EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into effective as of
April 30, 2005, by and among ARCADIA HEALTH SERVICES OF MICHIGAN, INC., a
Michigan corporation ("Buyer"), HOME HEALTH PROFESSIONALS, INC., a Delaware
Corporation ("Company"), and XXXXXXXX XXXXXXX, XXXXXX XXXXX and XXXXXXX X.
XXXXXXXXX ("Xxxxxxxxx"), Michigan residents (individually, "Seller" and
collectively, "Sellers"). Certain other capitalized terms used herein are
defined in Article V and throughout this Agreement.
RECITALS :
A. Sellers own 100% of the issued and outstanding shares (the "Shares") of
capital stock of Company.
B. Company is engaged in the home health care employee staffing business
(the "Business").
X. Xxxxxxx desire to sell, and Buyer desires to purchase, all of the
Shares upon the terms and subject to the conditions, representations, warrants
and covenants contained in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises,
representations, warranties and covenants herein contained, the parties agree as
follows:
ARTICLE I
SALE AND TRANSFER OF SHARES; CLOSING
1.1 SALE AND PURCHASE OF SHARES; CERTAIN LIABILITIES NOT BEING ASSUMED.
1.1.1 Subject to the terms and conditions of this Agreement, at the
Closing Sellers will sell, convey, assign, deliver and transfer all of the
Shares to Buyer, and Buyer will purchase the Shares from Sellers free and
clear of any Encumbrances.
1.1.2 Notwithstanding that Buyer is purchasing all of the Shares of
the Company from Sellers, the parties acknowledge and agree that Sellers
shall specifically retain and indemnify Buyer, and Buyer shall not assume
or otherwise be responsible for, the following liabilities of the Company
("Sellers Retained Liabilities"):
(a) Any and all lines of credit of the Company with lenders
and vendors, as detailed in Schedule 1.1.2(a) attached hereto, all
of which shall be paid and satisfied in full prior to Closing.
(b) Any Liability for Taxes (including penalties and interest)
of the Company existing as of the Closing or otherwise attributable
to any period prior to Closing.
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(c) Any Liability of the Company to T-Mobile.
(d) Any Liability in connection with the four (4) automobile
leases referenced in Schedule 1.1.2(d), which shall be transferred
as set forth in said schedule.
(e) Employee paid time off as detailed in Schedule 1.1.2(e).
(f) Workers compensation liability for any claims first
arising prior to Closing.
1.2 PURCHASE PRICE AND PAYMENT. Subject to Section 1.3, the purchase price
("Purchase Price") for the Shares shall be paid to Sellers on a pro-rata basis
based upon each Seller's respective ownership percentage and consist of the
following:
1.2.1 Subject to Section 1.3, cash at Closing in the amount of Two
Million Four Hundred Ninety-Nine Thousand Dollars and No/100 Dollars
($2,499,000.00), less the Escrow Amount (as defined in Section 1.3), by
wire transfer of immediately available funds (the "Cash Payment").
1.2.2 Shares of common stock of Buyer's ultimate parent company,
Arcadia Resources, Inc. (OTB: ACDI.OB)("ACDI") equal in value to Two
Million and No/100 Dollars ($2,000,000.00). The number of ACDI shares to
be provided to Sellers will be based on the average closing price per
share for each of the last ten (10) trading days prior to Closing (the
"Stock Payment").
1.2.3 An earnout amount equal to four (4) times the cumulative
EBITDA of the Company's St. Xxxxxx (Michigan) branch ("Earnout Amount")
for the twelve month period following the Closing Date ("Earnout Period"),
payable as follows:
1.2.3.1 Within thirty (30) days following the end of each
three month period during the Earnout Period, Buyer shall calculate
the cumulative Earnout Amount for the three month period just ended
and each prior three month period during the Earnout Period (the
"Cumulative Earnout Amount"). If the Cumulative Earnout Amount is a
positive number, then within five (5) business days following
Buyer's determination of the Cumulative Earnout Amount, Buyer shall
make a cash payment to Sellers (on a pro rata basis) equal to
("Quarterly Earnout Payment"): (x) fifty (50%) percent of the
Cumulative Earnout Amount, minus (y) the aggregate amount of
Quarterly Earnout Payments made by Buyer to Seller pursuant to this
Section 1.2.3 for all prior three month periods. If the Cumulative
Earnout Amount or Quarterly Earnout Payment is a negative number,
then the Quarterly Earnout Payment for that period shall be zero.
1.2.3.2 Within five (5) business days following the Buyer's
determination of Cumulative Earnout Amount for the last three (3)
month period during the Earnout Period, Buyer shall pay to Sellers
(on a pro rata basis) an amount equal to the entire Cumulative
Earnout Amount, minus the aggregate amount of the Quarterly Earnout
Payments previously made by Buyer.
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1.2.3.3 If the aggregate amount of Quarterly Earnout Payments
exceeds the actual Earnout Amount for the entire Earnout Period,
then the Buyer shall be reimbursed the excess amount paid to Sellers
from the Escrow Amount.
1.2.3.4 During the Earnout Period, monthly financial
statements of the Company utilized in determining the Earnout Amount
shall be provided to Sellers.
1.3 PURCHASE PRICE ADJUSTMENT. The Cash Payment amount due at Closing or
any other amount otherwise due Sellers hereunder shall be adjusted downward if
the Company's "Net Current Asset Value" (as defined herein) as of the Closing
Date is less than the Company's average Net Current Asset Value for the three
(3) month period ending March 31, 2005. For this purpose, the term "Net Current
Asset Value" means the book value of the Company's current assets as of the
applicable measurement date minus the Company's current liabilities as of the
same date, each of which shall be determined in accordance with GAAP. Within
ninety (90) days following the Closing, Buyer shall provide Sellers with a
Schedule prepared by Buyer in good faith showing (i) the Net Current Asset Value
as of the Closing Date, (ii) the average Net Current Asset Value for the three
month period ended March 31, 2005, and (iii) an estimate of the amount of the
adjustment to the Purchase Price, if any ("Buyer's Adjustment Schedule"). In
order for Buyer to prepare its Buyer's Adjustment Schedule, the Sellers shall
provide Buyer a copy of the Company's April 2005 financial statements on or
before May 31, 2005. Unless Sellers shall provide Buyer with written objection
to the Buyer's Adjustment Schedule within thirty (30) days following Sellers'
receipt thereof, the Buyer's Adjustment Schedule shall become final, binding and
conclusive upon the parties for purposes of this Agreement and Buyer shall be
entitled to have the Purchase Price adjustment amount reflected in the Buyer's
Adjustment Schedule released to Buyer from the Escrow Amount or otherwise. If
Sellers timely provide said objection to the Buyer's Adjustment Schedule, and
the parties are unable to reach a mutual agreement as to the Purchase Price
adjustment amount within a period of thirty (30) days following such objection
by Sellers, then within seven (7) days thereafter, the calculation of the
Purchase Price adjustment shall be submitted to an independent certified public
accountant mutually selected, in writing, by the parties for such purpose
("Independent Accountant"). Each party shall thereupon furnish to the
Independent Accountant such work papers and other documents and information
requested by the Independent Accountant. The Independent Accountant shall
determine the Purchase Price adjustment within thirty (30) days following the
date of its appointment, which determination shall be final, binding, and
conclusive upon the parties. The parties shall bear all costs, fees and expenses
of the Independent Accountant equally.
1.4 ESCROW AMOUNT. At the Closing, Buyer shall deposit the sum of Two
Hundred Forty-Five Thousand and No/100 Dollars ($245,000.00) into escrow (the
"Escrow Amount") to be held pursuant to the terms of that certain Escrow
Agreement attached hereto as Exhibit 1.4. The Escrow Amount shall be used to (i)
satisfy any valid indemnification claims that Buyer has against the Sellers,
(ii) reimburse Buyer for the amount of any excess Quarterly Earnout Payments,
and (iii) satisfy any other claims or rights of set off that Buyer has against
Sellers. Within five (5) days following the final determination of the
Cumulative Earnout Amount, the escrow agent shall release to Sellers (on a pro
rata basis) one-half of the remaining balance of the Escrow Amount, less a
reasonable reserve for any pending indemnification claims/offsets.
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Within thirty (30) days following the second anniversary date of the Closing
Date, the escrow agent shall release to Sellers the remaining balance of the
Escrow Amount, less a reasonable reserve for pending indemnification
claims/offsets. Once all indemnification claims/set offs have been finally
resolved, the balance of the Escrow Amount, if any, shall be released to
Sellers.
1.5 NATURE OF ACDI STOCK. Each Seller understands that the ACDI stock
acquired by them hereunder has not been registered under the Securities Act of
1933, as amended (the "Act"), or under any applicable state securities law, and
is being issued to them in reliance upon available exemptions from registration,
and is deemed restricted stock within the meaning of Rule 144 promulgated by the
Securities Exchange Commission. Each Seller further acknowledges and understands
that the resale of the ACDI stock has not been registered by ACDI, and the ACDI
stock cannot be resold by Sellers unless the ACDI stock is registered for resale
or an exemption from registration is available under federal and state law. As a
condition to Sellers' receipt of the Stock Payment, each Seller shall be
required to execute and deliver to ACDI the Stock Payment Agreement in the form
attached hereto as Exhibit "1.5". Buyer shall cause ACDI to issue to each Seller
a stock certificate evidencing such Seller's share of the Stock Payment as soon
as reasonably possibly following the Closing.
1.6 CLOSING. The purchase and sale (the "Closing") provided for in this
Agreement will take place at 10:00 a.m. on April 30, 2005 at the offices of
Arcadia Health Services of Michigan, Inc., 00000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxxx 00000, or at such other time and place as the parties
may mutually agree. The effective date of the transfer of ownership of the
Shares shall be 11:59:59 p.m. on April 30, 2005.
1.7 CLOSING OBLIGATIONS. At the Closing:
1.7.1 Sellers will deliver to Buyer (collectively the "Sellers'
Closing Documents"):
(a) Certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers);
(b) A Release in the form of Exhibit 1.7.1(b) executed by
Sellers indicating Sellers shall release the Company from any and
all claims, liabilities or obligations ("Sellers' Release");
(c) Noncompetition/Non-Solicitation agreements in the form of
Exhibit 1.7.1(c), executed by Sellers, and key branch personnel to
be agreed upon by the parties (collectively the "Sellers
Noncompetition Agreements");
(d) The Required Consents (as hereinafter defined);
(e) The resignation of Sellers and such other individuals
identified on Schedule 1.5.1(e), as officers, directors and
employees of the Company, effective as of the Closing Date, in the
form of Exhibit 1.7.1(e);
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(f) A legal opinion from Sellers' counsel in the form of
Exhibit 1.7.1(f);
(g) The Stock Payment Agreement;
(h) Sellers' proof of tail coverage for professional and
general liability for claims occurring prior to Closing;
(i) All other documents, instruments or writings required to
be delivered to Buyer at or prior to the Closing pursuant to this
Agreement and such other certificates of authority and documents as
Buyer may reasonably request.
1.7.2 Buyer will deliver to Sellers (the "Buyer's Closing
Documents"):
(a) The Cash Payment;
(b) The Stock Payment Agreement evidencing each Sellers right
to receive the Stock Payment;
(c) An Encumbancy Certificate in the form of Exhibit 1.7.2(c).
(d) All other documents, instruments or writings required to
be delivered to Sellers at or prior to the Closing pursuant to this
Agreement and such other certificates of authority and documents as
Sellers may reasonably request.
1.8 SELLERS' PAYMENT FOR TAIL LIABILITY INSURANCE.
On or before the Closing, Sellers shall purchase a tail policy and
provide evidence thereof to Buyer, which policy shall cover all
professional and general liability risks of the Company for occurrences or
events occurring prior to Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF COMPANY AND SELLERS
As a material inducement to Buyer entering into this Agreement and knowing
and acknowledging that Buyer is relying upon the same, the Company and Sellers,
jointly and severally, hereby make, as of the Closing Date, the following
representations and warranties to Buyer.
2.1 ORGANIZATION AND GOOD STANDING. The Company is a corporation duly
organized, validly existing, and in good standing under the respective laws of
the State of its incorporation, with full power and authority to conduct its
business as it is now being conducted, to own, lease and use the properties and
assets that it purports to own, lease or use, and has the full power and
authority to perform all of its material Contracts. The Company is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction which either the ownership, leasing
or use of the properties owned, leased or used by it, or the nature of the
activities conducted by it, require such qualification.
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2.2 AUTHORITY/ENFORCEABILITY. This Agreement constitutes the legal, valid,
and binding obligation of Sellers and Company, enforceable against them in
accordance with its terms. Upon the execution and delivery by Sellers of the
Sellers' Closing Documents, the Sellers' Closing Documents will constitute the
legal, valid, and binding obligations of Sellers, enforceable against them in
accordance with their respective terms. Sellers and Company have the absolute
and unrestricted right, power, authority, and capacity to execute and deliver
this Agreement and the Sellers' Closing Documents and to perform their
respective obligations under this Agreement and the Sellers' Closing Documents.
2.3 NO CONFLICT. Neither the execution and delivery of this Agreement nor
the consummation or performance of any of the contemplated transactions
hereunder will, directly or indirectly (with or without notice or lapse of
time): (a) contravene, conflict with, result in a violation of or have any
adverse affect upon (i) any provision of the organizational documents of the
Company, or (ii) any resolution adopted by the Board of Directors or the
stockholders of the Company; (b) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the right to
challenge, any of the transactions contemplated hereunder or to exercise any
remedy or obtain any relief under any Legal Requirement, any Order to which the
Company or Sellers, or any of the assets owned or used by the Company, may be
subject; (c) contravene, conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization
that is held by the Company or that otherwise relates to the business of, or any
of the assets owned or used by, the Company; (d) contravene, conflict with, or
result in a violation or breach of any provision of, or give any Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any Contract; or
(e) result in the imposition or creation of any Encumbrance upon or with respect
to any of the assets owned or used by the Company. Except as set forth in
Schedule 2.3 ("Required Consents"), neither Sellers nor Company is or will be
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the transactions contemplated hereunder.
2.4 CAPITALIZATION. The equity securities of the Company are duly
authorized, validly issued, fully paid and non-assessable, and consist solely of
the equity securities described in Schedule 2.4. At the Closing, the Shares
shall represent all of the issued and outstanding shares of capital stock of the
Company. Sellers are and will be on the Closing Date, the legal, record and
beneficial owners and holders of all of the Shares, free and clear of all
Encumbrances, and shall transfer ownership and marketable title to the Shares to
the Buyer, free of all Encumbrances at the Closing. There are no Contracts
relating to the issuance, sale, or transfer of any equity securities or other
securities of the Company, no Person has any rights to acquire any shares of the
capital stock of the Company, and there are no options, calls, warrants or other
securities or rights outstanding which relate to, are convertible into or
exercisable for any securities of the Company. Schedule 2.4 sets forth, with
respect to the Company, the name, address and federal taxpayer identification
number of, and the number of outstanding Shares legally and beneficially owned
by each Seller as of the Closing Date.
2.5 FINANCIAL STATEMENTS. Attached hereto as Schedule 2.5 are the
following financial statements of the Company ("Financial Statements"): (a) the
reviewed balance sheet of
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Company as of December 31, 2004 and 2003, and the reviewed related statements of
income for each of the years then ended, together with (b) a balance sheet of
Company as of March 31, 2005 and the related statement of income for the month
then ended (the "Interim Financial Statements"). All Financial Statements are
true, accurate, complete, and present the properties, financial condition and
results of operations of Company as of the respective dates of and for the
periods referred to in such Financial Statements, all in accordance with and
pursuant to GAAP consistently applied, except as expressly stated in Schedule
2.5.
2.6 BOOKS AND RECORDS. The books of account, accounting records, minute
books, and stock record books of the Company (collectively "Records"), are in
all material respects complete, accurate and correct and have been maintained in
accordance with reasonable business practices, except as may be disclosed in the
Financial Statements. All existing Records requested by the Buyer have been made
available to the Buyer for review. The minute books of the Company contain
accurate and complete records of all meetings held of, and corporate action
taken by, the stockholders, the Board of Directors, and committees of the Board
of Directors of the Company, and no meeting of any such stockholders, Board of
Directors or committee has been held for which minutes have not been prepared
and maintained in such minute books, except for any inconsequential and informal
meeting which did not have any significant impact upon the Company and at which
no business of any consequence was conduced, no actions or resolutions were
taken and no liability was incurred. At the Closing, all Records will be
delivered to the Buyer.
2.7 TITLE TO PROPERTIES; ENCUMBRANCES. Except as indicated in Schedule
2.7, the Company owns and has absolute, good and marketable title to all of the
material properties and assets (whether tangible or intangible) located in the
Leased Property, used in the Business or operations of the Company, or reflected
in the books, records or Financial Statements of the Company, and all material
properties and assets purchased or otherwise acquired by the Company since the
date of the Interim Financial Statements (collectively "Company Assets"). All
Company Assets are free and clear of all Encumbrances, except those Encumbrances
described in Schedule 2.7.
2.8 REAL PROPERTY.
2.8.1 Schedule 2.8.1 lists and describes all real property or
interests in real property leased or subleased to or by the Company
("Leased Property"). The Company does not conduct any of its Business and
no assets of the Company are located at any location other than the Leased
Property. The Sellers have delivered to the Buyer correct and complete
copies of the leases and subleases listed in Schedule 2.8.1 and with
respect to each such lease and sublease, except as disclosed in Schedule
2.8.1:
(a) Each is legal, valid, binding, enforceable, and in full
force and effect in all material respects and will continue to be
legal, valid, binding, enforceable, and in full force and effect in
all material respects on identical terms following the consummation
of the Contemplated Transactions;
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(b) No Person is in breach or default, and no event has
occurred which, with or without notice or lapse of time, would
constitute a breach or default or permit termination, modification,
or acceleration thereunder;
(c) No Person has repudiated any provision thereof;
(d) There are no disputes, material oral agreements, or
forbearance arrangements in effect as to the lease or sublease;
(e) With respect to each sublease, the representations and
warranties set forth in subsections (a) through (d) above are true
and correct with respect to the underlying lease; and
(f) The Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold.
2.8.2 Except as disclosed in Schedule 2.8.2, with respect to each
parcel of Leased Property:
(a) The Company has received all material Governmental
Authorizations required in connection with the use or operation
thereof and each have been operated and maintained in accordance
with material applicable Legal Requirements;
(b) Each is supplied with utilities and other services
necessary for the operation of said Leased Property in the Ordinary
Course of Business as conducted prior to the Closing;
(c) There are no pending or threatened condemnation
proceedings, or lawsuits or administrative actions relating to any
parcel of Leased Property which could affect the current use or
occupancy thereof;
(d) There are no public improvements which should have been
ordered, threatened, announced or contemplated which have not been
completed, assessed and fully paid for;
(e) There are no parties (other than the Company) in
possession or control of any parcel of Leased Property, except as
disclosed in Schedule 2.8.2; and
(f) Each parcel of Leased Property has vehicular access to a
public road, and access to the Facility provided by paved public
right-of-way with adequate curb cuts available.
2.9 CONDITION AND SUFFICIENCY OF ASSETS. Except as disclosed in Schedule
2.9, the Leased Property and the Company Assets which are material to the
Business and operations of the Company, are structurally sound, in good
operating condition and repair, and are adequate for the uses to which they are
being put, and none of such Leased Property or the Company
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Assets are in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. All personal
property, fixtures, machinery and equipment owned or used by the Company, which
are material to the operations of the Company, are in reasonable operating
condition and repair, except as disclosed in Schedule 2.9. All real property,
buildings, plants and structures used by the Company are, in all material
respects, structurally sound and in good operating condition, except as
disclosed in Schedule 2.9. The Leased Property and the Company Assets are
sufficient for the continued conduct of the Business after the Closing in
substantially the same manner as conducted prior to the Closing.
2.10 ACCOUNTS RECEIVABLE. All accounts receivable, net of allowances for
doubtful accounts, of the Company that are reflected in the Financial Statements
or in the accounting records of the Company as of the Closing Date (collectively
the "Accounts Receivable") represent and, at the Closing, will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. Unless paid prior to the Closing Date, the
Accounts Receivable are and at the Closing will be current and collectible, in
full, subject to no offsets or defenses, except for the amount of any respective
reserves shown in the Financial Statements (which reserves are adequate and
calculated in accordance with GAAP and consistent past practice and, in the case
of the reserves as of the Closing Date, will not represent a Material Adverse
Change in the composition of such Accounts Receivable in terms of aging).
Subject to such stated reserves, each of the Accounts Receivable either has been
or will be collected in full, without any set-off, within one hundred twenty
(120) days after the Closing. Sellers agree that in the event that for any
reason whatsoever Buyer, utilizing normal and reasonable collection efforts,
shall not collect the full face amount of each and every account receivable
included in the Financial Statements, within one hundred twenty (120) days
following the Closing, Sellers shall, within fifteen (15) days following Buyer's
request, from time to time, jointly and severally reimburse and indemnify Buyer
for the full uncollected portion thereof, or Buyer shall have the right, at its
option, to be reimbursed from the Escrow Amount or otherwise offset the amount
of such uncollected receivable. In the event that Buyer collects any portion of
a receivable for which Buyer previously received indemnity from Sellers or
reimbursement from the escrow, or offset amounts otherwise owing Sellers, Buyer
shall promptly remit such payment to Sellers. For any and all accounts
receivable for which Buyer is reimbursed out of the Escrow Amount, or otherwise,
Buyer shall thereafter assign such receivable back to Sellers. During the period
any amounts are held in Escrow pursuant to Section 1.4 hereof, the Company shall
provide a weekly Accounts Receivable summary in writing to Sellers.
2.11 INVENTORY. The Company has no inventory.
2.12 TAXES.
2.12.1 The Company has filed or caused to be filed, on a timely
basis including lawful extensions, all Tax Returns that are or were
required to be filed by or with respect to it, pursuant to applicable
Legal Requirements. The Company has paid all Taxes that have or may have
become due pursuant to those Tax Returns, any Legal Requirement or
otherwise, or pursuant to any assessment received by Sellers or the
Company.
2.12.2 Schedule 2.12.2 contains a complete and current list of all
audits of or adjustments to all Tax Returns of the Company (or its
predecessors) ending within the
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four (4) year period immediately preceding the date of the Interim
Financial Statements, including a reasonably detailed description of the
nature, proposed adjustments and outcome of each audit. Except as
described in Schedule 2.12.2, neither Sellers nor the Company have given
or been requested to give waivers or extensions (or are or would be
subject to a waiver or extension given by any other Person) of any statute
of limitations relating to the payment of Taxes by the Company or for
which the Company may be liable. All deficiencies accrued as a result of
such audits have been paid.
2.12.3 Taxes based on the operations of the Company have been
reflected on the books and records of the Sellers. The charges, accruals,
and reserves with respect to Taxes in the Financial Statements of the
Sellers for the Company are correctly determined in accordance with GAAP.
All Taxes that the Company is or was required by Legal Requirements to
pay, withhold or collect have been duly paid, withheld or collected and,
to the full extent required, have been timely paid to the proper
Governmental Body or other Person. The Company has no Liability for Taxes,
except for Taxes reserved in its Closing Financial Statements and accrued
in the Ordinary Course of Business since the date thereof.
2.12.4 All Tax Returns filed (or that are included on a consolidated
basis) by the Company are true, correct, and complete and exact copies of
all Tax Returns filed by the Company during the four (4) year period
preceding the date hereof have been made available to the Buyer. All Tax
Returns required to be filed on a consolidated or combined basis with any
affiliates or related parties have in fact been filed on a consolidated or
combined basis. There is no tax sharing agreement that will require any
payment by the Company after the date of this Agreement.
2.12.5 Schedule 2.12.5 describes all tax elections and consents
filed by the Company with any Governmental Body. The Company has never
filed any election or consent under IRC Sections 341 or 338.
2.13 NO MATERIAL ADVERSE CHANGE. Since December 31, 2004, there has not
been any Material Adverse Change to the Company, the Company Assets or the
Business, and no event has occurred or circumstance exists that may result in a
Material Adverse Change to the Company, the Company Assets or the Business.
2.14 EMPLOYEE BENEFITS.
2.14.1 Schedule 2.14.1 describes each Employee Benefit Plan that the
Company maintains or to which the Company contributes and each Employee
Benefit Plan that the Company formerly maintained or to which the Company
ever contributed in the past three (3) years.
2.14.2 Except as disclosed in Schedule 2.14.2, each Employee Benefit
Plan (and each related trust, insurance contract or fund) complies in form
and in operation in all respects with the applicable requirements of
ERISA, the IRC and all other Legal Requirements and all required filings,
returns, reports and descriptions (including Form 5500 Annual Reports,
Summary Annual Reports, PBGC-1's and Summary Plan
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Descriptions) have been timely filed or distributed appropriately with
respect to each such Employee Benefit Plan as required by ERISA, the IRC
and all Legal Requirements.
2.14.3 All required contributions (including all employer
contributions and employee salary reduction contributions) have been paid
to each Employee Benefit Plan and all required contributions for any
period ending on or before the Closing Date which are not yet due have
been and shall be accrued and reserved in the Company's Interim Financial
Statements and books and records. All premiums or other payments for all
periods ending on or before the Closing Date have been paid or have been
accrued and reserved in the Company's respective Interim Financial
Statements and books and records with respect to each such Employee
Benefit Plan.
2.14.4 No funding or asset deficiency of any kind exists under any
Employee Benefit Plan.
2.14.5 Except as disclosed in Schedule 2.14.5, Sellers have made
available to Buyer correct and complete copies of all Employee Benefit
Plans, including without limitation, all agreements, plan documents and
summary plan descriptions, the most recent determination letter received
from the IRS, the three (3) most recent Form 5500 Annual Reports, and all
related trust agreements, insurance contracts and other funding agreements
which implement or relate to each Employee Benefit Plan.
2.14.6 No such Employee Benefit Plan has been completely or
partially terminated or been the subject of a reportable event as to which
notices would be required to be filed with the PBGC within the past three
(3) years. No proceeding by the PBGC to terminate any such Employee
Benefit Plan has been instituted or threatened.
2.14.7 To the knowledge of the Sellers and the Company, there have
been no prohibited transactions with respect to any such Employee Benefit
Plan. No Fiduciary has any Liability for breach of fiduciary duty or any
other failure to act or comply in connection with the administration or
investment of the assets of any such Employee Benefit Plan. No action,
suit, proceeding, complaint, grievance, hearing or investigation with
respect to the administration or the investment of the assets of any such
Employee Benefit Plan (other than routine claims for benefits) is pending
or threatened. Neither the Company (nor their employees with
responsibility for employee benefits matters) nor the Sellers have any
Knowledge of any basis for any such action, suit, grievance, complaint,
proceeding, hearing or investigation.
2.14.8 The Company has not incurred, and neither the Sellers nor the
directors and officers (and employees with responsibility for employee
benefits matters) of the Company has any reason to expect that the Company
will incur any Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal Liability) or
under the Code with respect to any such Employee Benefit Plan which is an
Employee Benefit Plan.
Page 11 of 36
2.14.9 The Company does not contribute to, never has contributed to,
and never has been required to contribute to any Multi-Employer Plan or
has any Liability (including withdrawal Liability) under any
Multi-Employer Plan.
2.14.10 Except as disclosed in Schedule 2.14.10, the Company does
not maintain, has ever maintained, has never contributed, and has never
been required to contribute to any Employee Benefit Plan providing
medical, health or life insurance or other welfare-type benefits for
current or future retired or terminated employees, their spouses or their
dependents.
2.14.11 The Company has no Liability arising from any Employee Plan,
except for any liability reflected in the Company's Interim Financial
Statements or as accrued in the Ordinary Course of Business since the date
of such Interim Financial Statements.
2.15 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in Schedule
2.15:
2.15.1 The Company is, and at all times during the last three (3)
years has been, in full compliance with each material Legal Requirement
that is or was applicable to it or to the conduct or operation of its
business or the ownership or use of any of its assets;
2.15.2 No event has occurred or circumstance exists that (with or
without notice or lapse of time) may constitute or result in a violation
by the Company under, or a failure on the part of the Company to comply
with, any Legal Requirement
2.15.3 Neither Company nor Sellers have received any notice or other
communication (whether oral or written) from any Governmental Body or any
other Person regarding (i) any actual or, to the Knowledge of the Company,
alleged violation of, or failure to comply with, any Legal Requirement, or
(ii) any actual or, to the Knowledge of the Company, alleged obligation on
the part of the Company to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature.
2.16 GOVERNMENTAL AUTHORIZATIONS.
2.16.1 Schedule 2.16.1 contains a complete and correct list of each
Governmental Authorization that is held by the Company or that otherwise
relates to the Business of, or to any of the Company Assets. Each
Governmental Authorization listed or required to be listed in Schedule
2.16.1 is valid and in full force and effect. The Company has fully
complied with all conditions and requirements for, or relating to, all
Governmental Authorizations.
2.16.2 The Company has all material Governmental Authorizations
necessary to permit it to lawfully conduct and operate its business in the
manner as currently conducted, and to permit it to own and use the Company
Assets in the manner in which they are currently owned and used.
2.16.3 Neither Company nor Sellers have received any notice or other
communication regarding any actual or alleged (i) violation or failure to
comply with
Page 12 of 36
any Governmental Authorization, or (ii) revocation, withdrawal,
suspension, cancellation, termination or modification of any material
Governmental Authorization.
2.17 LEGAL PROCEEDINGS; ORDERS.
2.17.1 Except as disclosed in Schedule 2.17.1, there is no pending
Proceeding: (a) that has been commenced by or against the Company or any
Seller or that otherwise relates to or may affect the Business of, or any
of the Company Assets; or (b) that challenges, or that may have the effect
of preventing, delaying, making illegal, or otherwise interfering with,
any of the transactions contemplated hereunder. No such Proceeding has
been Threatened in writing or orally, and no Proceeding has been
terminated (by adjudication, settlement or otherwise) within the last
three (3) years. No event has occurred or circumstance exists that may
give rise to or serve as a basis for the commencement of any such
Proceeding; and
2.17.2 There is currently no Order to which the Company, any Seller
or any of the Business or any of the Company Assets, is subject. The
Company has complied with all Orders to which it, or any of the Company
Assets has been subject.
2.18 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Schedule 2.18, since December 31, 2004, the Company has conducted its Business
only in the Ordinary Course of Business and there has not been any:
2.18.1 Change in the Company's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock of
the Company; issuance of any security convertible into such capital stock;
or declaration or payment of any dividend or other distribution or payment
in respect of shares of capital stock;
2.18.2 Amendment to the Organizational Documents of the Company;
2.18.3 Payment of any bonuses to or any increase in any salaries,
wages, benefits or other compensation of any stockholder, director,
officer, employee, agent or Representative of the Company or entry into
any employment or severance agreement or arrangement, or any other
Contract with such Person except for increases or payments in the Ordinary
Course of Business;
2.18.4 Payment or accrual of any bonuses, commissions or other
distributions to any Sellers or any relative of any Sellers;
2.18.5 Adoption of, or increase in the payments to or benefits
under, any Employee Benefit Plan;
2.18.6 Damage to or destruction or loss of any asset or property of
the Company, whether or not covered by insurance, in excess of $10,000;
2.18.7 Entry into, termination of, or receipt of notice of
termination of any Contract or transaction outside the Ordinary Course of
Business or which involves a total
Page 13 of 36
remaining commitment by or to the Company of at least $10,000, other than
such actions that would not reasonably be considered to have a Material
Adverse Effect;
2.18.8 Sale, license, lease, or other disposition of any asset or
property of the Company in excess of $10,000 or imposition of any
Encumbrance on any asset or property of the Company, except in the
Ordinary Course of Business;
2.18.9 Cancellation, settlement, or waiver of any claims or rights
of or against the Company in excess of $10,000;
2.18.10 Change in any of the accounting methods or principles used
by the Company except for any changes necessitated by changes to GAAP or
as required pursuant to this Agreement; or
2.18.11 The entry into any Contract by the Company to do any of the
foregoing.
2.19 CONTRACTS; NO DEFAULTS.
2.19.1 Schedule 2.19.1 contains a complete and correct list, and
Sellers have made available to Buyer true and complete copies, of:
(a) Each Contract that involves the furnishing or performance
of services, or the delivery, sale, lease or transfer of goods,
materials or products, by the Company in an amount or value in
excess of $10,000, including, but not limited to, purchase orders
received by the Company;
(b) Each Contract that involves the furnishing or performance
of services to, or the purchase, lease or receipt of goods,
materials, inventory, supplies, products or other personal property
by the Company in an amount or value in excess of $10,000,
including, but not limited to, purchase orders issued by the
Company;
(c) Each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Contracts
affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any personal property (except
personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of less
than $10,000);
(d) Each Contract under which the Company has created,
incurred, assumed or guaranteed any indebtedness for borrowed money,
has incurred any capitalized lease obligation, or under which any of
its tangible or intangible assets, are Encumbered;
(e) Each licensing agreement or other Contract with respect to
any Intellectual Property Assets, including, without limitation,
agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any
of the Intellectual Property Assets;
Page 14 of 36
(f) Each profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan,
arrangement, contract or Employee Benefit Plan for the benefit of
its current or former directors, officers, and employees, except for
Employee Benefits Plans disclosed in Schedule 2.15;
(g) Each written agreement for the employment of or receipt of
any services from any Person on a full-time, part-time, consulting,
commission or any other basis, except for oral agreements of
employment that are terminable by the Company at will and without
any Liability;
(h) Each Contract containing covenants that in any way purport
to restrict the business activity of the Company or limit the
freedom of the Company to engage in any line of business or to
compete with any Person;
(i) Each Contract for capital expenditures in excess of
$10,000;
(j) Each warranty, guaranty, or other similar undertaking
extended by the Company for or with respect to any Person;
(k) Each Contract with any employee, officer, director,
shareholder, sales representative, consultant, distributor,
Representative or agent of the Company;
(l) Each Contract relating to Intellectual Property Assets;
(m) Each Contract not entered into in the Ordinary Course of
Business;
(n) Each Contract relating to confidentiality or
noncompetition;
2.19.2 Except as set forth in Schedule 2.19.2, the Sellers do not
have any fixed or contingent rights or obligations under any Contract that
relates to the business of, or any of the assets owned or used by, the
Company.
2.19.3 Except as set forth in Schedule 2.19.3, each Contract is in
full force and effect and is valid and enforceable in accordance with its
terms.
2.19.4 Except as set forth in Schedule 2.19.4, with respect to each
Contract (including, without limitation, those Contracts and agreements
disclosed or required to be disclosed in Schedule 2.19.1):
(a) The Company is, and at all times has been, in material
compliance with all applicable terms and requirements of each
Contract;
(b) Each other Person that has or had any obligation or
liability under any Contract is, and at all times has been, in
material compliance with all applicable terms and requirements of
such Contract;
Page 15 of 36
(c) No event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give the Company or other
Person the right to declare a default or exercise any remedy under,
or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any Contract; and
(d) The Company has not given to nor received from any other
Person any notice or other communication (whether oral or written)
regarding any actual or alleged violation or breach of, default
under or termination or cancellation of, any Contract.
2.19.5 The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Company have been entered into in
the Ordinary Course of Business and have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in
violation of any Legal Requirement or customer or supplier requirement,
restriction, code or rule of conduct.
2.20 INSURANCE. Schedule 2.20 sets forth a description with respect to
each insurance policy (including policies providing property, casualty,
liability and workers compensation coverage and bond and surety arrangements) to
which the Company has been a party, a named insured or otherwise the beneficiary
of coverage at any time within the past three (3) years, including (a) the name,
address and telephone number of the agent; (b) the name of the insurer, the name
of the policyholder, and the name of each covered insured; (c) the policy number
and the period of coverage; (d) the scope (including an indication of whether
the coverage was on a claims made, occurrence or other basis) and amount
(including a description of how deductibles and ceilings are calculated and
operate) of coverage; and (e) a description of any retroactive premium
adjustments or other loss-sharing arrangements. With respect to each such
insurance policy: (i) the policy is legal, valid, binding, enforceable and in
full force and effect; (ii) the policy, as to the Sellers, will continue to be
legal, valid, binding, enforceable and in full force and effect on identical
terms following the consummation of the transaction contemplated hereby; (iii)
neither Company nor any other Person is in breach or default, and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination, modification or acceleration, under the
policy; and (iv) no Person has repudiated any provision thereof. The Company has
been covered during the past three (3) years by insurance in scope and amount
customary and reasonable for the business in which it has engaged during such
period. Schedule 2.20 describes any self-insurance arrangements affecting the
Company.
2.21 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 2.21:
2.21.1 The Company is, and at all times has been, in full compliance
with, and has not been and is not in violation of or liable under, any
Environmental Law and has never engaged in any Hazardous Activity. Neither
Sellers nor the Company have any basis to expect, nor has any of them or
any other Person for whose conduct they are or may be held to be
responsible, received, any actual or Threatened Order, notice or other
communication from any Governmental Body or Person, or the current or
prior owner or
Page 16 of 36
operator of any Facility, of any actual or potential violation or failure
to comply with any Environmental Law, or of any actual or Threatened
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facility or any other
properties or assets (whether real, personal, or mixed) in which Sellers
or the Company has had an interest, or with respect to any property or
Facility at or to which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used, or processed by Sellers or the
Company or any other Person for whose conduct they are or may be held
responsible.
2.21.2 There are no pending, potential or Threatened claims or
Encumbrances arising under or pursuant to any Environmental Law, or any
Environmental, Health and Safety Liabilities, with respect to or affecting
the Facility or any other properties and assets (whether real, personal,
or mixed) in which Sellers or the Company have ever used, possessed or
occupied, or ever had any interest in.
2.21.3 Neither Sellers nor the Company, nor any other Person for
whose conduct they are or may be held responsible, has any Environmental,
Health and Safety Liabilities.
2.22 EMPLOYEES/REPRESENTATIVES.
2.22.1 Schedule 2.22.1 contains a complete and accurate list of the
following information for each employee of the Company, including each
employee on leave of absence or layoff status: (a) name; (b) date of hire,
(c) job title; (d) current compensation and bonus paid or payable; (e)
vacation accrued; (f) service credited for purposes of vesting and
eligibility to participate under any Employee Benefit Plan, and (g) all
other unpaid compensation, bonus and overtime pay, accrued or payable for
any period prior to the Closing.
2.22.2 To the Sellers' Knowledge, no employee, officer or director
of the Company is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee, officer or director and any other
Person.
2.22.3 Schedule 2.22.3 also contains a complete and accurate list of
the following information for each retired employee or director of the
Company, or their dependents, receiving benefits or eligible to receive
benefits in the future: (a) name, (b) benefit, (c) payment option
election, (d) retiree medical insurance coverage, (e) retiree life
insurance coverage, and (f) other benefits.
2.22.4 Schedule 2.22.4 lists each current sales representative,
commissioned salesperson, consultant or other agent or representative of
the Company ("Representatives"), and all former Representatives,
terminated within the last 3 years and to which the Company owes any
Liability, along with a complete description of the compensation or
Liability payable to such Representatives and all Contracts relating
thereto, and Sellers have made available to Buyer a true and complete copy
of each such Contract and/or all amendments thereto.
Page 17 of 36
2.22.5 Except for any written resignations expressly required by
this Agreement, to Sellers' Knowledge, no Representative, director or
officer, of the Company intends to terminate or materially alter his
employment or other business relationship with the Company. Neither
Sellers nor Company has received any notice of termination or resignation
from any current director, officer or Representative of the Company.
2.23 LABOR RELATIONS; COMPLIANCE. Except as set forth in Schedule 2.23,
the Company has not been nor is a party to any collective bargaining or other
labor Contract. There has not been, there is not presently pending or existing,
and there is not Threatened, any Proceeding against or affecting the Company
relating to the alleged violation of any Legal Requirement pertaining to labor
relations or employment matters, including any charge or complaint filed by an
employee with the National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable Governmental Body or other labor or
employment dispute against or affecting the Company or its premises. The Company
has complied in all material respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, the payment of social security and similar taxes, and
occupational safety and health. The Company is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing or other Legal
Requirements.
2.24 INTELLECTUAL PROPERTY.
2.24.1 Schedule 2.24.1 contains a complete and accurate list
(including, without limitation, any royalties paid or payable or received
by the Company), of all Contracts regarding Intellectual Property Assets
and Sellers have made available a true and complete copy of each such
Contract and any amendments thereto to the Buyer.
2.24.2 The Intellectual Property Assets are all those necessary for
the operation of the Company's business as it is currently conducted and
as it has been conducted during the three (3) year period prior to the
date hereof.
2.24.3 Ownership.
(a) Schedule 2.24.3 contains a complete and accurate list of
all Intellectual Property Assets. The Company is the owner of all
right, title, and interest in and to each of the Intellectual
Property Assets, free and clear of all Encumbrances and the Company
has the sole and undiminished right to the use of the Intellectual
Property Assets without any Liability for royalties or other
payments to a third party, except as disclosed on Schedule 2.24.3.
(b) All of the issued Patents, Marks and Copyrights are
properly filed and registered, are currently in compliance with all
Legal Requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), are valid and
enforceable, and are not subject to any challenges, violations,
infringement claims, maintenance fees, royalty fees, Taxes or
Proceedings or Liabilities, except as described in Schedule 2.24.3.
Page 18 of 36
(c) None of the products manufactured or sold, nor any process
or know-how used, by the Company infringes or is alleged to infringe
any patent, proprietary or other right of any other Person.
(d) Sellers and the Company have taken reasonable precautions
to protect the secrecy, confidentiality, and value of their Trade
Secrets.
2.25 SUBSIDIARIES. Except as disclosed in Schedule 2.25, the Company does
not nor has it ever owned, directly or indirectly, any equity, profit or other
interest in any subsidiary or other Person within the past three (3) years.
2.26 FINDERS OR BROKER FEES. There are no broker commissions, finders fees
or other payments of like nature payable to any Person in connection with the
transactions contemplated herein, and in no event will Buyer or the Company have
any Liability for any fee or commission including, but not limited to, any
finders, originators or brokers fee in connection with the transactions
contemplated hereby.
2.27 COMPETITIVE INTEREST. Neither the Sellers nor any officers, directors
or, to the Knowledge of the Sellers and the Company, any other employees of the
Company, own, directly or indirectly, any interests or have any business or
enterprise which is a competitor or potential competitor of the Company
(excluding any non-management employees owning less than five percent (5%) of
any public company).
2.28 RELATED PARTY TRANSACTIONS. Except as disclosed on Schedule 2.28, all
of the transactions by the Company have been conducted on an arms length basis.
No portions of the sales or other ongoing business relationships of the Company
are dependent upon any familial relationship of Sellers or of any of the
officers, directors or other employees of the Company. The Company has not
engaged in any purchase, lease, sale or other transaction involving any Sellers,
any officer, director, employee or Representative of the Company, any of their
respective representatives, or any Person owned or controlled, in whole or in
part, by any such parties, within the last three (3) years. The Company has no
outstanding loans or other advances, directly or indirectly, to or from any of
the Sellers, any officer, director or employee or Representative of the Company,
any affiliate or relative of Sellers or any entity in which either Sellers or
the Company have a direct or indirect interest.
2.29 BANK ACCOUNTS; BUSINESS LOCATIONS. Schedule 2.29 sets forth all
accounts or deposits of the Company with any bank, broker, depository
institution or other Person, and the names of all Persons authorized to withdraw
funds from each such account. As of the date hereof, the Company has no office
or place of business other than those identified in Schedule 2.29.
2.30 NAME; PRIOR TRANSACTIONS. All names under which the Company does
business as the date hereof are specified on Schedule 2.30. Except as set forth
on Schedule 2.30, the Company has not changed its name or used any assumed or
fictitious name, or been the surviving entity in a merger, acquired any business
or changed its principal place of business or chief executive office, within the
past five (5) years.
Page 19 of 36
2.31 DISCLOSURE.
2.31.1 No representation or warranty of Sellers or Company in this
Agreement and no statements in the Schedules omits to state any fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
2.31.2 No notice given pursuant to this Agreement or otherwise will
contain any untrue statement or omit to state a material fact necessary to
make the statements therein or in this Agreement, in light of the
circumstances in which they were made, not misleading.
2.31.3 There is no fact known to any Sellers or the Company that has
specific application to any Sellers or the Company (other than general
economic or industry conditions) and that may have a Material Adverse
Affect on the assets, business, prospects, financial condition, or
operations of the Company that has not been set forth in this Agreement or
the Schedules.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement of Sellers entering into this Agreement and
knowing and acknowledging that Sellers are relying upon the same, Buyer hereby
makes, as of the Closing Date, the following representations and warranties to
Sellers:
3.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Michigan.
3.2 AUTHORITY; NO CONFLICT.
3.2.1 This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against it in accordance with its terms.
Upon the execution and delivery by Buyer of the Buyer's Closing Documents,
the Buyer's Closing Documents will constitute the legal, valid, and
binding obligations of Buyer, enforceable against Buyer in accordance with
its respective terms. Buyer has the absolute and unrestricted right,
power, and authority to execute and deliver this Agreement and the Buyer's
Closing Documents and to perform its obligations under this Agreement and
the Buyer's Closing Documents.
3.2.2 Except as set forth in Schedule 3.2.2, neither the execution
and delivery of this Agreement by Buyer, nor the consummation or
performance of any of the transactions contemplated hereunder by Buyer
will give any Person the right to prevent, delay, or otherwise interfere
with any of the transactions pursuant to:
(a) Any provision of Buyer's Organizational Documents;
(b) Any resolution adopted by the board of directors or the
stockholders of Buyer;
Page 20 of 36
(c) Any Legal Requirement or Order to which Buyer may be
subject; or
(d) Any Contract to which Buyer is a party or by which Buyer
may be bound.
Except as set forth in Schedule 3.2.2, Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the transactions
contemplated hereunder.
3.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated hereunder. To Buyer's Knowledge, no such Proceeding
has been Threatened.
3.4 FINDERS OR BROKER FEES. There are no broker commissions, finders fees
or other payments of like nature payable to any Person in connection with the
transactions contemplated hereunder, and in no event will Buyer or the Company
have any Liability for any fee or commission including, but not limited to, any
finders, originators or brokers fee in connection with the transactions
contemplated hereby.
ARTICLE IV
INDEMNIFICATION, REMEDIES AND POST CLOSING COVENANTS
4.1 SURVIVAL; KNOWLEDGE. Except as otherwise provided in Sections 4.4 and
4.5 hereof, all representations, warranties, covenants, and obligations in this
Agreement, the Schedules, the supplements to the Schedules, the certificate
delivered pursuant to Section 1.5.1(a), and any other certificate or document
delivered pursuant to this Agreement will survive the Closing and continue in
perpetuity and in full force and effect thereafter. The right to
indemnification, payment of Damages (as hereinafter defined) or other remedy
based on such representations, warranties, covenants, and obligations will not
be affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations. Notwithstanding any
Knowledge or facts determined by the Buyer, the Buyer shall have the right to
fully rely on the representations, warranties, covenants and agreements of the
Sellers contained in this Agreement or in any other documents or papers
delivered in connection herewith. Each representation, warranty, covenant and
agreement of the Sellers contained in this Agreement is independent of each
other representation, warranty, covenant and agreement.
4.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS. Subject to the
limitations of Section 4.6 hereof, Sellers will, jointly and severally,
indemnify, defend and hold harmless Buyer, the Company and their respective
representatives, stockholders, controlling
Page 21 of 36
Persons, and affiliates (collectively the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any loss, Liability, claim,
damage, expense (including costs of investigation, defense and reasonable
attorneys' fees) or diminution of value, whether or not involving a third-party
claim (collectively "Damages"), arising, directly or indirectly, from or in
connection with:
4.2.1 Any Breach of any representation or warranty made by the
Company and Sellers in this Agreement, the Schedules, the supplements to
the Schedules, or any other certificate or document delivered by Sellers
pursuant to this Agreement;
4.2.2 Any Breach of any covenant or obligation of Sellers or Company
in this Agreement;
4.2.3 Any Liability or claim for workers compensation benefits by or
for any of the employees or Representatives of the Company arising from or
related to any occurrence during any period prior to or including the
Closing Date, except to the extent fully covered and paid for by
insurance;
4.2.4 Any Liability or claim for any Tax which relates to any period
prior to or including the Closing Date:
4.2.5 Any Environmental, Health and Safety Liabilities, or other
Liabilities in any way arising from or allegedly arising from (i) any
Hazardous Activity conducted or allegedly conducted with respect to the
Facilities or the operation of the Company prior to the Closing, (ii) any
Hazardous Material that was (a) present on or before the Closing on or at
the Facilities, the Environment at the Facilities or any other property
now or formerly owned, used or relating in any way to the operations or
activities of the Company; or (b) Released or allegedly Released by
Sellers, the Company or any other Person for whose conduct they are or may
be held responsible, at any time on or prior to the Closing. Buyer will be
entitled to control any Cleanup and related Proceeding;
4.2.6 Any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Sellers or the Company
(or any Person acting on their behalf) in connection with any of the
transactions contemplated hereunder or any other transaction;
4.2.7 Reliance by Buyer on any books or records of the Company or
the reliance by Buyer on any information furnished by Sellers or the
Company or any of the directors or officers of the Company, to Buyer, to
the extent any of such information should prove to be incorrect or false;
4.2.8 Any Liability or claim for health, life or other insurance
benefits, or any other employee benefits or claims by or for any of the
employees or Representatives of the Company arising from or relating to
any occurrence during any period prior to or including the Closing Date,
except to the extent fully covered and paid for by insurance;
Page 22 of 36
4.2.9 Any Liability or claim arising from the services, treatment,
employment or termination of any employee, agent or Representative of the
Company on or prior to the Closing Date;
4.2.10 The failure of Sellers to reimburse Buyer for any delinquent
Accounts Receivable pursuant to Section 2.10 of this Agreement;
4.2.11 Any agreements, contracts, negotiations or other dealings by
Sellers or the Company with any Person concerning the sale, transfer or
reorganization of the stock, assets or business of the Company;
4.2.12 Any Liability arising from any Breach, violation or
noncompliance with any Legal Requirement prior to the Closing;
4.2.13 Any Seller Retained Liability.
4.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will indemnify
and hold harmless Sellers, and will pay to Sellers the amount of any Damages
arising, directly or indirectly, from or in connection with (a) any Breach of
any representation or warranty made by Buyer in this Agreement or in any
certificate delivered by Buyer pursuant to this Agreement, or (b) any Breach by
Buyer of any covenant or obligation of Buyer in this Agreement.
4.4 TERMINATION OF OBLIGATIONS OF COMPANY. Notwithstanding anything
contained in this Agreement to the contrary, all of the representations,
warranties, covenants, agreements and obligations of the Company shall terminate
at the Closing and shall thereafter be of no further force and effect. Sellers
hereby waive and release any present or future cause of action or claim against
the Company arising in any way out of this Agreement or any representations,
warranties, covenants or obligations of the Company hereunder, whether for
contribution, indemnity or otherwise.
4.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties of the Sellers contained in this Agreement shall survive the
Closing and continue in full force and effect for a period of three (3) years
thereafter, except for the representations and warranties contained in Sections
2.12 and 2.21 (the "Limited Exempt Provisions"), which shall survive the Closing
and continue in full force and effect thereafter for the applicable statute of
limitations and, except for the representations and warranties contained in
Sections 2.1, 2.2, 2.4, 2.7, 2.8 and 2.26 ("Exempt Provisions") which shall
survive the Closing and continue in full force and effect forever thereafter in
perpetuity. All representations and warranties of the Buyer under this
Agreement, shall survive the Closing and continue for a period of five (5) years
thereafter.
4.6 INDEMNIFICATION LIMITATIONS. Except for the "Exempt Damages" (as
hereinafter defined), Sellers shall not have any obligation to indemnify, defend
and hold the Buyer harmless from and against any Damages until the Buyer has
suffered Damages, other than Exempt Damages, in excess of $10,000 (the "Floor"),
after which point the Sellers (except Xxxxxxx X. Xxxxxxxxx) will be obligated to
indemnify, defend and hold the Buyer harmless from and against all Damages
suffered going back to the first dollar. For purposes of this Agreement, the
"Exempt Damages" shall mean Damages arising out of (i) any intentional Breach,
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misrepresentation, concealment or fraud by the Sellers, (ii) any Breach in any
of the Limited Exempt Provisions or Exempt Provisions, and/or (iii) any Damages
suffered by the Buyer or the Company arising, directly or indirectly, from or in
connection with the items referred to in Sections 4.2.3, 4.2.4, 4.2.10, 4.2.12
or 4.2.13 of this Agreement. Notwithstanding anything contained herein to the
contrary, it is expressly agreed that the Exempt Damages shall not be subject to
the Floor. Furthermore, the Exempt Damages shall not be subject to the
"Limitation" (as hereinafter defined). Except as otherwise provided herein, the
maximum liability of the Sellers for indemnification under this Article IV shall
be limited to $5,500,000 (the "Limitation").
ARTICLE V
DEFINITIONS
For purposes of this Agreement, the following terms have the following meanings:
5.1 "ACCOUNTS RECEIVABLE" shall have the meaning as set forth in Section
2.10 of this Agreement.
5.2 "AGREEMENT" shall mean this Stock Purchase Agreement and all exhibits
and schedules referenced herein.
5.3 "BEST EFFORTS" shall mean the efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible.
5.4 "BREACH" shall mean a breach of a representation, warranty, covenant,
obligation, or other provision of this Agreement, any Schedule or any instrument
delivered pursuant to this Agreement and will be deemed to have occurred if
there is or has been (a) any inaccuracy in, failure or breach of, or any failure
to perform or comply with, such representation, warranty, covenant, obligation,
or other provision, whether material or otherwise or (b) any claim by any Person
or other occurrence or circumstance that is or was inconsistent with such
representation, warranty, covenant, obligation or other provision.
5.5 "BUYER'S CLOSING DOCUMENTS" shall have the meaning as set forth in
Section 1.5.2 of this Agreement.
5.6 "CASH PAYMENT" shall have the meaning as set forth in Section 1.2.1 of
this Agreement.
5.7 "CLOSING" shall have the meaning as set forth in Section 1.4 of this
Agreement.
5.8 "CLOSING DATE" shall mean the date and time as of which the Closing
actually takes place.
5.9 "COMPANY ASSETS" shall have the meaning as set forth in Section 2.7 of
this Agreement.
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5.10 "CORPORATE ALLOCATION AMOUNT" means for each measurement period an
amount equal to the lesser of (i) the amount of overhead expenses of the Company
and any affiliates of the Company actually allocated to the Company's St. Xxxxxx
(Michigan) branch for the applicable measurement period, or (ii) an amount equal
to five (5%) percent of the net revenues generated by the Company's St. Xxxxxx
(Michigan) branch during the applicable measurement period.
5.11 "CONSENT" or "CONSENTS" shall mean any approval, consent,
ratification, waiver, or other authorization (including, without limitation, any
Governmental Authorization) of any Person (i) listed in Schedule 2.3, and (ii)
required to be obtained in order to consummate the Contemplated Transactions.
5.12 "CONTRACT" shall mean any agreement (or group of related agreements),
contract, obligation, option, commitment, promise or understanding (whether
written or oral and whether expressed or implied) (a) under which the Company
has or may acquire any rights, (b) under which the Company has or may become
subject to any obligation or Liability, (c) by which the Company or any of the
assets owned or used by it is or may become bound, or (d) which may relate to,
establish or restrict any rights or obligations affecting the Shares or any
present or future securities of the Company.
5.13 "DAMAGES" shall have the meaning as set forth in Section 4.2 of this
Agreement.
5.14 "EBITDA" means the Company's earnings attributable to the St. Xxxxxx
(Michigan) branch (for the applicable measurement period), before interest,
taxes, depreciation and amortization attributable to such branch, minus the
Corporate Allocation Amount for that measurement period.
5.15 "EMPLOYEE BENEFIT PLAN" shall mean any qualified and/or non-qualified
fringe benefit, disability, health, medical, life insurance, supplemental
compensation, incentive, wage continuation, retirement, pension, profit sharing,
bonus, deferred compensation, stock ownership or other plan, trust, policy or
arrangement involving any past, present or future employee, consultant,
representative, or agent of the Company, including without limitation any plan,
program or arrangement defined in or relevant to any provision of ERISA.
5.16 "ENCUMBRANCE" shall mean any charge, claim, community property or
dower interest, mortgage, equitable interest, lien, option, pledge, security
interest, right of first refusal, Contract, Liability or restriction of any
kind, including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
5.17 "ENVIRONMENT" shall mean any soil, land surface or subsurface strata,
surface waters (including, without limitation, navigable waters, ocean waters,
streams, ponds, drainage basins, and wetlands), ground waters, drinking water
supply, stream, sediments, ambient air (including indoor air), plant and animal
life, and any other environmental medium or natural resource.
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5.18 "ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" shall mean any cost,
damage, expense, Liability, obligation, or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law including, without
limitation, any costs, damage, financial responsibility, expenses, liabilities,
obligations or other Liability for, arising out of or relating to:
5.18.1 The Environment;
5.18.2 The presence, generation, use, handling, transport,
recycling, reclamation, disposal, treatment, storage or release of any
Hazardous Material;
5.18.3 Any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and
health, and regulation of chemical substances or products);
5.18.4 Fines, penalties, judgments, awards, settlements, legal or
administrative Proceedings, damages, losses, claims, demands and response,
investigative, remedial and inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
5.18.5 Any Environmental Law or Occupational Safety and Health Law
for cleanup costs or corrective action, including any investigation,
cleanup, removal, containment, or other remediation or response actions
("Cleanup") required by any applicable Environmental Law or any
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and
for any natural resource damages; and/or
5.18.6 Any other compliance, corrective, investigative, or remedial
measures required under any Environmental Law or any Occupational Safety
and Health Law.
The terms "removal," "remedial," and "response action," include, without
limitation, the types of activities covered by the United States Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et
seq., as amended ("CERCLA").
5.19 "ENVIRONMENTAL LAW" shall mean any Legal Requirement that governs,
regulates, requires or relates to: (a) advising appropriate authorities,
employees, and the public of intended or actual releases of pollutants or
hazardous substances or materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as resource extraction
or construction, that could have significant impact on the Environment; (b)
preventing or reducing to acceptable levels the release of pollutants or
Hazardous Materials into the Environment; (c) reducing the quantities,
preventing the Release, or minimizing the hazardous characteristics of wastes
that are generated; (d) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to human
health or the Environment when used or disposed of; (e) protecting resources,
species, or ecological amenities; (f) reducing to acceptable levels the risks
inherent in the transportation of Hazardous Materials, pollutants, oil, or other
potentially harmful substances; (g) cleaning up pollutants that have been
released, preventing the Threat of Release, or paying the costs of such clean up
or
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prevention; (h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets; (i) Hazardous Activities, Hazardous Materials,
pollutants, petroleum products, oil, asbestos or other potentially harmful
substances; or (j) the protection of the health, safety and welfare of the
public, water health and safety and pollution and/or protection of the
Environment.
5.20 "ERISA" shall mean the Employee Retirement Income Security Act of
1974 or any successor law, and regulations and rules issued pursuant to that Act
or any successor law.
5.21 "EXEMPT DAMAGES" shall have the same meaning as set forth in Section
4.6.
5.22 "EXEMPT PROVISIONS" shall have the same meaning as set forth in
Section 4.5.
5.23 "FACILITIES" shall mean any real properties, leaseholds, or other
interests currently or formerly owned, operated or managed by the Company and
any buildings, plants, structures, or equipment (including motor vehicles)
currently or formerly owned or operated by the Company.
5.24 "FIDUCIARY" shall have the meaning as defined in ERISA ss.3(21).
5.25 "FINANCIAL STATEMENTS" shall have the meaning set forth in Section
2.5.
5.26 "GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
5.27 "GOVERNMENTAL AUTHORIZATION" shall mean any approval, consent,
license, permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
5.28 "GOVERNMENTAL BODY" shall mean any: (a) federal, state, local,
municipal, foreign, or other government; or (b) governmental or
quasi-governmental authority of any nature, including without limitation, (i)
any governmental agency, branch, department, official, or entity, (ii) any
court, judicial authority or other tribunal, and (iii) any arbitration body or
tribunal;
5.29 "HAZARDOUS ACTIVITY" shall mean the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment, or use of
Hazardous Materials in, on, under, about, or from the Facility or any part
thereof into the Environment, and/or any other act, business, operation, or
action that poses a risk of illness or property damage or diminution in value of
any property resulting from Hazardous Materials.
5.30 "HAZARDOUS MATERIALS" shall mean any waste or other substance that is
listed, regulated, defined, designated, or classified under, or otherwise
determined to be, hazardous, radioactive, toxic, or a pollutant or a contaminant
pursuant to, any Environmental Law and shall include materials or equipment
containing polychlorinated biphenals or asbestos in any form.
Page 27 of 36
5.31 "INDEBTEDNESS" of the Company means all Liabilities, and all
interest, fees, prepayment penalties, cancellation charges and other costs and
charges relating thereto, of the Company, except for current liabilities and
intercompany payables, including without limitation, all Liabilities which (i)
in accordance with GAAP should be classified upon a balance sheet as
indebtedness; (ii) are for borrowed money or purchase money financing; (iii) are
secured by any Lien or other charge upon any property or assets; (iv) are
created or arise under any conditional sale or other title retention agreement
with respect to any property; and/or (v) arise under any capitalized leases (as
defined under GAAP).
5.32 "INDEMNIFIED PERSONS" shall have the meaning as set forth in Section
4.2 of this Agreement.
5.33 "INTELLECTUAL PROPERTY ASSETS" shall include the following assets:
(a) the Company's name, all fictional business names, trade names, registered
and unregistered trademarks ("Marks"), service marks and applications; (b) all
patents, patent applications, and inventions and discoveries that may be
patentable ("Patents"); (c) all copyrights in both published works and
unpublished works ("Copyrights"); and (d) all know-how, trade secrets,
confidential information, customer lists, software, technical information, data,
process technology, plans, drawings, and blue prints, owned, used or licensed by
the Company, or otherwise referenced in or affected by any Contract ("Trade
Secrets").
5.34 "INTERIM FINANCIAL STATEMENTS" shall have the meaning as set forth in
Section 2.5 of this Agreement.
5.35 "IRC" shall mean the Internal Revenue Code of 1986 or any successor
law, and all U. S. Treasury regulations and rulings issued by the IRS or any
Governmental Authority pursuant to the Internal Revenue Code or any successor
law.
5.36 "IRS" shall mean the United States Internal Revenue Service or any
successor agency, and the United States Department of the Treasury.
5.37 "KNOWLEDGE" of any Person shall be deemed to include a particular
fact or other matter if: (a) such Person is actually aware of such fact or other
matter; or (b) a reasonable Person could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonable investigation concerning the existence of such fact or other matter.
A Person other than an individual will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as a director,
officer, partner, executor, or trustee of such Person (or in any similar
capacity) and has Knowledge of such fact or other matter.
5.38 "LEASED PROPERTY" shall have the meaning as set forth in Section
2.8.2 of this Agreement.
5.39 "LEGAL REQUIREMENT" shall mean any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, operational
Page 28 of 36
memorandum, guidance documents, policy, charter, ordinance, rule, code,
principle of common law, case, decision, regulation, statute, or treaty
including, without limitation, Environmental Laws, Occupational Safety and
Health Laws, Orders, ERISA and the IRC.
5.40 "LIABILITY" shall mean any liability or obligation whether known or
unknown, foreseeable or unforeseeable, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due.
5.41 "LIMITATION" shall have the meaning set forth in Section 4.6 of this
Agreement.
5.42 "MATERIAL ADVERSE CHANGE (OR EFFECT)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities, rights,
obligations, business or prospects of any Person which change (or effect),
individually or in the aggregate, is materially adverse to such condition,
properties, assets, liabilities, rights, obligations, business or prospects of
such Person.
5.43 "OCCUPATIONAL SAFETY AND HEALTH LAW" shall mean any Legal Requirement
which governs, regulates or relates to safety and health conditions or is
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
5.44 "ORDER" shall mean any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
5.45 "ORDINARY COURSE OF BUSINESS" shall mean an action taken by a Person
that is consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person and such
action is similar in nature and magnitude to actions customarily taken, without
any authorization by the board of directors (or by any Person or group of
Persons exercising similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of business as
such Person.
5.46 "ORGANIZATIONAL DOCUMENTS" shall mean the articles or certificates of
incorporation and the bylaws of a corporation including any amendments thereto
or restatements thereof, and all resolutions of the Board of Directors and
stockholders of such corporation.
5.47 "PERSON" shall mean any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or Governmental Body.
5.48 "PROCEEDING" shall mean any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced,
Page 29 of 36
brought, conducted, or heard by or before, or otherwise involving, any
Governmental Body or arbitrator or Person.
5.49 "PURCHASE PRICE" shall have the meaning as set forth in the Section
1.2 of this Agreement.
5.50 "REAL PROPERTY" shall have the meaning as set forth in Section 2.8 of
this Agreement.
5.51 "RECORDS" shall have the meaning as set forth in Section 2.6 of this
Agreement.
5.52 "RELEASE" shall mean any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
5.53 "REPRESENTATIVES" shall have the meaning as set forth in Section
2.22.4 of this Agreement.
5.54 "REQUIRED CONSENTS" shall have the meaning as set forth in Section
2.3 of this Agreement.
5.55 "SALE TRANSACTION" shall mean any transaction or series of
transactions involving the sale of the business or assets (other than sales of
inventory in the Ordinary Course of Business) of the Company, or any of the
Shares or any equity interest or capital stock of the Company, or any merger,
consolidation, joint venture, partnership, shares exchange, reorganization,
business combination, or similar transaction involving the Company.
5.56 "SELLERS' CLOSING DOCUMENTS" shall have the meaning as set forth in
the Section 1.5.1 of this Agreement.
5.57 "SELLERS' NONCOMPETITION AGREEMENT" shall have the meaning as set
forth in the Section 1.5.1(c) of this Agreement.
5.58 "SELLERS' RELEASE" shall have the meaning as set forth in the Section
1.5.1(b) of his Agreement.
5.59 "SHARES" shall have the meaning set forth in the recitals to this
Agreement.
5.60 "TAX" shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under IRC ss.59(A)),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated or other tax, assessment or charge by a Governmental Body of any kind
whatsoever, including any interest, penalty or addition thereto, whether
disputed or not.
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5.61 "TAX RETURN" shall mean any return (including any information
return), report, statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
5.62 "THREAT OF RELEASE" shall mean a reasonable possibility of a Release
that may require action in order to prevent or mitigate damage to the
Environment that may result from such Release.
5.63 "THREATENED" shall mean a claim, Proceeding, dispute, action, or
other matter if any demand or statement has been made (orally or in writing) or
any notice has been given (orally or in writing), or if any other event has
occurred or any other circumstances exist, that would lead a prudent Person to
conclude that such a claim, Proceeding, dispute, action, or other matter may be
asserted, commenced, taken, or otherwise pursued in the future.
5.64 "WORKERS COMPENSATION RESERVE" shall mean all Liabilities for
workers' compensation claims of the Company the date of occurrence of which is
on or prior to the Closing Date.
ARTICLE VI
GENERAL PROVISIONS
6.1 CONFIDENTIALITY. Given that a certain affiliate of Buyer is publicly
traded, among other reasons, the Sellers will maintain and hold in confidence
and not disclose any information concerning the business and affairs of the
Company and/or Buyer that is not already generally available to the public and
is not otherwise used in the business of Sellers ("Confidential Information"),
refrain from using any Confidential Information except in connection with this
Agreement, and deliver promptly to the Buyer or destroy, at the request and
option of the Buyer, all tangible embodiments (and all copies) of the
Confidential Information which are in its possession. In the event that Sellers
are requested or required (by oral question or request for information or
documents in any legal Proceeding, interrogatory, subpoena, civil investigative
demand, or similar process) to disclose any Confidential Information, such party
will notify the Buyer promptly of the request or requirement so that the Buyer
may seek an appropriate protective order or waive compliance with the provisions
of this Section. If, in the absence of a protective order or the receipt of a
waiver hereunder, any of the aforementioned parties is, on the written advice of
counsel, compelled to disclose any Confidential Information to any tribunal or
else stand liable for contempt, such party may without liability hereunder,
disclose that portion of the Confidential Information which such party is
required to disclose.
6.2 EXPENSES. Except as otherwise expressly provided in this Agreement,
the Sellers, on the one hand, and the Buyer, on the other hand, shall bear their
own respective expenses incurred in connection with the preparation, execution,
and performance of this Agreement and the Contemplated Transactions, including,
but not limited to fees and expenses of agents, representatives, investment
bankers, advisors, consultants, legal counsel, and accountants (collectively
"Transaction Costs"). Without limiting the generality of the foregoing, Sellers
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agree that the Company shall not bear any Transaction Costs, other than the time
and direct expenses of employees of the Company, and that the Sellers (and not
the Company) shall pay all costs, fees and expenses for services rendered by
legal counsel to the Sellers or the Company in any way relating to this
Agreement or the transactions contemplated hereunder. In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a Breach of
this Agreement by another party.
6.3 SCHEDULES. The Schedules are numbered to correspond to the various
sections of this Agreement relating to the representations and warranties
contained in this Agreement and certain other information called for by this
Agreement. Unless otherwise specified, no disclosure made in any particular
Schedule shall be deemed made in any other Schedule unless expressly made
therein.
6.4 PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement or the transactions contemplated hereunder will
be issued, if at all, at such time and in such manner as determined by Buyer.
Unless consented to by each party hereto in advance or required by Legal
Requirements prior to the Closing, all parties shall keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
Person. Sellers and Buyer will consult with each other concerning the means by
which the Company's employees, customers, and suppliers and others having
dealings with the Company will be informed of the transactions contemplated
hereunder, and Buyer will have the right to be present for any such
communication.
6.5 ARBITRATION. Any and all disputes, controversies or claims arising out
of or relating to this Agreement shall be resolved exclusively and conclusively
by binding arbitration in accordance with the rules of the American Arbitration
Association. Such arbitration shall be held at the office of the American
Arbitration Association located in Southfield, Michigan. Any award or decision
as a result of such arbitration shall be final and binding upon the parties,
shall not be subject to appeal and shall be enforceable by entry of a judgment
by any court of competent jurisdiction.
6.6 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by facsimile (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), or (d) two (2) business days following the deposit of same
in the U.S. mail, in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Sellers: Xxxxxx X. Xxxxx
000 Xxxxx Xxxx
Xxxxxxx, XX 00000
Cell Phone No. (000) 000-0000
Email: xxxxx.x@xxxxxxx.xxx
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Xxxxxxxx Xxxxxxx
0000 X Xxxxx Xxxxx
Xxxxxxx, XX 00000
Cell Phone No. (000) 000-0000
Email: xxxxxxxxxx@xxxx.xxx
Xxxxxxx X. Xxxxxxxxx
00000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax No. (000) 000-0000
With a copy to: Xxxxx X. Xxxxxxxxx
Mumford, Schubel, Norlander, Macfarlane & Xxxxxxx, PLLC
00 X. Xxxxxxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000-0000
Phone No. (000) 000-0000
Fax No. (000) 000-0000
Email: xxxxxxxxxx@xxxxxxxxxx.xxx
Buyer: Arcadia Health Services of Michigan, Inc.
00000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, XX
Fax No. (000) 000-0000
Email: xxxxx0000@xxx.xxx
With a copy to: Xxxx, Xxxxxxx and Xxxxx, PLC
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxx, Esq.
Fax No. (000) 000-0000
Email: xxx@xxxxxx.xxx
6.7 CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement and the transactions
Contemplated herein, shall be paid by Sellers when due, and Sellers will, at
their own expense, file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, sales, use, stamp, registration and
other Taxes and fees.
6.8 RECOUPMENT. Sellers hereby agree and acknowledge that in the event
that any amount is or becomes due or payable by Sellers to the Buyer or the
Company as Damages or otherwise, the Buyer shall have the option (but not
obligation) to elect to reduce, on a dollar-for-dollar basis, any amount owed,
due or payable to Sellers under this Agreement or otherwise, by any such amount,
due or payable to Buyer or the Company, which recoupment may be applied
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against one or more payments due, and/or treated as a prepayment of principal
due under the Earnout, or otherwise, as the Buyer or the Company may elect from
time to time. This elective right of setoff shall be cumulative and in addition
to any and all additional remedies to which Buyer or the Company may be entitled
at law or in equity.
6.9 FURTHER ASSURANCES. The parties agree (i) to furnish upon request to
each other such further information, (ii) to execute and deliver to each other
such other documents, and (iii) to do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out the intent of
this Agreement and the documents referred to in this Agreement.
6.10 WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged,
in whole or in part, by a waiver or renunciation of the claim or right, unless
done so in writing signed by the party asserting such claim or right; (b) no
waiver that may be given by a party will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand on one party will
be deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
6.11 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
6.12 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumptions or burden of proof
shall arise favoring or disfavoring any party by virtue of the authoring of any
of the provisions of this Agreement. Any reference to any federal, state, local
or foreign statute of law shall be deemed and also referred to all rules and
regulations promulgated thereunder, unless the context expressly provides
otherwise. The word "including" shall mean including without limitation. All
words used in this Agreement will be construed to be of such gender or number as
the circumstances may require. If any party has Breached any representation,
warranty or covenant contained in this Agreement, the fact that such party may
not have Breached another representation, warranty or covenant contained in this
Agreement which also relates to the same or similar subject matter shall not
detract from or mitigate the fact that the party is in breach of the first
representation, warranty or covenant (regardless of the relative levels of
specificity among such various representations, warranties or covenants). In the
event
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of any inconsistency between the statements in the body of this Agreement and
those in the Schedules, the statements in the body of this Agreement will
control.
6.13 ASSIGNMENTS; SUCCESSORS; NO THIRD PARTY RIGHTS. No party may assign
any of its rights under this Agreement without the prior written consent of the
other parties, except that Buyer may assign any of its rights under this
Agreement to any subsidiary, parent or affiliate of Buyer. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing contained in this Agreement will be construed to give any
Person other than the parties to this Agreement (and their successors and
assigns) and those Persons expressly identified herein as receiving or obtaining
rights or benefits hereunder, any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provision of this Agreement.
6.14 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction or arbitrator, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
6.15 SECTION HEADINGS. The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement.
6.16 GOVERNING LAW. This Agreement will be governed by the internal laws
of the State of Michigan without regard to conflicts of laws principles.
6.17 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents and
warrants to all other parties hereto that (a) before executing this Agreement,
said party has fully informed itself of the terms, contents, conditions and
effects of this Agreement, (b) said party has relied solely and completely upon
its own judgment in executing this Agreement, (c) said party has had the
opportunity to seek and has obtained the advice of counsel before executing this
Agreement, (d) said party has acted voluntarily and of its own free will and
executing this Agreement, (e) said party is not acting under duress, whether
economic or physical, in executing this Agreement, and (f) this Agreement is the
result of arm's length negotiations conducted by and among the parties and their
respective counsel.
6.18 COUNTERPARTS/FACSIMILE AND PDF SIGNATURES. This Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original of this Agreement and all of which, when taken together, will be deemed
to constitute one and the same agreement. A facsimile or PDF signature of any
party shall be immediately binding upon such party and have the same legal
effect as a original signature of such party.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
WITNESSES: BUYER:
ARCADIA HEALTH SERVICES OF
MICHIGAN, INC., a Michigan corporation
/S/ LAKSHU SUNDARAM By: /S/ XXXXX XXXXXXXX
------------------- ------------------------------
Lakshu Sundaram Xxxxx Xxxxxxxx
Its: Chief Operating Officer
COMPANY:
HOME HEALTH PROFESSIONALS, INC.,
a Delaware corporation
/S/ XXXXX XXXXXXXXX By: /S/ XXXXXX XXXXX
------------------- ----------------
Xxxxx Xxxxxxxxx Xxxxxx Xxxxx
Its: President/CEO
SELLERS:
/S/ XXXXX XXXXXXXXX /S/ XXXXXXX XXXXXXX
------------------- -------------------
Xxxxx Xxxxxxxxx Xxxxxxx Xxxxxxx
/S/ XXXXX XXXXXXXXX /S/ XXXXXX XXXXX
------------------- ----------------
Xxxxx Xxxxxxxxx Xxxxxx Xxxxx
/S/ XXXXX XXXXXXXXX /S/ XXXXXXX X. XXXXXXXXX*
------------------- ------------------------
Xxxxx Xxxxxxxxx Xxxxxxx X. Xxxxxxxxx
* By: /S/ XXXXXX XXXXX
----------------------------
Xxxxxx Xxxxx, Attorney-in-Fact
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