STOCK PURCHASE AGREEMENT
BY AND AMONG
RKDA, INC.
("BUYER")
AND
ARCADIA SERVICES, INC.
("COMPANY")
AND
ADDUS HEALTHCARE, INC.
("SELLER")
AND
W. XXXXXX XXXXXX
("XXXXXX")
May 7, 2004
TABLE OF CONTENTS
Page
ARTICLE I SALE AND TRANSFER OF SHARES; PURCHASE PRICE; WORKING CAPITAL ADJUSTMENT; UNCOLLECTED ACCOUNTS
RECEIVABLE; CLOSING.........................................................................1
1.1 Sale and Purchase of Shares.............................................................................1
1.2 Purchase Price..........................................................................................1
1.3 Working Capital Adjustment..............................................................................2
1.4 Payment of Purchase Price...............................................................................3
1.5 Uncollected Accounts Receivable.........................................................................4
1.6 Closing. ...........................................................................................5
1.7 Closing Obligations.....................................................................................5
1.8 [INTENTIONALLY OMITTED].................................................................................7
1.9 Depository Account......................................................................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY, SELLER AND XXXXXX.........................................7
2.1 Organization and Good Standing..........................................................................7
2.2 Authority/Enforceability................................................................................7
2.3 No Conflict. 8
2.4 Capitalization..........................................................................................8
2.5 Financial Statements....................................................................................8
2.6 Books and Records.......................................................................................9
2.7 Title to Properties; Encumbrances.......................................................................9
2.8 Real Property...........................................................................................9
2.9 Condition and Sufficiency of Assets....................................................................12
2.10 Accounts Receivable....................................................................................12
2.11 Inventory. ..........................................................................................13
2.12 Taxes. ..........................................................................................13
2.13 No Material Adverse Change.............................................................................14
2.14 Employee Benefits......................................................................................14
2.15 Compliance with Legal Requirements.....................................................................15
2.16 Governmental Authorizations............................................................................16
2.17 Legal Proceedings; Orders..............................................................................16
2.18 Absence of Certain Changes and Events..................................................................16
2.19 Contracts; No Defaults.................................................................................17
2.20 Insurance. ..........................................................................................20
2.21 Environmental Matters..................................................................................21
2.22 Employees/Representatives..............................................................................23
2.23 Labor Relations; Compliance............................................................................23
2.24 Intellectual Property..................................................................................24
2.25 Subsidiaries...........................................................................................25
2.26 Finders or Broker Fees.................................................................................25
2.27 Competitive Interest...................................................................................25
2.28 Related Party Transactions.............................................................................25
2.29 Intercompany Transactions..............................................................................26
2.30 Bank Accounts; Business Locations......................................................................26
2.31 Name; Prior Transactions...............................................................................26
2.32 Disclosure. 26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER.............................................................26
3.1 Organization and Good Standing.........................................................................26
3.2 Authority; No Conflict.................................................................................27
3.3 Certain Proceedings....................................................................................27
3.4 Finders or Broker Fees.................................................................................27
ARTICLE IV COVENANTS OF COMPANY AND SELLER PRIOR TO CLOSING DATE................................................27
4.1 Access and Investigation...............................................................................28
4.2 Operation of the Business of Each Acquired Company.....................................................28
4.3 Requirement; Approvals.................................................................................28
4.4 Notification.28
4.5 Payment of Indebtedness by Related Persons.............................................................29
4.6 No Solicitation or Negotiation.........................................................................29
4.7 Best Efforts.29
4.8 Title Insurance........................................................................................29
4.9 Intercompany Debt......................................................................................29
4.10 Workers Compensation Liabilities.......................................................................29
4.11 Payment of Taxes.......................................................................................30
ARTICLE V COVENANTS OF BUYER PRIOR TO CLOSING DATE..............................................................30
5.1 Approvals of Governmental Bodies.......................................................................30
5.2 Best Efforts.30
ARTICLE VI CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE..................................................30
6.1 Accuracy of Representations............................................................................30
6.2 Satisfactory Due Diligence.............................................................................30
6.3 Seller's Performance...................................................................................31
6.4 Consents. ..........................................................................................31
6.5 Additional Documents...................................................................................31
6.6 No Proceedings.........................................................................................31
6.7 No Claim Regarding Stock Ownership of Sale Proceeds....................................................31
6.8 No Prohibition.........................................................................................31
6.9 Resignation of Officers................................................................................31
6.10 Financing. ..........................................................................................32
6.11 Absence of Litigation..................................................................................32
6.12 No Material Adverse Change.............................................................................32
6.13 Permits and Licenses...................................................................................32
6.14 Real Estate Lease Agreements...........................................................................32
6.15 Xxxxxxxx Release.......................................................................................32
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATION OF COMPANY AND THE SELLER TO CLOSE..............................32
7.1 Accuracy of Representations............................................................................32
7.2 Buyer's Performance....................................................................................32
7.3 Additional Documents...................................................................................33
7.4 No Injunction..........................................................................................33
ARTICLE VIII TERMINATION........................................................................................33
8.1 Termination Events.....................................................................................33
8.2 Effect of Termination..................................................................................33
8.3 Limitation of Liability/Disbursement of Deposit........................................................34
ARTICLE IX INDEMNIFICATION, REMEDIES AND POST CLOSING COVENANTS.................................................34
9.1 Survival; Knowledge....................................................................................34
9.2 Indemnification and Payment of Damages.................................................................35
9.3 Indemnification and Payment of Damages by Buyer........................................................36
9.4 Termination of Obligations of Company..................................................................37
9.5 Survival of Representations and Warranties.............................................................37
9.6 Indemnification Limitations............................................................................37
ARTICLE X DEFINITIONS 38
10.1 "Accounts Receivable"..................................................................................38
10.2 "Acquired Companies"...................................................................................38
10.3 "Acquired Company".....................................................................................38
10.4 "Agreement"............................................................................................38
10.5 "Best Efforts".........................................................................................38
10.6 "Breach" ..........................................................................................39
10.7 "Buyer" ..........................................................................................39
10.8 "Buyer's Advisors".....................................................................................39
10.9 "Buyer's Closing Documents"............................................................................39
10.10 "Cash Payment".........................................................................................39
10.11 "Closing" ..........................................................................................39
10.12 "Closing Date".........................................................................................39
10.13 "Company Assets".......................................................................................39
10.14 "Consent" or "Consents"................................................................................39
10.15 "Contemplated Transactions"............................................................................39
10.16 "Contract" ..........................................................................................40
10.17 "Current Assets".......................................................................................40
10.18 "Current Liabilities"..................................................................................40
10.19 "Damages"..............................................................................................40
10.20 "Delinquent Accounts Receivable".......................................................................40
10.21 "Employment Agreement".................................................................................40
10.22 "Employee Benefit Plan"................................................................................40
10.23 "Encumbrance"..........................................................................................40
10.24 "Environment"..........................................................................................40
10.25 "Environmental, Health, and Safety Liabilities"........................................................40
10.26 "Environmental Law"....................................................................................41
10.27 "ERISA" ..........................................................................................42
10.28 "Exempt Damages".......................................................................................42
10.29 "Exempt Provisions"....................................................................................42
10.30 "Facilities"...........................................................................................42
10.31 "Fiduciary"............................................................................................42
10.32 [INTENTIONALLY OMITTED]................................................................................42
10.33 "Financial Statements".................................................................................42
10.34 "GAAP" ..........................................................................................42
10.35 "Governmental Authorization"...........................................................................42
10.36 "Governmental Body"....................................................................................42
10.37 "Hazardous Activity"...................................................................................42
10.38 "Hazardous Materials"..................................................................................42
10.39 "HSR Act"..............................................................................................42
10.40 "Indebtedness".........................................................................................42
10.41 "Indemnified Persons"..................................................................................43
10.42 "Intellectual Property Assets".........................................................................43
10.43 "Intercompany Debt"....................................................................................43
10.44 "Interim Financial Statements".........................................................................43
10.45 "IRC" ..........................................................................................43
10.46 "IRS" ..........................................................................................43
10.47 "Knowledge".......................................................................................... 43
10.48 "Leased Property"......................................................................................43
10.49 "Legal Requirement"....................................................................................43
10.50 "Liability" ..........................................................................................44
10.51 "Limitation"...........................................................................................44
10.52 "Material Adverse Change (or Effect)"..................................................................44
10.53 "Occupational Safety and Health Law"...................................................................44
10.54 "Order" ..........................................................................................44
10.55 "Ordinary Course of Business"..........................................................................44
10.56 "Organizational Documents".............................................................................44
10.57 "Person" ..........................................................................................44
10.58 "Proceeding"...........................................................................................44
10.59 [INTENTIONALLY OMITTED]................................................................................44
10.60 "Purchase Price".......................................................................................45
10.61 "Real Property"........................................................................................45
10.62 "Records" ..........................................................................................45
10.63 "Release" ..........................................................................................45
10.64 "Representatives"......................................................................................45
10.65 "Sale Transaction".....................................................................................45
10.66 "Seller's Closing Documents"...........................................................................45
10.67 "Seller's Noncompetition Agreement"....................................................................45
10.68 "Seller's Release".....................................................................................45
10.69 "Shares" ..........................................................................................45
10.70 "Subsidiaries".........................................................................................45
10.71 "Tax" ..........................................................................................45
10.72 "Tax Return"...........................................................................................45
10.73 "Threat of Release"....................................................................................46
10.74 "Threatened"...........................................................................................46
10.75 "Workers Compensation Reserve".........................................................................46
ARTICLE XI GENERAL PROVISIONS...................................................................................46
11.1 Confidentiality........................................................................................46
11.2 Expenses. ..........................................................................................46
11.3 Schedules. ..........................................................................................47
11.4 Public Announcements...................................................................................47
11.5 Dispute Resolution; Jurisdiction and Venue.............................................................47
11.6 Notices. ..........................................................................................47
11.7 Certain Taxes..........................................................................................48
11.8 Recoupment.............................................................................................48
11.9 Further Assurances.....................................................................................49
11.10 Waiver. ..........................................................................................49
11.11 Entire Agreement and Modification......................................................................49
11.12 Construction...........................................................................................49
11.13 Assignments; Successors; No Third Party Rights.........................................................50
11.14 Severability...........................................................................................50
11.15 Section Headings.......................................................................................50
11.16 Time of Essence........................................................................................50
11.17 Governing Law..........................................................................................50
11.18 Arm's Length Negotiations..............................................................................50
11.19 Counterparts/Facsimile Signatures......................................................................50
11.20 Records. ..........................................................................................51
11.21 Proration of Taxes.....................................................................................51
11.22 Execution Without Exhibits and Schedules...............................................................51
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into effective as of May
_, 2004, by and among RKDA, Inc., a Michigan corporation ("Buyer"), Arcadia
Services, Inc., a Michigan corporation ("Company"), Addus HealthCare, Inc., an
Illinois corporation ("Seller") and W. Xxxxxx Xxxxxx, an Illinois resident
("Xxxxxx"). Certain other capitalized terms used herein are defined in Article X
and throughout this Agreement.
R E C I T A L S :
A. Company is engaged through its wholly owned subsidiaries in home care,
professional healthcare staffing services and light industrial staffing services
(the "Business"), and Seller owns all of the issued and outstanding shares (the
"Shares") of capital stock of Company.
X. Xxxxxx owns, directly or indirectly, 92.4% of the issued and outstanding
shares of capital stock of Seller.
C. The facilities of Company and its subsidiaries consist of Company's
leased corporate headquarters at 00000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000, and nine (9) leased Company store locations
(collectively, the "Facilities").
D. Seller desires to sell, and Buyer desires to purchase, all of the Shares
upon the terms and subject to the conditions, representations, warranties and
covenants contained in this Agreement.
E. Seller and Xxxxxx are joining in this Agreement as a material inducement
to Buyer and as a condition to Buyer's willingness to enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises
representations, warranties and covenants herein contained, the parties agree as
follows:
ARTICLE I SALE AND TRANSFER OF SHARES; PURCHASE PRICE; WORKING CAPITAL
ADJUSTMENT; UNCOLLECTED ACCOUNTS RECEIVABLE; CLOSING
1.1 Sale and Purchase of Shares. Subject to the terms and conditions of
this Agreement, at the Closing, Seller will sell, convey, assign, deliver and
transfer the Shares to Buyer, and Buyer will purchase the Shares from Seller
free and clear of any Encumbrances.
1.2 Purchase Price. The purchase price for the Shares will be Sixteen
Million Six Hundred Thousand and No/100 Dollars ($16,600,000), plus payment in
the amount set forth in the agreements identified on Schedule 1.2, by Company or
Seller to Xxxxx Xxxxxxxx, Xxxxxxx Xxx, Xxxxxxx Xxxxxxx and Lakshu Sundaram as a
result of the transaction contemplated in this Agreement, plus or minus the
adjustment amount provided for in Section 1.3 hereof (collectively, the
"Purchase Price").
1.3 Working Capital Adjustment. At and following the Closing, the Purchase
Price shall be adjusted as follows:
1.3.1 The Seller and Buyer acknowledge that the Purchase Price is
based on the assumption that the net working capital of the Company on
a consolidated basis as of the Closing Date will be within the range
of $8,900,000 and $9,200,000 (the "Base Net Working Capital Range").
For purposes of this Agreement, the term "Net Working Capital of
Company" shall mean the Current Assets of the Company on a
consolidated basis minus the Current Liabilities of the Company on a
consolidated basis, all as of the Closing Date and calculated in
accordance with GAAP in a manner consistent with prior practice,
except for the reclassification of the Affiliate Office Long Term
Liability (defined below). The parties acknowledge and agree that (a)
there are and will be no liabilities of the Company other than (i)
Current Liabilities and (ii) the long term liability resulting from
the reclassification of a portion of the "affiliate office payables"
account from a current liability to a long term liability ("Affiliate
Office Long Term Liability"), (b) that Buyer is not assuming any
liabilities other than Current Liabilities and the Affiliate Office
Long Term Liability, and (c) additionally, Buyer is not assuming any
workers compensation liabilities for periods prior to the Closing Date
except for claims for benefits for employees located in Ohio and
Washington, to the extent that contributions to the respective state
agency for such claims for benefits are as of the Closing Date fully
and adequately reserved for in the financial statements of the
Acquired Companies, and except liabilities arising from occurrences
after the Closing Date, and that any such liabilities will be
satisfied in whole by Seller and/or Xxxxxx.
1.3.2 At the Closing, Buyer and Seller shall mutually agree that
the Net Working Capital of the Company as of the Closing Date shall
fall within the Base Net Working Capital Range of $8,900,000 to
$9,200,000.
1.3.3 [INTENTIONALLY OMITTED].
1.3.4 [INTENTIONALLY OMITTED].
1.3.5 [INTENTIONALLY OMITTED].
1.3.6 Within sixty (60) days following the Closing, Buyer and
Seller shall mutually determine the final Net Working Capital of
Company as of the Closing Date (the "Final Net Working Capital"),
compare it to the Base Net Working Capital Range, and calculate an
adjustment to the Purchase Price for purposes of this Agreement. If
the Final Net Working Capital is greater than $9,200,000 (the high end
of the Base Net Working Capital Range), the Purchase Price shall be
increased dollar for dollar by the lesser of: (a) $200,000, or (b) the
amount by which such Final Net Working Capital exceeds $9,200,000
("Positive Adjustment"). If the Final Net Working Capital is less than
$8,900,000 (the low end of the Base Net Working Capital Range) the
Purchase Price shall be reduced dollar for dollar by the lesser of:
(a) $200,000, or (b) the amount by which $8,900,000 exceeds the Final
Net Working Capital ("Negative Adjustment"). The Seller shall, within
sixty (60) days of the determination of the Final Net Working Capital,
refund to Buyer, by cashiers or certified check or by interbank wire
transfer, the amount of any Negative Adjustment to the Purchase Price.
The amount of any Positive Adjustment to the Purchase Price shall be
paid to the Seller within sixty (60) days of the determination of the
Final Net Working Capital. Notwithstanding anything contained herein
to the contrary, under no circumstances shall the Positive Adjustment
amount or the Negative Adjustment amount, as applicable, exceed
$200,000.
2
1.3.7 If Buyer and Seller are unable to mutually agree upon the
Final Net Working Capital, or the Positive Adjustment or Negative
Adjustment, within the time period set forth in this Section 1.3, then
such dispute shall be referred to a mutually agreed upon Independent
Accountant for a final determination. Each party shall furnish to the
Independent Accountant such work papers and other documents and
information that the party may desire or as the Independent Accountant
may request and each party will be afforded the opportunity to present
information to the Independent Accountant and to discuss with the
Independent Accountant the determination of the Final Net Working
Capital, and the Positive Adjustment or Negative Adjustment. The
Independent Accountant shall make a determination of the Final Net
Working Capital, and the Positive Adjustment or Negative Adjustment,
in a written notice delivered to the parties within thirty (30)
business days following the date of his appointment ("Determination
Notice"), which Determination Notice shall be final, binding and
conclusive upon the parties. All costs, fees and expenses of the
Independent Accountant shall be paid equally by Buyer and Seller.
1.4 Payment of Purchase Price. The Purchase Price shall be payable at the
Closing, as follows:
1.4.1 The sum of Sixteen Million One Hundred Thousand and No/100
Dollars ($16,100,000), minus the Deposit, shall be paid by Buyer to
Seller by bank cashiers or certified check or by interbank wire
transfer, at Seller's option ("Cash Payment").
1.4.2 [INTENTIONALLY OMITTED].
1.4.3 An unsecured promissory note from the Company payable to
Seller in the aggregate principal amount of Five Hundred Thousand and
No/100 Dollars ($500,000), in the form attached hereto as
Exhibit 1.4.3 (the "Promissory Note"). One of the purposes of the
Promissory Note shall be to fund in whole or in part (through
recoupment/offset in Buyer's sole discretion) valid indemnification
claims against Seller and/or Xxxxxx. The Note shall be fully unsecured
and all rights of the Seller thereunder shall be inferior and
subordinated to any Liability owed by Company or Buyer to its primary
bank ("Company's Lender") and all the rights and interest of Company's
Lender in connection with Company's working capital (including
necessary future increases) and acquisition revolver loans. Seller
agrees to execute and deliver such reasonable subordination agreements
and instruments as may be requested from time to time by Company's
Lender and agrees that the Promissory Note shall be in such form and
contain such provisions as are mutually satisfactory to Company's
Lender and Seller. The Promissory Note shall be for a term of one (1)
year from the Closing Date and shall provide for the principal payment
of $500,000, less any offsets pursuant to Buyer's/Company's recoupment
rights under Section 11.8 hereof, on the first anniversary date from
the Closing Date. If after the Closing Date the Company makes a
distribution to its shareholders (other than Seller) in the form of a
dividend, distribution, recapitalization, share redemption/repurchase
or otherwise (other than distributions to allow Company's shareholders
to pay taxes and in connection with the Company raising capital,
reasonable salaries for services rendered and reimbursement of
reasonable business expenses), then the Buyer shall immediately pay to
Seller any remaining principal payments on the Promissory Note.
3
1.4.4 Buyer has delivered on March 12, 2004 to Seller and Seller
acknowledges receipt of a deposit in the amount of One Hundred
Thousand and No/100 Dollars ($100,000) (the "Deposit"). In exchange
for Buyer making the Deposit, Seller and Xxxxxx hereby grant to Buyer
and/or its affiliates the exclusive right, for ninety (90) days from
March 12, 2004, to pursue the Contemplated Transactions and the
Closing thereon and failing such to otherwise continue negotiating
with Seller and Xxxxxx for the sale of the Company and/or
substantially all of the Company's assets, and during such ninety (90)
day period Seller and Xxxxxx and their affiliates agree to refrain
from entering into any communications, discussions, negotiations or
agreements with any other person or entity for such purposes. From
March 12, 2004 until the date of execution of this Agreement, the
Deposit shall constitute an interest free loan of $100,000 from Buyer
to Seller payable as set forth in Article VIII. However, from and
after such time as the execution of this Agreement, the Deposit shall
be deemed held by Seller in escrow and applied against the Purchase
Price at Closing, or in the event that this Agreement is terminated
prior to Closing, disbursed in the manner set forth in Article VIII.
The parties agree that the Deposit could be used for the transaction
in Cleveland (the "Cleveland Transaction") if not otherwise returned
under Article VIII.
1.5 Uncollected Accounts Receivable. The Seller and Xxxxxx agree that in
the event that for any reason whatsoever the Company shall not collect the full
face amount of each and every Account Receivable included in the Company Assets,
less the reserve for doubtful accounts and affiliate office holdback set forth
in the Financial Statements as of the Closing Date, within two hundred and ten
(210) days following the Closing Date (collectively the "Delinquent Accounts
Receivable"), and the Delinquent Accounts Receivable have been written off of
Company's books, then within seven (7) business days of Seller's receipt of
written notice from Buyer regarding such Delinquent Accounts Receivable, Seller
shall refund to Buyer, by cashiers or certified check or by interbank wire
transfer, the full amount of such Delinquent Accounts Receivable or, at the
option of Buyer, the Company shall have the right to reduce, on a dollar for
dollar basis, the principal amount due or to become due under the Promissory
Note, or otherwise, by the amount of such Delinquent Accounts Receivable. Upon
receipt of payment from Seller, or application of such offset and recoupment by
the Buyer in its sole discretion, Seller may request that the Company assign the
uncollected Delinquent Accounts Receivable to Seller and upon such request the
Company shall so assign the Delinquent Accounts Receivable. Further, any
subsequent collection by the Company of an assigned Delinquent Account
Receivable shall be promptly paid to Seller. The rights of the Buyer under this
Section are elective and in addition to all other rights and remedies of Buyer.
For purposes of this Section, all payments received by the Company or an
Acquired Company on any Accounts Receivable shall be applied by the Company
either as designated by the payor or to the specific Accounts Receivable to
which such payment applies, and otherwise to the oldest Accounts Receivable of
the payor. Accounts Receivable subject to payment plans of which Buyer has been
made aware, which payment plans extend beyond two hundred ten (210) days of
Closing and which are not in default, shall not be considered Delinquent
Accounts Receivable.
4
1.6 Closing. Unless this Agreement is terminated pursuant to Section 8.1,
the purchase and sale (the "Closing") provided for in this Agreement will take
place at the offices of Xxxx, Xxxxxxx and Xxxxx, PLC, 000 Xxxxxxxx Xxx., Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000 at 10:00 a.m. (local time) or at such other place
and time as is mutually agreed upon, on the later of (i) May 7, 2004, or (ii) on
such subsequent Friday and at such other time and place as the parties may
mutually agree. The Closing shall be effective 12:01 a.m. EST following the
Closing Date. Subject to the provisions of Article VIII, failure to consummate
the purchase and sale provided for in this Agreement on the date and time and at
the place determined pursuant to this Section 1.6 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.
1.7 Closing Obligations. At the Closing:
1.7.1 Seller will deliver to Buyer (collectively the "Seller's
Closing Documents"):
(a) Certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers);
(b) A Release in the form of Exhibit 1.7.1(b) executed by
Seller indicating that Seller shall release the Acquired
Companies from any and all claims, liabilities and obligations
("Seller's Release");
(c) A Release in the form of Exhibit 1.7.1(c) executed by
Xxxxxx indicating that Xxxxxx shall release the Acquired
Companies from any and all claims, liabilities and obligations
("Xxxxxx Release");
(d) A Noncompetition Agreement in the form of Exhibit
1.7.1(d), executed by Seller and Xxxxxx (the "Seller
Noncompetition Agreement");
(e) [INTENTIONALLY OMITTED];
(f) [INTENTIONALLY OMITTED].
(g) A Certificate executed by Seller and Xxxxxx,
respectively, representing and warranting to Buyer that each of
Seller's and Xxxxxx'x representations and warranties
(respectively) in this Agreement are accurate in all respects as
of the date of this Agreement and are accurate in all respects as
of the Closing Date as if made on the Closing Date;
(h) The Consents;
5
(i) The resignation of Xxxxxx and Xxxxxx Xxxx and such other
individuals identified on Schedule 1.7.1(i), as officers,
directors and employees of the Acquired Companies as the case may
be, effective as of the Closing Date, in form and substance
satisfactory to Buyer's counsel;
(j) The Addus Paynet Software License in the form of Exhibit
1.7.1(j) executed by Seller;
(k) An Encumbancy Certificate in the form of Exhibit
1.7.1(k);
(l) An assignment of all of Seller's right, title and
interest under a certain real estate lease agreement for the
Facility located at 00000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000 naming the Company as the assignee,
together with the Landlord's written consent thereto, in form and
substance acceptable to Buyer; and
(m) All other documents, instruments or writings required to
be delivered to Buyer at or prior to the Closing pursuant to this
Agreement and such other certificates of authority and documents
as Buyer may reasonably request, including those documents and
instruments required by Article VI hereof.
1.7.2 Buyer will deliver to Seller (collectively the "Buyer's
Closing Documents'):
(a) The Cash Payment;
(b) The Promissory Note;
(c) [INTENTIONALLY OMITTED];
(d) A certificate executed by Buyer representing and
warranting to Seller that each of Buyer's representations and
warranties in this Agreement are accurate in all respects as of
the date of this Agreement and are accurate in all respects as of
the Closing Date as if made on the Closing Date;
(e) [INTENTIONALLY OMITTED];
(f) An Encumbancy Certificate in the form of Exhibit
1.7.2(f);
(g) All other documents, instruments or writings required to
be delivered to Seller at or prior to the Closing pursuant to
this Agreement and such other certificates of authority and
documents as Seller may reasonably request, including the
documents and instruments required by Article VII hereof; and
(h) A Noncompetition Agreement in the form of
Exhibit 1.7.2(h), executed by Buyer and Company, prohibiting them
for a period of one (1) year from opening a so-called "Company
Owned Store" in any city where Seller has such a store, but not
prohibiting Buyer and/or Company from purchasing an existing
Company Owned Store in such city.
6
1.8 Xxxxxxxx Bonus. The 2003 retention bonus owed to Xxxxx Xxxxxxxx and
accrued for on the balance sheet of the Acquired Companies, in the amount of
$68,463, shall be paid by the Acquired Companies after the Closing Date.
1.9 Depository Account. Seller shall be entitled to receive all deposits
made to Bank One N.A., Account No. 0000000, through and including the Closing
Date.
1.10 Asset Acquisition Statement. Seller and Buyer agree that within 60
days following the Closing Date they shall agree upon and timely file or cause
to timely file Internal Revenue Service Form 8594 - Asset Acquisition Statement,
Under Section 1060 ("Form 8594"). If the parties are unable to agree on Form
8594 then the same procedures as provided for in Section 1.3.7 of this Agreement
shall be used for the resolution of any items that cannot be agreed upon.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF COMPANY, SELLER AND XXXXXX
As a material inducement to Buyer entering into this Agreement and knowing
and acknowledging that Buyer is relying upon the same, the Company, Seller, and
Xxxxxx, jointly and severally, hereby make, as of the date hereof and again as
of the Closing Date, the following representations and warranties to Buyer.
2.1 Organization and Good Standing. Each Acquired Company is a corporation
duly organized, validly existing, and in good standing under the respective laws
of the State of its incorporation as set forth on Schedule 2.1 hereof, with full
power and authority to conduct its business as it is now being conducted, to
own, lease and use the properties and assets that it purports to own, lease or
use, and has the full power and authority to perform all of its material
Contracts. Except where the failure to do so shall not cause a Material Adverse
Effect each Acquired Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction which either the ownership, leasing or use of the properties owned,
leased or used by it, or the nature of the activities conducted by it, require
such qualification.
2.2 Authority/Enforceability. This Agreement constitutes the legal, valid,
and binding obligation of Seller, Company and Xxxxxx, enforceable against them
in accordance with its terms. Upon the execution and delivery by Seller of the
Seller's Closing Documents, the Seller's Closing Documents will constitute the
legal, valid, and binding obligations of Seller, enforceable against it in
accordance with their respective terms. Seller, Company and Xxxxxx have the
absolute and unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the Seller's Closing Documents and to perform their
respective obligations under this Agreement and the Seller's Closing Documents.
The representations and warranties in this Section 2.2 are subject to
enforceability as may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar Legal Requirements relating to or affecting
creditor's rights generally.
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2.3 No Conflict. Except as set forth in Schedule 2.3, neither the execution
and delivery of this Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time): (a) contravene, conflict with, result in a violation of or
have any adverse affect upon (i) any provision of the Organizational Documents
of any Acquired Company, or (ii) any resolution adopted by the Board of
Directors or the stockholders of any Acquired Company; (b) contravene, conflict
with, or result in a violation of, or give any Governmental Body or other Person
the right to challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under any Legal Requirement, any Order to which any
Acquired Company or Seller, or any of the assets owned or used by any Acquired
Company, may be subject; (c) contravene, conflict with, or result in a violation
of any of the terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by any Acquired Company or that otherwise relates to
the business of, or any of the assets owned or used by, any Acquired Company;
(d) contravene, conflict with, or result in a violation or breach of any
provision of, or give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Contract; or (e) result in the imposition or creation
of any Encumbrance upon or with respect to any of the assets owned or used by
any Acquired Company. Except as set forth in Schedule 2.3, neither Seller nor
each Acquired Company is or will be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
2.4 Capitalization. The outstanding equity securities of each Acquired
Company are duly authorized, validly issued, fully paid and non-assessable, and
consist solely of the equity securities described in Schedule 2.4. At the
Closing, the Shares shall represent all of the issued and outstanding shares of
capital stock of the Company. Seller is and will be on the Closing Date, the
legal, record and beneficial owner and holder of the Shares, free and clear of
all Encumbrances, and shall transfer ownership and marketable title to the
Shares to the Buyer, free of all Encumbrances at the Closing. The Company is and
will be on the Closing Date, the legal record and beneficial owner of all the
outstanding equity securities of the Subsidiaries, free and clear of all
Encumbrances. There are no Contracts relating to the issuance, sale, or transfer
of any equity securities or other securities of any Acquired Company, no Person
has any rights to acquire any shares of the capital stock of any Acquired
Company, and there are no options, calls, warrants or other securities or rights
outstanding which relate to, are convertible into or exercisable for any
securities of any Acquired Company. Schedule 2.4 sets forth, with respect to
each Acquired Company, the name, address and federal taxpayer identification
number of, and the number of outstanding Shares legally and beneficially owned
by, each shareholder as of the date hereof and the Closing Date.
2.5 Financial Statements. Attached hereto as Schedule 2.5 are the following
consolidated financial statements of the Company ("Financial Statements"):
(a) the consolidated balance sheet of the Company as of December 31, 2002, 2001
and 2000, and the related consolidated statements of income for each of the
years then ended, together with (b) a consolidated balance sheet of the Company
as of October 31, 2003, and the related consolidated statement of income for the
ten (10) months then ended (the "Interim Financial Statements"). All Financial
Statements are true, accurate, complete, and fairly present, in all material
respects, the assets and liabilities, financial condition and results of
operations of Company on a consolidated basis as of the respective dates of and
for the periods referred to in such Financial Statements, all in accordance with
and pursuant to GAAP consistently applied, except for the absence of footnote
disclosure and the Workers' Compensation Reserve, and intercompany charges for
interest and corporate income taxes. The attached balance sheets for all periods
have been restated for the reclassifcation of the Affiliate Office Long Term
Liability.
8
2.6 Books and Records. The books of account, accounting records, minute
books, and stock record books, of each Acquired Company (collectively
"Records"), are in all material respects complete, accurate and correct and have
been maintained in accordance with reasonable business practices, except as may
be disclosed in the Financial Statements. All existing Records requested by the
Buyer have been made available to the Buyer for review. The minute books of each
Acquired Company contain accurate and complete records of all meetings held of,
and corporate action taken by, the stockholders, the Boards of Directors, and
committees of the Boards of Directors of each Acquired Company, and no meeting
of any such stockholders, Board of Directors or committee has been held for
which minutes have not been prepared and maintained in such minute books, except
for any inconsequential and informal meeting which did not have any significant
impact upon any Acquired Company and at which no business of any consequence was
conduced, no actions or resolutions were taken and no liability was incurred. At
the Closing, all Records will be promptly delivered to the Buyer.
2.7 Title to Properties; Encumbrances. Except as indicated in Schedule 2.7,
each Acquired Company owns and has absolute, good and marketable title to all of
the material properties and assets (whether real, personal, or mixed and whether
tangible or intangible) located in the Facilities owned, leased or operated by
any such Acquired Company, used in the business or operations of such Acquired
Company, or reflected in the books, records or Financial Statements of such
Acquired Company, and all material properties and assets purchased or otherwise
acquired by any Acquired Company since the date of the Interim Financial
Statements (except for supplies sold since said dates in the Ordinary Course of
Business and consistent with past practice) (collectively "Company Assets"). All
Company Assets greater than $3,000 in value individually and not in the
aggregate greater than $100,000 are free and clear of all Encumbrances, except
those Encumbrances described in Schedule 2.7.
2.8 Real Property.
2.8.1 Schedule 2.8.1 describes all real property that each
Acquired Company owns ("Real Property"). With respect to each such
item of Real Property of an Acquired Company, except as disclosed in
Schedule 2.8.1:
(a) Such Acquired Company has absolute, good and marketable
title, free and clear of any Encumbrances, easements, covenants,
or other restrictions;
(b) There are no pending or threatened condemnation
proceedings, lawsuits, or administrative actions relating to the
property or other matters affecting the current use, occupancy,
or value thereof;
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(c) The (i) legal description for the parcel contained in
the deed thereof describes such parcel fully and adequately, (ii)
buildings and improvements are located within the boundary lines
of the described parcels of land and conform to all current
applicable setback requirements, zoning laws, ordinances and
borderlines, building and use restrictions (and none of the
properties or buildings or improvements thereon are subject to
"permitted non-conforming use" or "permitted non-conforming
structure" classifications or any other variance or exception
from current zoning, building and use ordinances and
restrictions), and do not encroach on surrounding parcels of land
or any easement which may burden the land, and are not subject to
any encroachment from surrounding parcels and/or improvements
thereon, (iii) land does not serve any adjoining property, and
(iv) property is not located within any flood plain or subject to
any restriction for which any permits or licenses are necessary
for the use thereof;
(d) Such Acquired Company has received all Governmental
Authorizations required in connection with the ownership, use or
operation thereof and such Real Property has been operated and
maintained in accordance with all Legal Requirements;
(e) There are no leases, subleases, licenses or other
agreements, written or oral, granting to any Person an interest
in, or the right of use or occupancy of any portion of, any
parcel of Real Property;
(f) There are no unrecorded Encumbrances, restrictions,
easements, encroachments, boundary disputes, agreements, or other
matters not of record;
(g) There are no reservations of minerals, mineral rights,
oil, oil rights, gas and other hydrocarbon substances, timber or
timber rights or leases, profits or licenses of such rights;
(h) There are no public improvements which have been
ordered, threatened, announced or contemplated which have not
been completed, assessed and fully paid for;
(i) There are no outstanding agreements, options or rights
of first refusal to purchase any parcel of Real Property, any
portion thereof, rights with respect thereto or interest therein;
(j) There are no parties other than the Acquired Companies,
in possession or control of any parcel of Real Property;
(k) Each parcel of Real Property is adequately supplied with
utilities and other services necessary for the normal operation
of each such parcel and the normal conduct of business of the
Acquired Companies in the manner prior to the Closing, including
gas, electricity, water, telephone, sanitary sewer and storm
sewer, all of which services comply with all applicable laws,
ordinances, rules and regulations and are provided via public
roads or via permanent, irrevocable, appurtenant easements; and
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(l) Each parcel of Real Property abuts on and has direct
vehicular access to a public road, and access to the property is
provided by paved public right-of-way with adequate curb cuts
available.
2.8.2 Schedule 2.8.2 lists and describes all real property or
interests in real property leased or subleased to or by any Acquired
Company ("Leased Property"). The Seller has delivered to the Buyer
correct and complete copies of the leases and subleases listed in
Schedule 2.8.2 and with respect to each such lease and sublease,
except as disclosed in Schedule 2.8.2:
(a) Each is legal, valid, binding, enforceable, and in full
force and effect in all material respects and will continue to be
legal, valid, binding, enforceable, and in full force and effect
in all material respects on identical terms following the
consummation of the Contemplated Transactions;
(b) No Person is in breach or default, and no event has
occurred which, with or without notice or lapse of time, would
constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(c) No Person has repudiated any provision thereof;
(d) There are no disputes, material oral agreements, or
forbearance arrangements in effect as to the lease or sublease;
(e) With respect to each sublease, the representations and
warranties set forth in subsections (a) through (e) above are
true and correct with respect to the underlying lease; and
(f) No Acquired Company has assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
Leased Property, the leasehold or subleasehold.
2.8.3 Except as disclosed in Schedule 2.8.3, with respect to each
parcel of Leased Property:
(a) Each Acquired Company has received all material
Governmental Authorizations required in connection with the use
or operation thereof and each parcel has been operated and
maintained in accordance with material applicable Legal
Requirements;
(b) Each is supplied with utilities and other services
necessary for the operation of said Facilities in the Ordinary
Course of Business as conducted prior to the Closing;
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(c) There are no pending or threatened condemnation
proceedings, or lawsuits or administrative actions relating to
any parcel of Leased Property which could affect the current use
or occupancy thereof;
(d) There are no condemnation proceedings pending or
threatened or relating to any parcel of Leased Property for the
dedication of any public or quasi-public use;
(e) There are no public improvements which should have been
ordered, threatened, announced or contemplated which have not
been completed, assessed and fully paid for;
(f) There are no parties (other than such Acquired Company)
in possession or control of any parcel of Leased Property, except
as disclosed in Schedule 2.8.3; and
(g) Each parcel of Leased Property has vehicular access to a
public road, and access to the Facilities provided by paved
public right-of-way with adequate curb cuts available.
2.9 Condition and Sufficiency of Assets. Except as disclosed in Schedule
2.9, the Facilities and the Company Assets, which are material to the operations
of the Acquired Companies, are structurally sound, in good operating condition
and repair, and are adequate for the uses to which they are being put, and none
of such Facilities or the Company Assets are in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost. All personal property, fixtures, machinery and equipment owned
or used by the Acquired Companies, which are material to the operations of the
Acquired Companies, are in reasonable operating condition and repair, except as
disclosed in Schedule 2.9. All real property, buildings, plants and structures
owned or used by the Company are, in all material respects, structurally sound
and in good operating condition, except as disclosed in Schedule 2.9. The
Facilities and the Company Assets are sufficient for the continued conduct of
the Acquired Companies' respective businesses after the Closing in substantially
the same manner as conducted prior to the Closing.
2.10 Accounts Receivable. All accounts receivable, net of any reserves for
doubtful accounts and affiliate office holdbacks, of each Acquired Company that
are reflected in the Financial Statements, Interim Financial Statements, or in
the accounting records of such Acquired Company as of the Closing Date
(collectively the "Accounts Receivable") represent and, at the Closing, will
represent, valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. Unless paid prior to the
Closing Date, the Accounts Receivable are and at the Closing will be current and
collectible, in full, subject to no offsets or defenses, except for the amount
of any respective reserves for doubtful accounts and affiliate office holdbacks
shown in the closing Financial Statements (which reserves for doubtful accounts
and affiliate office holdbacks are adequate and calculated in accordance with
GAAP and past practice and, in the case of the reserves as of the Closing Date,
will not represent a Material Adverse Change in the composition of such Accounts
Receivable in terms of aging). Subject to any such stated reserves for doubtful
accounts and affiliate office holdbacks, each of the Accounts Receivable either
has been or will be collected in full, without any set-off, within two hundred
and ten (210) days after the Closing.
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2.11 Inventory. None of the Acquired Companies have any inventory.
2.12 Taxes.
2.12.1 The Acquired Companies have filed or caused to be filed,
on a timely basis including lawful extensions, all material Tax
Returns that are or were required to be filed by or with respect to
them, pursuant to applicable Legal Requirements. The Acquired
Companies have paid all Taxes that have or may have become due
pursuant to those Tax Returns, any Legal Requirement or otherwise, or
pursuant to any assessment received by Seller or any Acquired Company.
2.12.2 Schedule 2.12.2 contains a complete and current list of
all audits of or adjustments to all Tax Returns of the Acquired
Companies (or their predecessors) ending within the four (4) year
period immediately preceding the date of the Interim Financial
Statements, including a reasonably detailed description of the nature,
proposed adjustments and outcome of each audit. Except as described in
Schedule 2.12.2, neither Seller nor any Acquired Company have given or
been requested to give waivers or extensions (or are or would be
subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes by any
Acquired Company or for which any Acquired Company may be liable. All
deficiencies assessed as a result of such audits have been paid.
2.12.3 Taxes based on the operations of the Acquired Companies
have been reflected on the books and records of the Seller. Except as
disclosed in Schedule 2.12.3, the charges, accruals, and reserves with
respect to Taxes in the Financial Statements of the Seller for the
Acquired Companies are correctly determined in accordance with GAAP.
All Taxes that any Acquired Company is or was required by Legal
Requirements to pay, withhold or collect have been duly paid, withheld
or collected and, to the full extent required, have been timely paid
to the proper Governmental Body or other Person. No Acquired Company
has any Liability for Taxes, except for Taxes reserved in its
October 31, 2003 Financial Statements and accrued in the Ordinary
Course of Business since the date thereof.
2.12.4 All Tax Returns filed (or that are included on a
consolidated basis) by each Acquired Company are true, correct, and
complete and exact copies of all Tax Returns filed by each Acquired
Company during the four (4) year period preceding the date hereof have
been made available to the Buyer. There is no tax sharing agreement
that will require any payment by any Acquired Company after the date
of this Agreement.
2.12.5 Schedule 2.12.5 describes all tax elections and consents
filed by each Acquired Company with any Governmental Body. No Acquired
Company has ever filed any election or consent under IRC Sections 341
or 338.
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2.12.6 Company has been a valid electing "Q-Sub" corporation
within the meaning of IRC Section 1361 and Section1362 at all times
since April 23, 1999, and Company will be a "Q-Sub" corporation up to
and including the Closing Date.
2.13 No Material Adverse Change. Other than unforeseen matters of global
significance occurring after the date this Agreement is executed with completed
Schedules and Exhibits, since October 31, 2003, there has not been any Material
Adverse Change to any Acquired Company or its assets or business, and no event
has occurred or circumstance exists that may result in a Material Adverse Change
to any such Acquired Company.
2.14 Employee Benefits.
2.14.1 Schedule 2.14.1 describes each Employee Benefit Plan that
any Acquired Company maintains or to which any Acquired Company
contributes and each Employee Benefit Plan that any Acquired Company
formerly maintained or to which any Acquired Company ever contributed
in the past four (4) years.
2.14.2 Except as disclosed in Schedule 2.14.2, each Employee
Benefit Plan (and each related trust, insurance contract or fund)
complies in form and in operation in all respects with the applicable
requirements of ERISA, the IRC and all other Legal Requirements and
all required filings, returns, reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's and Summary
Plan Descriptions) have been timely filed or distributed appropriately
with respect to each such Employee Benefit Plan as required by ERISA,
the IRC and all Legal Requirements.
2.14.3 All required contributions (including all employer
contributions and employee salary reduction contributions) have been
paid to each Employee Benefit Plan and all required contributions for
any period ending on or before the Closing Date which are not yet due
have been and shall be accrued and reserved in the Company's Interim
Financial Statements and books and records. All premiums or other
payments for all periods ending on or before the Closing Date have
been paid - or have been accrued and reserved in each of the Acquired
Company's respective Interim Financial Statements and books and
records with respect to each such Employee Benefit Plan.
2.14.4 No funding or asset deficiency of any kind exists under
any Employee Benefit Plan.
2.14.5 Except as disclosed in Schedule 2.14.5, Seller has made
available to Buyer correct and complete copies of all Employee Benefit
Plans, including without limitation, all agreements, plan documents
and summary plan descriptions, the most recent determination letter
received from the IRS, the four (4) most recent Form 5500 Annual
Reports, and all related trust agreements, insurance contracts and
other funding agreements which implement or relate to each Employee
Benefit Plan.
2.14.6 No such Employee Benefit Plan has been completely or
partially terminated or been the subject of a reportable event as to
which notices would be required to be filed with the PBGC within the
past four (4) years. No proceeding by the PBGC to terminate any such
Employee Benefit Plan has been instituted or threatened.
14
2.14.7 To the knowledge of the Seller and the Acquired Companies,
there have been no prohibited transactions with respect to any such
Employee Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding, complaint,
grievance, hearing or investigation with respect to the administration
or the investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or threatened.
Neither the Acquired Companies (nor their employees with
responsibility for employee benefits matters) nor the Seller have any
Knowledge of any basis for any such action, suit, grievance,
complaint, proceeding, hearing or investigation.
2.14.8 The Acquired Companies have not incurred, and neither the
Seller nor the directors and officers (and employees with
responsibility for employee benefits matters) of any Acquired Company
have any reason to expect that any Acquired Company will incur any
Liability to the PBGC (other than PBGC premium payments) or otherwise
under Title IV of ERISA (including any withdrawal Liability) or under
the Code with respect to any such Employee Benefit Plan which is an
Employee Benefit Plan.
2.14.9 No Acquired Company contributes to, ever has contributed
to, or ever has been required to contribute to any Multi-Employer Plan
or has any Liability (including withdrawal Liability) under any
Multi-Employer Plan.
2.14.10 Except as disclosed in Schedule 2.14.10, no Acquired
Company maintains, has ever maintained, has ever contributed, or has
ever been required to contribute to any Employee Benefit Plan
providing medical, health or life insurance or other welfare-type
benefits for current or future retired or terminated employees, their
spouses or their dependents.
2.14.11 No Acquired Company has any Liability arising from any
Employee Plan, except for any liability reflected in the Company's
Interim Financial Statements or as accrued in the Ordinary Course of
Business since the date of such Interim Financial Statements.
2.15 Compliance with Legal Requirements. Except as set forth in Schedule
2.15:
2.15.1 Each Acquired Company is, and at all times during the last
four (4) years has been, in full compliance with each material Legal
Requirement that is or was applicable to it or to the conduct or
operation of its business or the ownership or use of any of its
assets;
2.15.2 No event has occurred or circumstance exists that (with or
without notice or lapse of time) may constitute or result in a
violation by any Acquired Company under, or a failure on the part of
any Acquired Company to comply with, any Legal Requirement.
2.15.3 No Acquired Company or Seller has received any notice or
other communication (whether oral or written) from any Governmental
Body or any other Person regarding (i) any actual or, to the Knowledge
of the Company, alleged violation of, or failure to comply with, any
Legal Requirement, or (ii) any actual or, to the Knowledge of the
Company, alleged obligation on the part of any Acquired Company to
undertake, or to bear all or any portion of the cost of, any remedial
action of any nature.
15
2.16 Governmental Authorizations.
2.16.1 Schedule 2.16.1 contains a complete and correct list of
each material Governmental Authorization that is held by each Acquired
Company or that otherwise relates to the business of, or to any of the
assets owned or used by, each Acquired Company. Each Governmental
Authorization listed or required to be listed in Schedule 2.16.1 is
valid and in full force and effect. Each Acquired Company has complied
in all material respects with all conditions and requirements for, or
relating to, all Governmental Authorizations.
2.16.2 The Acquired Companies have all material Governmental
Authorizations necessary to permit the Acquired Companies to lawfully
conduct and operate their respective businesses in the manner as
currently conducted, and to permit the Acquired Companies to own and
use their assets in the manner in which they currently own and use
such assets.
2.16.3 No Acquired Company or Seller has received any notice or
other communication regarding any actual, or to the Knowledge of the
Company, alleged (i) violation or failure to comply with any
Governmental Authorization, or (ii) revocation, withdrawal,
suspension, cancellation, termination or modification of any material
Governmental Authorization.
2.17 Legal Proceedings; Orders.
2.17.1 Except as disclosed in Schedule 2.17, there is no pending
Proceeding: (a) that has been commenced by or against any Acquired
Company or that otherwise relates to or may affect the business of, or
any of the assets owned, leased or used by any Acquired Company; or
(b) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. No such Proceeding has been Threatened in
writing, or orally to the Knowledge of the Seller or Acquired
Companies, and no material Proceeding has been terminated (by
adjudication, settlement or otherwise) within the last four (4) years,
except as disclosed in Schedule 2.17. To the Knowledge of the Seller
or Acquired Companies, no event has occurred or circumstance exists
that may give rise to or serve as a basis for the commencement of any
such Proceeding; and
2.17.2 There is currently no Order to which any Acquired Company,
Seller or any of the Acquired Company's businesses or any of the
assets owned, leased or used by any Acquired Company, is subject. Each
Acquired Company has complied with all Orders to which they, or any of
the assets owned or used, has been subject.
2.18 Absence of Certain Changes and Events. Except as set forth in Schedule
2.18, since October 31, 2003, each Acquired Company has conducted its business
only in the Ordinary Course of Business and there has not been any:
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2.18.1 Change in any Acquired Company's authorized or issued
capital stock; grant of any stock option or right to purchase shares
of capital stock of any Acquired Company; issuance of any security
convertible into such capital stock; grant of any registration rights;
or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
2.18.2 Amendment to the Organizational Documents of any Acquired
Company;
2.18.3 Payment of any bonuses to or any increase in any salaries,
wages, benefits or other compensation of any stockholder, director,
officer, employee, agent or Representative of any Acquired Company or
entry into any employment or severance agreement or arrangement, or
any other Contract with such Person except for increases or payments
in the Ordinary Course of Business;
2.18.4 Payment or accrual of any bonuses, commissions or other
distributions to Xxxxxx or any Seller or any relative of Xxxxxx or any
Seller;
2.18.5 Adoption of, or increase in the payments to or benefits
under, any Employee Benefit Plan;
2.18.6 Damage to or destruction or loss of any asset or property
of any Acquired Company, whether or not covered by insurance, in
excess of $50,000;
2.18.7 Entry into, termination of, or receipt of notice of
termination of any Contract or transaction outside the Ordinary Course
of Business or which involves a total remaining commitment by or to
any Acquired Company of at least $50,000, other than such actions that
would not reasonably be considered to have a Material Adverse Effect;
2.18.8 Sale, license, lease, or other disposition of any asset or
property of any Acquired Company in excess of $10,000 or imposition of
any Encumbrance on any asset or property of any Acquired Company
except in the Ordinary Course of Business;
2.18.9 Cancellation, settlement, or waiver of any claims or
rights of or against any Acquired Company in excess of $25,000;
2.18.10 Change in any of the accounting methods or principles
used by any Acquired Company except for any changes necessitated by
changes to GAAP or as required pursuant to this Agreement; or
2.18.11 The entry into any Contract by any Acquired Company to do
any of the foregoing.
2.19 Contracts; No Defaults.
2.19.1 Schedule 2.19.1 contains a complete and correct list, and
Seller has made available to Buyer true and complete copies, of:
17
(a) Each Contract that involves the furnishing or
performance of services, or the delivery, sale, lease or transfer
of goods, materials or products, by any Acquired Company in an
amount or value in excess of $10,000, including, but not limited
to, purchase orders received by an Acquired Company;
(b) Each Contract that involves the furnishing or
performance of services to, or the purchase, lease or receipt of
goods, materials, inventory, supplies, products or other personal
property by an Acquired Company in an amount or value in excess
of $10,000, including, but not limited to, purchase orders issued
by an Acquired Company;
(c) Each lease, rental or occupancy agreement, 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 $50,000);
(d) Except for that Certain Amended and Restated Loan and
Security Agreement dated as of September 30, 2003, each Contract
under which any Acquired Company has created, incurred, assumed
or guaranteed any indebtedness for borrowed money, has incurred
any capitalized lease obligation, or under which any of its
tangible or intangible assets are Encumbered;
(e) Each licensing agreement or other Contract relating to
any Intellectual Property Assets, including, without limitation,
agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of
any of the Intellectual Property Assets;
(f) Each collective bargaining agreement and other Contract
to or with any labor union or other employee representative of a
group of employees or which involves any Acquired Company or any
former or present employees, agents or representatives of an
Acquired Company;
(g) Each profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan,
arrangement, contract or Employee Benefit Plan for the benefit of
its current or former directors, officers, and employees, except
for Employee Benefits Plans disclosed in Schedule 2.14;
(h) Each written agreement for the employment of or receipt
of any services from any Person on a full-time, part-time,
consulting, commission or any other basis, except for oral
agreements of employment that are terminable by the Acquired
Companies at will and without any Liability;
(i) Each joint venture or partnership agreement or other
Contract involving any joint conduct or sharing of any business,
venture or enterprise, or a sharing of profits, losses, costs, or
liabilities by any Acquired Company with any other Person;
18
(j) Each Contract containing covenants that in any way
purport to restrict the business activity of any Acquired Company
or limit the freedom of any Acquired Company to engage in any
line of business or to compete with any Person;
(k) Each Contract for capital expenditures in excess of
$10,000;
(l) Each warranty, guaranty, or other similar undertaking
extended by any Acquired Company for or with respect to any
Person;
(m) Each Contract under which any Acquired Company has
advanced, guaranteed or loaned any amount to or for the benefit
of any of its directors, officers, employees or Representatives;
(n) Each Contract with any employee, officer, director,
shareholder, sales representative, consultant, distributor,
Representative or agent of any Acquired Company;
(o) [INTENTIONALLY OMITTED];
(p) Each Contract not otherwise scheduled providing for a
payment or involving an aggregate consideration or value in
excess of $10,000;
(q) Each Contract not entered into in the Ordinary Course of
Business;
(r) Each power of attorney granted by, on behalf of, or to
any Acquired Company;
(s) Each Contract relating to confidentiality or
noncompetition;
(t) Each Contract having a term or period of performance in
excess of 90 days; and
(u) Each proposed or actual amendment, supplement, or
modification (whether oral or written) in respect of any of the
foregoing.
2.19.2 Except as set forth in Schedule 2.19.2:
(a) The Seller does not have any fixed or contingent rights
or obligations under any Contract that relates to the business
of, or any of the assets owned or used by, any Acquired Company;
and
(b) No shareholder, officer, director, agent, employee,
consultant, or contractor of any Acquired Company is bound by any
Contract to which the Company is a party that purports to limit
the ability of such officer, director, agent, employee,
consultant, or contractor to (i) engage in or continue any
conduct, activity, practice or business, or (ii) assign to any
Acquired Company or to any other Person any rights to any
invention, improvement, or discovery of an Intellectual Property
Asset.
19
2.19.3 Each Contract of a material nature is in full force and
effect and is valid and enforceable in accordance with its terms.
2.19.4 With respect to each Contract (including, without
limitation, those Contracts and agreements disclosed or required to be
disclosed in Schedule 2.19.1):
(a) Each Acquired Company is, and at all times has been, in
material compliance with all applicable terms and requirements of
each Contract;
(b) Each other Person that has or had any obligation or
liability under any Contract is, and at all times has been, in
material compliance with all applicable terms and requirements of
such Contract;
(c) No event has occurred or circumstance exists that (with
or without notice or lapse of time) may contravene, conflict
with, or result in a violation or breach of, or give any Acquired
Company or other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Contract;
and
(d) No Acquired Company has given to or received from any
other Person any notice or other communication (whether oral or
written) regarding any actual or alleged violation or breach of,
default under or termination or cancellation of, any Contract.
2.19.5 There are no renegotiations of, attempts to renegotiate,
or outstanding rights to renegotiate any terms of, or amounts paid or
payable to, any Acquired Company under current or completed Contracts
with any Person and no such Person has made written demand for such
renegotiation.
2.19.6 The Contracts relating to the sale, design, manufacture,
or provision of products or services by each Acquired Company have
been entered into in the Ordinary Course of Business and have been
entered into without the commission of any act alone or in concert
with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any Legal Requirement or
customer or supplier requirement, restriction, code or rule of
conduct.
2.20 Insurance. Schedule 2.20 sets forth a description with respect to each
insurance policy (including policies providing property, casualty, liability and
workers' compensation coverage and bond and surety arrangements) to which any
Acquired Company has been a party, a named insured or otherwise the beneficiary
of coverage at any time within the past four (4) years, including (a) the name,
address and telephone number of the agent; (b) the name of the insurer, the name
of the policyholder, and the name of each Acquired Company insured; (c) the
policy number and the period of coverage; (d) the type (including an indication
of whether the coverage was on a claims made, occurrence or other basis) and
amount (including a description of how deductibles and ceilings are calculated
and operate) of coverage; and (e) a description of any retroactive premium
adjustments or other loss-sharing arrangements. With respect to each such
insurance policy currently in effect: (i) the policy is legal, valid, binding,
enforceable and in full force and effect; (ii) the policy, as to the Seller,
will continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the consummation of the transaction
contemplated hereby; (iii) no Acquired Company or any other Person is in breach
or default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification
or acceleration, under the policy; and (iv) no Person has repudiated any
provision thereof. Each Acquired Company has been covered during the past four
(4) years by insurance in scope and amount customary and reasonable for the
business in which they have engaged during the aforementioned period. Schedule
2.20 describes any self-insurance arrangements affecting any Acquired Company.
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2.21 Environmental Matters. Except as set forth in Schedule 2.21:
2.21.1 Each Acquired Company is, and at all times has been, in
full compliance with, and has not been and is not in violation of or
liable under, any Environmental Law and has never engaged in any
Hazardous Activity. No Seller or Acquired Company, has any basis to
expect, nor has any of them or any other Person for whose conduct they
are or may be held to be responsible, received, any actual or
Threatened Order, notice or other communication from any Governmental
Body or Person, or the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply
with any Environmental Law, or of any actual or Threatened obligation
to undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which
Seller or any Acquired Company has had an interest, or with respect to
any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or
processed by Seller, any Acquired Company or any other Person for
whose conduct they are or may be held responsible, or from which
Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
2.21.2 There are no pending, potential or Threatened claims or
Encumbrances arising under or pursuant to any Environmental Law, or
any Environmental, Health and Safety Liabilities, with respect to or
affecting any of the Facilities or any other properties and assets
(whether real, personal, or mixed) in which Seller or any Acquired
Company have ever used, possessed or occupied, or ever had any
interest in, or any adjoining property.
2.21.3 No Seller or any Acquired Company has any basis to expect,
nor has any of them or any other Person for whose conduct they are or
may be held responsible, received, any citation, directive, inquiry,
notice, Order, summons, warning, or other communication that relates
to Hazardous Activity, Hazardous Materials, or any alleged, actual, or
potential violation or failure to comply with any Environmental Law,
or of any alleged, actual, or potential obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities
with respect to any of the Facilities or any other properties or
assets (whether real, personal, or mixed) in which any Acquired
Company has or had an interest, or with respect to any property or
facility to which Hazardous Materials generated, manufactured,
refined, transferred, imported, used, or processed by any Acquired
Company or any other Person for whose conduct they are or may be held
responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
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2.21.4 No Seller or any Acquired Company, or any other Person for
whose conduct they are or may be held responsible, has any
Environmental, Health and Safety Liabilities, including without
limitation, those with respect to the Facilities or with respect to
any other properties or assets (whether real, personal, or mixed) in
which any Acquired Company (or any predecessor), have ever used,
possessed or occupied, or have ever had any interest in, or at any
property geologically or hydro logically adjoining the Facilities or
any such other property or assets.
2.21.5 Except as disclosed in Schedule 2.21.5, there are and have
been no Hazardous Materials present on, under, about or in the
Environment at the Facilities or any properties or assets (whether
real, personal or mixed) which Seller or any Acquired Company (or any
predecessor) have ever used, possessed or occupied, or have ever had
any interest in, or at any geologically or hydrologically adjoining
property, including, without limitation, any Hazardous Materials
contained in barrels, above or underground storage tanks, landfills,
land deposits, dumps, disposal areas, equipment (whether moveable or
fixed) or other containers, either temporary or permanent, and
deposited or located in land, water, sumps, or any other part of the
Facilities or such adjoining property, or incorporated into any
structure therein or thereon. No Seller or any Acquired Company, or
any other Person for whose conduct they are or may be held responsible
or any other Person, has permitted or conducted, or is aware of, any
Hazardous Activity conducted with respect to the Facilities or any
other properties or assets (whether real, personal, or mixed) in which
Seller or any Acquired Company have ever used, possessed or occupied
or have ever had any interest in.
2.21.6 There has been no Release or Threat of Release, of any
Hazardous Materials at or from the Facilities or at any other
locations where any Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used, or processed from or
by the Facilities, or from or by any other properties and assets
(whether real, personal, or mixed) in which Seller or any Acquired
Company have ever used, possessed or occupied, or have ever had any
interest in, or any geologically or hydrologically adjoining property,
whether by Seller, any Acquired Company or any other Person.
2.21.7 Schedule 2.21.7 lists all waste disposal sites, dump sites
and other areas at which wastes generated by any Acquired Company have
been disposed and specifically identifies each such site or area which
is or has been included in any published notice or state listing which
identifies sites for remedial clean-up or investigating actions.
Neither the Seller nor any Acquired Company have received any notice
of claim from any Governmental Authority or any Person regarding any
Environmental Health and Safety Liability or under any Environmental
Law.
22
2.21.8 Neither this Agreement nor the consummation of the
Contemplated Transaction will result in any Liability (including
without limitation, any Environmental, Health and Safety Liability)
for site investigation, monitoring or cleanup, or notification to or
consent of any Governmental Body or Person.
2.22 Employees/Representatives.
2.22.1 Schedule 2.22.1 contains a complete and accurate list of
the following information for each employee or director of any
Acquired Company working at or out of Arcadia's Southfield office or
at or out of any Company-owned location, including each such employee
on leave of absence or layoff status: (a) name; (b) date of hire, (c)
job title; (d) current compensation and bonus paid or payable; (e)
vacation accrued; (f) service credited for purposes of vesting and
eligibility to participate under any Employee Benefit Plan, and
(g) all other unpaid compensation, bonus and overtime pay, accrued or
payable for any period prior to the Closing.
2.22.2 Except as set forth in Schedule 2.22.2, to the Seller's
and Xxxxxx'x actual knowledge, no employee, officer or director of any
Acquired Company is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality,
noncompetition, or proprietary rights agreement, between such
employee, officer or director and any other Person.
2.22.3 Schedule 2.22.3 also contains a complete and accurate list
of the following information for each retired employee or director of
any Acquired Company, or their dependents, receiving benefits or
eligible to receive benefits in the future: (a) name, (b) benefit, (c)
payment option election, (d) retiree medical insurance coverage, (e)
retiree life insurance coverage, and (f) other benefits.
2.22.4 Schedule 2.22.4 lists each current sales representative,
commissioned salesperson, consultant or other agent or representative
of any Acquired Company ("Representatives") and all former
Representatives terminated within the last 3 years and to which any
Acquired Company owes any Liability, along with a complete description
of the compensation or Liability payable to such Representatives and
all Contracts relating thereto, and Seller has made available to Buyer
a true and complete copy of each such Contract and/or all amendments
thereto.
2.22.5 Except for the written resignations expressly required by
this Agreement, to Seller's Knowledge, no Representative, director, or
officer, of any Acquired Company intends to terminate or materially
alter his employment or other business relationship with any Acquired
Company. Neither Seller nor any Acquired Company has received any
notice of termination or resignation from any current director,
officer or Representative of any Acquired Company.
2.23 Labor Relations; Compliance. Except as set forth in Schedule 2.23 each
Acquired Company has not been nor is a party to any collective bargaining or
other labor Contract. There has not been, there is not presently pending or
existing, and there is not Threatened, (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (b) any Proceeding against or affecting
any Acquired Company relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations Board,
the Equal Employment Opportunity Commission, or any comparable Governmental
Body, organizational activity, or other labor or employment dispute against or
affecting each Acquired Company or its premises, or (c) any application for
certification of a collective bargaining agent. No event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by any Acquired Company, and
no such action is contemplated by any Acquired Company. Each Acquired 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. None of the
Acquired Companies are liable for the payment of any compensation, damages,
taxes, fines, penalties, or other amounts, however designated, for failure to
comply with any of the foregoing or other Legal Requirements.
23
2.24 Intellectual Property.
2.24.1 Schedule 2.24.1 contains a complete and accurate list
(including, without limitation, any royalties paid or payable or
received by any Acquired Company), of all Contracts regarding
Intellectual Property Assets and Seller has made available a true and
complete copy of each such Contract and any amendments thereto to the
Buyer.
2.24.2 The Intellectual Property Assets are all those necessary
for the operation of each Acquired Company's business as it is
currently conducted and as it has been conducted during the four (4)
year period prior to the date hereof.
2.24.3 Ownership.
(a) Schedule 2.24.3 contains a complete and accurate list of
all Intellectual Property Assets and the owner thereof. The
Acquired Companies are the owners of all right, title, and
interest in and to each of the Intellectual Property Assets, free
and clear of all Encumbrances and each Acquired Company has the
sole and undiminished right to the use of the Intellectual
Property Assets without any Liability for royalties or other
payments to a third party, except as disclosed on Schedule
2.24.3.
(b) All of the issued Patents, Marks and Copyrights are
properly filed and registered, are currently in compliance with
all Legal Requirements (including payment of filing, examination,
and maintenance fees and proofs of working or use), are valid and
enforceable, and are not subject to any maintenance fees, royalty
fees, Taxes or Proceedings or Liabilities, except as described in
Schedule 2.24.3.
(c) No Patent, Xxxx, Copyright or Trade Secret has been or
is now involved in any interference, reissue, reexamination, or
opposition Proceeding. To Seller's Knowledge, there is no
potentially interfering patent or patent application of any third
party.
24
(d) No Patent, Xxxx, Copyright, Trade Secret or other
Intellectual Property Assets violates or infringes upon any
rights of any Person, or, to Seller's Knowledge, has been
challenged or threatened in any way. None of the products
manufactured and sold, nor any process or know-how used, by any
Acquired Company infringes or is alleged to infringe any patent,
proprietary or other right of any other Person.
(e) All products made, used, or sold under the Patents,
Marks or Copyrights have been marked with the proper notice of
the Patent, Xxxx or Copyright, as applicable.
(f) Seller and each Acquired Company have taken reasonable
precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets.
(g) To the Knowledge of Seller, the Trade Secrets are not
part of the public knowledge or literature, and have not been
used, divulged, or appropriated either for the benefit of any
Person or to the detriment of any Acquired Company.
2.25 Subsidiaries. Except as disclosed in Schedule 2.25, no Acquired
Company owns or has ever owned, directly or indirectly, any equity, profit or
other interest in any subsidiary or other Person within the past four (4) years.
2.26 Finders or Broker Fees. There are no broker commissions, finders fees
or other payments of like nature payable to any Person in connection with the
Contemplated Transactions except for the fees to be paid to Xxxxxxx Xxxxx &
Company, which shall be the sole obligation of and paid, at the Closing, by
Seller, and in no event will Buyer or any Acquired Company have any Liability
for any fee or commission including, but not limited to, any finders,
originators or brokers fee in connection with the transactions contemplated
hereby.
2.27 Competitive Interest. Neither the Seller nor any officer, director or,
to the Knowledge of the Seller and the Acquired Companies, any other employee of
any Acquired Company, owns, directly or indirectly, any interests or has any
business or enterprise which is a competitor or potential competitor of any
Acquired Company (excluding any non-management employees owning less than five
percent (5%) of any public company), except as set forth in Schedule 2.27.
2.28 Related Party Transactions. Except as disclosed on Schedule 2.28, all
of the transactions by each Acquired Company have been conducted on an arms
length basis. No portions of the sales or other ongoing business relationship of
any Acquired Company is dependent upon any familial relationship of Seller or of
any of the officers, directors or other employees of any Acquired Company. None
of the Acquired Companies has engaged in any purchase, lease, sale or other
transaction involving any Seller, any officer, director, employee or
Representative of any Acquired Company, any of their respective representatives,
or any Person owned or controlled, in whole or in part, by any such parties,
within the last four (4) years. Except for Intercompany Debt as defined in
Section 2.29, none of the Acquired Companies have any outstanding loan or other
advances, directly or indirectly, to or from any of the Seller, any officer,
director or employee or Representative or any Acquired Company, any affiliate or
relative of Seller or any entity in which either Seller or any Acquired Company
have a direct or indirect interest. No Acquired Company has, or after Closing
shall have, any Liability to the Seller.
25
2.29 Intercompany Transactions. Schedule 2.29 is a list of all amounts owed
by or to each Acquired Company to or from another Acquired Company as of the
date of the Interim Financial Statements and as of the date hereof
("Intercompany Debt").
2.30 Bank Accounts; Business Locations. Schedule 2.30 sets forth all
accounts or deposits of each Acquired Company with any bank, broker, depository
institution or other Person, and the names of all Persons authorized to withdraw
funds from each such account. As of the date hereof, each Acquired Company has
no office or place of business other than those identified in Schedule 2.30.
2.31 Name; Prior Transactions. All names under which each Acquired Company
does business as the date hereof are specified on Schedule 2.31. Except as set
forth on Schedule 2.31, no Acquired Company has changed its name or used any
assumed or fictitious name, or been the surviving entity in a merger, acquired
any business or changed its principal place of business or chief executive
office, within the past four (4) years.
2.32 Disclosure.
2.32.1 No representation or warranty of Seller in this Agreement
and no statement in the Schedules omits to state any fact necessary to
make the statements herein or therein, in light of the circumstances
in which they were made, not misleading.
2.32.2 No notice given pursuant to this Agreement or otherwise
will contain any untrue statement or omit to state a material fact
necessary to make the statements therein or in this Agreement, in
light of the circumstances in which they were made, not misleading.
2.32.3 There is no fact known to any Seller or any Acquired
Company that has specific application to any Seller or any Acquired
Company (other than general economic or industry conditions) and that
may have a Material Adverse Affect on the assets, business, prospects,
financial condition, or operations of any Acquired Company that has
not been set forth in this Agreement or the Schedules.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement of Seller entering into this Agreement and knowing
and acknowledging that Seller is relying upon the same, Buyer hereby makes, as
of the date hereof and as of the Closing Date, the following representations and
warranties to Seller:
3.1 Organization and Good Standing. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Michigan.
26
3.2 Authority; No Conflict.
3.2.1 This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms. Upon the execution and delivery by Buyer of the Promissory Note
(collectively the "Buyer's Closing Documents"), the Buyer's Closing
Documents will constitute the legal, valid, and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective
terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Buyer's
Closing Documents and to perform its obligations under this Agreement
and the Buyer's Closing Documents.
3.2.2 Except as set forth in Schedule 3.2.2, neither the
execution and delivery of this Agreement by Buyer, nor the
consummation or performance of any of the Contemplated Transactions by
Buyer will give any Person the right to prevent, delay, or otherwise
interfere with any of the Contemplated Transactions pursuant to:
(a) Any provision of Buyer's Organizational Documents;
(b) Any resolution adopted by the board of directors or the
stockholders of Buyer;
(c) Any Legal Requirement or Order to which Buyer may be
subject; or
(d) Any Contract to which Buyer is a party or by which Buyer
may be bound.
Except as set forth in Schedule 3.2.2, Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.3 Certain Proceedings. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
Threatened.
3.4 Finders or Broker Fees. There are no broker commissions, finders fees
or other payments of like nature payable to any Person in connection with the
Contemplated Transactions except for the fees to be paid to FTI Consulting,
Inc., which shall be the sole obligation of and paid, at the Closing, by Buyer,
and in no event will Seller or any Acquired Company have any Liability for any
fee or commission including, but not limited to, any finders, originators or
brokers fee in connection with the transactions contemplated hereby.
ARTICLE IV
COVENANTS OF COMPANY AND SELLER PRIOR TO CLOSING DATE
The Company and Seller, jointly and severally, make the following covenants
to Buyer:
27
4.1 Access and Investigation. Between the date of this Agreement and the
Closing Date, Seller and each Acquired Company will (a) afford Buyer and its
representatives and prospective lenders and their representatives (collectively
"Buyer's Advisors") reasonable access to each Acquired Company's relevant
officers, properties, Contracts, books and records, and other documents and
data, (b) make available to Buyer and Buyer's Advisors copies of all such
Contracts, books and records, and other existing documents and data as Buyer may
reasonably request, and (c) make available to Buyer and Buyer's Advisors such
additional financial, operating, and other data and information as Buyer may
reasonably request.
4.2 Operation of the Business of Each Acquired Company. Between the date of
this Agreement and the Closing Date, Seller and each Acquired Company shall:
4.2.1 Conduct the business of each Acquired Company only in the
Ordinary Course of Business;
4.2.2 To the extent practical, preserve intact the current
business organization of each Acquired Company, keep available the
services of the current officers, employees, and Representatives of
each Acquired Company, and maintain the relations and goodwill with
suppliers, customers, landlords, creditors, employees, agents, and
others having business relationships with each Acquired Company;
4.2.3 Confer with Buyer concerning operational matters of a material nature;
4.2.4 Report periodically to Buyer concerning the status of the
business, operations, and finances of each Acquired Company,
including, without limitation, promptly providing monthly financial
statements to the Buyer;
4.2.5 Not enter into any transaction or conduct any activity
described in Section 2.19 of this Agreement without the prior consent
of Buyer;
4.2.6 Not take any affirmative action, or fail to take any action
which may reasonably result in any breach, failure, error or
misrepresentation under any representation, warranty, covenant or
provision of this Agreement, or result in any Material Adverse Effect
to any Acquired Company or its business, prospects, assets,
liabilities or rights.
4.3 Requirement; Approvals. As promptly as practicable after the date of
this Agreement, Seller will, and will cause each Acquired Company to, make all
filings required by Legal Requirements to be made by it in order to consummate
the Contemplated Transactions (including all filings under the HSR Act). Between
the date of this Agreement and the Closing Date, Seller will, and will cause
each Acquired Company to, (a) cooperate with Buyer with respect to all filings
that Buyer elects to make or is required by Legal Requirements to make in
connection with the Contemplated Transaction, and (b) cooperate with Buyer in
obtaining all Consents identified in Schedule 2.3. In the event there is a
filing required by the HSR Act, Buyer shall pay all filing fees to be submitted
to any Governmental Body.
4.4 Notification. Between the date of this Agreement and the Closing Date,
Seller will promptly notify Buyer in writing if Seller or any Acquired Company
becomes aware of any fact or condition that causes or constitutes a Breach of
any of Seller's representations and warranties as of the date of this Agreement,
or if Seller or any Acquired Company becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the Schedules
if the Schedules were dated as of the date of the occurrence or discovery of any
such fact or condition, Seller will deliver to Buyer a supplement to the
Schedules on the Closing Date. During the same period, Seller will promptly
notify Buyer of the occurrence of any Breach of any covenant of Seller in this
Article IV or of the occurrence of any event that may make the satisfaction of
the conditions in Article VI impossible or unlikely. Notwithstanding anything
contained in this Section 4.4, no disclosure, supplement to Schedule or other
action taken by Seller as required or described herein shall be deemed to amend
or supplement this Agreement or any Schedule, or to cure any misrepresentation,
Breach or failure of Seller under this Agreement or to waive any right or remedy
of Buyer for such misrepresentation, Breach or failure.
28
4.5 Payment of Indebtedness by Related Persons. Except as expressly
provided in this Agreement, Seller will cause all indebtedness owed to any
Acquired Company by any related Person of Seller to be paid in full prior to
Closing.
4.6 No Solicitation or Negotiation. Until such time, if any, as this
Agreement is terminated pursuant to Article VIII, the Acquired Companies and the
Seller shall not, and will cause each director, officer, employee, agent or
representative of any Acquired Company not to, directly or indirectly (a)
present any expression of interest, request for proposal, offer, proposal,
inquiry, information or agreement to, or have any contact with, any Person
(other than Buyer) regarding any actual or potential Sale Transaction, or
(b) invite, solicit, initiate, facilitate or encourage any inquiries, proposals
or offers from, discuss or negotiate with, provide any information or response
to, cooperate in any way regarding, or consider the merits of, any request,
offer, information, inquiry or proposal from any Person (other than Buyer)
relating in any way to any Sale Transaction.
4.7 Best Efforts. Between the date of this Agreement and the Closing Date,
Seller will use its Best Efforts to cause the conditions in Article VI to be
satisfied.
4.8 Title Insurance. As soon as reasonably possible and at least seven (7)
days prior to the Closing in any event, the Seller, at Seller's sole cost and
expense, will cause the Acquired Companies to obtain and deliver to Buyer, an
informational title commitment/report for the Company s leased space in
Southfield, Michigan.
4.9 Intercompany Debt. As of the Closing Date, the Intercompany Debt of the
Acquired Companies shall be zero.
4.10 Workers Compensation Liabilities. Seller hereby covenants and agrees
to immediately pay when due, any and all Liabilities or claims for workers
compensation benefits by or for any of the employees or representatives of any
of the Acquired Companies arising from or related to any occurrence during any
period prior to or including the Closing Date, (i) that is not fully paid or
covered by insurance, or (ii) in the case of claims for benefits for employees
located within the states of Ohio and Washington, to the extent that
contributions to the respective state agencies for such claims for benefits are
not as of the Closing Date fully reserved for in the financial statements of the
Acquired Company.
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4.11 Payment of Taxes. Seller hereby covenants and agrees to immediately
pay when due, any and all Liabilities for Taxes (not otherwise reserved for on
the Company s October 31 Financial Statements) for any of the Acquired Companies
that arise out of or relate to any time period prior to or including the Closing
Date.
ARTICLE V
COVENANTS OF BUYER PRIOR TO CLOSING DATE
Buyer makes the following covenants to Seller:
5.1 Approvals of Governmental Bodies. As promptly as practicable after the
date of this Agreement, Buyer will make all filings required by Legal
Requirements to be made by it to consummate the Contemplated Transactions
(including all filings under the HSR Act). Between the date of this Agreement
and the Closing Date, Buyer will cooperate with Seller with respect to all
filings that Seller is required by Legal Requirements to make in connection with
the Contemplated Transactions, and cooperate with Seller in obtaining all
Consents identified in Schedule 2.3 and 4.3; provided that this Agreement will
not require Buyer to dispose of or make any change in any portion of its
business or to incur any other burden to obtain a Governmental Authorization. In
the event there is a filing required by the HSR Act, Buyer shall pay all filing
fees to be submitted to any Governmental Body.
5.2 Best Efforts. Between the date of this Agreement and the Closing Date,
Buyer will use its Best Efforts to cause the conditions in Article VII to be
satisfied.
ARTICLE VI
CONDITIONS PRECEDENT TO BUYER"S OBLIGATION TO CLOSE
All of Buyer's obligations under this Agreement, including, without
limitation, Buyer's obligations to purchase the Shares and to take the other
actions required to be taken by Buyer under this Agreement or at the Closing,
are subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived in writing by Buyer, in whole
or in part):
6.1 Accuracy of Representations. All of Xxxxxx'x, Seller's and Company's
representations and warranties in this Agreement, individually and in the
aggregate, must be and remain accurate in all respects as of the date of this
Agreement, and must be accurate in all respects as of the Closing Date as if
made on the Closing Date.
6.2 Satisfactory Due Diligence. The Buyer and Buyer's Lender shall be
satisfied, in their sole discretion, with the results of their due diligence
investigation including, but not limited to, the results of any Environmental
investigation and studies.
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6.3 Seller's Performance.
6.3.1 All of the covenants and obligations that Seller is
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing, individually and in the Aggregate, must have
been duly performed and complied with in all material respects.
6.3.2 Each document, agreement, instrument or certificate
required to be executed and/or delivered by Seller shall have been
duly executed and/or delivered, as applicable.
6.4 Consents. Each of the Consents must have been obtained and must be in
full force and effect.
6.5 Additional Documents. Each of the following documents must have been
delivered to Buyer:
6.5.1 An opinion of Xxxxx & Xxxxxxx, legal counsel to the Seller,
dated as of the Closing Date, in the form of Exhibit 6.5.1; and
6.5.2 All of the Seller's, Xxxxxx'x and the Company's Closing
Documents and such other documents as Buyer may reasonably request for
the purpose of (i) evidencing the accuracy of such parties'
representations and warranties, (ii) evidencing the performance by
such parties of, or the compliance by such parties with, any covenant
or obligation required to be performed or complied with by such
parties, (iii) evidencing the satisfaction of any condition referred
to in this Article VI, or (iv) otherwise facilitating the consummation
or performance of any of the Contemplated Transactions.
6.6 No Proceedings. Since the date of this Agreement, there must not have
been commenced or Threatened against Buyer, or against any Person affiliated
with Buyer, any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated Transactions, or
(b) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the Contemplated Transactions.
6.7 No Claim Regarding Stock Ownership of Sale Proceeds. There must not
have been made or Threatened by any Person any claim asserting that such Person
(a) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any Shares or stock of, or any other voting,
equity, or ownership interest in, any Acquired Company, or (b) is entitled to
all or any portion of the Purchase Price payable for the Shares.
6.8 No Prohibition. Neither the consummation nor the performance of any of
the Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time), materially contravene, or conflict with, or result in
a material violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise proposed by or before any Governmental Body.
6.9 Resignation of Officers. Buyer shall have received the resignations,
effective as of the Closing, of each director and officer of each Acquired
Company.
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6.10 Financing. The Buyer shall have obtained, on terms and conditions
satisfactory to it, in its sole discretion, all of the financing desired by
Buyer in order to consummate the Contemplated Transactions and fund the working
capital requirements of each Acquired Company after the Closing.
6.11 Absence of Litigation. No Litigation shall have been commenced or
Threatened, and no Order, decree or action by any governmental body shall have
been issued against Buyer, Seller, Xxxxxx or any Acquired Company or any of
their respective officers or directors with respect to the Contemplated
Transactions.
6.12 No Material Adverse Change. There shall have been no material adverse
change in the business, operations, condition (financial or otherwise), assets,
liabilities or prospects of any Acquired Company from October 31, 2003 to the
Closing Date.
6.13 Permits and Licenses. The Acquired Companies shall have all material
permits and licenses needed for the operation of the Business.
6.14 Real Estate Lease Agreements. Written confirmation in the form of
Exhibit 6.14, from the landlords to leases set forth on Schedule 6.14, that such
leases are not in default and are in full force and effect.
6.15 Xxxxxxxx Release. Buyer must obtain a Release in the form of Exhibit
6.15 executed by Xxxxx Xxxxxxxx ("Xxxxxxxx") indicating Xxxxxxxx shall release
the Acquired Companies from any and all claims, liabilities and obligations
whatsoever ("Xxxxxxxx Release").
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATION OF
COMPANY AND THE SELLER TO CLOSE
All of the obligations of the Company and the Seller under this Agreement,
including, without limitation, Seller's obligation to sell the Shares and to
take the other actions required to be taken by Seller at the Closing, are
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived in writing by Seller or
Company, in whole or in part):
7.1 Accuracy of Representations. All of Buyer's representations and
warranties in this Agreement, individually and in the Aggregate, must be and
remain accurate in all respects as of the date of this Agreement and must be
accurate in all respects as of the Closing Date as if made on the Closing Date.
7.2 Buyer's Performance.
7.2.1 All of the covenants and obligations that Buyer is required
to perform or to comply with pursuant to this Agreement at or prior to
the Closing, individually and in the aggregate, must have been duly
and fully performed and complied with in all respects.
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7.2.2 Each document, agreement, instrument or certificate
required to be executed and/or delivered by Buyer shall have been duly
executed and/or delivered, as applicable.
7.3 Additional Documents. Each of the following documents must have been
delivered to Seller:
7.3.1 An opinion of Xxxx, Xxxxxxx and Xxxxx, PLC, legal counsel
to the Buyer, dated as of the Closing Date, in the form of
Exhibit 7.3.1; and
7.3.2 All of the Buyer's Closing Documents and such other
documents as Seller may reasonably for the purpose of (i) evidencing
the accuracy of any representation or warranty of Buyer,
(ii) evidencing the performance by Buyer of, or the compliance by
Buyer with, any covenant or obligation required to be performed or
complied with by Buyer, (iii) evidencing the satisfaction of any
condition referred to in this Section 7, or (iv) otherwise
facilitating the consummation of any of the Contemplated Transactions.
7.4 No Injunction. There must not be in effect any Legal Requirement or any
injunction or other Order that (a) prohibits the sale of the Shares by Seller to
Buyer, and (b) has been adopted or issued, or has otherwise become effective,
since the date of this Agreement.
ARTICLE VIII
TERMINATION
8.1 Termination Events. This Agreement may, by notice given prior to or at
the Closing, be terminated:
8.1.1 By either Buyer or Seller if a Breach of any provision of
this Agreement has been committed by the other party and such Breach
has not been waived in writing;
8.1.2 By (a) Buyer if any of the conditions in Article VI have
not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Buyer to comply with its obligations under this Agreement) and Buyer
has not waived in writing such condition on or before the Closing
Date; or (b) Seller, if any of the conditions in Article VII have not
been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Seller to comply with their obligations under this Agreement) and
Seller has not waived in writing such condition on or before the
Closing Date;
8.1.3 By mutual written consent of Buyer and Seller; or
8.1.4 By either Buyer or Seller if the Closing has not occurred
(other than through the failure of any party seeking to terminate this
Agreement to fully comply with its obligations under this Agreement)
on or before June 10, 2004, or such later date as the parties may
agree upon.
8.2 Effect of Termination. Each party's right of termination under Section
8.1 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 8.1, all further
obligations of the parties under this Agreement will terminate, except that the
obligations in Sections 11.1, 11.2, 11.4 and 11.6 will survive; provided,
however, that if this Agreement is terminated by a party because of the Breach
of the Agreement by the other party or because one or more of the conditions to
the terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
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8.3 Limitation of Liability/Disbursement of Deposit. Notwithstanding
anything contained in this Agreement to the contrary, in the event that this
Agreement is terminated pursuant to Section 8.1 or the Parties fail to
consummate the Contemplated Transactions, the following shall apply:
8.3.1 In the event that Company, Seller and Xxxxxx have fully
complied with this Agreement and this Agreement is terminated by
Seller pursuant to Section 8.1.1 due to a material breach of the
Agreement by the Buyer, then Seller shall be entitled to immediately
receive the Deposit as full liquidated damages hereunder and Buyer
(and its affiliates) shall have no further liabilities or obligations
arising from or under this Agreement.
8.3.2 In the event that the Agreement is terminated by Buyer or
Seller pursuant to Section 8.1.2, 8.1.3 or 8.1.4 of this Agreement and
provided Buyer, Company, Seller and Xxxxxx have fully complied with
all of their obligations under this Agreement, then the Buyer shall be
entitled to a refund of the Deposit within ninety (90) days of
termination if the Cleveland Transaction has been completed, and in
either case Buyer, Seller, Company and Xxxxxx shall have no further
liabilities or obligations arising from or under this Agreement.
8.3.3 In the event that Buyer has fully complied with this
Agreement and this Agreement is terminated by Buyer pursuant to
Section 8.1.1 due to a material breach of the Agreement by Seller,
Company and/or Xxxxxx, then regardless of whether the Cleveland
Transaction has been completed Buyer shall be entitled to a refund of
the Deposit within five (5) business days of termination and have all
additional rights and remedies set forth herein, at law or in equity.
ARTICLE IX
INDEMNIFICATION, REMEDIES AND POST CLOSING COVENANTS
9.1 Survival; Knowledge. Except as otherwise provided in Sections 9.4 and
9.5 hereof, all representations, warranties, covenants, and obligations in this
Agreement, the Schedules, the supplements to the Schedules, the Certificate
delivered pursuant to Section 1.6.1(g), and any other certificate or document
delivered pursuant to this Agreement, will survive the Closing and continue in
perpetuity and in full force and effect thereafter. The right to
indemnification, payment of Damages (as hereinafter defined) or other remedy
based on such representations, warranties, covenants, and obligations will not
be affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations. Notwithstanding any
Knowledge or facts determined by the Buyer, the Buyer shall have the right to
fully rely on the representations, warranties, covenants and agreements of the
Seller and Xxxxxx contained in this Agreement or in any other documents or
papers delivered in connection herewith. Each representation, warranty, covenant
and agreement of the Seller and Xxxxxx contained in this Agreement is
independent of each other representation, warranty, covenant and agreement.
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9.2 Indemnification and Payment of Damages. Subject to the limitations of
Section 9.6 hereof, Seller and Xxxxxx will indemnify, defend and hold harmless
Buyer, each Acquired Company and their respective representatives, stockholders,
controlling Persons, and affiliates (collectively the "Indemnified Persons")
for, and will pay to the Indemnified Persons the amount of, any loss, Liability,
claim, damage, expense (including costs of investigation, defense and reasonable
attorneys' fees) or diminution of value, whether or not involving a third-party
claim (collectively "Damages"), arising, directly or indirectly, from or in
connection with:
9.2.1 Any Breach of any representation or warranty made by
Seller, Xxxxxx or Company in this Agreement, the Schedules, the
supplements to the Schedules, or any other certificate or document
delivered pursuant to this Agreement;
9.2.2 Any Breach of any covenant or obligation of Seller, Company
or Xxxxxx in this Agreement;
9.2.3 Any Liability or claim for workers compensation benefits by
or for any of the employees or Representatives of any Acquired Company
arising from or related to any occurrence during any period prior to
or including the Closing Date, except to the extent fully covered and
paid for by insurance held by the applicable Acquired Company or
Seller or, in the case of claims for benefits for employees located
within the states of Ohio and Washington, to the extent that
contributions to the respective state agency for such claims for
benefits were not as of the Closing Date fully reserved for in the
financial statements of the applicable Acquired Company or such claims
for benefits were not fully funded with contributions to the
respective state agency;
9.2.4 Any Liability or claim for any Tax which relates to any
period prior to or including the Closing Date and not reserved in the
closing Financial Statements:
9.2.5 Any Environmental, Health and Safety Liabilities, or other
Liabilities in any way arising from or allegedly arising from (i) any
Hazardous Activity conducted or allegedly conducted with respect to
the Facilities or the operation of any Acquired Company prior to the
Closing, (ii) any Hazardous Material that was (a) present on or before
the Closing on or at the Facilities, the Environment at the Facilities
or any other property now or formerly owned, used or relating in any
way to the operations or activities of an Acquired Company; or (b)
Released or allegedly Released by Seller, any Acquired Company or any
other Person for whose conduct they are or may be held responsible, at
any time on or prior to the Closing. Buyer will be entitled to control
any Cleanup and related Proceeding;
35
9.2.6 Any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with
Seller, Xxxxxx or any Acquired Company (or any Person acting on their
behalf) in connection with any of the Contemplated Transactions or any
other transaction;
9.2.7 Reliance by Buyer on any books or records of any Acquired
Company or the reliance by Buyer on any information furnished by
Seller or the Acquired Company or any of the directors or officers of
any Acquired Company, to Buyer, to the extent any of such information
should prove to be materially incorrect or false;
9.2.8 Any Liability or claim for health, life or other insurance
benefits, or any other employee benefits or claims by or for any of
the employees or Representatives of any Acquired Company arising from
or relating to any occurrence during any period prior to or including
the Closing Date, except to the extent fully covered and paid for by
insurance held by any Acquired Company, Seller or Xxxxxx, or reflected
on the closing Financial Statements;
9.2.9 Any Liability or claim arising from the services,
treatment, employment or termination of any employee, agent or
Representative of any Acquired Company on or prior to the Closing Date
or reflected on the closing Financial Statements;
9.2.10 The failure of Seller to reimburse Buyer for any
Delinquent Accounts Receivable pursuant to Section 1.5 of this
Agreement;
9.2.11 Any agreements, contracts, negotiations or other dealings
by Seller, Xxxxxx or any Acquired Company with any Person concerning
the sale, transfer or reorganization of the stock, assets or business
of any Acquired Company;
9.2.12 Any Liability arising from any Breach, violation or
noncompliance with any Legal Requirement prior to the Closing
including, without limitation, any deficiencies described on Schedule
2.15;
9.2.13 Any breach by Seller or Company of the covenants contained
within Sections 4.9, 4.10 or 4.11 of this Agreement; and/or
9.2.14 Any Liability arising from or related to any of the Legal
Proceedings and Orders described on Schedule 2.17.1 and Schedule 2.23.
9.3 Indemnification and Payment of Damages by Buyer. Buyer will indemnify
and hold harmless Seller, and will pay to Seller the amount of any Damages
arising, directly or indirectly, from or in connection with (a) any Breach of
any representation or warranty made by Buyer in this Agreement or in any
certificate delivered by Buyer pursuant to this Agreement, (b) any Breach by
Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any
breach by Buyer of the covenants contained within Section 3.4 of this Agreement.
36
9.4 Termination of Obligations of Company. Notwithstanding anything
contained in this Agreement to the contrary, all of the representations,
warranties, covenants, agreements and obligations of the Company shall terminate
at the Closing and shall thereafter be of no further force and effect. Except
for obligations of the Company arising from those items set forth in Sections
1.7.2(a), (b), (c) and (e), Seller and Xxxxxx hereby waive and release any
present or future cause of action or claim against the Company arising in any
way out of this Agreement or any representations, warranties, covenants or
obligations of the Company hereunder, whether for contribution, indemnity or
otherwise.
9.5 Survival of Representations and Warranties. All of the representations
and warranties of the Seller contained in this Agreement shall survive the
Closing and continue in full force and effect for a period of two (2) years
thereafter, except for the representations and warranties contained in Sections
2.12 (taxes) and 2.21 (environmental) (together with Xxxxxx'x representations
and warranties contained in Section 2.12 the "Limited Exempt Provisions"), which
shall survive the Closing and continue in full force and effect thereafter for
the applicable statute of limitations and, except for the representations and
warranties contained in Sections 2.1, 2.2, 2.4, 2.7, 2.8 and 2.26 ("Exempt
Provisions") which shall survive the Closing and continue in full force and
effect forever thereafter in perpetuity. All representations and warranties of
the Buyer under this Agreement shall survive the Closing and continue for a
period of two (2) years thereafter. All of the representations and warranties of
Xxxxxx contained in this Agreement shall survive the Closing and continue in
full force and effect for a period of one (1) year thereafter, except for the
representations and warranties contained in Sections 2.12 (taxes) (included
within the "Limited Exempt Provisions"), which shall survive the Closing and
continue in full force and effect thereafter for the applicable statute of
limitations.
9.6 Indemnification Limitations. Except for the "Exempt Damages" (as
hereinafter defined), Seller and Xxxxxx shall not have any obligation to
indemnify, defend and hold the Buyer harmless from and against any Damages until
the Buyer has suffered Damages, other than Exempt Damages, in excess of $500,000
(the "Floor"), after which point the Seller and Xxxxxx will be jointly and
severally obligated to indemnify, defend and hold the Buyer harmless from and
against all Damages suffered. For purposes of this Agreement, the "Exempt
Damages" shall mean Damages arising out of (i) any intentional Breach,
intentional misrepresentation, concealment or fraud by the Seller or Xxxxxx,
(ii) any Breach in any of the Limited Exempt Provisions or Exempt Provisions,
and/or (iii) any Damages suffered by the Buyer or any of the Acquired Companies
arising, directly or indirectly, from or in connection with the items referred
to in Sections 9.2.3, 9.2.4, 9.2.11, 9.2.13, or 9.2.14 of this Agreement.
Notwithstanding anything contained herein to the contrary, it is expressly
agreed that the Buyer shall be indemnified from the first dollar of Damages
which are Exempt Damages and the Exempt Damages shall not be subject to the
Floor. Furthermore, the Exempt Damages shall not be subject to the "Limitation"
(as hereinafter defined). Except as otherwise provided herein, the maximum
liability of the Seller or Xxxxxx for indemnification under this Article IX
shall be limited to $2,500,000 (the "Limitation").
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9.7 Addus Healthcare, Inc. 401(k) Plan.The Employees of Arcadia Services,
Inc. participate (when eligible under the terms of the Plan) in the parent
Company 401(k) Plan (Addus Healthcare, Inc. 401(k) Plan). With respect to those
Employees of Arcadia who participate in the Addus Healthcare, Inc. 401(k) Plan,
the parties agree as follows:
9.7.1 Buyer agrees to establish a virtually identical 401(k)
program for Arcadia Employees', using the same eligibility,
contributions, vesting, and investment choices. This shall be
sponsored by Arcadia and known as the Arcadia Services, Inc. 401(k)
Plan.
9.7.2 Seller agrees to transfer the account balances of the
Employee participants who work for Arcadia, from the Addus 401(k) Plan
into the newly established Arcadia 401(k) Plan, as soon as reasonably
feasible following the closing of this transaction and the
establishment of the Arcadia 401(k) Plan.
9.7.3 Buyer and Seller agree to cooperate in a smooth transfer of
the 401(k) balances from one Plan to another, and to do such other
things as may be necessary to fulfill the intention of the parties
that each of the Employee/participants at Arcadia shall continue to
enjoy the benefits of a 401(k) Plan.
9.7.4 The parties agree to treat this as a transfer of Plan
assets and liabilities from one retirement plan to another retirement
plan, unless applicable law requires the transfer of Plan assets to be
treated as a plan termination or a partial plan termination of the
Addus Healthcare, Inc. 401(k) Plan.
ARTICLE X
DEFINITIONS
For purposes of this Agreement, the following terms have the following
meanings:
10.1 "Accounts Receivable" shall have the meaning as set forth in
Section 2.10 of this Agreement.
10.2 "Acquired Companies" shall mean collectively, the Company, Arcadia
Health Services, Inc., Arcadia Health Services of Michigan, Inc., Grayrose,
Inc., Arcadia Staff Resources, Inc., ASR Staffing, Inc., Arcadia Employee
Services, Inc., Arcadia Medical Products, Inc., and any subsidiaries of any of
the foregoing.
10.3 "Acquired Company" shall mean each one of the Acquired Companies.
10.4 "Agreement" shall mean this Stock Purchase Agreement and all Exhibits
and Schedules referenced herein.
10.5 "Best Efforts" shall mean the efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible.
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10.6 "Breach" shall mean a breach of a representation, warranty, covenant,
obligation, or other provision of this Agreement, any Schedule or any instrument
delivered pursuant to this Agreement and will be deemed to have occurred if
there is or has been (a) any inaccuracy in, failure or breach of, or any failure
to perform or comply with, such representation, warranty, covenant, obligation,
or other provision, whether material or otherwise, or (b) any claim by any
Person or other occurrence or circumstance that is or was inconsistent with such
representation, warranty, covenant, obligation or other provision.
10.7 "Buyer" shall mean that entity identified as Buyer in the introductory
section of this Agreement.
10.8 "Buyer's Advisors" shall have the meaning as set forth in Section 4.1
of this Agreement.
10.9 "Buyer's Closing Documents" shall have the meaning as set forth in
Section 3.2.1 of this Agreement.
10.10 "Cash Payment" shall have the meaning as set forth in Section 1.4.1
of this Agreement.
10.11 "Closing" shall have the meaning as set forth in Section 1.6 of this
Agreement.
10.12 "Closing Date" shall mean the date and time as of which the Closing
actually takes place.
10.13 "Company Assets" shall have the meaning as set forth in Section 2.7
of this Agreement.
10.14 "Consent" or "Consents" shall mean any approval, consent,
ratification, waiver, or other authorization (including, without limitation, any
Governmental Authorization) of any Person (i) listed in Schedule 2.3, and (ii)
required to be obtained in order to consummate the Contemplated Transactions.
10.15 "Contemplated Transactions" shall mean all of the transactions
contemplated by this Agreement, including, without limitation:
10.15.1 The sale of the Shares by Seller to Buyer;
10.15.2 The execution, delivery, and performance of the
Promissory Note, the Noncompetition Agreements, the Seller's Release
and the Employment Agreements;
10.15.3 The performance by Buyer and Seller of their respective
covenants and obligations under this Agreement; and
10.15.4 Buyer's acquisition and ownership of the Shares and
exercise of control over each Acquired Company.
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10.16 "Contract" shall mean any agreement (or group of related agreements),
contract, obligation, option, commitment, promise or understanding (whether
written or oral and whether expressed or implied) (a) under which any Acquired
Company has or may acquire any rights, (b) under which any Acquired Company has
or may become subject to any obligation or Liability, (c) by which any Acquired
Company or any of the assets owned or used by it is or may become bound, or (d)
which may relate to, establish or restrict any rights or obligations affecting
the Shares or any present or future securities of any Acquired Company.
10.17 "Current Assets" shall be defined as those assets of the Acquired
Companies which, in accordance with GAAP, are classified as "current", except
for intercompany accounts.
10.18 "Current Liabilities" shall be defined as those liabilities of the
Company, other than the Workers' Compensation Reserve and intercompany debt,
which, in accordance with GAAP, are classified as "current".
10.19 "Damages" shall have the meaning as set forth in Section 9.2 of this
Agreement.
10.20 "Delinquent Accounts Receivable" shall have the meaning as set forth
in Section 1.5 of this Agreement.
10.21 "Employment Agreement" shall have the meaning as set forth in
Section 6.11 of this Agreement.
10.22 "Employee Benefit Plan" shall mean any qualified and/or non-qualified
fringe benefit, disability, health, medical, life insurance, supplemental
compensation, incentive, wage continuation, retirement, pension, profit sharing,
bonus, deferred compensation, stock ownership or other plan, trust, policy or
arrangement involving any past, present or future employee, consultant,
representative, or agent of any Acquired Company, including without limitation
any plan, program or arrangement defined in or relevant to any provision of
ERISA.
10.23 "Encumbrance" shall mean any charge, claim, community property or
dower interest, mortgage, equitable interest, lien, option, pledge, security
interest, right of first refusal, contract, Liability or restriction of any
kind, including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
10.24 "Environment" shall mean any soil, land surface or subsurface strata,
surface waters (including, without limitation, navigable waters, ocean waters,
streams, ponds, drainage basins, and wetlands), ground waters, drinking water
supply, stream, sediments, ambient air (including indoor air), plant and animal
life, and any other environmental medium or natural resource.
10.25 "Environmental, Health, and Safety Liabilities" shall mean any cost,
damage, expense, Liability, obligation, fine, fee or other responsibility
arising from or under Environmental Law or Occupational Safety and Health Law
including, without limitation, any costs, damages, financial responsibility,
expenses, liabilities, obligations, fines, fees or other Liability for, arising
out of or relating to:
10.25.1 The Environment;
40
10.25.2 The presence, generation, use, handling, transport,
recycling, reclamation, disposal, treatment, storage or release of any
Hazardous Material;
10.25.3 Any environmental, health, or safety matters or
conditions (including on-site or off-site contamination, occupational
safety and health, and regulation of chemical substances or products);
10.25.4 Fines, penalties, judgments, awards, settlements, legal
or administrative Proceedings, damages, losses, claims, demands and
response, investigative, remedial and inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law;
10.25.5 Any Environmental Law or Occupational Safety and Health
Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or
response actions ("Cleanup") required by any applicable Environmental
Law or any Occupational Safety and Health Law (whether or not such
Cleanup has been required or requested by any Governmental Body or any
other Person) and for any natural resource damages; and/or
10.25.6 Any other compliance, corrective, investigative, or
remedial measures required under any Environmental Law or any
Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include, without
limitation, the types of activities covered by the United States Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 601
et seq., as amended ("CERCLA").
10.26 "Environmental Law" shall mean any Legal Requirement that governs,
regulates, requires or relates to: (a) advising appropriate authorities,
employees, and the public of intended or actual releases of pollutants or
hazardous substances or materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as resource extraction
or construction, that could have significant impact on the Environment; (b)
preventing or reducing to acceptable levels the release of pollutants or
Hazardous Materials into the Environment; (c) reducing the quantities,
preventing the Release, or minimizing the hazardous characteristics of wastes
that are generated; (d) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to human
health or the Environment when used or disposed of; (e) protecting resources,
species, or ecological amenities; (f) reducing to acceptable levels the risks
inherent in the transportation of Hazardous Materials, pollutants, oil, or other
potentially harmful substances; (g) cleaning up pollutants that have been
released, preventing the Threat of Release, or paying the costs of such clean up
or prevention; (h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets; (i) Hazardous Activities, Hazardous Materials,
pollutants, petroleum products, oil, asbestos or other potentially harmful
substances; or (j) the protection of the health, safety and welfare of the
public, water health and safety and pollution and/or protection of the
Environment.
41
10.27 "ERISA" shall mean the Employee Retirement Income Security Act of
1974 or any successor law, and regulations and rules issued pursuant to that Act
or any successor law.
10.28 "Exempt Damages" shall have the same meaning as set forth in Section
9.6.
10.29 "Exempt Provisions" shall have the same meaning as set forth in
Section 9.5.
10.30 "Facilities" shall mean any real property, leaseholds, or other
interests currently or formerly owned, operated or managed by any Acquired
Company and any buildings, plants, structures, fixtures or equipment (including
motor vehicles) currently or formerly owned or operated by any Acquired
Company.
10.31 "Fiduciary" shall have the meaning as defined in ERISA Section 3(21).
10.32 [INTENTIONALLY OMITTED].
10.33 "Financial Statements" shall have the meaning set forth in
Section 2.5.
10.34 "GAAP" shall mean United States Generally Accepted Accounting
Principles, consistently applied.
10.35 "Governmental Authorization" shall mean any approval, consent,
license, permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
10.36 "Governmental Body" shall mean any: (a) federal, state, local,
municipal, foreign, or other government; or (b) governmental or
quasi-governmental authority of any nature, including without limitation, (i)
any governmental agency, branch, department, official, or entity, (ii) any
court, judicial authority or other tribunal, and (iii) any arbitration body or
tribunal;
10.37 "Hazardous Activity" shall mean the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment, remediation
or use of Hazardous Materials in, on, under, about, or from the Facilities or
any part thereof into the Environment, and/or any other act, business,
operation, or action that poses a risk of illness or property damage or
diminution in value of any property resulting from Hazardous Materials.
10.38 "Hazardous Materials" shall mean any waste or other substance that is
listed, regulated, defined, designated, or classified under, or otherwise
determined to be, hazardous, radioactive, toxic, or a pollutant or a contaminant
pursuant to, any Environmental Law and shall include materials or equipment
containing polychlorinated biphenals or asbestos in any form.
10.39 "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976 or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
10.40 "Indebtedness" of the Acquired Companies means all Liabilities, and
all interest, fees, prepayment penalties, cancellation charges and other fees,
costs and charges relating thereto, of the Acquired Companies, except for
Current Liabilities and intercompany payables, including without limitation, all
Liabilities which (i) in accordance with GAAP should be classified upon a
balance sheet as indebtedness; (ii) are for borrowed money or purchase money
financing; (iii) are secured by any Lien or other charge upon any property or
assets; (iv) are created or arise under any conditional sale or other title
retention agreement with respect to any property; and/or (v) arise under any
capitalized leases (as defined under GAAP).
42
10.41 "Indemnified Persons" shall have the meaning as set forth in
Section 9.2 of this Agreement.
10.42 "Intellectual Property Assets" shall include the following assets:
(a) each Acquired Company's name, all fictional business names, trade names,
registered and unregistered trademarks ("Marks"), service marks and
applications; (b) all patents, patent applications, and inventions and
discoveries that may be patentable ("Patents"); (c) all copyrights in both
published works and unpublished works ("Copyrights"); and (d) all know-how,
trade secrets, confidential or proprietary information, customer lists, software
(except PayNet), technical information, data, process technology, plans,
drawings, and blue prints, owned, used or licensed by any Acquired Company, or
otherwise referenced in or affected by any Contract ("Trade Secrets").
10.43 "Intercompany Debt" shall have the meaning as set forth in
Section 2.29 of this Agreement.
10.44 "Interim Financial Statements" shall have the meaning as set forth in
Section 2.5 of this Agreement.
10.45 "IRC" shall mean the Internal Revenue Code of 1986 or any successor
law, and all U. S. Treasury regulations and rulings issued by the IRS or any
Governmental Authority pursuant to the Internal Revenue Code or any successor
law.
10.46 "IRS" shall mean the United States Internal Revenue Service or any
successor agency, and the United States Department of the Treasury.
10.47 "Knowledge" of any Person shall be deemed to include a particular
fact or other matter if: (a) such Person is actually aware of such fact or other
matter; or (b) a reasonable Person could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonable investigation concerning the existence of such fact or other matter.
A Person other than an individual will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as a director,
officer, partner, executor, or trustee of such Person (or in any similar
capacity) has Knowledge of such fact or other matter.
10.48 "Leased Property" shall have the meaning as set forth in
Section 2.8.2 of this Agreement.
10.49 "Legal Requirement" shall mean any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, operational memorandum, guidance documents, policy, charter,
ordinance, rule, code, principle of common law, case, decision, regulation,
statute, or treaty including, without limitation, Environmental Laws,
Occupational Safety and Health Laws, Orders, ERISA and the IRC.
43
10.50 'Liability" shall mean any liability or obligation whether known or
unknown, foreseeable or unforeseeable, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due.
10.51 "Limitation" shall have the meaning set forth in Section 9.6 of this
Agreement.
10.52 "Material Adverse Change (or Effect)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities, rights,
obligations, business or prospects of any Person which change (or effect),
individually or in the aggregate, is materially adverse to such condition,
properties, assets, liabilities, rights, obligations, business or prospects of
such Person.
10.53 "Occupational Safety and Health Law" shall mean any Legal Requirement
which governs, regulates or relates to safety and health conditions or is
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
10.54 "Order" shall mean any award, decision, decree, 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.
10.55 "Ordinary Course of Business" shall mean an action taken by a Person
that is consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person and such
action is similar in nature and magnitude to actions customarily taken, without
any authorization by the board of directors (or by any Person or group of
Persons exercising similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of business as
such Person.
10.56 "Organizational Documents" shall mean the articles or certificates of
incorporation and the bylaws of a corporation, including any amendments thereto
or restatements thereof, and all resolutions of the Board of Directors and
stockholders of such corporation.
10.57 "Person" shall mean any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or Governmental Body.
10.58 "Proceeding" shall mean 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 or Person.
10.59 [INTENTIONALLY OMITTED].
44
10.60 "Purchase Price" shall have the meaning as set forth in the Section
1.2 of this Agreement.
10.61 "Real Property" shall have the meaning as set forth in Section 2.8 of
this Agreement.
10.62 "Records" shall have the meaning as set forth in Section 2.6 of this
Agreement.
10.63 "Release" shall mean any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
10.64 "Representatives" shall have the meaning as set forth in
Section 2.22.4 of this Agreement.
10.65 "Sale Transaction" shall mean any transaction or series of
transactions involving the sale of the business or assets (other than sales of
inventory in the Ordinary Course of Business) of any Acquired Company, or any of
the Shares or any equity interest or capital stock of any Acquired Company, or
any merger, consolidation, joint venture, partnership, share exchange,
reorganization, business combination, or similar transaction involving any
Acquired Company.
10.66 "Seller's Closing Documents" shall have the meaning as set forth in
Section 1.7.1 of this Agreement.
10.67 "Seller's Noncompetition Agreement" shall have the meaning as set
forth in Section 1.7.1(d) of this Agreement.
10.68 "Seller's Release" shall have the meaning as set forth in
Section 1.7.1(b) of this Agreement.
10.69 "Shares"shall have the meaning set forth in the recitals to this
Agreement.
10.70 "Subsidiaries" shall have the meaning set forth in Section 2.25 of
this Agreement.
10.71 "Tax" shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under IRC Section
59(A)), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated or other tax, assessment or charge by a Governmental Body of
any kind whatsoever, including any interest, penalty or addition thereto,
whether disputed or not.
10.72 "Tax Return" shall mean any return (including any information or
amended 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.
45
10.73 "Threat of Release" shall mean a reasonable possibility of a Release
that may require action in order to prevent or mitigate damage to the
Environment that may result from such Release.
10.74 "Threatened" shall mean a claim, Proceeding, dispute, action, or
other matter if any demand or statement has been made (orally or in writing) or
any notice has been given (orally or in writing), or if any other event has
occurred or any other circumstances exist, that would lead a prudent Person to
conclude that such a claim, Proceeding, dispute, action, or other matter may be
asserted, commenced, taken, or otherwise pursued in the future.
10.75 "Workers Compensation Reserve" shall mean all Liabilities for
workers' compensation claims of the Acquired Companies the date of occurrence of
which is on or prior to the Closing Date, (i) that is not fully paid or covered
by insurance or (ii) in the case of claims for benefits for employees located
within the states of Ohio and Washington, to the extent that contributions to
the respective state agency for such claims for benefits are not as of the
Closing Date fully reserved for in the financial statements of the Acquired
Companies.
ARTICLE XI
GENERAL PROVISIONS
11.1 Confidentiality. The Company, Seller and Xxxxxx will maintain and hold
in confidence and not disclose any information concerning the business and
affairs of each Acquired Company that is not already generally available to the
public and is not otherwise used in the business of Seller and its affiliates
("Confidential Information"), will refrain from using any Confidential
Information except in connection with this Agreement, and will deliver promptly
to the Buyer or destroy, at the request and option of the Buyer, all tangible
embodiments (and all copies) of the Confidential Information which are in their
possession. In the event that the Company, Seller or Xxxxxx are requested or
required (by oral question or request for information or documents in any legal
Proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, such party will notify the
Buyer promptly of the request or requirement so that the Buyer may seek an
appropriate protective order or waive compliance with the provisions of this
Section. If, in the absence of a protective order or the receipt of a waiver
hereunder, any of the aforementioned parties is, on the written advice of
counsel, compelled to disclose any Confidential Information to any tribunal or
else stand liable for contempt, such party may without liability hereunder,
disclose that portion of the Confidential Information which such party is
required to disclose.
11.2 Expenses. Except as otherwise expressly provided in this Agreement,
the Seller, on the one hand, and the Buyer, on the other hand, shall bear their
own respective expenses incurred in connection with the preparation, execution,
and performance of this Agreement and the Contemplated Transactions, including,
but not limited to fees and expenses of agents, representatives, investment
bankers, advisors, consultants, legal counsel and accountants (collectively
"Transaction Costs"). Without limiting the generality of the foregoing, Seller
agrees that none of the Acquired Companies shall bear any Transaction Costs,
other than the time and direct expenses of employees of the Acquired Companies,
and that the Seller (and not the Acquired Companies) shall pay all costs, fees
and expenses for services rendered by Xxxxxxx Xxxxx & Company and legal counsel
to the Seller or the Acquired Companies in any way relating to this Agreement or
the Contemplated Transactions. 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.
46
11.3 Schedules. The Schedules are numbered to correspond to the various
sections of this Agreement relating to the representations and warranties
contained in this Agreement and certain other information called for by this
Agreement. Unless otherwise specified, no disclosure made in any particular
Schedule shall be deemed made in any other Schedule unless expressly made
therein.
11.4 Public Announcements. Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such manner as mutually agreed to by Seller and
Buyer. Unless consented to by each party hereto in advance or required by Legal
Requirements, prior to the Closing, all other parties shall keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
Person. Seller and Buyer will consult with each other concerning the means by
which each Acquired Company's employees, customers, and suppliers and others
having dealings with each Acquired Company will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any such
communication.
11.5 Dispute Resolution; Jurisdiction and Venue. Any and all disputes,
controversies or claims arising out of or relating to this Agreement shall be
resolved exclusively and conclusively by filing suit in the United States
District Court for the Eastern District of Michigan, Southern Division, and all
parties agree that jurisdiction and venue properly lie in such Court.
11.6 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), or (d) two (2) business days following the deposit of same
in the U.S. mail, in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Seller: Addus HealthCare, Inc.
0000 Xxxxx Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx Xxxx, Esq.
General Counsel
Fax No.: 000-000-0000
47
With a copy to: Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Quick, Esq.
Fax No.: 000-000-0000
Buyer: RKDA, Inc.
0000 Xxxxxxxxx Xxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, XX
Fax No.: 000-000-0000
With a copy to: Xxxx, Xxxxxxx and Xxxxx, PLC
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
/Xxxx X. Xxxx, Esq.
Fax No. 000-000-0000
Xxxxxx: W. Xxxxxx Xxxxxx
0000 X. Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax No. 000-000-0000
With a copy to: Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Quick, Esq.
Fax No.: 000-000-0000
11.7 Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement and the Contemplated
Transactions, shall be paid by Seller when due, and Seller will, at its own
expense, file all necessary Tax Returns and other documentation with respect to
all such transfer, documentary, sales, use, stamp, registration and other Taxes
and fees.
11.8 Recoupment. Seller hereby agrees and acknowledges that in the event
that any amount is or becomes due or payable by Seller to the Buyer or any
Acquired Company as Damages or otherwise, the Buyer shall have the option (but
not obligation) to elect to reduce, on a dollar-for-dollar basis, any amount
owed, due or payable to Seller under this Agreement, under the Promissory Note
or otherwise, by any such amount, due or payable to Buyer or any Acquired
Company, which recoupment may be applied against one or more payments due,
and/or treated as a prepayment of principal due under the Promissory Note, or
otherwise, as the Buyer or Acquired Company may elect from time to time. This
elective right of setoff shall be cumulative and in addition to any and all
additional remedies to which Buyer or any Acquired Company may be entitled at
law or in equity.
48
11.9 Further Assurances. The parties agree (i) to furnish upon request to
each other such further information, (ii) to execute and deliver to each other
such other documents, and (iii) to do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out the intent of
this Agreement and the documents referred to in this Agreement. The Acquired
Companies agree to cooperate and provide non-monetary assistance (including
reasonable time of their employees), as reasonably requested by Seller, in the
Seller's handling of worker's compensation and other claims, the liability for
which may have been retained by the Seller, to their closure or conclusion.
11.10 Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged,
in whole or in part, by a waiver or renunciation of the claim or right, unless
done so in writing signed by the party asserting such claim or right; (b) no
waiver that may be given by a party will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand on one party will
be deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
11.11 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter; provided, however, that the Confidentiality
Agreement by and among the parties dated March 31, 2003, as amended September 4,
2003, shall continue in full force and effect. This Agreement supercedes and
terminates any provision in the Term Sheet dated October 31, 2003, as amended,
by and among the parties and the Company and the agreement entered by the
parties dated March 12, 2004. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
11.12 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumptions or burden of proof
shall arise favoring or disfavoring any party by virtue of the authoring of any
of the provisions of this Agreement. Any reference to any federal, state, local
or foreign statute of law shall be deemed to also refer to all rules and
regulations promulgated thereunder, unless the context expressly provides
otherwise. The word "including" shall mean including without limitation. All
words used in this Agreement will be construed to be of such gender or number as
the circumstances may require. If any party has Breached any representation,
warranty or covenant contained in this Agreement, the fact that such party may
not have Breached another representation, warranty or covenant contained in this
Agreement which also relates to the same or similar subject matter shall not
detract from or mitigate the fact that the party is in breach of the first
representation, warranty or covenant (regardless of the relative levels of
specificity among such various representations, warranties or covenants). In the
event of any inconsistency between the statements in the body of this Agreement
and those in the Schedules, the statements in the body of this Agreement will
control.
49
11.13 Assignments; Successors; No Third Party Rights. Except as expressly
provided herein, no party may assign any of its rights under this Agreement
without the prior consent of the other parties, except that Buyer may assign any
of its rights under this Agreement to any subsidiary, parent, affiliate, or
equity partner (pursuant to Section 1.8 hereof), of Buyer. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing contained in this Agreement will be construed to give any
Person other than the parties to this Agreement (and their successors and
assigns) and those Persons expressly identified herein as receiving or obtaining
rights or benefits hereunder, any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provision of this Agreement.
11.14 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction or arbitrator, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
11.15 Section Headings. The headings of Sections in this Agreement are
provided for convenience only and will not affect their construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement.
11.16 Time of Essence. Time is of the essence with regard to each party's
performance under this Agreement and all dates and time periods set forth or
referred to in this Agreement.
11.17 Governing Law. This Agreement shall be governed by the internal laws
of the State of Michigan without regard to conflicts of laws principles.
11.18 Arm's Length Negotiations. Each party herein expressly represents and
warrants to all other parties hereto that (a) before executing this Agreement,
said party has fully informed itself of the terms, contents, conditions and
effects of this Agreement, (b) said party has relied solely and completely upon
its own judgment in executing this Agreement, (c) said party has had the
opportunity to seek and has obtained the advice of counsel before executing this
Agreement, (d) said party has acted voluntarily and of its own free will in
executing this Agreement, (e) said party is not acting under duress, whether
economic or physical, in executing this Agreement, and (f) this Agreement is the
result of arm's length negotiations conducted by and among the parties and their
respective counsel.
11.19 Counterparts/Facsimile Signatures. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original of
this Agreement and all of which, when taken together, shall be deemed to
constitute one and the same agreement. A facsimile signature of any party shall
be immediately binding upon such party and have the same legal effect as a
original signature of such party.
50
11.20 Records. Following the Closing, Buyer and the Acquired Companies
shall provide Seller with access upon reasonable notice to all financial and
other records of the Acquired Companies for the period ending on or prior to the
Closing Date for such reasonable purposes as Seller may require, including but
not limited to the purpose of Seller's calculation of the Final Net Working
Capital.
11.21 Proration of Taxes. The parties agree that for the pertinent periods
in fiscal year 2004 during which they directly or indirectly own the Company,
any income taxes (and the income upon which the taxes are based) shall be
computed on an actual basis, rather than on a prorated basis, such that the
parties will pay only the Taxes attributable to the actual income earned during
the period in which they own the Company.
11.22 Execution Without Exhibits and Schedules. This Agreement may be
executed without the Exhibits and Schedules referenced herein, in which case the
validity and effectiveness of this Agreement shall be subject to the parties'
subsequent agreement upon and finalization of such Exhibits and Schedules
exercising good faith and reasonable diligence. Additionally, as set forth in
Section 1.4.4 hereof, the Deposit provided herein by Buyer shall constitute a
loan to Seller and Xxxxxx, payable without interest as set forth in
Section 1.4.4 hereof, until such time as the Exhibits and Schedules are
subsequently completed, at which time the Deposit shall become subject to the
provisions of Article VIII herein.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
WITNESSES: BUYER:
RKDA, INC.,
a Michigan corporation
By:/s/Xxxx X. Xxxxxxx, XX
-------------------------
Its: President
COMPANY:
ARCADIA SERVICES, INC.,
a Michigan corporation
By:/s/ W. Xxxxxx Xxxxxx
----------------------
Its:President
SELLER:
ADDUS HEALTHCARE, INC.,
an Illinois corporation
By:/s/ W. Xxxxxx Xxxxxx
----------------------
Its:President
XXXXXX:
By:/s/ W. Xxxxxx Xxxxxx
----------------------
W. XXXXXX XXXXXX
__________________
