Exhibit 10.1
STOCK PURCHASE AGREEMENT
AMONG
UNIVERSAL HOSPITAL SERVICES, INC.,
X.X. CHILDS EQUITY PARTNERS III, L.P.,
JWC FUND III CO-INVEST LLC,
HALIFAX CAPITAL PARTNERS, L.P.
AND
CERTAIN OTHER PARTIES HERETO
DATED AS OF SEPTEMBER 26, 2003
TABLE OF CONTENTS
Page
1. Definitions...............................................................1
2. Sale and Purchase of Shares; Closing......................................8
2.1 Authorization of Shares............................................8
2.2 Sale and Purchase..................................................8
2.3 Closing............................................................8
2.4 Performance by Purchasers..........................................8
2.5 Closing Deliveries.................................................9
3. Representations and Warranties of the Company............................10
3.1 Organization and Good Standing....................................10
3.2 Authority; No Conflict............................................10
3.3 Capitalization....................................................11
3.4 Financial Statements..............................................12
3.5 Books and Records.................................................12
3.6 Title to Properties; Encumbrances.................................13
3.7 Condition and Sufficiency of Assets...............................13
3.8 No Undisclosed Liabilities........................................14
3.9 Taxes.............................................................14
3.10 No Company Material Adverse Effect................................15
3.12 Compliance with Legal Requirements; Governmental Authorizations...17
3.13 Legal Proceedings; Orders.........................................19
3.14 Absence of Certain Changes and Events.............................19
3.15 Contracts; No Defaults............................................20
3.16 Insurance.........................................................22
3.17 Environmental Matters.............................................22
3.18 Employees.........................................................23
3.19 Labor Relations; Compliance.......................................23
3.20 Intellectual Property.............................................23
3.21 Certain Payments..................................................24
3.22 Relationships with Related Persons................................24
3.23 Brokers or Finders................................................25
3.24 Offering Valid....................................................25
3.25 SEC Reports.......................................................25
4. Representations and Warranties of the Purchasers.........................26
4.1 Organization and Good Standing....................................26
4.2 Authority; No Conflict............................................26
4.3 Investment Representations........................................27
4.4 Legend............................................................27
4.5 Certain Proceedings...............................................28
4.6 Brokers or Finders................................................28
5. Covenants of the Company.................................................28
5.1 Access and Investigation..........................................28
5.2 Operation of the Business of the Company..........................28
5.3 Negative Covenant.................................................29
5.4 Required Approvals................................................29
5.5 Notification......................................................29
5.6 Further Assurances................................................29
5.7 Exclusivity.......................................................30
6. Covenants of the Purchasers..............................................30
6.1 Required Approvals................................................30
6.2 Further Assurances................................................30
7. Conditions Precedent to the Purchasers' Obligation to Close..............30
7.1 Accuracy of Representations.......................................31
The Company's Performance.....................................................31
7.3 Consents..........................................................31
7.4 No Proceedings....................................................31
7.5 No Injunction.....................................................31
7.6 Recapitalization..................................................31
7.7 Closing Deliveries................................................31
8. Conditions Precedent to the Company's Obligation to Close................32
8.1 Accuracy of Representations.......................................32
8.2 The Purchasers' Performance.......................................32
8.3 No Proceedings....................................................32
8.4 No Injunction.....................................................33
8.5 Recapitalization Transactions. ...................................33
8.6 Closing Deliveries................................................33
9. Termination..............................................................33
9.1 Termination Events................................................33
9.2 Effect of Termination.............................................34
10. Indemnification; Remedies................................................34
10.1 Survival; Indemnification Not Affected by Knowledge...............34
10.2 Indemnification by the Company....................................35
10.3 Indemnification by the Purchasers.................................35
10.4 Time Limitations..................................................35
10.5 Limitations on Amount -- the Company..............................36
10.6 Limitations on Amount -- the Purchasers...........................36
10.7 Payment of Damages by the Company.................................36
10.8 Procedure for Indemnification -- Third Party Claims...............37
10.9 Procedure for Indemnification -- Other Claims.....................38
11. General Provisions.......................................................38
11.1 Expenses..........................................................38
11.2 Public Announcements..............................................39
11.3 Confidentiality...................................................39
11.4 Notices...........................................................40
11.5 Jurisdiction; Service of Process..................................41
11.6 Waiver............................................................42
11.7 Entire Agreement and Modification.................................42
11.8 Disclosure Letter. ...............................................42
11.9 Assignments, Successors, and No Third-Party Rights................42
11.10 Severability......................................................43
11.11 Section Headings, Construction....................................43
11.12 Time of Essence...................................................43
11.13 Governing Law.....................................................43
11.14 Counterparts......................................................43
Exhibits
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Exhibit A -- Amended Certificate
Exhibit B -- Amended Bylaws
Exhibit C -- Amended and Restated Stockholders Agreement
Exhibit D -- Xxxxxx & Whitney Opinion Letter
Exhibit E -- Xxxxxxxxx Employment Agreement
Exhibit F -- Example of Payment of Stock Indemnity Under Section 10.7
Exhibit G -- Joinder Agreement
Schedules
---------
Schedule 1 -- Per Share Purchase Price
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made as of September
26, 2003 by and among Universal Hospital Services, Inc., a Delaware corporation
(the "Company"), X.X. Childs Equity Partners III, L.P., a Delaware limited
partnership ("JWC Equity Partners III"), JWC Fund III Co-invest LLC, a Delaware
limited liability company ("JWC Co-invest" and, together with JWC Equity
Partners III, "Childs"), Halifax Capital Partners, L.P., a Delaware limited
partnership ("Halifax" and, collectively with Childs, the "Investors"), and the
individuals listed as Management Holders on the signature pages hereof or who
signs a Joinder Agreement (the "Management Holders" and, collectively with the
Investors, the "Purchasers").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of up to
4,645,833.33 shares of its Common Stock (the "Shares");
WHEREAS, the Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to the Purchasers
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
AGREEMENT
1. Definitions.
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Affiliate" -- any Person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with such
Person. "Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise.
"Aggregate Certified Damages Amount" - an amount equal to the aggregate
Certified Damages Amount specified in all certificates (if any) delivered by any
or all of the Purchasers pursuant to Section 10.1.
"Amended Certificate" -- the amended certificate of incorporation of the
Company, substantially in the form attached hereto as Exhibit A.
"Amended Bylaws" -- the amended bylaws of the Company, substantially in the
form attached hereto as Exhibit B.
"Balance Sheet" -- as defined in Section 3.4.
"Best Efforts" -- the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is achieved
as expeditiously as possible; provided, however, that an obligation to use Best
Efforts under this Agreement does not require the Person subject to that
obligation to take actions that would result in a materially adverse change in
the benefits to such Person of this Agreement and the Contemplated Transactions.
"Business Day" -- any day other than a Saturday, Sunday or other day on
which banks in the City of New York are permitted or required to be closed by
law or regulation.
"Certified Damages Amount" -- as defined in Section 10.1 of this Agreement.
"Closing" -- as defined in Section 2.3.
"Closing Date" -- the date and time as of which the Closing actually takes
place.
"Common Stock" -- the Common Stock of the Company, par value $0.01 per
share.
"Company" -- as defined in the first paragraph of this Agreement.
"Company Material Adverse Effect" -- (a) any material adverse effect on (i)
the business, operations, properties, condition (financial or other) of the
Company or (ii) the ability of the Company to perform its obligations hereunder
and to consummate the Contemplated Transactions, or (b) any event or
circumstance that will, or that could reasonably be expected to, result in any
such material adverse effect; provided, however, that any adverse effect due to
changes in conditions generally affecting (A) the United States economy as a
whole or (B) the United States healthcare industry as a whole shall not
constitute a Company Material Adverse Effect.
"Confidential Offering Circular" -- the preliminary Confidential Offering
Circular of the Company, dated September 26, 2003, relating to the proposed
issuance of notes by the Company.
"Consent" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
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"Contemplated Transactions" -- all of the transactions contemplated by this
Agreement, including:
(a) the issuance, sale and delivery of the Shares by the Company to the
Purchasers;
(b) the performance by the Purchasers and the Company of their respective
covenants and obligations under this Agreement; and
(c) the execution, delivery, and performance of the Stockholders Agreement
by the Purchasers and the Company.
"Contract" -- any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally binding
on the Company or by which it or any of its assets may be bound.
"Damages" -- as defined in Section 10.2.
"Disclosure Letter" -- the disclosure letter delivered by the Company to
the Purchasers concurrently with the execution and delivery of this Agreement.
"Encumbrance" -- any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"Environment" -- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental Law" -- any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees and the public of intended
or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants
or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
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(d) assuring that products are designed, formulated, packaged, and used so
that they do not present unreasonable risks to human health or the Environment
when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the transportation
of hazardous substances, pollutants, oil, or other potentially harmful
substances;
(g) cleaning up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment, or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ERISA Affiliate" -- any Person that, together with the Company is (or at
any relevant time was) (a) a member of a "controlled group of corporations"
within the meaning of Section 414(b) of the IRC, (b) under "common control"
within the meaning of Section 414(c) of the IRC, (c) a member of an "affiliated
service group" within the meaning of Section 414(m) of the IRC, or (d) any other
Person aggregated with the Company pursuant to regulations under Section 414(o)
of the IRC.
"Exchange Act" -- Securities Exchange Act of 1934, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Existing Stockholders Agreement" -- that certain Stockholders Agreement,
dated as of February 25, 1998, by and among the Company and the stockholders of
the Company signatory thereto, as amended.
"Existing Stockholders Equity" -- (a) the aggregate number of shares of
Common Stock held by the stockholders of the Company other than the Purchasers
immediately following the consummation of the Contemplated Transactions
multiplied by (b) the Per Share Purchase Price.
"Facilities" -- any real property, leaseholds, or other interests currently
or formerly owned or operated by the Company and any buildings, plants,
structures, or equipment currently or formerly owned or operated by the Company.
"GAAP" -- generally accepted United States accounting principles.
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"Governmental Authorization" -- any approval, Consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" -- any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-Governmental Body of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal);
(d) multi-national organization or body; or
(c) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Health Care Laws" -- (i) all federal and state fraud and abuse Legal
Requirements, including, but not limited to, the federal Anti-Kickback Statute
(42 U.S.C. Section 1320a-7(b)) and the regulations promulgated thereunder, and
(ii) all quality, safety, accreditation, and all other relevant standards and
requirements of all applicable Legal Requirements or Governmental Bodies,
including, but not limited to, the Joint Commission on the Accreditation of
Healthcare Organizations.
"Indemnified Party" -- a Purchaser Indemnified Person or a Company
Indemnified Person, as the case may be.
"Intellectual Property Rights" -- as defined in Section 3.20.
"Interim Balance Sheet" -- as defined in Section 3.4.
"Investors" - as defined in the first paragraph of this Agreement.
"IRC" -- the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" -- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Joinder Agreement" -- as defined in Section 11.9.
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"Knowledge" -- (a) with respect to the Company, the actual knowledge of (i)
Xxxxx X. Xxxxxxxxx, Chairman; (ii) Xxxx X. Xxxxxxxxx, President and Chief
Executive Officer; (iii) Xxxx X. Xxxxx, Senior Vice President, Finance, and
Chief Financial Officer; and (iv) Xxxxxx X. Xxxxxxx, Senior Vice President,
Medical Equipment Outsourcing Services; and (b) with respect to the Purchasers,
(i) in the case of Childs, the actual knowledge of Xxxxxx X. Xxx; (ii) in the
case of Halifax, the actual knowledge of Xxxxx X. Xxxxxxxx and (iii) in the case
of any Management Holder, the actual knowledge of such Management Holder.
"Legal Requirement" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Offering" -- the issuance of high yield debt securities by the Company
pursuant to Rule 144A promulgated under the Securities Act, as described in the
Confidential Offering Circular, with a yield not greater than 12%.
"Order" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if such action is
consistent with the past practices of such Person and is taken in the ordinary
course of the normal day-to-day operations of such Person.
"Per Share Purchase Price" -- as defined in Section 2.2 of this Agreement.
"Person" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Plan" -- as defined in Section 3.11.
"Pre-Closing Claims" - as defined in Section 10.1 of this Agreement.
"Proceeding" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
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"Pro Rata Portion" -- with respect to each Purchaser, the percentage
calculated by dividing the number of Shares purchased by such Purchaser on the
Closing Date by the aggregate number of all Shares purchased by all Purchasers
on the Closing Date.
"Purchaser Material Adverse Effect" -- with respect to each Purchaser (a)
any material adverse effect on (i) the business, operations, properties,
condition (financial or other) of such Purchaser or (ii) the ability of such
Purchaser to perform its obligations hereunder and to consummate the
Contemplated Transactions, or (b) any event or circumstance that will, or that
could reasonably be expected to, result in any such material adverse effect;
provided, however, that any adverse effect due to changes in conditions
generally affecting (A) the United States economy as a whole or (B) the United
States healthcare industry as a whole shall not constitute a Purchaser Material
Adverse Effect.
"Purchasers" -- as defined in the first paragraph of this Agreement.
"Recapitalization" -- collectively, the Offering, the Refinancing, the
Repurchases, the Tender Offer and the Contemplated Transactions.
"Refinancing" -- the arrangement, underwriting and syndication by GE
Healthcare Financial Services and GE Global Sponsor Finance of a senior secured
credit facility in an aggregate principal amount of up to $100,000,000, as
described in the Confidential Offering Circular and as set forth in the
commitment letter dated September 12, 2003.
"Representative" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Repurchases" -- the repurchase by the Company of (i) certain outstanding
shares of capital stock of the Company, (ii) certain outstanding options of the
Company and (iii) certain outstanding warrants of the Company, as described in
the Confidential Offering Circular.
"SEC" -- the Securities and Exchange Commission, or any other federal
agency at the time administering the Exchange Act or the Securities Act.
"Securities Act" -- the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Shares" -- as defined in the recitals of this Agreement.
"Stockholders Agreement" -- that certain Amended and Restated Stockholders
Agreement to be entered into among the Company, the Purchasers and certain
existing stockholders of the Company signatory thereto, substantially in the
form attached hereto as Exhibit C.
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"Tax" -- any tax (including, without limitation, any income tax, capital
gains tax, value-added tax, sales tax, use tax, branch profits tax, property
tax, gift tax, or estate tax), levy, assessment, tariff, duty (including any
customs duty), deficiency, or other fee, and any related charge or amount
(including any fine, penalty, interest, or addition to tax), imposed, assessed,
or collected by or under the authority of any Governmental Body or payable
pursuant to any tax-sharing agreement or any other Contract relating to the
sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency,
or fee.
"Tax Return" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Tender Offer" -- the cash tender offer by the Company for all of its
outstanding 10 1/4 % senior notes due 2008, as described in the Confidential
Offering Circular.
2. Sale and Purchase of Shares; Closing.
2.1 Authorization of Shares. On or prior to the Closing, the Company
shall have authorized the sale and issuance of the Shares to the Purchasers.
2.2 Sale and Purchase. Subject to the terms and conditions hereof, the
Company hereby agrees to issue and sell to each Purchaser free and clear of
Encumbrances (other than Encumbrances imposed by the Stockholders Agreement and
by applicable securities laws), and each Purchaser agrees to purchase from the
Company, the number of Shares set forth opposite such Purchaser's name on
Schedule 1, at a purchase price of $12.00 per Share (the "Per Share Purchase
Price").
2.3 Closing. The closing of the sale and purchase of Shares under this
Agreement (the "Closing") shall take place at 10:00 a.m. on the date that is two
(2) Business Days following the satisfaction (or waiver by the appropriate party
or parties) of the conditions set forth in Sections 7 and 8 hereof (the "Closing
Date"), at the offices of Xxxx Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other time or place as the Company and the Purchasers may
mutually agree. At the Closing, subject to the terms and conditions hereof, the
Company will deliver to each Purchaser a certificate representing the number of
Shares purchased by such Purchaser from the Company, as set forth on Schedule 1,
against payment by or on behalf of such Purchaser of the purchase price
therefor, as set forth on Schedule 1, by wire transfer of immediately available
funds.
2.4 Performance by Purchasers. Except as otherwise expressly provided in
this Agreement, any right or obligation of, or any action to be taken by, the
Purchasers under this Agreement shall be exercised, performed or taken (as the
case may be), jointly, and not severally, by the Investors on behalf of all of
the Purchasers. Each Management Holder hereby agrees to release and discharge
the Investors,
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and their respective Representatives, stockholders, controlling Persons and
Affiliates (collectively, the "Released Parties"), from any and all claims,
demands, suits, actions, causes of action, damages and rights whatsoever, at law
or in equity, now existing or which may hereafter accrue in favor of such
Management Holder against any of the Released Parties, in any way relating to,
arising out of or in connection with any action taken, or failure to take any
action, by the Investors on behalf of all of the Purchasers pursuant to this
Section 2.4. Each Management Holder shall, severally and not jointly, indemnify
and hold harmless each Released Party from and against such Management Holder's
Pro Rata Portion of all Damages which may at any time be imposed upon, incurred
by or asserted against such Released Party as a result of, or in connection
with, any action taken, or failure to take any action, by the Investors on
behalf of all of the Purchasers pursuant to this Section 2.4; provided, however,
that no Management Holder shall be liable for the payment of its Pro Rata
Portion of such Damages resulting from the gross negligence or willful
misconduct of the Investors in discharging their responsibilities pursuant to
this Section 2.4.
2.5 Closing Deliveries. At the Closing:
(a) The Company will deliver to the Purchasers:
(i) certificates representing the Shares;
(ii) the Stockholders Agreement duly executed by the Company;
(iii) a certificate executed by the Company representing and
warranting to the Purchasers that (a) each of Company's representations and
warranties that contains an express materiality qualification was accurate
and complete in all respects as of the date of this Agreement and is
accurate and complete in all respects on the Closing Date as if made on the
Closing Date (unless the representations and warranties address matters as
of a particular date, in which case they shall be true and correct in all
respects as of such date) and (b) all of the other representations and
warranties of the Company were accurate and complete in all material
respects as of the date of this Agreement and are accurate and complete in
all material respects on the Closing Date as if made on the Closing Date
(unless the representations and warranties address matters as of a
particular date, in which case they shall be true and correct in all
material respects as of such date), in each case, without giving effect to
any supplement to the Disclosure Letter;
(iv) an opinion letter from Xxxxxx & Xxxxxxx LLP, substantially
in the form attached hereto as Exhibit D (the "Xxxxxx & Whitney
Opinion");
(v) evidence reasonably satisfactory to the Purchasers that the
Company has duly filed the Amended Certificate with the Secretary of State
of the State of Delaware;
(vi) evidence reasonably satisfactory to the Purchasers that the
Company has duly adopted the Amended Bylaws;
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(vii) evidence reasonably satisfactory to the Purchasers that the
Company has duly adopted a new stock option plan, in a form mutually agreed
upon by the Company and the Purchasers; and
(viii) a duly executed Employment Agreement between the Company
and Xxxx Xxxxxxxxx, substantially in the form attached hereto as Exhibit E.
(b) Each Purchaser will deliver to the Company:
(i) payment of the aggregate purchase price for the Shares to
be purchased by such Purchaser, as set forth opposite such Purchaser's name
on Schedule 1, by wire transfer to an account (or accounts) specified by
the Company in writing;
(ii) the Stockholders Agreement duly executed by such Purchaser;
and
(iii) a certificate executed by such Purchaser representing and
warranting to the Company that (a) each of such Purchaser's representations
and warranties that contains an express materiality qualification was
accurate and complete in all respects as of the date of this Agreement and
is accurate and complete in all respects on the Closing Date as if made on
the Closing Date (unless the representations and warranties address matters
as of a particular date, in which case they shall be true and correct in
all respects as of such date) and (b) all of the other representations and
warranties of such Purchaser were accurate and complete in all material
respects as of the date of this Agreement and are accurate and complete in
all material respects on the Closing Date as if made on the Closing Date
(unless the representations and warranties address matters as of a
particular date, in which case they shall be true and correct in all
material respects as of such date).
3. Representations and Warranties of the Company.
The Company hereby represents and warrants to the Purchasers as follows:
3.1 Organization and Good Standing. The Company is a corporation duly
organized, validly existing, and in good standing under the Legal Requirements
of the State of Delaware. The Company has full power and authority to own and
operate its properties and assets, and to carry on its business as presently
conducted and as presently proposed to be conducted. Except as set forth in Part
3.1 of the Disclosure Letter, the Company is duly qualified and is authorized to
do business and is in good standing as a foreign corporation in all
jurisdictions in which the nature of its activities and of its properties (both
owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a Company Material
Adverse Effect. The Company has no subsidiaries and owns no equity securities or
interests of any other Person.
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3.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding obligation
of the Company, enforceable against the Company in accordance with its terms
and, upon the execution and delivery by the Company of the Stockholders
Agreement , the Stockholders Agreement will constitute the legal, valid, and
binding obligations of the Company, enforceable against the Company in
accordance with its terms, except in each case as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights and general principles of
equity that restrict the availability of equitable remedies. All corporate
action on the part of the Company necessary for the authorization, sale and
issuance of the Shares pursuant hereto and for the performance of the Company's
obligations hereunder and under the Stockholders Agreement has been taken or
will be taken prior to the Closing.
(b) Except as set forth in Part 3.2(b) of the Disclosure Letter, assuming
that the Recapitalization occurs in accordance with the Confidential Offering
Circular, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions by the
Company or the Recapitalization will, directly or indirectly (with or without
notice or lapse of time):
(i) contravene, conflict with, or result in a violation of any
provision of the certificate of incorporation or bylaws of the Company;
(ii) contravene, conflict with, or result in a violation of any
Legal Requirement or any Order to which the Company or any of its assets
may be subject;
(iii) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any material
Governmental Authorization that is held by the Company or that otherwise
relates to the business of, or any of the assets owned or used by, the
Company;
(iv) contravene, conflict with, or result in a material
violation or material breach of any provision of, or give any Person the
right to declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel, terminate, or modify, any
Contract to which the Company is a party or by which its assets or
properties may be bound, other than immaterial Contracts; or
(v) result in the imposition or creation of any material
Encumbrance upon or with respect to any of the properties or assets owned
or used by the Company.
(c) Except as set forth in Part 3.2(c) of the Disclosure Letter, the
Company is not and will not be required to obtain any Consent from any Person
(other than with respect to immaterial Contracts) in
11
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
3.3 Capitalization. As of the date of this Agreement, the authorized
capital stock of the Company consists of 50,000,000 shares of Common Stock,
11,413,152 shares of which are issued and outstanding, and 25,000 shares of
Series B Preferred Stock, par value $0.01 per share, 6,246 of which are issued
and outstanding. All of the issued and outstanding shares of Common Stock and
Series B Preferred Stock have been duly authorized and validly issued and are
fully paid and nonassessable. When issued as contemplated by this Agreement, the
Shares will be duly authorized, validly issued and fully paid and nonassessable
and, assuming the accuracy of the Purchasers' representations and warranties in
Section 4.3 of this Agreement, will be issued in compliance with (a) all
applicable state and federal Legal Requirements concerning the issuance of
securities and (b) any applicable preemptive rights, rights of first refusal or
other similar rights. Other than as set forth in Part 3.3 of the Disclosure
Letter, and except as required pursuant to the Existing Stockholders Agreement
or as may be granted pursuant to the Stockholders Agreement, (i) there are no
outstanding options, warrants, restricted stock agreements, rights (including
conversion, exchange or preemptive rights), agreements of any kind for the
purchase or acquisition from the Company of any of its securities, or proxy or
stockholder agreements or other agreements with respect to the voting of any of
the Company's securities to which the Company is a party or, to the Company's
Knowledge, proxy or stockholder agreements or other agreements with respect to
the voting of any of the Company's securities to which the Company is not a
party, and (ii) the Company is not under any obligation, and has not granted any
rights, to register any class of its equity securities. Except as set forth in
the Company's certificate of incorporation, in the Existing Stockholders
Agreement or as set forth in Part 3.3 of the Disclosure Letter, there are no
agreements or arrangements of any character or nature whatever under which the
Company is or may be obligated to issue, sell, repurchase, redeem or retire any
of its capital stock. Set forth in Part 3.3 of the Disclosure Letter is a
complete and correct list, as of the date of this Agreement, of all outstanding
shares of capital stock or other equity securities of the Company and all
options, warrants or other securities which are exercisable for, convertible
into or exchangeable for such capital stock or other equity securities of the
Company. True, correct and complete copies of all documents relating to the
issuance and terms of such securities have been provided to the Purchasers.
3.4 Financial Statements. The Company has delivered to the Purchasers:
(a) an audited balance sheet of the Company as at December 31, 2001 and the
related audited statement of operations, changes in stockholders' equity, and
cash flow for the fiscal year then ended, together with the report thereon of
PriceWaterhouseCoopers LLP, independent certified public accountant ("PWC"), (b)
an audited balance sheet of the Company as at December 31, 2002 (including the
notes thereto, the "Balance Sheet"), and the related audited statement of
operations, changes in stockholders' equity, and cash flow for the fiscal year
then ended, together with the report thereon of PWC, and (c) an unaudited
balance sheet of the Company as at June 30, 2003 (the "Interim Balance Sheet")
and the related unaudited statement of operations, changes in stockholders'
equity, and cash flow for the period then ended, including in each case the
notes thereto. Such financial statements and notes fairly present the financial
condition and the
12
results of operations, changes in stockholders' equity, and cash flow of the
Company as at the respective dates of and for the periods referred to in such
financial statements, all in accordance with GAAP, subject, in the case of
interim financial statements, to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be material) and the
absence of notes (that, if presented, would not differ materially from those
included in the Balance Sheet). The financial statements referred to in this
Section 3.4 reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to such
financial statements.
3.5 Books and Records. Except as set forth in Part 3.5 of the Disclosure
Letter, the books of account, minute books, stock record books, and other
records of the Company, all of which have been made available to the Purchasers,
accurately and fairly reflect the transactions and dispositions of assets of the
Company and have been maintained in accordance with the Company's business
practices, as disclosed to Purchasers, and the requirements of Section 13(b)(2)
of the Exchange Act, including the maintenance of internal accounting controls
sufficient to provide assurance that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of the financial statements of the
Company and to maintain accountability for the Company's assets; (iii) access to
the Company's assets is permitted only in accordance with management's general
or specific authorization; (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals; and (v) accounts, notes
and other receivables and inventory are recorded accurately, and proper and
adequate procedures are implemented to effect the collection thereof on a
current and timely basis. The minute books of the Company contain accurate and
complete records of all meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and committees of the Board of Directors
of the Company, and no formal meeting of any such stockholders, Board of
Directors, or committee has been held for which minutes have not been prepared
and are not contained in such minute books.
3.6 Title to Properties; Encumbrances. Except as set forth in Part 3.6 of
the Disclosure Letter, the Company has good and marketable title to all of its
properties and assets, including without limitation the properties and assets
reflected in the Balance Sheet and Interim Balance Sheet, and the properties and
assets used in the conduct of its business, except for properties disposed of in
the Ordinary Course of Business since the close of the Balance Sheet or the
Interim Balance Sheet, as the case may be, and except as set forth in Part 3.6
of the Disclosure Letter, such properties and assets are not subject to any
Encumbrance other than those Encumbrances which are reflected on the Balance
Sheet and Interim Balance Sheet and are not, in the case of real property,
subject to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except, with respect to all such
properties and assets, (a) mortgages or security interests reflected on the
Balance Sheet or the Interim Balance Sheet with respect to which no default (or
event that, with notice or lapse of time or both, would constitute a default)
exists, (b) mortgages or security interests incurred in connection with the
purchase of property or assets after the date of the Interim Balance Sheet (such
mortgages and security interests being limited to the property or assets so
acquired), with respect to which no default (or event that, with notice or lapse
of time or both, would constitute a default) exists, (c) liens for current taxes
not yet due, and
13
(d) with respect to real property, (i) minor imperfections of title, if any,
none of which is substantial in amount, materially detracts from the value or
impairs the use of the property subject thereto, or impairs the operations of
the Company, and (ii) zoning laws and other land use restrictions that do not
materially impair the present or anticipated use of the property subject
thereto. All buildings, plants, and structures owned by the Company lie wholly
within the boundaries of the real property owned by the Company and do not
encroach upon the property of, or otherwise conflict with the property rights
of, any other Person. The only real property owned by the Company is the
Company's facility located at 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx.
3.7 Condition and Sufficiency of Assets. Except as set forth in Part 3.7
of the Disclosure Letter, the buildings, machinery, equipment or other tangible
assets owned or leased by the Company, as the case may be, and necessary for the
conduct of the Company's business as currently conducted are structurally sound,
are in good operating condition and repair (subject to normal wear and tear),
have been maintained in accordance with normal industry practice, consistent
with past practice and in material compliance with all applicable Legal
Requirements and in material compliance with the requirements of all Contracts
and, to the Company's Knowledge, are free from latent and patent defects, and
are adequate for the uses to which they are being put.
3.8 No Undisclosed Liabilities. Except as set forth in Part 3.8 of the
Disclosure Letter, the Company has no liabilities or obligations of any nature
(whether absolute, accrued, contingent, or otherwise), except for liabilities or
obligations (a) reflected on or reserved against in the Balance Sheet, or the
notes thereto, or the Interim Balance Sheet, (b) not required to be reflected on
the Balance Sheet, or the notes thereto, or the Interim Balance Sheet under GAAP
consistently applied with the Company's past practice, or (c) incurred in the
Ordinary Course of Business since the date of the Interim Balance Sheet.
3.9 Taxes.
(a) The Company has filed or caused to be filed on a timely basis all
material Tax Returns that are or were required to be filed by it pursuant to
applicable Legal Requirements. The Company has paid, or made provision for the
payment of, all Taxes that have or may have become due pursuant to those Tax
Returns or otherwise for all periods beginning before the date hereof, or
pursuant to any assessment received by the Company, except such Taxes, if any,
as are listed in Part 3.9(a) of the Disclosure Letter and are being contested in
good faith and as to which adequate reserves (determined in accordance with GAAP
consistently applied) have been provided in the Balance Sheet and the Interim
Balance Sheet. No Governmental Body in any jurisdiction in which the Company
does not file Tax Returns has asserted, in writing, that the Company is, or may
be, subject to Tax in that jurisdiction.
(b) The United States federal and state income Tax Returns of the Company
have been audited by the IRS or relevant state tax authorities or are closed by
the applicable statue of limitations for all taxable years through December 31,
1999. Part 3.9(b) of the Disclosure Letter contains a complete and accurate list
of all audits of all such Tax Returns, including a reasonably detailed
description of the nature and
14
outcome of each audit. All deficiencies proposed as a result of such audits have
been paid, reserved against, settled, or, as described in Part 3.9(b) of the
Disclosure Letter, are being contested in good faith by appropriate Proceedings.
Except as described in Part 3.9 of the Disclosure Letter, (i) the Company has
not given or been requested in writing to give waivers or extensions (or is or
would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes of the Company or for
which the Company may be liable and (ii) there are no deficiencies for Taxes
claimed, proposed or assessed in writing by any Governmental Body regarding the
Company that have not been fully and finally resolved.
(c) The charges, accruals, and reserves with respect to Taxes on the
books of the Company are adequate (determined in accordance with GAAP) and are
at least equal to the Company's liability for Taxes. There exists no proposed
tax assessment against the Company except as disclosed in the Balance Sheet or
in Part 3.9(c) of the Disclosure Letter. All Taxes that the Company is or was
required by Legal Requirements to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper Governmental
Body or other Person. There are no liens for Taxes upon any of the properties or
assets of the Company (other than liens for current Taxes not yet due and
payable).
(d) All Tax Returns filed by the Company were, when filed, true, correct,
and complete in all material respects and in material compliance with all
applicable Legal Requirements. There is no tax sharing agreement that will
require any payment by the Company after the date of this Agreement.
3.10 No Company Material Adverse Effect. Except as set forth in Part 3.10
of the Disclosure Letter, since the date of the Balance Sheet, there has not
been any Company Material Adverse Effect.
3.11 Employee Benefits.
(a) Except as set forth in Part 3.11 of the Disclosure Letter, the
Company does not maintain or have any obligation to contribute to, and the
Company has no obligation with respect to any, bonus, deferred compensation,
severance, pension, profit-sharing, incentive, retirement, employment agreement,
change in control agreement, insurance, stock purchase, stock option, or other
fringe benefit plan, arrangement or practice, or any other "employee benefit
plan" (as defined in Section 3(3) of ERISA), whether formal or informal,
relating to any Employee (collectively, "Plans"). Except as set forth in Part
3.11 of the Disclosure Letter, none of the Plans is, and neither the Company nor
any ERISA Affiliate has ever maintained or had an obligation to contribute to:
(i) a plan subject to Title IV of ERISA or Section 412 of the IRC, (ii) a
"multiemployer plan," as defined in Section 3(37) of ERISA (a "Multiemployer
Plan"), (iii) a "multiple employer plan," as defined in ERISA or the IRC or (iv)
a funded welfare benefit plan, as defined in Section 419 of the IRC. The Company
does not have any commitment, whether formal or informal and whether legally
binding or not, to create any additional Plan or to change any existing Plan.
15
(b) With respect to each Plan, the Company has furnished or made
available to Purchasers true, correct and complete copies of (i) all documents
which comprise the most current version of each Plan, including any related
trust agreements, insurance contracts or other funding or investment agreements
and any amendments thereto, and (ii) with respect to each Plan listed in Part
3.11 of the Disclosure Letter that is an "employee benefit plan," as defined in
Section 3(3) of ERISA (an "ERISA Plan"), (A) the most recent Annual Report (Form
5500 Series) and accompanying schedules for each of the ERISA Plans for which
such a report is required, (B) the most current summary plan description (and
any summary of material modifications if a summary plan description is required
for such ERISA Plan, (C) the most recent certified financial statements for each
of the ERISA Plans for which such a statement is required or was prepared, and
(D) for each ERISA Plan intended to be "qualified" within the meaning of Section
401(a) of the IRC, the most recent Internal Revenue Service determination letter
issued with respect to such Plan. Since the date of the documents delivered,
there has not been any material change in the assets or liabilities of any of
the Plans or any change in their terms and operations which could reasonably be
expected to affect or alter the tax status or materially affect the cost of
maintaining such Plan, and none of the Plans has been or will be amended prior
to the Closing Date. Except as set forth in Part 3.11 of the Disclosure Letter,
each of the Plans can be amended, modified or terminated by the Company within a
period of thirty days, without payment of any additional compensation or amount
or the additional vesting or acceleration of any such benefits, except to the
extent that such vesting is required under the IRC upon the complete or partial
termination of any ERISA Plan intended to be qualified within the meaning of
Section 401(a) of the IRC.
(c) The Company has performed and complied in all material respects with
all of its obligations under and with respect to each of the Plans, and except
as set forth in Part 3.11 of the Disclosure Letter, each of the Plans has, at
all times, in form, operation and administration complied in all material
respects with its terms and, where applicable, the requirements of the IRC,
ERISA and all other applicable laws and regulations or is within the remedial
amendment period for adopting amendments to satisfy the IRC requirements. Except
as set forth in Part 3.11 of the Disclosure Letter, each ERISA Plan which is
intended to be "qualified" within the meaning of Section 401(a) of the IRC has
received a determination letter from the Internal Revenue Service as to its
qualified status and nothing has occurred which reasonably could be expected to
adversely affect such qualified status.
(d) There are no unpaid contributions due prior to the date hereof with
respect to any Plan that are required to have been made under its terms and
provisions, any related insurance contract or any applicable law or regulation.
(e) All group health plans covering employees of the Company have been
operated in material compliance with the requirements of Section 4980B of the
IRC (and any predecessor provisions) and Part 6 of Title I of ERISA (COBRA), the
provisions of law enacted by the Health Insurance Portability and Accountability
Act of 1996 (HIPAA), and any similar state law (collectively, "Continuation
Coverage Requirements").
16
(f) The Company has no obligation to provide any deferred compensation,
pension or non-pension benefits to retired or other former employees of the
Company, except for health benefits as specifically required by the Continuation
Coverage Requirements or pension benefits payable from an ERISA Plan intended to
be "qualified" within the meaning of Section 401(a) of the IRC.
(g) Neither the Company nor any other "disqualified person" or "party in
interest," as defined in Section 4975 of the IRC and Section 3(14) of ERISA,
respectively, has engaged in any "prohibited transaction," as defined in Section
4975 of the IRC or Section 406 of ERISA, with respect to any Plan, nor have
there been any fiduciary violations under ERISA which could subject the Company
(or any officer, director or employee thereof) to any material penalty or tax
under Section 502(i) of ERISA or Sections 4971 and 4975 of the IRC.
(h) Except as set forth in Part 3.11 of the Disclosure Letter, with
respect to any Plan: (i) no filing, application or other matter is pending with
the Internal Revenue Service, the PBGC, the United States Department of Labor or
any other governmental body, (ii) there is no action, suit or claim pending
(nor, to the Company's Knowledge, any basis for such a claim), other than
routine claims for benefits, (iii) there are no outstanding liabilities for
taxes, penalties or fees, and (iv) no "reportable event" (as defined in Section
4043 of ERISA), whether or not waived, has occurred.
(i) Except as set forth in Part 3.11 of the Disclosure Letter, the
Company has not incurred any liability or taken any action, and to the Company's
Knowledge, no action or event has occurred that could cause the Company to incur
any liability (i) under Section 412 of the IRC or Title IV of ERISA with respect
to any "single-employer plan" (as defined in Section 4001(a)(15) of ERISA), (ii)
on account of a partial or complete withdrawal (as defined in Sections 4203 and
4205 of ERISA, respectively) with respect to any Multiemployer Plan or (iii) on
account of unpaid contributions to any Multiemployer Plan.
(j) Except as set forth in Part 3.11 of the Disclosure Letter, neither
the execution and delivery of this Agreement nor the consummation of any or all
of the Contemplated Transactions will (i) entitle any current or former employee
of the Company to severance pay, unemployment compensation or any similar
payment, (k) accelerate the time of payment or vesting or increase the amount of
any compensation due to any such employee or former employee or (iii) directly
or indirectly result in any payment made or to be made to or on behalf of any
person to constitute a "parachute payment" within the meaning of Section 280G of
the IRC.
3.12 Compliance with Legal Requirements; Governmental Authorizations.
(a) Except as set forth in Part 3.12(a) of the Disclosure Letter:
(i) the Company is in compliance in all material respects with
each Legal Requirement applicable to it or to the conduct or operation of
its business or the ownership or use of any of its assets;
17
(ii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result in a material
violation by the Company of, or a material failure on the part of the
Company to comply in any material respect with, any Legal Requirement, or
(B) may give rise to any material obligation on the part of the Company to
undertake, or to bear all or any portion of the cost of, any remedial
action of any nature; and
(iii) the Company has not received any written notice from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential material violation of, or material failure to comply
with, any Legal Requirement, or (B) any actual, alleged, possible, or
potential material obligation on the part of the Company to undertake, or
to bear all or any portion of the cost of, any remedial action of any
nature.
(b) Part 3.12(b) of the Disclosure Letter contains a complete and
accurate list of each material Governmental Authorization that is held by the
Company or that otherwise relates to the business of, or to any of the assets
owned or used by, the Company. Each Governmental Authorization listed or
required to be listed in Part 3.12(b) of the Disclosure Letter is valid and in
full force and effect. Except as set forth in Part 3.12(b) of the Disclosure
Letter:
(i) the Company is in compliance in all material respects with
the terms and requirements of each Governmental Authorization identified or
required to be identified in Part 3.12(b) of the Disclosure Letter;
(ii) no event has occurred or circumstance exists that may (with
or without notice or lapse of time) (A) constitute or result directly or
indirectly in a material violation of or a material failure to comply with
any term or requirement of any Governmental Authorization listed or
required to be listed in Part 3.12(b) of the Disclosure Letter, or (B)
result directly or indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any material modification to, any
Governmental Authorization listed or required to be listed in Part 3.12(b)
of the Disclosure Letter;
(iii) the Company has not received any written notice from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential material violation of or material failure to comply
with any term or requirement of any Governmental Authorization, or (B) any
actual, proposed, possible, or potential revocation, withdrawal,
suspension, cancellation, termination of, or material modification to any
Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed
in Part 3.12(b) of the Disclosure Letter have been duly filed on a timely
basis with the appropriate Governmental Bodies, and all other
18
filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental Bodies.
The Governmental Authorizations listed in Part 3.12(b) of the Disclosure Letter
collectively constitute all of the Governmental Authorizations necessary to
permit the Company to lawfully conduct and operate its business in the manner it
currently conducts and operates such business and to permit the Company to own
and use its assets in the manner in which it currently owns and uses such
assets.
(c) The Company and its operations are in material compliance with all
applicable Health Care Laws, except as otherwise disclosed in Part 3.12(c) of
the Disclosure Letter. There is no investigation, hearing, inquiry, notice,
audit, claim or other civil, criminal, administrative Proceeding pending,
received or, to the Knowledge of the Company, threatened which could result in
any fines, injunctions, civil or criminal penalties, investigations, or
suspensions being imposed on the Company due to a violation of a Health Care
Law. Neither the Company nor any of its officers, directors, employees or agents
have, directly or indirectly, paid or delivered any fee, commission or other sum
of money or remuneration, however characterized, to any Person or have taken any
other action which in any manner materially violates any Health Care Law.
3.13 Legal Proceedings; Orders. Except as set forth in Part 3.13 of the
Disclosure Letter, there is no Proceeding (including, without limitation, any
Proceeding by any Governmental Body) pending, or, to the Knowledge of the
Company, threatened against the Company or its properties or assets. Except as
set forth in Part 3.13 of the Disclosure Letter, neither the Company, nor any of
its properties or assets, is subject to any Order, which is specific to the
Company.
3.14 Absence of Certain Changes and Events. Except as set forth in Part
3.14 of the Disclosure Letter, since the date of the Balance Sheet, the Company
has conducted its business only in the Ordinary Course of Business and there has
not been any:
(a) change in the Company's authorized or issued capital stock; grant of
any stock option or right to purchase shares of capital stock of the Company;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
the Company of any shares of any such capital stock; or declaration or payment
of any dividend or other distribution or payment in respect of shares of capital
stock, in each case, other than (i) securities set forth in Part 3.3 of the
Disclosure Letter, (ii) as specifically required by this Agreement and (iii) for
shares of Common Stock issued upon exercise of options set forth in Part 3.3 of
the Disclosure Letter;
(b) amendment to the organizational documents of the Company;
(c) payment or increase by the Company of any bonuses, salaries, or other
compensation to any stockholder, director, officer, or (except in the Ordinary
Course of Business) employee or entry into
19
any employment, severance, or similar Contract with any director, officer, or
employee, other than transactions specifically required by this Agreement;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees, directors
or officers of the Company, other than transactions specifically required by
this Agreement;
(e) damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance, materially and adversely affecting
the properties, assets, business or financial condition, of the Company;
(f) entry into, termination of, or receipt of written notice of
termination of (i) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar agreement, or (ii) any Contract or transaction
involving an annual amount or value to be paid by or payable to the Company of
at least $500,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease (other than leases of movable medical equipment in the Ordinary
Course of Business), or other disposition of any material asset or property of
the Company or mortgage, pledge, or imposition of any Encumbrance on any
material asset or property of the Company;
(h) cancellation or waiver of any claims or rights with a value to the
Company in excess of $500,000;
(i) material change in the accounting methods used by the Company; or
(j) agreement, whether oral or written, by the Company to do any of the
foregoing, other than as specifically required by this Agreement.
3.15 Contracts; No Defaults.
(a) Part 3.15(a) of the Disclosure Letter contains a complete and
accurate list, and the Company has delivered to the Purchasers true and complete
copies, of:
(i) each Contract that involves performance of services or
delivery of goods or materials by the Company reasonably expected by the
Company to be for an annual amount or value in excess of $500,000,
including, for purposes of this clause (a)(i), each Contract with group
purchasing organizations (GPOs), Integrated Delivery Networks (IDNs) and
Contracts relating to asset management partnership programs (AMPPs),
regardless of annual amount or value;
20
(ii) each Contract that involves performance of services or
delivery of goods or materials to the Company of an amount or value in
excess of $500,000;
(iii) each Contract that would be a "material contract" (as
defined in Item 601(b)(10) of Regulation S-K promulgated by the SEC and
assuming the Company was obligated to file applicable reports under the
Exchange Act) to be performed after the date of this Agreement;
(iv) each (A) lease, sub-lease, rental or occupancy agreement
and other Contract affecting the leasing or use of, or any leasehold or
other interest in, any real property used or occupied by the Company, by
office location and (B) each lease, license, installment and conditional
sale agreement and other Contract affecting the ownership of, leasing of,
title to, use of, or any leasehold or other interest in, any personal
property (except personal property leases and installment and conditional
sales agreements having a value per item or aggregate payments of less than
$500,000 and with terms of less than one year);
(v) each licensing agreement or other Contract with respect to
patents, trademarks, copyrights, or other intellectual property, excluding
(A) agreements with current and former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Company's Intellectual Property Rights and (B) perpetual, paid-up licenses
for commonly available software programs;
(vi) each joint venture, partnership, and other Contract
(however named) involving a sharing of profits, losses, costs, or
liabilities by the Company with any other Person;
(vii) each Contract containing covenants that in any way purport
to restrict the business activity of the Company or limit the freedom of
the Company to engage in any line of business or to compete with any
Person;
(viii) each Contract providing for payments to or by any Person
based on sales, purchases, or profits, other than direct payments for
goods;
(ix) each power of attorney that is currently effective and
outstanding;
(x) each Contract for capital expenditures in excess of
$500,000;
(xi) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by the Company
other than in the Ordinary Course of Business; and
21
(xii) each amendment, supplement, and modification (whether oral
or written) in respect of any of the foregoing.
(b) Except as set forth in Part 3.15(b) of the Disclosure Letter, each
Contract identified or required to be identified in Part 3.15(a) of the
Disclosure Letter is in full force and effect and is valid and enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights and general principles of equity that
restrict the availability of equitable remedies.
(c) Except as set forth in Part 3.15(c) of the Disclosure Letter:
(i) the Company is in compliance in all material respects with
the terms and requirements of each Contract;
(ii) to the Knowledge of the Company, each other Person that has
any obligation or liability under any Contract is in compliance in all
material respects with the terms and requirements of such Contract;
(iii) to the Knowledge of the Company, no event has occurred or
circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with, or result in a material violation or material
breach of, or give the Company or other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Contract; and
(iv) the Company has not given to or received from any other
Person any written notice regarding (A) any actual, alleged, possible, or
potential material violation or material breach of, or default under, any
Contract or (B) termination or non-renewal of any Contract.
(d) The Company has received no written demands to renegotiate, and, to
the Knowledge of the Company, there are no outstanding rights to renegotiate,
any material amounts paid or payable to the Company under current or completed
Contracts with any Person.
(e) The Contracts relating to the sale or provision of products or
services by the Company have been entered into in the Ordinary Course of
Business and have been entered into without the commission of any act alone or
in concert with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any Legal Requirement.
3.16 Insurance. Part 3.16 of the Disclosure Letter contains a true and
complete listing of all current insurance policies insuring the Company and its
assets, properties and business against losses and risks, and any bonds issued
concerning the Company, detailing the coverage insured against and the amount
thereof, the insurance carrier and the policy number. All of said policies are
in full force and effect, are with
22
insurers of recognized responsibility, and are in such amounts as the Company
reasonably believes are customary in the case of companies of established
reputation engaged in the same or similar business and similarly situated. Part
3.16 of the Disclosure Letter further includes a statement of individual claims
for insured losses over $250,000 filed by the Company since January 1, 2001,
except for workers' compensation claims processed in the Ordinary Course of
Business. The Company has not been refused any insurance coverage sought or
applied for, and the Company has no reason to believe that it will be unable to
renew its existing insurance coverage as and when the same shall expire upon
terms at least as favorable as those presently in effect, other than possible
increases in premiums that do not result from any act or omission of the
Company.
3.17 Environmental Matters. (a) Except as set forth in Part 3.17 of the
Disclosure Letter, (i) the Company, the operation of it business, and any real
property that the Company owns or leases (the "Premises") are in compliance in
all material respects with all Environmental Laws; (ii) each location at which
the Company currently operates its business is, and each location at which the
Company has operated its business prior to the date of this Agreement was during
such time, in compliance in all material respects with all Environmental Laws;
and (iii) there are no pending, or to the Company's Knowledge, any threatened
allegations by any Person that any of the Premises is not, or that the Company's
business has not been conducted, in compliance in all material respects with all
Environmental Laws.
(b) The Company does not use, handle or accumulate hazardous or
toxic substances or waste (other than janitorial supplies) and has not
caused a release or disposal of a hazardous or toxic substance at any of
the Premises which is likely to result in material liability to the Company
under any Environmental Laws.
(c) The Company has not received written notice that it is
considered a responsible party for a release of a hazardous or toxic
substance at any of the Premises or at any location to which the Company
has transported or arranged for transportation of waste materials.
3.18 Employees. To the Company's Knowledge, no employee or director of the
Company is a party to, or is otherwise bound by, any agreement or arrangement,
including any confidentiality, noncompetition, or proprietary rights agreement,
between such employee or director and any other Person ("Proprietary Rights
Agreement") that in any way adversely affects or will affect (i) the performance
of his duties as an employee or director of the Company, or (ii) the ability of
the Company to conduct its business, including any Proprietary Rights Agreement
with the Company by any such employee or director.
3.19 Labor Relations; Compliance. The Company has no collective bargaining
agreements with any of its employees. To the Knowledge of the Company, there is
no labor union organizing activity pending or threatened with respect to the
Company. The Company has complied in all material respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing.
23
3.20 Intellectual Property.
(a) The Company owns, free and clear of all Encumbrances, or has the
valid right to use, and has the right to bring action for past and present
infringement of, all Intellectual Property (as defined below in this Section
3.20) used by it in its business as currently conducted or as currently proposed
to be conducted (the "Intellectual Property Rights"). Except as set forth in
Part 3.20 of the Disclosure Letter, no other Person (other than licensors of
software that is generally commercially available) has any rights to any of the
Intellectual Property Rights, and, to the Company's Knowledge, no other Person
is infringing, violating or misappropriating any of the Intellectual Property
Rights. For purposes of this Agreement, "Intellectual Property" means all (i)
patents, patent applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, reexamination, utility model,
certificate of invention and design patents, patent applications, registrations
and applications for registrations, (ii) trademarks, service marks, trade dress,
logos, trade names and corporate names and registrations and applications for
registration thereof, (iii) copyrights and registrations and applications for
registration thereof, (iv) Internet domain names and registrations and
applications for registration thereof, (v) computer software (in both source
code and object code form), data and documentation, (vi) trade secrets and
confidential business information, whether patentable or unpatentable and
whether or not reduced to practice, know-how, manufacturing and production
processes and techniques, research and development information, business and
marketing plans and customer and supplier lists and information, and (vii) other
proprietary rights relating to any of the foregoing.
(b) To the Company's Knowledge, none of the activities or business
conducted by the Company or proposed to be conducted by the Company (or any of
its employees or consultants, in such capacity) infringes, violates or
constitutes a misappropriation of any Intellectual Property of any other Person.
The Company has not received any written complaint, claim or notice alleging any
such infringement, violation or misappropriation, and to the Knowledge of the
Company, there is no basis for any such complaint, claim or notice.
3.21 Certain Payments. Since January 1, 2001, neither the Company, nor any
director, officer, agent, or employee of the Company, or, to the Company's
Knowledge, any other Person associated with or acting for or on behalf of the
Company, has directly or indirectly (a) made any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other payment to any Person,
private or public, regardless of form, whether in money, property, or services
(other than contributions and gifts made in accordance with applicable Company
policies and Legal Requirements) (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of the Company or any Affiliate of the Company, or (iv) in violation
of any Legal Requirement, or (b) established or maintained any fund or asset
that has not been recorded in the books and records of the Company.
24
3.22 Relationships with Related Persons. Since January 1, 2001, no
Affiliate, officer, director or stockholder holding more than five percent (5%)
of the outstanding capital stock of the Company (each, a "Related Person") has
had any interest in any property (whether real, personal, or mixed and whether
tangible or intangible), used in or pertaining to the business of the Company.
Since January 1, 2001, no Related Person of the Company has owned (of record or
as a beneficial owner) an equity interest or any other financial or profit
interest in, a Person that has (i) had business dealings or a material financial
interest in any transaction with the Company other than business dealings or
transactions conducted in the Ordinary Course of Business with the Company at
substantially prevailing market prices and on substantially prevailing market
terms, or (ii) engaged in competition with the Company with respect to any line
of the products or services of the Company (a "Competing Business") in any
market presently served by the Company, except for less than one percent of the
outstanding capital stock of any Competing Business that is publicly traded on
any recognized exchange or in the over-the-counter market. Except as set forth
in Part 3.22 of the Disclosure Letter, no Related Person of the Company is a
party to any Contract with, or has any claim or right against, the Company.
3.23 Brokers or Finders. Except as set forth in Part 3.23 of the
Disclosure Letter, the Company has incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payments in connection with this Agreement.
3.24 Offering Valid. Assuming the accuracy of the representations and
warranties of each Purchaser contained in Section 4.3, the offer, sale and
issuance of the Shares will be exempt from the registration requirements of the
Securities Act, and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities Legal Requirements. Neither the
Company nor any agent on its behalf has solicited or will solicit any offers to
sell or has offered to sell or will offer to sell all or any part of the Shares
to any Person or Persons so as to prevent the Company from relying upon an
exemption from the registration requirements of the Securities Act or applicable
state blue sky securities laws.
3.25 SEC Reports. The Company has on a timely basis filed all forms,
reports and documents required to be filed by it with the SEC since January 1,
2001. Except to the extent available in full without redaction on the SEC's web
site through the Electronic Data Gathering, Analysis and Retrieval System
("XXXXX") two days prior to the date of this Agreement, the Company has
delivered to the Purchasers copies in the form filed with the SEC of (i) the
Company's Annual Reports on Form 10-K for each fiscal year of the Company since
January 1, 2001, (ii) its Quarterly Reports on Form 10-Q for each of the first
three fiscal quarters in each of the fiscal years of the Company referred to in
clause (i) above, (iii) all certifications and statements required by (x) the
SEC's Order dated June 27, 2002, pursuant to Section 21(a)(1) of the Exchange
Act (File No. 4-460), (y) Rule 13a-14 or 15d-14 under the Exchange Act or (z) 18
U.S.C. Section 1350 (Section 906 of the Xxxxxxxx-Xxxxx Act of 2002) with respect
to any report referred to in clause (i) or (ii) above, (y) all other forms,
reports, registration statements and other documents (other than preliminary
materials if the corresponding definitive materials have been provided to the
Purchasers pursuant to this Section 3.25) filed by the Company with the SEC
since the beginning of the first fiscal year
25
referred to in clause (i) above (the forms, reports, registration statements and
other documents referred to above are, collectively, the "Company SEC Reports"
and, to the extent available in full without redaction on the SEC's web site
through XXXXX two days prior to the date of this Agreement, are, collectively,
the "Filed Company SEC reports"), and (iv) all comment letters received by the
Company from the staff of the SEC since January 1, 2001 and all responses to
such comment letters by or on behalf of the Company. The Company SEC Reports (x)
were prepared in accordance with the requirements of the Securities Act and the
Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder and (y) did not at the time they were filed with the SEC contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading. The
Company maintains disclosure controls and procedures as required by Rule 15d-15
under the Exchange Act; such controls and procedures have been designed to
ensure that all information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms. As used in this Section 3.25, the term "file" shall be broadly construed
to include any filing or voluntary filing of a document that would be required
to be filed (rather than furnished) by a reporting company required to file
reports with the SEC pursuant to Section 15(d) of the Exchange Act.
4. Representations and Warranties of the Purchasers.
Each Purchaser hereby represents and warrants, severally and not jointly,
to the Company as follows:
4.1 Organization and Good Standing. If an entity, such Purchaser is an
entity duly organized, validly existing, and in good standing under the Legal
Requirements of the State of its formation.
4.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding obligation
of such Purchaser, enforceable against such Purchaser in accordance with its
terms and, upon the execution and delivery by such Purchaser of the Stockholders
Agreement, the Stockholders Agreement will constitute the legal, valid, and
binding obligations of such Purchaser, enforceable against such Purchaser in
accordance with its terms, except in each case as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights and general principles of
equity that restrict the availability of equitable remedies. All action on the
part of such Purchaser necessary for the performance of its obligations
hereunder and under the Stockholders Agreement has been taken or will be taken
prior to the Closing.
(b) Neither the execution and delivery of this Agreement by such
Purchaser nor the consummation or performance of any of the Contemplated
Transactions by such Purchaser will give any
26
Person the right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to:
(i) any provision of such Purchaser's organizational documents;
(ii) any Legal Requirement or Order to which such Purchaser may
be subject; or
(iii) any contract to which such Purchaser is a party or by which
such Purchaser may be bound.
(c) Except as set forth in Schedule 4.2(c), such Purchaser is not and
will not be required to obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the consummation or performance
of any of the Contemplated Transactions.
4.3 Investment Representations. Without limiting the Company's
representation and warranty in Section 3.24, such Purchaser understands that the
offer and sale of the Shares have not been registered under the Securities Act
or the blue sky securities laws of any state. Such Purchaser also understands
that the Shares are being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon such Purchaser's
representations contained in this Agreement. Such Purchaser hereby represents
and warrants to the Company as follows:
(a) Purchaser Bears Economic Risk. Such Purchaser understands that it
must bear the economic risk of this investment indefinitely unless the transfer
of the Shares is registered pursuant to the Securities Act, or an exemption from
registration is available. Such Purchaser understands that the Company has no
present intention of registering the transfer of the Shares or any other shares
of its Common Stock. Such Purchaser also understands that there is no assurance
that any exemption from registration under the Securities Act will be available
and that, even if available, such exemption may not allow such Purchaser to
transfer all or any portion of the Shares under the circumstances, in the
amounts or at the times such Purchaser might propose.
(b) Acquisition for Own Account. Such Purchaser is acquiring the Shares
for its own account for investment only, and not with a view towards their
distribution.
(c) Purchaser Can Protect Its Interest. Such Purchaser has substantial
experience in evaluating and investing in private placement transactions of the
securities of business entities similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Such Purchaser represents that by reason
of its, or its management's, business or financial experience, such Purchaser
has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement and the Stockholders Agreement.
27
(d) Accredited Investor. Such Purchaser represents that it is an
"accredited investor" within the meaning of Regulation D under the Securities
Act. Such Purchaser is not an entity specifically formed for the purpose of
consummating these transactions.
4.4 Legend. Such Purchaser understands and acknowledges that the stock
certificates evidencing the Shares will be imprinted with legends in the form
set forth below.
"THE OFFER AND SALE OF THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED
OR SOLD UNLESS THEIR OFFER AND SALE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS OF AN AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER ___, 2003, AS
AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE WITH
AND AVAILABLE FROM THE SECRETARY OF THE COMPANY."
4.5 Certain Proceedings. There is no pending Proceeding that has been
commenced against such Purchaser and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To such Purchaser's Knowledge, no such Proceeding has
been threatened.
4.6 Brokers or Finders. Such Purchaser has incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
5. Covenants of the Company.
5.1 Access and Investigation. Between the date of this Agreement and the
Closing Date, the Company will, and will cause each of its Representatives to,
(a) afford the Purchasers and their respective Representatives and prospective
lenders and their respective Representatives (collectively, the "Purchasers'
Advisors") reasonable access during normal business hours to the Company's
personnel, properties, Contracts, books and records, and other documents and
data reasonably related to the Company's business, assets and/or properties and
within the Company's possession or control, (b) furnish the Purchasers and the
Purchasers' Advisors with copies of all such Contracts, books and records, and
28
other existing documents and data as the Purchasers may reasonably request, and
(c) furnish the Purchasers and the Purchasers' Advisors with such additional
financial, operating, and other data and information as the Purchasers may
reasonably request.
5.2 Operation of the Business of the Company. Between the date of this
Agreement and the Closing Date, the Company will:
(a) conduct the business of the Company only in the Ordinary Course of
Business, except for (i) the transactions specifically required by this
Agreement and (ii) the sale of the Company's owned facility located at 0000 00xx
Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx;
(b) use its reasonable Best Efforts to preserve intact the current
business organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents,
and others having business relationships with the Company;
(c) confer with the Purchasers concerning operational matters of a
material nature;
(d) not make or change any Tax election, not change any annual Tax
accounting period, not adopt or change any method of Tax accounting, or take or
omit to take any other action if such action or omission would have the effect
of materially increasing the Tax liability of the Company; and
(e) otherwise report periodically to the Purchasers concerning the status
of the business, operations, and finances of the Company.
5.3 Negative Covenant. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, the Company
will not, without the prior written Consent of the Purchasers, take any action,
or fail to take any action within its control, as a result of which any of the
changes or events listed in Section 3.14 is reasonably likely to occur.
5.4 Required Approvals. As promptly as practicable after the date of this
Agreement, the Company will make all filings required by Legal Requirements to
be made by it in order to consummate the Contemplated Transactions. Between the
date of this Agreement and the Closing Date, the Company will reasonably
cooperate with the Purchasers with respect to all filings that the Purchasers
are required by Legal Requirements to make in connection with the Contemplated
Transactions.
5.5 Notification. Between the date of this Agreement and the Closing
Date, the Company will promptly notify the Purchasers in writing if the Company
becomes aware of any fact or condition that causes or constitutes a breach of
any of the Company's representations and warranties as of the date of this
Agreement, or if the Company becomes aware of the occurrence after the date of
this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute
29
a breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Disclosure Letter if the Disclosure Letter were dated the date of the occurrence
or discovery of any such fact or condition, the Company will promptly deliver to
the Purchasers a supplement to the Disclosure Letter specifying such change.
During the same period, the Company will promptly notify the Purchasers of the
occurrence of any Breach of any covenant of the Company in this Section 5 or of
the occurrence of any event that may make the satisfaction of the conditions in
Section 7 impossible or reasonably unlikely. No disclosure by the Company
pursuant to this Section 5.5, however, shall be deemed to amend or supplement
the Exhibits hereto or the Disclosure Letter or to prevent or cure any
misrepresentation, breach or inaccuracy of any representation, warranty or
covenant.
5.6 Further Assurances. The Company shall prior to, on or after the
Closing Date, as may be appropriate, execute such documents and other papers and
take such other further actions as may be reasonably required to carry out the
provisions hereof and to effectuate the Contemplated Transactions. The Company
shall use its reasonable Best Efforts to fulfill or obtain the fulfillment of
the conditions to the Closing within its control, including obtaining any
Consents required in connection therewith.
5.7 Exclusivity. Between the date of this Agreement and the Closing Date,
the Company shall not, directly or indirectly, through any officer, director,
employee, Representative, Affiliate or agent, or otherwise, (i) solicit or
encourage the submission of inquiries, proposals or offers from any Person
relating to any acquisition or purchase of assets of, or any equity interest in,
the Company or any merger, consolidation, business combination,
recapitalization, spin-off, liquidation, dissolution or similar transaction
involving the Company, directly or indirectly (each, an "Acquisition Proposal"),
(ii) participate in any discussions or negotiations regarding any Acquisition
Proposal or furnish to any Person non-public information concerning the Company
or any information concerning an Acquisition Proposal or (iii) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person to make or enter into any agreement
with respect to any Acquisition Proposal. The Company shall promptly advise the
Purchasers of any Acquisition Proposal which is received.
6. Covenants of the Purchasers.
6.1 Required Approvals. As promptly as practicable after the date of this
Agreement, each Purchaser will, and will cause each of its Affiliates to, make
all filings required by Legal Requirements to be made by it to consummate the
Contemplated Transactions. Between the date of this Agreement and the Closing
Date, each Purchaser will, and will cause each of its Affiliates to, (a)
reasonably cooperate with the Company with respect to all filings that the
Company is required by Legal Requirements to make in connection with the
Contemplated Transactions, and (b) reasonably cooperate with the Company in
obtaining all Consents identified in Part 3.2(c) of the Disclosure Letter.
30
6.2 Further Assurances. Each Purchaser shall prior to, on or after the
Closing Date, as may be appropriate, execute such documents and other papers and
take such other further actions as may be reasonably required to carry out the
provisions hereof and to effectuate the Contemplated Transactions. Each
Purchaser shall use its reasonable Best Efforts to fulfill or obtain the
fulfillment of the conditions to the Closing within its control, including
obtaining any Consents required in connection therewith.
7. Conditions Precedent to the Purchasers' Obligation to Close.
The Purchasers' obligation to purchase the Shares and to take the other
actions required to be taken by the Purchasers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Purchasers, in whole or in part):
7.1 Accuracy of Representations.
(a) Each of the representations and warranties of the Company (i) set forth
in Sections 3.1, 3.2, and 3.3 of this Agreement or (ii) that contains an express
materiality qualification must have been accurate and complete in all respects
on the date when made and on the Closing Date as if made on the Closing Date
(unless the representations and warranties address matters as of a particular
date, in which case they shall be true and correct in all respects as of such
date) and (b) all of the other representations and warranties of the Company
must have been accurate and complete in all material respects on the date when
made and on the Closing Date as if made on the Closing Date (unless the
representations and warranties address matters as of a particular date, in which
case they shall be true and correct in all material respects as of such date),
in each case, without giving effect to any supplement to the Disclosure Letter.
7.2 The Company's Performance. All of the covenants and obligations that
the Company is required to perform or comply with pursuant to this Agreement
prior to the Closing that contain an express materiality qualification must have
been performed or complied with by the Company in all respects, and (b) all of
the other covenants and obligations that the Company is required to perform or
comply with pursuant to this Agreement prior to the Closing must have been
performed or complied with by the Company in all material respects.
7.3 Consents. The Consents identified in Part 3.2(c) of the Disclosure
Letter as agreed between the Company and the Purchasers must have been obtained
and must be in full force and effect.
7.4 No Proceedings. Since the date of this Agreement, there must not have
been commenced or threatened in writing against any Purchaser, or against any
Affiliate of any Purchaser, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the Contemplated Transactions, in
either case, which, if determined adversely against such Purchaser, would have a
Purchaser Material Adverse Effect.
31
7.5 No Injunction. There must not be in effect any Legal Requirement or
any injunction or other Order that prohibits the consummation of any part of the
Contemplated Transactions.
7.6 Recapitalization Transactions. The transactions constituting (a) the
Offering and the Refinancing, in an aggregate principal amount not less than
$260,000,000, shall have been consummated, or shall be deemed consummated
simultaneously, (b) the Repurchases shall have been commenced and (c) the Tender
Offer shall have been commenced and the Company shall have purchased at least a
majority of its outstanding 10 1/4% senior notes due 2008 in connection
therewith.
7.7 Closing Deliveries. The Company shall have delivered to each
Purchaser the documents, certificates and instruments required to be delivered
pursuant to Section 2.5(a).
7.8 Certified Damages.
(a) The amount by which the Aggregate Certified Damages Amount exceeds
the Basket Amount shall not exceed $5,000,000.
(d) Each Purchaser that delivered a certificate pursuant to Section 10.1
shall in good faith be able to ascertain the amount of Damages specified in such
certificate for which it will be entitled to assert claims following the
Closing.
8. Conditions Precedent to the Company's Obligation to Close.
The Company's obligation to sell the Shares and to take the other actions
required to be taken by the Company at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Company, in whole or in part):
8.1 Accuracy of Representations.
(a) Each of the representations and warranties of each Purchaser (i) set
forth in Sections 4.1 and 4.2 of this Agreement or (ii) that contains an express
materiality qualification must have been accurate and complete in all respects
on the date when made and on the Closing Date as if made on the Closing Date
(unless the representations and warranties address matters as of a particular
date, in which case they shall be true and correct in all respects as of such
date) and (b) all of the other representations and warranties of each Purchaser
must have been accurate and complete in all material respects on the date when
made and on the Closing Date as if made on the Closing Date (unless the
representations and warranties address matters as of a particular date, in which
case they shall be true and correct in all material respects as of such date).
32
8.2 The Purchasers' Performance.
(a) All of the covenants and obligations that each Purchaser is required
to perform or comply with pursuant to this Agreement prior to the Closing that
contain an express materiality qualification must have been performed or
complied with by such Purchaser in all respects and (b) all of the other
covenants and obligations that each Purchaser is required to perform or comply
with pursuant to this Agreement prior to the Closing must have been performed or
complied with by such Purchaser in all material respects.
8.3 No Proceedings. Since the date of this Agreement, there must not have
been commenced or threatened in writing against the Company, or against any
Affiliate of the Company, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the Contemplated Transactions, in
either case, which, if determined adversely against the Company, would have a
Company Material Adverse Effect.
8.4 No Injunction. There must not be in effect any Legal Requirement or
any injunction or other Order that prohibits the consummation of any part of the
Contemplated Transactions.
8.5 Recapitalization Transactions. The transactions constituting (a) the
Offering and the Refinancing, in an aggregate principal amount not less than
$260,000,000, shall have been consummated, or shall be deemed consummated
simultaneously, (b) the Repurchases shall have been commenced and (c) the Tender
Offer shall have been commenced and the Company shall have purchased at least a
majority of its outstanding 10 1/4% senior notes due 2008 in connection
therewith.
8.6 Closing Deliveries. Each Purchaser shall have delivered to the
Company the documents, certificates and instruments required to be delivered
pursuant to Section 2.5(b).
8.7 Certified Damages.
(a) The amount by which the Aggregate Certified Damages Amount exceeds
the Basket Amount shall not exceed $5,000,000.
(b) Each Purchaser that delivered a certificate pursuant to Section 10.1
shall in good faith be able to ascertain the amount of Damages specified in such
certificate for which it will be entitled to assert claims following the
Closing.
9. Termination.
9.1 Termination Events. This Agreement may, by notice given prior to or
at the Closing, be terminated:
33
(a) by either the Purchasers, on the one hand, or the Company, on the
other hand, if a material breach of any provision of this Agreement has been
committed by the other and such breach has not been waived;
(b) (i) by the Purchasers if satisfaction of any of the conditions in
Section 7 is or becomes impossible (other than through the failure of any
Purchaser to comply with its obligations under this Agreement) and the
Purchasers have not waived such condition; or (ii) by the Company, if
satisfaction of any of the conditions in Section 8 is or becomes impossible
(other than through the failure of the Company to comply with its obligations
under this Agreement) and the Company has not waived such condition;
(c) by mutual consent of the Purchasers and the Company;
(d) by either the Purchasers, on the one hand, or the Company, on the
other hand, if the Closing has not occurred (other than through the failure of
any party seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before November 30, 2003, or such later
date as the parties may agree upon;
(e) by either the Purchasers, on the one hand, or the Company, on the
other hand, if the amount by which the Aggregate Certified Damages Amount
exceeds the Basket Amount exceeds $5,000,000.
(f) by either the Purchasers, on the one hand, or the Company, on the
other hand, if the Purchaser(s) that delivered certificate(s) pursuant to
Section 10.1 is or are (as applicable) not able to ascertain in good faith the
amount of Damages specified in such certificate(s) for which such Purchaser(s)
will be entitled to assert claims following the Closing.
9.2 Effect of Termination. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 11.1 and 11.3 will survive; provided, however,
that if this Agreement is terminated by a party because of the breach of this
Agreement by the other party or parties (as applicable), or because one or more
of the conditions to the terminating party's obligations under this Agreement is
not satisfied as a result of the other party's or parties' (as applicable)
failure to comply with its or their obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
10. Indemnification; Remedies.
10.1 Survival; Indemnification Not Affected by Knowledge. All
representations, warranties, covenants, and obligations in this Agreement, the
Disclosure Letter, the supplements to the Disclosure Letter and any other
certificate or document delivered pursuant to this Agreement will survive
34
the Closing. The right to indemnification, payment of Damages (as defined below)
or other remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or before or after
the Closing Date, with respect to the accuracy or inaccuracy of, or compliance
with, any such representation, warranty, covenant, or obligation. The waiver of
any condition (including any Closing condition) by any party hereto based on the
accuracy of any representation or warranty, or on the performance of, or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations. Notwithstanding the
foregoing, if, on or prior to the Closing Date, any Purchaser has Knowledge (i)
that it is entitled to assert claims for Damages, or (ii) of any fact or
circumstance that is reasonably likely to result in the Company being
responsible for any Damages ("Pre-Closing Claims"), it shall promptly, but in
any event prior to the Closing, provide the Company with a certificate that sets
forth a description of all such matters and such Purchaser's estimate of
applicable Damages (the "Certified Damages Amount"), or if such Purchaser
determines in good faith that the amount of Damages is not ascertainable, the
certificate shall state that Damages are not ascertainable.
10.2 Indemnification by the Company. The Company will indemnify and hold
harmless the Purchasers and their respective Representatives, stockholders,
controlling Persons and Affiliates (collectively, the "Purchaser Indemnified
Persons") for, and will pay to the Purchaser Indemnified Persons the amount of,
any loss, liability, claim, damage (including punitive damages to the extent
liable to a Governmental Body or other third party), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by the Company in
this Agreement; or
(b) any breach by the Company of any covenant or obligation of the
Company in this Agreement;
provided, however, that, notwithstanding Section 2.4, each Investor shall have
the right, severally and not jointly, to seek indemnification for Damages
pursuant to this Section 10; provided, further, that, to the extent that any
Management Holder has incurred or suffered any Damages arising from claims for
which the Company is liable for indemnification pursuant to this Section 10,
such Management Holder shall (i) only be entitled to receive its Pro Rata
Portion of the aggregate amount of Damages awarded to either one or both of the
Investors for such claims; (ii) not have the right to independently seek
indemnification with respect to any of the facts or matters giving rise to such
claims, (iii) have no right to participate in the defense of, or otherwise to
take any action with respect to, any claim for indemnification hereunder and
(iv) be bound by all of the actions taken by, and the amount of Damages awarded
to, the Investors with respect to all such claims. Absent fraud, intentional
misrepresentation or willful breach, the remedies
35
provided in this Section 10 will be the exclusive remedy available to the
Purchasers or any other Purchaser Indemnified Person.
10.3 Indemnification by the Purchasers. Each Purchaser will, severally and
not jointly, indemnify and hold harmless the Company and its Representatives,
stockholders, controlling Persons and Affiliates (collectively, the "Company
Indemnified Persons") for, and will pay to the Company Indemnified Persons the
amount of, any Damages arising, directly or indirectly, from or in connection
with (a) any breach of any representation or warranty made by such Purchaser in
this Agreement or (b) any breach by such Purchaser of any covenant or obligation
of such Purchaser in this Agreement. Absent fraud, intentional representation or
willful breach, the remedies provided in this Section 10.3 will be the exclusive
remedy available to the Company or any other Company Indemnified Person.
10.4 Time Limitations. If the Closing occurs, the Company will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, other than those in Sections 3.1, 3.2, 3.3, 3.9, 3.11, 3.17 and
3.23, unless on or before December 31, 2004, one or more Purchasers notify the
Company of a claim specifying the factual basis of that claim in reasonable
detail to the extent then known by such Purchaser(s); provided, however, that a
claim with respect to Sections 3.1, 3.2, 3.3, 3.9, 3.11 or 3.23 may be made at
any time and a claim with respect to Section 3.17 may be made at any time prior
to the third anniversary of the Closing Date. If the Closing occurs, no
Purchaser will have any liability (for indemnification or otherwise) with
respect to any representation or warranty, unless on or before December 31,
2004, the Company notifies such Purchaser of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by the
Company; provided, however, that a claim with respect to Sections 4.1, 4.2 or
4.6 may be made at any time. Notwithstanding anything to the contrary in this
Section 10.4, a claim for indemnification (a) under Section 10.2(b) or 10.3(b)
(as the case may be) or (b) for fraud or intentional misrepresentation, may be
made at any time.
10.5 Limitations on Amount -- the Company. The Company will have no
liability (for indemnification or otherwise) with respect to the matters
described in Section 10.2(a) until the total of all Damages with respect to such
matters exceeds, with respect to all Purchaser Indemnified Persons, the
aggregate amount of $1,000,000 (the "Basket Amount") or, with respect to each
individual Purchaser Indemnified Person, such Purchaser's Pro Rata Portion of
the Basket Amount, in any event, only for the amount of such excess. The
aggregate liability of the Company (for indemnification or otherwise) with
respect to the matters described in Section 10.2(a) shall not exceed, with
respect to all Purchaser Indemnified Persons, $27,500,000 (the "Cap Amount") or,
with respect to each individual Purchaser Indemnified Person, such Purchaser's
Pro Rata Portion of the Cap Amount. Notwithstanding the foregoing, this Section
10.5 will not apply to any claims (a) based upon a breach of any representation
or warranty in Sections 3.1, 3.2, 3.3, 3.9, 3.11 or 3.23, (b) for
indemnification under Section 10.2(b) or (c) for fraud or intentional
misrepresentation. Notwithstanding anything in this Agreement to the contrary,
if a certificate is delivered by any Purchaser pursuant to Section 10.1 and if
the Closing occurs, the amount of Damages for which such Purchaser will be
entitled to assert claims following the Closing shall not be limited by virtue
of the fact that such Purchaser delivered a certificate pursuant to Section
10.1.
36
10.6 Limitations on Amount -- the Purchasers. No Purchaser will have any
liability (for indemnification or otherwise) with respect to the matters
described in Section 10.3(a) until the total of all Damages with respect to such
matters exceeds the Basket Amount and only for the amount of such excess. The
aggregate liability of the Purchasers (for indemnification or otherwise) with
respect to the matters described in Section 10.3(a) shall not exceed the Cap
Amount. Notwithstanding the foregoing, this Section 10.6 will not apply to any
claims (a) based upon a breach of any representation or warranty in Sections
4.1, 4.2 or 4.6, (b) for indemnification under Section 10.3(b) or (c) for fraud
or intentional misrepresentation.
10.7 Payment of Damages by the Company. Except as otherwise provided in
this Section 10.7, in the event that the Company shall be liable for the payment
of Damages pursuant to this Section 10, such Damages shall be paid by the
Company as follows:
(a) Subject to clause (c) below, with respect to any claim for
indemnification for any matter not involving a third-party claim asserted
against any Purchaser, solely by the issuance and delivery to the Purchaser(s)
seeking indemnification for such claim of that number of additional shares of
Common Stock so as to (i) decrease the Existing Stockholders Equity (as it may
be reduced from time to time pursuant to this Section 10.7) to the extent of
such Damages and (ii) increase the proportionate ownership of the Purchasers to
reflect such reduced Existing Stockholders Equity relative to the Purchasers'
aggregate purchase price hereunder of $55,750,000. For purposes of illustration
only, attached as Exhibit F hereto is an example of the calculations and
adjustments in connection with the issuance of additional shares of Common Stock
pursuant to this clause (a). Notwithstanding the foregoing, in the event and to
the extent that the issuance of additional shares of Common Stock pursuant to
this clause (a) would result in an "ownership change" of the Company under
Section 382 of the IRC, then the Purchasers shall not be entitled to receive,
and the Company shall not be obligated to issue, such additional shares of
Common Stock, but instead the Company shall satisfy its indemnification
obligation in cash by wire transfer to an account (or accounts) specified by the
relevant Purchaser Indemnified Person(s) in writing.
(b) With respect to any claim for indemnification for any matter
involving a third-party claim asserted against one or more Purchaser Indemnified
Persons, by cash payment in an amount equal to the Damages claimed by such
Purchaser Indemnified Person(s) by wire transfer to an account (or accounts)
specified by such Purchaser Indemnified Person(s) in writing; provided, however,
that any cash payment made by the Company pursuant to this clause (b) shall give
rise to a claim for Damages under clause (a) above.
(c) Notwithstanding the foregoing, with respect to any claim for
indemnification arising from or in connection with any breach by the Company of
any of its covenants or obligations in this Agreement, if the Closing does not
occur, by cash payment in an amount equal to the Damages claimed by any
Purchaser Indemnified Person(s) by wire transfer to an account (or accounts)
specified by such Purchaser Indemnified Person(s) in writing.
37
10.8 Procedure for Indemnification -- Third Party Claims.
(a) Promptly after receipt by an Indemnified Party under Section 10.2 or
Section 10.3 of notice of the commencement of any Proceeding against it, such
Indemnified Party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement of
such claim, but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any Indemnified
Party, except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the Indemnified Party's failure to give
such notice.
(b) If any Proceeding referred to in Section 10.8(a) is brought against
an Indemnified Party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes (unless the
indemnifying party is also a party to such Proceeding and the Indemnified Party
determines in good faith that joint representation would be inappropriate), to
assume the defense of such Proceeding with counsel reasonably satisfactory to
the Indemnified Party and, after notice from the indemnifying party to the
Indemnified Party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the Indemnified Party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the Indemnified Party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) no compromise or
settlement of such claims may be effected by the indemnifying party without the
Indemnified Party's prior written consent, which shall not be unreasonably
withheld, unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the Indemnified Party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (ii) the Indemnified Party will have no liability with respect to any
compromise or settlement of such claims effected without its consent. If notice
is given to an indemnifying party of the commencement of any Proceeding and the
indemnifying party does not, within ten (10) days after the Indemnified Party's
notice is given, give notice to the Indemnified Party of its election to assume
the defense of such Proceeding, the indemnifying party will not be permitted to
assume the defense of such Proceeding, in which case the indemnifying party will
not be bound by any compromise or settlement of such Proceeding entered into
without its prior written consent, which shall not be unreasonably withheld. A
party not assuming the defense of any Proceeding hereunder may participate
therein at its own expense.
10.9 Procedure for Indemnification -- Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by written notice to the party from which indemnification is sought.
38
11. General Provisions.
11.1 Expenses. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
Representatives, counsel, and accountants; provided, however, that upon the
Closing, the Company shall pay (x) to Halifax Genpar, L.P. a fee of $400,000 and
(y) to the Investors, the fees and expenses and other out-of-pocket costs
incurred by them in connection with the negotiation, preparation, execution and
administration of this Agreement and the Stockholders Agreement and the
transactions contemplated hereby and thereby, in each case, promptly upon
receipt of reasonable supporting documentation therefor. In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a breach of
this Agreement by another party; provided, however, that in the event that the
amount by which the Aggregate Certified Damages Amount exceeds the Basket Amount
exceeds $5,000,000 and this Agreement is terminated, the Company shall reimburse
each Investor for all actual out-of-pocket expenses incurred by such Investor in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
Representatives, counsel, and accountants.
11.2 Public Announcements. Prior to the Closing Date, except to the extent
required by applicable Legal Requirements, none of Purchasers or the Company
shall, directly or indirectly, issue any report, statement or press release
concerning, or otherwise publicly disclose, the Contemplated Transactions and/or
the terms and conditions of this Agreement, without the prior written consent of
the Purchasers (in the case of the Company) or the Company (in the case of the
Purchasers), which consent shall not be unreasonably withheld or delayed;
provided, that Purchasers shall be deemed to have consented to, and no separate
written consent shall be required in connection with, those documents reviewed
and approved by the attorneys for the Company and the Purchasers for use in
connection with the Recapitalization, including documents to be provided to
securityholders and potential purchasers of securities in the Offering. In the
event any such report, statement or press release or other public disclosure is
required by applicable Legal Requirements, the parties will consult prior to the
making thereof and use their reasonable Best Efforts to agree upon a mutually
satisfactory text. Notwithstanding the foregoing, each party to this Agreement
(and each Representative or other agent of each such party) may disclose to any
and all Persons, without limitations of any kind, the Tax treatment and Tax
structure of the Contemplated Transactions, and all materials of any kind
(including opinions or other Tax analyses) that are provided to the party
relating to such Tax treatment and Tax structure; provided, however, that the
foregoing permission to disclose the Tax treatment and Tax structure does not
permit the disclosure of any identifying information or any information that is
not relevant to understanding the Tax treatment or Tax structure of the
Contemplated Transactions; provided, further, however, that the Tax treatment
and Tax structure shall be kept confidential to the extent necessary to comply
with federal or state securities laws.
39
11.3 Confidentiality. Between the date of this Agreement and the Closing
Date, the Purchasers, on the one hand, and the Company, on the other hand, will
maintain in confidence, and not use to the detriment of the other, and will
cause their respective directors, officers, employees, agents, and advisors to
maintain in confidence, any written, oral, or other information obtained in
confidence from another party in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
Consent required for the consummation of the Contemplated Transactions, or (c)
the furnishing or use of such information is required by any Proceeding to which
such party is a party or pursuant to applicable Legal Requirements
("Confidential Information"). Notwithstanding the foregoing, (i) each Purchaser
may disclose Confidential Information to its partners, members, Affiliates and
Representatives to the extent that such disclosure reasonably relates to the
administration or evaluation of the investment represented by the Shares
purchased by such Purchaser and (ii) each party to this Agreement, (and each
employee, Representative, or other agent of each such party) may disclose to any
and all Persons, without limitations of any kind, the Tax treatment and Tax
structure of the Contemplated Transactions, and all materials of any kind
(including opinions or other Tax analyses) that are provided to the party
relating to such Tax treatment and Tax structure; provided, however, that the
foregoing permission to disclose the Tax treatment and Tax structure does not
permit the disclosure of any identifying information or any information that is
not relevant to understanding the Tax treatment or Tax structure of the
Contemplated Transactions; provided, further, however, that the Tax treatment
and Tax structure shall be kept confidential to the extent necessary to comply
with federal or state securities laws.
11.4 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by registered mail, return receipt requested, or (c) the Business Day
following delivery to a nationally recognized overnight delivery service
(requiring signature for delivery), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by written notice to the other
parties):
the Company:
Universal Hospital Services, Inc.
0000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Chief Executive Officer
Facsimile No.: 000-000-0000
with copies to:
Universal Hospital Services, Inc.
40
0000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: General Counsel
Facsimile No.: 000-000-0000
Xxxxxx & Xxxxxxx LLP
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile No.: 000-000-0000
Childs:
X.X. Childs Equity Partners III, L.P.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxx
Facsimile No.: 617-753-1101
with a copy to:
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: 000-000-0000
Halifax:
The Halifax Group
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile No.: 000-000-0000
with a copy to:
Xxxxxx & Xxxxxxx LLP
000 00/xx/ Xx. XX
00
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile No.: 000-000-0000
11.5 Jurisdiction; Service of Process. Any action or Proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the parties in the courts of the State of New
York, County of New York, or, if it has or can acquire jurisdiction, in the
United States District Court for the Southern District of New York, and each of
the parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or Proceeding and waives any objection to
venue laid therein. Process in any action or Proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
11.6 Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11.7 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter,
including, but not limited to, any confidentiality or secrecy agreements between
any Investor, on the one hand, and the Company, on the other hand, and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
11.8 Disclosure Letter. The disclosures in the Disclosure Letter shall
qualify the corresponding section or clause in Section 3 of this Agreement. Any
matter or item disclosed in any Part of the Disclosure Letter will be deemed
disclosed with respect to another Part of the Disclosure Letter only if such
disclosure is made in such a way as to make its relevance with respect to such
other Part of the Disclosure Letter apparent on its face.
42
11.9 Assignments, Successors, and No Third-Party Rights. None of the
parties may assign any of its rights under this Agreement without the prior
written consent of the other parties, except that (a) each Purchaser may assign
any of its rights under this Agreement to any of its Affiliates, provided that
no assignment shall relieve a party of its responsibility for the performance of
any obligation under this Agreement, and (b) Xxxx X. Xxxxxxxxx may, with the
prior written consent of the Investors, assign prior to the Closing the right
and the obligation to purchase a portion of the Shares which he is obligated to
purchase hereunder to any director, officer or management employee of the
Company, provided that any such assignment shall be expressly conditioned upon
the execution and delivery by such assignee of a joinder agreement,
substantially in the form of Exhibit G hereto. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
11.10 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.11 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
11.12 Time of Essence. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
11.13 Governing Law. This Agreement will be governed by the laws of the
State of New York without regard to conflicts of law principles.
11.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
11.15 Specific Performance. The parties agree that irreparable damages
would occur if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly hereby agreed that the parties shall be entitled to an injunction or
injunctions to prevent actual or anticipated breaches of this Agreement and to
otherwise specifically enforce
43
in any court having jurisdiction all of the foregoing in addition to any other
remedy to which they are entitled at law or in equity and without the necessity
of proving damages or posting a bond or other security.
[NEXT PAGE IS SIGNATURE PAGE]
44
IN WITNESS WHEREOF, the parties have executed and delivered this Stock
Purchase Agreement as of the date first written above.
UNIVERSAL HOSPITAL SERVICES, INC.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President and Chief
Executive Officer
Stock Purchase Agreement
Continuation of Counterpart Signature Pages
-------------------------------------------
X.X. CHILDS EQUITY PARTNERS III, L.P.
By: X.X. Childs Advisors III, L.P.,
General Partner
By: X.X. Childs Associates, L.P.,
General Partner
By: X.X. Childs Associates, Inc.,
General Partner
By: /s/ Xxxxxx X. Xxx
------------------------------------
Name: Xxxxxx X. Xxx
Title: Partner
JWC FUND III CO-INVEST, LLC
By: X.X. Childs Associates, L.P.,
Manager
By: X.X. Childs Associates, Inc.,
General Partner
By: /s/ Xxxxxx X. Xxx
------------------------------------
Name: Xxxxxx X. Xxx
Title: Partner
Stock Purchase Agreement
Continuation of Counterpart Signature Pages
-------------------------------------------
HALIFAX CAPITAL PARTNERS, L.P.
By: Halifax Genpar, L.P.
By: The Halifax Group, L.L.C.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title:Principal and vice President
Stock Purchase Agreement
Continuation of Counterpart Signature Pages
-------------------------------------------
MANAGEMENT HOLDERS
XXXX X. XXXXXXXXX
----------------------------------------
XXXX X. XXXXXXXXX
Exhibit A
---------
Amended Certificate
-------------------
[Not included]
49
Exhibit B
---------
Amended Bylaws
--------------
[Not included]
50
Exhibit C
---------
Amended and Restated Stockholders Agreement
[Not included]
51
Exhibit D
---------
Xxxxxx & Whitney Opinion Letter
-------------------------------
[Not included]
52
Exhibit E
---------
Xxxxxxxxx Employment Agreement
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[Not included]
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Exhibit F
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Example of Payment of Stock Indemnity Under Section 10.7
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Assuming that post-closing: (1) the equity of the Company is valued at $123
million, (2) the Existing Stockholders Equity is equal to $68 million (or 55.28%
of the total equity), (3) the aggregate Purchasers equity is equal to $55
million (or 44.72% of the total equity), (4) there are 10,250,000 shares of the
Company's common stock outstanding and (4) the Company is liable to the
Purchasers pursuant to an indemnification claim for Damages in an amount equal
to $10 million, then:
1. The adjusted equity valuation of the Company would be $113 million (i.e.,
$123 million minus the $10 million in Damages).
2. The Existing Stockholders Equity would be reduced by the $10 million in
Damages to $58 million (or 51.33%).
3. The Purchaser's aggregate ownership percentage would be increased from
44.72% to 48.67% (i.e., calculated by dividing $55 million (the constant
investment amount) by the adjusted equity valuation of the Company of $113
million) by the Company's issuance of additional shares of Common Stock.
4. The Company will issue to the Purchasers 789,679 additional shares of
Common Stock, which number would be determined by subtracting:
(a) the original amount of shares held by the Purchaser
(4,583,333), from
(b) the product of 48.67% and the number of common shares
outstanding (10,250,000), and dividing the resulting amount by
(c) 51.33% (1 minus 48.67%).
54
Exhibit G
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Joinder Agreement
-----------------
The undersigned is executing and delivering this Joinder Agreement pursuant
to the Stock Purchase Agreement, dated as of September 26, 2003 (the "Purchase
Agreement"), among Universal Hospital Services, Inc., a Delaware corporation
(the "Company"), and the Purchasers signatory thereto.
By executing and delivering this Joinder Agreement to the Company, the
undersigned hereby agrees to become a party to, to be bound by, and to comply
with the provisions of the Purchase Agreement in the same manner as if the
undersigned were an original signatory to such agreement as a Purchaser. In
connection therewith, effective as of the date hereof, the undersigned hereby
makes the representations and warranties contained in the Purchase Agreement.
Accordingly, the undersigned has executed and delivered this Joinder
Agreement as of the __ day of ____________, _____.
----------------------------------------
Signature of Purchaser
55
Schedule 1
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Schedule of Purchasers
----------------------
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Aggregate
Purchaser Name Number of Shares Purchase Price
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X.X. Childs Equity Partners III,
L.P. 2,873,244.33 $ 34,478,932
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JWC Fund III Co-invest LLC 43,422.33 $ 521,068
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Halifax Capital Partners, L.P. 1,666,666.67 $ 20,000,000
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Xxxx X. Xxxxxxxxx 62,500 $ 750,000
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56