EX-10.1 2 dex101.htm ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT BY AND BETWEEN PEDIATRIC SERVICES OF AMERICA, INC., AND MELMEDICA CHILDREN’S HEALTHCARE, INC. DATED: MAY 9, 2006 ASSET PURCHASE AGREEMENT
Exhibit 10.1
BY AND BETWEEN
PEDIATRIC SERVICES OF AMERICA, INC.,
AND
MELMEDICA CHILDREN’S HEALTHCARE, INC.
DATED: MAY 9, 2006
THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of May 9, 2006 by and between Pediatric Services of America, Inc., a Georgia corporation (the “Buyer”) and Melmedica Children’s Healthcare, Inc., an Illinois corporation (“Seller”).
Terms used in this Agreement are defined in Article 10 hereof.
ARTICLE 1
(a) All tangible personal property used or held for use in the operation of the Business, including all furniture, machinery, office furnishings, equipment and equipment leasehold improvements and all office and warehouse supplies existing on the Closing Date including, but not limited to, the items set forth on Schedule 1.1(a);
(b) All authorizations, permits and licenses necessary to operate the Business including, but not limited to, those set forth on Schedule 1.1(b);
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(c) All leases set forth on Schedule 1.1(c) including any and all security and other deposits, advance rents and any other payments made thereunder prior to the Closing (the “Assigned Leases”);
(d) Contracts and agreements relating to the Business set forth on Schedule 1.1(d) (the “Assigned Contracts”);
(e) All guarantees, warranties and rights of Seller against suppliers and manufacturers including, but not limited to, those set forth on Schedule 1.1(e);
(f) All intangible assets relating to the operation of the Business, including, but not limited to, all patents, trademarks, service marks and designs and those trade names and service names set forth on Schedule 1.1(f) hereto, data, information systems and software, and all telephone numbers and the goodwill in or arising from the operation of the Business;
(g) All prepaid items including, without limitation, all equipment, lease and other deposits existing on the Closing Date;
(h) All patient lists and patient medical or operating records, employment records, customer lists, customer contracts and financial records relating to the Business (copies of the foregoing documents may be provided to Buyer in lieu of originals where Seller is required by Law to retain original documentation; provided, further and in limitation of the foregoing with respect to patient medical records and employment records, Buyer will determine, and the bear the expense of copying, the specific patient medical records and employment records that Buyer desires to acquire and possess);
(i) Except for corporate records and minutes and those books, records and documents necessary for Seller to collect the Seller Receivables (including the Pledged Receivables), all books, records and documents owned by or required for the operation of the Business (copies of the foregoing documents may be provided to Buyer in lieu of originals where Seller is required by Law to retain original documentation), with Fifth Third Bank retaining reasonable right of access and inspection, upon reasonable prior notice, to books, records and documents pertaining to the Seller Receivables, including the Pledged Receivables;
(j) All inventory as of the close of business on the Closing Date and used in the operation of the Business (the “Inventory”); and
(l) Any and all assets of whatever type or description which are (i) reflected in the books and records of the Business, except to the extent any such assets have been disposed of in the ordinary course of business or (ii) used or held for use in the operation of the Business.
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(a) The total consideration to be paid by Buyer for the Assets shall be an aggregate of One Million Five Hundred Ninety Seven Thousand Six Hundred Sixty Eight Dollars ($1,597,668) (the “Purchase Price”), which shall be allocated among the Assets as provided in Section 1.7.
(b) At the Closing, the Aggregate Consideration shall be payable as follows:
(i) One Hundred Fifty Thousand Dollars ($150,000) (the “Primary Escrow Amount”) shall be placed in escrow for a period not to exceed one hundred and eighty (180) days after the Closing Date to be disbursed pursuant to the Primary Escrow Agreement in substantially the form attached hereto as Exhibit 4.10(a);
(ii) A cash payment by wire transfer of immediately available funds to such account or accounts as Fifth Third Bank shall designate in the aggregate amount of One Million Three Hundred Forty Seven Thousand Six Hundred Sixty Eight Dollars ($1,347,668); and,
(iii) One Hundred Thousand Dollars ($100,000) (the “Xxxxxx Escrow Amount”) shall be placed in escrow to be disbursed to Xx. Xxxxx Xxxxxx pursuant to the Xxxxxx Escrow Agreement in substantially the form attached hereto as Exhibit 4.10(b), which shall provide for the disbursement of such funds to Xx. Xxxxx Xxxxxx only in the event that Fifth Third Bank is paid all amounts owed to it pursuant to that certain promissory note, dated February 5, 2005, by and among Fifth Third Bank and Seller.
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necessary for Seller and/or Fifth Third Bank to collect the Seller Receivables (including the Pledged Receivables), and (x) without in any manner limiting the foregoing, those assets listed on Schedule 1.3(c) hereto (collectively, the “Retained Assets”).
(a) Any Liability for any incorrect, erroneous, improper or false xxxxxxxx or requests for reimbursements made by Seller or overpayments received by Seller under any Medicare, Medicaid, or other government or private payor arrangement in respect of goods or services provided on or prior to the Closing Date or any other violation of Laws or Orders on or prior to the Closing Date;
(b) Any Liability for failure by Seller to have complied with the terms of any corporate integrity programs or compliance plans with Regulatory Authorities;
(c) Any Liability arising out of any breach by Seller prior to or on or as a result of the Closing of any provision of the Seller Agreements (as defined herein) or any other contract to which Seller is a party;
(d) Any Liability arising prior to or as a result of the Closing, to any employee, agent, or independent contractor of Seller, whether or not employed by Buyer after the Closing, or under any benefit arrangement with respect thereto;
(e) All wages, commissions, vacation, holiday, workers’ compensation and sick pay obligations of Seller with respect to its employees, including, but not limited to, the employees engaged in the operation of the Business listed on Schedule 2.14(a), accrued through the Closing Date and all bonuses and fringe benefits as to such employees accrued through the Closing Date, and all severance pay obligations of Seller to employees resulting from the consummation of the transactions contemplated by the Agreement;
(f) Any Liability arising out of any employee benefit plan maintained by or covering employees of Seller, including, but not limited to, the Business Employees, or to which Seller has made any contribution or to which Seller could be subject to any Liability;
(g) Any Liability for any Taxes of Seller whether disputed or not, including any Liabilities or obligations of Seller relating to any transfer, sales, use, excise, realty transfer, controlling interest, recording, documentary stamp and other similar non-income Taxes and fees incurred in connection with the consummation of the transactions contemplated in this Agreement (“Transfer Taxes”) as set forth in Section 4.9, and
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including any Taxes resulting from any gain on the sale of the Assets pursuant to this Agreement, any Taxes related to the Assets or the Business with respect to Taxable periods ending on or prior to the Closing Date, and in the case of Taxable periods ending after the Closing Date (but beginning before the Closing Date), the portion of such periods ending on or prior to the Closing Date; and
(h) Any Liability related to, arising out of, or in connection with the Parties’ waiver of compliance with any Bulk Transfer Act or any similar statute as enacted in any jurisdiction, domestic or foreign (if applicable), including the defenses thereof and reasonable attorneys’ and other professional fees.
(i) Any Liability resulting from Seller’s acts or omissions made on or prior to the Closing Date.
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utilities; and (iii) other similar items. The net amount of all such prorations will be settled and paid on the Closing Date. In the event that the amount of any of the items to be prorated pursuant to this Section 1.8 is not known by Seller and Buyer at the Closing, the proration shall be made based upon the amount of the most recent cost of such item to Seller. After Closing, Buyer and Seller each shall provide to the other, promptly after receipt, each third party invoice relating to any items so estimated. Within ten (10) business days thereafter, Buyer and Seller shall make any payments to the other that are necessary to compensate for any difference between the proration made at the Closing and the correct proration based on the third party invoice, and amounts owed by Seller shall be considered a Retained Liability of Parent and amounts owed by Buyer shall be considered an Assumed Liability of Buyer.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
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therein and which have not been so set forth. Buyer has previously been provided with access to all of the minutes of Seller, which minutes accurately reflect in all material respects the proceedings of the board of directors (and all committees thereof) and shareholders of Seller.
2.5 Subsidiaries and Investments.
(a) Except as set forth on Schedule 2.5(a), Seller has not owned nor does it currently own, directly or indirectly, of record, beneficially or equitably, any capital stock or other equity, ownership or proprietary interest in any entity or Person, which has an ownership interest in the Assets.
(b) Except as listed on Schedule 2.5(b), Seller has not, within the last six (6) months and other than in the ordinary course of its business, sold or disposed of, by way of asset sale, stock sale, spin-off or otherwise, any assets or business in any way related to the Business or the Assets.
(a) The Business Financial Statements are set forth on Schedule 2.6(a) and fairly present in all material respects the results of operations for the Business and the Assets and Liabilities set forth therein for the periods set forth therein and have been prepared in accordance with generally accepted accounting principles consistently applied.
(b) Seller is able to pay its debts generally as they become due and is solvent (solvency is defined as assets exceeding the fair market value of liabilities) and will not be rendered insolvent as a result of the transactions contemplated hereby. Except as set forth on Schedule 2.6 (b), neither Seller nor any of its Affiliates is in breach or default of any obligation owed to any creditor for borrowed money or any other creditor who may have a Lien on any of its rights or assets, other than any person who is a lienholder by reason of being a lessor of property under an operating lease with such party. Neither Seller nor any of its Subsidiaries has, either voluntarily or involuntarily, (i) admitted in writing that it is or may become unable to pay its debts generally as they become due, (ii) filed or consented to the filing against it of a petition in bankruptcy or a petition to take advantage of an insolvency act, (iii) made an assignment for the benefit of its creditors, (iv) consented to the appointment of a receiver for itself or for the whole or any substantial part of its property, (v) had a petition in bankruptcy filed against it, or (vi) been adjudged a bankrupt or filed a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any Law or statute of the United States of America or any other jurisdiction, (vii) incurred, or believed or reasonably should have believed it would incur, debts that are or will be beyond its ability to pay as such debts mature.
(c) Set forth on Schedule 2.6(c) is a list of each creditor to which Seller has granted a security interest in any of the Assets other than in connection with personal property leases that are not material to the Business.
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(i) suffered any material adverse change in working capital, financial or otherwise condition, assets, liabilities, reserves, business or operations;
(ii) paid, discharged or satisfied any liability other than in the ordinary course of business;
(iii) written off as uncollectible any account receivable other than in the ordinary course of business;
(iv) compromised any debts, claims or rights or disposed of any of its properties or assets;
(v) entered into any commitments or transactions not in the ordinary course of business involving aggregate value in excess of $25,000 or made aggregate capital expenditures or commitments in excess of $25,000;
(vi) made any change in any method of accounting or accounting practice;
(vii) sold, assigned or transferred any tangible asset or any patents, trademarks, trade names, copyrights or other intangible assets;
(viii) subjected any of its assets, tangible or intangible, to any Lien;
(ix) increased any salaries, wages or employee benefits or made any arrangement for payment of any bonus or special compensation for any employee who devotes substantially all of their time to the operation of the Business other than in the ordinary course of business;
(x) hired or committed to hire any employee; or terminated any employee other than in the ordinary course of business;
(xi) terminated or amended any material contract, license or other instrument or suffered any loss or termination or of a threatened loss or termination of any existing material business arrangement or supplier;
(xii) sold or otherwise transferred any interest in the Business or the Assets;
(xiii) had any patients for whom xxxxxxxx in the preceding six (6) months exceeded $50,000 either: (a) transferred to the care of another home care provider; (b) expire; (c) discharged for any reason; (d) re-hospitalized; or (e) experience any change in their insurer or insurance coverage; or
(xiv) agreed, whether in writing or otherwise, to take any action described in this Section 2.7.
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2.10 No Violation of Law. Except as listed on Schedule 2.10, to the Knowledge of Seller:
(a) Seller has not been or is not currently in violation of any applicable local, state or federal Law, order, injunction or decree, or any other requirement of any governmental body, agency or Regulatory Authority or court related to the Business or the Assets.
(b) Seller is not subject to any fine, penalty, Liability or disability as the result of a failure to comply with any requirement of federal, state or local Law nor has Seller received any notice of such noncompliance related to the Business.
2.11 Title to Assets; Sufficiency of Assets and Employees; No Services.
(a) Except as set forth on Schedule 2.11(a), Seller (i) has good and valid title to all of the personal and mixed, tangible and intangible property, rights and assets included among the Assets which Seller purports to own; (ii) owns such rights, assets and personal property free and clear of all Liens; and (iii) will, upon the Closing, convey good and valid title to the Assets to Buyer free and clear of any and all Liens. All of the Assets, whether owned or leased, are and will be in the possession and control of and owned by Seller at the Closing, and no other party has any right or interest in or to the Assets.
(b) The Assets, in conjunction with the rights under the other Acquisition Documents, comprise all of the assets currently used or held for use by the Seller to operate, and are collectively sufficient to provide Buyer with the means and capability to operate, the Business, as and in the manner the Business has been performed by the Seller prior to the date of this Agreement.
(c) Except as set forth on Schedule 2.11(c), there are no services being provided by any Affiliate of Seller that are necessary for the operation of the Business by Buyer after the Closing Date in the manner the Business has been performed by the Seller prior to the date of this Agreement.
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(d) Buyer will reasonably cooperate with Seller and Fifth Third Bank regarding the collection of the Seller Receivables, including the Pledged Receivables; provided, further, Buyer acknowledges and agrees that it will not retain any Seller Receivables, including the Pledged Receivables, which, to Buyer’s Knowledge, are inadvertently or incorrectly remitted to Buyer. Seller and Business Employees will reasonably cooperate and assist Fifth Third Bank with the collection of the Pledged Receivables; provided, further and without limiting the foregoing, Seller agrees that it will immediately turn over any funds received on account of the Pledged Receivables to Fifth Third Bank and direct that parties obligated on the Pledged Receivables tender payment to such addresses as provided by Fifth Third Bank.
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2.12 Real, Personal and Intellectual Property.
(a) Seller does not own any real property used in the operation of the Business. Schedule 2.12(a) contains a true and correct description of all real property leased by Seller and used in the Business, including all tenant improvements located thereon (the “Facilities”). The Facilities are the only real property and improvements used primarily in the Business. Seller has valid and binding leases for each such property, true and complete copies of which have been made available to Buyer, and (i) the Seller is current with respect to all payments due under such leases, (ii) Seller has complied in all material respects with its obligations under such leases, and (iii) there are no defaults under any such lease that remain uncured and no condition exists which, with the lapse of time or giving of notice, or both, would give rise to a default under any such lease. No condemnation or similar actions are currently in effect or, to the Knowledge of Seller, pending against any part of any such real property leased by the Seller in connection with the Business. Further, Seller has not been expressly notified of a threatened condemnation or similar action against any part of any such real property leased by the Seller in connection with the Business. To the Knowledge of Seller, there are no encroachments, leases, easements, covenants, restrictions, reservations or other burdens of any nature which could reasonably be expected to impair the use of any such leased real property in a manner consistent with past practices nor does any part of any building structure or any other improvement thereon encroach on any other property.
(b) Except as set forth on Schedule 2.12(b), to the Knowledge of Seller the present zoning, subdivision, building and other ordinances and regulations applicable to the leased real property listed on Schedule 2.12(a) permit the continued operation, use, occupancy and enjoyment of such real property consistent with past practices, and, with respect to such leased real property, Seller has received no notices of violations of, and to the Knowledge of Seller, Seller is in compliance with, any applicable zoning, subdivision or building regulation, ordinance or other Law, regulation, or requirement. Seller has all rights and easements necessary for public ingress thereto and egress therefrom and for the provision of all utility services thereto, including any required curb cut or street opening permits or licenses for vehicular access over presently existing roads and driveways. No portion of the leased real property listed on Schedule 2.12(a), or any building, structure, fixture or improvement thereon, is the subject of, or affected by, any condemnation, taking, eminent domain or inverse condemnation proceeding currently instituted or pending, and none of the foregoing are, or, to the Knowledge of the Seller will be, the subject of, or affected by, any such proceedings.
(c) The tangible property included in the Assets is in good operating condition and repair, ordinary wear and tear excepted, and, except as disclosed on Schedule 2.12(c), includes all rights, properties, interests in properties, and assets necessary to permit Buyer to continue the Business after the Closing Date in a manner consistent with past practices. The Seller has only conducted the Business under such names and at such locations as are identified on Schedule 2.12(c), and all of the Assets are currently located at those locations identified on Schedule 2.12(a).
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(d) Schedule 2.12(d) contains a complete and correct list of all trademarks, trade names, service marks, service names, brand names, copyrights, technology rights and licenses, know-how, software and patents, registrations thereof and applications therefor, and any other intellectual property used in the Business, together with a complete list of all licenses granted by or to Seller with respect to any of the foregoing. Seller is not currently in receipt of any notice of any violation or infringement of, and has no reason to believe that the operation of the Business is violating or infringing, the rights of others with respect to any such matter. No proceedings have been instituted or are pending or threatened, which challenge the rights of Seller with respect to the intellectual property used, sold or licensed by Seller in the course of the Business. Except as set forth on Schedule 2.12(d), Seller is not obligated to pay any recurring royalties to any Person with respect to intellectual property related to the Business.
(e) Seller will cooperate with Buyer to convey to Buyer in an orderly fashion all software, systems, data and any licenses or any other rights related thereto used by the Business.
2.13 Contracts and Commitments.
(a) Schedule 2.13(a) contains a complete and accurate list of all contracts, agreements, commitments, instruments and obligations (whether written or oral, proposed, contingent or otherwise, but, excluding such obligation requiring financial payments or commitments of less than $2,500 per year) of the Seller, which relate to or affect the Business or the Assets (the “Seller Agreements”) including those concerning the following matters:
(i) the lease, as lessee or lessor, or license, as licensee or licensor, of any real or personal property (tangible or intangible);
(ii) the employment or engagement of any officer, director, employee, consultant or agent, other than those terminable at will without severance obligation, and any covenant not to compete with any former employees;
(iii) any contract or commitment that requires financial payments in the aggregate in excess of $10,000 or performance over a period of more than thirty (30) days;
(iv) any arrangement with any person or entity affiliated with or related to Seller or any Affiliate of Seller or any immediate family member thereof;
(v) any arrangement limiting the freedom of Seller to compete, solicit customers or solicit employees in any manner in any geographic area or line of business, or requiring Seller to share profits;
(vi) any arrangement not in the ordinary course of business under which Seller has agreed to assume Liabilities of another party or indemnify or hold harmless another party;
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(vii) any arrangement that could reasonably be anticipated to have a Seller Material Adverse Effect;
(viii) any arrangement not in the ordinary course of business;
(ix) any power of attorney, whether limited or general, granted by or to Seller;
(x) any charitable commitment in excess of $2,000 individually per year;
(xi) any arrangement with customers, patients, managed care organizations, third party payors, pharmacy benefit managers or drug suppliers that requires financial payments in the aggregate in excess of $10,000 per year or performance over a period of more than thirty (30) days; and
(xii) any other arrangement that requires performance for a period of more than thirty (30) days or that requires aggregate payments in excess of $10,000.
(b) Seller has delivered to Buyer true and complete copies of all of the written Seller Agreements. Except as indicated on Schedule 2.13(b), the Seller Agreements are valid and effective in accordance with their terms, and there is not under any of Seller Agreements (i) any existing or claimed default by Seller or event which, with the notice or lapse of time, or both, would constitute a default by Seller or (ii) to the Knowledge of Seller any existing or claimed default by any other party or event which with notice or lapse of time, or both, would constitute a material default by any such party. Except as indicated on Schedule 2.13(b), the continuation, validity and effectiveness of the Seller Agreements will not be affected by the Acquisition, and the Acquisition will not result in a breach of or default under, or require the Consent of any other party to, any of the Seller Agreements. There is no actual or threatened termination, cancellation or limitation of Seller Agreements identified in Section 2.13(a). To the Knowledge of the Seller, there is no pending or threatened bankruptcy, insolvency or similar proceeding with respect to any other party to the Seller Agreements.
2.14 Employment and Labor Matters.
(a) Other than the Business Employees listed on Schedule 2.14(a), there are no other employees of Seller whose services are engaged in the Business.
(b) With respect to the Business Employees, Seller has complied at all times in all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment, wages and hours, and occupational safety and health, including Laws concerning unfair labor practices within the meaning of Section 8 of the National Labor Relations Act, and the employment of non-residents under the Immigration Reform and Control Act of 1986.
(c) Except as disclosed on Schedule 2.14(b), with respect to the Business:
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(i) there are no charges, governmental audits, investigations, administrative proceedings or complaints concerning the employment practices of Seller pending, nor has Seller been expressly notified of any such matters being threatened, before any federal, state or local agency or court and, to the Knowledge of Seller, no basis for any such matter exists;
(ii) there are no inquiries, investigations or monitoring of activities pending, nor has Seller been expressly notified of any such matters being threatened by any state professional board or agency charged with regulating the professional activities of any licensed, registered, or certified professional personnel employed by, credentialed or privileged by, or otherwise affiliated with Seller and who provides services to the Business;
(iii) Seller is not a party to any union or collective bargaining agreement, no union attempts to organize its employees have been made, nor are any such attempts now threatened;
(iv) Seller has not experienced any organized slowdown, work interruption, strike, or work stoppage by any of its employees; and
(v) Seller will not incur any Liability to any employee or, to the Knowledge of Seller, violate any applicable Laws respecting employment and employment practices as a result of this Acquisition.
2.15 Employee Benefit Matters.
(a) The Business Employees receive benefits or are eligible under only the employee pension benefit plans, as defined in Section 3(2) of ERISA, as are listed on Schedule 2.15(a) (the “Pension Plans”). Except as disclosed on Schedule 2.15(a), Seller has never maintained or contributed to any other employee pension benefit plan, as defined in Section 3(2) of ERISA.
(b) The Business Employees receive benefits or are eligible under only the employee welfare benefit plans, as defined in Section 3(1) of ERISA (including but not limited to, life insurance, medical, hospitalization, holiday, vacation, disability dental and vision plans) as are listed on Schedule 2.15(b) (the “Welfare Plans”).
(c) The Business Employees receive benefits or are eligible under only the compensation programs and/or employment arrangements, (including but not limited to, any written or unwritten incentive compensation, fringe benefit, payroll or employment practice, bonus, option, employee stock ownership, stock purchase, severance, sick pay, salary continuation, deferred compensation, supplemental executive compensation plans, employment agreements and consulting agreements for the benefit of their officers, directors, employees, former employees, or independent contractors) as are listed on Schedule 2.15(c) (the “Compensation Programs”).
(d) To the extent applicable, each Pension Plan, Welfare Plan and Compensation Program has been operated and administered in material compliance with
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ERISA, the Code and all other statutes, rules and regulations, agreements and instruments by which it is governed. Seller has not received any notice from any Regulatory Authority questioning or challenging such compliance. Each Pension Plan which is intended to be qualified under Section 401(a) of the Code has been determined by the IRS to be so qualified or a request for such determination has been timely filed with the IRS (and Seller does not have Knowledge that any event has occurred between the date of the last such determination and the Closing Date that would cause the Internal Revenue Service to revoke such determination).
(e) All amounts required to be paid by Seller with respect to any Business Employee under each Pension Plan, Welfare Plan and Compensation Program on or before the Closing Date have been paid or will be paid prior to the Closing Date. All liabilities arising out of or related to the Pension Plans, Welfare Plans, or Compensation Programs of Seller are reflected on the Business Financial Statements in accordance with generally accepted accounting principles.
(f) Except as set forth on Schedule 2.15(f), neither the execution and delivery of this Agreement nor the consummation of any of the transactions contemplated hereby will (i) result in any payment (including, without limitation, severance, unemployment compensation, golden parachute or otherwise) becoming due to any Business Employee, (ii) increase any benefits otherwise payable under any Pension Plan, Welfare Plan or Compensation Program to any such Business Employee, or (iii) result in any acceleration of the time of payment or vesting of any such benefits.
(g) Seller nor any of its ERISA Affiliates has at any time sponsored, contributed to, or been obligated under Title I or Title IV of ERISA to contribute to a “defined benefit plan” (as defined in ERISA 3(35)). None of Seller nor its ERISA Affiliates have ever had an “obligation to contribute” (as defined in ERISA Section 4212) to a “multiemployer plan” (as defined in ERISA Sections 4001(a)(3) and 3(37)(A). Seller has no liability under Title IV of ERISA either directly or through their ERISA Affiliates, including any liability that could arise as a result of any Seller’s membership in a “controlled group” as defined in ERISA Section 4001(a)(14) and ERISA Section 4001(b)(1).
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or present any claim thereunder in due and timely fashion. Seller has not been refused, or denied renewal of, any insurance coverage by insurance companies offering such insurance in connection with the ownership or use of the Assets or the operation of the Business. Seller has provided to Buyer correct and complete copies of all insurance audit reports, loss prevention reports, all claims made and loss history reports in respect of any insurance maintained by Seller or any predecessor of Seller, including under any organized plan of self insurance, relating to the Business during the past five (5) years. All professional and general liability insurance covering the Business is and has been “claims made” insurance.
(a) Except as set forth on Schedule 2.17(a), to Seller’s Knowledge Seller’s operation of the Business and its Facilities is, and has at all times been, in compliance with all Environmental Laws. Except as disclosed on Schedule 2.17(a), there is no Litigation pending or, to Seller’s Knowledge, threatened before any Regulatory Authority or other forum in which Seller or any of its Facilities has been, or with respect to pending Litigation, may be named as a defendant (i) for alleged noncompliance (including by any predecessor) or with Liability under any Environmental Law or (ii) relating to the release, discharge, spillage, or disposal into the environment of any Hazardous Material, whether or not occurring at, on, under, adjacent to, or affecting (or potentially affecting) a site currently or formerly owned, leased, or operated by Seller or any of its Facilities, nor, to the Knowledge of Seller, is there any reasonable basis for any Litigation of a type described in this sentence.
(b) Except as disclosed on Schedule 2.17(b), during the period of (i) Seller’s ownership or operation of any of its current properties, or (ii) Seller’s participation in the management of any Facility, there have been no releases, discharges, spillages, or disposals of Hazardous Material in, on, under, adjacent to, or affecting (or potentially affecting) such properties.
(c) Schedule 2.17(c) contains a true, complete and accurate listing and description of each facility or location at which Seller has been named as or alleged to be a responsible party or potentially responsible party under any Environmental Law in connection with the release, disposal, transportation or arrangement for the release, disposal or transportation of Hazardous Materials.
(d) Seller has obtained all permits, licenses, approvals, Consents, Orders, and authorizations which are required under any Environmental Law in connection with the ownership, use, or lease of the Assets (“Environmental Permits”). Schedule 2.17(d) contains a true, complete and accurate listing and description of, and Seller has delivered, or caused to be delivered or made available, to Buyer true and complete copies of each Environmental Permit. Except as described on Schedule 2.17(d), Seller is in compliance with each such Environmental Permit, and no Environmental Permit restricts Seller from operating any equipment covered by such Environmental Permit as currently conducted.
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(e) Seller has delivered, or caused to be delivered or made available, to Buyer true and complete copies of each contract or agreement under which the Seller retained Liability for environmental matters, agreed to indemnify third parties with respect to environmental matters, or is indemnified by a third party with respect to environmental matters.
(a) Seller has timely filed with the appropriate Taxing authorities all Tax Returns in all jurisdictions in which Tax Returns are required to be filed, and such Tax Returns are correct and complete in all respects. Seller is not the beneficiary of any extension of time within which to file any Tax Return. All Taxes of Seller (whether or not shown on any Tax Return) have been fully and timely paid. There are no Liens for any Taxes (other than a Lien for current real property or ad valorem Taxes not yet due and payable) on any of the Assets of Seller. No claim has ever been made by an authority in a jurisdiction where Seller does not file a Tax Return that such entity may be subject to Taxes by that jurisdiction.
(b) Seller has not received any notice of assessment or proposed assessment in connection with any Taxes, and there are no pending or, to Seller’s Knowledge, threatened disputes, claims, audits or examinations regarding any Taxes of Seller or the assets of Seller. No officer or employee responsible for tax matter of Seller expects any Taxing authority to assess any additional Taxes for any period for which Tax Returns have been filed. Seller has not waived any statute of limitations in respect of any Taxes or agreed to a Tax assessment or deficiency.
(c) Seller has complied with all applicable Laws, rules and regulations relating to the withholding of Taxes and the payment thereof to appropriate authorities, including Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee or independent contractor, and Taxes required to be withheld and paid pursuant to Sections 1441 and 1442 of the Internal Revenue Code or similar provisions under foreign Law.
(d) The unpaid Taxes of Seller (i) did not, as of the most recent fiscal month end, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the most recent balance sheet (rather than in any notes thereto) for Seller and (ii) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with past custom and practice of Seller in filing its Tax Returns.
(e) Seller is not a party to any Tax allocation or sharing agreement and Seller has not been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which is Parent) or has any Tax Liability of any Person under Treasury Regulation Section 1.1502-6 or any similar provision of state, local or foreign Law (other than the other members of the consolidated group of which Parent is parent), or as a transferee or successor, by contract or otherwise.
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2.19 Licenses, Authorizations and Provider Programs.
(a) Set forth on Schedule 2.19(a)(i) is a correct and complete list of all (i) licenses, accreditations, permits and other rights held by Seller and (ii) provider agreements under all Government Programs and Private Programs related to the Business, complete and correct copies of which have been provided to Buyer. True, complete and correct copies of all surveys of Seller or its predecessors in interest related to the Business and conducted in connection with any Government Program, Private Program or licensing or accreditor body during the past three (3) years have been provided to Buyer. Except as set forth on Schedule 2.19(a)(ii), Seller holds all valid licenses, accreditations, permits, certificates, consents, exceptions, authorizations and other rights required by Law, ordinance, regulation or ruling of any Regulatory Authority necessary to operate the Business. Except as disclosed on Schedule 2.19(a)(iii), Seller is certified for participation and reimbursement under Titles XVIII and XIX of the Social Security Act (the “Medicare and Medicaid programs”) (Medicare and Medicaid programs and such other similar federal, state or local reimbursement or governmental programs for which Seller is eligible are hereinafter referred to collectively as the “Government Programs”) and has current provider agreements for such Government Programs and with such private non-governmental programs, including without limitation, any private insurance program under which they directly or indirectly are presently receiving payments (such non-governmental programs herein referred to as “Private Programs”).
(b) Except as disclosed on Schedule 2.19(b), to Seller’s Knowledge no violation, default, order or deficiency exists with respect to any of the items listed on Schedule 2.19(a)(i). Seller has not received any notice of any action, investigation, inquiry or informational request pending or recommended by any Regulatory Authority having jurisdiction over the items listed on Schedule 2.19(a)(i), either to revoke, withdraw, limit or suspend any license, right or authorization or to suspend, terminate the participation of Seller in any Government Program or Private Program. No event has occurred which, with the giving of notice, the passage of time, or both, would constitute grounds for a violation, order or deficiency with respect to any of the items listed on Schedule 2.19(a)(i) or to revoke, withdraw, or suspend any such license, or to terminate or modify the participation of Seller in any Government Program or Private Program. Except as set forth on Schedule 2.19(b), since January 1, 2006, there has been no decision not to renew any provider or third-party payor agreement of Seller. Except as listed on Schedule 2.19(b), no Consent or approval of, prior filing with or notice to, or any action by, any governmental body or agency or any other third party is required in connection with the transfer or change of ownership of such license, accreditation, permit, certificate or Government Program or Private Program, by reason of the assignment thereof to Buyer at the Closing, and the continued operation of the Business by Buyer thereafter on a basis consistent with past practices. No Business Employee or agent or contractor engaged by Seller in connection with the Business has been excluded from, suspended from or prohibited from providing services under any federal or state program, including but not limited to any federal or state health care program such as Medicare and Medicaid.
(c) With respect to the Business, Seller has timely filed all reports and xxxxxxxx required to be filed by it prior to the date hereof with respect to the Government
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Programs and Private Programs, all fiscal intermediaries and other insurance carriers and all such reports and xxxxxxxx are complete and accurate in all material respects and, to Seller’s Knowledge, have been prepared in compliance with all applicable Laws, regulations, policies, terms and conditions and principles governing reimbursement and payment of claims. True and complete copies of such reports and xxxxxxxx for the most recent year have heretofore been made available to Buyer. Set forth on Schedule 2.19(c)(i) is a true and complete list of any refunds, overpayments , discounts or adjustments in excess of $5,000 paid to any single Government Program or Private Program by the Business since January 1, 2006. Seller has paid or caused to be paid all known and undisputed refunds, overpayments, discounts or adjustments which have become due pursuant to such reports and xxxxxxxx and has no Liability under any Government Program or Private Program (known or unknown, contingent or otherwise) for any refund, overpayment, discount or adjustment. Except as set forth on Schedule 2.19(c)(ii), (i) there are no pending appeals, adjustments, challenges, audits, claims, litigation, or notices of intent to audit such prior reports or xxxxxxxx, and (ii) during the last two (2) years Seller has not been audited or otherwise examined by any Government Program or Private Program. There are no other reports required to be filed by Seller in order to be paid under any Government Program or Private Program for services rendered in connection with the Business, except for cost reports not yet due.
(d) Seller is not subject to any corporate integrity agreements or any other agreements, corporate integrity programs, regulatory guidance or compliance plans with any Regulatory Authority. Seller has provided Buyer with true, correct and complete copies of any corporate integrity agreements and any other agreement, corporate integrity program or compliance plan that is applicable to Seller or any Affiliate of Seller.
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regulation or standard. Attached to Schedule 2.20 are copies of all reports, correspondence, notices and other documents relating to any matter described or referenced therein.
(a) offered, paid, solicited or received anything of value, paid directly or indirectly, overtly or covertly, in cash or in kind (“Remuneration”) to or from any physician, family member of a physician, or an entity in which a physician or physician family member has an ownership or investment interest, including, but not limited to:
(i) payments for personal or management services pursuant to a medical director agreement, consulting agreement, management contract, personal services agreement, or otherwise;
(ii) payments for the use of premises leased to or from a physician, a family member of a physician or an entity in which a physician or family member has an ownership or investment interest; or
(iii) payments for the acquisition or lease of equipment, goods or supplies from a physician, a family member of a physician or an entity in which a physician or family member has an ownership or investment interest;
(b) offered, paid, solicited or received any Remuneration (excluding fair market value payments for services, equipment or supplies) to or from any healthcare provider, pharmacy, drug or equipment supplier, distributor or manufacturer, including, but not limited to:
(i) payments or exchanges of anything of value under a warranty provided by a manufacturer or supplier of an item to a Seller; or
(ii) discounts, rebates, or other reductions in price on a good or service received by Seller;
(c) offered, paid, solicited or received any Remuneration to or from any person or entity in order to induce business, including, but not limited to, payments intended not only to induce referrals of patients, but also to induce the purchasing, leasing, ordering or arrangement for any good, facility, service or item;
(d) entered into any joint venture, partnership, co-ownership or other arrangement involving any ownership or investment interest by any physician, or family member of a physician, or an entity in which physician or physician family member has an ownership or investment interest, directly or indirectly, through equity, debt, or other means, including, but not limited to, an interest in an entity providing goods or services to Seller;
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(e) entered into any joint venture, partnership, co-ownership or other arrangement involving any ownership or investment interest by any person or entity that is or was in a position to make or influence referrals, furnish items or services to, or otherwise generate business for Seller; or
(f) entered into any agreement providing for the referral of any patient for the provision of goods or services by Seller, or payments by Seller as a result of any referrals of patients to Seller.
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2.25 Accounts Receivable; Inventories.
(a) Except as set forth on Schedule 2.25(a), the accounts receivable reflected in the Business Financial Statements, and all accounts receivable related to the Business arising since January 1, 2006, arose from bona fide transactions in the ordinary course of business. Except as set forth on Schedule 2.25(a), the accounts receivable reflected in the Business Financial Statements have been properly recorded and reserved against consistent with past practice. No such account receivable has been assigned or pledged to any other person, firm or corporation other than to Fifth Third Bank or is subject to any right of set off other than to Fifth Third Bank. Reasonable provision has been made in the Business Financial Statements for collection losses, contractual discounts and other adjustments from third party payers.
(b) All items of Inventory of the Seller will, at the Closing, consist of items of a quality and quantity usable and saleable in the ordinary course of business and conform to generally accepted standards in the industry in which the Business is a part. Except as set forth on Schedule 2.25(b), since January 1, 2006, no Inventory has been sold or disposed of, except through sales in the ordinary course of business, and in no event at prices less than the book value of such Inventory as of January 1, 2006
(a) Except as disclosed on Schedule 2.26(a), the relationships between the Seller and all customers, clients, third party payors, patients, Employees and vendors who receive goods and services from or provide goods and services to Seller are satisfactory, and Seller has no Knowledge of (i) any facts or circumstances which might materially alter, negate, impair or in any way adversely affect the continuity of any such relationships or (ii) any complaints, claims, threats of which Seller has received express notice, plans or intentions to discontinue or curtail relations under any such relationships. Seller is not under any obligation with respect to the return of goods in the possession of customers or patients related to the Business.
(b) Except as disclosed on Schedule 2.26(b), Seller has no Knowledge of any present or future condition or state of facts or circumstances which would prevent the Business from being carried on by Buyer after the Closing Date in the same manner as it is presently being carried on.
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governmental employee or other person or entity who is or may be in a position to help or hinder the Business (or assist Seller in connection with any actual or proposed transaction) which, in the case of either clause (i) or clause (ii) above, would reasonably be expected to subject Seller to any damage or penalty in any civil, criminal or governmental Litigation. Neither Seller nor any officer, director, employee or agent of Seller has used any funds for unlawful contributions, gifts, entertainment or other expenses relating to political activity or otherwise, or has made any direct or indirect unlawful payment to governmental officials or employees from Seller’s funds or been reimbursed from Seller’s funds for any such payment, or is aware that any other person associated with or acting on behalf of Seller has engaged in any such activities.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
3.1 Organization, Authority and Capacity. Buyer is a corporation, duly organized, validly existing and in good standing under the laws of the State of Georgia. Buyer has the full power and authority necessary to (i) execute, deliver and perform its obligations under the Acquisition Documents to be executed and delivered by it, and (ii) carry on its business as it has been and is now being conducted and to own and lease the properties and assets which it now owns or leases. Buyer is duly qualified to do business and is in good standing in each jurisdiction in which a failure to be so qualified or in good standing would have a material adverse effect on Buyer.
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conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, require any notice under, or accelerate or permit the acceleration of any performance required by the terms of any agreement, instrument, license or permit to which Buyer is a party or by which any of Buyer’s properties are bound.
ARTICLE 4
4.1 Consent of Regulatory Authorities.
(a) The Parties hereto shall cooperate with each other and use their reasonable efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings and to obtain as promptly as practicable all Consents of all Regulatory Authorities and other Persons which are necessary or advisable to consummate the Acquisition and the other transactions contemplated by this Agreement. The Parties agree that they shall consult with each other with respect to the obtaining of all Consents of all Regulatory Authorities and other Persons necessary or advisable to consummate the transactions contemplated by this Agreement and each Party shall keep the other apprised of the status of matters relating to consummation of the transactions contemplated herein. Each Party also shall promptly advise the other upon receiving any communication from any Regulatory Authority or other Person whose Consent is required for consummation of the transactions contemplated by this Agreement which causes such Party to believe that there is a reasonable likelihood that any requisite Consent shall not be obtained or that the receipt of any such Consent will be materially delayed.
(b) The Seller and Buyer will coordinate causing the Seller’s licenses, permits, supply agreements, agreements with customers and other material contracts related to the Business to be transferred to Buyer and where appropriate Buyer shall apply, at Buyer’s expense, for any change of ownership required for government licenses or permits or for new licenses or permits to enable Buyer to operate the Business from and after the Closing Date. In the event that any license or contract cannot be transferred and such failure is material to Buyer, the Seller will reasonably cooperate in making alternate arrangements acceptable to Buyer in order to facilitate Buyer’s ability to conduct the Business in the same manner as conducted by the Seller prior to the Closing.
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4.3 Confidentiality Agreements.
(a) The Parties acknowledge and affirm the Confidentiality Agreement between them and their Affiliates, dated February 9, 2006 (the “Confidentiality Agreement”).
(b) The Parties shall take all reasonable commercial actions to maintain the confidentiality of the confidential information and trade secrets relating to the Business and to enforce the provisions of its confidentiality agreements with other Persons, including such reasonable commercial actions as requested by Buyer or Seller, as the case may be.
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parties agree that this Agreement shall be and become null and void in the event that the shareholders of Seller do not provide the requisite approval described and referenced herein.
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ARTICLE 5
5.2 Affirmative Covenants of Seller.
(a) From the date hereof until the earlier of the Closing Date or the termination of this Agreement, unless the prior written consent of Buyer shall have been obtained, such consent not to be unreasonably withheld or denied, and except as otherwise expressly contemplated herein, Seller shall to the extent any of the following relates to or in any way may effect the Acquisition or the Assets:
(i) operate the Business only in the usual, regular and ordinary course of business, consistent with past practices;
(ii) use reasonable commercial efforts to preserve intact their business organization, licenses, permits, government programs, private programs and customers;
(iii) use reasonable commercial efforts to retain the services of their employees, agents and consultants on terms and conditions not less favorable than those existing prior to the date hereof and to ensure that there are no material or adverse changes to employee relations;
(iv) keep and maintain their assets in their present condition, repair and working order, except for normal depreciation and wear and tear, and maintain its insurance, rights and licenses;
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(v) pay all accounts payable of Seller in accordance with past practice and collect all accounts receivable in accordance with past practice, but not less than in accordance with prudent business practices;
(vi) confer on a regular and frequent basis with one or more designated representatives of Buyer to report material operational matters and to report the general status of ongoing Business operations;
(vii) make available to Buyer true and correct copies of all internal management and control reports (including aging of accounts receivable, listings of accounts payable, and inventory control reports) and available financial statements of Seller;
(viii) cause all Tax Returns relating the Business or the Assets that are due and have not been filed prior to the date hereof or which become due prior to the Closing Date (taking into account valid extensions), to be prepared and filed on or before the date such Tax Return is required to be filed; provided, however, that any such Tax Return shall be prepared in accordance with past practice and custom unless Seller reasonably determines that changes are required by changes in facts or applicable Law;
(ix) perform in all material respects all obligations under agreements relating to or affecting its assets, properties or rights, except for the failure of which performance would not have a material adverse effect on the Business taken as a whole, financial or otherwise;
(x) keep in full force and effect present insurance policies or other comparable insurance coverage; and
(xi) notify Buyer of (i) any event or circumstance which is reasonably likely to have a Seller Material Adverse Effect or would cause or constitute a breach of any representations, warranties or covenants of Seller contained herein; (ii) any change in the normal course of business or in the operation of the assets of the Business, or (iii) of any governmental complaints, investigations or hearings (or communications indicating that the same may be contemplated), any adjudicatory proceedings, any budget meetings or any submissions involving the Assets. Seller shall keep Buyer fully informed of such events and permit Buyer’s representatives prompt and reasonable access to all materials prepared in connection therewith.
(xii) Cooperate with Fifth Third Bank as set forth in Section 2.11(d).
(b) Seller shall provide Buyer such information and supporting documentation as reasonably requested by Buyer to support the representations and warranties made by Seller pursuant to Sections 2.6(a) and 2.6(b) hereof.
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5.3 Negative Covenants of Seller.
(a) From the date hereof until the earlier of the Closing Date or the termination of this Agreement, Seller will not, other than as contemplated hereby or as disclosed on Schedule 5.3(a), do any of the following without the prior written consent of Buyer to the extent any of the following relates to or in any way may affect the Acquisition, the Business or the Assets:
(i) take any action which would (a) adversely affect the ability of any party to the Acquisition Documents to obtain any Consents required for the transactions contemplated thereby, or (b) adversely affect the ability of any party hereto to perform its covenants and agreements under the Acquisition Documents;
(ii) amend any of its organizational or governing documents, except for the purpose of accomplishing the transactions contemplated by this Agreement;
(iii) impose, or suffer the imposition, on any material asset of Seller of any Lien or permit any such Lien to exist;
(iv) other than pursuant to the Acquisition Documents, sell, pledge or encumber, or enter into any contract to sell, pledge or encumber, any interest in the assets of Seller;
(v) purchase or acquire any assets or properties related to the Business, whether real or personal, tangible or intangible, or sell or dispose of any assets or properties, whether real or personal, tangible or intangible, except in the ordinary course of business and consistent with past practices;
(vi) grant any increase in compensation or benefits to any Business Employee, except in accordance with past practice; pay any severance or termination pay or any bonus other than pursuant to written policies or written contracts in effect as of the date hereof and disclosed on Schedule 5.3(a)(vi); enter into or amend any severance agreements with any Business Employee;
(vii) enter into or amend any employment contract between Seller and any Business Employee (unless such amendment is required by law) that Seller does not have the unconditional right to terminate without Liability (other than compensation for services already rendered), at any time on or after the Closing Date;
(viii) except as disclosed in Schedule 5.3(a)(viii), adopt any new employee benefit plan or make any material change in or to any existing Business Employee benefit plans other than any such change that is required by law or that, in the opinion of counsel, is necessary or advisable to maintain the tax qualified status of any such plan except as disclosed in Schedule 5.3(a)(viii);
(ix) commence any Litigation other than in accordance with past practice, settle any Litigation involving any Liability of Seller for material money damages or restrictions upon the operations of the Business;
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(x) except in the ordinary course of business and which is not material, modify, amend or terminate any material contract or waive, release, compromise or assign any material rights or claims;
(xi) except in the ordinary course of business and, even if in the ordinary course of business, then not in an amount to exceed $10,000 in the aggregate, make or commit to make any capital expenditure, or enter into any lease of capital equipment as lessee or lessor, related to the Business;
(xii) make any loan to any person or increase the aggregate amount of any loan currently outstanding to any person;
(xiii) make any significant change in any Tax or accounting methods or systems of internal accounting controls, except as may be appropriate to conform to changes in Tax Laws or regulatory accounting requirements or generally accepted accounting principles;
(xiv) except in the ordinary course of business and which is not material, modify, amend or terminate any material contract or waive, release, compromise or assign any material rights or claims;
(xv) take any action, or omit to take any action, which would cause any of the representations and warranties contained in Article 2 to be untrue or incorrect;
(xvi) modify, amend or terminate any of the insurance policies listed on Schedule 2.16.
(xvii) take any action, or omit to take any action, that would adversely impact the ability of Seller to complete the Acquisition upon the terms and conditions set.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
6.1 Conditions to Obligations of Each Party.
The respective obligations of each Party to perform this Agreement and consummate the Acquisition and the other transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by both Parties pursuant to Section 11.3:
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6.2 Conditions to Obligations of Buyer.
The obligations of Buyer to perform this Agreement and consummate the Acquisition and the other transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by Buyer pursuant to Section 11.3:
(c) Material Adverse Effect. No Seller Material Adverse Effect shall have occurred and be continuing.
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(i) Bills of sale in favor of Buyer and, at the direction of Buyer in such form as shall be mutually agreed to by the Parties for the transfer of the Assets, and all such other endorsements, assignments and other instruments as Buyer may reasonably request and are reasonably necessary to transfer to Buyer good and marketable title to the Assets (the “Conveyance Documents”);
(ii) Assignment and assumption agreements in favor of Buyer in such form as shall be mutually agreed to by the Parties, for the Assumed Liabilities (the “Assignment and Assumption Agreements”);
(iii) The Primary Escrow Agreement and the Xxxxxx Escrow Agreement substantially in the forms attached hereto as Exhibit 4.10(a) and Exhibit 4.10(b), respectively; and
(f) Lien Releases. Buyer shall have received evidence, satisfactory to it, that Seller has identified the Liens on the Assets and discharged all such Liens (including, without limitation, as set forth in Section 4.8 hereof) on or prior to the Closing Date.
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6.3 Conditions to Obligations of the Seller.
The obligations of Seller to perform this Agreement and consummate the Acquisition and the other transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by Seller pursuant to Section 11.3:
(i) The Assignment and Assumption Agreements;
(ii) The Primary Escrow Agreement and the Xxxxxx Escrow Agreement in substantially the forms attached hereto as Exhibit 4.10(a) and Exhibit 4.10(b), respectively.
ARTICLE 7
Notwithstanding any other provision of this Agreement, this Agreement may be terminated and the Acquisition abandoned at any time prior to the Closing Date as follows:
(a) By mutual written consent duly authorized by the Boards of Directors of Buyer and Seller; or
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(b) By either Buyer or Seller in the event that the Acquisition shall not have been consummated by December 31, 2006 (the “End Date”), if the failure to consummate the transactions contemplated hereby on or before such date is not caused by any breach of this Agreement by the Party electing to terminate pursuant to this Section 7.1(b); or
(c) By either Buyer or Seller (provided that the terminating Party is not then in material breach of any representation, warranty, covenant, or other agreement contained in this Agreement) in the event of a breach by the other Party of any representation, warranty, covenant or agreement contained in this Agreement which breach is reasonably likely, in the opinion of the non-breaching Party, to permit such Party to refuse to consummate the transactions contemplated by this Agreement pursuant to the standards set forth in Section 6.2 (a) or (b) or 6.3(a) or (b), as applicable; provided that if such breach in the representations, warranties, covenants or agreements is curable prior to the End Date through the exercise of reasonable efforts and the breaching Party exercises reasonable efforts to cure such breach, then the non-breaching Party may not terminate this Agreement under this Section 7.1(c) prior to thirty (30) days following the receipt of written notice of such breach; or
(d) By either Buyer or Seller in the event (i) any Consent of any Regulatory Authority required for consummation of the Acquisition and the other transactions contemplated hereby, shall have been denied by final nonappealable action of such authority or if any action taken by such authority is not appealed within the time limit for appeal, or (ii) any Law or Order permanently restraining, enjoining or otherwise prohibiting the consummation of the Acquisition shall have become final and nonappealable; or
(e) By either Buyer or Seller (provided that the terminating Party is not then in material breach of any representation, warranty, covenant, or other agreement contained in this Agreement) in the event that any of the conditions precedent to the obligations of such Party (as contained in Sections 6.2 and 6.3, as applicable) to consummate the Acquisition cannot be satisfied or fulfilled by the date specified in Section 7.1(b).
In the event of the termination and abandonment of this Agreement pursuant to Section 7.1, this Agreement shall become void and have no effect, except that (i) the provisions of Sections 4.4(a), 7.2, 7.3 and Article 11, shall survive any such termination and abandonment, and (ii) no such termination shall relieve the breaching Party from Liability resulting from any breach by that Party of this Agreement. In the event that Buyer, on the one hand, or Seller, on the other hand, defaults upon or breaches in any material respect any commitment or agreement set forth in this Agreement, the non-breaching party shall have all rights afforded by law and equity against the defaulting or breaching party.
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ARTICLE 8
(a) the Retained Liabilities and the Retained Assets;
(b) the breach of any representation or warranty of Seller contained herein or in any other document or instrument delivered by Seller in connection herewith;
(c) the non-fulfillment of any covenant or agreement of Seller contained herein or any other document or instrument delivered by Seller in connection herewith;
(d) the failure to deliver good, valid and marketable title to any of the Assets; and
(e) the impairment or preclusion of Fifth Third Bank’s right to collect the Pledged Receivables as a result of Seller’s assignment to Buyer of the Assigned Contracts.
(a) the Assumed Liabilities and the operation by Buyer of the Business after the Closing;
(b) the breach of any representation or warranty contained herein or in any other document or instrument delivered by Buyer in connection herewith; and
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(c) the non-fulfillment of any covenant or agreement of Buyer contained herein or in any other document or instrument delivered by Buyer in connection herewith.
8.3 Notice and Opportunity to Defend; Third Party Claims.
(a) The Buyer Indemnified Party or the Seller Indemnified Party, as applicable (the “Indemnified Party”), shall promptly notify in writing the indemnifying party (the “Indemnifying Party”) of any matter giving rise to an obligation to indemnify, specifying the basis on which indemnification is sought.
(b) If the claim for indemnification does not involve a Third Party Claim, the Indemnifying Party shall have twenty (20) days to object to such claim by delivery of a written notice of such objection to the Indemnified Party specifying the basis for such objection. Failure to timely so object shall constitute a final and binding acceptance by the Indemnifying Party of the claim and the Indemnifying Party shall pay such claim by wire transfer of immediately available funds within ten (10) days after such twenty (20) day period or, if later, the date the amount of such claim is determined.
(c) If the claim for indemnification involves a Third Party Claim, such Third Party Claim shall be subject to the following terms and conditions:
(i) The Indemnifying Party shall have thirty (30) days (or such lesser time as may be necessary to comply with statutory response requirements for litigation claims) from receipt of the claim (the “Notice Period”) to notify the Indemnified Party, (x) whether or not the Indemnifying Party disputes its Liability to the Indemnified Party with respect to such Third Party Claim, and (y) notwithstanding any such dispute, whether or not the Indemnifying Party desires, at its sole cost and expense, to defend the Indemnified Party against such Third Party Claim.
(ii) In the event that the Indemnifying Party notifies the Indemnified Party within the Notice Period that it desires to defend the Indemnified Party against such Third Party Claim then the Indemnifying Party shall have the right to defend the Indemnified Party by appropriate proceedings, which proceedings shall be promptly settled or prosecuted by the Indemnifying Party to a final conclusion in such a manner as to minimize the risk of the Indemnified Party becoming subject to Liability for any significant matter. If the Indemnified Party desires to participate in, but not control, any such defense or settlement, it may do so at its sole cost and expense. If in the reasonable opinion of this Indemnified Party, any such Third Party Claim or the litigation or resolution of any such Third Party Claim involves an issue or matter which could have a material adverse effect on the Indemnified Party, including, without limitation, the administration of the Tax Returns of the Indemnified Party or a dispute with a significant customer or supplier of the Business, then the Indemnified Party shall have the right to control the defense or settlement of any such claim or demand and its reasonable costs and expenses shall be included as part of the indemnification obligation of the Indemnifying Party. If the Indemnified Party should elect to exercise such right, the Indemnifying Party shall have the right to participate in, but not control, the defense or settlement of such claim at its sole cost and expense.
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(iii) Except where the Indemnifying Party disputes its Liability in a timely manner under this Section 8.3(c), the Indemnifying Party shall be conclusively liable for the amount of any Loss resulting from such claim or defense which is unsuccessful.
(iv) The Indemnified Party and the Indemnifying Party shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available records relating to such claim and management employees as may be reasonably necessary for the preparation of the defense of any such claim or for testimony as witness in any proceeding relating to such Third Party Claim.
(v) No settlement of a Third Party Claim shall be made without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed.
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ARTICLE 9
(a) Seller shall be responsible for the payment of all earned but unpaid salaries, bonus, vacation pay, sick pay, holiday pay, severance pay and other like obligations and payments to the Business Employees for all periods ending on and prior to the Closing Date. Seller shall be responsible for the payment of any amounts due to its employees pursuant to the employee benefit plans of Seller as a result of the employment of its employees through the Closing Date, and, in determining bonuses and other similar payments due to such employees for any period ended on or prior to the Closing, Seller shall, if payment thereof will occur after the Closing, waive any requirement that such employees be employees of a Seller on the date such bonuses or other similar payments are paid. Seller shall be responsible for all unpaid medical claims occurring prior to the Closing and for the cost associated with confinement in any medical care, nursing, rehabilitation or similar facility which commences prior to the Closing. Seller shall be responsible for (a) all Liabilities arising under the employee benefit plans of Seller or ERISA Affiliate of Seller or (b) Liabilities associated with any leaves taken prior to the Closing Date in connection with the Family and Medical Leave Act of 1993. Effective at the Closing, Seller (i) shall assign to Buyer any confidentiality agreement previously entered into between Seller and such employees related to the Business, and (ii) to the extent such confidentiality agreement is not assignable, Seller hereby releases such employee from any confidentiality agreement previously entered into between Seller and such employees relating to the Business to the extent (but only to the extent) necessary for Buyer to operate the Business in the same manner as operated by Seller prior to the Closing Date. Seller shall not release any employee from any confidentiality agreement executed by such employee in favor of third parties relating to receipt of confidential information in connection with potential business acquisitions.
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(b) Buyer may, at its sole discretion, offer employment to any Business Employee. Seller hereby consents to the hiring of any of the Business Employees and waives any claims or rights Seller may have against Purchaser or any such employee under any non-competition or employment agreement to the extent such agreements would preclude such employment by Buyer or limit the ability of such employee to perform services on Buyer’s behalf.
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transactions contemplated by this Agreement, it is agreed that Seller shall be responsible for any WARN Obligations arising as a result of any employment losses from Seller occurring prior to the Closing Date, except to the extent that such WARN Obligations are the result of the offers of employment made by Buyer to the Business Employees which WARN Obligations shall be the responsibility of Buyer, and Buyer shall be responsible for any WARN Obligations arising as a result of any employment losses occurring upon or following the Closing Date.
ARTICLE 10
(a) Except as otherwise provided herein, the capitalized terms set forth below shall have the following meanings:
“Acquisition” shall have the meaning set forth in the Preamble
“Acquisition Documents” shall mean this Agreement and the other documents and instruments to be delivered pursuant to this Agreement.
“Acquisition Proposal” shall have the meaning set forth in Section 4.13.
“Agreement” shall have the meaning set forth in the Preamble.
“Affiliate” of a party shall mean: (i) any other Person directly, or indirectly through one or more intermediaries, controlling, controlled by or under common control with such party; (ii) any officer, director, partner, employer or direct or indirect beneficial owner of any ten percent (10%) or greater equity or voting interest of such party; or (iii) any other Person for which a Person described in clause (ii) above acts in any such capacity. For purposes of the foregoing, “control” shall have the meaning provided by Rule 405 of the Securities Act, or any successor rule thereto.
“Agreement” shall mean this Asset Purchase Agreement, including the Exhibits and Schedules delivered pursuant hereto and incorporated herein by reference.
“Allocable Consideration” shall have the meaning set forth in Section 1.7.
“Allocation Schedule” shall have the meaning set forth in Section 1.7.
“Assets” shall have the meaning set forth in Section 1.1.
“Assigned Contracts” shall have the meaning set forth in Section 1.1(d).
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“Assigned Leases” shall have the meaning set forth in Section 1.1(c).
“Assumed Liabilities” shall have the meaning set forth in Section 1.5.
“Assignment and Assumption Agreements” shall have the meaning set forth in Section 6.2(e)(ii).
“Business” shall have the meaning set forth in the Preamble.
“Business Financial Statements” shall mean the Income Statements and the Statement of Assets and Liabilities.
“Business Employees” shall mean those individuals listed on Schedule 2.14.
“Buyer” shall have the meaning set forth in the Preamble.
“Buyer Indemnified Parties” shall have the meaning set forth in Section 8.1.
“Closing” shall have the meaning set forth in Section 1.6.
“Closing Date” shall have the meaning set forth in Section 1.6.
“Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
“Compensation Programs” shall have the meaning set forth in Section 2.15(c).
“Confidentiality Agreements” shall have the meaning set forth in Section 4.3(a).
“Consent” shall mean any consent, approval, authorization, clearance, exemption, waiver of or similar affirmation by any Person pursuant to any contract or agreement, Law, Order or permit.
“Conveyance Documents” shall have the meaning set forth in Section 6.2(e)(i).
“Deferred Contracts” shall have the meaning set forth in Section 1.9.
“DGCL” shall mean the Delaware General Corporation Law.
“End Date” shall have the meaning set forth in Section 7.1(b).
“Environmental Laws” means all Laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface, or subsurface strata), including, without limitation (i) the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. §§9601 et seq. (“CERCLA”); (ii) the Solid Waste Disposal Act, as amended by the Resource
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Conservation and Recovery Act, as amended, 42 U.S.C. §§6901 et seq., (“RCRA”); (iii) the Emergency Planning and Community Right to Know Act (42 U.S.C. §§11001 et seq.); (iv) the Clean Air Act (42 U.S.C. §§ 7401 et seq.); (v) the Clean Water Act (33 U.S.C. §§1251 et seq.); (vi) the Toxic Substances Control Act (15 U.S.C. §§2601 et seq.); (vii) the Hazardous Materials Transportation Act (49 U.S.C. §§ 5101 et seq.); (viii) the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. §§136 et seq.); (ix) the Safe Drinking Water Act (41 U.S.C. §§300f et seq.); (x) any state, county, municipal or local statutes, laws or ordinances similar or analogous to the federal statutes listed in parts (i)—(ix) of this subparagraph; (xi) any amendments to the statutes, laws or ordinances listed in parts (i)—(x) of this subparagraph, regardless of whether in existence on the date hereof; (xii) any rules, regulations, guidelines, directives, orders or the like adopted pursuant to or implementing the statutes, laws, ordinances and amendments listed in parts (i)—(xi) of this subparagraph; and (xiii) any other law, statute, ordinance, amendment, rule, regulation, guideline, directive, order or the like in effect now or in the future relating to environmental, health or safety matters.
“Environmental Permits” shall have the meaning set forth in Section 2.17(d).
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” shall mean, with respect to any entity, any other entity, which, together with such entity, would be treated as a single employer (i) under Section 414(b) or (c) of the Code or (ii) for purposes of any Benefit Plan subject to Title IV of ERISA, under Section 414(b), (c), (m) or (o) of the Code.
“Exhibits” shall mean the Exhibits so marked, copies of which are attached to this Agreement. Such Exhibits are hereby incorporated by reference herein and made a part hereof, and may be referred to in this Agreement and any other related instrument or document without being attached hereto.
“Facilities” shall have the meaning set forth in Section 2.12(a).
“Government Programs” shall have the meaning set forth in Section 2.19(a).
“Xxxxxx Escrow Amount” shall have the meaning set forth in Section 1.2(b)(iii).
“Hazardous Material” means any chemical, substance, waste, material, pollutant, contaminant, equipment or fixture defined as or deemed hazardous or toxic or otherwise regulated under any Environmental Law, including, without limitation, RCRA hazardous wastes, CERCLA hazardous substances, pesticides and other agricultural chemicals, oil and petroleum products or byproducts and any constituents thereof, asbestos and asbestos-containing materials, and polychlorinated biphenyls (PCBs).
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“HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. § 1320d through d-8, as amended, and regulations promulgated thereunder, including the privacy, transaction standard, and security regulations.
“Indemnified Party” shall have the meaning set forth in Section 8.3(b).
Indemnifying Party shall have the meaning set forth in Section 8.3(a).
“Income Statements” shall mean audited income statements for the Business for the twelve-month periods ended December 31, 2005 and 2004 and an unaudited interim income statement for the most recent completed month immediately preceding the Closing Date.
“Inventory” shall have the meaning set forth in Section 1.1(j).
“IRS” means the Internal Revenue Service.
“Knowledge” as used with respect to a Person (including references to such Person being aware of a particular matter) shall mean those facts which are known or should reasonably have been known after due inquiry by the chairman, president, chief financial officer, chief accounting officer, chief operating officer, general counsel, any assistant or deputy general counsel, compliance officer, any senior executive or other vice president or sales manager of such Person.
“Law” shall mean any code, law, ordinance, regulation, reporting or licensing requirement, rule, or statute applicable to a person or its assets, Liabilities or business, including those promulgated, interpreted or enforced by any Regulatory Authority.
“Liability” shall mean any direct or indirect, primary or secondary, liability, indebtedness, obligation, penalty, cost or expense (including costs of investigation, collection and defense), claim, deficiency, guaranty or endorsement of or by any Person (other than endorsements of notes, bills, checks, and drafts presented for collection or deposit in the ordinary course of business) of any type, whether accrued, absolute or contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
“Lien” means any lien, mortgage, pledge, reservation, option, right of first refusal, restriction, security interest, title retention, or other security arrangement, conditional sale agreement, default of title, easement, encroachment, encumbrance, hypothecation, infringement or any adverse right or interest, charge, or claim of any nature whatsoever of, on, or with respect to any property or property interest, other than Liens for current property Taxes not yet due and payable.
“Litigation” means any action, arbitration, cause of action, lawsuit, claim, complaint, criminal prosecution, governmental or other examination, investigation or inquiry (whether formal or informal), audit (other than regular audits of financial statements by outside auditors), compliance review, inspection, hearing, administrative or other proceeding relating to or affecting a Party, its business, its records, its policies, its practices, its compliance with Law, its actions, its assets (including contracts related to it), or the transactions contemplated by this Agreement.
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“Losses” shall have the meaning set forth in Section 8.1.
Medicare and Medicaid Programs shall have the meaning set forth in Section 2.19(a).
“Notice Period” shall have the meaning set forth in Section 8.3(c)(i).
“Party” means Buyer, on the one hand, and Seller, on the other hand, and “Parties” means the Seller and Buyer.
“Pension Plans” shall have the meaning set forth in Section 2.15(a).
“Person” shall mean a natural person or any legal, commercial or governmental entity, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, trust, business association, group acting in concert, or any person acting in a representative capacity.
“Pledged Receivables” shall have the meaning set forth in Section 1.3.
“Primary Escrow Amount” shall have the meaning set forth in Section 1.2(b)(i).
“Private Programs” shall have the meaning set forth in Section 2.19(a).
“Purchase Price” shall have the meaning set forth in Section 1.2(a).
“Regulatory Authorities” shall mean, collectively, all federal and state regulatory agencies having jurisdiction over the Parties and their respective Subsidiaries.
“Remuneration” shall have the meaning set forth in Section 2.21(a).
“Restrictive Covenant Agreements” shall mean the restrictive covenant agreements by and between Buyer and each of Seller, Xx. Xxxxx Xxxxxx, and Xx. Xxxxxx Xxxxxxxx, respectively.
“Retained Assets” shall have the meaning set forth in Section 1.3.
“Retained Liabilities” shall have the meaning set forth in Section 1.4.
“Seller” shall have the meaning set forth in the Preamble.
“Seller Agreements” shall mean those agreements listed on Schedule 2.13(a).
“Seller Indemnified Parties” shall have the meaning set forth in Section 8.2.
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“Seller Material Adverse Effect” shall mean an event, change or occurrence which, individually or together with any other event, change or occurrence, has had or is reasonably likely to have a material adverse impact on (i) the Assets or on the financial position, business, results of operations or prospects of the Business, or (ii) the ability of Seller to perform its obligations under this Agreement or to consummate the Acquisition or the other transactions contemplated by this Agreement.
“Seller Receivables” shall have the meaning set forth in Section 1.3.
“Special Meeting” shall have the meaning set forth in Section 4.12.
“Statement of Assets and Liabilities” shall mean audited statements of the assets and liabilities of the Business as of December 31, 2005.
“Subsidiaries” shall mean all those corporations, associations, or other business entities of which the entity in question either (i) owns or controls fifty percent (50%) or more of the outstanding equity securities either directly or through an unbroken chain of entities as to each of which fifty percent (50%) or more of the outstanding equity securities is owned directly or indirectly by its parent (provided, there shall not be included any such entity the equity securities of which are owned or controlled in a fiduciary capacity), (ii) in the case of partnerships, serves as a general partner, (iii) in the case of limited liability companies, serves as a managing member, or (iv) otherwise has the ability to elect a majority of the directors, trustees, managing members or managers thereof.
“Taxes” shall mean any federal, state, county, local, or foreign tax, charge, fee, levy, impost, duty, or other assessment, including income, gross receipts, excise, employment, sales, use, transfer, recording, license, payroll, franchise, severance, documentary, stamp, occupation, windfall profits, environmental, highway use, commercial rent, customs duty, capital stock, paid-up capital, profits, withholding, Social Security, single business, unemployment, disability, real property, personal property, registration, ad valorem, value added, alternative or add-on minimum, estimated, or other tax or governmental fee of any kind whatsoever, imposed or required to be withheld by any governmental authority, including any estimated payments relating thereto, any interest, penalties, and additions imposed thereon or with respect thereto, and including liability for taxes of another person under Treas. Reg. Section 1.1502-6 or similar provision of state, local or foreign law, as a transferee or successor, by contract or otherwise.
“Tax Return” means any return, filing, questionnaire, information return or other document required to be filed, including requests for extensions of time, filings made with estimated tax payments, claims for refund and amended returns that may be filed, for any period with any taxing authority (whether domestic or foreign) in connection with any Tax (whether or not a payment is required to be made with respect to such filing).
“Third Party Claim” shall mean any Litigation threatened or instituted against an Indemnified Party by anyone not a Party to this Agreement which would be a matter for which the Indemnified Party is entitled to indemnification under Article 8 of this Agreement.
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“Transferring Employees” shall have the meaning set forth in Section 9.1(b).
“Transfer Taxes” shall have the meaning set forth in Section 1.4(g).
“WARN Act” shall mean the Worker Adjustment and Retraining Notification Act, as amended.
“WARN Obligations” shall have the meaning set forth in Section 9.5.
“Welfare Plans” shall have the meaning set forth in Section 2.15(b).
(b) Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed followed by the words “without limitation.” The terms Buyer and Seller shall be deemed to include their respective Subsidiaries where the context requires but such term is not provided.
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ARTICLE 11
(a) Any notice sent in accordance with the provisions of this Section 11.1 shall be deemed to have been received (even if delivery is refused or unclaimed) on the date which is: (i) the third day following the date of proper posting, if sent by certified U.S. mail or by Express U.S. mail or private overnight courier; or (ii) the date on which sent, if sent by facsimile transmission, with confirmation and with the original to be sent by certified U.S. mail, addressed as follows:
If to the Buyer: | Pediatric Services of America, Inc. | |
000 Xxxxxxxxxx Xxxxxxx | ||
Xxxxxxxx, Xxxxxxx 00000-0000 | ||
Attention: Xxxxx X. XxXxxxx | ||
Telecopy Number: (000) 000-0000 | ||
Copy to Counsel: | XxXxxxx Long & Xxxxxxxx LLP | |
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000 | ||
Xxxxxxx, Xxxxxxx 00000 | ||
Attention: Xxxxxx Xxxxxxx, Esq. | ||
Telecopy Number: (000) 000-0000 | ||
If to Seller: | Melmedica Children’s Healthcare, Inc. | |
00000 Xxxxx Xxxxxxx Xx. | ||
Xxxxxxx Xxxx Xxxxx, XX 00000 | ||
Copy to Counsel: | Stone, Pogrund & Xxxxx | |
000 Xxxxx Xx Xxxxx Xxxxxx, 00xx Xxxxx | ||
Xxxxxxx, Xxxxxxxx 00000 | ||
Attention: Xxxxxxx X. Xxxxxxx, Esq. | ||
Telecopy Number: (000) 000-0000 | ||
Copy to Fifth Third Bank: | Xxxxx X. Xxx, AVP | |
000 Xxxxxxxx Xx. | ||
Xx. Xxxxxx, XX 00000 | ||
Telecopy Number: (000) 000-0000 |
(b) Any party hereto may change its address specified for notices herein by designating a new address by notice in accordance with this Section 11.1.
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11.8 Governing Law; Severability. This Agreement shall be governed by and construed in accordance with the Laws of the State of Georgia, without regard to any applicable conflicts of Laws. The provisions of this Agreement are severable and the invalidity of one or more of the provisions herein shall not have any effect upon the validity or enforceability of any other provision.
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EXECUTION VERSION
SELLER: | MELMEDICA CHILDREN’S HEALTHCARE, INC. | |||
By: | /s/ Xxxxx Xxxxxx | |||
Name: | Xxxxx Xxxxxx | |||
Title: | President/CEO | |||
BUYER: | PEDIATRIC SERVICES OF AMERICA, INC. | |||
By: | /s/ Xxxxxx X. Xxxx | |||
Name: | Xxxxxx X. Xxxx | |||
Title: | CEO |
EXHIBITS
4.10(a) | Form of Primary Escrow Agreement | |
4.10(b) | Form of Xxxxxx Escrow Agreement | |
6.2(g) | Legal Opinion | |
Exhibit A | Restrictive Covenants |