be unreasonably withheld, to settle or dismiss the
Litigation issued manner as Seller may reasonably
determine. Provided, however, that Buyer may elect to assume, at its
cost and expense, and upon written notice to the Seller, the prosecution of the
Litigation at any time prior to entry of an order of dismissal or execution of a
settlement agreement, at which xxxx Xxxxxx shall assign its interest in the
Litigation to the Buyer. Seller shall have the right to retain any
monetary awards received by the Plaintiff pursuant to Sections 1 and 5 of the
Settlement Agreement, without regard to whether such amounts are received by
Plaintiff on or before June 30, 2008.
10. Lease Agreement for
Premises. Pursuant to this agreement, Seller has assigned its
rights and obligations under the lease agreement with respect to the Premises
(the “Lease”) to Buyer. Consent of the landlord is required with
respect to such assignment. Such consent has been sought by Seller;
however, as of the Closing Date, such consent has not yet been
obtained. Following the Closing Date, Seller shall use its best
efforts to secure consent of the landlord with respect to assignment of the
Lease to Buyer. Until the time that such consent is obtained, Seller
agrees that it will timely make any rent payments due under the Lease, and Xxxxx
shall reimburse Seller for any such amounts paid within 5 days notice of any
such payment from Seller. Following the Closing Date, Xxxxx agrees to
perform all of Seller’s obligations under the Lease.
11. Miscellaneous
a. Entire
Agreement. This agreement contains, and is intended as, a
complete statement of all of the terms of the arrangements between the parties
with respect to the matters provided for, supersedes any previous agreements and
understandings between the parties with respect to those matters, and cannot be
changed or terminated orally. Except as specifically set forth in
this agreement, there are no representations or warranties by any party in
connection with the transactions contemplated by this agreement. This
agreement may not be assigned without the consent of the other party hereto, and
subject to such proviso, it shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted assigns and
successors.
b. Governing
Law. This agreement shall be governed by and construed in
accordance with the law of the State of Michigan, without regard to conflicts of
laws principles.
c. Dispute
Resolution. Any disputes under this Agreement shall be
resolved amicably between or among the parties in dispute and failing same,
shall be submitted to any court having jurisdiction of such matters located in
Oakland County, Michigan or the Eastern District of Michigan and the parties
hereby waive any claim that such court does not have personal jurisdiction over
it or that such court is an inconvenient forum.
d. Counterparts. The
parties may execute this agreement in counterparts, including facsimile
counterparts, and on separate counterparts, but all such counterparts shall
constitute the same instrument.
e. Expenses of
Transaction. Each party shall pay its own expenses incident to
the preparation for carrying this Agreement into effect and consummating the
transaction hereby contemplated.
Please
countersign the enclosed copy of this agreement on behalf of the Company and
individually, as indicated below.
Very truly yours,
Xxxxxx Evaluations, Inc.
By:
_______________________
Name: Xxxxxxx
X. Xxxxxxxxxx
Title: Senior
Vice President,
General
Counsel
Acknowledged
and Agreed:
J&P
Michigan Evaluation Group, Inc.
By:
___________________________
Xxxxxxx Xxxxx, President
Xxxxxx
Xxxxxx, Inc. xxxxxx agrees to the provisions of Section 4 a. of this
agreement.
Xxxxxx Xxxxxx, Inc.
By: ____________________
Name: Xxxxxxx X.
Xxxxxxxxxx
Title: Senior Vice
President,
General Counsel
This
Asset Purchase Agreement (“Agreement”) is dated as of June 30, 2008, by and
among Xxxxxx Evaluations, Inc., a New York corporation (“Seller”); Xxxxxx
Xxxxxx, Inc., a New York corporation (“Shareholder”); and DDA Management
Services, LLC, a New York limited liability company (“Buyer”).
Seller is
engaged in the business of facilitating independent medical evaluations and
related services as conducted by Seller in the State of New York and commonly
known as “D&D Associates”, “Allegiance Health” and/or “Medimax”, including,
without limitation, such business as was formerly conducted by Allegiance
Administrative Corporation, Allegiance Health, Inc., File Solutions, Inc.,
Medimax, Inc. and Allegiance Health Services, LLC, each of which entities has
been merged with and into Seller (collectively, “Business”).
Shareholder
owns all of the issued and outstanding shares of capital stock of
Seller.
Seller
desires to sell and Buyer desires to purchase substantially all of the assets
used by Seller in the operation of the Business upon the terms and subject to
the conditions set forth in this Agreement.
The
parties, intending to be legally bound, agree as follows.
ARTICLE
I
PURCHASE
AND SALE OF ASSETS
1.1 Purchase and Sale of
Assets. At the Closing (defined below), Buyer will purchase
from Seller and Seller will sell, transfer, assign, convey, and deliver to Buyer
all of Seller's right, title and interest in and to all of the assets owned by
or leased or licensed to Seller and used or held for use by Seller in the
conduct of the Business, excepting only the Excluded Assets (collectively,
“Purchased Assets”). Without limiting the generality of the foregoing, the
Purchased Assets shall include all of Seller's right, title and interest in, to
and under:
(a) all
machinery, furniture, fixtures, equipment, computer hardware, supplies, repair
and replacement parts and other tangible personal property, including, without
limitation, those items listed on Schedule 1.1(a);
(b) the real
property leases and other contracts, agreements, commitments, leases, subleases,
licenses, sublicenses and similar arrangements listed on Schedule 1.1(b);
(c) all
licenses, permits, registrations, authorizations, and similar rights required to
carry on the Business in the ordinary course, including, without limitation,
those items listed on Schedule
1.1(c);
(d) all
intellectual, industrial and proprietary rights, including without limitation
(i) all design and use rights to all circuit boards, software, and system
architecture, (ii) all telephone and facsimile numbers and e-mail addresses used
in the Business, (iii) all inventions, (iv) all granted patents for inventions
and any reissues thereof, if any, (v) all copyrights, whether registered or
unregistered, (vi) all designs and industrial designs, (vii) all trademarks,
trade names, all variations thereof, and any word, symbol, icon, logo or other
indicia of origin adopted or used in connection with any product made or service
provided in the Business, whether registered or unregistered, and rights to
prevent unfair trading, (viii) all trade secrets, confidential information,
know-how and processes, (ix) all applications and registrations for all of the
foregoing, (x) all licenses, including sub-licenses, or other rights to use
intellectual, industrial or proprietary rights of third parties including,
without limitation, any customer of the Business, (xi) all Internet addresses,
web sites and other Business addresses; and (xii) all licenses, including
sub-licenses granted to third parties to use any of the foregoing;
(e) all
deposits, prepaid taxes and other prepaid expenses;
(f) all
billed and unbilled trade accounts receivable, an aging of which, current as of
May 31, 2008, is listed on Schedule 1.1(f), and other
rights to payment from customers of Seller and the full benefit of all security
for such accounts or rights to payment, and any claim, remedy or other right
related to any of the foregoing (“Accounts Receivable”);
(g) the
goodwill of the Business, including, without limiting the generality of the
foregoing, Seller’s rights to the names “D&D Associates”, “Allegiance
Health” and “Medimax”, all other names under which Seller has conducted or now
does conduct business, and all variations thereof, the exclusive right of Buyer
to represent itself as carrying on the Business in continuation of and in
succession to Seller, and all records of sales, customer lists, physician lists
and supplier lists of Seller; and
(h) all
personnel records, inspection records, accounting records, and all other
records, books, documents and data bases in the possession or under the control
of Seller relating to the Business, the Purchased Assets, the Assumed
Liabilities, and those employees of Seller who subsequent to the Closing are
employed by Xxxxx.
1.2 Excluded
Assets. Notwithstanding the foregoing, the Purchased Assets
specifically do not include (a) Seller’s cash and cash equivalents on hand as of
the Closing, (b) Seller’s rights to the names “Xxxxxx Xxxxxx” and “Xxxxxx
Evaluations,” (c) those assets owned by or leased or licensed to Seller and used
or held for use by Seller exclusively in the conduct of Seller’s “Michigan
Evaluation Group” business, (d) Seller’s tax returns and related work papers
with respect to the Business for taxable periods ending on or prior to the
Closing Date, and (e) the specific items listed on Schedule 1.2.
1.3 Assumed
Liabilities. At the Closing, Buyer shall assume the following
liabilities and obligations of Seller related to the Business (“Assumed
Liabilities”):
(a) all trade
accounts payable that arise from the ordinary course conduct of the Business and
relate to the period prior to the Closing, an aging of which, current as of May
31, 2008, is listed on Schedule
1.3(a) (“Accounts Payable”); and
(b) all
liabilities and obligations of Seller first arising after and related to the
period following the Closing under those contracts assigned to Buyer as part of
the Purchased Assets.
1.4 Excluded
Liabilities. Except for the Assumed Liabilities, Buyer shall
not be liable or obligated for any of Seller’s past, present or future
liabilities or obligations and nothing in this Agreement shall be construed in
any manner to constitute an assumption by Buyer of any such liability or
obligation of Seller. Seller shall retain and pay and perform when
due all of its liabilities and obligations other than the Assumed Liabilities,
whether known or unknown, asserted or unasserted, absolute, accrued contingent
or otherwise, and whether due or to become due (collectively, “Excluded
Liabilities”). Without limiting the generality of the foregoing,
Excluded Liabilities shall include, without limitation, all liabilities and
obligations of Seller with respect to taxes for periods prior to the Closing
Date, Seller’s employment of any of Seller’s employees or their termination by
Seller whether prior to or after the Closing Date (as more particularly
described in Sections 5.8 and 5.9), any Action pending or threatened as of the
Closing Date or arising out of or relating to matters or events occurring prior
to the Closing Date, and all other claims arising out of or relating to matters
or events occurring prior to the Closing Date.
1.5 Purchase Price. The
aggregate consideration for the Purchased Assets and the non-competition and
non-solicitation agreements set forth in Article VII shall be (U.S.) $5,000,000
(“Purchase Price”). The Purchase Price shall be paid by Buyer to
Seller in cash at the Closing.
1.6 Allocation of Purchase
Price. Seller and Buyer agree to allocate the Purchase Price
among the Purchased Assets and the non-competition and non-solicitation
provisions for all purposes, including financial accounting and tax purposes, in
accordance with the allocation set forth on Schedule 1.6
(“Allocation”). Seller and Buyer shall cooperate in good faith in the
joint preparation of IRS Form 8594 on a basis consistent with the agreed-upon
Allocation. Each party shall notify the other party if it receives
notice that any taxing authority proposes any allocation of the Purchase Price
that is different from the agreed-upon Allocation.
ARTICLE
II
CLOSING
AND CLOSING DATE
2.1 Closing. The
closing of the transactions contemplated by this Agreement (“Closing”) shall
take place effective as of 11:59 P.M. (EST) on the date of this Agreement
(“Closing Date”).
2.2 Closing
Deliverables. In addition to any other deliveries required by
the parties under this Agreement, at or prior to the Closing, Seller shall
execute and deliver, or cause to be executed and delivered, to Buyer the
following, in form reasonably acceptable to Buyer:
(a) such
bills of sale, assignments and other instruments of transfer as Buyer may
reasonably require to vest in Buyer as of the Closing Date good, valid and
marketable title to all of the Purchased Assets, free and clear of any security
interest, pledge, mortgage, lien, charge, restriction, or other encumbrance
(“Liens”);
(b) consents
to assignment from each of the third parties listed on Schedule 2.2(b);
(c) an
estoppel certificate from the landlord of each of (i) the Buffalo, New York
leased real property, (ii) the Garden City, New York leased real property, and
(iii) the Franklin Square, New York leased real property; and
(d) the
employment agreements for each employee of the
Business listed on Schedule
2.2(d).
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SELLER
Seller
represents and warrants to Buyer that the statements contained in this Article
are correct and complete.
3.1 Organization of
Seller. Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of New York and has
full power to carry on its business as now being conducted. Seller is
duly authorized to conduct business as a foreign corporation and is in good
standing in each jurisdiction in which the property owned, leased or operated by
Seller, or the nature of the business conducted by Seller makes such
qualification necessary.
3.2 Authorization. Each
of Seller and Shareholder has full power and authority to execute and deliver
this Agreement and all other agreements and documents to be executed and
delivered by it in connection with the consummation of the transactions
contemplated hereby and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of Seller and
Shareholder, enforceable in accordance with its terms.
3.3 Noncontravention. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and the compliance with the terms of this
Agreement do not and will not: (a) conflict with or result in any breach of any
provision of the terms of the Articles of Incorporation or Bylaws of Seller, (b)
conflict with, constitute a default under, result in a breach of or require
notice to or the consent of any third party under any contract, agreement,
commitment, note, license or other instrument to which Seller is a party or by
which it or any of its property may be bound; (c) result in the creation of any
Lien upon or any person obtaining the right to acquire any properties, assets or
rights of Seller; (d) violate or conflict with any law, ordinance, code, rule,
regulation, decree, order or ruling of any court or governmental authority, to
which Seller or any of its property is subject; or (e) require any
authorization, consent, order, permit or approval of, or notice to, or filing,
registration or qualification with, any governmental, administrative or judicial
authority.
3.4 Financial
Statements. Schedule 3.4 contains true and complete copies of
the following financial statements (collectively, “Financial Statements”): (a)
the statements of income of the Business for the fiscal years ended December 31,
2006 and December 31, 2007 (“Most Recent Fiscal Year End”), and (b) the
statements of income of the Business (“Most Recent Financial Statements”) as of
and for the period beginning January 1, 2008 and ending on the last day of the
calendar month immediately preceding the Closing Date (“Most Recent Fiscal Month
End”). All Financial Statements are in accordance with the books and
records of Seller, and such books and records of Seller are true and
complete. Each of the statements of income included within
the Financial Statements fairly presents the results of operations of the
Business as of its date. All Financial Statements have been prepared
in conformity with U.S. GAAP, consistently applied. Since the date of
the Most Recent Financial Statements, there has not been any material adverse
change in the financial or operating condition of the Business.
3.5 Undisclosed
Liabilities. The Business has no liabilities or obligations
except for the liabilities and obligations (a) reflected or reserved for on the
Most Recent Financial Statements or (b) that have arisen since the date of the
Most Recent Fiscal Month End in the ordinary course of
business. Seller knows of no circumstance, condition, event or
arrangement that could hereafter give rise to any other liabilities or
obligations of Seller with respect to the Business, or any successor to the
Business.
3.6 Title,
Condition and Sufficiency of the Purchased Assets.
(a) Seller
has, and at the Closing, Buyer will receive, good, valid and marketable title to
all of the Purchased Assets, free and clear of all Liens.
(b) All of
the Purchased Assets are in operating condition, subject only to ordinary wear
and tear. All of the tangible Purchased Assets have been maintained
in the ordinary course of business in accordance with industry
standards.
(c) The
Purchased Assets constitute all of the assets, rights and properties used or
held for use by Seller in connection with the Business and necessary for the
conduct of the Business as presently conducted.
(d) There are
no corporations, partnerships, joint ventures, limited liability companies or
other entities other than Seller in which Seller or Shareholder, directly or
indirectly, has an interest and which owns any of the Purchased Assets or
through which any part of the Business is conducted.
3.7 Contracts. Schedule 1.1(b) sets forth a
true and complete list of all real property leases and other contracts,
agreements, commitments, leases, subleases, licenses, sublicenses and similar
arrangements (written or oral) to which Seller is a party in connection with the
Business that involve an annual expenditure by Seller in excess of $2,500
(“Contracts”). Seller has delivered to Buyer a true and complete copy
of each written Contract and a written summary setting forth the terms and
conditions of any oral Contract. With respect to each of the
Contracts: (a) the Contract is legal, valid, binding, enforceable and in full
force and effect; (b) Seller has fulfilled, or taken all action necessary to
enable it to fulfill when due, all of its obligations under the Contract; (c)
the transactions contemplated by this Agreement do not require the consent of
any other party to the Contract, will not result in a breach of or default under
the Contract, and will not otherwise cause the Contract to cease to be legal,
valid, binding, enforceable and in full force and effect on identical terms
following the Closing; (d) no party to the Contract is in breach or default
under the Contract, or has alleged a breach or default, and no event has
occurred or circumstance exists which, with the delivery of notice, the passage
of time or both, would constitute a breach or default, or permit termination,
modification or acceleration under the Contract; and (e) no party has repudiated
any provision of the Contract. With respect to each real property
lease included in the Contracts: (i) Seller’s possession and quiet enjoyment of
the real property under such lease has not been disturbed; (ii) Seller has not
subleased, licensed or otherwise granted any person or entity the right to use
or occupy the leased real property or any portion thereof; (iii) Seller has not
collaterally assigned or granted any other Lien in such lease or any interest
therein; and (iv) all buildings, structures, fixtures, building systems and
equipment, and all components thereof included in the underlying leased real
property are in good condition and repair and sufficient for the operation of
the Business.
3.8 Licenses. Seller
possesses or has been granted all licenses, permits, certifications,
registrations, authorizations, and similar rights required to carry on the
Business in the ordinary course (“Licenses”) and all such Licenses are listed on
Schedule
1.1(c). All such Licenses are in full force and effect and no
proceeding is pending or, to Seller’s knowledge, threatened seeking the
revocation or limitation of any License.
3.9 Accounts
Receivable. All Accounts Receivable represent or will
represent valid obligations arising from bona fide sales actually made or
services actually performed by Seller in the ordinary course of the Business,
are consistent with all applicable fee schedules and all usual and customary
charges of the Business, are current and collectible, and are not subject to any
defense, setoff or counter-claim. Schedule 1.1(f) contains a
complete and accurate list of all Accounts Receivable as of May 31, 2008, which
list sets forth the aging of each Account Receivable. Since December
31, 2006, Xxxxxx has maintained, in the ordinary course of business, a
consistent policy for the collection of accounts receivable of the Business and
has not accelerated the collection of any such accounts receivable in any
manner.
3.10 Accounts
Payable. All Accounts Payable represent or will represent
valid obligations arising from bona fide purchases actually made or services
actually obtained by Seller in the ordinary course of the
Business. Schedule
1.3(a) contains a complete and accurate list of all Accounts Payable as
of May 31, 2008, which list sets forth the aging of each Account
Payable. Since December 31, 2006, Xxxxxx has maintained, in the
ordinary course of business, a consistent policy for the payment of accounts
payable of the Business and has not delayed or postponed the payment of such
accounts payable in any manner.
3.11 Compliance with
Laws. Seller has, with respect to the Business and the
Purchased Assets, complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of every federal, state, local, and foreign governmental
authority (and all agencies thereof) having jurisdiction, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against Seller alleging any failure so to
comply.
3.12 Litigation;
Orders. Except as disclosed on Schedule 3.12, there is no
action, suit, arbitration, inquiry, proceeding or investigation by or before any
court of competent jurisdiction, governmental or other regulatory or
administrative agency or commission or arbitral panel (including, without
limitation any workers compensation claims) (“Action”) pending or, to Seller’s
knowledge, threatened against Seller or any of its physician contractors with
respect to the Business or any of the Purchased Assets and to Seller’s
knowledge, there is no basis in fact for any such Action. There are
no judgments or outstanding orders, injunctions, decrees, stipulations or awards
(whether rendered by a court or administrative agency, or by arbitration)
against Seller that would interfere with the conduct of the Business as
presently conducted or prevent or delay the transactions contemplated in this
Agreement.
3.13 Taxes. Seller has
filed all tax returns required to be filed by Seller in connection with the
Business. All such returns are true and correct, and all taxes due in
connection with such returns or otherwise due have been paid in
full. There is no Action or unresolved claim for assessment or
collection, pending or, to Seller’s knowledge, threatened, by, or present
dispute with, the United States or any other taxing authority for assessment or
collection from Seller of any taxes of any nature in connection with the
Business. All taxes that Seller has been required to collect or
withhold for in connection with the Business, including, without limitation, all
payroll taxes, have been withheld or collected and, to the extent required, have
been paid to the proper taxing authority. Seller has not waived any
statute of limitations in respect of taxes in connection with the Business or
agreed to any extension of time with respect to a tax assessment or deficiency
in connection with the Business. Seller is not a “foreign person”
within the meaning of Internal Revenue Code Section 1445(f)(3).
3.14 Labor. Schedule
3.14 to this Agreement is a list, as of the date of this Agreement, of
the current employees of Seller associated with the Business (“Current
Employees”), and their dates of hire, positions, base salary and commission
schedule (if applicable). Except as set forth on Schedule 3.14 none of the
Current Employees has any understanding or agreement (written or otherwise) with
Seller or is covered by any collective bargaining or union contract or
agreement. There are no material strikes, work stoppages, boycotts or
concerted actions pending or, to the knowledge of Seller, threatened (and Xxxxxx
has no knowledge of any circumstances that may reasonably be expected to give
rise thereto) against Seller or the conduct of the Business. Seller
has not received notice of any pending (a) proceeding under the National Labor
Relations Act or before the National Labor Relations Board, (b) grievances or
arbitrations, or (c) organizational drives or union clarification requests, in
each case against or affecting Seller or the conduct of the
Business.
3.15 Customers and
Contractors. No customer of the Business has indicated to
Seller that it will stop, or materially decrease the rate of, purchasing
services from the Business. Schedule 3.15 lists the top
twenty-five (25) revenue producing physician contractors to the Business during
the last fiscal year and the amount of combined revenue from each such physician
contractor during such period. No physician contractor listed on
Schedule 3.15 has
indicated to Seller that it will stop providing, or materially decrease his or
her availability to provide, services to the Business. To Seller’s
knowledge, there is no fact, condition or event relating to the Business that
would materially adversely affect Seller’s relationship, or Xxxxx’s relationship
after the Closing, with any customer or contractor.
3.16 Brokers. Seller has
not employed any broker or finder, or incurred any liability or obligation for a
brokerage fee, commission or finder's fee in connection with the transactions
contemplated by this Agreement.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
represents and warrants to Seller that the statements contained in this Article
are correct and complete.
4.1 Organization of
Buyer. Buyer is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of New York
and has full power to carry on its business as now being
conducted. Buyer is duly authorized to conduct business as a foreign
limited liability company and is in good standing in each jurisdiction in which
the property owned, leased or operated by Buyer, or the nature of the business
conducted by Xxxxx makes such qualification necessary.
4.2 Authorization. Xxxxx
has full power and authority to execute and deliver this Agreement and all other
agreements and documents to be executed and delivered by it in connection with
the consummation of the transactions contemplated hereby and to perform its
obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of Buyer, enforceable in accordance with its
terms.
4.3 Noncontravention. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and the compliance with the terms of this
Agreement do not and will not: (a) conflict with or result in any breach of any
provision of the terms of the Articles of Organization of Buyer, (b) conflict
with, constitute a default under, result in a breach of or require notice to or
the consent of any third party under any contract, agreement, commitment, note,
license or other instrument to which Buyer is a party or by which it or any of
its property may be bound; (c) result in the creation of any Lien upon or any
person obtaining the right to acquire any properties, assets or rights of Buyer;
(d) violate or conflict with any law, ordinance, code, rule, regulation, decree,
order or ruling of any court or governmental authority, to which Buyer or any of
its property is subject; or (e) require any authorization, consent, order,
permit or approval of, or notice to, or filing, registration or qualification
with, any governmental, administrative or judicial authority.
4.4 Brokers. Buyer has
not employed any broker or finder, or incurred any liability or obligation for a
brokerage fee, commission or finder's fee in connection with the transactions
contemplated by this Agreement.
ARTICLE
V
COVENANTS
OF SELLER AND BUYER
5.1 General. Each party
agrees to take further action as reasonably requested by the other to carry out
the purpose of this Agreement. The sole cost and expense of any
further action will be borne by the requesting party.
5.2 Consents. Seller
will use commercially reasonable efforts from and after the Closing Date to
obtain all agreed upon third-party consents that have not been obtained by
Seller prior to the Closing Date. Nothing in this Agreement shall be
construed as an attempt to assign any Contract or License that is by its terms
or law nonassignable without the consent of the other party or parties thereto,
unless such consent shall have been given or as to which all the remedies for
the enforcement thereof enjoyed by Seller would, as a matter of law, pass to
Buyer as an incident of the assignments provided for by this
Agreement. In the event (a) a Contract or License either does not
permit or expressly prohibits the assignment by Seller of its rights and
obligations thereunder, or (b) Seller has not obtained the necessary consents to
assignment from all parties to any Contract or License prior to the Closing
Date, or (c) direct assumption of any Contract or License is not practical,
Buyer shall fulfill such Contract or License and shall assume the obligations
and liabilities of such Contract or License accruing after the Closing for and
on behalf of Seller but for the account of Xxxxx and Seller shall cooperate with
Buyer in any reasonable arrangements designed to provide for Buyer the benefits
under such Contract or License accruing after the Closing including the
enforcement for the benefit and at the expense of Buyer of any rights comparable
to the rights previously enjoyed by Seller in connection with such Contract or
License.
5.3 Proration. Current
real estate taxes, personal property taxes, rents, utility charges (including
electricity, gas, water, sewer and telephone), refuse collection, and other
service contracts assumed by Buyer shall be prorated ratably as of the Closing
Date. To the extent practicable, all such prorations shall be
computed and paid by Seller at the Closing, and to the extent not practicable,
as soon as practicable thereafter. Current real estate taxes and
personal property taxes shall be prorated as of the Closing Date in accordance
with the custom and practice of the jurisdiction of the Business
location.
5.4 Reimbursement for Certain
Payments. If Buyer pays any of the Excluded Liabilities, then Seller
shall reimburse the amount of such payment to Buyer by wire transfer of
immediately available funds within five (5) business days of receipt by Seller
of a demand for reimbursement, together with corresponding documentation of such
payment. In the event that on or after the Closing Date Seller
receives any Accounts Receivable payments belonging to Buyer, Seller shall remit
such payments to Buyer in the form received within five (5) business days of
Seller’s receipt of such payments. Seller shall, if applicable,
provide Buyer with a regular accounting of all Accounts Receivable payments
received by Seller, but belonging to Buyer, and shall provide Buyer with access
to such books, records and other information as may be reasonably necessary for
Buyer to verify such accounting. Shareholder shall be jointly and
severally liable with Seller for any payments required under this Section
5.4.
5.5 Transition
Services. In order to facilitate the orderly continuation of
the Business after the Closing, for a period of three (3) months following the
Closing Date, Seller shall provide, or cause to be provided, to Buyer, the
services described on Schedule
5.5 (“Transition Services”). If Buyer wishes to extend the
term of any such Transition Services beyond such period, Seller and Buyer shall
negotiate such extension in good faith. Seller agrees that for the
first sixty (60) days following the Closing Date, the Transition Services shall
be provided to Buyer free of charge. Thereafter, to the extent Buyer
still requires any of the Transition Services, Buyer shall reimburse Seller for
Seller’s actual, direct, out-of-pocket cost, without markup, to provide the
applicable Transition Services to Buyer. Upon Xxxxx’s request, Seller
shall provide Buyer with access to such books, records and other information as
may be reasonably necessary for Buyer to verify such cost.
5.6 Accounts Receivable Collection
Assistance. For a period of six (6) months following the
Closing Date, upon Xxxxx’s specific request, Seller will use commercially
reasonable efforts to assist Buyer in the collection of any Accounts Receivable
that remain uncollected after their respective due dates.
5.7 Access. For a
period of four (4) years following the Closing Date, each party shall provide
the other party with commercially reasonable access during normal business hours
to its books, records and other information relating to the Business to the
extent related to the condition or operation of the Business by Seller prior to
the Closing Date and that are requested by the party to prepare its tax returns,
to respond to third party claims, or for any other legitimate purpose specified
in writing. Each party shall have the right, at its own expense, to
make copies of any such books, records and information.
5.8 Employees. Buyer
shall offer to employ, commencing on the Closing Date, those employees of Seller
listed on Schedule 5.8
who are actively performing services for the Business as of the Closing Date
(including any such employee of Seller on vacation) or who, as of the Closing
Date are on leave of absence for any reason (other than long-term disability)
and return to active full time employment within ninety (90) days after
commencement of the leave (each, an “Eligible Employee”), on substantially
similar terms and conditions of employment and with substantially the same
benefits as those enjoyed by similarly situated employees of Buyer as of the
Closing Date. If an Eligible Employee accepts the offer to commence
employment as of the Closing Date, he or she shall become an employee of Buyer
as of the Closing Date (or as of the return from leave) and shall be referred to
herein as a “Company Employee.” Nothing herein shall limit the right
of Buyer to terminate the employment of any such employee at any time after the
Closing Date, or alter the salary, wages or benefits payable to any such
employee at any time after the Closing Date. Seller shall be
responsible for the payment through the Closing Date of all compensation and
benefits (including, without limitation, accrued vacation, sick time and
personal time benefits) payable to all Company Employees and all other
liabilities and obligations of Seller with respect to such Company Employees
arising out of or relating to matters, events or periods occurring prior to the
Closing Date, including, but not limited to any and all severance and/or stay
bonus arrangements. As to any of Seller’s employees that do not
become a Company Employee, Seller shall retain and discharge when due any and
all liabilities and obligations of Seller with respect to such employees,
regardless of whether relating to matters or events occurring on, prior to or
after the Closing Date.
5.9 Employee
Benefit Arrangements.
(a) Effective
as of the Closing Date, Company Employees shall cease participation in all
employee benefit plans, programs, policies and arrangements maintained or
contributed to for their benefit by Seller or any of its affiliates (“Seller
Plans”) except to the extent such Seller Plans provide for continued
participation by former employees or Seller otherwise retains liability with
respect to such Seller Plans under this Agreement.
(b) Buyer
shall use reasonable efforts to cause each Company Employee to be given credit
for purposes of vesting and eligibility for participation for all service prior
to the Closing Date with Seller and its affiliates (to the extent taken into
account under similar employee benefit plans, programs, policies and
arrangements of Seller in effect immediately prior to the Closing Date) under
each employee benefit plan, program and arrangement intended to meet the
requirements of Code section 401(a) and for all purposes, including benefit
payment levels under any severance or vacation arrangement and any other welfare
benefit arrangement (in each case, to the extent taken into account under
similar employee benefit plans, programs, policies and arrangements of Seller in
effect immediately prior to the Closing Date) maintained for his or her benefit
by Xxxxx on the Closing Date.
(c) Seller
shall retain responsibility for and continue to pay, to the extent covered by
Seller Plans, all medical, life insurance, disability and other welfare and
government-mandated plan expenses and benefits for each Company Employee with
respect to claims incurred by such employees or their covered dependents on or
prior to the Closing Date. Expenses and benefits with respect to
claims incurred by Company Employees or their covered dependents after the
Closing Date shall be the responsibility of Buyer under, and to the extent
covered by, Xxxxx’s employee benefit plans, programs, policies and arrangements,
and government-mandated plans. For purposes of this paragraph, a
medical claim shall be deemed to be incurred as of the date of the occurrence or
event giving rise to the benefit to which the claim relates.
(d) With
respect to the welfare benefit plans initially implemented for the benefit of
Company Employees immediately after the Closing Date, Buyer shall use reasonable
efforts to (i) cause to be waived any requirement to provide evidence of
insurability and any pre-existing condition limitations, (ii) give effect, in
determining any deductible and maximum out-of-pocket limitations for the year in
which the Closing Date occurs, to claims incurred and amounts paid with respect
to such employees with respect to similar plans maintained by Seller (or any
affiliate thereof) for their benefit during the portion of the year that occurs
prior to the date employment commences (provided Seller provides such
information to Buyer as of the Closing Date).
(e) Seller
shall furnish Buyer with any information that Buyer may require to provide
benefits to Company Employees as of the Closing Date in accordance with this
Section 5.9.
5.10 Public
Announcements. Except as agreed in writing by the parties or
as otherwise may be required by applicable law or applicable stock exchange
regulation, none of Seller, Shareholder or Buyer will issue, or permit any agent
or affiliate to issue, any press releases or otherwise make, or permit any agent
or affiliate to make, any public statements with respect to this Agreement or
the transactions contemplated hereby. Without limiting the generality
of the foregoing, in no event shall any public statements reference any parent
or affiliated entity of Buyer.
ARTICLE
VI
INDEMNIFICATION
6.1 Survival. All
representations and warranties of the parties contained in this Agreement shall
survive the Closing Date until the eighteen (18) month anniversary of the
Closing Date, other than the representations and warranties contained in
Sections 3.13 (Employee Benefits) and 3.14 (Taxes), which shall survive until
six (6) months following the expiration of the applicable statutes of
limitations; provided, however, (a) representations and warranties that are the
basis for claims asserted under this Agreement prior to the expiration of such
applicable time periods shall also survive until the final resolution of those
claims; and (b) the representations and warranties in Sections 3.2 and 3.6(a)
and any representation or warranty made falsely by a party intentionally,
willfully or recklessly shall survive the Closing without
limitation. Covenants and agreements contained in this Agreement
shall survive the Closing without limitation. The right to
indemnification, payment of damages and other remedies based on representations,
warranties, covenants and obligations in this Agreement shall not be affected by
any investigation conducted by any party or by any information that any party
may receive at any time, whether before or after the Closing Date, with respect
to the accuracy or inaccuracy of or compliance with any such representation,
warranty, covenant or obligation.
6.2 Indemnification by
Xxxxx. From and after the Closing Date, Xxxxx shall indemnify
and hold harmless Seller and its affiliates, each of their respective members,
managers, directors, officers, employees and agents, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, “Seller
Indemnified Parties”) from and against any and all loss, cost, liability,
damage, penalty, fine, judgment, claim or expense (including reasonable
attorneys’ fees) (“Losses”) incurred by
or asserted against any of the Seller Indemnified Parties in connection with or
arising from (a) any breach by Buyer of its covenants and agreements contained
herein; (b) any breach by Buyer of its representations and warranties contained
herein; or (c) the Assumed Liabilities. Notwithstanding the
foregoing, (i) Buyer shall be required to indemnify the Seller Indemnified
Parties pursuant to Section 6.2(b) only to the extent that the aggregate Losses
indemnifiable pursuant to Section 6.2(b) exceed (U.S.) $10,000 in the aggregate
(“Basket”), (ii) Buyer shall not be required to indemnify the Seller Indemnified
Parties pursuant to Section 6.2(b) in an aggregate amount in excess of (U.S.)
$1,000,000 (“Cap”), and (iii) any claim for indemnification under Section 6.2(b)
must be made, if at all, during the applicable survival period set forth in
Section 6.1.
6.3 Indemnification by Xxxxxx and
Shareholder. From and after the Closing Date, Seller and
Shareholder, jointly and severally, shall indemnify and hold harmless Buyer and
its affiliates, each of their respective stockholders, directors, officers,
employees and agents, and each of the heirs, executors, successors and assigns
of any of the foregoing (collectively, “Buyer Indemnified Parties”) from and
against any and all Losses incurred by or asserted against any of the Buyer
Indemnified Parties in connection with or arising from (a) any breach by Seller
or Shareholder of their covenants and agreements contained herein; (b) any
breach by Seller of its representations and warranties contained herein; (c) the
Excluded Liabilities; or (d) the matters disclosed in Schedule
3.12. Notwithstanding the foregoing, (i) Seller and
Shareholder shall be required to indemnify the Buyer Indemnified Parties
pursuant to Section 6.3(b) only to the extent that the aggregate Losses
indemnifiable pursuant to Section 6.3(b) exceed the Basket, (ii) Seller and
Shareholder shall not be required to indemnify the Buyer Indemnified Parties
pursuant to Section 6.3(b) in an aggregate amount in excess of the Cap, and
(iii) any claim for indemnification under Section 6.3(b) must be made, if at
all, during the applicable survival period set forth in Section 6.1; provided,
however, that claims made under Section 6.3(b) for breaches of Sections 3.2 or
3.6(a) or for any representation or warranty made falsely by a party
intentionally, willfully or recklessly shall not be subject to the Basket or the
Cap.
6.4 Third-Party
Claims. Promptly after receipt by a Seller Indemnified Party
or a Buyer Indemnified Party (“Indemnified Party”) of notice of any matter or
the commencement of any Action by a third party in respect of which the
Indemnified Party will seek indemnification hereunder (“Third-Party Claim”), the
Indemnified Party shall notify each Person that is obligated to provide such
indemnification (“Indemnifying Party”) thereof in writing but any failure to so
notify the Indemnifying Party shall not relieve it from any liability that it
may have to the Indemnified Party other than to the extent the Indemnifying
Party is actually prejudiced by such failure. The Indemnifying Party shall be
entitled to participate in the defense of such Third-Party Claim and, provided
that within fifteen (15) days after receipt of such written notice the
Indemnifying Party confirms in writing its responsibility therefor and
demonstrates to the reasonable satisfaction of the Indemnified Party its
financial capability to undertake the defense and provide indemnification with
respect to such Third-Party Claim, to assume control of such defense with
counsel reasonably satisfactory to such Indemnified Party; provided, however,
that:
(a) the
Indemnified Party shall be entitled to participate in the defense of such
Third-Party Claim and to employ counsel at its own expense to assist in the
handling of such matter or claim;
(b) the
Indemnifying Party shall obtain the prior written approval of the Indemnified
Party before entering into any settlement of such Third-Party Claim or ceasing
to defend against such matter or claim (with such approval not to be
unreasonably withheld);
(c) no
Indemnifying Party shall consent to the entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
each claimant or plaintiff to each Indemnified Party of a full and complete
release from all liability in respect of such Third-Party Claim;
and
(d) the
Indemnifying Party shall not be entitled to control (but shall be entitled to
participate at its own expense in the defense of), and the Indemnified Party
shall be entitled to have sole control over, the defense or settlement of any
Third-Party Claim to the extent the matter or claim seeks an order, injunction,
non-monetary or other equitable relief against the Indemnified Party that, if
successful, could materially interfere with the business, operations, assets,
condition (financial or otherwise) or prospects of the Indemnified
Party.
After
written notice by the Indemnifying Party to the Indemnified Party of its
election to assume control of the defense of any such Third-Party Claim and
proof of its financial responsibility as provided in this Section 6.4, the
Indemnifying Party shall not be liable to such Indemnified Party hereunder for
any legal expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof other than reasonable costs of investigation and of
liaison counsel for the Indemnified Party; provided, however, that the
Indemnifying Party shall be liable for such legal expenses if the Indemnified
Party determines in good faith that the incurrence of the same is appropriate in
light of defenses not available to the Indemnifying Party, conflicts of interest
or other similar circumstances. If the Indemnifying Party does not assume
control of the defense of such Third-Party Claim as provided in this Section
6.4, the Indemnified Party shall have the right to defend such Third-Party Claim
in such manner as it may deem appropriate at the cost and expense of the
Indemnifying Party, and the Indemnifying Party will promptly reimburse the
Indemnified Party therefor in accordance with this Article VI. The reimbursement
of fees, costs and expenses required by this Article VI shall be made by
periodic payments during the course of the investigations or defense, as and
when bills are received or expenses incurred.
ARTICLE
VII
CONFIDENTIALITY,
NON-COMPETITION AND NON-SOLICITATION
7.1 Confidentiality. From
and after the Closing, each of Seller and Shareholder agrees to keep
confidential and not divulge, communicate, use to the detriment of Buyer or for
the benefit of any other person or persons or misuse in any way any knowledge or
information of a confidential nature relating to the Business or the Purchased
Assets, including, without limitation, confidential or proprietary information
of Seller acquired by Buyer pursuant to this Agreement (“Confidential
Information”). Seller may disclose Confidential Information if
required by any judicial or governmental request, requirement or order; provided
that Seller will take reasonable steps to give Buyer sufficient prior notice in
order to contest such request, requirement or order or to obtain a protective
order. Seller may also disclose Confidential Information if the
information has become known to the general public by means other than Seller’s
or Shareholder’s breach of this Agreement.
7.2 Non-Competition. In
consideration for the Purchase Price, each of Seller and Shareholder agrees that
for a period of three (3) years following the Closing Date, neither Seller nor
Shareholder shall, either directly or indirectly (and whether or not for
compensation), work for, be employed by, own, manage, operate, control, finance,
participate or engage in, or have any interest in, any person, firm, entity,
partnership, limited partnership, limited liability company, corporation or
business (whether as an employee, owner, sole proprietor, partner, venturer,
member, shareholder, officer, director, agent, creditor, consultant or in any
capacity which calls for the rendering of personal services, advice, acts of
management, operation or control) which engages in the business of independent
medical evaluations, peer reviews, functional capacity evaluations, related
services, or any other activity substantially the same as or competitive with
all or any part of the Business anywhere in the State of New York (“Restricted
Business”).
7.3 Non-Solicitation. In
consideration for the Purchase Price, each of Seller and Shareholder agrees that
for a period of three (3) years following the Closing Date, neither Seller nor
Shareholder shall, either directly or indirectly: (a) divert or attempt to
divert from Buyer or any affiliate of Buyer any work within the definition of
the Restricted Business; (b) solicit, contact, call upon or attempt to solicit,
or provide services to, any of Buyer’s or its affiliates’ customers, suppliers
or actively sought potential customers or suppliers for the purpose of doing
anything within the definition of the Restricted Business; or (c) induce or
attempt to induce any person who is an employee or consultant of Buyer or any
affiliate of Buyer to leave the employ of Buyer or such affiliate or hire any
person who is, or within twelve (12) months prior to the date of such hiring
was, an employee or consultant of Buyer or any affiliate of Buyer.
7.4 Reasonable
Restrictions. Each of Seller and Shareholder acknowledges and
agrees that the covenants set forth in this Article VII are necessary to protect
the goodwill value and other legitimate business interests of Buyer relating to
the Business and are reasonable and valid in geographical and temporal scope and
in all other respects. If, at the time of enforcement of any of the
provisions of this Article VII, a court holds that the restrictions stated
therein are unreasonable under the circumstances then existing, each of Seller
and Shareholder agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area.
7.5 Remedies. Each of
Seller and Shareholder acknowledges that the remedy at law of Buyer for breach
of the covenants in this Article VII will be inadequate and that, in addition to
any other remedy Buyer may have, including the right to recover damages, Buyer
will be entitled to an injunction restraining any breach or threatened breach,
without proof of actual damages and without bond or other security being
required. Each of Seller and Shareholder further agrees not to assert
as a defense in any proceeding in which Xxxxx is seeking enforcement of any of
the covenants in this Article VII any claim that Seller or Shareholder may have
against Buyer or any other person arising under this Agreement or
otherwise. Seller or Shareholder, as applicable, shall be permitted
to assert any such claim in a separate proceeding initiated by Seller or
Shareholder but the pendency of any such proceeding shall not affect Buyer’s
right to the strict enforcement of the covenants set forth in this Article
VII.
ARTICLE
VIII
MISCELLANEOUS
8.1 Entire
Agreement. This Agreement (including all Schedules or other
attachments hereto) constitutes the complete and exclusive statement of the
terms of the agreement among the parties with respect to the subject matter
hereof and supersedes all prior agreements, understandings, promises, and
arrangements, oral or written, among the parties with respect to the subject
matter hereof.
8.2 Amendment. This
Agreement may be amended or modified only by an instrument in writing signed by
each of the parties.
8.3 Third
Parties. Except as otherwise expressly provided under this
Agreement, nothing in this Agreement, express or implied, is intended to or
shall be construed to confer upon or give any person other than the parties and
their respective successors and permitted assigns, any legal or equitable right,
remedy or claim under or with respect to this Agreement.
8.4 Expenses. Except as
otherwise expressly provided in this Agreement, each party shall pay its own
fees and expenses (including, without limitation, the fees of any attorneys,
accountants, investment bankers or others engaged by such party) incurred in
connection with the preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby.
8.5 Notices. All
notices, consents, waivers and other communications required or permitted under
this Agreement shall be sufficiently given for all purposes hereunder if in
writing and (a) hand delivered, (b) sent by certified or registered mail, return
receipt requested and proper postage prepaid, (c) sent by a nationally
recognized overnight courier service, or (d) sent by facsimile, in each case to
the address or facsimile number and to the attention of the Person (by name or
title) set forth below (or to such other address and to the attention of such
other Person as a party may designate by written notice to the other
parties):
If to
Seller:
Xxxxxx
Evaluations, Inc.
170 Mt.
Airy Road
Basking
Ridge, NJ 07920
Attn: Xxxxxxx
X. Xxxxxxxxxx,
Xx. Vice President,
General Counsel
Facsimile
No.: (000) 000-0000
If to
Shareholder:
Xxxxxx
Xxxxxx, Inc.
170 Mt.
Airy Road
Basking
Ridge, NJ 07920
Attn: Xxxxxxx
X. Xxxxxxxxxx
Xx. Vice President,
General Counsel
Facsimile
No.: (000) 000-0000
If to
Buyer:
with a mandatory copy to:
DDA Management Services,
LLC Xxxxxx
LLP
0000 Xxxxxxx
Xxxx
Xxxx 000
Xxxx Xxx Xxxxxx Xx.
Suite
305
Suite 500
The
Woodlands,
TX 77380 Troy,
MI 48084
Attn: Xxxxx
X.
Xxx Attn: Xxxx
X. Xxxxx
Xx. Vice
President
Facsimile No.: (000)
000-0000
General Counsel
Facsimile
No.: (000) 000-0000
The date
of giving of any such notice, consent, waiver or other communication shall be
(i) the date of delivery if hand delivered, (ii) the date of receipt for
certified or registered mail, (iii) the day after delivery to the overnight
courier service if sent thereby, and (iv) the date of facsimile transmission on
production of a transmission report by the machine from which the facsimile was
sent that indicates that the facsimile was sent in its entirety to the facsimile
number of the recipient.
8.6 Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns;
provided, however, that no party shall assign any of its rights or delegate any
of its obligations under this Agreement without the express prior written
consent of each other party, except that Buyer may assign and/or delegate any or
all of its rights and obligations hereunder, without the consent of Seller or
Member, to (a) one or more Affiliates of Buyer, (b) an entity that acquires all
or substantially all of the assets of Buyer used in connection with the
Business; or (c) to any successor in a merger or acquisition involving Buyer;
provided, further, that in no event shall any such assignment or delegation
relieve Buyer of its obligations under this Agreement. Any purported
assignment of rights or delegation of obligations in violation of this Section,
whether voluntary or involuntary, by merger, consolidation, dissolution,
operation of law, or otherwise, is void.
8.7 Construction. Captions,
titles and headings to articles, sections or paragraphs of this Agreement are
inserted for convenience of reference only and shall not affect the construction
or interpretation of this Agreement. All references in this Agreement
to “Article”, or “Section” refer to the corresponding articles or sections of
this Agreement unless otherwise stated and, unless the context otherwise
specifically requires, refer to all subsections or subparagraphs
thereof. All references in this Agreement to “Schedule” or “Exhibit”
refer to the corresponding Schedules or Exhibits to this Agreement unless
otherwise stated. All references in this Agreement to a “party” or
“parties” refer to the parties signing this Agreement. All defined
terms and phrases used in this Agreement are equally applicable to both the
singular and plural forms of such terms. Nouns and pronouns will be
deemed to refer to the masculine, feminine or neuter, singular and plural, as
the identity of the Person or Persons may in the context require.
8.8 Cumulative
Remedies. Except as otherwise expressly provided in this
Agreement, the rights and remedies of the parties under this Agreement are
cumulative and not alternative and are in addition to any other right or remedy
set forth in any other agreement between the parties, or that may now or
subsequently exist at law or in equity, by statute or otherwise.
8.9 Waiver. Neither any
failure nor any delay by any party in exercising any right, power or privilege
under this Agreement will operate as a waiver of such right, power or privilege,
and no single or partial exercise of any such right, power or privilege will
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege. To the maximum extent permitted
by applicable law, (a) no claim or right arising out of this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by each party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of that party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement.
8.10 Severability. In
the event that a court or arbitral body of competent jurisdiction holds any
provision of this Agreement invalid, illegal or unenforceable, such decision
shall not affect the validity or enforceability of any of the other provisions
of this Agreement, which other provisions shall remain in full force and effect,
and the application of such invalid, illegal or unenforceable provision to
Persons or circumstances other than those as to which it is held invalid,
illegal or unenforceable shall be valid and be enforced to the fullest extent
permitted by law. To the extent permitted by applicable law, each
party waives any provision of law that renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
8.11 Representation of
Parties. The parties acknowledge that they have been
represented by competent counsel of their own choice and that this Agreement has
been the product of negotiation between them. Accordingly, the
parties agree that in the event of any ambiguity in any provision of this
Agreement, this Agreement shall not be construed against a party regardless of
which party was responsible for the drafting thereof.
8.12 Time of the
Essence. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
8.13 Execution of
Agreement. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement. This Agreement shall become effective
when one or more counterparts have been executed by each of the parties and
delivered to each other party. The exchange of copies of this
Agreement and of signature pages by facsimile or other electronic transmission
shall constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all purposes.
Signatures of the parties transmitted by facsimile or by other electronic means
shall be deemed to be their original signatures for all purposes.
8.14 Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without regard to conflicts-of-law principles that would
require the application of any other law.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, this Asset Purchase Agreement has been signed by or on behalf
of each of the parties as of the day first above written.
“SELLER”
XXXXXX
EVALUATIONS, INC.
By:
Name: Xxxxxxx X.
Xxxxxxxxxx
Title: Sr.
Vice President, General Counsel
“SHAREHOLDER”
XXXXXX
XXXXXX, INC.
By:
Name: Xxxxxxx X.
Xxxxxxxxxx
Title: Sr.
Vice President, General Counsel
“BUYER”
DDA
MANAGEMENT SERVICES, LLC
By:
Name:
Title:
