ASSET PURCHASE AGREEMENT
DATED AS OF MARCH 5, 2001
AMONG
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.,
PMP ACQUISITION CORP.,
PROVIDER MEDICAL PHARMACEUTICAL, LLC,
AND
THE OTHER PERSONS NAMED HEREIN
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................................1
SECTION 1.01 Certain Defined Terms..................................................................1
SECTION 1.02 Terms Generally........................................................................6
ARTICLE II PURCHASE AND SALE OF ASSETS............................................................................7
SECTION 2.01 Purchase and Sale of Assets............................................................7
SECTION 2.02 Excluded Assets........................................................................8
SECTION 2.03 Assumption of Liabilities..............................................................8
SECTION 2.04 Excluded Liabilities...................................................................8
SECTION 2.05 Purchase Price; Allocation of Purchase Price..........................................10
SECTION 2.06 Closing...............................................................................10
SECTION 2.07 Closing Deliveries by the Seller......................................................11
SECTION 2.08 Closing Deliveries by the Purchaser...................................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE OWNERS..........................................11
SECTION 3.01 Organization, Etc.....................................................................12
SECTION 3.02 Capitalization........................................................................12
SECTION 3.03 Authorization.........................................................................12
SECTION 3.04 No Violation..........................................................................13
SECTION 3.05 Approvals.............................................................................13
SECTION 3.06 Financial Statements and Other Information............................................13
SECTION 3.07 Absence of Certain Changes or Events..................................................15
SECTION 3.08 Taxes.................................................................................16
SECTION 3.09 Litigation............................................................................17
SECTION 3.10 Compliance with Laws..................................................................17
SECTION 3.11 Real Property.........................................................................18
SECTION 3.12 [Reserved]............................................................................18
SECTION 3.13 Condition of the Assets and Related Matters...........................................18
SECTION 3.14 Employee and Labor Matters and Plans..................................................18
SECTION 3.15 Contracts.............................................................................20
SECTION 3.16 Insurance Policies....................................................................20
SECTION 3.17 Records...............................................................................21
SECTION 3.18 [Reserved.]...........................................................................21
SECTION 3.19 Brokers...............................................................................21
SECTION 3.20 Suppliers and Customers...............................................................21
SECTION 3.21 Intellectual Property.................................................................22
SECTION 3.22 Licenses..............................................................................22
SECTION 3.23 No Illegal or Improper Transactions...................................................23
SECTION 3.24 Subsidiaries..........................................................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF NMHC AND THE PURCHASER..............................................23
SECTION 4.01 NMHC Organization, Etc................................................................23
SECTION 4.02 Purchaser Organization, Etc...........................................................23
SECTION 4.03 Authorization.........................................................................24
SECTION 4.04 No Violation..........................................................................24
SECTION 4.05 Approvals.............................................................................24
ARTICLE V COVENANTS..............................................................................................25
SECTION 5.01 General...............................................................................25
SECTION 5.02 Access to Premises and Information....................................................25
SECTION 5.03 Conduct of Business in Ordinary Course................................................25
SECTION 5.04 Updating of Schedules.................................................................26
SECTION 5.05 Further Assurances....................................................................26
SECTION 5.06 No Shopping...........................................................................26
SECTION 5.07 Non-Competition; Non-Solicitation.....................................................27
SECTION 5.08 Consents..............................................................................28
SECTION 5.09 Public Announcements..................................................................28
SECTION 5.10 Confidentiality Obligations of the Parties............................................28
SECTION 5.11 Discharge of Liabilities..............................................................29
SECTION 5.12 Employee Matters......................................................................29
SECTION 5.13 Maintenance of Books and Records; Right of Access.....................................30
SECTION 5.14 Bulk Sales Law........................................................................30
SECTION 5.15 Risk of Loss..........................................................................30
SECTION 5.16 Name of Seller........................................................................31
SECTION 5.17 Operating Agreements..................................................................31
SECTION 5.18 Collection of Accounts Receivable.....................................................31
SECTION 5.19 Post Closing Balance Sheet............................................................31
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF NMHC AND PURCHASER.............................................32
SECTION 6.01 Accuracy of Representations and Warranties............................................32
SECTION 6.02 Performance...........................................................................32
SECTION 6.03 No Material Adverse Change............................................................32
SECTION 6.04 Certification by the Seller...........................................................32
SECTION 6.05 Absence of Litigation.................................................................32
SECTION 6.06 Legal Prohibition.....................................................................32
SECTION 6.07 Consents, Approvals, Permits, Licenses, etc...........................................33
SECTION 6.08 Employment Agreement..................................................................33
SECTION 6.09 Escrow Agreement......................................................................33
SECTION 6.10 Closing Matters.......................................................................33
SECTION 6.11 Supplemental Disclosure...............................................................33
SECTION 6.12 Opinion...............................................................................33
SECTION 6.13 Due Diligence.........................................................................33
SECTION 6.14 Delivery of Financial Statements......................................................33
SECTION 6.15 Bank Agreement........................................................................34
SECTION 6.16 Lease.................................................................................34
SECTION 6.17 Temporary Services Agreement..........................................................34
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER........................................................34
SECTION 7.01 Accuracy of Representations and Warranties............................................34
SECTION 7.02 Performance...........................................................................34
SECTION 7.03 Certification by the Purchaser........................................................34
SECTION 7.04 Xxxxxxx Option........................................................................35
ARTICLE VIII INDEMNIFICATION.....................................................................................35
SECTION 8.01 Indemnification by NMHC and the Purchaser.............................................35
SECTION 8.02 Indemnification by the Seller and the Owners..........................................36
SECTION 8.03 Notification of Claims................................................................37
SECTION 8.04 Certain Adjustments...................................................................38
SECTION 8.05 Survival of Representations and Warranties............................................39
SECTION 8.06 Other Indemnification Provisions......................................................39
SECTION 8.07 Escrow Agreement......................................................................39
ARTICLE IX TERMINATION...........................................................................................39
SECTION 9.01 Termination of Agreement..............................................................39
SECTION 9.02 Effect of Termination.................................................................40
ARTICLE X GENERAL PROVISIONS.....................................................................................40
SECTION 10.01 Effect of Due Diligence...............................................................40
SECTION 10.02 Expenses..............................................................................40
SECTION 10.03 Notices...............................................................................40
SECTION 10.04 Headings..............................................................................41
SECTION 10.05 Severability..........................................................................41
SECTION 10.06 Entire Agreement......................................................................42
SECTION 10.07 Assignment............................................................................42
SECTION 10.08 No Third-Party Beneficiaries..........................................................42
SECTION 10.09 Amendment.............................................................................42
SECTION 10.10 Arbitration, Governing Law; Submission to Jurisdiction, Waivers.......................42
SECTION 10.11 Recovery of Litigation Expenses.......................................................42
SECTION 10.12 Counterparts..........................................................................43
SECTION 10.13 Construction..........................................................................43
SECTION 10.14 Specific Performance..................................................................43
ARTICLE XI DEPARTMENT REPRESENTATION.............................................................................43
SECTION 11.01 Department Representation.............................................................43
ARTICLE XII XXXXXX XXXXXXX GUARANTEE.............................................................................44
SECTION 12.01 Xxxxxx Xxxxxxx Guarantee..............................................................44
EXHIBITS
Exhibit 1.01 Form of Xxxx of Sale and Assignment
Exhibit 6.08 Form of Employment Agreement
Exhibit 6.09 Form of Escrow Agreement
Exhibit 6.12 Form of Opinion of Counsel to the Seller
Exhibit 6.17 Form of Temporary Services Agreement
Schedule 2.05 Contingent Payments
ASSET PURCHASE AGREEMENT, dated as of March 5, 2001, among National Medical
Health Card Systems, Inc., a New York corporation ("NMHC"), PMP Acquisition
Corp., an Oklahoma corporation (the "PURCHASER"), Provider Medical
Pharmaceutical, LLC, an Oklahoma limited liability company (including its
predecessors, the "SELLER"), Xxxxxxx Brokers and Administrators, LLC, Xxxx
Xxxxxxxxxxx, X.X. Xxxxxxxx, and Xxxx Xxxxxx (each, an "OWNER" and, collectively,
the "OWNERS"), for purposes of Section 11.01 set forth herein, the Oklahoma
Department of Insurance (the "DEPARTMENT"), and for purposes of Sections 5.17
and 12.01 set forth herein, Xxxxxx Xxxxxxx.
W I T N E S S E T H:
WHEREAS, the Purchaser desires to purchase, and the Seller
desires to sell, certain of the assets and certain of the liabilities of the
Business (as defined herein); and
WHEREAS, in order to effectuate the sale and purchase of
certain assets and certain liabilities of the Business as described above and as
more fully described herein, the Seller shall sell and the Purchaser shall
purchase certain of the assets and certain of the liabilities of the Seller
relating to the Business, all upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in reliance upon the covenants and agreements
set forth herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"ACCOUNTS RECEIVABLE" has the meaning ascribed to such term in Section
2.01(b) hereof.
"ACQUISITION TRANSACTION" has the meaning ascribed to such term in Section
5.06(a) hereof.
"ACTION" means any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority or arbitration panel.
"AFFILIATE" means, with respect to any specified Person, any other Person
that, directly or indirectly through one or more intermediaries, Controls, is
Controlled by or is under common Control with such specified Person.
"AGREEMENT" means this Agreement, including the Disclosure Schedule, the
other Schedules and the Exhibits and all amendments hereto.
"ANCILLARY AGREEMENTS" means the Xxxx of Sale, the Employment Agreement,
the Temporary Services Agreement, the Sublease Agreement, the Xxxxxxx Option
Agreement and the Escrow Agreement.
"ASSETS" has the meaning ascribed to such term in Section 2.01 hereof.
"ASSUMED CONTRACTS" has the meaning ascribed to such term in Section 2.01
hereof.
"BANK" means the Bank of Oklahoma, N.A.
"BANK AGREEMENT" means the Loan Agreement by and between the Bank and the
Seller providing for both a term loan and a revolving line of credit.
"BANK LOAN AMOUNT" has the meaning ascribed to such term in Section 2.05(a)
hereof.
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act or transaction that forms or could form the basis for any
specified consequence.
"XXXX OF SALE" means the xxxx of sale and assignment, substantially in the
form attached hereto as Exhibit 1.01, to be delivered by the Seller to NMHC and
the Purchaser at the Closing.
"BUSINESS" means the Seller's pharmacy benefit management business of (i)
contracting with pharmacies or pharmacists to provide pharmaceutical products
and/or services to sponsors of pharmacy benefit plans or individuals covered by
pharmacy benefit plans; (ii) managing a network of pharmacies or pharmacists,
(iii) processing the claims for such services, (iv) providing appropriate
consulting services to managers of pharmacy benefit plans and their clients, (v)
providing prescription mail order service, and (vi) contracting directly with
pharmaceutical manufacturers or third party rebate aggregators for the provision
of rebates. The Business of the Company does not include engaging in the normal
activities of a third party administrator with respect to the administration of
health claims or benefits.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other day
on which banks are required or authorized by Law to be closed in the City of New
York.
"BUSINESS EMPLOYEES" has the meaning ascribed to such term in Section
3.14(a) hereof.
"CLOSING" means the completion of the sale and purchase of the Assets
pursuant to this Agreement.
"CLOSING CASH AMOUNT" has the meaning ascribed to such term in Section
2.05(a) hereof.
"CLOSING DATE" has the meaning ascribed to such term in Section 2.06
hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the Business
that is not generally known to the public, including, without limitation,
information, knowledge or data of an industrial, intellectual or technical
nature that relates to a party's business plans, business opportunities,
projections and costs, pricing or marketing data, finances, products, designs,
processes, know-how and personnel.
"CONTRACT" means any oral or written agreement, lease, License or
sublicense, evidence of indebtedness, mortgage, indenture, security agreement,
deed of trust or other contract, commitment, arrangement or obligation.
"CONTROL" means, as to any Person, the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by Contract or otherwise. The term "Controlled"
shall have a correlative meaning.
"COPYRIGHTS" means copyrightable works, copyrights (whether or not
registered), and registrations and applications for registration therefor, and
all rights provided by international treaties or conventions with respect to the
foregoing.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule delivered by the Seller
to the Purchaser on the date hereof and initialed by the parties hereto.
"EMPLOYMENT AGREEMENT" means the Employment Agreement, substantially in the
form attached hereto as Exhibit 6.08, to be entered into pursuant to Section
6.08.
"EMPLOYEE PLAN" has the meaning ascribed to such term in Section 3.14(a)
hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" shall be Bank of Oklahoma, N.A.
"ESCROW AGREEMENT" means the Escrow Agreement, substantially in the form
attached hereto as Exhibit 6.09, to be entered into pursuant to Section 6.09.
"ESCROWED CASH" means $722,000.
"ESCROW RELEASE DATE" has the meaning ascribed to such term in Section
2.05(a) hereof.
"EXCLUDED ASSETS" has the meaning ascribed to such term in Section 2.02
hereof.
"EXCLUDED LIABILITIES" has the meaning ascribed to such term in Section
2.04 hereof.
"GAAP" means United States generally accepted accounting principles.
"GOVERNMENTAL AUTHORITY" means any United States federal, state or local or
any foreign government, governmental, regulatory or administrative authority,
agency or commission or court, tribunal or judicial or arbitral body or any
private arbitrator.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"INDEMNIFIED PARTY" has the meaning ascribed to such term in Section
8.03(a) hereof.
"INDEMNIFYING PARTY" has the meaning ascribed to such term in Section
8.03(a) hereof.
"INDEPENDENT ACCOUNTING FIRM" means (a) an independent certified public
accounting firm in the United States of national recognition mutually acceptable
to the Seller and the Purchaser or (b) if the Seller and Purchaser are unable to
agree upon such a firm, then each party's independent accountants shall select a
firm, unaffiliated with either the Seller or the Purchaser, in which event
"Independent Accounting Firm" shall mean such firm.
"INTELLECTUAL PROPERTY" means United States, international, and foreign (a)
patents, patent applications and statutory invention registrations, including
reissuances, divisions, continuations, continuations in part, extensions and
reexaminations thereof, all inventions, all rights provided by international
treaties or conventions with respect to the foregoing, and all improvements
thereto, (b) Trademarks, (c) Copyrights, (d) confidential and proprietary
information, including trade secrets, technology, know-how, formulae, databases
and customer and supplier lists, (e) computer software (including source codes,
data and related documentation), and (f) all other proprietary rights, in each
case, whether owned or licensed.
"JBA" means Xxxxxxx Benefit Administrators, LLC.
"LAW" means any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code, order or other requirement or rule of law.
"LEASED REAL PROPERTY" has the meaning ascribed to such term in Section
3.11(b) hereof.
"LICENSES" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, filings, qualifications, privileges,
franchises and similar consents granted or issued by any Governmental Authority.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation, security
interest, encumbrance, claim, lien or charge of any kind, or any conditional
sales Contract, title retention Contract or other Contract to create any of the
foregoing (it being understood that a Contract which permits a purchaser to
return items purchased thereunder shall not be deemed to constitute a Lien
solely by virtue thereof).
"NMHC LOAN" means the $1,500,000 loan made by NMHC to Seller on January 16,
2001, which is evidenced by the NMHC Note.
"NMHC NOTE" means the promissory note in the principal amount of $1,500,000
made by Seller in favor of NMHC, dated January 16, 2001.
"PERMITTED LIENS" means the following Liens: (a) Liens for Taxes,
assessments or other governmental charges or levies that are not yet due or
payable, (b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and repairmen and other Liens imposed by Law for amounts
not yet due, (c) Liens incurred or deposits made in the ordinary course of
business of the Business consistent with past practice in connection with
worker's compensation, unemployment insurance or other types of social security,
and (d) Liens not created by the Seller which affect the underlying fee interest
of any Leased Real Property (as defined herein).
"PERSON" means any natural person, general or limited partnership, trust,
corporation, limited liability company, firm, association, Governmental
Authority or other legal entity.
"PMP BALANCE SHEET" has the meaning ascribed to such term in Section
3.06(a) hereof.
"PMT" means Provider Medical Trust.
"PURCHASER INDEMNIFIED PARTIES" has the meaning ascribed to such term in
Section 8.02(a)hereof.
"PURCHASER MATERIAL ADVERSE EFFECT" means any event, change, occurrence or
development that has or could have a material adverse effect on (a) the
business, assets, results of operations, prospects or condition (financial or
otherwise) of the Purchaser and its Subsidiaries and parent taken as a whole or
(b) NMHC and the Purchaser's ability to perform their obligations under this
Agreement.
"PURCHASE PRICE " has the meaning ascribed to such term in Article Section
2.05(a) hereof.
"REAL PROPERTY LEASES" has the meaning ascribed to such term in Section
3.11(b) hereof.
"SELLER FINANCIAL STATEMENTS" has the meaning ascribed to such term in
Section 3.06(a) hereof.
"SELLER INDEMNIFIED PARTIES" has the meaning ascribed to such term in
Section 8.01(a) hereof.
"SELLER INTELLECTUAL PROPERTY" has the meaning ascribed to such term in
Section 3.21 hereof.
"SELLER MATERIAL ADVERSE EFFECT" means any event, change, occurrence or
development that has had or could have a material adverse effect on (a) the
business taken as a whole, assets, results of operations, prospects or condition
(financial or otherwise) of the Business or (b) the ability of the Seller or the
Owners to perform their obligations under this Agreement.
"SELLER'S CURRENT ASSETS" means, as of a specified date, current assets on
the books of Seller determined in accordance with GAAP.
"SELLER'S CURRENT LIABILITIES" means, as of a specified date, current
liabilities on the books of Seller determined in accordance with GAAP.
"SUBSIDIARY" of any Person means any corporation, partnership, joint
venture, limited liability company, trust, estate or other Person of which (or
in which) more than 50% of (a) the issued and outstanding capital stock or other
equity interests having ordinary voting power to elect a majority of the board
of directors of such corporation or Persons performing similar functions of any
other Person (irrespective of whether at the time capital stock or other equity
interests of any other class or classes of such corporation or other Person
shall or might have voting power upon the occurrence of any contingency), (b)
the interest in the capital or profits of such partnership, joint venture or
limited liability company or other Person, or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries.
"TAX" or "TAXES" means all income, excise, gross receipts, ad valorem,
sales, use, employment, franchise, profits, gains, property, transfer, payroll,
withholding, severance, occupation, social security, unemployment compensation,
alternative minimum, value added, intangibles or other taxes, fees, stamp taxes,
duties, charges, levies or assessments of any kind whatsoever (whether payable
directly or by withholding), together with any interest and any penalties,
fines, additions to tax or additional amounts imposed by any Governmental
Authority with respect thereto.
"TAX RETURN" or "TAX RETURNS" has the meaning ascribed to such term in
Section 3.08(a) hereof.
"THIRD PARTY CLAIM" has the meaning ascribed to such term in Section
8.03(b) hereof.
"TRADEMARKS" means trademarks, service marks, trade dress, logos,
proprietary icons, trade names, corporate names, internet domain names and other
source identifiers (whether or not registered) including all common law rights
therein, and registrations and applications for registration therefor, all
rights provided by international treaties or conventions with respect to the
foregoing, and all reissuances, extensions and renewals of any of the foregoing
and all goodwill associated therewith.
SECTION 1.02 Terms Generally. Words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other gender as the context requires, the terms "hereof", "herein"
and "herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement and not to any particular provision of this
Agreement, and Article, Section, paragraph, Exhibit and Schedule references are
to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement
unless otherwise specified, and the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation", unless
otherwise specified.
ARTICLE II
PURCHASE AND SALE OF ASSETS
SECTION 2.01 Purchase and Sale of Assets. At the Closing, on the terms and
subject to the conditions contained herein, the Seller shall sell, transfer,
convey, assign and deliver to the Purchaser, and the Purchaser shall purchase
and accept from the Seller, all of the Seller's right, title and interest in and
to all assets and properties that are owned, leased or licensed by the Seller
and used in connection with the Business, free and clear of any Liens, other
than the Excluded Assets (collectively, the "ASSETS"), including, without
limitation:
(a) all of the Seller's cash on hand;
(b) all of the Seller's trade and other accounts receivable arising from
the conduct of the Business ("ACCOUNTS RECEIVABLE");
(c) all rights of the Seller in and to the Seller Intellectual Property;
(d) the goodwill and going concern value of the Business, including without
limitation the right to use the names "Provider Medical Pharmaceutical," "PMP"
and "Interchange PMP;"
(e) all prepaid expenses arising from the conduct of the Business;
(f) any other asset that would be classified as a current asset under GAAP
arising from the conduct of the Business;
(g) all property, plant and equipment, supplies, furniture, automobiles,
fixtures, computers, computer files, books and records and other items of
personal property used in connection with the Business;
(h) all deposits and other noncurrent assets as reflected on the PMP
Balance Sheet and all deposits made and noncurrent assets acquired since the
date of the PMP Balance Sheet as reflected on the PMP closing date balance
sheet;
(i) all rights of and benefits accruing to the Seller under Contracts
related to the Business, including rights to assert claims and take other
rightful actions in respect of breaches, defaults and other violations of such
Contracts (the "ASSUMED CONTRACTS"), including the Contracts listed on Schedule
3.15;
(j) all Licenses of the Seller relating to the Business, including the
Licenses listed on Schedule 2.01(j);
(k) all agreements with vendors listed on Schedule 2.01(k); and
(l) all operating data and records of the Seller relating to the Business,
including, without limitation, customer lists and records, vendor lists,
equipment logs, operating guides and manuals, telephone numbers and connections,
purchasing materials and records, correspondence and other similar documents and
records.
Notwithstanding the foregoing, to the extent that assignment hereunder by the
Seller to the Purchaser of any Assumed Contract or License is not permitted or
is not permitted without the consent of any third party, this Agreement will not
be deemed to be an assignment of the same or to constitute an undertaking to
assign the same if such consent is not given or if such an assignment or
undertaking to assign otherwise would constitute a breach of or cause a loss of
benefits thereunder. The Seller will use reasonable commercial efforts to obtain
any and all such third party consents. If any such third party consent is not
obtained, the Seller will cooperate with the Purchaser in any reasonable
arrangement designed to provide to the Purchaser after the Closing the benefits
under the applicable Assumed Contract or License, including enforcement of
rights thereunder at the cost and for the account of the Purchaser, and the
Purchaser shall pay or satisfy any liabilities with respect to such Assumed
Contract or License as and when they are due, to the extent the Purchaser would
have been responsible therefor hereunder if such consent or approval had been
obtained.
SECTION 2.02 Excluded Assets. Anything to the contrary in Section 2.01
notwithstanding, the Assets shall not include, and the Purchaser shall not
purchase, those items described on Schedule 2.02 hereto (collectively, the
"EXCLUDED ASSETS").
SECTION 2.03 Assumption of Liabilities. On the terms and subject to the
conditions contained herein, the Purchaser shall assume and agree to pay,
perform and discharge in accordance with their terms only the following
obligations, debts and liabilities relating to the Business (collectively, the
"Assumed Liabilities"):
(a) except as provided in Section 2.04, the accrued current liabilities
relating to the Business of the Company as of Closing, which totaled $4,317,990
at December 31, 2000, as increased or decreased by transactions conducted in the
ordinary course of conduct of the Business between January 1, 2001 and Closing;
and
(b) all of the Seller's obligations (other than obligations arising as a
result of breaches by the Seller) arising or continuing after the Closing under
the Assumed Contracts and Licenses.
SECTION 2.04 Excluded Liabilities. It is understood and agreed that the
Purchaser is not hereby assuming any liabilities of the Seller other than the
Assumed Liabilities (such liabilities other than the Assumed Liabilities being
referred to herein as the "EXCLUDED LIABILITIES"). In addition, anything
contained in this Agreement to the contrary notwithstanding (other than as set
forth below), the Assumed Liabilities do not include and, accordingly, the
Excluded Liabilities include, without limitation, the following liabilities:
(a) any obligation of the Seller for Taxes, including without limitation
any Taxes arising from the operation of the Business or the ownership of the
Assets as of the Closing or arising out of the consummation of the transactions
contemplated hereby (for purposes of this section 2.04(a), all real property
Taxes, personal Property Taxes and similar ad valorem obligations levied with
respect to the Assets for a tax period that includes (but does not end on) the
Closing Date shall be apportioned between the Seller and Purchaser based upon
the number of days of such period included in the period before (and including)
the Closing Date and the number of days of such tax period after the Closing
Date); in accordance with Oklahoma law, any sales taxes due as a result of the
transactions contemplated hereby shall be collected by Seller from Purchaser in
addition to the Purchase Price and shall be remitted to the appropriate taxing
authorities.
(b) all borrowings on life insurance;
(c) all long-term debt of the Seller;
(d) any liabilities or obligations of any Owner;
(e) the liabilities and obligations of the Seller arising under this
Agreement or any of the Ancillary Agreements;
(f) any liabilities of the Seller under any Contract pursuant to which the
Seller or any predecessor of the Seller acquired the Business or any part
thereof from a third party;
(g) any liability or obligation, including, without limitation, any
liability for the Seller's attorney's fees or expenses, resulting from any
litigation disclosed pursuant to Section 3.09;
(h) any liability or obligations arising under or in connection with any
pension, insurance, bonus, profit-sharing or other Employee Plan (as defined in
Section 3.14(a)) or any obligation relating to salaries, bonuses, vacation or
severance pay, or any obligation under any Law, including, without limitation,
ERISA and 4980B of the Code;
(i) any liability, Contract or other obligation of the Seller, known or
unknown, fixed or contingent, the existence of which constitutes or will
constitute a breach of any representation or warranty of the Seller contained in
or made pursuant to this Agreement or which the Purchaser is not assuming
hereunder;
(j) any liabilities or obligations of the Seller under any Contracts
relating to the Excluded Assets;
(k) any violation of any Law;
(l) other than liabilities disclosed pursuant to Section 2.03(a), any
liability or obligation arising out of the conduct of the Business prior to the
Closing Date, including, without limitation, liabilities and obligations arising
out of transactions entered into prior to the Closing Date (including, without
limitation, liabilities or obligations arising out of any breach by the Seller
of any provision of any Assumed Contract, including, but not limited to,
liabilities or obligations arising out of the Seller's failure to perform as
required under any Contract in accordance with its terms prior to the Closing),
any action or inaction prior to the Closing Date or any state of facts existing
prior to the Closing Date (regardless of when asserted) not expressly assumed by
the Purchaser pursuant to this Agreement;
(m) all legal fees and expenses incurred by Seller or for which Seller is
otherwise liable; and
(n) all accounting fees and expenses incurred by Seller or for which Seller
is otherwise liable.
SECTION 2.05 Purchase Price; Allocation of Purchase Price.
(a) The aggregate purchase price to be paid by the Purchaser for the Assets
(the "PURCHASE PRICE") shall consist of (i) $4,000,000 in cash (the "CLOSING
CASH AMOUNT"), (ii) an additional amount of cash (the "BANK LOAN AMOUNT") equal
to the outstanding balance under the Bank Agreement (as indicated in a Bank
payoff letter) provided that in no event shall such amount exceed $1,300,000 in
the aggregate, and (iii) cancellation of the NMHC Note, including all accrued
interest thereon. At the Closing, NMHC shall deliver (1) to the Seller a
certified check or wire transfer in the amount of $3,278,000, (2) to the Escrow
Agent, a certified check or wire transfer in an amount equal to the Escrowed
Cash and (3) to the Bank on behalf of the Seller, a certified check or wire
transfer equal to the Bank Loan Amount in satisfaction of all amounts due under
the Bank Agreement.
(b) The Escrowed Cash shall be held in the escrow account pursuant to the
Escrow Agreement until the Escrow Release Date (as defined below). The Escrowed
Cash shall be released to the Seller at such time as determined in accordance
with the terms of the Escrow Agreement (the "ESCROW RELEASE DATE").
(c) Contingent Payments. In addition to the Purchase Price and subject to
the provisions contained in Schedule 2.05(c) hereto, the Purchaser shall, to the
extent applicable, pay to the Seller as additional consideration for the sale of
the Assets, cash as calculated in accordance with Schedule 2.05(c ) hereto (the
"CONTINGENT PAYMENT").
(d) The aggregate purchase price shall be allocated to the Assets as set
forth on Schedule 2.05(d). The Seller and the Purchaser shall report the
federal, state, local and foreign Tax consequences of the transaction
contemplated by this Agreement in a manner consistent with such allocation. The
Seller and the Purchaser further covenant and agree not to take a position with
respect to Taxes that is inconsistent with such allocation on any Tax Return or
otherwise, except as may be required by Law; provided, however, that if any Tax
authority makes or proposes an allocation with respect to the Purchase Price
which differs materially from such allocation, each of NMHC, the Purchaser and
the Seller shall have the right, at its election and expense, to contest such
Tax authority's determination. Each party shall provide the other party with all
notices and information reports filed with Tax authorities and agencies with
respect to the allocation of the Purchase Price.
SECTION 2.06 Closing. Subject to the terms and conditions of this
Agreement, the Closing shall take place at the offices of Fulbright & Xxxxxxxx
L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx commencing at 9:00 a.m. on the
second Business Day following the satisfaction or waiver of all conditions to
the obligations of the parties to consummate the transactions contemplated
hereby (other than conditions with respect to the certificates, opinions and
agreements to be delivered at the Closing); provided, however, that date of the
Closing shall be no later than March 15, 2001 (the date on which the Closing
takes place being the "CLOSING Date"), unless extended by mutual consent of NMHC
or the Purchaser and the Seller. The Closing shall be deemed effective as of the
opening of business on the Closing Date. Each party hereto agrees to use its or
his reasonable efforts to satisfy promptly the conditions to the obligations of
the respective parties hereto in order to expedite the Closing.
SECTION 2.07 Closing Deliveries by the Seller. At the Closing, the Seller
shall deliver or cause to be delivered to NMHC and the Purchaser:
(a) executed copies of the Ancillary Agreements;
(b) all certificates and other documents required to be delivered on the
Closing Date pursuant to Article VI hereof; and
(c) the wire transfer of all the Seller's cash on hand to an account
designated by the Purchaser.
SECTION 2.08 Closing Deliveries by the Purchaser. At the Closing, the
Purchaser shall deliver:
(a) to the Seller executed copies of the Ancillary Agreements to which it
is a party;
(b) to the Seller a certified check or wire transfer in an amount equal to
the Closing Cash Amount;
(c) to the Escrow Agent a certified check or wire transfer equal to the
amount of the Escrowed Cash;
(d) to the Seller the NMHC Note marked "cancelled";
(e) to the Bank, on behalf of the Seller, the Bank Loan Amount; and
(f) all certificates and other documents required to be delivered on the
Closing Date pursuant to Article VII hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE OWNERS
The Seller and the Owners jointly and severally represent and warrant to
NMHC and the Purchaser that the statements contained in this Article III are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article
III), except as set forth in the Disclosure Schedule. Nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, however, unless the Disclosure Schedule identifies the
exception with reasonable particularity and describes the relevant facts in
reasonable detail. The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Article
III.
SECTION 3.01 Organization, Etc. The Seller is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Oklahoma. The Seller is duly qualified or licensed to do business, and
is in good standing, as a foreign company in each jurisdiction where the
character of the Assets or the nature of its activities in connection with the
Business makes such qualification or licensing necessary except where the
failure to so qualify or be licensed would not have a Seller Material Adverse
Effect, all of which jurisdictions are set forth on the Disclosure Schedule. The
Seller has full power and authority to conduct the Business as it is now being
conducted and to own, operate or lease the Assets. The Seller has heretofore
delivered to NMHC and the Purchaser true and correct copies of its certificate
of formation and operating agreement as in effect on the date hereof. The Seller
has all requisite power and authority to enter into this Agreement and each of
the Ancillary Agreements to which it is a party, to carry out its obligations
under this Agreement and each of the Ancillary Agreements to which it is a party
and to consummate the transactions contemplated hereby and thereby.
SECTION 3.02 Capitalization. The authorized, issued and outstanding
membership interests of the Seller are as set forth on the Disclosure Schedule.
All of the issued and outstanding membership interests of the Seller are owned,
of record and beneficially, by the Owners. The designations, powers,
preferences, rights, qualifications, limitations and restrictions in respect of
membership interests of the Seller are as set forth in the Seller's operating
agreement, and all such designations, powers, preferences, rights,
qualifications, limitations and restrictions are valid, binding and enforceable
in accordance with all applicable Laws. None of such outstanding interests has
been issued in violation of any preemptive rights, rights of first refusal or
similar rights. There are no outstanding options, warrants, convertible
securities, calls, rights, commitments, preemptive rights or agreements or
instruments or understandings of any character to which the Seller is a party or
by which the Seller is bound, obligating the Seller to issue, deliver or sell,
or cause to be issued, delivered or sold, contingently or otherwise, additional
membership interests or any securities or obligations convertible into or
exchangeable for such membership interests or to grant, extend or enter into any
such option, warrant, convertible security, call, right, commitment, preemptive
right or agreement. There are no voting trust agreements or other Contracts or
understandings restricting or otherwise relating to voting, dividend or other
rights with respect to the membership interests of the Seller.
SECTION 3.03 Authorization. The execution and delivery by the Seller of
this Agreement and the Ancillary Agreements to which it is a party, the
performance by the Seller of its obligations hereunder and thereunder and the
consummation by the Seller of the transactions contemplated hereby and thereby
have been duly authorized by all requisite action on the part of the Seller and
its members. This Agreement has been, and each Ancillary Agreement to which the
Seller or any Owner is a party will be, duly executed and delivered by the
Seller and each of the Owners, as applicable, and (assuming due authorization,
execution and delivery by NMHC and the Purchaser) this Agreement is, and each
Ancillary Agreement, when duly executed and delivered will be, a legal, valid
and binding obligation of the Seller and each of the Owners, as applicable,
enforceable against it or him in accordance with its terms (except as the
enforceability thereof may be limited by any applicable bankruptcy, insolvency
or other Laws affecting creditors' rights generally or by general principles of
equity, regardless of whether such enforceability is considered in equity or at
law).
SECTION 3.04 No Violation. Assuming all consents, approvals, authorizations
and other actions described in Section 3.05 have been obtained or taken, the
execution, delivery and performance of this Agreement and the Ancillary
Agreements do not and will not (a) violate or conflict with the certificate of
formation or operating agreement of the Seller, (b) conflict with or violate any
Law or Governmental Order applicable to the Business, the Seller or any Owner,
or (c) result in any breach of, or constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under, or
give to any Person any rights of termination, amendment, acceleration or
cancellation of, or give to any Person any additional rights or entitlement to
increased, additional, accelerated or guaranteed payments under, or result in
the loss of any benefit under or result in the creation of any Lien on any of
the Assets pursuant to, any Contract, License or other instrument to which the
Seller is a party or by which any of the Assets are bound or affected, except
for Liens created by or through NMHC and the Purchaser or any of their
Affiliates.
SECTION 3.05 Approvals. The execution and delivery of this Agreement and
the Ancillary Agreements by the Seller and each of the Owners do not, and the
performance of this Agreement and the Ancillary Agreements by the Seller and
each of the Owners will not, require any consent, approval, authorization or
other action by, or filing with or notification to, any Governmental Authority
or other Person under any Law or Contract other than such filings or
registrations with, or authorizations, consents or approvals of Governmental
Authorities the failure of which to make or obtain would not have a Seller
Material Adverse Effect.
SECTION 3.06 Financial Statements and Other Information.
(a) The Seller has delivered to NMHC and the Purchaser true, correct and
complete copies of the Seller's audited balance sheet for the Business as of
December 31, 2000 and the related statements of operations and cash flows for
the fiscal year ended December 31, 2000 and the unaudited balance sheets as of
June 30, 1999 and 2000 and related statements of operations and cash flows for
the six months ended June 30, 1999 and 2000 together with the notes to such
financial statements (collectively, the "SELLER FINANCIAL STATEMENTS"). The
balance sheet of the Seller at December 31, 2000 is referred to as the "PMP
BALANCE SHEET".
(b) The Seller Financial Statements are in accordance with the books and
records of the Seller and have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby, and the balance
sheets included therein present fairly as of their respective dates the
financial condition of the Seller. All liabilities and obligations, whether
absolute, accrued, contingent or otherwise, whether direct or indirect, and
whether due or to become due, which existed at the date of such Seller Financial
Statements have been disclosed in the balance sheets included in the Seller
Financial Statements or in notes to the Seller Financial Statements to the
extent such liabilities were required, under GAAP, to be so disclosed. The PMP
Balance Sheet specifically identifies the assets and liabilities which, if the
Closing had been held on December 31, 2000, would have been transferred to or
assumed by NMHC or the Purchaser in accordance herewith. The statements of
operations and cash flows included in the Seller Financial Statements present
fairly the results of operations and cash flows of the Seller for the periods
indicated, and the notes included in the Seller Financial Statements present
fairly the information purported to be shown thereby. The statements of
operations included in the Seller Financial Statements do not contain any
material items of special or non-recurring income or other income not earned, or
omit any expenses incurred, in the ordinary course of business except as
expressly specified therein. The statements of operations and cash flows
included in the Seller Financial Statements do not reflect any operations or
business not intended to constitute part of the Business following consummation
of the transactions contemplated hereby and reflect all costs that have
historically been incurred by the Business. The Business has not been conducted
through any Person other than Seller.
(c) [Reserved]
(d) The accounts receivable of the Seller arising from the its business as
set forth on the latest balance sheet included in the Seller's Financial
Statements or arising since the date thereof are valid and genuine; have arisen
solely out of bona fide sales and deliveries of goods, performance of services
and other business transactions in the ordinary course of business consistent
with past practice; are not subject to valid defenses, set-offs or
counterclaims; and, except as set forth in the Disclosure Schedule, are
collectible at the full recorded amount thereof (less, in the case of accounts
receivable appearing on the balance sheet, the recorded allowance for collection
losses on the balance sheet) over the period of usual trade terms (by use of the
Seller's normal collection methods without resort to litigation or reference to
a collection agency). The allowance for collection losses on the latest balance
sheet included in the Seller's Financial Statements has been determined in
accordance with GAAP consistent with past practice.
(e) Except as set forth in the notes to the Seller Financial Statements or
in the Disclosure Schedule, the liabilities on the latest balance sheet included
in Seller's Financial Statements consist solely of accrued obligations and
liabilities incurred by the Business in the ordinary course of business to
Persons which are not Affiliates of the Seller. There are no liabilities of the
Business of any kind whatsoever, whether or not accrued and whether or not
contingent or absolute, determined or determinable or otherwise, including,
without limitation, documentary or standby letters of credit, bid or performance
bonds, or customer or third party guarantees, and no existing condition,
situation or set of circumstances that could reasonably result in such a
liability, other than (i) liabilities disclosed in the Seller's Financial
Statements, and (ii) liabilities which have arisen after the date of the latest
balance sheet included in the Seller's Financial Statements in the ordinary
course of business and consistent with past practice (none of which is a
liability for breach of contract, breach of warranty (other than charge backs
incurred in the ordinary course of business and consistent with past practice),
tort, infringement claim or lawsuit) which, individually or in the aggregate,
could not reasonably be expected to have a Seller Material Adverse Effect.
(f) The books, records and accounts of the Seller maintained with respect
to the Business accurately and fairly reflect, in reasonable detail, the
transactions and the assets and liabilities of the Seller with respect to the
Business. The Seller has not engaged in any transaction with respect to its
business, maintained any bank account for its business or used any of the funds
of the Seller in the conduct of the Business except for transactions, bank
accounts and funds which have been and are reflected in the normally maintained
books and records of the Business.
(g) The Disclosure Schedule lists the name and address of every bank and
other financial institution in which the Seller or its Affiliates maintain an
account (whether checking, savings or otherwise), lock box or safe deposit box
for the Business, and the account numbers and names of persons having signing
authority or other access thereto.
(h) The client listing and margin analysis in the form attached as Schedule
3.06(h) prepared by the Seller and delivered to NMHC and the Purchaser relating
to the Business, together with any notes thereto, were prepared reasonably and
in good faith on the basis of the assumptions stated therein, which assumptions
(a) were believed by the Seller to be reasonable in light of conditions existing
at the time of delivery of such client listing and margin analysis and, in all
material respects, on the date hereof and the Closing Date, and (b) represented,
at the time of delivery and on the date hereof and the Closing Date, the
Seller's best estimate of the future financial performance (after giving effect
to the transactions contemplated hereby) of the Business on a consolidated
basis, it being understood that such assumptions may vary from actual future
results or events and are subject to changing future conditions some of which
are beyond the Seller's control.
SECTION 3.07 Absence of Certain Changes or Events.
(a) Since December 31, 2000, except as contemplated by this Agreement, the
Business has been conducted in all material respects in the ordinary course
consistent with past practice. Since December 31, 2000, there has been (i) no
material adverse change in the Assets or liabilities, or in the business,
condition (financial or otherwise), results of operations or prospects, of the
Business, whether as a result of any legislative or regulatory change,
revocation of any License or right to do business, fire, explosion, accident,
casualty, labor trouble, flood, drought, riot, storm, condemnation or act of God
or otherwise, and (ii) no adverse change in the Assets or Liabilities or in the
business or condition (financial or otherwise) of the Business except in the
ordinary course of business; and, to the knowledge of the Seller, no fact or
condition exists or is contemplated or threatened which could reasonably be
anticipated to cause such a change in the future.
(b) Without limiting the generality of the foregoing, since December 31,
2000, except as contemplated by this Agreement, the Seller has not:
(i) except in the ordinary course of business of the Business consistent
with past practice granted any Lien (other than a Permitted Lien) on any Asset;
(ii) granted or agreed to grant any bonus to any Business Employee or made
any increase in the rate of salary or compensation or benefits of any Business
Employee except as set forth on Schedule 3.07(b);
(iii) except for sales of inventory in the ordinary course of business of
the Business and consistent with past practice of the Business, sold, assigned,
transferred, leased or otherwise disposed of any of the Assets having a value
individually or in the aggregate exceeding $10,000;
(iv) except as required by GAAP, made any material change in any method of
accounting or accounting practice relating to the Business;
(v) failed to pay or discharge when due any liability or obligation;
(vi) made any material change in the manner of its business or operations;
(vii) paid or declared any dividend or other distribution with respect to
any membership interests;
(viii) issued any membership interests or other security (including,
without limitation, securities convertible into or rights to acquire membership
interests of the Seller);
(ix) except for the NMHC Loan, borrowed any amount or incurred or become
subject to any liability (absolute, accrued or contingent), except current
liabilities incurred, liabilities under Contracts entered into, borrowings under
the banking facilities of the Business disclosed on the Disclosure Schedule and
liabilities in respect of letters of credit issued under such banking
facilities, all of which were in the ordinary course of business;
(x) suffered any loss of any Asset or waived any right of substantial value
relating to the Business whether or not in the ordinary course of business;
(xi) suffered any adverse change in its relations with, or any loss or
threatened loss of, any of the suppliers or customers of the Business disclosed
pursuant to Section 3.20;
(xii) delayed or postponed the payment of accounts payable and other
liabilities outside the ordinary course of business;
(xiii) entered into any transaction affecting the Assets of the Business
except in the ordinary course of business; and
(xiv) except as contemplated by this Agreement, entered into any commitment
or Contract to do any of the foregoing.
SECTION 3.08 Taxes. Except as set forth in the Disclosure Schedule:
(a) all Tax returns, forms, statements and reports (herein referred to
collectively as "TAX RETURNS" or singularly as a "TAX RETURN") required to be
filed by or on behalf of the Seller have been filed in a timely manner with the
appropriate Governmental Authorities in all jurisdictions in which such Tax
Returns are required to be filed (taking into account all extensions) and all
Taxes shown to be due and payable on such Tax Returns have been paid in full;
(b) all such Tax Returns and the information and data contained therein
have been properly and accurately compiled and completed, fairly present the
information purported to be shown therein and reflect all liabilities for Taxes
for the periods covered by such Tax Returns;
(c) none of such Tax Returns relating to the Business or the Assets are now
under audit or examination by any Governmental Authority, there are no
agreements, waivers or other arrangements providing for an extension of time
with respect to the assessment or collection of any Tax or deficiency of any
nature with respect to any such Tax Return, nor is any Action now pending or, to
the knowledge of the Seller, threatened against the Seller with respect to any
Tax relating to the Business or the Assets, and, to the knowledge of the Seller,
there is no Basis for such an Action;
(d) there is no Tax Lien imposed by any Governmental Authority outstanding
against any of the Assets or the Business;
(e) (i) neither the Seller nor any of its Affiliates has made with respect
to any Assets of the Business any consent under Section 341 of the Code, (ii)
none of the Assets is "tax exempt use property" within the meaning of Section
168(h) of the Code, and (iii) none of the Assets is a lease made pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954; and
(f) the Seller does not have any liability for Taxes of any other taxpayer
as a transferee, successor, by Contract or otherwise.
SECTION 3.09 Litigation. Except as set forth in the Disclosure Schedule,
there are no Actions pending or, to the knowledge of the Seller, threatened
against the Seller, or to the knowledge of Seller, any Basis in fact therefor
known to the Seller, relating to the Business or to which any of the Assets are
subject. With respect to each Action described in the Disclosure Schedule,
copies of all pleadings, filings, correspondence with opposing parties and their
counsel, opinions of counsel, results of studies, judgments, orders,
attachments, impositions of or recordings of Liens and other documents have been
furnished to NMHC and the Purchaser. Neither the Business nor the Seller is
subject to any outstanding injunction, judgment, order, decree, ruling or charge
which could reasonably be expected to have a Seller Material Adverse Effect.
SECTION 3.10 Compliance with Laws. The Business has been conducted by the
Seller in compliance in all material respects with all Laws and Governmental
Orders applicable to the Seller, the Business or any Asset. No investigation or
review by any Governmental Authority with respect to the Business or the Assets
is pending or, to the knowledge of the Seller, threatened, nor has any
Governmental Authority indicated in writing to the Seller an intention to
conduct the same. Neither the Seller nor, to the knowledge of the Seller, any
director, officer, consultant or employee of the Seller (in their capacity as
such), is in default in any material respect with respect to any Governmental
Order known to or served upon the Seller by any Governmental Authority. There is
no existing Law which would prohibit or materially restrict or otherwise
materially adversely affect the conduct of the Business in any jurisdiction in
which it is now being conducted or in which the Business is currently proposed
to be conducted.
SECTION 3.11 Real Property.
(a) The Seller owns no real property.
(b) Section 3.11(b) of the Disclosure Schedule identifies each real
property leased or subleased by the Seller and used in the Business (the "LEASED
REAL PROPERTY"). All leases and subleases with respect to such Leased Real
Property (the "REAL PROPERTY LEASES") are subject to no Liens except Permitted
Liens.
(c) True and complete copies of the Real Property Leases have been made
available to NMHC and the Purchaser by the Seller. Subject to the terms of the
respective Real Property Leases, the Seller has a valid and subsisting leasehold
or subleasehold estate in each Leased Real Property. The Real Property Leases
are in full force and effect and neither the Seller nor, to the knowledge of the
Seller, any other party to any Real Property Lease is in default thereunder.
SECTION 3.12 [Reserved].
SECTION 3.13 Condition of the Assets and Related Matters(a). (a) The
Assets will, as of the Closing Date, constitute all of the assets (other than
people resources) necessary for the conduct of the Business in all material
respects as currently conducted by the Seller, and none of the Excluded Assets
are material to the Business.
(b) Except for (i) Permitted Liens and (ii) Liens created by or through
NMHC or the Purchaser or any of their Affiliates, the Seller has, and upon
payment therefor, the Purchaser will have good and indefeasible title to the
Assets (except for leased or licensed Assets, as to which the Seller has, and
the Purchaser will have, valid leaseholds or licenses), free and clear of all
Liens.
(c) The Assets are in good operating condition, ordinary wear and tear
excepted, are usable in the ordinary course of business, are adequate and
suitable for the uses to which they are being put and conform in all material
respects to all applicable Laws relating to their construction, use and
operation. None of the Assets are in need of maintenance or repairs other than
ordinary routine maintenance and repairs which are not material, individually or
in the aggregate, in nature or cost. The Assets do not include any equity
interests in any other Person.
SECTION 3.14 Employee and Labor Matters and Plans
(a) Section 3.14(a) of the Disclosure Schedule lists each "employee benefit
plan," as defined in Section 3(3) of ERISA, whether or not subject to ERISA, and
each other employment, severance, consulting, confidentiality, deferred,
incentive, fringe benefit, change in control, retention, stock option or other
equity based or other compensatory or benefit plan, policy, agreement or
arrangement (including, without limitation, any collective bargaining agreement)
that is, with respect to Seller's own employees, (i) maintained, administered,
contributed to or required to be contributed to by the Seller, or any entity
that, together with the Seller, would be treated as a single employer under
Section 414 of the Code (an "ERISA AFFILIATE") or to which the Seller or any
ERISA Affiliate is a party, and (ii) covers any employee or former employee of
the Seller or any of its ERISA Affiliates who provides or has provided services
to or in connection with the Business (the "BUSINESS EMPLOYEES"). Each such
plan, policy, agreement or arrangement is referred to herein as an "EMPLOYEE
Plan".
(b) Seller has delivered or made available to NMHC and the Purchaser true,
correct and complete copies of the following documents with respect to each
Employee Plan (where applicable): (i) all plan documents and agreements, as well
as collective bargaining agreements and amendments of same; and (ii) the most
recent copies of all summary plan descriptions and booklets distributed to plan
participants.
(c) With respect to any funded employee pension plan within the meaning of
Section 3(2) of ERISA, (i) there has been no accumulated funding deficiency
within the meaning of Section 302(a)(2) of ERISA or Section 412 of the Code,
which has resulted or could result in the imposition of a Lien upon any of the
Assets; and (ii) no event has occurred and no circumstance exists under which
the Seller or any of its Affiliates has incurred or may incur, directly or
indirectly, any liability under the provisions of Title IV of ERISA which could
become a liability of NMHC or the Purchaser. Except as set forth in the
Disclosure Schedule, Seller neither is nor ever was obligated to contribute or
is otherwise a party to any employee welfare benefit plan or employee pension
benefit plan which is a multiemployer plan within the meaning of Section 3(37)
of ERISA.
(d) Each Employee Plan has been maintained in compliance with its terms and
applicable Law. With respect to each Employee Plan which is a group health plan
within the meaning of Section 5000(b)(1) of the Code, (i) Seller has complied in
all material respects with the provisions of Section 4980B of the Code; and (ii)
no event has occurred and no circumstance exists under which Seller has incurred
or may incur, direct or indirect liability under the provisions of Section 4980B
of the Code which could become a liability of NMHC or Purchaser or which has
resulted or could result in the imposition of a Lien upon any of the Assets.
(e) Section 3.14(e) of the Disclosure Schedule contains a true and complete
list of all Business Employees who are employed or performing services in the
Business on the date hereof, the title and rate of compensation of each Business
Employee, and the amount of any accrued bonuses, vacation, sick leave, maternity
leave and other leave for such personnel as of the date of this Agreement. All
accrued salary and bonuses, and accrued amounts for vacation, sick leave,
maternity leave and other leave shall be paid by the Seller on or prior to the
Closing Date. The Seller is not in default with respect to any withholding or
other employment Taxes or payments with respect to accrued vacation or severance
pay on behalf of any employee or independent contractor for which it is
obligated on the date hereof, and the Seller will maintain and continue to make
all such necessary payments or adjustments arising through the Closing Date. The
Seller has not instituted any "freeze" of, or delayed or deferred the grant of,
any cost-of-living or other salary adjustment for any Business Employee. The
Seller has not engaged in any unfair labor practice or discriminated on the
basis of race, color, religion, sex, national origin, age, disability or
handicap in its employment conditions or practices. No employee or independent
contractor has filed or, to the Seller's knowledge, threatened any claims, and
there is no reasonable Basis for a claim against the Seller relating to
employment or similar matters (including, without limitation, compensation and
benefits) with the Seller. There are not in existence or, to the Seller's
knowledge, threatened any (y) work stoppages respecting employees or independent
contractors of the Seller or (z) unfair labor practice complaints against the
Seller. The Seller is not a party to any collective bargaining agreement
applicable to any Business Employees. No representation question exists
respecting the Business Employees and no collective bargaining agreement is
currently being negotiated by the Seller covering its employees, nor is any
grievance procedure or arbitration proceeding pending under any collective
bargaining agreement and no claim therefor has been asserted. The Seller has not
received notice from any union or the Business Employees setting forth demands
for representation, elections or for present or future changes in wages, terms
of employment or working conditions. There have been no audits of the equal
employment opportunity practices of the Seller, and, to the knowledge of the
Seller, no Basis for such audit exists. The Seller does not have any severance
agreement or other arrangement with respect to severance with any Business
Employee. True and complete copies of the current written personnel policies,
manuals and/or handbooks of the Seller have previously been delivered to NMHC
and the Purchaser.
SECTION 3.15 Contracts. The Disclosure Schedule lists each currently
effective Contract relating to the Business, the Business Employees and the
Assets. Except as indicated on the Disclosure Schedule, all of the foregoing
Contracts are Assumed Contracts. True and correct copies of all the Assumed
Contracts have been furnished to NMHC and the Purchaser. With respect to each
Assumed Contract (whether or not listed on the Disclosure Schedule): (i) the
agreement is legal, valid, binding, enforceable and in full force and effect;
(ii) the agreement will continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms immediately following the consummation
of the transactions contemplated hereby; (iii) neither the Seller nor, to the
Seller's knowledge, any other party thereto, is in breach or default in any
material respect, and no event has occurred which with notice or lapse of time
would constitute a breach or default in any material respect, or permit
termination, modification or acceleration, under the agreement; and (iv) neither
the Seller nor, to the Seller's knowledge, any other party thereto has
repudiated any provision of the agreement. There are no material liabilities of
the Seller or, to the Seller's knowledge, any other party to any of the Assumed
Contracts arising from any breach of or default in any provision thereof, nor
has there occurred any breach or default thereof by the Seller which would
permit the acceleration of any obligation of any party thereto or the creation
of a Lien upon any of the Assets. There are no negotiations pending or in
progress to revise any material terms of such Assumed Contracts.
SECTION 3.16 Insurance Policies. The Disclosure Schedule (a) contains a
correct and complete description of all insurance agreements and policies
maintained by the Seller, including any and all insurance agreements and
policies covering the Assets and the Business, and the type and amounts of
coverage thereunder, and (b) reflects all such insurance required by Law or that
the Seller deems necessary and adequate, in type and amount, to protect it and
its financial condition against the risks involved in the conduct of the
Business. Such agreements and policies are in full force and effect, the Seller
is not delinquent with respect to any premium payments thereon, and the Seller
has not received any notice of cancellation or termination with respect to any
such policy. Except as set forth in Schedule 3.16, since 1997, the Seller has
not been refused insurance coverage, nor has any insurer otherwise reserved
rights, in connection with the Business, nor has any claim in excess of $1,000
been made in respect of any such agreement or policy. The Seller has not failed
to give any notice or present any claim under any such insurance policy or
agreement in due and timely fashion. There are no pending claims against such
insurance agreements and policies by or on behalf of the Seller. All retroactive
premium adjustments under any worker's compensation policy of the Seller have
been recorded in the Financial Statements in accordance with GAAP and are
reflected in the Financial Statements.
SECTION 3.17 Records. The Seller has records that accurately and validly
reflect its transactions and accounting controls sufficient to insure that such
transactions are (i) in all material respects executed in accordance with its
management's general or specific authorization and (ii) recorded in conformity
with GAAP.
SECTION 3.18 [Reserved.]
SECTION 3.19 Brokers. Other than a commission payable to Xxxx Xxxxxxxxxxx
pursuant to an agreement with the Department (a copy of which has been provided
to Purchaser), no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Seller, the Owners or their respective Affiliates.
SECTION 3.20 Suppliers and Customers
(a) The Disclosure Schedule lists (i) all suppliers of the Business to
which the Seller made payments during the year ended December 31, 2000, or
expects to make payments during the year ending December 31, 2001, in excess of
two percent of the Seller's cost of sales as reflected on the Seller's statement
of operations for such year and (ii) all customers of the Business that paid the
Seller during the year ended December 31, 2000 or that the Seller expects will
pay to the Seller during the year ending December 31, 2001, more than two
percent of the Seller's sales revenues relating to the Business as reflected on
the Seller's statement of operations for such year.
(b) The Seller has no information which might reasonably indicate that any
of the customers or suppliers of the Business listed on the Disclosure Schedule
intend to cease purchasing from, selling to or dealing with the Business, nor
has any information been brought to the Seller's attention which might
reasonably lead the Seller to believe any such customer or supplier intends to
alter in any material respect the amount of such purchases or sales or the
extent of dealings with the Business or would alter in any material respect such
purchases, sales or dealings in the event of the consummation of the
transactions contemplated by this Agreement.
(c) Neither the Seller, nor, to the knowledge of the Seller, any of its
officers, directors or Affiliates, nor any relative or spouse (or relative of
such spouse) of any such officer, director or Affiliate, nor any entity
controlled by one of more of the foregoing:
(i) owns, directly or indirectly, any interest in (excepting less than
2% stock holdings for investment purposes in securities of publicly held
and traded companies), or is an officer, director, employee or consultant
of, any Person which is, or is engaged in business as, a competitor,
lessor, lessee, supplier, distributor, sales agent, customer or client of
the Business;
(ii) owns, directly or indirectly, in whole or in part, any tangible
or intangible property that the Business uses in the conduct of business;
or
(iii) has any cause of action or other claim whatsoever against, or
owes any amount to, the Business, except for claims in the ordinary course
of business such as for accrued vacation pay, accrued benefits under
employee benefit plans, and similar matters and agreements existing on the
date hereof.
SECTION 3.21 Intellectual Property. The Disclosure Schedule contains an
accurate and complete list of all Intellectual Property owned (in whole or in
part), licensed to any extent or used or anticipated to be used in the conduct
of the Business as currently conducted, whether in the name of the Seller, any
employee or otherwise (collectively, the "SELLER INTELLECTUAL PROPERTY"). The
Seller owns or has the valid right to use, in each case as and to the extent
currently used in the Business, all Seller Intellectual Property that is
material to the operation of the Business as currently operated by the Seller.
Each item constituting part of the Seller Intellectual Property in which the
Seller has an ownership or license interest has been, to the extent indicated on
the Disclosure Schedule, duly registered with, filed in or issued by, as the
case may be, the United States Patent and Trademark Office or such other
Governmental Authorities, domestic or foreign, as are indicated on the
Disclosure Schedule and such registrations, filings and issuances remain in full
force and effect. To the knowledge of the Seller, the Seller Intellectual
Property and the use thereof in the operation of the Business as currently
conducted by the Seller, do not infringe any Copyright, Trademark or other
Intellectual Property right of any Person. No claim, written or oral, has been
asserted or, to the knowledge of the Seller, could be asserted, which threatens
or, to the knowledge of the Seller, could threaten, that the use of such Seller
Intellectual Property in a manner consistent with past practice does or may
infringe upon the Intellectual Property rights of any Person. No Person is
engaging in any activity that infringes in any material respect upon the Seller
Intellectual Property or the Seller's rights in or to any Seller Intellectual
Property. Neither the Seller nor any of its Affiliates is in breach of, or
default under, any term of any Contract relating to the Seller Intellectual
Property, and, to the Seller's knowledge, no other party to any such Contract is
in breach thereof or default thereunder. Without limiting any other provisions
hereof, the Seller has not granted any license, franchise or permit to any
Person to use any of the Seller Intellectual Property and no other Person
(including, without limitation, the Seller) has the right to use the same
Trademarks used by the Seller or any similar Trademarks likely to lead to
confusion. Since January 1, 1996, the Seller has not conducted the Business
under any corporate, trade or fictitious name. The Disclosure Schedule sets
forth all Trademark and Copyright registrations and applications relating to the
Business abandoned by the Seller since January 1, 1996.
SECTION 3.22 Licenses. The Seller holds all Licenses necessary for the
operation of the Business as currently operated, all of which Licenses are set
forth on the Disclosure Schedule. All of such Licenses are in full force and
effect in all material respects, the Seller is in compliance in all material
respects with the terms of such Licenses, and no Action is pending nor, to the
knowledge of the Seller, is threatened to revoke or terminate any License or
declare any License invalid in any material respect. The Seller has taken all
necessary action to maintain such Licenses. All such Licenses are assignable by
the Seller to the Purchaser.
SECTION 3.23 No Illegal or Improper Transactions. Neither the Seller, the
Owners, nor any director, officer or employee of the Seller has, directly or
indirectly, used funds or other assets of the Seller, or made any promise or
undertaking in such regards, for (a) illegal contributions, gifts, entertainment
or other expenses relating to political activity, (b) illegal payments to or for
the benefit of governmental officials or employees, whether domestic or foreign,
(c) illegal payments to or for the benefit of any Person, or any director,
officer, employee, agent or representative thereof, or (d) the establishment or
maintenance of a secret or unrecorded fund, and there have been no false or
fictitious entries made in the books or records of the Seller.
SECTION 3.24 Subsidiaries. Seller does not own or control (directly or
indirectly), or own or hold any right to acquire, any stock, partnership
interest, joint venture interest, equity participation or other security or
interest in any other entity, corporation, partnership, trust or any other
business association.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NMHC AND THE PURCHASER
NMHC and the Purchaser jointly and severally represent and warrant to the
Seller and the Owners that the statements contained in this Article IV are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article
IV).
SECTION 4.01 NMHC Organization, Etc. NMHC is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
NMHC is duly qualified or licensed to do business, and is in good standing, as a
foreign corporation in each jurisdiction where the character of its business or
the nature of its properties makes such qualification or licensing necessary,
except where the failure to so qualify or be licensed would not have a Purchaser
Material Adverse Effect. NMHC has full corporate power and authority to conduct
its business as it is now being conducted and to own, operate or lease the
properties and assets it currently owns, operates or holds under lease. NMHC has
heretofore made available to the Seller true and correct copies of its
certificate of incorporation and bylaws as in effect on the date hereof. NMHC
has all requisite corporate power and authority to enter into this Agreement and
each of the Ancillary Agreements to which it is a party, to carry out its
obligations under this Agreement and each of the Ancillary Agreements to which
it is a party, and to consummate the transactions contemplated hereby and
thereby.
SECTION 4.02 Purchaser Organization, Etc. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Oklahoma. Purchaser is duly qualified or licensed to do business, and
is in good standing, as a foreign limited liability company in each jurisdiction
where the character of its business or the nature of its properties makes such
qualification or licensing necessary, except where the failure to so qualify or
be licensed would not have a Purchaser Material Adverse Effect. The Purchaser
has full power and authority to conduct its business as it is now being
conducted and to own, operate or lease the properties and assets it currently
owns, operates or holds under lease. The Purchaser has heretofore made available
to the Seller true and correct copies of its organizational documents as in
effect on the date hereof. The Purchaser has all requisite power and authority
to enter into this Agreement and each of the Ancillary Agreements to which it is
a party, to carry out its obligations under this Agreement and each of the
Ancillary Agreements to which it is a party, and to consummate the transactions
contemplated hereby and thereby.
SECTION 4.03 Authorization. The execution and delivery by NMHC and the
Purchaser of this Agreement and the Ancillary Agreements to which they are a
party, the performance by NMHC and Purchaser of their obligations hereunder and
thereunder and the consummation by NMHC and the Purchaser of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of NMHC and the Purchaser. This Agreement has been,
and each Ancillary Agreement to which NMHC and the Purchaser is a party will be,
duly executed and delivered by NMHC and the Purchaser, and (assuming due
authorization, execution, and delivery by the Seller and the Owners parties
thereto) this Agreement is, and each Ancillary Agreement, when duly executed and
delivered, will be a legal, valid and binding obligation of NMHC and the
Purchaser, enforceable against NMHC and the Purchaser in accordance with its
terms (except as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency or other Laws affecting creditors' rights generally or by
general principles of equity, regardless of whether such enforceability is
considered in equity or at law).
SECTION 4.04 No Violation. Assuming all consents, approvals, authorizations
and other actions described in Section 4.03 have been obtained or taken, the
execution, delivery and performance of this Agreement and the Ancillary
Agreements do not and will not (a) violate or conflict with the certificate of
incorporation or bylaws of NMHC or the organizational documents of the Purchaser
or any Subsidiary of NMHC or the Purchaser, (b) conflict with or violate any Law
or Governmental Order applicable to NMHC and the Purchaser or any Subsidiary of
NMHC or the Purchaser, or (c) result in any breach of, or constitute a default
(or event which with the giving of notice or lapse of time, or both, would
become a default) under, or give to any Person any rights of termination,
amendment, acceleration or cancellation of, or give to any Person any additional
rights or entitlement to increased, additional, accelerated or guaranteed
payments under, or result in the creation of any Lien on any of the assets or
properties of NMHC or the Purchaser or any Subsidiary of NMHC or the Purchaser
pursuant to, any Contract, License or other instrument to which NMHC and the
Purchaser or any Subsidiary of NMHC or Purchaser is a party or by which any of
the assets or properties of NMHC or the Purchaser or any Subsidiary of NMHC or
the Purchaser are bound or affected, which breach or default would have a
Purchaser Material Adverse Effect.
SECTION 4.05 Approvals. The execution and delivery of this Agreement and
the Ancillary Agreements by NMHC and the Purchaser do not, and the performance
of this Agreement and the Ancillary Agreements by NMHC and the Purchaser will
not, require any consent, approval, authorization or other action by, or filing
with or notification to, any Governmental Authority or other Person under any
Law or Contract, other than such filings or registrations with, or
authorizations, consents or approvals of Governmental Authorities the failure of
which to make or obtain would not have a Purchaser Material Adverse Effect.
ARTICLE V
COVENANTS
SECTION 5.01 General. Each of the parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Articles VI and VII below).
SECTION 5.02 Access to Premises and Information. NMHC, the Purchaser and
their Affiliates, counsel, accountants, and other representatives will have
reasonable access during normal business hours to the Business and to all
properties, books, accounts and records, Contracts and documents of or relating
to the Business. The Seller will furnish or cause to be furnished to the
Purchaser and its representatives all data and information within the Seller's
reasonable possession or control concerning the business, finances, and
properties of the Seller and the Business that may be requested.
SECTION 5.03 Conduct of Business in Ordinary Course.
(a) The Seller will, and the Owners will cause the Seller to, conduct the
Business diligently, in the ordinary course and in substantially the same manner
as the Business was previously conducted, and will not make or institute any
unusual or novel purchase, sale, lease, change in management, accounting policy
or operation that will vary materially from those methods used by it during the
12-month period ending on the date of this Agreement. Without limiting the
foregoing, from the date hereof until the Closing Date, as it relates to the
Business and its operation, the Seller will, and the Owners will cause the
Seller to: (i) not change the compensation of any of its officers, nor, except
in the ordinary course of business, increase any compensation (including,
without limitation, any bonuses) payable to any Business Employee or consultant
of the Business, not enter into any employment, severance or other agreement
with any of its officers or any Business Employee or consultant of the Business
and not enter into, amend or adopt any Employee Plan, (ii) not enter into, amend
or terminate any Contract without the prior written consent of NMHC and the
Purchaser, (iii) not enter into any commitment to borrow money or subject to
Lien any of the Assets, (iv) not sell or transfer any of the Assets of the
Business or cancel any claim applicable to the Business except in the ordinary
course of conduct of the Business, (v) not dispose of any material assets of the
Business outside the ordinary course of business, or dispose of any membership
interests (or securities exchangeable for its membership interests), or declare
or pay any dividend or make any distribution in respect of any membership
interests of the Seller or enter into any commitments or agreements with respect
thereto except as mutually agreed by the Purchaser and the Seller, (vi) perform
all material obligations under Licenses, the Assumed Contracts and other
documents relating to or affecting the Business, all in the same manner as
heretofore performed, (vii) use its best efforts to maintain and preserve the
Business, the goodwill and relationships with the Business Employees, customers,
suppliers and others having a business relationship with the Business, and
maintain all Licenses requisite to the conduct of the Business as now conducted,
(viii) maintain in working condition all equipment and other personal property
that are Assets, reasonable wear and tear excepted, (ix) comply with all Laws
and Governmental Orders applicable to the Business (x) not enter into any
license, technology development or technology transfer agreement with any person
or entity (other than NMHC or the Purchaser) which might have a material adverse
affect on the Business, (xi) not enter into negotiations with, or solicit offers
from, any party, directly or indirectly, for the sale of all or substantially
all of the Business or the assets at the Business, (xii) vote the membership
interests held or controlled by an Owner to approve this Agreement, the
Ancillary Agreement and the transactions contemplated hereby and thereby, and
(xiii) not take any action or omit to take any action which act or omission
would result in the inaccuracy of any of its representations and warranties set
forth herein if such representations or warranties were to be made immediately
after the occurrence of such act or omission.
SECTION 5.04 Updating of Schedules. The Seller undertakes to revise and
update all Schedules hereto as may be necessary from the date hereof until the
Closing Date. No such Schedules provided and revisions made to such Schedules
pursuant to this Section shall be deemed to be accepted by NMHC and the
Purchaser, nor cure any breach of any representation or warranty made in this
Agreement, unless NMHC or the Purchaser specifically agrees thereto in writing
or by initialing such Schedule, nor shall any such Schedule or revision thereto
be considered to constitute or give rise to a waiver by NMHC or the Purchaser of
any condition set forth in this Agreement.
SECTION 5.05 Further Assurances. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will cooperate with the other and take such
further action (including the execution and delivery of such further instruments
and documents) as any other party reasonably may request, all at the sole cost
and expense of the requesting party (unless the requesting party is entitled to
indemnification therefor under Article VIII below). In addition, the Seller from
time to time after the Closing, at NMHC or the Purchaser's request, will
execute, acknowledge and deliver to NMHC and the Purchaser such other
instruments of conveyance and transfer and will take such other actions and
execute and deliver such other documents, certifications and further assurances
as NMHC and the Purchaser may reasonably require in order to vest more
effectively in the Purchaser, or to put the Purchaser more fully in possession
of, any of the Assets, or to better enable the Purchaser to complete, perform or
discharge any of the Assumed Liabilities.
SECTION 5.06 No Shopping
(a) From and after the date hereof until the termination of this Agreement,
without the express written consent of NMHC and the Purchaser, the Seller and
the Owners shall not, directly or indirectly, (i) solicit, initiate discussions
or engage in negotiations with any Person, other than NMHC and the Purchaser,
relating to the possible acquisition of any interest in any of the Assets,
whether by way of merger, reorganization, purchase of membership interests,
purchase of Assets, management agreement or license agreement with respect to
any of the Assets, or otherwise (any such acquisition or other transaction or
agreement being referred to herein as an "ACQUISITION TRANSACTION"), (ii)
provide information with respect to the Assets to any Person, other than the
NMHC and Purchaser, in connection with a possible Acquisition Transaction or
(iii) enter into a transaction with any Person, other than NMHC and the
Purchaser, concerning a possible Acquisition Transaction. Prior to the
termination of this Agreement, if after the date of this Agreement the Seller or
any Owner receives an unsolicited offer or proposal relating to a possible
Acquisition Transaction, the Seller shall immediately notify NMHC and the
Purchaser and provide information to NMHC and the Purchaser as to the identity
of the party making any such offer or proposal and the specific terms of such
offer or proposal (including, without limitation, the proposed price and
financing therefor).
(b) Each Owner and the Seller hereby recognizes and acknowledges that a
breach by it of its obligations under this Section 5.06 will cause irreparable
and material loss and damage to the Purchaser as to which NMHC and the Purchaser
will not have an adequate remedy at Law or in damages. Accordingly, each of the
Owners and the Seller acknowledges and agrees that the issuance of an injunction
or other equitable remedy is an appropriate remedy for any such breach. In
addition, in the event of any breach of the foregoing, the breaching party shall
promptly reimburse NMHC and the Purchaser for the reasonable expenses incurred
by NMHC and the Purchaser in connection with the transactions contemplated by
this Agreement.
SECTION 5.07 Non-Competition; Non-Solicitation(a)
(a) The Seller and each of the Owners agrees that neither the Seller nor
any of the Owners will, for the period described in the next succeeding
sentence, directly or indirectly (i) build, invest in, assist in the development
of, or have any management or advisory role in another business that competes
with the Business, (ii) solicit for employment any employee of NMHC or the
Purchaser or any of their Affiliates or (iii) interfere with, entice away,
disrupt or attempt to disrupt the relationship between NMHC, the Purchaser and
their Affiliates and any of their lessors, lessees, licensors, licensees,
customers or suppliers. The obligations of the Seller and each of the Owners
under the immediately preceding sentence shall remain in effect for the
following periods: (A) for the Seller, four years; (B) for Xxxxxx Xxxxxxx, three
years; and (C) for each of Xxxx Xxxxxx, X.X. Xxxxxxxx and Xxxx Xxxxxxxxxxx, two
years.
(b) Each Owner and the Seller acknowledges and agrees that the agreements
and covenants contained in this Section 5.07 are essential to protect the Assets
being acquired by NMHC and the Purchaser hereunder, that NMHC and the Purchaser
would not consummate the transactions contemplated hereby but for such
agreements and covenants, and that a legally sufficient consideration will be
paid to the Owners and the Seller for the non-competition provisions of this
Section 5.07, and each of the Owners and the Seller expressly waives any right
to assert inadequacy of consideration as a defense to enforcement of the
non-competition provisions of this Section 5.07 should such enforcement ever
become necessary. The Owners and the Seller acknowledges that a remedy at Law
for any breach or attempted breach of this Section 5.07 will be inadequate and
further agrees that any breach of this Section 5.07 will result in irreparable
harm to the Assets and the Business; and each of the Owners and the Seller
covenants and agrees not to oppose any demand for specific performance and
injunctive and other equitable relief in case of any such breach or attempted
breach. Whenever possible, each provision of this Section 5.07 shall be
interpreted in such manner as to be effective and valid under applicable Law but
if any provision of this Section 5.07 shall be prohibited by or invalid under
applicable Law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Section 5.07. If any provision of this
Section 5.07 shall, for any reason, be judged by any court of competent
jurisdiction to be invalid or unenforceable, such judgment shall not affect,
impair or invalidate the remainder of this Section 5.07 but shall be confined in
its operation to the provision of this Section 5.07 directly involved in the
controversy in which such judgment shall have been rendered. In the event that
the provisions of this Section 5.07 should ever be deemed to exceed the time or
geographic limitations permitted by applicable Law, then such provision shall be
reformed to the maximum time or geographic limitations permitted by applicable
Law.
SECTION 5.08 Consents. The Seller, NMHC and the Purchaser, as
promptly as practicable (a) will make, or cause to be made, all filings and
submissions under laws, rules and regulations applicable to it, or to its
subsidiaries and Affiliates, as may be required for any party hereto to
consummate the transactions contemplated hereby, (b) will use their respective
reasonable efforts to obtain, or cause to be obtained, all authorizations,
approvals, consents and waivers from all persons and Governmental Authorities
necessary to be obtained by either of them in order to consummate such
transactions, and (c) will use their respective best efforts to take, or cause
to be taken, all other actions necessary, proper or advisable in order for each
of them to fulfill their respective obligations hereunder. The Seller, the
Owners, NMHC and the Purchaser will coordinate and cooperate with one another in
exchanging information and supplying such reasonable assistance as may be
reasonably requested by each in connection with the foregoing.
SECTION 5.09 Public Announcements. Unless and to the extent required by
Law, each party hereto will agree in advance prior to the issuance by any of
them of any press release or the making of any public statement with respect to
this Agreement and the transactions contemplated hereby and shall not issue any
such press release or make any such public statement without the agreement of
the other parties. In the event that any party is required to issue a press
release or make a public statement by Law, it or he will use its or his
reasonable efforts to notify the other parties of the contents thereof in
advance of the issuance or making thereof.
SECTION 5.10 Confidentiality Obligations of the Parties(a)
(a) Each party (except the Department) shall keep all information obtained
from any other party either before or after the date of this Agreement
confidential, in accordance with the terms of that certain Confidentiality
Agreement, dated as of October 9, 2000, between NMHC and the Seller.
(b) From and after the Closing Date, each of the Owners, the Seller and the
Department will, and will cause their Affiliates to, treat and hold as
confidential, and not disclose any of the Confidential Information to any
Person. In the event that the Department, the Seller, the Owners or their
Affiliates are requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand or similar process or as otherwise required by law) to
disclose any Confidential Information, the Seller will notify NMHC and the
Purchaser promptly of the request or requirement so that NMHC and the Purchaser
may seek an appropriate protective order or waive compliance with the provisions
of this Section 5.10. If, in the absence of a protective order or the receipt of
a waiver hereunder, the Seller, the Owners or their Affiliates are, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, they may disclose the Confidential
Information to the tribunal; provided, however, that the Seller shall use its
reasonable best efforts to obtain, at the request of NMHC and the Purchaser, an
order or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as NMHC and the
Purchaser shall designate. The foregoing provisions shall not apply to any
Confidential Information which is generally available to the public immediately
prior to the time of disclosure.
(c) Notwithstanding anything herein to the contrary, neither NMHC nor the
Purchaser shall have any obligation with respect to Confidential Information of
the Business after the Closing Date.
SECTION 5.11 Discharge of Liabilities. Following the Closing Date, the
Purchaser agrees to discharge in accordance with their terms the Assumed
Liabilities and the Seller agrees to discharge in accordance with their terms
all Excluded Liabilities.
SECTION 5.12 Employee Matters
(a) To the extent permitted by applicable Law, including, without
limitation, Internal Revenue Service Procedure 96-60, NMHC will file (with the
federal government and the state, where appropriate) W-2 forms for the 2001
taxable year for each employee of the Seller who becomes an employee of NMHC,
reporting the wages paid by both NMHC and the Seller to any such employee. The
Seller will provide NMHC any information not available to NMHC relating to
periods ending on or prior to the Closing Date necessary for NMHC to prepare and
distribute Forms W-2 for the year ending December 31, 2001 to any such
employees. In addition, both parties will file Forms 941 for the quarter during
which the sale takes place, reflecting the wages and deposits made during its
period of ownership.
(b) No term of this Agreement shall be deemed to create any contract
between NMHC, the Purchaser and any current employee of the Seller which gives
the employee the right to be retained in the employment of NMHC or the
Purchaser, or any related employer, or to interfere with NMHC and Purchaser's
right to terminate employment of any employee at any time or to change its
policies regarding salaries, benefits and other employment matters at any time
or from time to time, other than pursuant to the terms of the Employment
Agreements. The representations, warranties, covenants and agreements contained
herein are for the sole benefit of the parties hereto, and employees are not
intended to be and shall not be construed as beneficiaries hereof.
(c) Except as specifically provided herein, NMHC and the Purchaser do not
and will not assume the sponsorship of, the responsibility for contributions to,
or any liability in connection with, any Employee Plan. Without limiting the
foregoing, Seller shall be liable for any continuation coverage (including any
penalties, excise taxes or interest resulting from the failure to provide
continuation coverage) with respect to any Business Employee (or covered
dependent of such Business Employee) required by Section 4980B of the Code due
to qualifying events which occur on or before the Closing Date, and NMHC and the
Purchaser will in no event be deemed to be a successor employer (within the
meaning of Treasury Regulation ss.54.4980B-2) of Seller for purposes of applying
the provisions of Section 4980B of the Code.
(d) No provision of this Agreement shall create any third party beneficiary
or other rights in any employee or former employee (including any beneficiary or
dependent thereof) of the Seller in respect of employment with NMHC or the
Purchaser in respect of any benefits that may be provided, directly or
indirectly, under any employee benefit plan, agreement, policy or arrangement
which may be established by NMHC or the Purchaser. No provision of this
Agreement shall constitute a limitation on rights to amend, modify or terminate
after the Closing Date any such plans, agreements, policies or arrangements of
NMHC or the Purchaser.
SECTION 5.13 Maintenance of Books and Records; Right of Access. Each of the
Seller, NMHC and the Purchaser shall preserve until the seventh anniversary of
the Closing Date all records possessed or to be possessed by such party relating
to any of the Assets prior to the Closing Date. After the Closing Date, where
there is a legitimate purpose, such party shall provide the other party with
access, upon prior reasonable written request specifying the need therefor,
during regular business hours, to (i) the officers and employees of such party
or the former officers and directors of such party and (ii) the books of account
and records of such party, but, in each case, only to the extent relating to the
Assets or Assumed Liabilities prior to the Closing Date, and the other party and
its representatives shall have the right to make copies of such books and
records; provided, however, that the foregoing right of access shall not be
exercisable in such a manner as to interfere unreasonably with the normal
operations and business of such party; and provided further that, as to so much
of such information as constitutes trade secrets or confidential business
information of such party, the requesting party and its officers, directors and
representatives will use due care to not disclose such information except (i) as
required by Law, (ii) with the prior written consent of such party, which
consent shall not be unreasonably withheld, or (iii) where such information
becomes available to the public generally, or becomes generally known to
competitors of such party, through sources other than the requesting party, its
Affiliates or its officers, directors or representatives. Such records may
nevertheless be destroyed by a party if such party sends to the other party
written notice of its intent to destroy records, specifying with particularity
the contents of the records to be destroyed. Such records may then be destroyed
after the 30th day after such notice is given unless another party objects to
the destruction in which case the party seeking to destroy the records shall
deliver such records to the objecting party.
SECTION 5.14 Bulk Sales Law. NMHC and the Purchaser hereby waive compliance
by the Seller with all applicable bulk sales Laws; PROVIDED, HOWEVER, that this
waiver shall not relieve the Seller of its indemnification obligations to NMHC
and the Purchaser pursuant to Section 8.02 hereof as a result of the Seller's
non-compliance with any applicable bulk sales or similar Laws.
SECTION 5.15 Risk of Loss. The risk of loss or damage to any of the Assets
shall remain with the Seller until the Closing and the Seller shall maintain its
insurance policies covering the Assets through the Closing. All insurance
proceeds attributable to the damage, destruction, or casualty loss of any of the
Assets prior to the Closing Date shall be assigned by the Seller to the
Purchaser at the Closing.
SECTION 5.16 Name of Seller. Promptly following the Closing, the Seller
agrees to change its name to a name that is unrelated to the terms "Provider
Medical Pharmaceutical," "PMP" and "Interchange."
SECTION 5.17 Operating Agreements. Xxxxxx Xxxxxxx agrees to cause the
Seller's landlord to lease to the Purchaser the Seller's office space for up to
a period of six months following the Closing Date, and to obtain any necessary
consents in connection with such sublease. The terms of the lease shall be
substantially identical to the terms of the primary lease as of the date hereof.
SECTION 5.18 Collection of Accounts Receivable.
(a) For a period of six months from the Closing, Purchaser shall utilize
the same efforts it uses in collecting its own receivables in attempting to
collect the Accounts Receivable acquired by Purchaser at Closing. At or as soon
as reasonably practicable following Closing, Seller shall provide to Purchaser
an Accounts Receivable aging schedule as of February 28, 2001. Thereafter,
Purchaser's personnel shall be responsible for maintaining records related to
the Accounts Receivable collected, including recording cash receipts, offsets
and adjustments which Purchaser deems appropriate (provided, however, that
Purchaser shall not settle any Account Receivable for less than 100% without the
written consent of Seller, which shall not be unreasonably withheld), and
Purchaser shall provide Seller with an updated aging schedule for the Accounts
Receivable on each of the 60th, 120th, and 180th day anniversaries of the
Closing Date. Notwithstanding the above, in the event that following Closing,
the Purchaser receives payment from a customer which is both a historical
customer of the Seller and a continuing customer of the Purchaser following
Closing, and such payment does not otherwise indicate or specify an invoice for
which such payment is intended, such payment shall be deemed to relate to the
oldest Seller Account Receivable of such customer, unless such Seller Account
Receivable is the subject of a dispute between the Purchaser and such customer,
in which case such payment shall be applied to the next most recent account
receivable.
(b) On or after the six month anniversary of the Closing Date, Purchaser
shall have no further obligations with respect to collection efforts related to
the Accounts Receivable and shall be entitled to draw from the escrow account,
the balance of any remaining uncollected Accounts Receivable ("Uncollected
Accounts"), in exchange for the assignment of such uncollected Accounts
Receivable back to Seller; provided, however, if after such period Purchaser
thereafter receives a payment which by its terms clearly relates to an Account
Receivable reassigned to Seller, Purchaser shall promptly forward such payment
pursuant to instructions provided by Seller at the end of the such six month
period.
SECTION 5.19 Post Closing Balance Sheet. As soon or reasonably practicable
following the Closing, Purchaser shall prepare a balance sheet for the Business
as of the Closing Date for the purpose of calculating the amounts identified in
Section 8.02(v).
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF NMHC AND PURCHASER
The obligations of NMHC and the Purchaser under this Agreement are subject
to the satisfaction, at or before the Closing, of all the conditions set forth
below. NMHC and the Purchaser may waive any or all of these conditions in whole
or in part without prior notice; PROVIDED, HOWEVER, that no such waiver of a
condition shall constitute a waiver by NMHC and the Purchaser of any of its
other rights or remedies, at law or in equity, if the Seller and/or any of the
Owners is in default of any of the representations, warranties or covenants
contained in this Agreement, except to the extent that such defaults are
expressly waived.
SECTION 6.01 Accuracy of Representations and Warranties. All
representations and warranties by the Seller and the Owners contained in this
Agreement or in any agreement or written statement delivered by the Seller or
any of the Owners to NMHC and the Purchaser pursuant to this Agreement that are
qualified as to materiality will be true and correct in all respects and those
not so qualified shall be true and correct in all material respects on and as of
the Closing Date as though such representations and warranties were made on and
as of that date.
SECTION 6.02 Performance. The Seller will have performed, satisfied and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it on or before the Closing Date.
SECTION 6.03 No Material Adverse Change. There shall have been no material
adverse change in the Assets, tangible property, condition, results of
operations or prospects of the Business since the date of this Agreement.
SECTION 6.04 Certification by the Seller. NMHC and the Purchaser will have
received a certificate, dated the Closing Date, signed by the President of the
Seller, on behalf of the Seller, certifying that the conditions specified in
Sections 6.01, 6.02 and 6.03 hereof have been fulfilled in all respects,
including, but not limited to, certified copies of all documentation of the
Seller pertaining to authorization of the execution, delivery and performance of
this Agreement and the Ancillary Agreements.
SECTION 6.05 Absence of Litigation. No Action by or before any Governmental
Authority pertaining to the transactions contemplated by this Agreement or to
their consummation will have been instituted or threatened on or before the
Closing Date.
SECTION 6.06 Legal Prohibition. On the Closing Date, no Governmental Order
shall be in effect prohibiting consummation of the transactions contemplated
hereby or which would make the consummation of such transactions unlawful and no
Action shall have been instituted and remain pending before a Governmental
Authority to restrain or prohibit the transactions contemplated by this
Agreement and no adverse decision shall have been made by any such Governmental
Authority which could materially and adversely affect the Business. No Law shall
have been enacted the effect of which would be to prohibit, restrict, impair or
delay the consummation of the transactions contemplated hereby or restrict or
impair the ability of NMHC and the Purchaser to own or conduct the Business.
SECTION 6.07 Consents, Approvals, Permits, Licenses, etc. All material
authorizations, consents, waivers, approvals, orders, registrations,
qualifications, designations, declarations, filings or other action required
with or from any Governmental Authority (including, without limitation, receipt
of Licenses to own and operate the Business as currently conducted) or third
party (including, without limitation, all parties to each of the Assumed
Contracts) and all other requirements of Law in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly obtained and shall be
reasonably satisfactory to NMHC and the Purchaser and their counsel. No such
consent or approval (a) shall be conditioned on the modification, cancellation
or termination of any Assumed Contract, or (b) shall impose on NMHC and the
Purchaser any material condition, provision or requirement with respect to the
Business or its operation that is more restrictive than or different from the
conditions imposed upon such operation prior to Closing, unless NMHC and the
Purchaser gives their prior written approval.
SECTION 6.08 Employment Agreement. NMHC shall have entered into an
Employment Agreement with Xxxx Xxxxxxxxxxx substantially in the form attached
hereto as Exhibit 6.08.
SECTION 6.09 Escrow Agreement. NMHC and the Owners shall have entered into
the Escrow Agreement substantially in the form attached hereto as Exhibit 6.09.
SECTION 6.10 Closing Matters. All proceedings to be taken by the Seller in
connection with the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in form and
substance to the Purchaser and their counsel.
SECTION 6.11 Supplemental Disclosure. If the Seller shall have delivered,
supplemented or amended any Schedule pursuant to its obligations set forth in
Section 5.04 hereof, NMHC and the Purchaser shall not have given notice to the
Seller that, as a result of information provided to NMHC and the Purchaser in
connection with any or all of such amendments or supplements, NMHC and the
Purchaser have determined not to proceed with the consummation of the
transactions contemplated hereby.
SECTION 6.12 Opinion. NMHC and the Purchaser shall have received a legal
opinion, dated the Closing Date, from counsel to the Seller substantially in the
form attached hereto as Exhibit 6.12.
SECTION 6.13 Due Diligence. NMHC and the Purchaser shall have completed its
due diligence review of the Business and the Assets and shall be reasonably
satisfied with the results thereof.
SECTION 6.14 Delivery of Financial Statements. The Seller shall have
prepared and delivered to NMHC and the Purchaser such financial statements,
prepared in accordance with generally accepted accounting principles covering
such periods as NMHC and the Purchaser may request.
SECTION 6.15 Bank Agreement. NMHC shall have received a payoff letter from
the Bank and other written evidence satisfactory to the Purchaser evidencing
that the Bank's liens on the Assets will be released upon the payment of the
Bank Loan Amount.
SECTION 6.16 Lease. The Purchaser and Xxxxxxx Benefit Administrators, LLC
shall have entered into an agreement providing for the sublease by Xxxxxxx
Benefit Administrators, LLC to the Purchaser of the Seller's office space for a
period of up to six months following the Closing Date.
SECTION 6.17 Temporary Services Agreement. The Purchaser and Xxxxxxx
Benefit Administrators, LLC shall have entered into the Temporary Services
Agreement substantially in the form attached hereto as Exhibit 6.17.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of the Seller under this Agreement are subject to the
satisfaction, at or before the Closing, of all the conditions set forth below.
The Seller may waive any or all of these conditions in whole or in part without
prior notice; PROVIDED, HOWEVER, that no such waiver of a condition shall
constitute a waiver by the Seller of any of its other rights or remedies, at law
or in equity, if NMHC or the Purchaser is in default of any of the
representations, warranties or covenants contained in this Agreement, except to
the extent that such defaults are expressly waived.
SECTION 7.01 Accuracy of Representations and Warranties. All
representations and warranties by NMHC and the Purchaser contained in this
Agreement or in any agreement or written statement delivered by NMHC and the
Purchaser to the Seller or any of the Owners pursuant to this Agreement that are
qualified as to materiality will be true and correct in all respects and those
not so qualified will be true and correct in all material respects on and as of
the Closing Date as though such representations and warranties were made on and
as of that date.
SECTION 7.02 Performance. NMHC and the Purchaser will have performed,
satisfied and complied with all covenants, agreements and conditions required by
this Agreement to be performed or complied with by it on or before the Closing
Date.
SECTION 7.03 Certification by the Purchaser. The Seller will have received
a certificate, dated the Closing Date, signed by the President of NMHC, on
behalf of NMHC and the Purchaser, certifying that the conditions specified in
Sections 7.01 and 7.02 hereof have been fulfilled in all respects, including,
but not limited to, certified copies of all documentation of the Purchaser
pertaining to authorization of the execution, delivery and performance of this
Agreement and the Ancillary Agreements.
SECTION 7.04 Xxxxxxx Option. The Purchaser shall have duly executed and
delivered to Xxxxxx Xxxxxxx the option agreement substantially in the form
attached hereto as Exhibit 7.04.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 Indemnification by NMHC and the Purchaser.
(a) Subject to Section 8.05 in the case of subclause (i) below, NMHC and
the Purchaser shall indemnify, defend and hold harmless each of the Owners, the
Seller, its Affiliates and its employees, officers, directors and stockholders
(collectively, the "SELLER INDEMNIFIED PARTIES") against, and reimburse any
Seller Indemnified Party for, any and all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including in respect of any
Action brought by any Governmental Authority or any other Person) including
reasonable attorneys' and consultants' fees and expenses and other legal costs
and expenses reasonably incurred in prosecution, investigation, remediation,
defense or settlement (collectively, "Losses"), that such Seller Indemnified
Party may at any time suffer or incur, or become subject to, as a result of or
in connection with:
(i) the inaccuracy of any representations and warranties made by NMHC
and the Purchaser in this Agreement (without regard to any materiality
qualifier contained in such representation or warranty);
(ii) any failure by NMHC and the Purchaser to perform any of their
covenants or agreements under this Agreement or any of the Ancillary
Agreements; and
(iii) any Assumed Liability.
(b) Notwithstanding any other provision in this Agreement to the contrary,
neither NMHC nor the Purchaser shall be required to indemnify, defend or hold
harmless any Seller Indemnified Party against or reimburse any Seller
Indemnified Party for any Losses pursuant to Section 8.01(a)(i) unless:
(i) such Seller Indemnified Party has notified NMHC and the Purchaser
in writing in accordance with Section 8.03(a) of a claim with respect to
such matters within the applicable survival period set forth in Section
8.05;
(ii) the aggregate Losses resulting from, arising out of, relating to
or in the nature of or caused by the breach (or alleged breach) of any
representation or warranty of NMHC and the Purchaser exceeds $25,000, at
which point NMHC and the Purchaser will be obligated to indemnify the
Seller from and against all Losses relating back to the first dollar); and
(iii) NMHC and the Purchaser's maximum aggregate liability hereunder
shall not exceed the Purchase Price.
SECTION 8.02 Indemnification by the Seller and the Owners .
(a) Subject to paragraph (b)(iii) below, Section 8.05 hereof in the case of
subclause (i) below, the Seller and each of the Owners shall indemnify, defend
and hold harmless NMHC and the Purchaser, their Affiliates and their respective
employees, officers, directors and stockholders (collectively, the "PURCHASER
INDEMNIFIED PARTIES") against, and reimburse any Purchaser Indemnified Party
for, any and all Losses that such Purchaser Indemnified Party may at any time
suffer or incur, or become subject to, as a result of or in connection with:
(i) the inaccuracy of any representations and warranties made by the
Seller or the Owners in this Agreement (without regard to any materiality
qualifier contained in such representation and warranty);
(ii) any failure by the Seller to perform any of its covenants or
agreements under this Agreement or any of the Ancillary Agreements;
(iii) any Excluded Liability;
(iv) any Loss incurred by NMHC and the Purchaser as a result of
non-compliance by the Seller with any applicable bulk transfer or similar
Law;
(v) an amount by which the Company's excess of its Current
Liabilities, exclusive of amounts owed under the NMHC Loan, over Current
Assets at Closing is greater than the Company's excess of its Current
Liabilities over Current Assets on the PMP Balance Sheet; and
(vi) Uncollected Accounts.
(b) Notwithstanding any other provision in this Agreement to the contrary,
the Seller and the Owners shall not be required to indemnify, defend or hold
harmless any Purchaser Indemnified Party against or reimburse any Purchaser
Indemnified Party for any Losses pursuant to Section 8.02(a)(i) unless:
(i) such Purchaser Indemnified Party has notified the Seller in
writing in accordance with Section 8.03(a) of a claim with respect to such
matters within the applicable survival period set forth in Section 8.05;
(ii) the aggregate Losses resulting from, arising out of, relating to
or in the nature of or caused by the breach (or alleged breach) of any
representation or warranty of the Seller exceeds $25,000, at which point
the Seller and the Owners will be obligated to indemnify the Purchaser from
and against all Losses relating back to the first dollar); and
(iii) the Seller's and each of the Owners' maximum liability hereunder
shall not exceed the Purchase Price, and, in the case of each of the
Owners, such Owner's respective share of such Purchase Price based on the
percentage attributable to each such Owner as shown on the signature page
thereto, except in the case of the Seller's or Owner's fraud, intentional
misrepresentation or willful misconduct, in which case the Seller's and any
such Owners' liability shall not be so limited.
SECTION 8.03 Notification of Claims.
(a) A party that may be entitled to be indemnified pursuant to Section 8.01
or 8.02 (the "INDEMNIFIED PARTY") shall promptly notify the party liable for
such indemnification (the "INDEMNIFYING PARTY") in writing of any pending or
threatened claim or demand which the Indemnified Party has determined has given
or could give rise to a right of indemnification under this Agreement (including
a pending or threatened claim or demand asserted by a third party against the
Indemnified Party), describing in reasonable detail, to the extent known by the
Indemnified Party, the facts and circumstances with respect to the subject
matter of such claim or demand; PROVIDED, HOWEVER, that the failure to provide
such notice shall not release the Indemnifying Party from any of its obligations
under this Article VIII except and only to the extent the Indemnifying Party is
prejudiced by such failure.
(b) If the Indemnified Party shall notify the Indemnifying Party of any
claim or demand pursuant to Section 8.03(a), and if (i) such claim or demand
relates to a pending or threatened claim or demand asserted by a third party (a
"THIRD PARTY CLAIM") against the Indemnified Party which the Indemnifying Party
acknowledges is a claim or demand as to which it must indemnify, defend and hold
harmless the Indemnified Party against or reimburse the Indemnified Party for
under Section 8.01 or 8.02, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, (iii) the
Third Party Claim involves only money damages and does not seek an injunction or
other equitable relief, (iv) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice adverse to the
continuing business interests of the Indemnified Party, and (v) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently,
then the Indemnifying Party shall have the right to defend such claim or demand
and if it elects to defend such claim or demand, it shall employ counsel
reasonably acceptable to the Indemnified Party to defend such claim or demand
asserted against the Indemnified Party. The Indemnified Party and the
Indemnifying Party shall each have the right to participate in the defense of
any claim or demand for which it is not controlling the defense, at its own
expense; PROVIDED, that the reasonable fees and expenses of counsel for the
Indemnified Party shall be borne by the Indemnifying Party if (i) the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it which are different from or in addition to those
available to any other party defending such claim or demand and (ii) counsel
have advised that a conflict of interest exists between the Indemnifying Party
and another party. The Indemnifying Party shall notify the Indemnified Party in
writing, as promptly as possible (but in any case at a time sufficiently before
the due date for the answer or response to a claim so as to allow the
Indemnified Party reasonable time to answer or respond in the event the
Indemnifying Party fails to assume the defense of such action) after the date of
the notice of claim given by the Indemnified Party to the Indemnifying Party
under Section 8.03(a), of its election to defend in good faith any such third
party claim or demand. So long as the Indemnifying Party is actively and
diligently defending in good faith any such claim or demand asserted by a third
party against the Indemnified Party, the Indemnified Party shall not settle or
compromise such claim or demand and, in any event, shall not enter into any such
settlement or compromise without giving at least five Business Days' prior
written notice thereof to the Indemnifying Party. The Indemnified Party shall
make available to the Indemnifying Party or its agents all records and other
materials in the Indemnified Party's possession reasonably required by the
Indemnifying Party for its use in defending any third party claim or demand.
Whether or not the Indemnifying Party elects to defend any such claim or demand,
the Indemnified Party shall have no obligations to do so. The Indemnifying Party
shall not settle or compromise any such claim or demand, unless the Indemnified
Party is given a full, complete and unconditional release of any and all
liability by all relevant parties relating thereto.
(c) Within 30 days after a party obtains knowledge that it has sustained
any Losses not involving a Third Party Claim which such party reasonably
believes may give rise to a claim for indemnification from another party
hereunder, such Indemnified Party shall deliver notice of such claim to the
Indemnifying Party, together with a brief description of the facts and data
which support the claim for indemnification; PROVIDED, HOWEVER, that failure to
so notify the Indemnifying Party shall not relieve the Indemnifying Party of its
indemnification obligations hereunder, except to the extent that the
Indemnifying Party is actually prejudiced thereby. Any such notice must be made
to the Indemnifying Party not later than the expiration of the applicable
survival period specified in Section 8.05 below. If the Indemnifying Party does
not notify the Indemnified Party within 45 days following its receipt of such
notice that the Indemnifying Party disputes its liability to the Indemnified
Party under this Article VIII, such claim specified by the Indemnified Party in
such notice shall be conclusively deemed a liability of the Indemnifying Party
under this Article VIII and the Indemnifying Party shall pay the amount of such
claim to the Indemnified Party on demand or, in the case of any notice in which
the amount of the claim (or any portion thereof) is estimated, on such later
date when the amount of such claim (or such portion thereof) becomes finally
determined. If the Indemnifying Party has timely disputed its liability with
respect to such claim, as provided above, the Indemnifying Party and the
Indemnified Party shall proceed in good faith to negotiate a resolution of such
dispute and, if not resolved through negotiations, such dispute shall be
resolved by litigation in an appropriate court of competent jurisdiction.
SECTION 8.04 Certain Adjustments. For all purposes of this Article VIII,
"Losses" shall be net of (a) any insurance benefits actually paid to the
Indemnified Party from insurance policies in connection with the facts giving
rise to the right of indemnification (net of any insurance premiums paid on the
policy related thereto) and (b) if subsequent to receiving any indemnification
payment as provided in this Article VIII, any Indemnified Party receives any
insurance benefits in connection with the relevant Losses, it shall promptly pay
to the Indemnifying Party the amount of such insurance benefits, but in any
event not exceeding the amount of such indemnification payment. The Indemnified
Party shall use its reasonable efforts to make insurance claims relating to any
claim for which it is seeking indemnification pursuant to this Article VIII;
PROVIDED that the Indemnified Party shall not be obligated to make such an
insurance claim if the Indemnified Party in its reasonable judgment believes
that the cost of pursuing such an insurance claim together with any
corresponding increase in insurance premiums or other charge backs to the
Indemnified Party, as the case may be, would exceed the value of the claim for
which the Indemnified Party is seeking indemnification.
SECTION 8.05 Survival of Representations and Warranties. All of the
representations and warranties contained in this Agreement shall survive the
Closing hereunder and continue in full force and effect for a period of two (2)
years thereafter, regardless of any investigation made by the Purchaser or the
Seller or on their behalf, except (a) as to any matters with respect to which a
bona fide written claim shall have been made or an action at law or in equity
shall have commenced before such date, in which event survival shall continue
(but only with respect to, and to the extent of, such claim) until the final
resolution of such claim or action, including all applicable periods for appeal,
(b) the representations and warranties set forth in Sections 3.03 and 3.13(b)
shall be of unlimited duration and (iii) the representations and warranties set
forth in Sections 3.08 shall survive until 30 days following the expiration of
any applicable statute of limitations.
SECTION 8.06 Other Indemnification Provisions. The remedies provided herein
shall be the exclusive remedies of each of the parties hereto with respect to
any Losses arising out of the transactions contemplated hereby; PROVIDED,
HOWEVER, that (i) the parties hereto shall be entitled to an injunction or other
equitable relief to prevent breaches of this Agreement, to enforce specifically
the terms and provisions of this Agreement or to seek any other remedy to which
they are entitled in equity; and (ii) nothing herein shall preclude a party from
bringing an action for fraud.
SECTION 8.07 Escrow Agreement . The Seller and each of the Owners agree
that the Escrowed Cash shall be deposited with the Escrow Agent in accordance
with the terms of the Escrow Agreement to serve the indemnification obligations
of the Seller and each of the Owners under this Agreement. The Escrowed Cash
shall be released from escrow and distributed to the Seller in accordance with
the terms of the Escrow Agreement.
ARTICLE IX
TERMINATION
SECTION 9.01 Termination of Agreement. The parties may terminate this
Agreement as provided below:
(a) The Purchaser, NMHC, the Owners and the Seller may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(b) NMHC and the Purchaser may terminate this Agreement by giving written
notice to the Seller and the Owners at any time prior to the Closing (i) in the
event the Seller or any Owner has breached any representation, warranty or
covenant contained in this Agreement in any respect (in the case of any
representation or warranty qualified by materiality) or in any material respect
(in the case of any representation or warranty without any materiality
qualification), the Purchaser has notified the Seller of the breach, and the
breach has continued without cure for a period of five (5) days after the notice
of breach or (ii) if the Closing shall not have occurred on or before March 15,
2001, or such later date as the parties may agree, other than through a failure
of NMHC and the Purchaser to fulfill their obligations hereunder; and
(c) The Seller may terminate this Agreement by giving written notice to
NMHC and the Purchaser at any time prior to the Closing (i) in the event NMHC
and the Purchaser have breached any representation, warranty or covenant
contained in this Agreement in any respect (in the case of any representation or
warranty qualified by materiality) or in any material respect (in the case of
any representation or warranty without a materiality qualifier), the Seller has
notified NMHC and the Purchaser of the breach, and the breach has continued
without cure for a period of five (5) days after the notice of breach or (ii) if
the Closing shall not have occurred on or before March 15, 2001, or such later
date as the parties may agree, other than through a failure of the Seller to
fulfill its obligations hereunder.
SECTION 9.02 Effect of Termination. (a) If any party terminates this
Agreement pursuant to Section 9.01 above, all rights and obligations of the
parties hereunder shall terminate without any liability of any party to any
other party (except for any liability of any party then in breach).
(a) Upon termination of this Agreement for reasons other than as set forth
in Section 9.01(c) above, the NMHC Note shall become due and payable in
accordance with its terms.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Effect of Due Diligence. No investigation by or on behalf of
NMHC and the Purchaser into the business, operations, prospects, assets or
condition (financial or otherwise) of the Business shall diminish in any way the
effect of any representations or warranties made by the Seller and the Owners in
this Agreement or shall relieve the Seller or any of the Owners of any of its or
his obligations under this Agreement.
SECTION 10.02 Expenses. Except as may be otherwise specified herein, all
costs and expenses, including fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses, whether or not the Closing shall have occurred. Notwithstanding
the above, up to $50,000 in fees incurred by Xxxxxx & Kliegman LLP, which has
been engaged to audit the financial statements of the Seller in connection with
this Agreement, shall be paid by the Purchaser; any fees in excess of that
amount shall be paid by the Seller.
SECTION 10.03 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by overnight courier service, by facsimile (followed by delivery of a
copy via overnight courier service) or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 10.03):
(a) if to the Seller or the Owners:
0000 X. 00xx Xxxxxx
Xxxxx 0000
Xxxxx, XX 00000-0000
Attention: Xxxx Xxxxxxxxxxx
with a copy to (which shall not constitute
notice):
Johnson, Jones, Xxxxxxxxxx, Xxxxxxx & Xxxxx PC
0000 Xxxx xx Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Xx.
(b) if to NMHC and the Purchaser:
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
with a copy to (which shall not constitute
notice):
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
SECTION 10.04 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.05 Severability. If any term or other provision of this
Agreement is held invalid, illegal or incapable of being enforced by any Law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
SECTION 10.06 Entire Agreement. This Agreement and the Ancillary Agreements
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof, and supersede all prior agreements and
undertakings, both written and oral, between the parties with respect to the
subject matter hereof, including, without limitation, any purported or actual
summary of terms that may have been provided by one party to another.
SECTION 10.07 Assignment. This Agreement shall not be assigned by operation
of Law or otherwise.
SECTION 10.08 No Third-Party Beneficiaries. Except as provided in Article
VIII, this Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 10.09 Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by the Seller holding a majority of
the outstanding membership interest of the Seller, the Owners, NMHC and the
Purchaser.
SECTION 10.10 Arbitration, Governing Law; Submission to Jurisdiction,
Waivers
(a) Arbitration. In the event that any dispute, disagreement or controversy
arises out of or relates to or concerns any rights, obligations or other aspect
of this Agreement, either party may notify the other in writing within 30 days
of the circumstances giving rise to such dispute. If the Purchaser and the
Seller are not able to resolve such dispute within 30 days of the applicable
party's receipt of notice of such dispute hereunder, such dispute shall promptly
be submitted to arbitration in New York City before the American Arbitration
Association (the "AAA") in accordance with the commercial arbitration rules of
the AAA. The arbitration tribunal shall be composed of three arbitrators, one of
which shall be appointed by the Purchaser within 10 business days of the end of
the 30-day period referred to above, one of which shall be appointed by the
Seller within 10 business days of the end of the 30-day period referred to
above, and the third to be appointed by the other two arbitrators. The
arbitrators will be directed to resolve such dispute, disagreement or
controversy. The award of the arbitrator shall be enforceable in any court of
competent jurisdiction. Notwithstanding the foregoing, any party shall be
entitled to seek injunctive relief or other equitable remedies from any court of
competent jurisdiction.
(b) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflict of laws.
SECTION 10.11 Recovery of Litigation Expenses. In connection with any
Action between the Seller, the Owners, NMHC and/or the Purchaser and their
respective Affiliates arising out of or related to this Agreement or any of the
Ancillary Agreements, the prevailing party in such Action shall be entitled to
recover all of its costs and expenses in connection with such Action or
proceeding, including all costs and expenses in investigating and prosecuting or
defending such Action, including the reasonable fees and expenses of counsel,
auditors and other consultants.
SECTION 10.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 10.13 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
parties intend that each representation, warranty and covenant contained herein
shall have independent significance. If any party has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty or covenant.
SECTION 10.14 Specific Performance. Each party acknowledges and agrees that
the other party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each party agrees that the other party
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the parties and the matter,
in addition to any other remedy to which they may be entitled, at law or in
equity.
ARTICLE XI
DEPARTMENT REPRESENTATION
SECTION 11.01 Department Representation. The Department hereby represents
to the Purchaser that (i) neither the Business nor the Seller is subject to
regulation of, or oversight by the Department and (ii) the consummation by the
Seller of the transactions contemplated by this Agreement does not require the
approval or consent of, or any filings to be made with, the Department, or to
the best of its current knowledge, any other Oklahoma Governmental Authority.
ARTICLE XII
XXXXXX XXXXXXX GUARANTEE
SECTION 12.01 Xxxxxx Xxxxxxx Guarantee. Xxxxxx Xxxxxxx hereby guarantees
the payment and performance of all the obligations of Xxxxxxx Brokers and
Administrators, LLC under this Agreement and the Ancillary Agreements in its
capacity as an Owner.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused
this Agreement to be executed by their respective officers thereunto duly
authorized, and the Owners have executed this agreement, as of the date first
written above.
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
By:---------------------------------------
Name:
Title:
PMP ACQUISITION CORP.
By:---------------------------------------
Name:
Title:
PROVIDER MEDICAL PHARMACEUTICAL, LLC
By:---------------------------------------
Name:
Title:
OKLAHOMA DEPARTMENT OF INSURANCE
By:---------------------------------------
Name:
Title:
Xxxxxxx Brokers and Administrators, LLC
By:---------------------------------------
Name: Xxxxxx Xxxxxxx
Title:
87% interest for purposes of Section 8.02
------------------------------------------
Xxxx Xxxxxxxxxxx
9% interest for purposes of Section 8.02
------------------------------------------
X. X. Xxxxxxxx
2% interest for purposes of Section 8.02
------------------------------------------
Xxxx Xxxxxx
2% interest for purposes of Section 8.02
SCHEDULE 2.05
CONTINGENT PAYMENTS
(a) Following the Closing, in addition to the Purchase Price, if the
Purchaser's Gross Profit (defined below) attributable to xxxxxxxx generated by
JBA or its successors/purchaser (determined in accordance with generally
accepted accounting principles in effect as of the date of this Agreement
consistently applied in accordance with the practices employed in connection
with the audit of the Seller's Financial Statements) in any of the 12 full month
periods ending on the first, second or third anniversaries of the Closing Date,
(each such 12 month period an "Earn-Out Period" and collectively, the "Earn-Out
Periods") is equal to or greater than $567,000, then promptly following the
final determination of the Gross Profit Calculation (defined below) for the
applicable Earn Out Period, the Purchaser shall pay an amount or amounts (the
"Contingent Payment") to the Seller, as follows:
(i) for the first Earn-Out Period, if Gross Profit is (1) equal to or
greater than $630,000 for the first Earn-Out Period, then the Contingent
Payment for such period shall equal $333,333 or (2) equal to or greater
than $567,000 but less than $630,000, then the Contingent Payment for such
period shall equal the product of (x) $333,333 and (y) a fraction, the
numerator of which is Gross Profit, and the denominator of which is
$630,000;
(ii) for the second Earn-Out Period, if Gross Profit is (1) equal to
or greater than $630,000 for the second Earn-Out Period, then the
Contingent Payment for such period shall equal $333,333 or (2) equal to or
greater than $567,000 but less than $630,000, then the Contingent Payment
for such period shall equal the product of (x) $333,333 and (y) a fraction,
the numerator of which is Gross Profit, and the denominator of which is
$630,000; and
(iii) for the third Earn-Out Period, if Gross Profit is (1) equal to
or greater than $630,000 for the third Earn-Out Period, then the Contingent
Payment for such period shall equal $333,334 or (2) equal to or greater
than $567,000 but less than $630,000, then the Contingent Payment for such
period shall equal the product of (x) $333,334 and (y) a fraction, the
numerator of which is Gross Profit, and the denominator of which is
$630,000.
The Seller shall be entitled to earn a Contingent Payment for every
Earn-Out Period.
(b) "Gross Profit" means gross revenues, less (i) cost of claims (including
the cost of drugs and all fees), (ii) the costs associated with any outside
claim adjudication and (iii) any net rebate amounts.
(c) Within sixty (60) days of the end of each Earn-Out Period, the
Purchaser shall deliver to the Seller a calculation of the Gross Profit prepared
by the Purchaser (such calculation referred to as a " Gross Profit
Calculation"). Accompanying the Gross Profit Calculation will be the Purchaser's
payment to the Seller or Seller's designee, of the Contingent Payment then due
based on such Gross Profit Calculation
(d) In the event that any dispute arises as to any provisions of this
Schedule 2.05, the Seller shall notify the Purchaser in writing within 15 days
of the circumstance giving rise to such dispute. If the Purchaser and the Seller
are not able to resolve such dispute within 30 days of the Purchaser's receipt
of notice of such dispute hereunder, such dispute shall promptly be submitted to
the American Arbitration Association (the "AAA") to be resolved by binding
arbitration in accordance with the arbitration rules of the AAA. The place of
arbitration shall be New York, New York. The arbitration tribunal shall be
composed of three arbitrators, one of which shall be appointed by the Purchaser
within 10 Business Days of the end of the 30-day period referred to above, one
of which shall be appointed by the Seller within 10 Business Days of the end of
the 30-day period referred to above and one of which shall be appointed by the
arbitrators appointed by the Purchaser and the Seller within 15 Business Days of
the end of the 30-day period referred to above. The arbitrators will be directed
to resolve such dispute, disagreement or controversy as soon as practicable.
(e) Notwithstanding anything to the contrary contained in this Agreement,
the Purchaser shall deduct from the amount of any Contingent Payment which
becomes payable hereunder the amount of any Losses for which the Purchaser is
entitled to recover from the Seller or the Owner under Section 8.02 of the
Agreement.
