Exhibit 10.5
EXECUTION COPY
PURCHASE AND SALE AGREEMENT
By and Among
LUK-SYMPHONY MANAGEMENT, LLC
SYMPHONY HEALTH SERVICES, LLC
And
REHABCARE GROUP, INC.
Dated as of May 3, 2006
TABLE OF CONTENTS
ARTICLE PAGE
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ARTICLE 1 DEFINITIONS.................................................................................1
1.1. Definitions.....................................................................................1
ARTICLE 2 PURCHASE AND SALE OF INTERESTS..............................................................9
2.1. Purchase and Sale of Symphony Interests.........................................................9
2.2. Purchase Price..................................................................................9
2.3. Symphony Net Working Capital Adjustment.........................................................9
2.4. Closing Date...................................................................................12
2.5. Deliveries at the Closing......................................................................12
2.6. Further Assurances.............................................................................12
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER...................................................13
3.1. Organization, Standing and Authority...........................................................13
3.2. Execution and Delivery.........................................................................13
3.3. No Conflict....................................................................................13
3.4. Litigation.....................................................................................13
3.5. Consents and Approvals.........................................................................14
3.6. Brokerage......................................................................................14
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SYMPHONY AND SELLER......................................14
4.1. Organization and Standing......................................................................14
4.2. Authority; No Conflicts........................................................................14
4.3. Capitalization.................................................................................15
4.4. Financial Statements...........................................................................16
4.5. No Undisclosed Liabilities; Indebtedness.......................................................16
4.6. Absence of Certain Changes.....................................................................16
4.7. Litigation.....................................................................................17
4.8. Compliance with Laws...........................................................................17
4.9. Material Contracts.............................................................................18
4.10. Labor Matters..................................................................................18
4.11. Employee Benefits..............................................................................19
4.12. Taxes..........................................................................................21
4.13. Insurance Policies.............................................................................25
4.14. Licenses.......................................................................................25
4.15. Assets Complete................................................................................25
4.16. Real Property..................................................................................25
4.17. Intellectual Property..........................................................................26
4.18. Customers......................................................................................27
4.19. Affiliate Transactions.........................................................................27
ARTICLE PAGE
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4.20. Environmental Matters..........................................................................27
4.21. Accounts Receivable............................................................................28
4.22. Medicare and Medicaid; Third Party Payors......................................................28
4.23. Cost Reports...................................................................................28
4.24. Exclusion from Government Programs.............................................................28
4.25. Compliance Program.............................................................................28
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER....................................................29
5.1. Organization and Standing......................................................................29
5.2. Authority; No Conflicts........................................................................29
5.3. Governmental Consents..........................................................................30
5.4. Litigation.....................................................................................30
5.5. Brokers........................................................................................30
5.6. Solvency.......................................................................................30
5.7. Accredited Investor............................................................................30
5.8. Funding........................................................................................30
5.9. No Knowledge of Misrepresentations or Omissions................................................30
5.10. Independent Investigation......................................................................31
ARTICLE 6 COVENANTS..................................................................................31
6.1. Conduct of Symphony Businesses Prior to the Closing............................................31
6.2. Access to Information..........................................................................31
6.3. Confidentiality................................................................................33
6.4. Covenant Not To Compete........................................................................33
6.5. Solicitation of Employees......................................................................34
6.6. Regulatory and Other Authorizations, Consents..................................................34
6.7. Notification of Certain Matters................................................................34
6.8. Exclusivity....................................................................................35
6.9. Repayment of Intercompany Accounts and Third-Party Indebtedness; Termination of
Affiliate Transactions.........................................................................35
6.10. Transitional Matters...........................................................................35
6.11. Tax Treatment..................................................................................36
6.12. Agreement on Valuation.........................................................................36
6.13. Certain Tax Matters............................................................................37
6.14. Conveyance Taxes...............................................................................37
6.15. Continuing Disregard Entity Status.............................................................37
6.16. Severance Obligations..........................................................................37
6.17. COBRA..........................................................................................37
6.18. HSR Filing.....................................................................................37
6.19. Insurance......................................................................................38
6.20. Deferred Compensation Plans....................................................................38
ARTICLE 7 CONDITIONS TO THE OBLIGATIONS OF SELLER AND SYMPHONY.......................................39
7.1. Representations and Covenants..................................................................39
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ARTICLE PAGE
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7.2. Absence of Adverse Governmental Action.........................................................39
7.3. Consents and Approvals.........................................................................39
7.4. No Material Adverse Change.....................................................................39
7.5. Resolutions....................................................................................39
7.6. Incumbency Certificate.........................................................................39
7.7. Xxxx-Xxxxx Xxxxxx Act..........................................................................40
ARTICLE 8 CONDITIONS TO THE OBLIGATIONS OF BUYER.....................................................40
8.1. Representations and Covenants..................................................................40
8.2. Absence of Adverse Governmental Action........................................................40
8.3. Consents and Approvals.........................................................................40
8.4. Resolutions....................................................................................40
8.5. Incumbency Certificate.........................................................................40
8.6. FIRPTA Certificate.............................................................................41
8.7. Resignation of Officers and Directors..........................................................41
8.8. Settlement of Intercompany Accounts............................................................41
8.9. Termination of Affiliate Agreements............................................................41
8.10. Xxxx-Xxxxx Xxxxxx Act..........................................................................41
ARTICLE 9 INDEMNIFICATION; SURVIVAL..................................................................41
9.1. Indemnification by Seller......................................................................41
9.2. Indemnification by Buyer.......................................................................42
9.3. Method of Asserting Claims, Etc................................................................42
9.4. Certain Indemnification Payments...............................................................43
9.5. Injunctive Relief..............................................................................43
9.6. Limitations....................................................................................43
9.7. Sole and Exclusive Remedy......................................................................44
ARTICLE 10 TAX MATTERS................................................................................45
10.1. Indemnity......................................................................................45
10.2. Payment of Tax Obligations.....................................................................45
10.3. Returns and Refunds............................................................................45
10.4. Cooperation....................................................................................46
10.5. Contests.......................................................................................46
10.6. Allocation of Taxes............................................................................46
10.7. Termination of Tax Allocation Agreements.......................................................47
10.8. Indemnity Payments.............................................................................47
10.9. Transition Services............................................................................47
10.10. Conflict Between Article 9 and Article 10 Successors...........................................47
ARTICLE 11 TERMINATION, AMENDMENT AND WAIVER..........................................................47
11.1. Termination....................................................................................47
11.2. Effect of Termination..........................................................................48
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ARTICLE PAGE
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ARTICLE 12 MISCELLANEOUS..............................................................................48
12.1. Notices........................................................................................48
12.2. Entire Agreement...............................................................................49
12.3. Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies....................49
12.4. Governing Law..................................................................................49
12.5. Binding Effect; No Assignment..................................................................49
12.6. Counterparts...................................................................................49
12.7. Schedules and Annexes..........................................................................50
12.8. Headings.......................................................................................50
12.9. Publicity......................................................................................50
12.10. Severability...................................................................................50
12.11. Time of Essence................................................................................50
12.12. Attorneys' Fees................................................................................50
12.13. Expenses.......................................................................................50
12.14. Third Party Beneficiaries......................................................................50
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PURCHASE AND SALE AGREEMENT
---------------------------
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of May 3,
2006, is entered into by and among RehabCare Group, Inc., a Delaware corporation
("Buyer"), LUK-Symphony Management, LLC, a Delaware limited liability company
("Seller") and Symphony Health Services, LLC, a Delaware limited liability
company ("Symphony"). The parties hereto shall be referred to herein
individually as a "Party" and collectively as the "Parties."
R E C I T A L S:
WHEREAS, Seller owns all of the issued and outstanding limited
liability company membership interests in Symphony (the "Symphony Interests");
WHEREAS, Symphony is engaged, directly or indirectly through its
subsidiaries, in the businesses of providing: (a) physical, occupational and
speech therapy on a contract basis primarily to long term care facilities, (b)
health care consulting services for skilled nursing facilities, (c) specialized
nurse and therapy staffing for public schools in the state of New York, and (d)
nurse staffing for long term care facilities in the state of New York
(collectively, the "Businesses");
WHEREAS, Buyer desires to acquire all of the Symphony Interests from
Seller, and Seller desires to sell all of the Symphony Interests to Buyer, in
each case on the terms and subject to the conditions contained herein; and
WHEREAS, as a condition to the consummation of the transaction
described in this Agreement, Seller will deliver at the closing an agreement by
Leucadia National Corporation, a New York corporation ("Leucadia") to cause
certain actions to be taken with regard to Seller's obligations hereunder
pursuant to the Leucadia Agreement, as further described herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the representations, warranties,
mutual covenants and agreements set forth in this Agreement and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE 1
DEFINITIONS
1.1. DEFINITIONS. As used herein, the following terms have the
following meanings:
"ACTION" means any claim, action, suit, arbitration or proceeding by or
before any Governmental Authority.
"AFFILIATE" or "AFFILIATES" as applied to any Person, means any other
Person directly or indirectly controlling, controlled by, or under common
control with, that Person. For the purposes of this definition, "control"
(including with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract or otherwise.
"AFFILIATE AGREEMENT" has the meaning given in Section 6.9(b).
"ALLOCATION STATEMENT" has the meaning given in Section 6.12.
"AGREEMENT" has the meaning given in the Preamble hereto.
"AUDITOR" has the meaning given in Section 2.3(d).
"BASE WORKING CAPITAL" has the meaning given in Section 2.3(b).
"BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which banks in St. Louis, Missouri are authorized or obligated by Law or
executive order to close.
"BUSINESSES" has the meaning given in the Recitals hereto.
"BUYER" has the meaning given in the Preamble hereto.
"BUYER INDEMNIFIED PARTY" means any Person entitled to indemnification
by Seller as specified in Section 9.1.
"CASH AND CASH EQUIVALENTS" means the amount of cash and cash
equivalents reported in the Closing Balance Sheet.
"CLAIM NOTICE" has the meaning given in Section 9.3(a).
"CLOSING" means the consummation of the transactions contemplated by
this Agreement.
"CLOSING BALANCE SHEET" has the meaning given in Section 2.3(a).
"CLOSING CASH AMOUNT" has the meaning set forth in Section 2.2.
"CLOSING DATE" means the date specified in Section 2.4.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTRACT" means with respect to any Person, any agreement, contract,
lease of personal property, note, loan, evidence of Indebtedness, purchase
order, letter of credit, franchise agreement, undertaking, covenant not to
compete, employment agreement, license, instrument, obligation, commitment,
purchase and sale order, quotation or other executory commitment to which such
Person or its Subsidiaries is a party or which relates to such Person or its
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Subsidiaries' businesses or any of their respective assets, whether oral or
written, express or implied, and which pursuant to its terms has not expired,
terminated or been fully performed by the parties thereto.
"COST REPORTS" means all cost reports relating to the periods ending
prior to the Closing Date or required as a result of the consummation of the
transactions described herein, including, without limitation, those relating to
Medicare, Medicaid and other third party payors which settle on a cost report
basis.
"DOJ" means the United States Department of Justice.
"ENCUMBRANCE" means any claim, lien, pledge, option, charge, easement,
security interest, deed of trust, mortgage, right-of-way, encroachment, building
or use restriction, encumbrance or other right of third parties, whether
voluntarily incurred or arising by operation of law, and includes, without
limitation, any agreement to give any of the foregoing in the future, and any
contingent or conditional sale agreement or other title retention agreement or
lease in the nature thereof.
"ENVIRONMENTAL LAWS" means any and all Laws and Governmental Orders
regulating, relating to or imposing liability or standards of conduct concerning
protection of the environment, human health or safety or relating to exposure
to, emissions, discharges, releases or threatened releases of, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes.
"EQUITY SECURITIES" of any Person means (a) shares of capital stock,
limited liability company interests, partnership interests or other equity
securities of such Person, (b) subscriptions, calls, warrants, options or
commitments of any kind or character relating to, or entitling any Person to
purchase or otherwise acquire, any capital stock, limited liability company
interests, partnership interests or other equity securities of such Person, (c)
securities convertible into or exercisable or exchangeable for shares of capital
stock, limited liability company interests, partnership interests or other
equity securities of such Person, and (d) equity equivalents, interests in the
ownership or earnings of, or equity appreciation, phantom stock or other similar
rights of, or with respect to, such Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATES" means with respect to any Person, any other Person
which is (or at any relevant time was) a member of a "controlled group of
corporations" with, under "common control" with, or a member of an "affiliated
service group" with, or otherwise required to be aggregated with, such first
Person or any of its Subsidiaries as set forth in Section 414(b), (c), (m) or
(o) of the Code but shall not include Symphony or any of its Subsidiaries.
"ESTIMATED CLOSING WORKING CAPITAL" has the meaning given in Section
2.3(b).
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"ESTIMATED CLOSING WORKING CAPITAL ADJUSTMENT AMOUNT" has the meaning
given in Section 2.3(b).
"FINAL CLOSING WORKING CAPITAL" has the meaning given in Section
2.3(c).
"FINAL CLOSING WORKING CAPITAL ADJUSTMENT AMOUNT" has the meaning given
in Section 2.3(c).
"FIXED ASSETS" means with respect to any Person any and all equipment,
furniture, automobiles, trucks and other vehicles, office and computer equipment
and other personal property owned or used by such Person in its business.
"FTC" means the United States Federal Trade Commission.
"GAAP" means United States generally accepted accounting principles in
effect from time to time applied consistently throughout the period involved.
"GOVERNMENTAL AUTHORITY" means any government, any governmental entity,
department, commission, board, agency or instrumentality, and any court,
tribunal, or judicial or arbitral body, whether federal, state, local or
foreign.
"GOVERNMENTAL ORDER" means any order, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"GOVERNMENT PROGRAMS" has the meaning given in Section 4.22.
"HEALTH CARE LAWS" means all applicable federal, state or local health
care laws, rules and regulations, including, without limitation those relating
to the payment or receipt of illegal remuneration, including 42 U.S.C. ss.
1320a-7b(b) (the Medicare/Medicaid anti-kickback statute), 42 U.S.C. ss. 1395nn
(the Xxxxx Statute), 42 U.S.C. ss. 1320a-7a, 42 U.S.C. ss. 1320a-7b(a), 42
U.S.C. ss. 1320a-7b(c) and any applicable state anti-kickback laws.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"HSR FILING" has the meaning given in Section 6.18.
"INDEBTEDNESS" means (a) indebtedness for borrowed money, (b)
obligations evidenced by bonds, notes, debentures, letters of credit (whether or
not drawn) or similar instruments, (c) obligations under capital leases, (d)
obligations under conditional sale, title retention or similar agreements or
arrangements creating an obligation of such Person or any of its Subsidiaries
with respect to the deferred purchase price of property (other than customary
trade credit), (e) interest rate and currency obligation swaps, xxxxxx or
similar arrangements and (f) all obligations to guarantee any of the foregoing
types of obligations on behalf of any Person other than a Subsidiary, including
in each case, the aggregate principal amount thereof, the aggregate amount of
any accrued but unpaid interest thereon and any prepayment penalties or other
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similar amounts payable in connection with the repayment thereof on or prior to
the Closing Date if required pursuant to the terms of such Indebtedness or by
this Agreement.
"INDEMNIFIED PARTY" has the meaning given in Section 9.3.
"INDEMNIFYING PARTY" has the meaning given in Section 9.3(a).
"INTELLECTUAL PROPERTY RIGHTS" means, with respect to any Person all
(a) domestic and foreign registrations of trademarks, service marks, logos,
corporate names, protected models, designs, created works, trade names or other
trade rights of such Person or any of its Subsidiaries, (b) pending applications
by such Person or any of its Subsidiaries for any such registrations, (c) rights
in or to patents and copyrights and pending applications therefor of such Person
or any of its Subsidiaries, (d) such Person's and each of its Subsidiaries'
rights to other trademarks, service marks, logos, corporate names, protected
models, designs, data, software, created works, trade names and other trade
rights and all other trade secrets, designs, plans, specifications, technology,
know-how, methods, designs, concepts and other proprietary rights, whether or
not registered, and (e) rights under any licenses of such Person or any of its
Subsidiaries to use any of intellectual property owned or licensed by any other
Person of the type described in clauses (a) to (d) above.
"INTERCOMPANY ACCOUNT" has the meaning given in Section 6.9(a).
"KNOWLEDGE" when used (a) with respect to Buyer, means the actual
knowledge of Xxxx Xxxxx, Xxxxx Xxxxx and Xxxx Xxxxxx; and (b) with respect to
Seller or Symphony, means the actual knowledge of Xxxxx Xxxxx, Xxxxxx Xxxxxx,
Xxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxx Guild, Xxxxx Xxxxx and Xxxx
XxXxxxxx.
"LAW" means any federal, state, local or foreign statute, ordinance,
regulation, rule or code, including, without limitation, the Environmental Laws
and the Health Care Laws.
"LEUCADIA AGREEMENT" means an agreement in substantially the form
attached hereto as Exhibit A, pursuant to which Leucadia shall be obligated to
(i) to fund up to $20,000,000 of cash to Seller from time to time to allow
Seller to perform its indemnification obligations as set forth in Article 9 of
this Agreement (it being agreed and understood that Leucadia is not obligated to
maintain any cash balance in the accounts of Seller), and (ii) cause Leucadia
and its Affiliates to comply with the terms and conditions of Section 6.4.
"LIABILITIES" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law, Action or Governmental Order and those arising under any Contract.
"LICENSES" means all of the licenses, permits and other governmental
authorizations.
"LETTER AGREEMENT" has the meaning given in Section 9.1.
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"LOSSES" or "LOSS" means any loss, cost, liability, damage,
disbursement, expense, deficiency, obligation, penalty, Tax or settlement of any
kind, including interest or other carrying costs, penalties, legal, accounting
and other professional fees and expenses incurred in the investigation,
collection, prosecution and defense of claims and amounts paid in settlement,
that may be imposed on or otherwise incurred or suffered.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, any change
or effect that, either individually or in the aggregate with all other such
changes or effects, is materially adverse to the assets, properties, business,
liabilities, financial condition or results of operations of such Person and its
Subsidiaries taken as a whole; provided, however, that the effect of changes
that are generally applicable to the industries or markets in which the Person
and its subsidiaries operate, the United States economy or local economics in
which the Person and its Subsidiaries operate and changes and effects resulting
from the announcement of the transaction contemplated by this Agreement, shall
be excluded from the determination of Material Adverse Effect.
"MATERIAL SYMPHONY AGREEMENTS" has the meaning given in Section 4.9.
"MEDICAID" has the meaning given in Section 4.22.
"MEDICARE" has the meaning given in Section 4.22.
"NET WORKING CAPITAL" has the meaning given in Section 2.3(a).
"NOTICE PERIOD" has the meaning given in Section 9.3(a).
"ORDER" means any writ, judgment, decree, injunction or similar order
of any Governmental Authority (in each such case whether preliminary or final).
"OUTSIDE CLOSING DATE" has the meaning given in Section 11.1(d).
"PARTY" or "PARTIES" has the meaning given in the Preamble hereto.
"PERMITTED ENCUMBRANCES" means (a) liens for Taxes or governmental
charges or claims (i) not yet due and payable or (ii) being contested in good
faith, if a reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor, (b) statutory liens of landlords, liens
of carriers, warehouse persons, mechanics and material persons and other liens
imposed by law incurred in the ordinary course of business for sums (i) not yet
due and payable or (ii) being contested in good faith, if a reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor, (c) liens incurred or deposits made in connection with workers'
compensation, unemployment insurance and other similar types of social security
programs or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and return of
money bonds and similar obligations, in each case in the ordinary course of
business, consistent with past practice, (d) purchase money liens incurred in
the ordinary course of business, (e) easements, rights-of-way, restrictions and
other similar charges or Encumbrances on real property, in each case which do
not materially interfere with the use of, and do not materially detract from the
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value of, the property to which such Encumbrance relates and (f) liens disclosed
in Section 1.1(a) of the Disclosure Schedule.
"PERSON" means any natural person, corporation, limited partnership,
general partnership, limited liability partnership, joint stock company, limited
liability company, joint venture, association, company, trust or other
organization, or any Governmental Authority.
"PRE-CLOSING PARTIAL PERIOD" has the meaning given in Section 10.1.
"RELATED DOCUMENTS" means the any exhibits or schedules attached hereto
and any documents or instruments executed and delivered pursuant to this
Agreement.
"RESPIRATORY SALE AGREEMENT" means that certain Stock Purchase
Agreement dated May 25, 2005 by and among Symphony, Symphony Health Services,
Inc., Symphony Respiratory Services, Inc., Meridian Healthcare Group, Inc. and
Primedica, Inc.
"RESTRICTED PERIOD" has the meaning given in Section 6.4(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, including the rules and regulations thereunder.
"SELLER" has the meaning given in the Preamble hereto.
"SELLERS' CONTEST" has the meaning given in Section 10.5.
"SELLER INDEMNIFIED PARTY" has the meaning given in Section 9.2.
"SUBSIDIARY" of any Person means any other Person (a) of which such
first Person (either alone or through or together with any other Subsidiary)
owns, directly or indirectly, more than 50% of the stock or other Equity
Securities of such other Person, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of, or
otherwise control the business and affairs of, such other Person or (b) the
operations of which are consolidated with such first Person, pursuant to GAAP,
for financial reporting purposes.
"SYMPHONY" has the meaning given in the Preamble hereto.
"SYMPHONY DETERMINATION DATE" has the meaning given in Section 2.3(d).
"SYMPHONY EMPLOYEES" shall mean each employee of Symphony or any of its
Subsidiaries (whether or not listed or described in Section 4.11 of the
Disclosure Schedule) who is employed by Symphony or any of its Subsidiaries on
the Closing Date.
"SYMPHONY EMPLOYEE PLAN" means with respect to Symphony and its
Subsidiaries, any "employee pension benefit plan" as defined in Section 3(2) of
ERISA, any "employee welfare benefit plan" as defined in Section 3(1) of ERISA,
any employment, consulting, severance or other similar contract, arrangement or
policy, and any other plan, program, policy, practice, understanding, agreement
or commitment, whether written or oral, providing for compensation or other
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benefits to any current or former director, officer, employee (whether active or
on leave) or consultant of Symphony or its Subsidiaries, which are, have been,
or will be prior to Closing, administered, maintained, or contributed to by
Symphony or its Subsidiaries, or under which any of the forgoing entities has or
has had any liability or obligation, whether actual or contingent, including,
without limitation, insurance coverage (including without limitation any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health, disability or accident benefits or deferred compensation, pension,
savings and thrift, and profit-sharing plans, bonuses, fringe benefits,
retention, change in control, stock ownership, restricted stock, phantom stock,
stock options, stock appreciation rights, stock purchases or other forms of cash
or stock based incentive compensation or post-retirement insurance, but
excluding unwritten, at-will services contracts with independent contractors.
"SYMPHONY FINANCIAL STATEMENTS" has the meaning given in Section 4..4.
"SYMPHONY INSURANCE POLICIES" has the meaning given in Section 4.13.
"SYMPHONY INTERESTS" has the meaning given in the Recitals hereto.
"SYMPHONY INTERIM FINANCIAL STATEMENTS" has the meaning given in
Section 4.4.
"SYMPHONY REAL PROPERTY" has the meaning given in Section 4.16(a).
"SYMPHONY REAL PROPERTY LEASES" has the meaning given in Section
4.16(a).
"SYMPHONY YEAR-END FINANCIAL STATEMENTS" has the meaning given in
Section 4.4.
"TAX" means any tax, assessment or charge imposed by any Governmental
Authority of any nature including federal, state, local or foreign net income
tax, alternative or add-on minimum tax, franchise tax, gross income, adjusted
gross income or gross receipts tax, employment related tax (including employee
withholding or employer payroll tax, Social Security, Medicare, or FUTA), ad
valorem, transfer, franchise, license, excise, severance, stamp, occupation,
premium, personal property, real property, capital stock, profits, disability,
registration, value added, estimated, customs duties, and sales or use tax,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Authority (domestic or foreign) responsible for the
imposition of any such tax.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY INDEBTEDNESS" has the meaning given in Section 6.9(a).
"TRANSACTION RELATED EXPENSES" has the meaning set forth in Section
12.13.
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ARTICLE 2
PURCHASE AND SALE OF INTERESTS
2.1. PURCHASE AND SALE OF SYMPHONY INTERESTS. Subject to the terms and
conditions contained in this Agreement and for the consideration specified in
Section 2.2, at the Closing, Buyer agrees to purchase from Seller, and Seller
agrees to sell to Buyer, the Symphony Interests.
2.2. PURCHASE PRICE. Subject to the terms and conditions contained in
this Agreement (including, without limitation, the Net Working Capital
Adjustment contained in Section 2.3) and for the consideration specified in
Section 2.1, at the Closing, Buyer agrees to pay to Seller an amount in cash
equal to the sum of One Hundred One Million Five Hundred Thousand Dollars
($101,500,000.00) ("Closing Cash Amount") by wire transfer to such account as
designated by Seller.
2.3. SYMPHONY NET WORKING CAPITAL ADJUSTMENT.
(a) CLOSING BALANCE SHEET AND NET WORKING CAPITAL FOR PURPOSES
OF NET WORKING CAPITAL ADJUSTMENT Provisions. For all purposes of this
Section 2.3, the balance sheet for Symphony as of the date immediately
preceding the Closing Date (the "Closing Balance Sheet") shall be
prepared in accordance with GAAP, on a basis consistent with the
preparation of the Symphony Financial Statements (except that the
Closing Balance Sheet shall contain (i) an asset equal to the funds
held in the Symphony Health Services Non-Qualified Deferred
Compensation Plan and Symphony Health Services Mutual Fund Option Plan
and a corresponding liability in the same amount and (ii) a liability
for retention bonuses payable to employees of Symphony and its
Subsidiaries equal to $100,000, regardless of the actual amount of
retention bonuses payable by Symphony to its and its Subsidiaries'
employees following the Closing), and shall fairly present the
financial position of Symphony as of the close of business on the date
immediately preceding the Closing Date; provided, however, the Closing
Balance Sheet will not reflect any write-up of assets attributable to
the purchase transaction or other purchase accounting adjustments, if
any. Except as set forth in the preceding sentence, the Closing Balance
Sheet shall reflect all assets and liabilities of Symphony using the
same accounting methods, policies, practices and procedures with
consistent classifications, judgments and valuation and estimation
methodologies reflected on the Symphony Financial Statements. As used
herein, the term "Net Working Capital" shall mean (x) the current
assets of Symphony to be retained by Symphony immediately following the
Closing, excluding any assets related to the Respiratory Division Sale,
as of the close of business on the date immediately preceding the
Closing Date minus (y) the current liabilities of Symphony as of the
close of business on the date immediately preceding the Closing Date
(other than current reserves or other accruals with respect to any
liabilities described in Sections 9.1(b), 9.1(c), 9.1(d), 9.1(e) and
9.1(f)). For purposes of calculating the Net Working Capital of
Symphony, the current assets and current liabilities of Symphony shall
(i) reflect the settlement of the Intercompany Accounts and Third Party
Indebtedness and the distribution of cash, if any, pursuant to Section
6.9, (ii) exclude any accrual for current or deferred income taxes (or
any other Tax asset or liability as included on the Symphony Financial
9
Statements), (iii) shall reflect an asset equal to the funds held in
the Symphony Health Services Non-Qualified Deferred Compensation Plan
and Symphony Health Services Mutual Fund Option Plan and a
corresponding liability in the same amount, and (iv) shall reflect a
liability for retention bonuses payable to employees of Symphony and
its Subsidiaries equal to $100,000, regardless of the actual amount of
retention bonuses payable by Symphony to its and its Subsidiaries'
employees following the Closing.
(b) NET CLOSING WORKING CAPITAL AMOUNT. On or before the
fifteenth (15th) calendar day after the Closing Date, Seller will have
delivered to Buyer a statement of Seller's good faith estimate of the
Net Working Capital of Symphony as of the date immediately preceding
the Closing Date in substantially the form of the Statement of Working
Capital set forth in Section 2.3(b) of the Disclosure Schedule (the
"Estimated Closing Working Capital"). Seller's statement of Estimated
Closing Working Capital shall set forth in detail the amounts and the
methodology underlying such estimate. The statement of Estimated
Closing Working Capital is to be prepared from the Closing Balance
Sheet of Symphony, as adjusted consistent with Section 2.3(b). If the
Estimated Closing Working Capital is less than Thirty Million Nine
Hundred Thousand Dollars ($30,900,000) (the "Base Working Capital"),
then within five (5) days of the date that the Estimated Closing
Working Capital is determined by the parties, Seller shall pay to Buyer
an amount equal to the shortfall. If the Estimated Closing Working
Capital is greater than the Base Working Capital, then within five (5)
days of the date that the Estimated Closing Working Capital is
determined by the parties, Buyer shall pay to Seller an amount equal to
the excess. The amount that is determined in accordance with this
Section 2.3(b) shall be called the "Estimated Closing Working Capital."
(c) FINAL CLOSING WORKING CAPITAL ADJUSTMENT AMOUNT. On or
before the date that is the sixtieth (60th) calendar day after the
Closing Date, Buyer will have delivered to Seller a statement of the
Closing Net Working Capital as of the date immediately preceding the
Closing Date in substantially the form of the Statement of Working
Capital set forth in Section 2.3(b) of the Disclosure Schedule (the
"Final Closing Working Capital"). Buyer's statement of the Final
Closing Working Capital shall set forth in detail the amounts and
methodology underlying such Final Closing Working Capital. The
statement of Final Closing Working Capital is to be prepared from the
Closing Balance Sheet of Symphony, as adjusted consistent with Section
2.3(a). The difference between the Estimated Closing Working Capital
and the Final Closing Working Capital shall be the "Final Closing
Working Capital Adjustment Amount").
(d) DISPUTES. Upon delivery of the statement of Final Closing
Working Capital, if Seller disagrees with the calculation of the Final
Closing Working Capital or any element of the Closing Balance Sheet
relevant thereto that would result in a change to the Final Closing
Working Capital Adjustment Amount, it shall notify Buyer of such
disagreement in writing within thirty (30) days after its receipt of
the Closing Balance Sheet which notice shall set forth in detail the
particulars of such disagreement. In the event Seller does not provide
such a notice of disagreement within such thirty (30) day period,
Seller shall be deemed to have accepted the calculations of the Final
Closing Working Capital and the Final Closing Working Capital
10
Adjustment Amount delivered by Buyer, which shall be final, binding and
conclusive for all purposes hereunder. In the event any such notice of
disagreement is timely provided by Seller, Seller and Buyer shall
negotiate in good faith for a period of thirty (30) days (or such
longer period as the Buyer and Seller may mutually agree) to resolve
any disagreements with respect to the calculation of the Final Closing
Working Capital and the Final Closing Working Capital Adjustment
Amount. If, at the end of such period, they are unable to resolve such
disagreements, then Ernst & Young LLP, (or such other independent
accounting firm of recognized national standing as may be mutually
selected by Buyer and Seller) (the "Auditor") shall resolve any
remaining disagreements. The Auditor shall determine as promptly as
practicable, but in any event within thirty (30) days of the date on
which such dispute is referred to the Auditor, based on written
submissions forwarded by Buyer and Seller to the Auditor within ten
(10) Business Days following the Auditor's selection, whether the Final
Closing Working Capital and the Final Closing Working Capital
Adjustment Amount were prepared in accordance with the standards set
forth in this Section 2.3 and (only with respect to the remaining
disagreements submitted to the Auditor) whether and to what extent (if
any) the Final Closing Working Capital and the Final Closing Working
Capital Adjustment Amount determination requires adjustment. In
connection with the resolution of the disagreement, the Auditor shall
allow Buyer and Seller to present their respective positions regarding
the elements of the Final Closing Working Capital and the Final Closing
Working Capital Adjustment Amount in dispute. The Auditor may, at its
discretion, conduct a conference concerning the disagreement, at which
conference Buyer and Seller shall have the right to present additional
documents, materials and other information and to have present their
respective advisors, counsel and accountants. In connection with the
resolution of the disagreement, there shall be no other hearings or
oral examinations, testimony, depositions, discovery or other similar
proceedings. Each of Buyer and Seller shall make available to the
Auditor such documents, books, records, work papers, facilities,
personnel and other information as the Auditor may reasonably request
to review the Final Closing Working Capital and the Final Closing
Working Capital Adjustment Amount and to resolve the disagreement. The
fees and expenses of the Auditor shall be paid one-half by Seller and
one-half by Buyer. The determination of the Auditor shall be final,
conclusive and binding on the parties. The date on which the Final
Closing Working Capital and the Final Closing Working Capital
Adjustment Amount is finally determined in accordance with this Section
2.3 is referred to as the "Symphony Determination Date."
(e) PAYMENT. In the event that the Final Closing Working
Capital Adjustment Amount is a negative number, then within five (5)
days after the Symphony Determination Date Seller shall pay to Buyer an
amount equal to the absolute value of the Final Closing Working Capital
Adjustment Amount, together with any interest earned thereon calculated
at a rate of 6% per annum starting from the Closing Date and through
the date of payment. In the event that the Final Closing Working
Capital Adjustment Amount is a positive number, then within five (5)
days after the Symphony Determination Date Buyer shall pay to Seller an
amount equal to the absolute value of the Final Closing Working Capital
Adjustment Amount, together with any interest earned thereon calculated
at a rate of 6% per annum starting from the Closing Date and through
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the date of payment. The payment of the Final Working Capital
Adjustment Amount shall be treated as an adjustment to the
consideration given by the parties for income tax purposes.
(f) COOPERATION AND ACCESS. Seller and Buyer shall use
commercially reasonable efforts to cooperate with each other and each
other's representatives and to provide each other and each other's
representatives with reasonable access during normal business hours to
such financial and other information as may be in such party's and its
accountants' possession and that is necessary or useful in the
preparation of the Closing Balance Sheet and the calculation of the
Final Closing Working Capital and the Final Closing Working Capital
Adjustment Amount, the review thereof or the resolution of any dispute
with respect thereto.
2.4. CLOSING DATE. The Closing shall occur at 10:00 a.m. local time on
the first day of the month after all of the conditions to Closing set forth in
Articles 7 and 8 have been satisfied (other than such conditions as are to be
performed at Closing) or waived by the Party entitled to waive such conditions,
in the offices of Xxxxxxxx Xxxxxx LLP, One XX Xxxx Xxxxx, Xx. Xxxxx, Xxxxxxxx
00000 or at such place and time as may be agreed to by the Parties (the date
that the Closing actually occurs, the "Closing Date").
2.5. DELIVERIES AT THE CLOSING. To effect the transfers referred to in
Sections 2.1 and 2.2, the following deliveries shall occur on the Closing Date:
(a) Seller and Symphony shall execute and deliver to Buyer the
certificates, instruments, documents and agreements specified in
Article 8 hereof;
(b) Buyer shall execute and deliver to Seller the
certificates, instruments, documents and agreements specified in
Article 7;
(c) Seller shall deliver to Buyer an assignment of the
Symphony Interests, free and clear of any Encumbrances of any nature
whatsoever, duly endorsed for transfer;
(d) Seller shall deliver to Buyer the Leucadia Agreement
executed by Leucadia; and
(e) Buyer shall deliver by wire transfer of immediately
available funds into an account or accounts designated by Seller the
Closing Cash Amount, with such account or accounts designated at least
one Business Day prior to the Closing Date.
The form and substance of all certificates, instruments and other documents
delivered at the Closing shall be reasonably satisfactory in all material
respects to each Party and its counsel, consistent with the provisions of this
Agreement.
2.6. FURTHER ASSURANCES. Each of the Parties shall execute such
instruments, documents and agreements and take such further actions as may be
reasonably required or desirable to carry out the provisions of this Agreement
and the transactions contemplated hereby. Each Party shall use its reasonable
12
efforts to fulfill or obtain the fulfillment of the conditions to the Closing as
promptly as practicable.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof as
follows:
3.1. ORGANIZATION, STANDING AND AUTHORITY. Seller is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the limited liability company power
and authority to own the Symphony Interests.
3.2. EXECUTION AND DELIVERY. Seller has the requisite corporate or
limited liability company power and authority to execute, deliver and perform
the terms of this Agreement, each of the Related Documents and all other
instruments, documents and agreements contemplated or required by the provisions
of this Agreement to be executed, delivered or performed by it. This Agreement
and the Related Documents have been duly approved by all requisite action of
Seller, and, when executed and delivered by Seller, each will be duly and
properly executed and delivered by Seller and will constitute legally valid and
binding obligations of Seller enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization and other similar laws affecting
creditors' rights generally and by general principles of equity, regardless of
whether asserted in a proceeding in equity or at law.
3.3. NO CONFLICT. With the exception of the matters described in
Section 3.3 of the Disclosure Schedule, the execution, delivery and performance
of this Agreement and the Related Documents and the consummation of the
transactions contemplated hereby and thereby will not (a) conflict with or
violate any provision of the certificate of formation or limited liability
company operating agreement of Seller, (b) violate, conflict with or result in
the breach of any of the terms of, result in any modification of the effect of,
or otherwise give any other contracting party the right to terminate,
accelerate, or constitute (or with notice of lapse of time or both constitute) a
default under, any material Contract to which Seller or its Subsidiaries is a
party or by or to which any of their assets or properties may be bound or
subject, (c) violate any Governmental Order against, or binding upon, Seller or
its Subsidiaries or their respective securities, assets or business, or (d)
violate any Law that relates to Seller or its Subsidiaries or to their
respective securities, assets or businesses, except in the case of (b), (c) and
(d), for such defaults or violations as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the ability
of Seller or Symphony to consummate the transactions contemplated hereby or by
the Related Documents.
3.4. LITIGATION. With the exception of the matters described in Section
3.4 of the Disclosure Schedule, neither Seller nor its Subsidiaries is a party
to any Action or investigation presently pending or, to the Knowledge of Seller,
threatened, before any court or Governmental Authority that would reasonably be
expected to have, individually or in the aggregate, a material and adverse
13
effect on the ability of Seller or Symphony or to consummate the transactions
contemplated hereby or by the Related Documents.
3.5. CONSENTS AND APPROVALS. Except for the HSR Filing and as set forth
in Section 3.5 of the Disclosure Schedule, the execution, delivery and
performance of this Agreement and the Related Documents by Seller and Symphony
and the consummation of the transactions contemplated hereby or thereby do not
require Seller or Symphony to obtain any consent, approval or action of, or make
any filing with or give notice to, any Person (including any Governmental
Authority).
3.6. BROKERAGE. 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.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
SYMPHONY AND SELLER
Seller and Symphony jointly and severally represent and warrant to
Buyer as follows:
4.1. ORGANIZATION AND STANDING. Symphony is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Section 4.1 of the Disclosure Schedule sets forth each
jurisdiction where Symphony is qualified to do business as a limited liability
company. Such jurisdictions include all jurisdictions where the character of
Symphony's owned, operated or leased properties or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not have a Material Adverse Effect. Symphony has full
limited liability company power and authority to own or lease its properties and
assets and to carry on its businesses as they are currently conducted. Symphony
has provided or made available to Buyer true and correct copies of its
certificate of formation and limited liability company operating agreement, and
similar organizational documents, each as amended as of the date hereof.
4.2. AUTHORITY; NO CONFLICTS. Except as disclosed in Section 4.2 of the
Disclosure Schedule, the execution, delivery and performance of this Agreement
and the Related Documents and the agreements and transactions contemplated
hereby and thereby have been duly authorized by all necessary action by Symphony
and do not result in, and the consummation of the transactions contemplated
hereby and thereby shall not result in, (a) a violation of any provision of
Symphony's or any of its Subsidiaries' certificates of formation or
incorporation, limited liability company operating agreements or bylaws, or
similar organizational documents, (b) a default (or event which with notice or
lapse of time or both would constitute a default) under, or the acceleration of
any obligation under, any Material Symphony Agreement or Symphony Real Property
Lease, or (c) a violation of any Order to which Symphony or any of its
Subsidiaries is a party or by which Symphony or any of its Subsidiaries or any
of their respective properties are bound, except in the case of (b) and (c) as
would not individually or in the aggregate reasonably be expected to have a
Material Adverse Effect.
14
4.3. CAPITALIZATION.
(a) The authorized limited liability company membership
interests of Symphony consists solely of the Symphony Interests, all of
which are held of record and beneficially by Seller, free and clear of
all Encumbrances. All of the Symphony Interests have been duly
authorized and validly issued and are not subject to any preemptive
rights. There are no outstanding options, warrants, rights or other
securities convertible into or exchangeable or exercisable for Equity
Securities of Symphony. There are no commitments or agreements
providing for the issuance of additional Equity Securities of Symphony,
or for the repurchase or redemption of Equity Securities of Symphony.
There are no agreements of any kind that may obligate Symphony to
issue, purchase, register for sale, redeem or otherwise acquire any
Equity Securities of Symphony. There are no voting trusts, stockholder
agreements, proxies or other agreements in effect to which Seller or
Symphony is a party or by which any of them may be bound with respect
to the voting or transfer of the shares of the Symphony Interests or
any other Equity Securities of Symphony.
(b) Section 4.3 of the Disclosure Schedule is a correct and
complete list of all of the Subsidiaries of Symphony, each of which is
a corporation or limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has the requisite corporate or limited liability
company power and authority to conduct its business as it is presently
being conducted and to own or lease its properties and assets. Section
4.3 of the Disclosure Schedule sets forth each jurisdiction where each
Subsidiary of Symphony is qualified to do business as a foreign
corporation or limited liability company. Such jurisdictions include
all jurisdictions where the character of such Subsidiaries' owned,
operated or leased properties or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or
in good standing would not have a Material Adverse Effect. Copies of
the certificate of incorporation, bylaws, limited liability company
operating agreement or other governing documents of each Subsidiary
have been provided or made available to Buyer and are accurate and
complete as of the date hereof. Section 4.3 of the Disclosure Schedule
sets forth (a) for each Subsidiary that is a corporation, a correct and
complete listing of the number of shares of each class of capital stock
authorized and the number of shares of each class of capital stock or
other Equity Securities that are issued and outstanding and (b) for
each Subsidiary that is a limited liability company, the percentage
ownership of Symphony and each other Person who is a member of such
Subsidiary. All of the outstanding shares of capital stock of, or other
Equity Securities in, the Subsidiaries have been duly and validly
authorized and issued and are fully paid and nonassessable, and except
as set forth in Section 4.3 of the Disclosure Schedule are owned of
record and beneficially by Symphony, free and clear of any Encumbrance
other than Permitted Encumbrances. Except as set forth in Section 4.3
of the Disclosure Schedule, there are no subscriptions, calls,
warrants, options or commitments of any kind or character relating to,
or entitling any Person to purchase or otherwise acquire, any capital
stock or other Equity Securities of the Subsidiaries. There are no
stockholder agreements, voting trusts, proxies or other agreements or
understandings with respect to or concerning the purchase, sale or
voting of the capital stock or other Equity Securities of the
15
Subsidiaries to which Symphony or any of its Subsidiaries or, to the
Knowledge of Seller or Symphony, any other Person, is a party or by
which Symphony or any of its Subsidiaries or, to the Knowledge of
Seller and Symphony, any other Person, is bound.
(c) Other than as set forth in Section 4.3 of the Disclosure
Schedule, neither Symphony nor its Subsidiaries owns of record or
beneficially any Equity Securities of any Person or any right
(contingent or otherwise) to acquire the same. Other than as set forth
in Section 4.3 of the Disclosure Schedule, neither Symphony nor its
Subsidiaries is a member of (nor are any part of their respective
businesses conducted through) any partnerships or limited liability
companies, and neither Symphony nor its Subsidiaries are a participant
in any joint venture or similar arrangement.
4.4. FINANCIAL STATEMENTS. Attached as Section 4.4 of the Disclosure
Schedule are true and correct copies of (a) the audited consolidated balance
sheet of Symphony as of December 31, 2005 and 2004, and the related audited
consolidated statement of operations and cash flows of Symphony for the years
ended December 31, 2005 and 2004, (the "Symphony Year-End Financial
Statements"), (b) the unaudited consolidated balance sheet of Symphony as of
March 31, 2006 and the related unaudited consolidated statement of operations
and cash flows of Symphony for the 3-month period ended as of March 31, 2006
(the "Symphony Interim Financial Statements" and together with the Symphony
Year-End Financial Statements, the "Symphony Financial Statements"). The
Symphony Financial Statements have been prepared in accordance with GAAP and
present fairly, in all material respects, the consolidated financial position
and results of operations of Symphony as of the dates and for the periods
indicated, subject to, in the case of the Symphony Interim Financial Statements,
normal year-end adjustments and the absence of footnotes and other presentation
items.
4.5. NO UNDISCLOSED LIABILITIES; INDEBTEDNESS. Symphony and its
Subsidiaries do not have any Liabilities that would be required, in accordance
with GAAP, to be disclosed in or provided for in the Symphony Interim Financial
Statements if incurred on the date or during the period covered by the Symphony
Interim Financial Statements, other than Liabilities (a) disclosed or provided
for on the Symphony Interim Financial Statements, (b) disclosed in Section 4.5
of the Disclosure Schedule, (c) under the executory portions of any Contract,
Order or Governmental Order binding on Symphony or any of its Subsidiaries, or
(d) incurred since the date of the Symphony Interim Financial Statements in the
ordinary course of business consistent with past practice. Except as set forth
in Section 4.5 of the Disclosure Schedule, neither Symphony or its Subsidiaries
have any Indebtedness.
4.6. ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 4.6 of
the Disclosure Schedule, since March 31, 2006, the businesses of Symphony and
its Subsidiaries have been conducted in the ordinary course consistent with the
past practice in all material respects, and there has not been as of the date
hereof: (a) any event, occurrence, development or change in the businesses of
Symphony or its Subsidiaries that has had or is reasonably likely to result in a
Material Adverse Effect; (b) any damage, destruction or other casualty loss that
is reasonably likely to have a material and adverse impact on the Business; (c)
any material change in the manner that Symphony and its Subsidiaries keeps their
respective books and records; (d) any notification by any material supplier,
material customer or material payor of Symphony and its Subsidiaries expressly
16
stating its intent to discontinue doing business with Symphony and its
Subsidiaries, that is reasonably likely to have a material and adverse impact on
the Businesses; (e) any cancellation of any material Indebtedness owed to
Symphony or any of its Subsidiaries, or waiver of any material rights by
Symphony or any of its Subsidiaries; (f) any changes to the payroll practices of
Symphony and its Subsidiaries or the compensation of their employees, other than
in the ordinary course of business; (g) any capital expenditure by Symphony or
any of its Subsidiaries that were not contemplated by Symphony's annual budget;
(h) any Indebtedness incurred by Symphony or any of its Subsidiaries, or any
commitment to incur Indebtedness entered into by Symphony or any of its
Subsidiaries, or any loans made or agreed to be made by Symphony or any of its
Subsidiaries, other than Indebtedness to Seller or its Subsidiaries to be repaid
or cancelled prior to the Closing in accordance with Section 6.9; (i) offer,
issuance, sale or pledge of any shares of common stock or other Equity
Securities of Symphony or its Subsidiaries; (j) any stock split or other change
the capitalization of Symphony or its Subsidiaries; (k) sale, lease, license,
mortgage, pledge, encumbrance, transfer, exchange or other disposal of any of
the properties or assets, whether tangible or intangible of Symphony or its
Subsidiaries (including capital stock of such Subsidiaries), other than in the
ordinary course of business consistent with past practices; (l) acquisition by
merger or consolidation with, by purchase of any equity interest of or by any
other manner, any business or entity or other acquisition of any assets, except
for purchases of supplies or capital equipment in the ordinary course of
business; (m) except as expressly provided herein or as set forth in Section
4.19 of the Disclosure Schedule, any transaction between Symphony or any of its
Subsidiaries, on the one hand, and Seller or any of its Subsidiaries other than
Symphony, on the other hand, or (n) any written agreement by Seller or its
Subsidiaries (including Symphony) to do any of the foregoing.
The foregoing representations and warranties shall not be deemed to be breached
by virtue of the entry by Seller into this Agreement or its consummation of the
transactions contemplated hereby.
4.7. LITIGATION. Except as set forth in Section 4.7 of the Disclosure
Schedule, and except for Actions which would not reasonably be expected to
result in liability to Symphony or any of its Subsidiaries of $50,000
individually, there are no Actions pending, or, to the Knowledge of Seller or
Symphony, threatened Actions, by or against or relating to Symphony or any of
its Subsidiaries, pending before any Governmental Authority or arbitrator (or,
to the Knowledge of Seller or Symphony, threatened in writing to be brought by
or before any Governmental Authority). Except as set forth in Section 4.7 of the
Disclosure Schedule, neither Symphony nor any of its Subsidiaries is subject to
any Governmental Order (nor, to the Knowledge of Seller or Symphony, are there
any such Governmental Orders threatened to be imposed by any Governmental
Authority).
4.8. COMPLIANCE WITH LAWS. Except as set forth in Section 4.8 of the
Disclosure Schedule, Symphony and its Subsidiaries are, and since January 1,
2003 have been, in compliance in all material respects with all Laws and
Governmental Orders applicable to Symphony or any of its Subsidiaries,
including, without limitation, all governmental regulations with respect to the
qualifications and licensing requirements of the Symphony Employees, and neither
Seller, Symphony nor any of its Subsidiaries has received notice of
non-compliance with respect thereto. Except as set forth in Section 4.8 of the
Disclosure Schedule, neither Seller, Symphony or any of its Subsidiaries have,
at any time since January 1, 2003, conducted any internal investigations with
17
respect to the Businesses for which any of them has retained outside counsel to
conduct such investigations.
4.9. MATERIAL CONTRACTS. All of the Contracts required to be set forth
in Section 4.9 of the Disclosure Schedule (the "Material Symphony Agreements")
are in full force and effect, and no material breach or default (or event which
with notice or lapse of time or both would constitute a material breach default)
by Symphony or its Subsidiaries, to the Knowledge of Seller or Symphony, by any
other party has occurred with respect thereto. Except as set forth in Section
4.9 of the Disclosure Schedule, each Material Symphony Agreement is enforceable
against Symphony or its Subsidiaries and, to the Knowledge of Seller or
Symphony, each other party thereto, in accordance with its terms, except where
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and except where enforceability is subject
to the application of equitable principles or remedies. Section 4.9 of the
Disclosure Schedule sets forth a true and correct list of each written Contract
to which Symphony or any of its Subsidiaries is a party or by which any of its
assets are bound or which otherwise relate to the Businesses that (a) was not
made in the ordinary course of business, (b) involves an aggregate commitment or
potential aggregate commitment on the part of any party of more than $50,000 per
year or $250,000 in the aggregate, (c) involves the sale of products and or
services having a value (or reasonably likely to have a value with respect to
future sales) of more than $100,000 per year or $250,000 in the aggregate, (d)
is an employment contract not terminable on less than thirty days' notice or
that will result in any obligation (absolute or contingent) to make any payment
to any of their employees following termination of employment or upon a change
of control of Symphony or any of its Subsidiaries, (e) is a material license
agreement for any Intellectual Property Rights, (f) is a personal property lease
involving annual payments in excess of $100,000, (g) is a joint venture
agreement, partnership agreement or otherwise involves the sharing of profits by
Symphony or any of its Subsidiaries with any third party, (h) involves
Indebtedness involving $25,000 individually or $100,000 in the aggregate, other
than Indebtedness to be repaid or cancelled prior to the Closing in accordance
with Section 6.9, (i) includes any written warranty, guaranty or other similar
undertaking with respect to contractual performance extended by Symphony or any
of its Subsidiaries other than in the ordinary course of business, (j) contains
covenants materially limiting the freedom of Symphony or any of its Subsidiaries
to engage in any line of business or compete with any Person, (k) involves the
sale or disposition of material properties or assets of Symphony and its
Subsidiaries, taken as a whole (other than the sale of inventory in the ordinary
course of business), (l) is with an individual physician, physician group or any
other Person in a position to make referrals to Symphony or its Subsidiaries, or
(m) involves the payment by Symphony or any of its Subsidiaries for commissions,
marketing, or similar arrangements of more than $50,000 per year or $250,000 in
the aggregate. Symphony has delivered or made available to Buyer correct and
complete copies of all written Material Symphony Agreements listed in Section
4.9 of the Disclosure Schedule, including all amendments and supplements
thereto.
4.10. LABOR MATTERS. Neither Seller, Symphony nor any of Symphony's
Subsidiaries is a party to any collective bargaining or other labor union
agreements with respect to the Symphony Employees, subject to a legal duty to
bargain with any labor organization on behalf of the Symphony Employees or is
presently operating under an expired collective bargaining agreement with
respect to the Symphony Employees. Except as set forth in Section 4.10 of the
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Disclosure Schedule, at no time since January 1, 2003 has there been any
material work stoppage or material labor dispute (including representation
questions, arbitration proceedings, labor strikes, slow downs or stoppages,
organizing attempts, picketing, boycotts or other material labor disputes)
against Symphony or any of its Subsidiaries or, to the Knowledge of Seller or
Symphony, is any such action threatened, and, to the Knowledge of Seller or
Symphony, there is no union organizing activity currently underway nor has
Seller, Symphony or any of their Subsidiaries experienced any attempt by
organized labor to cause Seller, Symphony or any of their Subsidiaries to comply
with or conform to the demands of organized labor with respect to the Symphony
Employees. Symphony and its Subsidiaries are in material compliance with all
applicable Laws respecting employment practices, employee documentation, terms
and conditions of employment, payment and termination of labor, including the
provisions thereof relative to severance, vacation, unemployment, wages and
hours, equal employment opportunity, nondiscrimination, immigration, benefits,
collective bargaining, the payment of social security and similar taxes,
occupational safety, and health and plant closings (collectively, "Labor Laws").
Except as set forth in Section 4.10 of the Disclosure Schedule, Symphony and its
Subsidiaries are in compliance in all material respects with all professional
licensure and credentialing requirements required by applicable Law and any
Material Symphony Contract. Except as set forth in Section 4.10 of the
Disclosure Schedule, neither Symphony nor any of its Subsidiaries is engaged in,
and Symphony has not received any notice of, any unfair labor practice and, to
the Knowledge of Seller or Symphony, no such complaints are pending before the
National Labor Relations Board or any other Governmental Authority. The
representations and warranties in this Section 4.10 are the only representations
and warranties being made with respect to the compliance of Symphony and its
Subsidiaries with Labor Laws. No other representations or warranties, expressed
or implied, are being made by Seller and Symphony with respect thereto.
4.11. EMPLOYEE BENEFITS. Section 4.11 of the Disclosure Schedule sets
forth a true and correct list of each "Symphony Employee" as of a date not
earlier than two business days prior to the date hereof, such Symphony
Employee's position, date of hire, status of employment (including whether
active, on short-term disability, long-term disability or type of leave) and
base salary. Section 4.11(ii) of the Disclosure Schedule contains a complete
list of all Symphony Employee Plans. True and complete copies of each of the
following documents, including any amendment thereto, have been delivered or
made available to Buyer upon Buyer's request: (a) each Symphony Employee Plan
(and, if applicable, related trust agreements, insurance policies and
administrative services agreements), all written descriptions thereof which have
been distributed to Symphony Employees, all annuity contracts or other funding
instruments, and a complete description of any Symphony Employee Plan which is
not in writing, (b) the most recent determination or opinion letter issued by
the Internal Revenue Service with respect to each applicable Symphony Employee
Plan, and (c) for the three most recent plan years (or for such lesser number of
years in the case of plans filed for less than three plan years), Annual Reports
on Form 5500 Series required to be filed with any Governmental Authority for
each applicable Symphony Employee Plan and (d) copies of all documents and
correspondence relating to any Symphony Employee Plan received from or provided
to the Internal Revenue Service or the Department of Labor. Except as set forth
in Section 4.11 of the Disclosure Schedule:
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(a) None of Symphony nor any of its Subsidiaries maintains or
has ever maintained, contributed to or has had an obligation to
contribute to an "employee pension benefit plan" (as defined in Section
3(2) of ERISA) which is or was subject to Title IV of ERISA or Section
412 of the Code.
(b) None of Symphony nor any of its Subsidiaries has ever
contributed to, withdrawn in a partial or complete withdrawal from, or
had an obligation to contribute to any "multiemployer plan" as defined
in Section 4001(a)(3) or Section 3(37) of ERISA or has any fixed or
contingent liability under Section 4204 of ERISA with respect to any of
their current or former employees.
(c) Each Symphony Employee Plan and each related trust
agreement, annuity contract or other funding instrument which is
intended to be qualified and tax-exempt under the provisions of Code
Sections 401(a) and 501(a) has been maintained, operated, and
administered in compliance with its terms and all applicable Laws in
all material respects and is subject to an IRS determination or opinion
letter regarding such qualified status.
(d) As of and including the Closing Date, either Symphony or
its Subsidiaries shall have made all contributions and payments
required to be made by it up to and including the Closing Date with
respect to each Symphony Employee Plan (excepting salary deferrals to
Symphony's 401(k) plan pending as of the Closing Date, which shall be
contributed by Symphony on a timely basis), or adequate accruals
therefor will have been provided for and will be reflected on the
Symphony Financial Statements.
(e) Except as may be required by Code Section 4980B or Section
601 (et seq.) of ERISA ("COBRA"), or under any applicable state law,
none of Symphony, its Subsidiaries nor any Symphony Employee Plan has
any present or future obligation to make any payment to, or with
respect to, any present or former employee of Symphony nor any of its
Subsidiaries pursuant to any retiree medical benefit plan or other
retiree welfare plan.
(f) To the Knowledge of Symphony, neither Symphony nor any of
its Subsidiaries has any liability with respect to or arising from any
action taken by Seller, Symphony or any of its Subsidiaries involving a
Symphony Employee Plan other than contributions to, distributions from
or benefit payments due under any such plan in the ordinary course of
business.
(g) Except for routine claims for benefits, there is no
action, order, writ, injunction, judgment or decree outstanding or
claim, suit, litigation, proceeding, arbitral action, governmental
audit or investigation relating to or seeking benefits under any
Symphony Employee Plan that is pending, or, to the Knowledge of Seller
or Symphony, threatened against either of Symphony or any of its
Subsidiaries or any Symphony Employee Plan, and to the Knowledge of
Symphony, there exist no facts or circumstances that could give rise to
any such action, writ injunction, judgment, decree, claim, suit,
litigation, proceeding, arbitral action, audit or investigation.
20
(h) Neither Symphony nor any of its Subsidiaries have any
announced plan or legally binding commitment to create any additional
"employee benefits plans" within the meaning of Section 3(3) of ERISA,
or to amend or modify any existing Symphony Employee Plan, except as
required by law.
Neither the execution and delivery of this Agreement by Symphony nor
the consummation of the transactions contemplated hereby will trigger a
termination of employment entitling any employee of Symphony or its
Subsidiaries to any additional benefits or result in the acceleration
or creation of any rights of any person to benefits under any Symphony
Employee Plan (including, without limitation, the acceleration of the
vesting or exercisability of any stock options, the acceleration of the
vesting of any restricted stock, the acceleration of the accrual or
vesting of any benefits under any Symphony Employee Plan or the
acceleration or creation of any rights under any severance, parachute
or change in control agreement).
(i) There is no contract, agreement, plan or arrangement
covering any employee, director or consultant of Symphony or any of its
Subsidiaries that individually or collectively provides for the payment
by Symphony or its Subsidiaries of any amount that is not deductible
under Section 162(a)(1) or 404 of the Code, as applicable, or that is
an "excess parachute payment" pursuant to Section 280G of the Code.
(j) Each material contract, agreement, plan or arrangement
that covers any employee, former employee, director or consultant of
Symphony or any of its Subsidiaries that constitutes a nonqualified
deferred compensation plan, as defined in Section 409A of the Code,
complies in all material respects in operation with the requirements of
such Section as in effect on the Closing Date.
(k) Seller and its ERISA Affiliates other than Symphony and
its Subsidiaries, intend to file or cause to be filed a Notice of
Qualified Separate Lines of Business on Form 5310-A with the Internal
Revenue Service in relation to the 2005 and 2006 calendar years.
(l) The representations and warranties contained in this
Section 4.11 are the only representations and warranties being made
with respect to the Symphony Employee Plan and the compliance of
Symphony and its Subsidiaries with ERISA and the Code with respect to
the Symphony Employee Plan. No other representations or warranties,
expressed or implied, are being made by Seller and Symphony with
respect thereto.
4.12. TAXES. Except as set forth in Section 4.12 of the Disclosure
Schedule:
(a) All material Tax Returns that are required to be filed
with respect to Symphony or its Subsidiaries, and all material Tax
Returns that are required to include Symphony or any of its
Subsidiaries, have been timely filed on or before the due date thereof
(taking into account timely extensions) and all material Taxes have
been timely paid, whether or not shown on such Tax Returns. All such
Tax Returns are true, correct and complete in all material respects,
and there is no position taken on any Tax Return with respect to the
21
income, properties or operations of Symphony or its Subsidiaries for
which there is not substantial authority within the meaning of Section
6662 of the Code. There are no extensions of time to file any Tax
Return of Symphony or its Subsidiaries that are pending. Seller has
delivered to Buyer true copies of the federal and state income Tax
Returns (and amended Tax Returns, revenue agents' reports, and other
notices from federal or state taxing authorities) for each of the last
three taxable years of Symphony and its Subsidiaries (or such shorter
period as a Subsidiary has been in existence). Seller has delivered to
Buyer true, correct and complete copies of all other Tax Returns and
other reports and statements made or received by or on behalf of
Symphony or any of its Subsidiaries that relate to Taxes arising during
such periods, including, without limitation, income tax audit reports,
statements of income or gross receipts taxes, franchise tax, sales tax
and transfer tax received by or on behalf of Symphony or any of its
Subsidiaries;
(b) All Taxes required to be paid by Symphony or any of its
Subsidiaries on or before the date hereof have been paid. The unpaid
Taxes of Symphony or any of its Subsidiaries did not, as of the date of
the relevant balance sheet of Symphony included in the Symphony Interim
Financial Statements, exceed the accrual for Tax liability (rather than
any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the balance sheet
of Symphony;
(c) There are no liens for Taxes upon the assets of Symphony
or any of its Subsidiaries or any of the Symphony Interests therein
except for Permitted Encumbrances. There is no outstanding audit or
other matter in controversy with respect to Taxes due and owing by
Symphony or any of its Subsidiaries or in respect of the income,
properties or operations of Symphony or any of its Subsidiaries which
has been (i) claimed or raised by any authority in writing or (ii) as
to which Seller and Symphony has Knowledge based on personal contact
with any agent of such authority. There is no tax deficiency or claim
assessed, or to the Knowledge of Symphony and Seller, proposed or
threatened, with respect to Symphony, any of its Subsidiaries or the
income, properties or operations of Symphony or any of its
Subsidiaries, other than in respect of audits, controversies,
deficiencies, assessments or proposed adjustments that are being
contested in good faith, for which adequate reserves have been
established in accordance with GAAP and which are set forth on Section
4.12 of the Disclosure Schedule;
(d) Symphony and its Subsidiaries have withheld all Taxes
required to have been withheld by, or with respect to the operations
of, Symphony or any of its Subsidiaries in connection with amounts paid
to any employee, independent contractor, creditor, stockholder, or
other third party, and such withheld Taxes have either been duly paid
to the proper Taxing Authority or set aside in accounts for such
purpose;
(e) Neither Symphony nor any of its Subsidiaries (i) has
waived any statutory period of limitations for the assessment of any
Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency other than in the case of any such waivers or
extensions in respect of an assessment or deficiency of Tax the
liability of which has been satisfied or settled, or (ii) has
22
distributed the stock of any corporation in a distribution qualifying
under Section 355 of the Code in the preceding two years;
(f) No claim has been made or, to the Knowledge of Symphony
and Seller, threatened for any taxable year which remains open by a
Taxing Authority in a jurisdiction where Symphony or any of its
Subsidiaries does not file Tax Returns that Symphony or any of its
Subsidiaries is or may be subject to taxation. No claim with respect to
the income, operations or assets of Symphony or any of its Subsidiaries
has been made in writing by any Taxing Authority for any taxable year
with which remains open in a jurisdiction where Tax Returns are not
filed on behalf of Symphony;
(g) Except as set forth on Section 4.12(g) of the Disclosure
Schedule, neither Symphony nor any of its Subsidiaries has been a
member of any affiliated group filing a consolidated federal income Tax
Return other than as part of the affiliated group filing a consolidated
federal income Tax Return with Seller. Neither Symphony nor any of its
Subsidiaries has any liability for Taxes of any Person as defined in
Section 7701(a)(1) of the Code (other than Symphony in respect of
itself, and its Subsidiaries in respect of themselves), including
without limitation under Treas. Reg. ss. 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or
successor, by contract, as a result of any merger or liquidation, or
otherwise;
(h) None of the assets of Symphony or its Subsidiaries (i) are
required to be treated as being owned by any other Person pursuant to
the so-called safe harbor lease provisions of former Section 168(f)(8)
of the Code, (ii) secure any debt the interest on which is tax-exempt
under Section 103(a) of the Code, (iii) are tax-exempt use property
within the meaning of Section 168(h) of the Code, (iv) are subject to a
467 rental agreement as defined in Section 467 of the Code, or (v)
constitute an "amortizable section 197 intangible" within the meaning
of Section 197(c) of the Code that is not amortizable by reason of
having been acquired pursuant to the nonrecognition transactions
described in Section 197(f)(2)(B) of the Code or the anti-churning
rules of Section 197(f)(9) of the Code and the Treasury Regulations
thereunder;
(i) Symphony and its Subsidiaries are, and have been since
August 30, 2003 have been, properly characterized as a disregarded
entity for U.S. federal and state income tax purposes and Symphony and
each of its Subsidiaries has not taken any position inconsistent with
such treatment with regard to any Tax. Each transaction whereby
Symphony and each of its Subsidiaries was converted from a corporation
to a disregarded entity was intended to qualify as a tax-free
liquidation under Section 332 of the Code. The Symphony Interests and
the membership or other equity interests of Symphony's Subsidiaries do
not constitute stock for federal income tax purposes and are
disregarded for such purposes.
(j) There are no elections in effect made by Symphony or any
of its Subsidiaries pursuant to Sections 338 or 336(e) or the Code or
the Treasury Regulations thereunder;
23
(k) Any Tax sharing (or similar) agreement between Symphony
and its Subsidiaries on the one hand, and any third party on the other
hand, will be terminated as of the Closing Date, and will thereafter
have no further effect for any taxable year (whether the current year,
a future year, or a past year). Any payments required by any such Tax
sharing agreement will be made at or prior to the termination thereof;
(l) Neither Symphony nor any of its Subsidiaries will be
required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) change in
method of accounting for a taxable period ending on or prior to the
Closing Date under Code Section 481(c) (or any corresponding or similar
provision of state, local or foreign income Tax law); (ii) "closing
agreement" as described in Code Section 7121 (or any corresponding or
similar provision of state, local or foreign income Tax law) entered
into on or prior to the Closing Date; or (iii) installment sale made on
or prior to the Closing Date;
(m) Neither Symphony nor any of its Subsidiaries has made any
payments, nor is it obligated to make any payments, nor it is a party
to any agreement that could obligate it to make any payments that will
not be deductible under Code Section 280G or any comparable provision
of foreign income tax law;
Neither Symphony nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period specified in Code
Section 897(c)(1)(A)(ii);
(n) Except as otherwise set forth in Section 4.12 of the
Disclosure Schedule, (i) neither Symphony nor any of its Subsidiaries
owns any real property in any jurisdiction in which a Tax is imposed
upon the transfer of securities of an issuer having an interest in real
property; (ii) neither Symphony nor any of its Subsidiaries is a party
or subject to any joint venture, partnership or other arrangement or
contract that could be treated as a partnership for federal income tax
purposes; (iii) neither Symphony nor any of its Subsidiaries has
participated in any "reportable transaction" or acted as a "material
advisor" with respect thereto, as such terms are defined, in the case
of "reportable transaction" in the Treasury Regulations under Code
Sections 6011 and 6112, and in the case of "material advisor," as
defined in Code section 6111; (iv) neither Symphony nor any of its
Subsidiaries is a foreign person within the meaning of section 1445 of
the Code;
(o) Section 4.12 of the Disclosure Schedule sets forth an
accurate list of all states, counties, cities and other taxing
jurisdictions (whether foreign or domestic) to which any Tax is
properly payable by Symphony or any Subsidiary; and
(p) For purposes of this Section 4.12 and Article 10, any
reference to "Symphony" or "Subsidiary" shall include any predecessor
entity thereto.
24
(q) The representations and warranties contained in this
Section 4.12 are the only representations and warranties being made
with respect to the Taxes of Symphony and its Subsidiaries and the
compliance of Symphony and its Subsidiaries with applicable Tax Laws.
No other representations or warranties, expressed or implied, are being
made by Seller and Symphony with respect thereto.
(r) No clearance certificate or similar document(s) is
required by any state taxing authority in order to relieve Buyer of any
obligation to withhold any portion of the Purchase Price with respect
to the Symphony Interests, the membership or other equity interests of
Symphony's Subsidiaries or their respective assets.
4.13. INSURANCE POLICIES. Section 4.13 of the Disclosure Schedule
contains an accurate and complete description of all policies of property, fire
and casualty, product liability, workers' compensation, and other forms of
insurance held by either of Symphony or any of its Subsidiaries or with respect
to which Symphony or any of its Subsidiaries is a beneficiary (the "Symphony
Insurance Policies"). True, correct and complete copies of such Symphony
Insurance Policies have been made available to Buyer. All of the Symphony
Insurance Policies are in full force and effect, all premiums with respect
thereto have been paid to the extent due and no written notice of cancellation
or termination has been received with respect to any such Symphony Insurance
Policy (other than policies which Symphony has replaced or intends to replace
prior to the expiration thereof by policies providing substantially the same
types and amounts of coverage). Since August 30, 2003, neither Symphony nor any
of its Subsidiaries has submitted a claim under its Directors' and Officers'
indemnity insurance policies.
4.14. LICENSES. Section 4.14 of the Disclosure Schedule lists all of
the material Licenses held by Symphony and each of its Subsidiaries. Such
Licenses constitute all of the material Licenses required for the conduct of the
businesses of Symphony and its Subsidiaries as presently conducted. Each such
License is valid, binding and in full force and effect; and there are no
proceedings pending, or to the Knowledge of Seller or Symphony, threatened, that
seek the revocation, cancellation, suspension or adverse modification of any
such License. Symphony and each of its Subsidiaries holding such Licenses are,
and since January 1, 2003, have been in material compliance with all obligations
under the Licenses. Since August 31, 2003, all reasonable steps have been taken
to correct all deficiencies identified in any state licensing survey reports
received by Symphony or any of its Subsidiaries.
4.15. ASSETS COMPLETE. As of the Closing Date, Symphony and its
Subsidiaries own or have a valid right to use all material Fixed Assets required
for the operation of the Businesses, as currently conducted.
4.16. REAL PROPERTY.
(a) Section 4.16 of the Disclosure Schedule contains a
complete and accurate list of all real property leased by Symphony or
any of its Subsidiaries, and all real property in which Symphony or any
of its Subsidiaries have been granted a right of access, easement,
license or other real property interest of any kind ("Symphony Real
Property"). The Symphony Real Property constitutes all real property
25
used for, or for which access is necessary for, the operation of the
businesses of Symphony or any of its Subsidiaries. Except as set forth
in Section 4.16 of the Disclosure Schedule, Symphony or its
Subsidiaries have a valid leasehold, license, easement or other real
property interest in, and enjoy peaceful and undisturbed possession or
right to access (consistent with historical use) of, all Symphony Real
Property, in each case free and clear of all Encumbrances except for
Permitted Encumbrances and subject to the terms of the Symphony Real
Property Leases. Seller has made available to Buyer correct and
complete copies of the leases, subleases and other rights listed in
Section 4.16 of the Disclosure Schedule (the "Symphony Real Property
Leases"). Each of the Symphony Real Property Leases is in full force
and effect, and no breach or default by Symphony or its Subsidiaries
or, to the Knowledge of Symphony and Seller, by any other party thereto
has occurred with respect thereto. Each Symphony Real Property Lease is
enforceable against Symphony or its Subsidiaries, and, to the Knowledge
of Symphony and Seller each other party thereto, in accordance with its
terms, except where enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally
and except where enforceability is subject to the application of
equitable principles or remedies. Except for the Symphony Real Property
Leases, there are no material leases, subleases, licenses, occupancy
agreements, options, rights, concessions or other agreements or
arrangements, written or oral, granting to any Person the right to use
or occupy any Symphony Real Property. Neither Symphony nor any of its
Subsidiaries owns any real property;
(b) Except as set forth in Section 4.16 of the Disclosure
Schedule, Symphony and its Subsidiaries have obtained all material
Licenses from any Governmental Authority having jurisdiction over any
of the Symphony Real Property required for the occupancy and use of any
of the Symphony Real Property by Symphony or its Subsidiaries, and each
such License is in full force and effect, and there is no pending, or
to the Knowledge of Seller and Symphony threatened proceeding which
could result in the modification or cancellation thereof except, in
each case, for deviations from the foregoing which would not reasonably
be expected to materially impair the continued use of such Symphony
Real Property for the use currently being made thereof; and
(c) To the Knowledge of Seller or Symphony, neither Seller nor
any of its Subsidiaries (including Symphony and its Subsidiaries) has
received notice of any special assessment in an amount greater than
$500,000, individually or in the aggregate, relating to any Symphony
Real Property or any portion thereof, and to the Knowledge of Seller
and Symphony, no such special assessment is pending or threatened.
There are no pending or, to the Knowledge of Seller and Symphony,
threatened condemnation proceedings with respect to any of the Symphony
Real Property.
4.17. INTELLECTUAL PROPERTY. Section 4.17 of the Disclosure Schedule
sets forth all material patents, trademarks, service marks, trade names and
copyrights (whether registered or unregistered and including pending
applications by Symphony or any of its Subsidiaries for any of the foregoing)
used in the businesses of Symphony or any of its Subsidiaries as currently
conducted. Symphony or its Subsidiaries own and/or have the rights to use all
material Intellectual Property Rights used in their respective businesses as
currently conducted. Except as set forth in Section 4.17 of the Disclosure
26
Schedule, to the Knowledge of Seller and Symphony, no other Person (a) has the
right to use any of the Intellectual Property Rights of Symphony or any of its
Subsidiaries, or (b) is infringing upon any such Intellectual Property Rights.
To the Knowledge of Seller and Symphony, Symphony's and its Subsidiaries' use of
such Intellectual Property Rights is not infringing upon or otherwise violating
the rights of any third party. No proceedings have been instituted against or
written notices received by Seller or its Subsidiaries (including Symphony and
its Subsidiaries) alleging that the use of the Intellectual Property Rights by
Symphony or any of its Subsidiaries infringes upon or otherwise violates any
rights of a third party in or to such Intellectual Property Rights.
4.18. CUSTOMERS. Section 4.18 of the Disclosure Schedule sets forth a
complete and accurate list of the names of the fifteen (15) largest customers of
Symphony and each of its Subsidiaries with respect to revenue and profitability
for the most recent two (2) fiscal years showing the approximate total sales in
dollars to each customer during such period. Except as disclosed in Section 4.18
of the Disclosure Schedule, neither Seller nor any of its Subsidiaries
(including Symphony and its Subsidiaries) has received any written communication
from any customer listed in Section 4.18 of the Disclosure Schedule stating its
intention to discontinue doing business with Symphony or any of its Subsidiaries
or to substantially reduce purchases from or use of products or services of
Symphony or any of its Subsidiaries.
4.19. AFFILIATE TRANSACTIONS. Except as set forth in Section 4.19 of
the Disclosure Schedule, (a) neither Seller nor any of its Subsidiaries (other
than Symphony and its Subsidiaries) nor any officer, director or Affiliate of
Seller or of any of its Subsidiaries (including Symphony and its Subsidiaries),
(b) no individual related by blood, marriage or adoption to any person described
in clause (a), and (c) no entity in which any of the foregoing persons described
in clause (a) or clause (b) owns individually or in the aggregate a greater than
10% beneficial interest, is a party to any material agreement, contract,
commitment or transaction with Symphony or any of its Subsidiaries or has a
material interest in any material property used by the Symphony or any of its
Subsidiaries.
4.20. ENVIRONMENTAL MATTERS. Except as set forth in Section 4.20 of the
Disclosure Schedule: (a) Symphony and its Subsidiaries are in material
compliance with all of the Environmental Laws; (b) Symphony and its Subsidiaries
have no material liability under any Environmental Law; (c) no written notices
of any material violation or alleged material violation of, or any material
liability under, any Environmental Law have been received by Symphony or any of
its Subsidiaries since January 1, 2003; (d) there are no Actions, Governmental
Orders or investigations pending or, to the Knowledge of Seller or Symphony,
threatened, relating to compliance with or liability under any Environmental
Law; and (e) copies of all Phase I or Phase II reports or other environmental
audits in the possession of Seller or its Subsidiaries (including Symphony and
its Subsidiaries) and relating to the Symphony Real Property have been provided
to Buyer prior to the date hereof. The representations and warranties contained
in this Section 4.20 are the only representations and warranties being made with
respect to the compliance of Symphony and its Subsidiaries with Environmental
Laws. No other representations or warranties, expressed or implied, are being
made by Seller and Symphony with respect thereto.
27
4.21. ACCOUNTS RECEIVABLE. All accounts receivable of Symphony and its
Subsidiaries as reflected in the Symphony Financial Statements, to the extent
uncollected on the date hereof, and the accounts receivable arising subsequent
to the date of the Financial Statements, arose from bona fide transactions in
the ordinary course of business. All reserves, allowances and discounts with
respect to the accounts receivable were determined in the ordinary course of
business consistent with past practice.
4.22. MEDICARE AND MEDICAID; THIRD PARTY PAYORS. Except as set forth in
Section 4.22 of the Disclosure Schedule, neither Seller nor Symphony has
received notice that Symphony or any of its Subsidiaries are subject to any
restriction or limitation on the receipt of payment under Title XVIII of the
Social Security Act ("Medicare") and Title XIX of the Social Security Act
("Medicaid"). Symphony and its Subsidiaries are "providers" (as defined therein)
with valid and current provider agreements and with one or more provider numbers
with Medicare, Medicaid, Tricare/CHAMPUS and successor programs (the "Government
Programs") through intermediaries. Except as set forth in Section 4.22 of the
Disclosure Schedule, Symphony and its Subsidiaries are in compliance in all
material respects with the conditions of participation for the Government
Programs. Except as set forth in Section 4.22 of the Disclosure Schedule, there
is no pending or threatened, proceeding or investigation under the Government
Programs involving Seller or Symphony or the Business. Except as set forth in
Section 4.22 of the Disclosure Schedule, (a) all claims have been submitted in
substantial compliance with applicable billing requirements of the Government
Programs and third party payors, and (b) neither Symphony nor any of its
Subsidiaries has received notice of denial of payment or overpayment from the
Government Programs, or any third party payor, with respect to the services
provided by Symphony or any of its Subsidiaries.
4.23. COST REPORTS. Except as set forth in Section 4.23 of the
Disclosure Schedule, since January 1, 2003, neither Symphony nor any of its
Subsidiaries has been required to filed or caused to be filed any Cost Reports,
cost reports or other similar reports with any third party payor.
4.24. EXCLUSION FROM GOVERNMENT PROGRAMS. Since January 1, 2003, except
as set forth in Section 4.24 of the Disclosure Schedule, neither Symphony, its
Subsidiaries nor any of the employees, independent contractors, officers or
directors of any of them have been (i) excluded from participating in any
federal health care program (as defined in 42 U.S.C. ss.1320a-7b(f)), (ii)
subject to sanction pursuant to 42 U.S.C. ss.1320a-7a or 1320a-8, or (iii)
convicted of a crime described at 42 U.S.C. ss.1320a-7b. To the Knowledge of
Seller and Symphony, neither Symphony nor its Subsidiaries have engaged in any
conduct that may lead to exclusion from participation in any such Government
Programs, or had a civil monetary penalty assessed against them under Section
1128A of the Social Security Act or any regulations promulgated thereunder.
4.25. COMPLIANCE PROGRAM. Except as set forth in Section 4.25 of the
Disclosure Schedule, (a) neither Symphony nor its Subsidiaries are a party to a
Corporate Integrity Agreement with the Office of Inspector General of the
Department of Health and Human Services, and (b) Symphony and its Subsidiaries
have no ongoing reporting obligations pursuant to any Settlement Agreement
entered into with any Governmental Authority. Symphony and its Subsidiaries have
28
developed internal policies and procedures for billing third party payors,
including without limitation, Government Programs. Neither Symphony nor its
Subsidiaries have received any notice from any third party payor, including
without limitation, any Government Programs, that indicates that Symphony or its
Subsidiaries are not in compliance with applicable billing requirements.
4.26. MEDICAL STAFF. Symphony and its Subsidiaries' employees who
are medical professionals are under the supervision of, and subject to the
policies, procedures and requirements of, the customers of Symphony and its
Subsidiaries for whom such medical professionals provide services.
4.27 NO KNOWLEDGE OF MISREPRESENTATIONS OR OMISSIONS. Neither Seller
nor Symphony has any Knowledge (i) that the representations and warranties of
Buyer in this Agreement, as modified by the Disclosure Schedule, are not true
and correct in all material respects, or (ii) that there are any material errors
in or material omissions from the Disclosure Schedule.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and Symphony as of the date
hereof as follows:
5.1. ORGANIZATION AND STANDING. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Buyer is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of its properties owned,
operated or leased or the nature of its activities make such qualification
necessary. Buyer has full corporate power and authority to own or lease its
properties and assets and to carry on its business as it is currently conducted.
Buyer has provided or made available to Seller true and correct copies of its
certificate of incorporation and bylaws, each as amended as of the date hereof.
5.2. AUTHORITY; NO CONFLICTS. Except as disclosed in Section 5.2 of the
Disclosure Schedule, the execution, delivery and performance of this Agreement
and the Related Documents and the agreements and transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
by Buyer and do not result in, and the consummation of the transactions
contemplated hereby and thereby shall not result in, (a) a violation of any
provision of Buyer's certificate of incorporation, bylaws, or similar
organizational documents, (b) a material default (or event which with notice or
lapse of time or both would constitute a material default) under, or the
acceleration of any obligation under, any material Contract to which Buyer or
its Subsidiaries is a party or by or to which any of their assets or properties
may be bound or subject, or (c) a material violation of any Order to which Buyer
is a party or by which Buyer or any of its property is bound, except in case of
(b) and (c) as would not individually or in the aggregate reasonably be expected
to have a Material Adverse Effect.
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5.3. GOVERNMENTAL CONSENTS. Except for the HSR Filing governed by
Section 6.18 and except as set forth in Section 5.3 of the Disclosure Schedule
and except as would not result in a Material Adverse Effect, Buyer has obtained
all material governmental consents and approvals required to be obtained by it
and has filed all material notices, declarations or registrations required to be
filed by it with any Governmental Authority, in each case, necessary to enter
into this Agreement and each Related Agreement to which it is a party and to
consummate the transactions contemplated hereby and thereby, and all notice
periods with respect thereto have expired or been terminated.
5.4. LITIGATION. With the exception of the matters described in Section
5.4 of the Disclosure Schedule, Buyer is not a party to any Action or
investigation presently pending or, to the Knowledge of Buyer, threatened,
before any court or Governmental Authority that would reasonably be expected to
have, individually or in the aggregate, a material and adverse effect on the
ability of Seller or Symphony or to consummate the transactions contemplated
hereby or by the Related Documents.
5.5. BROKERS. Except as set forth in Section 5.5 of the Disclosure
Schedule, no broker, finder, investment banker or other third party 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 Buyer or its Subsidiaries.
5.6. SOLVENCY. Immediately after giving effect to the transactions
contemplated hereby and the incurrence of any indebtedness therewith, the assets
of the Buyer, Symphony and its Subsidiaries will exceed their respective
liabilities. In connection with the consummation of the transactions
contemplated hereby and the incurrence of any indebtedness in connection
therewith, neither Buyer, Symphony nor any of its Subsidiaries will incur debts
that will be beyond their ability to pay as such debts mature.
5.7. ACCREDITED INVESTOR. Buyer is an "accredited investor" within the
meaning of Rule 501(a) of Regulation D under the Securities Act and is acquiring
the Symphony Interests for its own account for investment and with no present
intention of distributing or reselling such securities or any part thereof in
any transaction which would constitute a "distribution" within the meaning of
the Securities Act. Buyer understands that the Symphony Interests have not been
registered under the Securities Act or any state securities laws and are being
transferred to Buyer, in part, in reliance on the foregoing representation.
5.8. FUNDING. Buyer has or will have prior to the Closing all funds
required in order to complete the purchase of the Symphony Interests on the
terms contained in this Agreement. Buyer has delivered to Seller evidence of
each of Buyer's debt and equity financing source's commitment to provide the
funds referred to in the previous sentence, subject to the terms and conditions
thereof.
5.9. NO KNOWLEDGE OF MISREPRESENTATIONS OR OMISSIONS. Buyer has no
knowledge (i) that the representations and warranties of Seller and Symphony in
this Agreement, as modified by the Disclosure Schedule, are not true and correct
in all material respects, or (ii) that there are any material errors in or
material omissions from the Disclosure Schedule.
30
5.10. INDEPENDENT INVESTIGATION. Buyer has conducted an independent
investigation of the Business and Symphony's and its Subsidiaries' business
operations, assets, liabilities, results of operations, financial condition and
prospects in making its determination as to the propriety of the transactions
contemplated by this Agreement and in entering into this Agreement, and has
relied solely on the results of said investigation and on the representations
and warranties of Seller and Symphony expressly contained in this Agreement.
ARTICLE 6
COVENANTS
6.1. CONDUCT OF SYMPHONY BUSINESSES PRIOR TO THE CLOSING.
(a) Seller and Symphony covenant that, between the date of
this Agreement and the Closing Date, Symphony and its Subsidiaries
shall conduct their respective businesses in the ordinary course and
consistent with past practice. Without limiting the foregoing, except
(i) for such actions as are expressly contemplated by this Agreement
and (ii) as described in Section 6.1 of the Disclosure Schedule,
without the consent of Buyer, neither Symphony nor its Subsidiaries
shall, and Seller shall not permit Symphony or its Subsidiaries to: (x)
take any action which if taken prior to the date hereof would be
required to be disclosed pursuant to Section 4.6, or (y) amend the
articles of incorporation, bylaws and other governing documents of
Symphony or its Subsidiaries. Seller and Symphony further agree that,
prior to the Closing, they shall, and shall cause Symphony and its
Subsidiaries to, use their reasonable efforts to preserve substantially
intact the business organization of their businesses, keep available to
Buyer the services of the key personnel of their businesses and
preserve their current relationships with the material customers and
suppliers of, and other Persons which have significant business
relationships with, Symphony and its Subsidiaries.
(b) Without limiting the foregoing Section 6.1(a), during the
period from the date hereof and continuing until the Closing Date,
except for borrowing from Seller in the ordinary course of business to
fund working capital needs of Symphony or to the extent that Buyer
shall otherwise consent in writing, Symphony and its Subsidiaries shall
not, and Seller shall not permit or cause it to, incur any
Indebtedness. To the extent Symphony or its Subsidiaries incur such
Indebtedness to Seller or to third party lenders, such Indebtedness
shall be, to the extent not repaid in cash prior to the Closing,
settled in accordance with Section 6.9.
6.2. ACCESS TO INFORMATION.
(a) From the date hereof through the Closing Date, upon
reasonable notice and during normal business hours, the books and
records of Symphony, Symphony's Subsidiaries and Seller (to the extent
related to Symphony or Symphony's Subsidiaries), and to the senior
management of Symphony for the purpose of consummating the transactions
contemplated by this Agreement and ensuring an orderly transition of
the Businesses following the Closing. From the date hereof through the
Closing Date, Seller and Symphony shall provide to Buyer unaudited
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monthly financial statements for Symphony and its Subsidiaries and
reasonable access to the books and records of Symphony, its
Subsidiaries and Seller (to the extent related to Symphony or
Symphony's Subsidiaries), and to the senior management of Symphony for
the purpose of consummating the transactions contemplated by this
Agreement and ensuring an orderly transition of the Businesses
following the Closing, to the extent reasonably requested by Buyer or
its advisors. Notwithstanding the foregoing, all disclosures of
information and documents pursuant to this Section 6.2(a) shall be in
compliance with the privacy and security requirements of the Health
Insurance Portability and Accountability Act of 1996 ("HIPAA") and all
other applicable Laws.
(b) Seller acknowledges that following the Closing Date, Buyer
may require access to the books and records of Seller (to the extent
related to Symphony or Symphony's Subsidiaries), in connection with
Buyer's Tax Returns and audited financial statements of Symphony and
its Subsidiaries. In such event, Seller shall provide reasonable
cooperation and access to such financial information, upon reasonable
notice and during normal business hours, to the extent reasonably
requested by Buyer or its advisors. Buyer acknowledges that following
the Closing Date, Seller may require access to the books and records of
Symphony and its Subsidiaries in connection with Seller's obligations
under the Purchase Agreement, dated as of April 16, 2003, by and
between Abe Briarwood Corp. and LUK-Symphony Management, LLC. In such
event, Buyer shall provide reasonable cooperation and access to such
financial information, upon reasonable notice and during normal
business hours, to the extent reasonably requested by Seller or its
advisors. Notwithstanding the foregoing, all disclosures of information
and documents pursuant to this Section 6.2(b) shall be in compliance
with the privacy and security requirements of the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA") and all other
applicable Laws.
(c) Seller shall use commercially reasonable efforts to
furnish to Buyer within 60 days following the Closing Date (i) audited
financial statements of Symphony (on a consolidated basis with
Symphony's subsidiaries) for the years ended December 31, 2005, 2004
and 2003 and unaudited interim financial statements for Symphony (on a
consolidated basis with Symphony's subsidiaries) for any interim
financial period ending on or prior to the Closing Date, each of which
shall be prepared in accordance with the requirements of GAAP and meet
the requirements of Regulation S-X of the Securities Act, and (ii) the
consent of Symphony's independent accountants to the use of their
reports thereon in Buyer's SEC Reports, as required by applicable Law
or regulation.
(d) Buyer shall use commercially reasonable efforts to furnish
to Seller within 30 days following the end of the applicable quarter
(i) unaudited interim financial statements for Symphony (on a
consolidated basis with Symphony's subsidiaries) for any interim
financial period ending on or prior to the Closing Date and for the
following quarter, each of which shall be prepared in accordance with
the requirements of GAAP and meet the requirements of Regulation S-X of
the Securities Act, and (ii) the consent of Buyer's independent
accountants to the use of their reports thereon in Leucadia's SEC
Reports, as required by applicable Law or regulation.
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6.3. CONFIDENTIALITY.
(a) From and after the Closing Date, each of Seller and its
Affiliates shall preserve in strict confidence all confidential or
proprietary information regarding Buyer, Symphony, Symphony's
Subsidiaries and each of their respective businesses, shall not
duplicate or use or disclose to any Person such information and
instruct its employees who have had access to such information to keep
confidential and not to use any such information (i) unless such
information is now or is hereafter disclosed, through no act or
omission of Seller or any of its Affiliates, in a manner making it
available to the general public, (ii) unless such information is
required by Law or legal process to be disclosed, and (iii) except to
the extent included in any Tax Return required to be filed by Seller or
to the extent reasonably related to the resolution by Seller of any
dispute with any Governmental Authority with respect to such Tax
Returns. Buyer shall be entitled to injunctive relief to enforce this
Section 6.3 in accordance with Section 9.5 hereof.
(b) From the date hereof through the Closing Date, each of
Seller and Buyer shall continue to be bound by that certain
Confidentiality Agreement, dated February 6, 2006, by and between Buyer
and Seller (the "Confidentiality Agreement"). After the Closing Date,
the Parties hereby agree that the Confidentiality Agreement shall
terminate and be of no further force and effect.
6.4. COVENANT NOT TO COMPETE.
(a) Subject only to the exceptions expressly set forth in this
Section 6.4, for so long as Seller and its Affiliates are controlled by
Leucadia National Corporation, Seller and its Affiliates shall not,
throughout the period from and including the Closing Date and
continuing for four (4) years thereafter, unless earlier terminated or
extended as provided herein (the "Restricted Period"), directly or
indirectly (including, without limitation, through any subcontracting
or similar arrangement with any other Person), whether independently or
in association with another entity: (i) engage in the Businesses, (ii)
own any equity or other ownership interest in any Person who is engaged
in the Businesses, or (iii) otherwise participate in, manage, control
any Person who is engaged in the Businesses, in each case anywhere in
the United States.
(b) Notwithstanding any provision of this Section 6.4, nothing
contained herein shall prohibit Seller and its Affiliates from
investing in (i) the securities of private equity, venture capital and
hedge funds (provided that Seller and its Affiliates do not control the
investment decisions of such funds) or (ii) stocks, bonds or other
securities of any business organization (but without otherwise
participating in such business) which engages in the Businesses,
provided that either (A) such business organization's principal line of
business is not one or more of the Businesses or (B) such investment in
any class of such securities does not exceed twenty (20%) of the issued
and outstanding shares of such class, or twenty (20%) of the aggregate
outstanding principal amount of such class.
(c) The parties acknowledge and agree that the time, scope,
and other provisions of this covenant have been specifically negotiated
by sophisticated, commercial parties and specifically hereby agree that
33
such time, scope and other provisions are reasonable under the
circumstances. The parties further agree that if, at any time, despite
the express agreement of the parties hereto, a court of competent
jurisdiction holds that any portion of this Covenant is unenforceable
because any of the restrictions herein are unreasonable, or for any
other reason, the maximum restrictions of time and scope, as determined
by such court, will be substituted for any such restrictions held
unenforceable.
6.5. SOLICITATION OF EMPLOYEES. For a period of four (4) years after
the Closing Date, Seller shall not and shall cause each of its Subsidiaries and
Affiliates to not, without Buyer's prior written consent, solicit or hire any
person set forth in Section 6.5 of the Disclosure Schedule to become an employee
or independent contractor of Seller or any of its Subsidiaries or Affiliates;
provided, however, that the foregoing shall not prevent Seller or any of its
Subsidiaries or Affiliates from hiring (a) any Person who responds to a general
advertisement for employment not specifically or primarily directed to Symphony
Employees or independent contractors of Symphony; or (b) the individuals who are
the Chief Executive Officer and the Chief Financial Officer of Symphony as of
the date hereof if at any point in time they should no longer be employed by
Buyer, Symphony or any of their Subsidiaries. If, at the time of enforcement of
this section, a court holds that the restrictions stated herein are unreasonable
under the circumstances then existing, the Parties agree that the maximum period
or scope reasonable under such circumstances shall be substituted for the stated
period, scope or area.
6.6. REGULATORY AND OTHER AUTHORIZATIONS, CONSENTS. Subject to the
terms and conditions herein provided, each Party shall: (a) use reasonable
efforts to cooperate with one another in: (i) determining which filings are
required to be made prior to the Closing with, and which consents, approvals,
permits or authorizations are required to be obtained prior to the Closing from,
Governmental Authorities or other third parties in connection with the execution
and delivery of this Agreement and any Related Documents and the consummation of
the transactions contemplated hereby and thereby and (ii) timely making all such
filings and timely seeking all such consents, approvals, permits, authorizations
and waivers; and (b) use reasonable efforts to take, or cause to be taken, all
other action and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions contemplated by
this Agreement. Notwithstanding, the provisions of this Section 6.6 shall not
govern the parties respective obligations under the HSR Act, which shall be
governed solely by the terms of Section 6.18.
6.7. NOTIFICATION OF CERTAIN MATTERS. From the date hereof through the
Closing Date, each Party shall give prompt notice to any other Party of (a) the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause such notifying Party's respective representations or
warranties contained in this Agreement to be untrue or inaccurate in any
material respect and (b) any material failure of the notifying Party to comply
with or satisfy any of its respective covenants, conditions or agreements to be
complied with or satisfied by it under this Agreement; provided, however, that
such disclosure shall not be deemed to cure any breach of a representation,
warranty, covenant or agreement, or to satisfy any condition. From the date
hereof through the Closing, Seller shall provide to Buyer the unaudited
consolidated balance sheet of Symphony and the related consolidated statements
34
of income and cash flow for Symphony for each month from the date hereof through
the Closing Date within 15 calendar days after the end of each such month.
6.8. EXCLUSIVITY. From the date hereof through the Closing Date or
earlier termination of this Agreement pursuant to Article 11, neither Seller nor
Symphony shall, nor shall any of them knowingly permit any of their respective
Affiliates, officers, directors, employees, representatives and agents to,
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any Person or
group of Persons (other than Buyer or any of its Affiliates) in furtherance of
any merger, sale of assets, sale of shares of capital stock or similar
transactions involving Symphony. Seller and Symphony shall (a) immediately
notify Buyer (orally and in writing) if any discussions or negotiations are
sought to be initiated, any inquiry or proposal is made, any information is
requested with respect to the transactions contemplated hereby or any offer is
made with respect to Symphony, the Symphony Interests or any of the material
assets of Symphony, (b) include in such notification the terms of any such
proposal or offer that it may receive with respect thereto (and provide Buyer
with a copy thereof in writing), including the identity of the soliciting party
and (c) keep Buyer informed with respect to the status of the foregoing.
6.9. REPAYMENT OF INTERCOMPANY ACCOUNTS AND THIRD-PARTY INDEBTEDNESS;
TERMINATION OF AFFILIATE TRANSACTIONS.
(a) At or prior to the Closing, Seller shall cause (x)
Symphony and each of its Subsidiaries to repay or otherwise satisfy the
full amount of any account receivable or tax obligation owed from
Symphony to Seller or its Subsidiaries (other than Symphony) or owed
from any of Symphony's Subsidiaries to Seller or Symphony (each, an
"Intercompany Account"), (y) Symphony and each of its Subsidiaries to
repay or otherwise satisfy the full amount of all Indebtedness set
forth in Section 4.6 of the Disclosure Schedule (other than an
Intercompany Account) ("Third Party Indebtedness"), and (z) Symphony
and its Subsidiaries to distribute to Seller all Cash and Cash
Equivalents on hand as of the Closing Date, after giving effect to the
foregoing.
(b) At or prior to the Closing, Seller shall, and shall cause
its Affiliates to, terminate each agreement set forth in Section 4..19
of the Disclosure Schedule (each an "Affiliate Agreement") so that
following the Closing, Symphony shall have no further obligation
thereunder.
(c) At or prior to the Closing, Seller shall be entitled to
cause Symphony Health Services, Inc. to transfer all of its rights
under the Respiratory Sale Agreement (including rights pursuant to the
earnout obligations thereunder) to Seller for nominal consideration.
6.10. TRANSITIONAL MATTERS. Prior to the Closing, the Parties shall
cooperate including providing notice regarding the transactions contemplated by
this Agreement to (a) the Symphony Employees, (b) material customers and
suppliers of Symphony and its Subsidiaries and (c) other Persons which have
significant business relationships with Symphony or its Subsidiaries, in each
35
case, in a manner reasonably calculated to preserve the current relationships of
Symphony and its Subsidiaries, except as otherwise expressly contemplated by the
terms of this Agreement.
6.11. TAX TREATMENT. The parties hereto intend for U.S. federal income
tax purposes that the transactions contemplated by this Agreement will be
treated as an acquisition by the Buyer of the assets of Symphony and Symphony's
Subsidiaries. Neither Seller nor Buyer shall take a position in any Return or
examination or other administrative or judicial proceeding (including any ruling
request) relating to any Tax that is inconsistent with such treatment.
6.12. AGREEMENT ON VALUATION.
(a) Within 120 days after the Closing Date, Buyer shall
provide to Seller a proposed allocation of the purchase price described
in Section 2.2 (as adjusted pursuant to Section 2.3 ) among the assets
of Symphony and its Subsidiaries and the noncompetition agreement set
forth in Section 6.4, which allocation shall be reasonable and in
accordance with the principles of Section 1060 of the Code and the
Treasury Regulations promulgated thereunder (the "Allocation
Statement"). Within ten days following such provision, Seller shall
have the right to object to the Allocation Statement (by written notice
to Buyer), and if Seller objects, it shall notify Buyer (in such
written notice) of such disputed item (or items) and the basis for its
objection. If Seller does not object by written notice within such
period, the Allocation Statement shall be deemed to have been accepted
and agreed upon, and final and conclusive, for all purposes of this
Agreement. Seller and Buyer shall act in good faith to resolve any such
dispute prior to the date on which Form 8594 is required to be filed
with the appropriate Tax authority. If Seller and Buyer cannot resolve
any disputed item, the item in question shall be resolved by the
Auditor as promptly as practicable. The fees and expenses of the
Auditor shall be apportioned and paid equally by Seller and Buyer.
Except with respect to any subsequent adjustments to the purchase price
(which shall be allocated using the mechanism for allocating purchase
price in this Section 6.12), Seller and Buyer and their respective
Affiliates (i) shall be bound by the determinations and the Allocation
Statement determined pursuant to this Section 6.12 consistent therewith
for purposes of determining any Taxes, (ii) shall prepare and file all
Tax Returns required to be filed with any Tax authority in a manner
consistent with the Allocation Statement and (iii) shall take no
position inconsistent with the Allocation Statement in any Tax Return,
any proceeding before any Tax authority or otherwise (in each case,
unless required to do otherwise pursuant to a "determination" as
defined in Section 1313 of the Code (a "Determination")). In the event
that the Allocation Statement is disputed by any Tax authority, the
Person receiving notice of such dispute shall promptly notify and
consult with the other Parties concerning resolution of such dispute.
(b) Each of Seller and Buyer shall cooperate in the
preparation and timely filing of (1) Form 8594 and any comparable state
or local forms or reports, and (2) to the extent permissible by or
required by law, any corrections, amendments, or supplements (or
additional forms or reports) thereto (including any supplements,
amendments, forms or reports arising as a result of any adjustments to
the purchase price).
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6.13. CERTAIN TAX MATTERS. Prior to Closing, none of Symphony, its
Subsidiaries nor Buyer shall make or change any election, change an annual
accounting period, adopt or change an accounting method, file any amended Tax
Return, fail to pay any Taxes which are first due and payable in the period from
January 1, 2006 through and including the Closing Date, enter into any closing
agreement, settle any Tax claim or assessment relating to Symphony, its
Subsidiaries or Buyer, as the case may be, surrender any right to claim a refund
of Taxes, or take any other similar action, or omit to take any action relating
to the filing of any Tax Return or the payment of any Tax, if such election,
adoption, change, amendment, agreement, settlement, surrender, consent or other
action or omission would have the effect of increasing the present or future Tax
liability or decreasing any present or future Tax asset of Symphony, its
Subsidiaries or Buyer, as the case may be.
6.14. CONVEYANCE TAXES. Notwithstanding anything to the contrary in
this Agreement, any transfer, documentary, sales, use, stamp, registration and
other such Taxes incurred in connection with the transfer of the Symphony
Interests to Buyer shall be paid 50% by Buyer and 50% by Seller. Each party
shall file any necessary Tax Returns and other documentation with respect to all
such transfer, documentary, sales, use, stamp, registration and other Taxes and
fees, if required by applicable law.
6.15. CONTINUING DISREGARD ENTITY STATUS. Seller shall not take any
action or permit any action to be taken that could result in Symphony or any of
its Subsidiary ceasing to be a disregarded entity for federal and state income
tax purposes for all periods through the Closing Date.
6.16. SEVERANCE OBLIGATIONS. Buyer shall be responsible for all
liabilities in respect of all costs arising out of payments and benefits
relating to, stay bonuses offered to, or the resignation from, termination of or
alleged termination of employment of, Symphony Employees arising after the
Closing Date (including the severance obligations owed to the Chief Executive
Officer and Chief Financial Officer of Symphony pursuant to their respective
employment agreements with Symphony, which payments shall be made by Buyer at
the earliest date such payment would not be subject to excise tax pursuant to
Code Section 409A; provided further, the Parties may agree prior to Closing to
allow a further payment deferral election subject to the terms, conditions and
limitations of Code Section 409A which election may be effective after Closing).
6.17. COBRA. Buyer shall be responsible for the administration of and
shall assume any and all obligations arising under the continuation coverage
requirements of Section 4980B of Code and Part 6 of Title I of ERISA, or any
similar requirement under applicable state law, for those plan participants in,
and beneficiaries under, the Symphony Employee Plans who are eligible to
exercise their rights to such coverage as of or following the Closing Date.
6.18. HSR FILING. Seller and Buyer shall, as promptly as practicable,
but in no event later than five calendar days following the execution and
delivery of this Agreement, submit all filings required by the HSR Act (the "HSR
Filing") to the DOJ and FTC, and thereafter provide, as appropriate, any
supplemental information requested in connection therewith pursuant to the HSR
Act and make any similar filing within, to the extent reasonably practicable, a
similar time frame with any other Governmental Authority for which such filing
37
is required. Any such notification and report form and supplemental information
will be in substantial compliance with the requirements of the HSR Act or other
applicable antitrust regulation. Buyer and Seller shall furnish to the other
such necessary information and reasonable assistance as the other may request in
connection with its preparation of any filing or submission which is necessary
under the HSR Act or other applicable antitrust regulation. Each of Buyer and
Seller will promptly inform the other party of any material communication
received by such party from any Governmental Authority in respect of the HSR
Filing. Each of the parties will (a) use its respective commercially reasonable
efforts to comply as expeditiously as possible with all requests of any
Governmental Authority for additional information and documents, including
information or documents requested under the HSR Act or other applicable
antitrust regulation; (b) not (i) extend any waiting period under the HSR Act or
any applicable antitrust regulation or (ii) enter into any agreement with any
Governmental Authority not to consummate the transactions contemplated by this
Agreement, except, in each case, with the prior consent of the other parties;
and (c) cooperate with the other parties and use commercially reasonable efforts
to contest and resist any administrative or judicial action, and to have
vacated, lifted, reversed or overturned any Order (whether temporary,
preliminary or permanent) that restricts, prevents or prohibits the consummation
of the transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, each of Buyer and Seller agrees to cooperate with
the other party to effect prior to the Closing Date, the sale, divestiture or
disposition of such assets or businesses of Buyer, Symphony or their respective
Subsidiaries as may be required in order to avoid the entry of, or to effect the
dissolution of, any Order (whether temporary, preliminary or permanent), which
would otherwise have the effect of preventing or delaying the consummation of
the transactions contemplated hereby; provided, however, that neither Buyer nor
Seller shall be required to sell, divest or dispose of any material asset or
businesses of such party. Buyer shall pay all filing fees under the HSR Act.
6.19. INSURANCE. Prior to Closing, Seller shall cause Symphony to be
the policyholder of all insurance policies providing benefits under any Symphony
Employee Plan, and that Symphony's Subsidiaries are covered by such policies
with respect to the eligible employees of such Subsidiaries to the extent such
Subsidiaries were covered under the policies prior to Closing. Symphony shall
provide documentation to Buyer that the foregoing sentence is true as of
Closing.
6.20. DEFERRED COMPENSATION PLANS. Prior to Closing, Seller shall cause
Symphony to adopt an amendment to the Symphony Health Services Nonqualified
Deferred Compensation Plan to allow for payment on a specified date. Prior to
Closing, Seller shall cause Symphony to adopt an amendment to the Symphony
Health Services Mutual Fund Option Plan to allow for payment upon a change in
control.
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ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF SELLER AND SYMPHONY
The obligations of Seller and Symphony to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at the Closing of
the following conditions, any one or more of which may be waived by Seller, to
the extent permitted by law:
7.1. REPRESENTATIONS AND COVENANTS. (a) The representations and
warranties of Buyer set forth in this Agreement shall be true and correct in all
material respects as of the Closing with the same force and effect as if made as
of the Closing (or, in the case of representations and warranties by Buyer which
address matters only as of a particular date as of such date), (b) Buyer shall
have duly performed and complied with in all material respects all covenants,
agreements and conditions to be performed or satisfied by Buyer on or prior to
the Closing Date and (c) Seller shall have received a certificate executed by
the chief financial officer of Buyer as to the matters set forth in clauses (a)
and (b) above.
7.2. ABSENCE OF ADVERSE GOVERNMENTAL ACTION. No Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation or order which is in effect and has the effect of making the
transactions contemplated by this Agreement or any of the Related Documents
illegal or otherwise prohibiting consummation of such transactions.
7.3. CONSENTS AND APPROVALS. All waivers, licenses, agreements,
permits, consents, approvals or authorizations of third parties or governmental
agencies set forth on Section 7.3 of the Disclosure Schedule shall have been
obtained and shall be in full force and effect and without conditions or
limitations and Seller shall have been furnished with appropriate evidence,
reasonably satisfactory to it and its counsel, of the granting of same.
7.4. NO MATERIAL ADVERSE CHANGE. Between the date hereof and the
Closing Date, there shall not have occurred any material adverse change in the
assets, liabilities, business, condition (financial or otherwise), or results of
operations of Buyer and its Subsidiaries, taken as a whole.
7.5. RESOLUTIONS. Seller shall have received a true and complete copy,
certified by an authorized officer of Buyer, of the resolutions duly and validly
adopted by the Board of Directors of Buyer evidencing its authorization of the
execution and delivery of this Agreement and each Related Document to which
Buyer is a party and the consummation of the transactions contemplated hereby
and thereby (including, without limitation the issuance of the Buyer Shares to
be issued to Seller at the Closing).
7.6. INCUMBENCY CERTIFICATE. Seller shall have received a certificate
of a duly authorized officer of Buyer certifying the names and signatures of the
officers of Buyer authorized to sign this Agreement, the Related Documents to
which it is a party and the other documents to be delivered hereunder.
39
7.7. XXXX-XXXXX XXXXXX ACT. Any waiting period applicable to the
consummation of the transactions contemplated by this Agreement under the HSR
Act shall have expired or been terminated, and no action shall have been
instituted by the Department of Justice or Federal Trade Commission challenging
or seeking to enjoin the consummation of such transaction, which action shall
have not been withdrawn or terminated.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to the fulfillment at the Closing of the following
conditions, any one or more of which may be waived by Buyer, to the extent
permitted by law:
8.1. REPRESENTATIONS AND COVENANTS. (a) The representations and
warranties of Seller and Symphony set forth in this Agreement (read without any
materiality qualifications) shall be true and correct in all material respects
as of the Closing with the same force and effect as if made as of the Closing
(or, in the case of representations and warranties by Seller and Symphony which
address matters only as of a particular date as of such date), other than
failures to be true and correct that, individually and in the aggregate, would
not reasonably be expected to result in a Material Adverse Effect, (b) Seller
and Symphony shall have duly performed and complied with in all material
respects all covenants, agreements and conditions to be performed or satisfied
by Buyer on or prior to the Closing Date and (c) Buyer shall have received a
certificate executed by the chief financial officer of Seller as to the matters
set forth in clauses (a) and (b) above.
8.2. ABSENCE OF ADVERSE GOVERNMENTAL ACTION. No Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation or order which is in effect and has the effect of making the
transactions contemplated by this Agreement or any of the Related Documents
illegal or otherwise prohibiting consummation of such transactions.
8.3. CONSENTS AND APPROVALS. All waivers, licenses, agreements,
permits, consents, approvals or authorizations of third parties or governmental
agencies set forth on Section 8.3 of the Disclosure Schedule shall have been
obtained and shall be in full force and effect and without conditions or
limitations and Buyer shall have been furnished with appropriate evidence,
reasonably satisfactory to it and its counsel, of the granting of same.
8.4. RESOLUTIONS. Buyer shall have received a true and complete copy,
certified by an authorized officer of Seller of the resolutions duly and validly
adopted by the Boards of Directors of Seller and Symphony evidencing their
authorization of the execution and delivery of this Agreement and each Related
Document to which Seller or Symphony are a party and the consummation of the
transactions contemplated hereby and thereby.
8.5. INCUMBENCY CERTIFICATE. Buyer shall have received a certificate of
a duly authorized officer of Seller certifying the names and signatures of the
officers of Seller and Symphony authorized to sign this Agreement, the Related
40
Documents to which they are a party and the other documents to be delivered
hereunder.
8.6. FIRPTA CERTIFICATE. Seller shall deliver, or cause to be
delivered, to Buyer an executed affidavit, dated not more than thirty (30) days
prior to the Closing Date, in accordance with Code Section 1445(b)(2) and
Treasury Regulation Section 1.1445-2(b), which statement certifies that the
Seller is not a foreign person and sets forth Seller's name, taxpayer
identification number and address.
8.7. RESIGNATION OF OFFICERS AND DIRECTORS. Except as provided on
Section 10.9 of the Disclosure Schedule, each member of the board of directors
and each officer of Symphony shall have resigned as elected or appointed
directors or officers of Symphony, effective as of the Closing Date.
8.8. SETTLEMENT OF INTERCOMPANY ACCOUNTS. At or prior to the Closing,
Seller and Symphony shall have settled the Intercompany Accounts and Third Party
Indebtedness as contemplated by Section 6.9 hereof so that as of the Closing the
balance of such Intercompany Accounts and Third Party Indebtedness shall be
zero.
8.9. TERMINATION OF AFFILIATE AGREEMENTS. Each of the Affiliate
Agreements shall have been terminated, so that following the Closing Symphony
shall have no further obligation thereunder.
8.10. XXXX-XXXXX XXXXXX ACT. Any waiting period applicable to the
consummation of the transactions contemplated by this Agreement under the HSR
Act shall have expired or been terminated, and no action shall have been
instituted by the Department of Justice or Federal Trade Commission challenging
or seeking to enjoin the consummation of such transaction, which action shall
have not been withdrawn or terminated.
ARTICLE 9
INDEMNIFICATION; SURVIVAL
9.1. INDEMNIFICATION BY SELLER. Seller agrees to indemnify, defend and
hold harmless Buyer and Buyer's directors, officers, employees, stockholders,
partners, members, Affiliates, Subsidiaries, including Symphony, its
Subsidiaries, and assigns (each a "Buyer Indemnified Party") from and against
any and all Losses arising out of, resulting from or relating to (a) any breach,
nonperformance or inaccuracy of any representation, warranty or covenant by
Seller or Symphony made or contained in this Agreement or in any Exhibit,
Disclosure Schedule, certificate, Related Document or other document executed
and delivered to Buyer by Seller or by or on behalf of Symphony under or
pursuant to this Agreement or the transactions contemplated herein, (b) all
liabilities or obligations related to workers' compensation or employment
practices claims asserted (whether before, on or after the Closing Date) with
respect to any occupational illness or injury or employment practice or
discrimination claim arising or occurring prior to the Closing Date by any
present or former officer, employee, contractor, agent or representative of
Symphony, whether or not insured and whether or not a reserve exists therefor on
the Symphony Interim Financial Statements, other than those liabilities and
41
obligations for which Buyer has indemnified Seller and Symphony pursuant to the
letter agreement, dated as of April 28, 2006, delivered by Buyer to Seller and
Symphony (the "Letter Agreement") (c) all liabilities of Seller or Symphony for
commissions or fees owed to any finder or broker in connection with the
transactions contemplated hereunder; (d) any transaction bonuses,
change-of-control payments or other amounts payable to any employee or
contractor as a result of the consummation of the transactions contemplated
hereby, other than payments governed by Section 6.16 of this Agreement; (e) any
employee benefit arrangement or employee benefit plan (as defined in Section
3(3) of ERISA) sponsored as of the Closing by Seller or its ERISA Affiliates
other than Symphony or any of its Subsidiaries, and (f) all liabilities and
obligations of Symphony arising under or in relation to the Respiratory Sale
Agreement.
9.2. INDEMNIFICATION BY BUYER. Buyer agrees to indemnify, defend and
hold harmless Seller and Seller's directors, officers, employees, stockholders,
partners, members, Affiliates, Subsidiaries (each a "Seller Indemnified Party")
from and against any and all Losses arising out of, resulting from or relating
to (a) any breach, nonperformance or inaccuracy of any representation, warranty
or covenant by Buyer made or contained in this Agreement or in any Exhibit,
Disclosure Schedule, (b) operation of the Businesses after the Closing Date, (c)
any Symphony Employee Plan after the Closing Date, certificate, Related Document
or other document executed and delivered to Seller by Buyer under or pursuant to
this Agreement or the transactions contemplated herein, (d) any breach or
nonperformance of Buyer's obligations under the Letter Agreement, and (e) all
liabilities of Buyer for commissions or fees owed to any finder or broker in
connection with the transactions contemplated hereunder.
9.3. METHOD OF ASSERTING CLAIMS, ETC. All claims for indemnification by
any Buyer Indemnified Party or any Seller Indemnified Party (each, an
"Indemnified Party") shall be asserted and resolved as follows:
(a) In the event that any claim or demand in respect of which
any Indemnified Party would be entitled to indemnification hereunder is
asserted against such Indemnified Party by a third party, such
Indemnified Party shall with reasonable promptness notify the party
from whom indemnification is sought ("Indemnifying Party") of such
claim or demand, specifying the nature of and specific basis for such
claim or demand and the amount or the estimated amount thereof to the
extent then feasible (the "Claim Notice"). The failure of any
Indemnified Party to give timely notice hereunder shall not affect such
Indemnified Party's rights to indemnification hereunder, except to the
extent such delay or failure prejudices the Indemnifying Party's
ability to defend such claim or mitigate any Losses resulting
therefrom. The Indemnifying Party shall have thirty (30) days from the
personal delivery or mailing of the Claim Notice (the "Notice Period")
to notify the Indemnified Party (i) whether or not it disputes
entitlement of the Indemnified Party to indemnification hereunder with
respect to such claim or demand, and (ii) whether or not it desires at
no cost or expense to the Indemnified Party, to defend the Indemnified
Party against such claim or demand; provided, however, that any
Indemnified Party is hereby authorized prior to and during the Notice
Period to file any motion, answer or other pleading which it shall deem
necessary or appropriate to protect its interests or those of the
Indemnifying Party and not materially prejudicial to the Indemnifying
Party. In the event that the Indemnifying Party notifies the
42
Indemnified Party within the Notice Period that it desires to defend
the Indemnified Party against such claim or demand and except as
hereinafter provided, the Indemnifying Party shall have the right to
defend by all appropriate proceedings, which proceedings shall be
promptly settled or prosecuted by it to a final conclusion. If the
Indemnified Party desires to participate in, but not control, any such
defense or settlement it may do so at its sole cost and expense. If
requested by the Indemnifying Party, the Indemnified Party agrees to
cooperate with the Indemnifying Party and its counsel in contesting any
claim or demand which the Indemnifying Party elects to contest, or, if
appropriate and related to the claim in question, in making any
counterclaim against the person asserting the third cross complaint
against any person. Such cooperation shall include the retention and
the provision to the Indemnifying Party of records, documents and
information that are considered relevant to any such claim or demand,
and making employees available on a mutually convenient basis to
provide additional information, explanation or testimony with respect
thereto. No claim that admits fault or that requires the Indemnifying
Party to make any payment may be settled without the consent of the
Indemnifying Party.
(b) In the event any Indemnified Party should have an
indemnification claim hereunder which does not involve a claim or
demand being asserted against or sought to be collected from it by a
third party, the Indemnified Party shall send a Claim Notice with
respect to such claim to the Indemnified Party specifying the nature of
and specific basis for such claim or demand and the amount or the
estimated amount thereof to the extent then feasible.
9.4. CERTAIN INDEMNIFICATION PAYMENTS. The Parties agree that in the
event that the Indemnifying Party is obligated to make any indemnification
payment with respect to any Losses pursuant to this Article 9, the Indemnifying
Party shall be entitled to effect such indemnification payment by paying to the
Indemnifying Party in question cash in the aggregate amount of the Losses for
which such Indemnified Party is entitled to indemnification.
9.5. INJUNCTIVE RELIEF. In addition to any rights or remedies available
by law, the Parties shall have the right to seek injunctive relief, declaratory
relief or specific performance as remedies for the breach of any covenant under
this Agreement.
9.6. LIMITATIONS.
(a) Any other provision hereof to the contrary
notwithstanding, the parties agree that the representations and
warranties of the parties contained in this Agreement shall survive the
Closing for a period of 18 months, except that (i) solely in the case
of the representations and warranties contained in Section 4.12 which
shall survive until the expiration of the applicable statute of
limitations, if later (giving effect to any waiver, mitigation or
extension thereof); and (ii) solely in the case of the representations
and warranties contained in Section 4.1, which survive without
limitation. The survival of the representations and warranties
contained in Section 4.12 shall be governed by Article 10.
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(b) Notwithstanding any other provision of this Article 9, (i)
the Buyer Indemnified Parties shall not be entitled to indemnification
hereunder for Losses arising out of a breach of Seller's or Symphony's
representations or warranties contained in this Agreement until the
aggregate of all Losses to all Buyer Indemnified Parties exceeds Five
Hundred Thousand Dollars ($500,000) and then all Buyer Indemnified
Parties shall be entitled to indemnification for all of such Losses
(subject to the following clause (ii) and Section 9.6(d)), and (ii) the
Buyer Indemnified Parties shall not be entitled to indemnification
hereunder for any Losses arising out of a breach of Seller's or
Symphony's representations or warranties contained in this Agreement
which exceed Six Million Five Hundred Thousand Dollars ($6,500,000) in
the aggregate. The limitations set forth in the immediately preceding
sentence, however, shall not apply to claims by the Buyer Indemnified
Parties arising out of any breach or inaccuracy of any representation
or warranty by Seller or Symphony made or contained in Section 4.1 or
4.12 (subject to Section 9.6(d)).
(c) Neither the Buyer Indemnified Parties nor the Seller
Indemnified Parties shall be entitled to recover under Article 9 or
Article 10:
(i) With respect to consequential damages of any
kind, damages consisting of business interruption or lost
profits (regardless of the characterization thereof), damages
computed on a multiple of earnings or similar basis, and
indirect, special, exemplary and punitive damages;
(ii) With respect to any inaccuracy in or breach of
any representation and warranty or covenant by or of Seller
which is contained herein if, at or before the time of
Closing, Buyer had actual knowledge of the inaccuracy or
breach;
(iii) With respect to any inaccuracy in or breach of
any representation and warranty or covenant by or of Buyer
which is contained herein if, at or before the time of
Closing, Seller or Symphony had actual knowledge of the
inaccuracy or breach;
(iv) To the extent the subject matter of the claim is
covered by insurance held by Buyer, Symphony or its
Subsidiaries; and
(v) To the extent the matter in question, taken
together with all similar matters, does not exceed the amount
of any reserves with respect to such matters which are
reflected in the Closing Balance Sheet and taken into account
in the calculation of the Closing Net Working Capital.
(d) Notwithstanding any other provision of this Agreement, the
Buyer Indemnified Parties shall not be entitled to indemnification
hereunder for Losses which exceed Twenty Million Dollars ($20,000,000)
in the aggregate.
9.7. SOLE AND EXCLUSIVE REMEDY. Except in the event of fraud and except
as provided in this Article 9 and Article 10, if the Closing occurs, the
remedies for indemnification contained in this Article 9 shall be the exclusive
44
remedies of the parties hereto with respect to any breach of any representation
or warranty and shall be deemed exclusive of any other remedy conferred by law
or equity upon any party hereto.
ARTICLE 10
TAX MATTERS
10.1. INDEMNITY. From and after the Closing, Seller shall indemnify and
hold harmless each Buyer Indemnified Party from any and all Losses arising out
of or in connection with (a) any Taxes payable by Symphony and its Subsidiaries
for all taxable periods ending on or prior to the Closing Date, and for the
portion of all taxable periods beginning prior to the Closing Date and ending
after the Closing Date for that portion of such taxable period up to and
including the Closing Date (a "Pre-Closing Partial Period") (b) any breach of
any representation or warranty in Section 4.12, or any covenant made by the
Company in this Article 10 or in any of Sections 6.12, 6.13 or 6.14 of this
Agreement; (c) Taxes of any person (as defined in Section 7701(a) of the Code)
(other than Symphony with respect to itself and its Subsidiaries with respect to
themselves) imposed on Symphony or any of its Subsidiaries as a transferee or
successor, by contract or otherwise; and Taxes of any member of an affiliated,
consolidated, combined or unitary group of which Symphony (or any predecessor)
is or was a member on or prior to the Closing Date, including but not limited to
Section 1.1502-6 of the United States Treasury Regulations (or any similar or
analogous provision of state, local, or foreign law or regulation).
Notwithstanding the foregoing, no payment to any Buyer Indemnified Party shall
be required for Taxes to the extent reserves for such Taxes are established on
the Closing Balance Sheet and reflected in the calculation of Closing Net
Working Capital (other than any reserves for deferred Taxes established to
reflect timing differences between book and Tax income).
10.2. PAYMENT OF TAX OBLIGATIONS. Buyer shall notify Seller of any Tax
obligation under Section 10.1 for (x) any taxable period ending on or before the
Closing Date and (y) any Pre-Closing Partial Period (determined in accordance
with the principles of Section 10.6) at least seven (7) days before such
obligation is due to be paid. Seller shall wire funds to Buyer or its designee
no later than two (2) days before such payments are due to be paid.
10.3. RETURNS AND REFUNDS. Seller at its expense shall be responsible
for the preparation of all Tax Returns of Symphony and each of its Subsidiaries
required to be filed after the Closing Date that relate to taxable periods
ending on or before the Closing Date. Seller shall also be responsible for
payment in full (net of any amounts reserved for Taxes on the Closing Balance
Sheet to the extent reflected in the calculation of the Closing Net Working
Capital (other than any reserves for deferred Taxes established to reflect
timing differences between book and Tax income)) of all Taxes shown to be due
thereon. Buyer, at its expense, shall cause to be prepared and timely filed all
other Tax Returns of Symphony and each of its Subsidiaries which are filed after
the Closing Date with respect to periods that begin on or before and end after
the Closing Date. Buyer shall cause all such Tax Returns to be prepared in a
manner consistent with prior practices of Symphony. All such Tax Returns shall
be subject to the prior approval of Seller which shall not be unreasonably
withheld. Seller shall be entitled to any refunds of Taxes relating to taxable
periods ending on or before the Closing Date and any Pre-Closing Partial Period
45
(other than any refunds arising from carry-backs from periods ending after the
Closing Date). Buyer and Symphony, upon the request of Seller, shall use
reasonable commercial efforts to obtain any such Tax refunds which can be
reasonably said to be available under applicable law and shall pay over to
Seller the amount of any such Tax refunds within fifteen (15) days after receipt
thereof. Seller shall reimburse Buyer and Symphony for all costs in connection
with seeking or obtaining a Tax refund for the benefit of Seller pursuant this
Section 10.3.
10.4. COOPERATION. Buyer and Seller shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with the
filing of any Tax Returns of Symphony, the filing and prosecution of any Tax
claims and any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder.
10.5. CONTESTS. Buyer agrees to give prompt notice to Seller of any
proposed adjustment to Taxes payable by Symphony or any of its Subsidiaries
(other than income Taxes includible in a consolidated or combined Tax Return of
Seller) for periods ending on or prior to the Closing Date (other than income
Taxes includable on a consolidated or combined Tax Return of Seller) or any
Pre-Closing Partial Period. Seller shall give Buyer prompt notice of any
proposed adjustments in income Taxes of Symphony includable on a consolidated or
combined Tax Return of Seller. Buyer and Seller shall cooperate with each other
in the conduct of any audit or other proceeding involving Symphony or and of its
Subsidiaries for such periods and each party may participate at its own expense.
Seller shall have the right to control the conduct of any such audit or
proceeding for which Seller agrees in writing that any resulting Tax allocable
to any period prior to and including the Closing Date is covered by the
indemnity set forth in Section 10.1 of this Agreement, (such audit or
proceeding, a "Sellers' Contest"), provided that: (i) Seller shall keep Buyer
informed regarding the progress and substantive aspects of any Sellers' Contest
and (ii) Seller shall not compromise or settle any Sellers' Contest if such
compromise or settlement would have the effect of (x) increasing any Tax
liability of Symphony or any of its Subsidiaries or (y) otherwise materially and
adversely affect any item or Tax attribute of Symphony or any of its
Subsidiaries, in each case for any taxable period ending after the Closing Date,
without obtaining Buyer's consent, which consent shall not be unreasonably
withheld. If Seller chooses to direct a Sellers' Contest, Buyer shall cause
powers of attorney authorizing Seller's designee to represent Symphony and its
Subsidiaries before the relevant taxing authority and such other documents as
are reasonably necessary for Seller to control the conduct of any Sellers'
Contest, consistent with the terms of this Section 10.5.
10.6. ALLOCATION OF TAXES. For purposes of Sections 4.12 and this
Article 10, in the case of Taxes that are payable with respect to a period that
begins before the Closing Date and ends after the Closing Date, the portion of
such Taxes payable for the period ending on the Closing Date shall be (a) in the
case of any property or ad valorem Tax, the amount of such Tax for the entire
period multiplied by a fraction, the numerator of which is the number of days in
the period ending on the Closing Date and the denominator of which is the number
of days in the entire period and (b) in the case of any other Tax, the amount
46
which would be payable if the taxable year ended as of the end of the Closing
Date.
10.7. TERMINATION OF TAX ALLOCATION AGREEMENTS. Any tax allocation or
sharing agreement or arrangement, whether or not written, that may have been
entered into between Seller or any of its Affiliates, on the one hand, and
Symphony, on the other hand, shall be terminated as of the Closing Date and
after the Closing Date neither Buyer, its Affiliates nor Symphony shall be bound
thereby or have any liability thereunder.
10.8. INDEMNITY PAYMENTS. All indemnity payments under Article 9 and
Article 10 shall be treated for income Tax purposes as adjustments to the
purchase price for the Symphony Interests as adjusted pursuant to the terms of
this Agreement.
10.9. TRANSITION SERVICES. In consideration for the transactions
contemplated by this Agreement, Buyer agrees to provide or cause to be provided
to Seller and its Subsidiaries the services of the individuals in Symphony's tax
department who are tasked with the preparation of Tax Returns in order to assist
Seller in its preparation and filing of the Tax Returns contemplated to be
prepared and filed by Seller by Section 10.3 (the "Transition Services"),
commencing on the Closing Date and for the period of time necessary for Seller
to fulfill its obligations under Section 10.3. The Transition Services will be
provided consistent with the scope, utilization level, manner and level of care
with which such services were previously provided during the 18 months prior to
the date hereof. Buyer will not be required to provide Transition Services of a
quality or quantity that is greater in any material respect from that which has
been provided in the 18 months prior to the date hereof. Such individuals
performing the services in this Section 10.9 to Seller shall have no liability
to Seller, or any of Seller's Affiliates or Subsidiaries, for any action or
omission in connection with performing such services.
10.10. CONFLICT BETWEEN ARTICLE 9 AND ARTICLE 10 SUCCESSORS. In any
conflict between the provisions of Article 9 and this Article 10, this Article
10 shall control. For purposes of this Article 10, any references to any of the
Parties shall include successors.
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1. TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(a) by the mutual written consent of Seller and Buyer;
(b) by either Seller or Buyer, if any Governmental Authority
with jurisdiction over such matters shall have issued an Order
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby, and such order, decree, ruling or
other action shall have become final and unappealable;
(c) at any time before the Closing, by notice given by Seller
or Buyer in the event of a material breach of this Agreement by the
non-terminating party if such non-terminating party fails to cure such
47
breach within ten (10) Business Days following notification thereof by
the terminating party; or
(d) by either Seller or Buyer, if the Closing shall not have
occurred prior to September 30, 2006 ("Outside Closing Date");
provided, however, that the right to terminate this Agreement under
this Section 11.1(d) shall not be available to any party whose failure
to fulfill any obligation under this Agreement shall have been the
cause of, or shall have resulted in, the failure of the Closing to
occur prior to the Outside Closing Date.
11.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 11.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any Party hereto except that
nothing herein shall relieve any Party from liability for any breach of this
Agreement prior to the date of termination.
ARTICLE 12
MISCELLANEOUS
12.1. NOTICES. All notices and other communications provided for or
permitted hereunder shall be in writing and shall be deemed to have been duly
given and received when delivered by overnight courier or hand delivery, when
sent by telecopy, or five days after mailing if sent by registered or certified
mail (return receipt requested) postage prepaid, to the Parties at the following
addresses:
If to Buyer, to: 0000 Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xx. Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy (which shall not constitute Xxxxxxxx Xxxxxx LLP
actual or constructive notice) to: One XX Xxxx Xxxxx
Xx. Xxxxx, XX 00000
Attention: Xxxxxx X.. XxXxxx, Esq.
Telephone: (000) 000 0000
Telecopier: (000) 000 0000
If to Seller and/or Symphony, to: c/o Leucadia International Corporation
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000 0000
48
With a copy (which shall not constitute DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP
actual or constructive notice) to: 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000 0000
Telecopier: (000) 000 0000
Any Party, by notice given in accordance with this Section 12.1 to the
Parties, may designate another address or person for receipt of notices or
copies thereof hereunder.
12.2. ENTIRE AGREEMENT. This Agreement (including the Annexes,
Schedules, Related Documents and each other document or agreement executed
concurrently herewith) contains the entire agreement among the Parties with
respect to the subject matter hereof and thereof, and supersedes all prior
agreements, written or oral, with respect thereto.
12.3. WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES; PRESERVATION OF
REMEDIES. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by each of the Parties or, in the case of a waiver, by the Party waiving
compliance. No delay on the part of any Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof. No waiver on the part of
any Party of any right, power or privilege, nor any single or partial exercise
of any such right, power or privilege, shall preclude any further exercise
thereof or the exercise of any other such right, power or privilege. Except as
otherwise expressly stated herein, the rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
12.4. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive and procedural laws of the State of Delaware
applicable to agreements made and to be performed entirely within such State
(without giving effect to any conflict of laws principles of such state which
might require application of the law of a different jurisdiction).
12.5. BINDING EFFECT; NO ASSIGNMENT. Neither this Agreement, nor any
right hereunder, may be assigned by any Party without the written consent of the
other Parties. Any such assignment or attempted assignment in violation of the
foregoing shall be void. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the Parties and their permitted
successors and assigns and legal representatives.
12.6. COUNTERPARTS. This Agreement may be executed by the Parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the Parties.
49
12.7. SCHEDULES AND ANNEXES. The Schedules and Annexes are a part of
this Agreement as if fully set forth herein, provided that the Related Documents
are each self-contained agreements. All references herein to articles, sections,
paragraphs, Schedules and Annexes shall be deemed references to such parts of
this Agreement, unless the context shall otherwise require.
12.8. HEADINGS. The headings in the Agreement are for reference only
and shall not affect the interpretation of this Agreement.
12.9. PUBLICITY. Except as mandated by law or applicable regulations,
in which event the Parties shall use their best efforts to coordinate any
disclosure required thereby, no Party shall deliver any notice to third parties
or make any other public statement concerning the transactions contemplated by
this Agreement without the prior written consent of the other Parties.
12.10. SEVERABILITY. If any portion of this Agreement shall be deemed
unenforceable by a court of competent jurisdiction, the remaining portions shall
be valid and fully enforceable.
12.11. TIME OF ESSENCE. Time is of the essence for each and every
provision of this Agreement.
12.12. ATTORNEYS' FEES. If any legal action, arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it may be
entitled.
12.13. EXPENSES. Except to the extent paid prior to the Closing Date or
accrued on the Closing Balance Sheet and including in the calculation of Closing
Net Working Capital, all costs and expenses, including, without limitation, fees
and disbursements of counsel, financial advisors and accountants incurred in
connection with this Agreement and the transactions contemplated hereby (the
"Transaction Related Expenses") shall be paid by the party incurring such costs
and expenses, whether or not the Closing shall have occurred. To the extent that
any Transaction Related Expenses are incurred by the Symphony which are not paid
prior to the Closing or accrued on the Closing Balance Sheet, such expenses
shall be assumed by Seller at the Closing or if paid by Symphony after the
Closing reimbursed by Seller to Symphony.
12.14. THIRD PARTY BENEFICIARIES. Nothing in this Agreement, express or
implied, is intended to confer upon any Person other than the Parties to this
Agreement any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
REHABCARE GROUP, INC.
By:
----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
LUK-SYMPHONY MANAGEMENT, LLC
By: LUK-SYMPHONY, LLC, its Manager
By: SYMPHONY HEALTH SERVICES, INC.,
its Manager
By:
----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
SYMPHONY HEALTH SERVICES, LLC
By: LUK-SYMPHONY MANAGEMENT, LLC,
its sole Member
By: LUK-SYMPHONY, LLC, its Manager
By: SYMPHONY HEALTH SERVICES, INC.,
its Manager
By:
----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
51
