EXHIBIT 10.34
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made this 9th day of
January, 1998, by Xxxxxxxx Health Care, Inc., a Georgia corporation
("Buyer"), the Drake Family Revocable Trust, Xxxxxxx or Xxxxxx Xxxxx Trustees
under agreement (the "Trust Agreement") dated September 17, 1991 (the "Drake
Trust"), Xxxxxxx Xxxxx, an individual resident of the State of Arizona ("X.
Xxxxx"), Xxxxxx Xxxxx, an individual resident of the State of Arizona ("X.
Xxxxx"), and Philippe Michelin, an individual resident of the State of
Arizona ("Michelin" and, collectively with the Drake Trust, X. Xxxxx and X.
Xxxxx, "Sellers") and Drake Management Services, Inc., an Arizona corporation
(the "Company").
RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the
issued and outstanding shares (the "Shares") of capital stock of the Company,
for the consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"AAA"-- as defined in Section 11.2(c).
"Adjustment Amount"-- the principal and interest due on the Promissory
Note on the Closing Date.
"Affiliate" -- with respect to an individual, any family member, any
Person that is directly or indirectly controlled by such individual or such
individual's family members, or any Person with respect to which such
individual, or a member of such individual's family, serves as a director,
officer, partner, executor, or trustee (or similar capacity, and with respect
to any Person other than an individual, any person that controls, in
controlled by or under common control with such Person, and each Person that
serves as a director, officer, partners, executor or trustee (or similar
capacity) of such Person.
"Agreement"-- as defined in the Preamble.
"Applicable Contract"-- any Contract (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, or (c) by which the Company or any of the
assets owned or used by it is or may become bound.
"Balance Sheet"-- as defined in Section 3.4.
"Buyer"-- as defined in the Preamble.
"Buyer's Closing Documents"-- as defined in Section 4.2.
"Closing"-- as defined in Section 2.3.
"Closing Date"-- the date and time as of which the Closing actually
takes place.
"COBRA Rights" - as defined in Section 3.13(k)
"Company"-- as defined in the Preamble.
"Company Plans"-- as defined in Section 3.13(b).
"Company Qualified Plans"-- as defined in Section 3.13(c).
"Competing Business"-- as defined in Section 3.25.
"Contemplated Transactions"-- all of the transactions contemplated by
this Agreement, including: (a) the sale of the Shares by Sellers to Buyer;
(b) the execution, delivery, and performance of the Promissory Note, the
Employment Agreements, the Noncompetition Agreements, the Earnout Agreement
and the Sellers' Releases; (c) the performance by Buyer and Sellers of their
respective covenants and obligations under this Agreement; and (d) Buyer's
acquisition and ownership of the Shares and exercise of control over the
Company.
"Contract"-- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Copyrights"-- as defined in Section 3.22(a)(ii).
"CPR" - as defined in Section 11.2(b).
"X. Xxxxx"-- as defined in the Preamble.
"Damages"-- as defined in Section 10.2.
"Disclosure Letter"-- the disclosure letter delivered by Sellers to
Buyer concurrently with the execution and delivery of this Agreement.
"Dispute" -- as defined in Section 11.1.
"Drake Trust" - as defined in the Preamble.
"Efron Assignment" - assignment of a limited partnership interest in
Efron Apartment Investors, an Indiana limited partnership, as payment for a
debt to the Company.
"Earnout Agreement" -- as defined in Section 2.4(a)(vii).
"Employment Agreements"-- as defined in Section 2.4(a)(iii).
"Employees" -- as defined in Section 3.13(b).
"Encumbrance"-- any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind, including any restriction on
use, voting, transfer, receipt of income, or exercise of any other attribute
of ownership.
"Environment"-- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins,
and wetlands), groundwaters, drinking water supply, stream sediments, ambient
air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities"-- any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law including fines,
penalties, financial responsibility for cleanup costs, corrective action,
removal, remedial actions and response actions, and any other compliance,
corrective, investigative or remedial measures required under any
Environmental Law or Occupational Safety and Health Law. The terms
"removal," "remedial," and "response action," include the types of activities
covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended("CERCLA").
"Environmental Law"-- any Legal Requirement that requires or relates to
releases of pollutants or hazardous substances or materials, violations of
discharge limits, or other prohibitions that relate to the Environment.
"ERISA"-- 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.
"Facilities"-- any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures, or equipment (including motor vehicles) currently or
formerly owned or operated by the Company.
"Governmental Authorization"-- 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.
"Governmental Body"-- any federal, state, local, municipal, foreign, or
other government; or governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
"Hazardous Materials"-- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution
thereof, and specifically including petroleum and all derivatives thereof or
synthetic substitutes therefor and asbestos or asbestos-containing materials.
"Indemnified Persons" -- as defined in Section 10.2.
"Initial Purchase Price"-- as defined in Section 2.2.
"Intellectual Property Assets" -- as defined in Section 3.22
Intellectual Property..
"Interim Balance Sheet"-- as defined in Section 3.4
"IRC"-- the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"-- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge"-- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if: (a) such individual is actually aware of
such fact or other matter; or (b) a prudent individual 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, or who has at any time served, as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has, or at
any time had, Knowledge of such fact or other matter.
"Legal Requirement"-- any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution,
law, ordinance, principle of common law, regulation, statute, or treaty.
"Marks"-- as defined in Section 3.22(a)(i).
"Mediation Request"-- as defined in Section 11.2(b).
"Michelin"-- as defined in the Preamble.
"Noncompetition Agreements"-- as defined in Section 2.4(a)(iv).
"Occupational Safety and Health Law"-- any Legal Requirement 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.
"Order"-- 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.
"Ordinary Course of Business"-- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if such
action 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.
"Organizational Documents"-- the articles or certificate of
incorporation and the bylaws of a corporation and any amendment to any of the
foregoing.
"Person"-- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, labor union, or
other entity or Governmental Body.
"Proceeding"-- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative,
or informal) commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Body or arbitrator.
"Promissory Note"-- as defined in Section 6.2.
"X. Xxxxx"-- as defined in the Preamble.
"Release"-- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"Representative"-- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of
such Person, including legal counsel, accountants, and financial advisors.
"Sellers"-- as defined in the Preamble.
"Sellers' Closing Documents"-- as defined in Section 3.2(a).
"Sellers' Releases"-- as defined in Section 2.4
"Shares"-- as defined in the Preamble.
"Tax"-- all tax (including income tax, capital gains tax, value added
tax, sales tax, property tax, gift tax or estate tax), levy, assessment,
tariff, duty, deficiency or other fee and any related charge or amount
(including fine, penalty and interest) imposed, assessed or collected by or
under the authority of any Governmental Body.
"Tax Return"-- 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.
"TBA" -- tax basis of accounting required for the preparation of
Federal Tax Returns, applied on a basis consistent with the basis on which
the Balance Sheet and the other financial statements referred to in Section
3.4 hereof were prepared.
"Threatened"-- a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" 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 is likely to be asserted,
commenced, taken, or otherwise pursued in the future.
"Trade Secrets" -- as defined in Section 3.22(a)(iii).
"Trust Agreement" -- as defined in the Preamble.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 Shares. Subject to the terms and conditions of this Agreement,
at the Closing, Sellers will sell and transfer the Shares to Buyer, and Buyer
will purchase the Shares from Sellers free and clear of any and all
Encumbrances.
2.2 Purchase Price. The purchase price for the Shares will be
(i) $5,000,000 minus the Adjustment Amount (the "Initial Purchase Price")
plus (ii) any and all amounts payable to Sellers under the Earnout Agreement.
2.3 Closing. The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Powell, Goldstein, Xxxxxx & Xxxxxx
LLP, Sixteenth Floor, 000 Xxxxxxxxx Xx., X.X., Xxxxxxx, Xxxxxxx, 00000 at 10:00
a.m. (local time) on January [5], 1998 or at such other time and place as the
parties may agree. Subject to the provisions of Article 9, failure to consummate
the purchase and sale provided for in this Agreement on the date and time and at
the place determined pursuant to this Section 2.3 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.
2.4 Closing Obligations. At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares accompanied by
duly executed stock powers;
(ii) releases in the form of Exhibit 2.4(a)(ii) executed
by X. Xxxxx, X. Xxxxx and Michelin (collectively, the "Sellers'
Releases");
(iii) employment agreements in the form of Exhibit
2.4(a)(iii), executed by X. Xxxxx and Michelin (collectively, the
"Employment Agreements");
(iv) noncompetition agreements in the form of Exhibit
2.4(a)(iv), executed by X. Xxxxx and Michelin (collectively, the
"Noncompetition Agreements");
(v) resignations from all current officers and directors
of the Company other than X. Xxxxx who shall remain President of
the Company and Michelin who shall remain Vice President of the
Company;
(vi) a certificate executed by Sellers to the effect that
(A) each of Sellers' representations and warranties in this
Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date
as if made on the Closing Date; and (B) each of the covenants and
agreements of Sellers to be performed prior to the Closing Date
has been duly performed or complied with by the Seller;
(vii) a certificate from the Secretary of the Company
attaching and certifying to (a) the Company's Organizational
Documents and (b) resolutions of the board of directors of the
Company approving the Contemplated Transactions;
(viii) the earnout agreement in the form of Exhibit
2.4(a)(vii), execute by Sellers (the "Earnout Agreement"); and
(ix) the documents contemplated by Section 7.3 hereof.
(b) Buyer will deliver to Sellers:
(i) the Initial Purchase Price by bank cashier's check or
by wire transfer to the accounts specified by Sellers, to be
allocated among the Sellers pursuant to the allocation schedule
set forth on Part 2.4 of the Disclosure Letter;
(ii) a certificate executed by Buyer to the effect that,
(A) each of Buyer's representations and warranties in this
Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date
as if made on the Closing Date; and (B) each of the covenants and
agreements of Buyer to be performed prior to the Closing Date has
been duly performed and complied with by Buyer;
(iii) a certificate from the Secretary of Buyer attaching
and certifying to (a) the Buyer's Organizational Documents and
(b) resolutions of the board of directors of Buyer authorizing
the Contemplated Transactions;
(iv) the Employment Agreements, executed by the Company
and Buyer;
(v) the Noncompetition Agreements, executed by Buyer;
(vi) the Earnout Agreement, executed by Buyer; and
(vii) the documents contemplated by Section 8.3 hereof.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to Buyer as
follows:
3.1 Organization and Good Standing.
(a) Part 3.1 of the Disclosure Letter contains a complete and
accurate list of the Company's name, its jurisdiction of incorporation, other
jurisdictions in which it is authorized to do business, and its
capitalization (including the identity of each stockholder of the Company and
the number of shares held by each). The Company is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the
properties and assets that it purports to own or use, and to perform all its
obligations under Applicable 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 in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by
it, requires such qualification. The Drake Trust is a trust duly organized
and validly existing under the laws of the state in which it was formed.
(b) Sellers have delivered to Buyer copies of the
Organizational Documents of the Company and the Trust Agreement, as currently
in effect.
(c) The Company has no subsidiaries and no ownership interest
in any Person, except as may be deemed to exist as a result of the Efron
Assignment.
3.2 Authority; No Conflict.
(a) The Agreement constitutes the legal, valid and binding
obligation of the Company and the Sellers, enforceable against the Company
and Sellers in accordance with its terms, and upon the execution and delivery
by Sellers of the Employment Agreements, the Sellers' Releases, the Earnout
Agreement, the Promissory Note and the Noncompetition Agreements to which
each such Seller is a party (collectively, the "Sellers' Closing Documents"),
Sellers' Closing Documents will constitute the legal, valid, and binding
obligations of each Seller party thereto and the Company, enforceable against
such Seller and/or the Company in accordance with their respective terms.
Sellers and the Company have the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and the
Sellers' Closing Documents to which it is party and to perform their
obligations under this Agreement and the Sellers' Closing Documents.
(b) Except as set forth in Part 3.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation
of (A) any provision of the Organizational Documents of the
Company or the Trust Agreement, or (B) any resolution adopted by
the board of directors or the stockholders of the Company;
(ii) in any material respect, contravene, conflict with,
or result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which the Company or
any Seller, or any of the assets owned or used by the Company,
may be subject;
(iii) in any material respect, 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;
(iv) cause Buyer or the Company to become subject to, or
to become liable for the payment of, any Tax except as the
Company or Buyer would otherwise be subject to in the Ordinary
Course of Business;
(v) in any material respect, cause any of the assets
owned the Company to be reassessed or revalued by any taxing
authority or other Governmental Body;
(vi) in any material respect, 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 Applicable Contract; or
(vii) in any material respect, 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 Part 3.2 of the Disclosure Letter, no Seller nor
the 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 Contemplated
Transactions.
3.3 Capitalization. The authorized equity securities of the Company
consist of 1,000,000 shares of common stock, par value $1.00 per share, of
which 3,157 shares are issued and outstanding, and 100,000 shares of eight
percent (8%) convertible, cumulative preferred stock, par value $100.00 per
share, none of which is issued and outstanding, and all issued and
outstanding shares as set forth above constitute the Shares. Sellers are and
will be on the Closing Date the record and beneficial owners and holders of
the Shares, free and clear of all Encumbrances, in the amounts set forth on
Part 3.3 of the Disclosure Letter. No legend or other reference to any
purported Encumbrance appears or will appear upon any certificate
representing the Shares except as otherwise set forth in Section 4.3. All of
the Shares have been duly authorized and validly issued and are fully paid
and nonassessable. There are no Contracts relating to the issuance, sale, or
transfer of the Shares or other securities of the Company. None of the
outstanding equity securities or other securities of the Company was issued
in violation of the Securities Act or any other Legal Requirement. The
Company does not own, or have any Contract to acquire, any equity securities
or other securities of any Person or any direct or indirect equity or
ownership interest in any other business.
3.4 Financial Statements. Sellers have delivered to Buyer:
(a) unaudited balance sheets of the Company as at December 31 in each of the
years 1995 and 1996, and the related unaudited statements of income, changes
in stockholders' equity, and cash flow for each of the fiscal years then
ended, (b) an unaudited balance sheet of the Company as at September 30, 1997
(including the notes thereto, the "Balance Sheet"), and the related
statements of income, changes in stockholders' equity, and cash flow for the
fiscal year then ended, and (c) an unaudited balance sheet of the Company as
at September 30, 1997 (the "Interim Balance Sheet") and the related unaudited
statements of income, changes in stockholders' equity, and cash flow for the
nine (9) months then ended. Such financial statements and notes fairly
present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Company as at the respective dates
of and for the periods referred to in such financial statements, all in
accordance with TBA, subject, in the case of interim financial statements, to
normal recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse); the financial
statements referred to in this Section 3.4 reflect the consistent
application of TBA accounting principles throughout the periods involved.
Each of the supporting documents listed on Part 3.4 of the Disclosure
Letter is true and correct in all material respects.
3.5 Books and Records. The books of account, minute books, stock
record books, and other records of the Company, all of which have been made
available to Buyer, are complete and correct and have been maintained in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls for a company the size of the Company
with the number of employees as the Company has. The minute books of the
Company contains accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Boards of Directors, and
committees of the Boards of Directors of the Company. At the Closing, all of
those books and records will be in the possession of the Company.
3.6 Title to Properties; Encumbrances. Part 3.6 of the Disclosure
Letter contains a complete and accurate list of all leaseholds or other
interests therein owned by the Company. Sellers have delivered or made
available to Buyer copies of the deeds and other instruments (as recorded) by
which the Company acquired such real property and interests, and copies of
all title insurance policies, opinions, abstracts, and surveys in the
possession of Sellers or the Company and relating to such property or
interests. The Company owns all the properties and assets (whether real,
personal, or mixed and whether tangible or intangible) that they purport to
own located in the facilities owned or operated by the Company or reflected
as owned in the books and records of the Company, including all of the
properties and assets reflected in the Interim Balance Sheet (except for
assets held under capitalized leases disclosed or not required to be
disclosed in Part 3.6 of the Disclosure Letter and personal property sold
since the date of the Interim Balance Sheet in the Ordinary Course of
Business), and all of the properties and assets purchased or otherwise
acquired by the Company since the date of the Interim Balance Sheet (except
for personal property acquired and sold since the date of the Balance Sheet
in the Ordinary Course of Business and consistent with past practice). All
properties and assets reflected in the Balance Sheet and the Interim Balance
Sheet are free and clear of all Encumbrances except (a) mortgages or security
interests shown on the Balance Sheet or the Interim Balance Sheet as securing
specified liabilities or obligations, with respect to which no default (or
event that, with notice or lapse of time or both, would constitute a default)
exists, (b) mortgages or security interests incurred in connection with the
purchase of property or assets after the date of the Interim Balance Sheet
(such mortgages and security interests being limited to the property or
assets so acquired), with respect to which no default (or event that, with
notice or lapse of time or both, would constitute a default) exists, and
(c) liens for current taxes not yet due. The Company does not currently own,
and has never owned, any real property.
3.7 Condition and Sufficiency of Assets. In all material respects,
the buildings, structures, and equipment of the Company are structurally
sound, are in good operating condition and repair, and are adequate for the
uses to which they are being put, and none of such buildings, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The
building, structures, and equipment of the Company are sufficient for the
continued conduct of the Company's businesses after the Closing in
substantially the same manner as conducted prior to the Closing.
3.8 Accounts Receivable. All accounts receivable of the Company that
are reflected on the Interim Balance Sheet or on the accounting records of
the Company as of the Closing Date (collectively, the "Accounts Receivable")
represent or 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 or will be
as of the Closing Date current and, to the Company's and the Seller's
Knowledge, collectible (other than those accounts in bankruptcy which are set
forth on Part 3.8 of the Disclosure Letter). There is no contest, claim, or
right of set-off under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable.
Part 3.8 of the Disclosure Letter contains a complete and accurate list of
all Accounts Receivable as of the date of the Interim Balance Sheet, which
list sets forth the aging of such Accounts Receivable.
3.9 Inventory. All inventory of the Company, whether or not
reflected in the Balance Sheet or the Interim Balance Sheet, consists of a
quality and quantity usable and salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of which
have been written off or written down to net realizable value in the Balance
Sheet or the Interim Balance Sheet or on the accounting records of the
Company as of the Closing Date, as the case may be. All inventories not
written off have been priced at cost on a first in, first out basis.
The quantities of each item of inventory (whether raw materials,
work-in-process, or finished goods) are not excessive, but are reasonable in
the present circumstances of the Company.
3.10 No Undisclosed Liabilities. Except as set forth in Part 3.10 of
the Disclosure Letter, the Company has no material liabilities or obligations
of any nature (whether known or unknown and whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations reflected or
reserved against in the Balance Sheet or the Interim Balance Sheet,
liabilities associated with the Promissory Note and current liabilities
incurred in the Ordinary Course of Business since the date of the Interim
Balance Sheet and the respective dates thereof.
3.11 Taxes.
(a) The Company has filed or caused to be filed, on a timely
basis, all Tax Returns that are or were required to be filed by or with
respect to it, either separately or as a member of a group of corporations,
pursuant to applicable Legal Requirements. Sellers have delivered to Buyer
copies of, and Part 3.11 of the Disclosure Letter contains a complete and
accurate list of, all such Tax Returns filed for 1994, 1995 and 1996. The
Company has paid, or made provision for the payment of, all Taxes that have
or may have become due pursuant to those Tax Returns or otherwise, or
pursuant to any assessment received by Sellers or the Company, except such
Taxes, if any, as are listed in Part 3.11 of the Disclosure Letter and are
being contested in good faith and as to which adequate reserves, if any
(determined in accordance with TBA) have been provided in the Balance Sheet
and the Interim Balance Sheet.
(b) Except as described in Part 3.11 of the Disclosure Letter,
no Seller nor the Company has given or been requested to give waivers or
extensions (or is 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
of the Company or for which the Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes
on the respective books of the Company are adequate (determined in accordance
with TBA). There exists no proposed tax assessment against the Company
except as disclosed in the Balance Sheet or in Part 3.11 of the Disclosure
Letter. No consent to the application of Section 341(f)(2) of the IRC has
been filed with respect to any property or assets held, acquired, or to be
acquired by the Company. All Taxes that the Company is or was required by
Legal Requirements to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper
Governmental Body or other Person.
(d) All Tax Returns filed by (or that include on a consolidated
basis) the Company are true, correct, and complete in all material respects.
There is no tax sharing agreement that will require any payment by the
Company after the date of this Agreement.
3.12 No Material Adverse Change. Since the date of the Balance Sheet,
there has not been any material adverse change in the business, operations,
properties, prospects, assets, or condition of the Company, and no event has
occurred or circumstance exists that may result in such a material adverse
change.
3.13 Employee Benefits
(a) Except as disclosed on Part 3.13 of the Disclosure Letter,
no other corporation, trade, business, or other entity, other than the
Company, together with the Company would now or in the past constitute a
single employer within the meaning of Section 414 of the IRC. The Company
and any other entities that now or in the past constitute a single employer
within the meaning of IRC Section 414 are hereinafter collectively referred
to as the "Company Group."
(b) Part 3.13(b) of the Disclosure Letter contains a true and
complete list of all the following agreements or plans which are presently in
effect or which have previously been in effect and which cover employees of
any member of the Company Group ("Employees"), and indicating, with respect
to each, the plans for which the Company maintains or contributes to on
behalf of their employees:
(i) Any employee benefit plan as defined in Section 3(3)
of ERISA and any trust or other funding agency created
thereunder, or under which any member of the Company Group, with
respect to Employees, has any outstanding, present, or future
obligation or liability, or under which any Employee or former
Employee has any present or future right to benefits which are
covered by ERISA; or
(ii) Any other pension, profit sharing, retirement,
deferred compensation, stock purchase, stock option, incentive,
bonus, vacation, severance, disability, hospitalization, medical,
life insurance or other employee benefit plan, program, policy,
or arrangement, whether written or unwritten, formal or informal,
which any member of the Company Group maintains or to which any
member of the Company Group has any outstanding, present or
future obligations to contribute or make payments under, whether
voluntary, contingent or otherwise.
The plans, programs, policies, or arrangements described in
subparagraph (i) or (ii) above are hereinafter collectively referred to as
the "Company Plans." Sellers have delivered to Buyer true and complete
copies of all written plan documents and contracts evidencing the Company
Plans, as they may have been amended to the date hereof, together with (A)
all documents, including without limitation, Forms 5500, relating to any
Company Plans required to have been filed prior to the date hereof with
governmental authorities for each of the three most recently completed plan
years; (B) attorney's response to any auditor's request for information for
each of the three most recently completed plan years; and (C) financial
statements and actuarial reports, if any, for each Company Plan for the three
most recently completed plan years.
(c) Except as to those plans identified on Part 3.13(c) of the
Disclosure Letter as tax-qualified Company Plans (the "Company Qualified
Plans"), no member of the Company Group maintains or previously maintained a
Company Plan which meets or was intended to meet the requirements of IRC
Section 401(a). Except as set forth on Part 3.13(c) of the Disclosure
Letter, the IRS has issued favorable determination letters to the effect that
each Company Qualified Plan qualifies under IRC Section 401(a) and that any
related trust is exempt from taxation under IRC Section 501(a), and such
determination letters remain in effect and have not been revoked or, in the
alternative, the members of the Company Group currently maintain only one
Company Qualified Plan and such Company Qualified Plan is a standardized form
plan, within the meaning of Revenue Procedure 97-6, Section 8.05, with
respect to which the IRS has issued a favorable determination letter and such
determination letter remains in effect and has not been revoked. Copies of
the most recent determination letters and any outstanding requests for a
determination letter with respect to each Company Qualified Plan have been
delivered to Buyer. Except as disclosed on Part 3.13(c) of the Disclosure
Letter, no Company Qualified Plan has been amended since the issuance of each
respective determination letter. The Company Qualified Plans currently
comply in form with the requirements under IRC Section 401(a), other than
changes required by statutes, regulations and rulings for which amendments
are not yet required. To the Knowledge of Sellers and the Company, no issue
concerning qualification of the Company Qualified Plans is pending before or
is threatened by the IRS. To the Knowledge of Sellers and the Company, the
Company Qualified Plans have been administered according to their terms
(except for those terms which are inconsistent with the changes required by
statutes, regulations, and rulings for which changes are not yet required to
be made, in which case the Company Qualified Plans have been administered in
accordance with the provisions of those statutes, regulations and rulings)
and in accordance with the requirements of IRC Section 401(a). No member of
the Company Group or any fiduciary of any Company Qualified Plan has done
anything that would adversely affect the qualified status of the Company
Qualified Plans or the related trusts. Any Company Qualified Plan which is
required to satisfy IRC Section 401(k)(3) and 401(m)(2) has been tested for
compliance with, and has satisfied the requirements of, IRC Section 401(k)(3)
and 401(m)(2) for each plan year ending prior to the Closing Date.
(d) Each member of the Company Group is in compliance with the
requirements prescribed by any and all statutes, orders, governmental rules
and regulations applicable to the Company Plans and all reports and
disclosures relating to the Company Plans required to be filed with or
furnished to any governmental entity, participants or beneficiaries prior to
the Closing Date have been or will be filed or furnished in a timely manner
and in accordance with applicable law.
(e) Except as expressly identified on Part 3.13(e) of the
Disclosure Letter, no termination or partial termination of any Company
Qualified Plan has occurred nor has a notice of intent to terminate any
Company Qualified Plan been issued by a member of the Company Group.
(f) No member of the Company Group maintains or has maintained
an "employee benefit pension plan" within the meaning of ERISA Section 3(2)
that is or was subject to Title IV of ERISA.
(g) Except as listed in Part 3.13(g) of the Disclosure Letter,
any Company Plan can be terminated on or prior to the Closing Date without
liability to any member of the Company Group or Buyer, including without
limitation, any additional contributions, penalties, premiums, fees or any
other charges as a result of the termination, except to the extent of funds
set aside for such purpose or reflected as reserved for such purpose on the
Balance Sheet.
(h) Each member of the Company Group has made full and timely
payment of, or has accrued pending full and timely payment, all amounts which
are required under the terms of each of the Company Plans and in accordance
with applicable laws to be paid as a contribution to each Company Plan and no
excise taxes are assessable as a result of any non-deductible or other
contributions made or not made to a Company Plan. The assets of all Company
Plans which are required under applicable laws to be held in trust are in
fact held in trust and the assets of each Company Plan equal or exceed the
liabilities of each such Company Plan. The assets of each Company Plan are
reported at their fair market value on the books and records of each plan.
(i) No member of the Company Group has any past, present or
future obligation or liability to contribute or has contributed to any
multiemployer plan as defined in ERISA Section 3(37).
(j) No member of the Company Group nor any other "disqualified
person" or "party in interest" (as defined in IRC Section 4975 and ERISA
Section 3(14), respectively) with respect to the Company Plans, has engaged
in any "prohibited transaction" (as defined in IRC Section 4975 or ERISA
Section 406). All members of the Company Group and all "fiduciaries" (as
defined in ERISA Section 3(21)) with respect to the Company Plans, including
any members of the Company Group which are fiduciaries as to a Company Plan,
have complied in all respects with the requirements of ERISA Section 404. No
member of the Company Group and no party in interest or disqualified person
with respect to the Company Plans has taken or omitted any action which could
lead to the imposition of an excise tax under the IRC or a fine under ERISA.
(k) Each member of the Company Group has complied with the
continuation coverage requirements of Section 1001 of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, and ERISA Sections 601
through 608 (collectively, "COBRA Rights") and with the portability, access
and renewability provisions of Subtitle K, Chapter 100 of the IRC and Section
701 et. seq. of ERISA.
(l) Except as disclosed on Part 3.13(l) of the Disclosure
Letter, no member of the Company Group has made or is obligated to make any
nondeductible contributions to any Company Plan.
(m) Except as set forth in Part 3.13(m) of the Disclosure
Letter, no member of the Company Group is obligated, continently or
otherwise, under any agreement to pay any amount which would be treated as a
"parachute payment," as defined in IRC Section 280G(b) (determined without
regard to IRC Section 280G(b)(2)(A)(ii)).
(n) Other than routine claims for benefits, to the Knowledge of
Sellers and the Company, there are no actions, audits, investigations, suits
or claims pending, or threatened against any Company Plan, any trust or other
funding agency created thereunder, or against any fiduciary of any Company
Plan or against the assets of any Company Plan.
(o) The consummation of the transactions contemplated hereby
will not accelerate or increase any liability under any Company Plan because
of an acceleration or increase of any of the rights or benefits to which
Employees may be entitled thereunder.
(p) No member of the Company Group has any obligation to any
retired or former employee or any current employee of the Company upon
retirement or termination of employment under any Company Plan, other than
COBRA Rights.
(q) Except as set forth in Part 3.13(q) of the Disclosure
Letter or otherwise provided in this Agreement, since the last date through
which the Interim Balance Sheet reflects financial information, no member of
the Company Group has (i) increased the rate of compensation payable or to
become payable to any of the employees of the Company, other than in the
normal course of business and consistent with past practice; (ii) has not
made any commitment and has not incurred any liability to any labor union;
(iii) has not paid or agreed to pay any bonuses or severance pay; (iv) has
not increased any benefits or rights under any Company Plan; and (v) has not
adopted any new plan, program, policy or arrangement, which if it existed as
of the Closing Date, would constitute a Company Plan.
3.14 Compliance with Legal Requirements; Governmental Authorizations.
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) the Company is, and at all times since September 30,
1997 has been, in full compliance in all material respects with
each 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;
(ii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may constitute or
result in a material violation by the Company of, or a material
failure on the part of the Company to comply with, any Legal
Requirement, or (B) may give rise to any 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; and
(iii) the Company has not received, at any time since
September 30, 1997, any notice or other communication (whether
oral or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential
violation of, or failure to comply with, any Legal Requirement,
(B) any actual, alleged, possible, or potential 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, or (C) either
to revoke, withdraw or suspend any license to operate the Company
or any of its assets, or to terminate or decertify or exclude
from any participation of the Company in Medicare, Medicaid,
CHAMPUS or other governmental health care programs.
(b) Part 3.14 of the Disclosure Letter contains a complete and
accurate list of each Governmental Authorization that is held by the Company
or that otherwise relates to the business of, or to any of the assets owned
or used by, the Company. Each Governmental Authorization listed or required
to be listed in Part 3.14 of the Disclosure Letter is valid and in full force
and effect. Except as set forth in Part 3.14 of the Disclosure Letter:
(i) the Company is, and at all times since January 1,
1994 has been, in full compliance in all material respects with
all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Part
3.14 of the Disclosure Letter;
(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or
result directly or indirectly in a material violation of or a
material failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in
Part 3.14 of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to,
any Governmental Authorization listed or required to be listed in
Part 3.14 of the Disclosure Letter;
(iii) the Company has not received, at any time since
January 1, 1994, any notice or other communication (whether oral
or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential
violation of or failure to comply with any term or requirement of
any Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental
Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to
be listed in Part 3.14 of the Disclosure Letter have been duly
filed on a timely basis with the appropriate Governmental Bodies,
and all other filings required to have been made with respect to
such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the Disclosure
Letter collectively constitute all of the Governmental Authorizations
necessary to permit the Company to lawfully conduct and operate their
businesses in the manner they currently conduct and operate such businesses
and to permit the Company to own and use its assets in the manner in which it
currently owns and uses such assets.
3.15 Legal Proceedings; Orders.
(a) Except as set forth in Part 3.15 of the Disclosure Letter,
there is no pending Proceeding:
(i) that has been commenced by or against the Company or
that otherwise relates to or may affect the business of, or any
of the assets owned or used by, the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions.
To the Knowledge of Sellers and the Company, (1) no such Proceeding has
been Threatened, and (2) no event has occurred or circumstance exists that
may give rise to or serve as a basis for the commencement of any such
Proceeding. Sellers have delivered to Buyer copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in
Part 3.15 of the Disclosure Letter. The Proceedings listed in Part 3.15 of
the Disclosure Letter will not have a material adverse effect on the
business, operations, assets, condition, or prospects of the Company.
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which the Company, or any of the
assets owned or used by the Company, is subject;
(ii) no Seller is subject to any Order that relates to the
business of, or any of the assets owned or used by, the Company;
and
(iii) to the Knowledge of Sellers and the Company, no
officer, director, agent, or employee of the Company is subject
to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or
practice relating to the business of the Company.
3.16 Absence of Certain Changes and Events. Except as set forth in
Part 3.16 of the Disclosure Letter, since the date of the Interim Balance
Sheet, the Company has conducted its businesses only in the Ordinary Course
of Business and there has not been any:
(a) 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; grant
of any registration rights; purchase, redemption, retirement, or other
acquisition by the Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits
under, any Company Plans;
(e) damage to or destruction or loss of any asset or property
of the Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects
of the Company;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to the
Company of at least $25,000;
(g) sale (other than sales of inventory in the Ordinary Course
of Business), lease, or other disposition of any asset or property of the
Company or mortgage, pledge, or imposition of any lien or other encumbrance
on any material asset or property of the Company;
(h) cancellation or waiver of any claims or rights with a value
to the Company in excess of $25,000;
(i) change in the accounting methods used by the Company; or
(j) agreement, whether oral or written, by the Company to do
any of the foregoing.
3.17 Contracts; No Defaults.
(a) Part 3.17(a) of the Disclosure Letter contains a complete
and accurate list, and Sellers have delivered to Buyer true and complete
copies, of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by the Company of an
amount or value in excess of $25,000;
(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to the Company of an
amount or value in excess of $25,000;
(iii) each Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or
receipts of the Company in excess of $25,000;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use
of, or any leasehold or other interest in, any real or 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 and with terms of less than one
year);
(v) each licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or
former employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual
Property Assets;
(vi) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee
representative of a group of employees;
(vii) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by the Company with any other Person;
(viii) each Applicable Contract containing covenants
that in any way purport to restrict the business activity of the
Company or any Affiliate of the Company or limit the freedom of
the Company or any Affiliate of the Company to engage in any line
of business or to compete with any Person;
(ix) each Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits, other than
direct payments for goods;
(x) each power of attorney that is currently effective
and outstanding;
(xi) each Applicable Contract entered into other than in
the Ordinary Course of Business that contains or provides for an
express undertaking by the Company to be responsible for
consequential damages;
(xii) each Applicable Contract for capital expenditures in
excess of $25,000;
(xiii) each written warranty, guaranty, and or other
similar undertaking with respect to contractual performance
extended by the Company other than in the Ordinary Course of
Business; and
(xiv) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) Except as set forth in Part 3.17(b) of the Disclosure
Letter, each Contract identified or required to be identified in Part 3.17(a)
of the Disclosure Letter is in full force and effect and is valid and
enforceable in accordance with its terms.
(c) Except as set forth in Part 3.17(c) of the Disclosure
Letter:
(i) the Company is, and at all times since September 30,
1997 has been, in full compliance with all applicable material
terms and requirements of each Contract under which it has or had
any obligation or liability or by which it or any of the assets
owned or used by it is or was bound;
(ii) to Sellers' Knowledge, each other Person that has or
had any obligation or liability under any Contract under which
the Company has or had any rights is, and at all times since
September 30, 1997 has been, in full compliance with all
applicable terms and requirements of such Contract;
(iii) 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
Applicable Contract; and
(iv) the Company has not given to or received from any
other Person, at any time since September 30, 1997, any notice or
other communication (whether oral or written) regarding any
actual, alleged, possible, or potential violation or breach of,
or default under, any Contract.
(d) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to the
Company under current or completed Contracts with any Person that would have
a material adverse effect on the business of the Company and, to the
Knowledge of Sellers and the Company, no such Person has made written demand
for such renegotiation.
3.18 Insurance.
(a) Sellers have delivered to Buyer:
(i) true and complete copies of all policies of insurance
to which the Company is a party or under which the Company, or
any director of the Company, is currently covered; and
(ii) true and complete copies of all pending applications
for policies of insurance.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting the
Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by the
Company; and
(iii) all obligations of the Company to third parties with
respect to insurance (including such obligations under leases and
service agreements) and identifies the policy under which such
coverage is provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year,
for the current policy year:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance
policy for an amount in excess of $10,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance, and period of coverage; and
(C) the amount and a brief description of the
claim; and
(iii) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate
cost of such claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure
Letter:
(i) All policies to which the Company is a party or that
provide coverage to any Seller, the Company, or any director or
officer of the Company: (A) are valid, outstanding, and
enforceable; (B) are sufficient for compliance with all Legal
Requirements and Contracts to which the Company is a party or by
which it is bound; (C) will continue in full force and effect
following the consummation of the Contemplated Transactions or
Sellers will exert their best, good faith efforts to continue
such policies and, to Sellers' Knowledge, such policies will
continue in full force and effect; and (D) do not provide for any
retrospective premium adjustment or other experienced-based
liability on the part of the Company, except that the Company's
general liability insurance issued by Hartford is priced
according to the level of the Company's sales and adjustments may
be made based upon a sales audit, although any such adjustment
will not be of a material dollar amount.
(ii) No Seller or the Company has received (A) any refusal
of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any
other indication that any insurance policy is no longer in full
force or effect or will not be renewed or that the issuer of any
policy is not willing or able to perform its obligations
thereunder.
(iii) The Company has paid all premiums due, and has
otherwise performed its obligations, under each policy to which
it is a party or that provides coverage to the Company or
director thereof, except for an adjustment as noted in Section
3.18(d)(i) hereof.
(iv) The Company has given notice to the insurer of all
claims that may be insured thereby.
(v) For the five-year period prior to the effective date
of all current policies listed on Part 3.18(c) of the
Disclosure Letter, the Company has had in effect coverage
at least equivalent to all current coverages.
3.19 Environmental Matters. Except as set forth in part 3.19 of the
Disclosure Letter:
(a) The Company is, and at all times has been, in all material
respects, in full compliance with, and has not been and is not in violation
of or liable under, any Environmental Law. No Seller nor the Company has 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 (i) any Governmental Body or
private citizen acting in the public interest, or (ii) the current or prior
owner or operator of any Facilities, 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 Facilities or any other
properties or assets used by the Company.
(b) There are no pending or, to the Knowledge of Sellers and
the Company, Threatened claims, Encumbrances, or other restrictions of any
nature, resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or
affecting any of the Facilities or any other properties and assets used by
the Company.
(c) No Seller nor the Company has received or has any basis to
expect any citation, directive, inquiry, notice, Order, summons, warning, or
other communication that relates to Hazardous Materials, or any alleged,
actual, or potential violation or failure to comply with any Environmental
Law, or of any alleged, actual, or potential obligation to undertake or bear
the cost of any Environmental, Health, and Safety Liabilities with respect to
any of the Facilities or any other properties or assets used by the Company,
or with respect to any property or facility to which Hazardous Materials
generated, manufactured, refined, transferred, imported, used, or processed
by Sellers, the Company, or any other Person for whose conduct they are or
may be held responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(d) Neither Seller nor the Company has any material
Environmental, Health, and Safety Liabilities with respect to the Facilities.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities except in full compliance in all material
respects with all applicable Environmental Laws.
(f) There has been no Release or, to the Knowledge of Sellers
and the Company, threat of Release, of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used, or
processed from or by the Facilities, or from or by any other properties and
assets used by the Company.
(g) Sellers have delivered to Buyer true and complete copies
and results of any reports, studies, analyses, tests, or monitoring possessed
or initiated by Sellers or any the Company pertaining to Hazardous Materials
in, on, or under the Facilities, or concerning compliance by Sellers or the
Company.
3.20 Employees.
(a) Part 3.20 of the Disclosure Letter contains (i) a complete
and accurate list of the following information for each employee or director
of the Company, including each employee on leave of absence or layoff status:
employer; name; job title; current compensation paid or payable and any
change in compensation since September 30, 1997; and (ii) a list of all
written contracts of employment with the Company.
(b) No director or officer, or to the Knowledge of Seller,
employee of the Company, is a party to, or is otherwise bound by, any
agreement or arrangement, including any employment, confidentiality,
noncompetition, or proprietary rights agreement, between such employee or
director and any other Person ("Proprietary Rights Agreement") that in any
way adversely affects or will affect (i) the performance of his duties as an
employee or director of the Company, or (ii) the ability of the Company to
conduct its business, including any Proprietary Rights Agreement with Sellers
or the Company by any such employee or director. To Sellers' Knowledge, no
director, officer, or other key employee of the Company intends to terminate
his employment with the Company.
(c) There are no retired employees or directors of the Company
or dependants who are receiving benefits or are scheduled to receive benefits
in the future, except for Company Plan benefits set forth in Section 3.13
which are properly accrued on the Financial Statements.
3.21 Labor Relations; Compliance. Since September 30, 1997, the
Company has not been and is not a party to any collective bargaining or other
labor Contract. Since September 30, 1997, there has not been, there is not
presently pending or existing, and to Sellers' and the Company's Knowledge
there is not Threatened, (a) any strike, slowdown, picketing, work stoppage,
or employee grievance process, (b) 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 or union with the National Labor Relations Board, the
Equal Employment Opportunity Commission, or any comparable Governmental Body,
organizational activity, or other labor or employment dispute against or
affecting the Company or its premises, or (c) any application for
certification of a collective bargaining agent. To Sellers' and the Company's
Knowledge, no event has occurred or circumstance exists that could provide
the basis for any work stoppage or other labor dispute. There is no lockout
of any employees by the Company, and no such action is contemplated by the
Company. The Company has complied in all material respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. 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
Legal Requirements.
3.22 Intellectual Property.
(a) Intellectual Property Assets -- The term "Intellectual
Property Assets" includes:
(i) the name "Drake Management Services, Inc.", all
fictional business names, trading names, registered and
unregistered trademarks, service marks, and applications
(collectively, "Marks");
(ii) all copyrights in both published works and
unpublished works (collectively, "Copyrights"); and
(iii) all know-how, trade secrets, confidential
information, customer lists, software, technical information,
data, process technology, plans, drawings, and blue prints
(collectively, "Trade Secrets"); owned, used, or licensed by the
Company as licensee or licensor.
(b) Agreements. Part 3.22(b) of the Disclosure Letter contains
a complete and accurate list and summary description, including any royalties
paid or received by the Company, of all Contracts relating to the
Intellectual Property Assets to which Company is a party or by which any
Company is bound. There are no outstanding and, to Sellers' and the
Company's Knowledge, no Threatened disputes or disagreements with respect to
any such agreement.
(c) Know-How Necessary for the Business. The Intellectual
Property Assets are all those necessary for the operation of the Company's
businesses as it is currently conducted. 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 liens, security interests, charges,
encumbrances, equities, and other adverse claims, and has the right to use
without payment to a third party all of the Intellectual Property Assets.
(d) Patents. The Company owns no patents.
(e) Trademarks.
(i) Part 3.22(e) of Disclosure Letter contains a complete
and accurate list and summary description of all Marks. The
Company is the owner of all right, title and interest in and to
each of the Marks, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse
claims.
(ii) No Xxxx has been or is now involved in any
opposition, invalidation, or cancellation and, to Sellers' and
the Company's Knowledge, no such action is Threatened with the
respect to any of the Marks.
(iii) To Sellers' and the Company's Knowledge, there is no
potentially interfering trademark or trademark application of any
third party.
(iv) No Xxxx is infringed or, to Sellers' and the
Company's Knowledge, has been challenged or threatened in any
way. None of the Marks used by the Company infringes or is
alleged to infringe any trade name, trademark, or service xxxx of
any third party.
(f) Copyrights.
(i) Part 3.22(f) of the Disclosure Letter contains a
complete and accurate list and summary description of all
registered Copyrights. The Company is the owner of all right,
title and interest in and to each of the registered Copyrights,
free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims.
(ii) No Copyright is infringed or, to Sellers' and the
Company's Knowledge, has been challenged or threatened in any
way. None of the subject matter of any of the registered
Copyrights infringes or is alleged to infringe any copyright of
any third party or is a derivative work based on the work of a
third party.
(iii) All works encompassed by the registered Copyrights
have been marked with the proper copyright notice.
(g) Trade Secrets.
(i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and
sufficient in detail and content to identify and explain it and
to allow its full and proper use without reliance on the
knowledge or memory of any individual.
(ii) Sellers and the Company have taken all reasonable
precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets.
(iii) The Company has good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets. The Trade
Secrets are not part of the public knowledge or literature, and,
to Sellers' and the Company's Knowledge, have not been used,
divulged, or appropriated either for the benefit of any Person or
to the detriment of the Company. No Trade Secret is subject to
any adverse claim or has been challenged or threatened in any way.
3.23 Certain Payments. Since January 1, 1994, neither the Company nor
any director, officer, agent, or employee of the Company, or any other Person
associated with or acting for or on behalf of the Company, has directly or
indirectly (a) made, directly or indirectly, any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other payment to any Person,
private or public, regardless of form, whether in money, property, or
services (i) to obtain favorable treatment in securing business, (ii) to pay
for favorable treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for or in respect of
the Company or any Affiliate of the Company, or (iv) in violation of any
Legal Requirement, (b) received, directly or indirectly, any rebates,
payments, commissions, promotional allowances or any other economic benefits
from any vendor, governmental employee or other Person with whom the Company
has done business, directly or indirectly, which would reasonably be expected
to subject the Company to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, or (c) established or maintained any
fund or asset that has not been recorded in the books and records of the
Company.
3.24 Fraud and Abuse; Financial Relationships. The Company does not
have any government contracts, and the Company has no claims relating to
Medicare, Medicaid CHAMPUS or other governmental reimbursements.
3.25 Relationships with Related Persons. No Seller or any Affiliate
of Sellers or of the Company has, or since January 1, 1994, has had, any
interest in any property (whether real, personal, or mixed and whether
tangible or intangible), used in or pertaining to the Company's businesses.
No Seller or any Affiliate of Sellers or of the Company is, or since
January 1, 1994 has owned (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in, a Person that has (i)
had business dealings or a material financial interest in any transaction
with the Company, or (ii) engaged in competition with the Company with
respect to any line of the products or services of the Company (a "Competing
Business") in any market presently served by the Company except for less than
five percent (5%) of the outstanding capital stock of any Competing Business
that is publicly traded on any recognized exchange or in the over-the-counter
market. Except as set forth in Part 3.25 of the Disclosure Letter, no Seller
nor any Affiliate of Sellers or of the Company is a party to any Contract
with, or has any claim or right against, the Company.
3.26 Brokers or Finders. Sellers and their Representatives have
incurred no obligation or liability, contingent or otherwise, for brokerage
or finders' fees or agents' commissions or other similar payment in
connection with the Contemplated Transactions.
3.27 Disclosure.
(a) No representation or warranty of Sellers in this Agreement
and no statement in the Disclosure Letter omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 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.
(c) There is no fact known to any Seller that has specific
application to any Seller or the Company (other than general economic or
industry conditions) and that materially adversely affects the assets,
business, prospects, financial condition, or results of operations of the
Company (on a consolidated basis) that has not been set forth in this
Agreement or the Disclosure Letter.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Georgia.
4.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Earnout Agreement, the
Employment Agreements, and the Noncompete Agreements (collectively, 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 their 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.
(b) Except as set forth in Part 4.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
will not materially breach and/or give any Person the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions
pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or
the shareholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject;
(iv) any Governmental Authorization that is held by Buyer;
or
(v) any Contract to which Buyer is a party or by which
Buyer may be bound.
Except as set forth in Part 4.2 of the Disclosure Letter, 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 Contemplated Transactions.
4.3 Investment Intent. Buyer is acquiring the Shares for its own
account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act of 1933, as amended. Buyer understands
that any resale of the shares must be made in compliance with the
registration requirements of the Securities Act of 1933, as amended, or
pursuant to an exemption therefrom. Buyer understands that the certificate
representing the Shares shall be endorsed with the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE (A) HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND (B) MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION
THEREFROM UNDER SAID ACT.
4.4 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 Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has
been Threatened.
4.5 Brokers or Finders. Buyer and its agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with the
Contemplated Transactions.
4.6 Disclosure.
(a) No representation or warranty of Buyer in this Agreement
omits to state a material fact necessary to make the statements herein, in
light of the circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 6.4 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.
(c) There is no fact known to Buyer that has specific
application to Buyer (other than general economic or industry conditions) and
that materially adversely affects the assets, business, prospects, financial
condition, or results of operations of Buyer (on a consolidated basis) that
has not been set forth in this Agreement.
5. COVENANTS OF SELLERS
5.1 Access and Investigation. Between the date of this Agreement and
the Closing Date, Sellers will, and will cause the Company and its
Representatives to, (a) afford Buyer and its Representatives full and free
access to the Company's offices, facilities, properties, equipment,
inventories, books, contracts, commitments, records and other relevant
information of the business and shall furnish such persons with all
information concerning the business, assets and financial condition of the
Company as Buyer and its Representatives shall reasonably request; provided,
however, that no direct contact with Company customers shall be made without
the consent of X. Xxxxx and such access shall occur in a manner that does not
disrupt Company employees or business.
5.2 Operation of the Businesses of the Company. Between the date of
this Agreement and the Closing Date, Sellers will, and will cause the Company
to:
(a) conduct the business of the Company only in the Ordinary
Course of Business consistent with past practices;
(b) use their Best Efforts to preserve intact the current
business organization of the Company, keep available the services of the
current officers, employees, and agents of the Company, and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with the Company;
(c) not make any material change in the operation of the
business;
(d) not enter into any material agreement or incur any material
liabilities;
(e) make all payments to vendors when due;
(f) confer with Buyer concerning operational matters of a
material nature; and
(g) otherwise report periodically to Buyer concerning the
status of the business, operations, and finances of the Company.
5.3 Negative Covenant. Except as otherwise expressly permitted by
this Agreement, between the date of this Agreement and the Closing Date,
Sellers will not, and will cause the Company not to, without the prior
consent of Buyer, take any affirmative action, or fail to take any reasonable
action within their or its control, as a result of which any of the changes
or events listed in Section 3.16 is likely to occur.
5.4 Required Approvals. As promptly as practicable after the date of
this Agreement, Sellers will, and will cause the Company to, make all filings
required by Legal Requirements to be made by them in order to consummate the
Contemplated Transactions. Between the date of this Agreement and the
Closing Date, Sellers will, and will cause the Company to, (a) cooperate with
Buyer with respect to all filings that Buyer elects to make or is required by
Legal Requirements to make in connection with the Contemplated Transactions,
and (b) cooperate with Buyer in obtaining all consents identified in Part 4.2
of the Disclosure Letter.
5.5 Notification. Between the date of this Agreement and the Closing
Date, each Seller will promptly notify Buyer in writing if such Seller or the
Company becomes aware of any fact or condition that causes or constitutes a
Breach of any of Sellers' representations and warranties as of the date of
this Agreement, or if such Seller or the Company becomes aware of the
occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or
constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. During the same period, each Seller will
promptly notify Buyer of the occurrence of any Breach of any covenant of
Sellers in this Article 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Article 7 impossible or unlikely.
5.6 Payment of Indebtedness by Related Persons. Except as expressly
provided in this Agreement, Sellers will cause all indebtedness owed to the
Company by its Seller or any Affiliate of any Seller to be paid in full prior
to Closing.
5.7 No Negotiation. Sellers agree that until the earlier of March 5,
1998 or such date upon which Buyer notifies Seller that it has abandoned the
Contemplated Transactions, the Company and Sellers shall deal exclusively
with Buyer with respect to the Contemplated Transactions and the Company and
Sellers will not, and will direct the Company's Representatives not to, (i)
solicit the submission of proposals or offers from any person relating to any
acquisition or purchase of all or a material part of the assets or stock of
the Company or any merger, consolidation, or similar transaction with respect
to the Company; (ii) participate in any discussions or negotiations
regarding, or furnish any information to any other person other than Buyer
with respect to any such possible transaction; or (iii) enter into any
agreement or understanding, whether oral or in writing, that would prevent
the consummation of the Contemplated Transactions. If, notwithstanding the
foregoing, the Company or the Sellers should receive any such proposal from a
third party or any inquiry regarding any such proposal, the Company shall
promptly inform Buyer thereof.
5.8 Satisfaction of Obligations. On or before December 31, 1997, the
Company shall pay in full all amounts owed to Xxxxxx Xxxxxxxx and X. Xxxxx.
5.9 Payment of 1997 Profits. Prior to the Closing, the Company may
pay out to its employees and shareholders as bonuses or other compensation
such amounts as the Company deems appropriate, not to exceed $447,445 in the
aggregate, provided that (i) there is sufficient cash in the Company to pay
such bonuses and all related payroll taxes; (ii) if the Villa DeAnza accounts
receivable is not collected at the time of such payment, such receivable must
be written off and there shall be a dollar-for-dollar reduction in the total
amount paid as bonuses hereunder; and (iii) all year-end adjustments,
including without limitation expensing fixed assets purchased during the
year, must be booked prior to the payment of such bonuses.
5.10 Termination of Company Qualified Plan. The Company shall take
all appropriate corporate action no later than the day before the Closing
Date to terminate the sole Company Qualified Plan maintained by the Company,
effective no later than the day before the Closing Date. Unless the
provisions of the Company Qualified Plan expressly provide to the contrary,
appropriate corporate action shall mean duly authorized action by the Board
of Directors of the Company.
6. COVENANTS OF BUYER
6.1 Approvals of Governmental Bodies. As promptly as practicable
after the date of this Agreement, Buyer will, and will cause each of its
Affiliate to, make all filings required by Legal Requirements to be made by
them to consummate the Contemplated Transactions. Between the date of this
Agreement and the Closing Date, Buyer will, and will cause each Affiliate to,
(a) cooperate with Sellers with respect to all filings that Sellers are
required by Legal Requirements to make in connection with the Contemplated
Transactions, and (b) cooperate with Sellers in obtaining all consents
identified in Part 3.2 of the Disclosure Letter; provided that this Agreement
will not require Buyer to dispose of or make any change in any portion of its
business or to suffer any other material adverse effect to obtain a
Governmental Authorization.
6.2 Loan to the Company. On or before December 31, 1997, subject to
customary conditions, Buyer shall lend the Company sufficient funds (or
arrange for financing) to pay off the obligations of the Company due to
Xxxxxx Xxxxxxxx and X. Xxxxx in the aggregate amount of approximately
$289,750.06 as of December 31, 1997. The Company shall execute and deliver
to Buyer a promissory note (the "Promissory Note") in the form attached
hereto as Exhibit 6.2. The Note shall be secured by a security interest in
all accounts receivable of the Company and the proceeds thereof.
6.3 Notification. Between the date of this Agreement and the Closing
Date, Buyer will promptly notify Seller in writing if Buyer becomes aware of
any fact or condition that causes or constitutes a Breach of any of Buyer's
representations and warranties as of the date of this Agreement, or if Buyer
becomes aware of the occurrence after the date of this Agreement of any fact
or condition that would (except as expressly contemplated by this Agreement)
cause or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time or occurrence of
discovery of such fact or condition. During the same period, Buyer will
promptly notify Seller of the occurrence of any Breach of any covenant of
Buyer in this Article 6 or of the occurrence of any event that may make the
satisfaction of the conditions in Article 8 impossible or unlikely.
6.4 Employment Matters.
(a) After the Closing, the Company will maintain a bonus
program comparable to the existing bonus program of the Company for a period
of two years following the Closing, and all employees of the Company other
than Xx. Xxxxx will be entitled to participate in such program.
(b) Xxxxx Xxxxxxxxxxx, Xxxxxx Xxxxx, Xxxx Xxxxxxxxxx, Xxx Xxxx
and Xxxxx Xxxxxxx shall be guaranteed employment with the Company for one
year following the Closing, except that such individuals may be terminated
for cause.
(c) Any employee of the Company who is employed as of the
Closing Date and who is subsequently terminated involuntarily by the Company
without cause during the one-year period following the Closing shall receive
no less than three months of base salary as severance pay, provided such
employee continues to work for the Company until the termination date.
(d) Upon the Closing, Michelin shall receive 5,000 options to
purchase shares of Buyer's common stock, $.01 par value, pursuant to Buyer's
standard stock option agreement, and each of Xxxxx Xxxxxxxxxxx, Xxxxxx Xxxxx,
Xxxx Xxxxxxxxxx, Xxx Xxxx and Xxxxx Xxxxxxx shall receive 3,000 options to
purchase shares of Buyer's Common Stock, $.01 par value, pursuant to Buyer's
standard stock option agreement.
(e) The Buyer shall provide credit for an employee's service
with the Company prior to the Closing Date with respect to those
employees of the Company who remain employed with the Company
immediately after the Closing Date for the following purposes:
(i) for purposes of determining both eligibility to participate
and vesting under the Xxxxxxxx Health Care, Inc. Salary Deferral
Plan (the "SDP"), the Xxxxxxxx Health Care, Inc. Deferred
Compensation Plan (the "DCP"), the Xxxxxxxx Health Care, Inc.
Management Retirement Plan (the "MRP") and the Xxxxxxxx Health
Care, Inc. Executive Supplemental Pension Plan (the "ESP"); (ii)
for purposes of determining the level of matching contributions
under the SDP and DCP; and (iii) for purposes of determining the
accrual of benefits under the MRP and ESP; provided, however,
that for purposes of crediting service under this clause (iii),
only one year of service credit shall be given for every two full
years of service with the Company prior to the Closing Date and
no more than a total of five years of service credit shall be
granted to any Company employee for service performed prior to
the Closing Date.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Buyer, in whole or in part):
7.1 Accuracy of Representations.
(a) All of Sellers' representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all
material respects as of the Closing Date as if made on the Closing Date.
(b) Each of Sellers' representations and warranties in Sections
3.3, 3.4, 3.12, and 3.24 must have been accurate in all respects as of the
date of this Agreement, and must be accurate in all respects as of the
Closing Date as if made on the Closing Date.
7.2 Sellers' Performance.
(a) All of the covenants and obligations that Sellers are
required to perform or to comply with pursuant to this Agreement at or prior
to the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered pursuant to
Section 2.4 must have been delivered.
7.3 Due Diligence. Buyer shall have completed its due diligence
inquiry into the business, affairs and financial condition of the Company.
7.4 Consents. Each of the consents identified in Part 3.2 of the
Disclosure Letter, and each consent identified in Part 4.2 of the Disclosure
Letter, must have been obtained and must be in full force and effect.
7.5 Termination of Agreements. Each of (a) the Shareholders and
Voting Agreement dated June 6, 1997, (b) the Stock Cross Purchase and
Redemption Agreement dated June 6, 1997, and (c) the Stock Retirement and
Subscription Agreement dated February 8, 1996, as amended, shall be
terminated.
7.6 Additional Documents. Each of the following documents must have
been delivered to Buyer:
(a) an opinion of Bonn, Luscher, Xxxxxx & Xxxxxxx, dated the
Closing Date, in the form of Exhibit 7.6(a);
(b) an certificate executed on behalf of the Sellers dated as
of the Closing Date, in the form of Exhibit 7.6(b);
(c) a UCC-3 termination statement shall be filed with respect
to all obligations of the Company previously owed to Xxxxxx Xxxxxxxx and Xx.
Xxxxx and any collateral held by such individuals shall be released; and
(d) such other documents as Buyer may reasonably request for
the purpose of (i) enabling its counsel to provide the opinion referred to in
Section 8.4 Additional Documents. Buyer must have caused the following
documents to be delivered to Sellers:(a), (ii) evidencing the accuracy of any
of Sellers' representations and warranties, (iii) evidencing the performance
by either Seller of, or the compliance by either Seller with, any covenant or
obligation required to be performed or complied with by such Seller,
(iv) evidencing the satisfaction of any condition referred to in this
Section 7, or (v) otherwise facilitating the consummation or performance
of any of the Contemplated Transactions.
7.7 No Proceedings. Since the date of this Agreement, there must not
have been commenced or Threatened against Buyer, or against any Person
affiliated with Buyer, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the Contemplated Transactions.
7.8 No Claim Regarding Stock Ownership or Sale Proceeds. There must
not have been made or Threatened by any Person any claim asserting that such
Person (a) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, the Company, or (b) is entitled to
all or any portion of the Initial Purchase Price payable for the Shares.
7.9 No Prohibition. Neither the consummation nor the performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause Buyer or any Person affiliated
with Buyer to suffer any material adverse consequence under, (a) any
applicable Legal Requirement or Order, or (b) any Legal Requirement or Order
that has been published, introduced, or otherwise formally proposed by or
before any Governmental Body.
7.10 Board Approval. The contemplated transaction must be approved by
the Board of Directors of Buyer.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Sellers, in whole or in part):
8.1 Accuracy of Representations. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and must
be accurate in all material respects as of the Closing Date as if made on the
Closing Date.
8.2 Buyer's Performance.
(a) All of the covenants and obligations that Buyer is required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all material respects.
(b) Buyer must have delivered each of the documents required to
be delivered by Buyer pursuant to Section 2.4 Closing Obligations. At the
Closing: and must have made the cash payments required to be made by Buyer
pursuant to Section 2.4(b)(i).
8.3 Consents. Each of the consents identified in Part 4.2 of the
Disclosure Letter must have been obtained and must be in full force and
effect.
8.4 Additional Documents. Buyer must have caused the following
documents to be delivered to Sellers:
(a) an opinion of Powell, Goldstein, Xxxxxx & Xxxxxx LLP dated
the Closing Date, in the form of Exhibit 8.4(a); and
(b) such other documents as Sellers may reasonably request for
the purpose of (i) enabling their counsel to provide the opinion referred to
in Section (a) an opinion of Bonn, Luscher, Xxxxxx & Xxxxxxx, dated the
Closing Date, in the form of Exhibit 7.6(a);, (ii) evidencing the accuracy of
any representation or warranty of Buyer, (iii) evidencing the performance by
Buyer of, or the compliance by Buyer with, any covenant or obligation
required to be performed or complied with by Buyer, (ii) evidencing the
satisfaction of any condition referred to in this Section 8, or (v) otherwise
facilitating the consummation of any of the Contemplated Transactions.
8.5 No Injunction. There must not be in effect any Legal Requirement
or any injunction or other Order that (a) prohibits the sale of the Shares by
Sellers to Buyer, and (b) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
8.6 No Prohibition. Neither the consummation nor the performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause any Seller to suffer any material
adverse consequence under (a) any applicable Legal Requirement or Order, or
(b) any Legal Requirement or Order that has been published, introduced, or
otherwise formally proposed by or before any Governmental Body.
9. TERMINATION
9.1 Termination Events. This Agreement may, by notice given prior to
or at the Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of any
provision of this Agreement has been committed by the other party and such
Breach has not been waived;
(b) (i) by Buyer if any of the conditions in Section 7.
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE has not been satisfied as
of the Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date; or (ii) by Sellers, if any of the conditions in
Section 8. CONDITIONS PRECEDENT TO SELLERS'OBLIGATION TO CLOSE has not
been satisfied as of the Closing Date or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Sellers to comply
with their obligations under this Agreement) and Sellers have not waived such
condition on or before the Closing Date;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing has not occurred
(other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before January 31, 1998, or such later date as the parties may agree upon.
9.2 Effect of Termination. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will
not be an election of remedies. If this Agreement is terminated pursuant
to Section 9.1, all further obligations of the parties under this Agreement
will terminate, except that the obligations in Sections 12.1 and 12.3 will
survive; provided, however, that if this Agreement is terminated by a party
because of the Breach of the Agreement by the other party or because one
or more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to
comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 Survival; Right to Indemnification Not Affected by Knowledge.
All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Letter, and any other certificate or document
delivered pursuant to this Agreement will survive the Closing. The right to
indemnification, payment of Damages 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.
10.2 Indemnification and Payment of Damages by Sellers. Sellers,
jointly and severally, will indemnify and hold harmless Buyer, the Company,
and their respective Representatives, stockholders, controlling persons, and
Affiliates (collectively, the "Indemnified Persons") for, and will pay to the
Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and 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:
(a) any Breach of any representation or warranty made by
Sellers in this Agreement, the Disclosure Letter, the supplements to the
Disclosure Letter, or any other certificate or document delivered by Sellers
pursuant to this Agreement;
(b) any Breach of any representation or warranty made by
Sellers in this Agreement as if such representation or warranty were made on
and as of the Closing Date;
(c) any Breach by any Seller of any covenant or obligation of
such Seller in this Agreement;
(d) any product shipped or manufactured by, or any services
provided by, any the Company prior to the Closing Date;
(e) 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 any Seller or the Company
(or any Person acting on their behalf) in connection with any of the
Contemplated Transactions.
The remedies provided in this Section 10.2 will not be exclusive of or
limit any other remedies that may be available to Buyer or the other
Indemnified Persons.
10.3 Indemnification and Payment of Damages by Sellers --
Environmental Matters. In addition to the provisions of Section 10.2. Sellers,
jointly and severally, will indemnify and hold harmless Buyer, the Company,
and the other Indemnified Persons for, and will pay to Buyer, the Company,
and the other Indemnified Persons the amount of, any Damages (including
costs of cleanup, containment, or other remediation) arising, directly or
indirectly, from or in connection with any Environmental, Health, and Safety
Liabilitie arising out of or relating to: (i) (A) the ownership,
operation, or condition at any time on or prior to the Closing Date of the
Facilities or any other properties and assets used by the Company, or any
Hazardous Materials or other contaminants that were present on the Facilities
or such other properties and assets at any time on or prior to the Closing
Date; or (ii) any Hazardous Materials or other contaminants, wherever
located, that were, or were allegedly, generated, transported, stored,
treated, Released, or otherwise handled by Sellers or the Company or by any
other Person for whose conduct they are or may be held responsible at any
time on or prior to the Closing Date.
10.4 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, (b) any
Breach by Buyer of any covenant or obligation of Buyer in this Agreement, or
(c) 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 such Person with Buyer (or any Person acting on its behalf) in
connection with any of the Contemplated Transactions. Notwithstanding the
foregoing, in the case of any Damages arising out of a third party claim
brought against Parent based on the conduct of its business as a whole (as
opposed to just the business of Drake), Parent will pay any reasonable
defense costs related thereto. The remedies provided in this Section 10.4
will not be exclusive of or limit any other remedies that may be available to
Sellers.
10.5 Time Limitations. If the Closing occurs, Sellers will have no
liability (for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, other than those in Sections 3.3,
3.11, 3.13 (with respect to matters other than Tax), 3.19, 3.23 and 3.24
unless on or before the second anniversary of the Closing Date Buyer notifies
Sellers of a claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Buyer; a claim with respect to Section
3.11, 3.13, 3.23 or 3.24 shall be made within the applicable statute of
limitations; a claim with respect to Sections 3.3 or 3.19 or a claim for
indemnification or reimbursement based upon any covenant or obligation to be
performed and complied with after the Closing Date, may be made at any time.
If the Closing occurs, Buyer will have no liability (for indemnification or
otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date,
unless on or before the second anniversary from the Closing Date, Sellers
notify Buyer of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Sellers; a claim for
indemnification or reimbursement based upon any covenant or obligation to be
performed or complied with after the Closing Date may be made at any time.
Notwithstanding the foregoing, no party hereto shall waive any applicable
statute of limitations with respect to any third party claim.
10.6 Limitations on Amount -- Sellers. Sellers will have no liability
(for indemnification or otherwise) with respect to the matters described in
Section 10.2 until the total of all Damages with respect to such matters
exceeds $25,000, and once such threshold is met, Sellers shall be liable for
all Damages, including, without limitation, such $25,000. However, this
Section 10.6 will not apply to any intentional Breach by any Seller of any
representation, warranty, covenant or obligation, and Sellers will be jointly
and severally liable for all Damages with respect to such Breaches.
10.7 Limitations on Amount -- Buyers. Buyer will have no liability
(for indemnification or otherwise) with respect to the matters described in
Section 10.4 until the total of all Damages with respect to such matters
exceeds $25,000, and once such threshold is met, Buyer shall be liable for all
Damages, including, without limitation, such $25,000. However, this Section
10.7 will not apply to any intentional Breach by Buyer of any representation,
warranty, covenant or obligation, and Buyer will be liable for all Damages
with respect to such Breaches.
10.8 Procedure For Indemnification -- Third Party Claims.
(a) Promptly after receipt by an indemnified party under
Section 10.2, 10.4, or (to the extent provided in the last sentence of Section
10.3) Section 10.3 of notice of the commencement of any Proceeding against
it, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying party
of the commencement of such claim, but the failure to notify the indemnifying
party will not relieve the indemnifying party of any liability that it may
have to any indemnified party, except to the extent that the indemnifying
party demonstrates that the defense of such action is prejudiced by the
indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.8(a) is brought
against an indemnified party and it gives notice to the indemnifying party
of the commencement of such Proceeding, the indemnifying party will,
unless the claim involves Taxes, be entitled to participate in such
Proceeding and, to the extent that it wishes (unless (i) the indemnifying
party is also a party to such Proceeding and the indemnified party determines
in good faith that joint representation would be inappropriate, or (ii) the
indemnifying party fails to provide reasonable assurance to the indemnified
party of its financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding), to assume the defense of
such Proceeding with counsel reasonably satisfactory to the indemnified
party and, after notice from the indemnifying party to the indemnified party
of its election to assume the defense of such Proceeding, the indemnifying
party will not, as long as it diligently conducts such defense, be liable to
the indemnified party under this Section 10 for any fees of other counsel or
any other expenses with respect to the defense of such Proceeding,
in each case subsequently incurred by the indemnified party in connection
with the defense of such Proceeding, other than reasonable costs of
investigation. If the indemnifying party assumes the defense of a Proceeding,
(i) it will be conclusively established for purposes of this Agreement that
the claims made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be
effected by the indemnifying party without the indemnified party's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on
any other claims that may be made against the indemnified party, and (B) the
sole relief provided is monetary damages that are paid in full by the
indemnifying party; and (iii) the indemnified party will have no liability
with respect to any compromise or settlement of such claims effected without
its consent. If notice is given to an indemnifying party of the commencement
of any Proceeding and the indemnifying party does not, within ten days after
the indemnified party's notice is given, give notice to the indemnified party
of its election to assume the defense of such Proceeding, the indemnifying
party will be bound by any determination made in such Proceeding or any
compromise or settlement effected by the indemnified party, absent gross
negligence or willful misconduct on the part of the indemnified party.
Notwithstanding the foregoing, the indemnified party in such cases shall use
its reasonable best efforts to provide notice of material events in any
Proceeding and attempt to obtain the consent of the indemnifying party to any
compromise or settlement.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result
of monetary damages for which it would be entitled to indemnification under
this Agreement, the indemnified party may, by notice to the indemnifying
party, assume the exclusive right to defend, compromise, or settle such
Proceeding, but the indemnifying party will not be bound by any determination
of a Proceeding so defended or any compromise or settlement effected without
its consent (which may not be unreasonably withheld).
(d) Sellers and Buyer hereby consent to the non-exclusive
jurisdiction of any court in which a Proceeding is brought against any
Indemnified Person for purposes of any claim that an Indemnified Person may
have under this Agreement with respect to such Proceeding or the matters
alleged therein, and agree that process may be served on Sellers or Buyer
with respect to such a claim anywhere in the world.
10.9 Procedure for Indemnification -- Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be
asserted by notice to the party from whom indemnification is sought.
10.10 Insurance Coverages. Notwithstanding any of the foregoing, an
indemnifying party shall not be liable for the amount of damages recovered by
the indemnified party from any insurance policies unless otherwise agreed to
by the parties, and this indemnification shall not be interpreted or
construed, and the parties do not intend it, to negate or limit any such
coverages.
11. Dispute Resolution
11.1 Dispute Defined. As used in this Agreement, "Dispute" shall mean
any dispute or disagreement between the Buyer and the Sellers concerning the
interpretation of this Agreement, the validity of this Agreement, any breach
or alleged breach by any party under this Agreement or any other matter
relating in any way to this Agreement.
11.2 Dispute Resolution Procedures.
(a) If a Dispute arises, the parties shall follow the
procedures specified in this Article 11. The parties shall promptly attempt
to resolve any Dispute by negotiations between themselves. Either the Buyer
or the Sellers may give the other party written notice of any Dispute not
resolved in the normal course of business. The parties shall meet at a
mutually acceptable time and place within 15 calendar days after delivery of
such notice, and thereafter as often as they reasonably deem necessary, to
exchange relevant information and to attempt to resolve the Dispute. If the
Dispute has not been resolved by the parties within 30 calendar days of the
disputing party's notice, or if the parties fail to meet within such 15
calendar days, either the Buyer or the Company may initiate mediation as
provided in Section 11.2(b) of this Agreement. If a negotiator intends to be
accompanied at a meeting by legal counsel, the other negotiator shall be given
at least three (3) business days' notice of such intention and may also be
accompanied by legal counsel.
(b) If the Dispute is not resolved by negotiations pursuant to
Section 11.2(a), the parties shall attempt in good faith to resolve any such
Dispute by nonbinding mediation. Either the Buyer or the Sellers may
initiate a nonbinding mediation proceeding by a request in writing to the
other party (the "Mediation Request"), and both parties will then be
obligated to engage in a mediation. The proceeding will be conducted in
accordance with the then current Center for Public Resources ("CPR") Model
Procedure for Mediation of Business Disputes, with the following exceptions:
(i) if the parties have not agreed within 15 calendar
days of the Mediation Request on the selection of a mediator
willing to serve, CPR, upon the request of either the Buyer or
the Sellers, shall appoint a member of the CPR Panels of Neutrals
as the mediator, and
(ii) efforts to reach a settlement will continue until the
conclusion of the proceedings, which shall be deemed to occur
upon the earliest of the date that: (A) a written settlement is
reached, or (B) the mediator concludes and informs the parties in
writing that further efforts would not be useful, or (C) the
parties agree in writing that an impasse has been reached, or (D)
a period of 30 calendar days has passed since the Mediation
Request and none of the events specified in the foregoing clauses
(A), (B) or (C) has occurred. No party may withdraw before the
conclusion of the proceeding.
(c) If a Dispute is not resolved by negotiation pursuant to
Section 11.2(a) of this Agreement or by mediation pursuant to Section 11.2(b)
of this Agreement within 70 calendar days after initiation of the negotiation
process pursuant to Section 11.2(a), such Dispute and any other claims
arising out of or relating to this Agreement may be heard, adjudicated and
determined by arbitration before a single arbitrator pursuant to the rules of
the American Arbitration Association ("AAA"). Arbitration may be commenced
at any time by any party hereto giving written notice to each other party to
a dispute that such a dispute has been referred to arbitration under this
Section 11.2. The arbitrator shall be selected by the joint agreement of the
parties, but if they do not so agree within 20 days after the date of the
notice referred to in the preceding sentence, the selection shall be made
pursuant to the rules from the panels of arbitrators maintained by the AAA.
Any award rendered by the arbitrator shall be conclusive and binding upon the
parties hereto; provided, however, that any such award shall be accompanied
by a written opinion of the arbitrator giving the reasons for the award.
This provision for arbitration shall be specifically enforceable by the
parties, and the decision of the arbitrator in accordance herewith shall be
final and binding and there shall be no right of appeal therefrom. Unless
otherwise designated by the arbitrator as a result of fault, each party shall
pay its own expenses of arbitration and the expenses of the arbitrator shall
be equally shared.
11.3 Provisional Remedies. At any time during the procedures
specified in Sections 11.2(a) and 11.2(b) of this Agreement, a party may seek
preliminary injunction or other provisional judicial relief if in its judgement
such action is necessary to avoid irreparable damage or to preserve the status
quo. Despite such action, the parties will continue to participate in good faith
in the procedures specified in Section 11.2(a) and 11.2(b).
11.4 Tolling Statue Limitations. All applicable statutes of limitations
and defenses based upon the passage of time shall be tolled while the procedures
specified in Section 11.2(a) and 11.2(b) of this Agreement are pending. The
parties will take such action, if any, as is required to effectuate such
tolling.
11.5 Performance to Continue. Each party shall continue to perform
its or his obligations under this Agreement pending final resolution of any
Dispute.
11.6 Extension of Deadlines. All deadlines specified in this Article
11 may be extended by mutual agreement between the parties.
11.7 Enforcement. The parties regard the obligations in this Article
11 to constitute an essential provision of this Agreement and one that is
legally binding on them. In case of a violation of the obligations in this
Article 11 by either the Buyer or the Sellers, the other party may bring an
action to seek enforcement of such obligations in any state or federal court
specified in Section 11.2(c).
11.8 Costs. The parties shall pay their own costs, fees, and expenses
incurred in connection with the application of the provisions of sections
11.2(a) and 11.2(b) of this Agreement. In addition, the fees and expenses of
CPR and the mediator in connection with the application of the provisions of
Section 11.2(b) of this Agreement shall be borne fifty percent (50%) by the
Buyer and fifty percent (50%) by the Sellers.
11.9 Replacement. If CPR is no longer in business or is unable or
refuses or declines to act or to continue to act under Section 11.2(b) of this
Agreement for any reason, then the functions specified in Section 11.2(b) to
be performed by CPR shall be performed by AAA.
11.10 Injunctive Relief Notwithstanding any provision to the contrary
contained in this Article II, in the event a remedy at law for a breach of any
provision would be inadequate, the non-breaching party shall be entitled to
seek temporary or permanent injunctive relief.
12. GENERAL PROVISIONS
12.1 Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of
this Agreement and the Contemplated Transactions, including all fees and
expenses of agents, representatives, counsel, and accountants.
12.2 Public Announcements. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions
will be issued, if at all, at such time and in such manner as Buyer
determines with prior notice, if possible, given to Sellers. Unless
consented to by Buyer in advance or required by Legal Requirements, prior to
the Closing Sellers shall, and shall cause the Company to, 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
Contemplated Transactions, and Buyer will have the right to be present for
any such communication.
12.3 Confidentiality. Between the date of this Agreement and the
Closing Date, Buyer and Sellers will maintain in confidence, and will cause
the directors, officers, employees, agents, and advisors of Buyer and the
Company to maintain in confidence, any written, oral, or other information
obtained in confidence, any written oral, or other information obtained in
confidence from another party or the Company in connection with this
Agreement or the Contemplated Transactions, unless (a) such information is
already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available through no
fault of such party, (b) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval
required for the consummation of the Contemplated Transactions, or (c) the
furnishing or use of such information is required by or necessary or
appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request.
12.4 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 telecopier (with written confirmation of receipt),
provided that a copy is mailed by registered mail, return receipt requested,
or (c) when received by the addressee, if sent by a nationally recognized
overnight delivery service (receipt requested), 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):
The Company or Sellers:
Drake Management Services, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Bonn, Luscher, Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxx X. Xxxxxxxx
Facsimile: (000) 000-0000
Buyer:
Xxxxxxxx Health Care, Inc.
Xxxxx 000
0000 Xxxx Xxxx Xxxxx, X.X.
Xxxxxx, Xxxxxxx 30080-3300
Attn: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
Sixteenth Floor
191 Peachtree Street, N.E.
Xxxxxxx, Xxxxxxx 00000
Attn.: Xxxxxx X. XxXxxxx, Esq.
Facsimile: (000) 000-0000
12.5 Further Assurances. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) 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.
12.6 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 by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except
in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of 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.
12.7 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter
(including the Letter of Intent between Buyer and Sellers dated December 5,
1997) 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.
12.8 Disclosure Letter.
(a) The disclosures in the Disclosure Letter must relate only
to the representations and warranties in the Section of the Agreement to
which they expressly relate and not to any other representation or warranty
in this Agreement.
(b) In the event of any inconsistency between the statements in
the body of this Agreement and those in the Disclosure Letter (other than an
exception expressly set forth as such in the Disclosure Letter with respect
to a specifically identified representation or warranty), the statements in
the body of this Agreement will control.
12.9 Assignments, Successors, and No Third-Party Rights. Neither
party may assign any of its rights under this Agreement without the prior
consent of the other parties except that Buyer may assign any of its rights
under this Agreement to any subsidiary 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 expressed or referred to in this Agreement will be construed to give
any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
12.10 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, 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.
12.11 Section Headings, Construction. 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. All words
used in this Agreement will be construed to be of such gender or number, as
the circumstances require. Unless otherwise expressly provided, the word
"including" does not limit the preceding words or terms.
12.12 Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
12.13 Governing Law. This Agreement will be governed by the laws of
the State of Arizona without regard to conflicts of laws principles.
12.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
BUYER:
XXXXXXXX HEALTH CARE, INC.
By: /s/ Xxxxx Xxxxxxxxx
--------------------------
Name: Xxxxx Xxxxxxxxx
Title: President & CEO
THE COMPANY:
DRAKE MANAGEMENT SERVICES, INC.
By: /s/ Xxxxxxx Xxxxx
--------------------------
Name: Xxxxxxx Xxxxx
Title: President
SELLERS:
Xxxxxxx Xxxxx
----------------------------------------
Drake Family Revocable Trust, Xxxxxxx
or Xxxxxx Xxxxx Trustee under agreement
dated September 17, 1991
By: Xxxxxxx Xxxxx, Trustee
/s/ Xxxxxxx Xxxxx
------------------------------
XXXXXXX XXXXX
/s/ Xxxxxx X. Xxxxx
------------------------------
XXXXXX XXXXX
/s/ Philippe Michelin
------------------------------
PHILIPPE MICHELIN
