Exhibit 2
EXECUTION COPY
ASSET PURCHASE AGREEMENT
Dated as of September 1, 2002
Among
NAVIGANT CONSULTING, INC.
HUNTER & ASSOCIATES MANAGEMENT SERVICES, INC.
THG INVESTORS, INC.
and
THE SHAREHOLDERS LISTED ON THE SIGNATURE PAGES HERETO
TABLE OF CONTENTS
Page No.
ARTICLE I DEFINITIONS .......................................................... 1
1.1. Definitions .......................................................... 1
1.2. Interpretation ....................................................... 8
ARTICLE II PURCHASE AND SALE ................................................... 8
2.1. Purchased Assets ..................................................... 8
2.2. Excluded Assets ...................................................... 9
2.3. Assumed Liabilities .................................................. 9
2.4. Excluded Liabilities ................................................. 10
ARTICLE III PURCHASE PRICE ..................................................... 11
3.1. Purchase Price ....................................................... 11
3.2. Adjustment to Purchase Price ......................................... 11
3.3. Deferred Payments .................................................... 12
3.4. Earn-Out Payments .................................................... 13
3.5. Allocation of Purchase Price ......................................... 15
ARTICLE IV CLOSING ............................................................. 16
4.1. Closing Date ......................................................... 16
4.2. Payment on the Closing Date .......................................... 16
4.3. Buyer's Additional Deliveries ........................................ 16
4.4. Seller's Deliveries .................................................. 16
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER, PARENT AND THE
SHAREHOLDERS ................................................................... 18
5.1. Organization of Parent and Seller .................................... 18
5.2. Subsidiaries and Investments ......................................... 18
5.3. Authority of Parent, Seller and the Shareholders ..................... 18
5.4. Financial Statements ................................................. 19
5.5. Operations Since Balance Sheet Date .................................. 19
5.6. No Undisclosed Liabilities ........................................... 21
5.7. Taxes ................................................................ 21
5.8. Availability of Assets ............................................... 22
5.9. Governmental Permits ................................................. 22
5.10. Real Property ....................................................... 23
5.11. Real Property Leases ................................................ 23
5.12. Condemnation ........................................................ 23
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5.13. Personal Property .............................................. 23
5.14. Personal Property Leases ....................................... 23
5.15. Intellectual Property; Software ................................ 23
5.16. Accounts Receivable ............................................ 25
5.17. Title to Property .............................................. 25
5.18. Employees and Related Agreements; ERISA ........................ 25
5.19. Employee Relations ............................................. 27
5.20. Contracts ...................................................... 28
5.21. Status of Contracts ............................................ 28
5.22. No Violation, Litigation or Regulatory Action .................. 29
5.23. Environmental Matters .......................................... 29
5.24. Insurance ...................................................... 31
5.25. Customers and Suppliers ........................................ 31
5.26. Securities Law Matters ......................................... 31
5.27. No Finder ...................................................... 32
5.28. Disclosure ..................................................... 32
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER ........................ 33
6.1. Organization of Buyer ........................................... 33
6.2. Authority of Buyer .............................................. 33
6.3. No Regulatory Actions or Litigation ............................. 33
6.4. No Finder ....................................................... 34
6.5. Capital Stock of Buyer .......................................... 34
6.6. Disclosure ...................................................... 34
ARTICLE VII ADDITIONAL AGREEMENTS ......................................... 34
7.1. Covenant Not to Compete or Solicit Business ..................... 34
7.2. Taxes ........................................................... 35
7.3. Discharge of Business Liabilities ............................... 36
7.4. Employees and Employee Benefit Plans ............................ 36
7.5. Change in Corporate Name ........................................ 38
7.6. Additional Transfer Restrictions ................................ 38
7.7. Restrictions on Ownership ....................................... 39
7.8. Hunter Employment Agreement ..................................... 39
7.9. Lease Expense Reimbursement ..................................... 39
7.10. Management Committee ........................................... 39
7.11. Application of Buyer Travel Policies ........................... 40
7.12. Assignment or Enforcement of Certain Agreements ................ 40
7.13. Payment to Xxxxx Xxxxxx ........................................ 40
ARTICLE VIII INDEMNIFICATION .............................................. 40
8.1. Indemnification by Parent, Seller and the Shareholders .......... 40
8.2. Indemnification by Buyer ........................................ 41
8.3. Notice of Claims ................................................ 41
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8.4. Third Person Claims .............................................. 42
8.5. Limitations on Indemnification Obligations ....................... 43
ARTICLE IX GENERAL PROVISIONS .............................................. 44
9.1. Survival of Obligations .......................................... 44
9.2. Confidential Nature of Information ............................... 44
9.3. No Public Announcement ........................................... 45
9.4. Notices .......................................................... 45
9.5. Successors and Assigns ........................................... 46
9.6. Access to Records after Closing .................................. 46
9.7. Entire Agreement; Amendments ..................................... 46
9.8. Interpretation ................................................... 46
9.9. Waivers .......................................................... 47
9.10. Expenses ........................................................ 47
9.11. Execution in Counterparts ....................................... 47
9.12. Enforcement of Agreement ........................................ 47
9.13. Further Assurances .............................................. 47
9.14. Governing Law ................................................... 48
9.15. Time is of the Essence .......................................... 48
9.16. Offset .......................................................... 48
9.17. Submission to Jurisdiction ...................................... 48
9.18. Dispute Resolution .............................................. 48
9.19. Arbitration ..................................................... 49
9.20. Judicial Procedure .............................................. 50
9.21. Seller Representative ........................................... 50
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of September 1, 2002, among Navigant
Consulting, Inc., a Delaware corporation ("Buyer"), Hunter & Associates
Management Services, Inc., a Delaware corporation ("Seller"), THG Investors,
Inc., a Florida corporation ("Parent"), and each of the shareholders of Parent
listed on the signature pages hereto (the "Shareholders").
WHEREAS, Seller is engaged in the business of providing consulting services
to hospital and other healthcare systems (including hospitals, physician
practices and managed care organizations), including management services,
operating performance improvement plans and plan implementation, operational
restructuring and related consulting services (the "Business"); and
WHEREAS, Seller desires to sell, and Parent and the Shareholders desire to
cause Seller to sell to Buyer, and Buyer desires to purchase from Seller, on a
going concern basis, substantially all of the assets, properties and business of
the Seller, all on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed between Seller, Parent,
the Shareholder and Buyer as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. In this Agreement, the following terms have the meanings
specified or referred to in this Section 1.1 and shall be equally applicable to
both the singular and plural forms.
"AAA" has the meaning specified in Section 9.19.
"Accounting Firm" has the meaning specified in Section 3.2.
"Additional Periods" has the meaning specified in Section 3.4.
"Additional Shares" means the Deferred Payment Shares and the Earnout
Shares.
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"Agreed Accounting Principles" means generally accepted accounting
principles consistently applied, provided that, with respect to any matter as to
which there is
more than one generally accepted accounting principle, Agreed Accounting
Principles means the generally accepted accounting principles applied in the
preparation of the Balance Sheet included in Schedule 5.4; provided further
that, for purposes of the Agreed Accounting Principles, no known adjustments by
Parent, Seller or their accountants for items or matters, regardless of the
amount thereof, shall be deemed to be immaterial.
"Agreed Earnout Adjustments" has the meaning specified in Section 3.4.
"Agreed Net Asset Value Adjustments" has the meaning specified in Section
3.2.
"Allocation Schedule" has the meaning set forth in Section 3.5.
"Assumed Liabilities" has the meaning specified in Section 2.3.
"Average Closing Price" has the meaning specified in Section 3.3.
"Balance Sheet" means the unaudited balance sheet of Seller as of the
Balance Sheet Date included in Schedule 5.4.
"Balance Sheet Date" means July 31, 2002.
"Business" has the meaning specified in the recitals to this Agreement.
"Business Property" means any real or personal property, plant, building,
facility, structure, underground storage tank, equipment or unit, or other asset
owned, leased or operated by Seller.
"Buyer" has the meaning specified in the first paragraph of this Agreement.
"Buyer Ancillary Agreements" means all agreements, instruments and
documents being or to be executed and delivered by Buyer under this Agreement or
in connection herewith.
"Buyer Group Member" means Buyer and its Affiliates and their respective
successors and assigns.
"Cash Election" has the meaning specified in Section 3.3.
"Cash Percentage" has the meaning specified in Section 3.3.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C.ss.ss.9601 et seq.
"Claim Notice" has the meaning specified in Section 8.3.
"Closing" means the closing of the transfer of the Purchased Assets from
Seller to Buyer.
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"Closing Date" has the meaning specified in Section 4.1.
"Closing Date Balance Sheet" has the meaning specified in Section 3.2.
"Closing Date Cash Payment" has the meaning specified in Section 3.1.
"Code" means the Internal Revenue Code of 1986.
"Contaminant" means any waste, pollutant, hazardous or toxic substance or
waste, petroleum, petroleum-based substance or waste, special waste, or any
constituent of any such substance or waste.
"Copyrights" means United States and foreign copyrights and mask works (as
defined in 17 U.S.C. ss. 901), whether registered or unregistered, and pending
applications to register the same.
"Court Order" means any judgment, order, award or decree of any foreign,
federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"day" means, unless otherwise specified, the calendar days of the week
excluding Saturday, Sunday and legally recognized holidays.
"Deferred Payment" has the meaning specified in Section 3.3.
"Deferred Payment Date" has the meaning specified in Section 3.3.
"Deferred Payment Shares" has the meaning specified in Section 3.3.
"Dispute" has the meaning specified in Section 9.18.
"Earnout Average Closing Price" has the meaning specified in Section 3.4.
"Earnout Cash Election" has the meaning specified in Section 3.4.
"Earnout Cash Percentage" has the meaning specified in Section 3.4.
"Earnout Determination" has the meaning specified in Section 3.4.
"Earnout Payment" has the meaning specified in Section 3.4.
"Earnout Shares" has the meaning specified in Section 3.4.
"Employment Agreements" means, collectively, (i) the Employment Agreement
in the form of Exhibit A between Buyer and Xxxxx Xxxxxx and (ii) the Employment
Agreements, each in the form of Exhibit B, between Buyer and each of Xxxxxxxx
Xxxxxxx, Jr., Xxxxx X. Xxxxx, Xxxxxx X. Xxxxx, Xxxxxx XxXxxxxx, Xxxxx X.
Xxxxxxx, M. Xxxx Xxxxxx, M.D. and Xxxx X. Xxxxx.
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"Encumbrance" means any lien (statutory or other), claim, charge, security
interest, mortgage, deed of trust, pledge, hypothecation, assignment,
conditional sale or other title retention agreement, preference, priority or
other security agreement or preferential arrangement of any kind or nature, and
any easement, encroachment, covenant, restriction, right of way, defect in title
or other encumbrance of any kind.
"Environmental Encumbrance" means an Encumbrance in favor of any
Governmental Body for (i) any liability under any Environmental Law, or (ii)
damages arising from, or costs incurred by such Governmental Body in response
to, a Release or threatened Release of a Contaminant into the environment.
"Environmental Law" means all Requirements of Laws derived from or relating
to all federal, state and local laws or regulations relating to or addressing
the environment, health or safety, including CERCLA, OSHA and RCRA and any state
equivalent thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" has the meaning specified in Section 2.2.
"Excluded Leases" has the meaning specified in Section 2.4(e).
"Excluded Liabilities" has the meaning specified in Section 2.4.
"Expenses" means any and all expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including court filing
fees, court costs, arbitration fees or costs, witness fees, and reasonable fees
and disbursements of legal counsel, investigators, expert witnesses,
consultants, accountants and other professionals).
"Governmental Body" means any foreign, federal, state, local or other
governmental authority or regulatory body.
"Governmental Permits" has the meaning specified in Section 5.9.
"Indemnified Party" has the meaning specified in Section 8.3.
"Indemnitor" has the meaning specified in Section 8.3.
"Instrument of Assignment" means the Instrument of Assignment in the form
of Exhibit C.
"Instrument of Assumption" means the Instrument of Assumption in the form
of Exhibit D.
"Intellectual Property" means Copyrights, Patent Rights, Trademarks and
Trade Secrets.
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"IRS" means the Internal Revenue Service.
"knowledge" means actual knowledge of, or that which reasonably should have
been known by, the Person to whom the knowledge is attributed, except that
"knowledge" with respect to Parent or Seller shall be limited to that which is
actually known or reasonably should have been known by its executive officers or
by the Shareholders and "knowledge" with respect to Buyer shall be limited to
that which is actually known or reasonably should have been known by its
executive officers.
"Letter of Intent" means the Letter of Intent dated July 10, 2002, between
Buyer, Seller and certain of the Shareholders.
"Losses" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, deficiencies
or other charges.
"Net Asset Value" has the meaning specified in Section 3.2.
"Net Asset Value Determination" has the meaning specified in Section 3.2.
"Net Fee Revenues" has the meaning specified in Section 3.4.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.ss.ss.651 et
seq.
"Owned Software" has the meaning specified in Section 5.15.
"Parent" has the meaning specified in the first paragraph of this
Agreement.
"Patent Rights" means United States and foreign patents, provisional patent
applications, patent applications, continuations, continuations-in-part,
divisions, reissues, patent disclosures, industrial designs, inventions (whether
or not patentable or reduced to practice) or improvements thereto.
"Permitted Encumbrances" means (a) liens for Taxes and other governmental
charges and assessments which are not yet due and payable, (b) liens of
landlords and liens of carriers, warehousemen, mechanics and materialmen and
other similar liens imposed by law arising in the ordinary course of business
for sums not yet due and payable and (c) other liens or imperfections on
property which do not adversely affect title to, detract from the value of, or
impair the existing use of, the property affected by such lien or imperfection.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"Practice" has the meaning specified in Section 3.4.
"Purchase Price" has the meaning specified in Section 3.1.
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"Purchased Assets" has the meaning specified in Section 2.1.
"RCRA" means the Resource Conservation and Recovery Act, 42
U.S.C.ss.ss.6901 et seq.
"Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Business Property,
including the movement of Contaminants through or in the air, soil, surface
water, groundwater or Business Property.
"Remedial Action" means actions required to (i) clean up, remove, treat or
in any other way address Contaminants in the indoor or outdoor environment; (ii)
prevent the Release or threatened Release or minimize the further Release of
Contaminants or (iii) investigate and determine if a remedial response is needed
and to design such a response and post-remedial investigation, monitoring,
operation and maintenance and care.
"Requirements of Laws" means any foreign, federal, state and local laws,
statutes, regulations, rules, codes or ordinances enacted, adopted, issued or
promulgated by any Governmental Body (including those pertaining to electrical,
building, zoning, environmental and occupational safety and health requirements)
or common law.
"Seller" has the meaning specified in the first paragraph of this
Agreement.
"Seller Agreements" has the meaning specified in Section 5.21.
"Seller's Compensation Commitments" has the meaning specified in Section
5.18.
"Seller's ERISA Plans" has the meaning specified in Section 5.18.
"Seller's Non-ERISA Plans" has the meaning specified in Section 5.18.
"Seller Ancillary Agreements" means all agreements, instruments and
documents being or to be executed and delivered by Seller, Parent or any
Shareholder under this Agreement or in connection herewith.
"Seller Group Member" means Seller, Parent or any Shareholder and their
respective Affiliates and their respective successors and assigns.
"Seller Representative" has the meaning specified in Section 9.21.
"Shareholders" has the meaning specified in the first paragraph of this
Agreement.
"Shares" means 1,464,547 shares of common stock, par value $.001 per share
(including associated preferred stock purchase rights), of Buyer.
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"Software" means computer software programs and software systems, including
all databases, compilations, tool sets, compilers, higher level or "proprietary"
languages, related documentation and materials, whether in source code, object
code or human readable form.
"Straddle Period" means any taxable year or period beginning on or before
and ending after the Closing Date.
"Tax" (and, with correlative meaning, "Taxable") means: (i) any federal,
state, local or foreign net income, gross income, gross receipts, windfall
profit, severance, property, production, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or add-on minimum, ad valorem,
value-added, transfer, stamp, or environmental (including taxes under Code
Section 59A) tax, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty, addition to tax or additional amount imposed by any Governmental Body;
and (ii) any liability for the payment of amounts with respect to payments of a
type described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group, or as a result of any obligation under
any Tax Sharing Arrangement or Tax indemnity agreement.
"Tax Return" means any return, report or similar statement required to be
filed by Parent or Seller with respect to any Taxes (including any attached
schedules), including, any information return, claim for refund, amended return
or declaration of estimated Tax.
"Tax Sharing Arrangement" means any written or unwritten agreement or
arrangement for the allocation or payment of Tax liabilities or payment for Tax
benefits with respect to a consolidated, combined or unitary Tax Return which
Tax Return includes Seller or Parent.
"Trademarks" means United States, state and foreign trademarks, service
marks, trade names, Internet domain names, designs, logos, slogans and general
intangibles of like nature, whether registered or unregistered, and pending
registrations and applications to register the foregoing.
"Trade Secrets" means confidential ideas, trade secrets, know-how,
concepts, methods, processes, formulae, technology, algorithms, models, reports,
data, customer lists, supplier lists, mailing lists, business plans, or other
proprietary information which derives economic value, either directly or
indirectly, from its owner's desire or need to maintain its confidentiality.
"trading day" means any day on which the New York Stock Exchange is open
for trading.
"Transfer" has the meaning specified in Section 7.6.
"Transferring Employees" has the meaning specified in Section 7.4.
"Unresolved Earnout Objections" has the meaning specified in Section 3.4.
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"Unresolved Net Asset Value Objections" has the meaning specified in
Section 3.2.
1.2. Interpretation. For purposes of this Agreement, (i) the words
"include," "includes" and "including" shall be deemed to be followed by the
words "without limitation," (ii) the word "or" is not exclusive and (iii) the
words "herein", "hereof", "hereby", "hereto" and "hereunder" refer to this
Agreement as a whole. Unless the context otherwise requires, references herein:
(i) to Articles, Sections, Exhibits and Schedules mean the Articles and Sections
of, and the Exhibits and Schedules attached to, this Agreement; (ii) to an
agreement, instrument or other document means such agreement, instrument or
other document as amended, supplemented and modified from time to time to the
extent permitted by the provisions thereof and by this Agreement; and (iii) to a
statute means such statute as amended from time to time and includes any
successor legislation thereto and any regulations promulgated thereunder. The
Schedules and Exhibits referred to herein shall be construed with and as an
integral part of this Agreement to the same extent as if they were set forth
verbatim herein. Titles to Articles and headings of Sections are inserted for
convenience of reference only and shall not be deemed a part of or to affect the
meaning or interpretation of this Agreement.
ARTICLE II
PURCHASE AND SALE
2.1. Purchased Assets. Upon the terms and subject to the conditions of
this Agreement, on the Closing Date, Seller shall sell, transfer, assign, convey
and deliver to Buyer, and Buyer shall purchase from Seller, on a going concern
basis, free and clear of all Encumbrances (except for Permitted Encumbrances),
all of the business and operations of Seller and all of the assets and
properties of Seller of every kind and description, wherever located, real,
personal or mixed, tangible or intangible, as the same shall exist on the
Closing Date (herein collectively called the "Purchased Assets"), including, all
right, title and interest of Seller in, to and under:
(a) all of the assets reflected on the Balance Sheet, except those
disposed of or converted into cash after the Balance Sheet Date in the
ordinary course of the Business consistent with past practice;
(b) all notes and accounts receivable generated by the Business;
(c) the Governmental Permits listed in Schedule 5.9;
(d) the equipment, furniture and other personal property listed or
referred to in Schedule 5.13;
(e) the personal property leases listed in Schedule 5.14;
(f) the Copyrights, Patent Rights and Trademarks and the agreements,
contracts, licenses, sublicenses, assignments and indemnities, listed in
Schedule 5.15;
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(g) the contracts, agreements or understandings listed or described
in Schedule 5.20;
(h) all client engagements, contracts or agreements with clients or
subcontractors, client or subcontractors relationships, client work papers
and client lists;
(i) all Trade Secrets and other proprietary or confidential
information;
(j) the Software listed in Schedule 5.15;
(k) all of Seller's or Parent's rights, claims or causes of action
against third parties relating to the assets, properties, business or
operations of Seller in respect of the Business arising out of transactions
occurring prior to the Closing Date;
(l) all books and records (including all data and other information
stored on discs, tapes or other media) of Seller or Parent relating to the
Business, including sales, advertising and marketing materials; and
(m) all telephone, telex and telephone facsimile numbers and other
directory listings utilized by Seller.
2.2. Excluded Assets. Notwithstanding the provisions of Section 2.1,
the Purchased Assets shall not include the following (herein referred to as the
"Excluded Assets"):
(a) all cash and bank deposits;
(b) Seller's rights, claims or causes of action against third parties
relating to the Business which might arise in connection with the discharge
by Seller of the Excluded Liabilities;
(c) all contracts of insurance;
(d) any real estate leases or leasehold improvements, including the
Excluded Lease;
(e) all minute books and stock transfer books of Seller;
(f) any goodwill or other intangibles relating to organization costs;
(g) Seller's employee benefit agreements, plans or arrangements
listed in Schedule 5.18(A), Schedule 5.18 (B) or otherwise maintained by
Seller on behalf of persons employed by Seller; and
(h) all refunds of any Tax for which Seller is liable pursuant to
Section 7.2.
2.3. Assumed Liabilities. On the Closing Date, Buyer shall deliver to
Seller the Instrument of Assumption pursuant to which Buyer shall assume and
agree to discharge the following obligations and liabilities of Seller in
accordance with their respective terms and subject to the respective conditions
thereof:
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(a) all liabilities and obligations of Seller to be paid or performed
on or after the Closing Date under (i) the Seller Agreements, including but
not limited to unpaid expenses and liabilities listed on Schedule 2.3(a)
relating to all contractual deposits of clients of the Business that are
held by Seller on the Closing Date, and (ii) the leases, contracts and
other agreements with respect to the Business not required by the terms of
Section 5.20 to be listed in a Schedule to this Agreement, except in each
case, to the extent such liabilities and obligations, but for a breach or
default by Seller, would have been paid, performed or otherwise discharged
prior to the Closing Date or to the extent the same arise out of any such
breach or default; and
(b) all liabilities in respect of Taxes for which Buyer is liable
pursuant to Section 7.2.
All of the foregoing liabilities and obligations to be assumed by Buyer
hereunder (excluding any Excluded Liabilities) are referred to herein as the
"Assumed Liabilities."
2.4. Excluded Liabilities. Buyer shall not assume or be obligated to
pay, perform or otherwise discharge any liability or obligation of Seller,
Parent or any Shareholder, direct or indirect, known or unknown, absolute or
contingent, not expressly assumed by Buyer pursuant to the Instrument of
Assumption (all such liabilities and obligations not being assumed being herein
called the "Excluded Liabilities") and, notwithstanding anything to the contrary
in Section 2.3, none of the following shall be Assumed Liabilities for purposes
of this Agreement:
(a) any liabilities in respect of Taxes for which Parent or Seller is
liable pursuant to Section 7.2;
(b) any payables and other liabilities or obligations of Parent or
Seller to any of its Affiliates, including any payables and other
liabilities to any Shareholder or any other shareholder or former
shareholder of Parent or Seller;
(c) any costs and expenses incurred by Seller incident to its
negotiation and preparation of this Agreement and its performance and
compliance with the agreements and conditions contained herein;
(d) any liabilities or obligations in respect of any Excluded Assets,
other than cash;
(e) any liabilities or obligations in respect of the leases listed on
Schedule 2.4(E) (the "Excluded Leases");
(f) any liabilities in respect of the lawsuits, claims, suits,
proceedings or investigations set forth in Schedule 5.22; or
(g) any liabilities and obligations related to, associated with or
arising from (i) the occupancy, operation, use or control of any of the
Business Property prior to the Closing Date or (ii) the operation of the
Business prior to the Closing Date, in each case incurred or imposed by any
Environmental Law, including liabilities and obligations related to, or
arising from, any Release of any Contaminant on, at or from (A) the
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Business Property, including all facilities, improvements, structures and
equipment thereon, surface water thereon or adjacent thereto and soil or
groundwater thereunder, or any conditions whatsoever on, under or in the
vicinity of such real property or (B) any real property or facility owned
by a third Person to which Contaminants generated by the Business were sent
prior to the Closing Date.
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the Purchased Assets (the
"Purchase Price") shall be equal to:
(i) $10,157,806 in cash paid at closing (the "Closing Date Cash
Payment"), plus
(ii) the Shares, plus
(iii) $500,000 in cash payable on April 1, 2003, plus
(iv) the Deferred Payments, plus
(v) any Earnout Payments.
3.2. Adjustment to Purchase Price. (a) The parties agree that the
Closing Date Cash Payment has been calculated based on an assumed Net Asset
Value of $217,806. Within forty (40) days after the Closing Date, Buyer shall
prepare, in accordance with the Agreed Accounting Principles, a balance sheet as
of the Closing Date with respect to the Purchased Assets and the Assumed
Liabilities (the "Closing Date Balance Sheet") and shall deliver to Seller such
balance sheet and Buyer's determination of the Net Asset Value (the "Net Asset
Value Determination"). As used herein, "Net Asset Value" means an amount equal
to the excess of (i) the book value of the Purchased Assets as shown on the
Closing Date Balance Sheet over (ii) the amount of the Assumed Liabilities as
shown on the Closing Date Balance Sheet.
(b) Promptly following receipt of the Net Asset Value Determination,
Seller may review the same and, within seven (7) days after the date of such
receipt, may deliver to Buyer a certificate (signed by its President, its chief
financial officer or its chief accounting officer) setting forth each of its
objections to the Net Asset Value Determination (the "Unresolved Net Asset Value
Objections"), together with a complete and detailed list of the reasons therefor
and calculations which, in its view, are necessary to eliminate such Unresolved
Net Asset Value Objections. If Seller does not so object within such seven day
period, the Net Asset Value Determination shall be final and binding for
purposes of this Agreement but shall not limit the representations, warranties,
covenants and agreements of the parties set forth elsewhere in this Agreement.
(c) If Seller so objects within such seven day period, Buyer and
Seller shall use their reasonable efforts to resolve by written agreement (the
"Agreed Net Asset Value
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Adjustments") the Unresolved Net Asset Value Objections and, if Seller and Buyer
so resolve all the Unresolved Net Asset Value Objections, the Net Asset Value
Determination, as adjusted by the Agreed Net Asset Value Adjustments, shall be
final and binding for purposes of this Agreement but shall not limit the
representations, warranties, covenants and agreements of the parties set forth
elsewhere in this Agreement.
(d) If any Unresolved Net Asset Value Objections are not resolved by
the Agreed Net Asset Value Adjustments within the twenty (20) day period next
following such seven day period, then Buyer and Seller shall submit the
remaining Unresolved Net Asset Value Objections that have not been resolved by
the Agreed Net Asset Value Adjustments to PricewaterhouseCoopers LLP (or to such
other national accounting firm acceptable to both Seller and Buyer) and such
firm (the "Accounting Firm") shall be directed by Buyer and Seller to resolve
such remaining Unresolved Net Asset Value Objections (based solely on the
presentations by Buyer and by Seller as to whether such remaining Unresolved Net
Asset Value Objection has been determined in a manner consistent with this
Agreement) as promptly as reasonably practicable and to deliver written notice
to each of Buyer and Seller setting forth its resolution of such remaining
Unresolved Net Asset Value Objections. The Net Asset Value Determination, after
giving effect to any Agreed Net Asset Value Adjustments and to such resolution
by the Accounting Firm, shall be final and binding as the Net Asset Value
Determination for purposes of this Agreement but shall not limit the
representations, warranties, covenants and agreements of the parties set forth
elsewhere in this Agreement.
(e) The parties hereto shall make available to Buyer, Seller and, if
applicable, the Accounting Firm, such books, records and other information as
any of the foregoing may reasonably request to prepare or review the Net Asset
Value Determination or any Unresolved Net Asset Value Objections submitted to
the Accounting Firm. The fees and expenses of the Accounting Firm hereunder
shall be paid 50% by Buyer and 50% by Seller.
(f) If the Net Asset Value, as finally determined pursuant to this
Section 3.2, is less than $217,806, then Seller shall pay to Buyer, within seven
(7) days after such determination, an amount of cash equal to the excess of
$217,806 over such Net Asset Value. If the Net Asset Value, as finally
determined pursuant to this Section 3.2, exceeds $217,806, then Buyer shall pay
to Seller, within seven (7) days after such determination, an amount of cash
equal to the excess of such Net Asset Value over $217,806. Any payment pursuant
to this Section 3.2(f) shall be an adjustment to the Purchase Price.
3.3. Deferred Payments. On each of the first anniversary and the
second anniversary of the Closing Date (each, a "Deferred Payment Date"), Buyer
shall pay to Seller, as additional Purchase Price, an additional payment (each,
a "Deferred Payment") equal to $3,250,000. Each such Deferred Payment shall be
paid by issuing and delivering to Seller unregistered shares of common stock,
par value $.001 per share (including any associated preferred stock purchase
rights), of Buyer ("Deferred Payment Shares") equal to the number determined by
dividing the amount of such Deferred Payment by the average per share closing
price for shares of common stock of Buyer on the New York Stock Exchange for the
ten trading day period ending on the fifth trading day prior to the Deferred
Payment Date for such Deferred Payment (the "Average Closing Price"); provided
that no later than five days prior to such Deferred Payment Date, either Buyer
or Seller may deliver to the other a written irrevocable
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election (a "Cash Election") to have a percentage (not to exceed 67%) of such
Deferred Payment (the "Cash Percentage"), paid in cash in lieu of Deferred
Payment Shares, in which case the Deferred Payment shall be paid by (a)
delivering to Seller cash in an amount equal to the Cash Percentage (provided
that if both Buyer and Seller deliver a Cash Election with respect to the same
Deferred Payment, the Cash Percentage for such Deferred Payment shall be the
higher of the percentages contained in such Cash Elections) of such Deferred
Payment and (b) issuing and delivering to Seller a number of Deferred Payment
Shares equal to the number determined by dividing the difference between the
amount of such Deferred Payment and the amount of the cash payment described in
clause (a) by the Average Closing Price.
3.4. Earn-Out Payments. The Purchase Price shall include additional
payments, if any, to be made to Seller by Buyer (each such payment an "Earnout
Payment") based on the performance of the Practice during the period from the
Closing Date through and including December 31, 2002, the period from January 1,
2003 through and including December 31, 2003, the period from January 1, 2004
through and including December 31, 2004 and the period from January 1, 2005
through and including August 31, 2005 (such periods being referred to as the
"Additional Periods"), to be determined as follows:
(a) Subject to Section 3.4(d), the amount of any Earnout Payment in
respect of an Additional Period shall be equal to an amount equal to nine
percent (9%) of all Net Fee Revenues for such Additional Period.
(b) As used herein: (i) "Net Fee Revenues" means, for an Additional
Period the sum (without duplication) of (A) for client engagements which
generate revenue of the Practice, the client fee revenue of the Practice
recognized during such Additional Period for client work completed and billed or
billable by the Practice and (B) for client engagements which (x) do not
generate revenue of the Practice, but which were secured primarily by
Shareholders or other employees of the Practice as of the Closing Date and as of
the date of such engagement and (y) Seller or any Shareholder request be
included in Net Fee Revenues within twenty (20) days after the commencement of
such engagement, an amount equal to a portion (based on the relative
contribution of Shareholders or such employees in securing such engagement
compared to other Buyer employees, with any disputes being resolved finally by
the Executive Managing Director of Buyer's Financial & Claims Practice, or his
or her designee) of the client fee revenue recognized by Buyer or its Affiliates
during such Additional Period for client work billed and completed pursuant to
such engagement; provided that each of items (A) and (B) shall (i) include fees
of subcontractors that are individuals, (ii) include fees of subcontractors that
are entities that are billed by Buyer to the client at Buyer's then standard
rates and margins, (iii) for fees of subcontractors that are entities that are
not billed by Buyer at Buyer's then standard rates and margins, include the net
incremental revenue of the Practice recognized by Buyer in respect of such fees
(such net incremental revenue being equal to the excess, if any, of the amount
billed in respect of such fees over the cost to Buyer in respect of such fees),
(iv) exclude client reimbursed expenses and (v) shall be reduced by an allowance
for doubtful or uncollectable amounts determined in a manner consistent with
Buyer's other similar businesses; and
(ii) "Practice" means the Business operating prior to the Closing Date
under the trade name "The Hunter Group", which will be operated by Buyer as
part of its
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healthcare consulting group on and after the Closing Date, it being
understood that such Practice may be changed from time to time during the
Additional Periods.
(c) During the Additional Periods, the Practice will enter into client
engagements on terms, including profit margins, consistent with past practice,
except as may be otherwise agreed by Buyer and Seller in writing.
(d) Notwithstanding anything to the contrary contained herein, the
aggregate Earnout Payments paid pursuant to this Agreement shall not exceed
$13.0 million.
(e) Within forty (40) days after the end of each Additional Period,
Buyer shall determine the Earnout Payment, if any, to be made in respect of such
Additional Period and deliver to Seller Buyer's determination thereof (the
"Earnout Determination"), including the determination of the Net Fee Revenues
for such Additional Period.
(f) Promptly following receipt of the Earnout Determination, Seller
may review the same and, within seven (7) days after the date of such receipt,
may deliver to Buyer a certificate (signed by its President, its chief financial
officer or its chief accounting officer) setting forth each of its objections to
the Earnout Determination (the "Unresolved Earnout Objections"), together with a
complete and detailed list of the reasons therefor and calculations which, in
its view, are necessary to eliminate such Unresolved Earnout Objections. If
Seller does not so object within such seven day period, the Earnout
Determination (including the amount of the Earnout Payment, if any, set forth
therein) shall be final and binding for purposes of this Agreement but shall not
limit the representations, warranties, covenants and agreements of the parties
set forth elsewhere in this Agreement.
(g) If Seller so objects within such seven day period, Buyer and
Seller shall use their reasonable efforts to resolve by written agreement (the
"Agreed Earnout Adjustments") the Unresolved Earnout Objections and, if Seller
and Buyer so resolve all the Unresolved Earnout Objections, the Earnout
Determination (including the amount of the Earnout Payment, if any, set forth
therein), as adjusted by the Agreed Earnout Adjustments, shall be final and
binding for purposes of this Agreement but shall not limit the representations,
warranties, covenants and agreements of the parties set forth elsewhere in this
Agreement.
(h) If any Unresolved Earnout Objections are not resolved by the
Agreed Earnout Adjustments within the twenty (20) day period next following such
seven day period, then Buyer and Seller shall submit the remaining Unresolved
Earnout Objections that have not been resolved by the Agreed Earnout Adjustments
to the Accounting Firm and the Accounting Firm shall be directed by Buyer and
Seller to resolve such remaining Unresolved Earnout Objections (based solely on
the presentations by Buyer and by Seller as to whether such remaining Unresolved
Earnout Objection has been determined in a manner consistent with this
Agreement) as promptly as reasonably practicable and to deliver written notice
to each of Buyer and Seller setting forth its resolution of such remaining
Unresolved Earnout Objections. The Earnout Determination (including the amount
of the Earnout Payment, if any, set forth therein), after giving effect to any
Agreed Earnout Adjustments and to such resolution by the Accounting Firm, shall
be final and binding as the Earnout Determination (including the amount of the
Earnout Payment, if any, set forth therein) for purposes of this Agreement (and
the resolution by
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the Accounting Firm shall be applied to the Earnout Determination for any
subsequent Additional Period) but shall not limit the representations,
warranties, covenants and agreements of the parties set forth elsewhere in this
Agreement.
(i) The parties hereto shall make available to Buyer, Seller and, if
applicable, the Accounting Firm, such books, records and other information as
any of the foregoing may reasonably request to prepare or review the Earnout
Determination or any Unresolved Earnout Objections submitted to the Accounting
Firm. The fees and expenses of the Accounting Firm hereunder shall be paid 50%
by Buyer and 50% by Seller.
(j) Buyer shall pay to Seller the amount of an Earnout Payment, if
any, which is due pursuant to the provisions of this Section 3.4 upon the later
of (i) promptly after the final and binding determination of the amount of such
Earnout Payment pursuant to this Section 3.4 and (ii) April 1 immediately
following the end of the Additional Period relating to such Earnout Payment (or,
in the case of the Earnout Payment relating to the Additional Period ending
August 31, 2005, December 1, 2005). Such Earnout Payment shall be paid by
issuing and delivering to Seller unregistered shares of common stock, par value
$.001 per share (including any associated preferred stock purchase rights), of
Buyer ("Earnout Shares") equal to the number determined by dividing the amount
of such Earnout Payment by the average per share closing price for shares of
common stock of Buyer on the New York Stock Exchange for the ten trading day
period ending on the fifth trading day prior to the date of payment of such
Earnout Payment (the "Earnout Average Closing Price"); provided that no later
than five days prior to such date, either Buyer or Seller may deliver to the
other a written irrevocable election (an "Earnout Cash Election") to have a
percentage (not to exceed 67%) of such Earnout Payment (the "Earnout Cash
Percentage") paid in cash in lieu of Earnout Payment Shares, in which case the
Earnout Payment shall be paid by (A) delivering to Seller cash in an amount
equal to the Earnout Cash Percentage (provided that if both Buyer and Seller
deliver an Earnout Cash Election with respect to the same Earnout Payment, the
Earnout Cash Percentage for such Earnout Payment shall be the higher of the
percentages contained in such Earnout Cash Elections) of such Earnout Payment
and (B) issuing and delivering to Seller a number of Earnout Payment Shares
equal to the number determined by dividing the difference between the amount of
such Earnout Payment and the amount of the cash payment described in clause (A)
by the Earnout Average Closing Price.
3.5. Allocation of Purchase Price. Within forty (40) days following
the Closing Date, Buyer shall deliver to Seller and Parent a schedule (the
"Allocation Schedule") allocating the Purchase Price (including, for purposes of
this Section 3.5, any other consideration paid to Seller including the Assumed
Liabilities) among the Purchased Assets. The Allocation Schedule shall be
reasonable and shall be prepared in accordance with Section 1060 of the Code and
the regulations thereunder. Seller and Parent agree that promptly after
receiving the Allocation Schedule, they shall sign the Allocation Schedule and
return an executed copy thereof to Buyer, Seller and Parent each agrees to file
IRS Form 8594, and all federal, state, local and foreign Tax Returns, in
accordance with the Allocation Schedule. Buyer, Parent and Seller each agrees to
provide the other promptly with any other information required to complete IRS
Form 8594.
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ARTICLE IV
CLOSING
4.1. Closing Date. The Closing shall be consummated at 10:00 A.M.,
local time, as of the date hereof, or such later date as may be agreed upon by
Buyer and Seller, at the offices of Sidley Xxxxxx Xxxxx & Xxxx, Chicago,
Illinois, or at such other place or at such other time as shall be agreed upon
by Buyer and Seller. The Closing shall be deemed to be effective as of 12:01
A.M., Chicago time, on September 1, 2002, and such time and date are sometimes
referred to herein as the "Closing Date." Without limiting the foregoing, Buyer
shall be entitled to receive all revenues and shall be responsible for all
expenses incurred in the ordinary course of the Business from and after the
Closing Date.
4.2. Payment on the Closing Date. At Closing Buyer shall (a) pay
Seller an amount equal to the Closing Date Cash Payment by wire transfer of
immediately available funds to the account in the United States specified by
Seller in writing to Buyer at least two days prior to the Closing and (b) issue
and deliver to Seller a certificate representing the Shares.
4.3. Buyer's Additional Deliveries. At Closing Buyer shall deliver to
Seller all the following:
(a) a copy of Buyer's Certificate of Incorporation certified as of a
recent date by the Secretary of State of the State of Delaware;
(b) a certificate of good standing of Buyer issued as of a recent
date by the Secretary of State of the State of Delaware;
(c) a certificate of the secretary or an assistant secretary of
Buyer, dated the Closing Date, in form and substance reasonably
satisfactory to Seller, as to (i) no amendments to the Certificate of
Incorporation of Buyer since a specified date; (ii) the by-laws of Buyer;
(iii) the resolutions of the Board of Directors of Buyer authorizing the
execution and performance of this Agreement and the transactions
contemplated hereby; and (iv) incumbency and signatures of the officers of
Buyer executing this Agreement and any Buyer Ancillary Agreement;
(d) the Instrument of Assumption duly executed by Buyer; and
(e) the Employment Agreements duly executed by Buyer.
4.4. Seller's Deliveries. At Closing Seller, Parent and the
Shareholders shall deliver to Buyer all the following:
(a) a copy of the Certificate of Incorporation of Seller certified as
of a recent date by the Secretary of State of the State of Delaware and a
copy of the Articles of Incorporation of Parent certified as of a recent
date by the Secretary of State of the State of Florida;
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(b) a certificate of good standing of Seller issued as of a recent
date by the Secretary of State of the State of Delaware and a certificate
of good standing of Parent issued as of a recent date by the Secretary of
State of the State of Florida;
(c) a certificate of the secretary or an assistant secretary of each
of Seller and Parent, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer, as to (i) no amendments to its
Certificate of Incorporation or Articles of Incorporation, as the case may
be, since a specified date; (ii) its by-laws; (iii) the resolutions of its
Board of Directors and of Parent, as the sole stockholder of Seller,
authorizing the execution and performance of this Agreement and the Seller
Ancillary Agreements and the transactions contemplated hereby and thereby;
and (iv) incumbency and signatures of its officers executing this Agreement
and any Seller Ancillary Agreement;
(d) the Instrument of Assignment duly executed by Seller;
(e) the Employment Agreements duly executed by each party thereto
(other than Buyer);
(f) certificates of title or origin (or like documents) with respect
to any vehicles or other equipment included in the Purchased Assets for
which a certificate of title or origin is required in order to transfer
title;
(g) all consents, waivers or approvals obtained by Seller with respect
to the Purchased Assets or the consummation of the transactions
contemplated by this Agreement;
(h) assignments, in recordable form, with respect to each of the
registered Copyrights, issued Patent Rights, registered Trademarks and
pending applications for the registration or issuance of any Copyrights,
Patent Rights and Trademarks included in the Purchased Assets, duly
executed by Seller and in form and substance reasonably satisfactory to
Buyer; and
(i) such other bills of sale, assignments and other instruments of
transfer or conveyance as Buyer may reasonably request or as may be
otherwise necessary to evidence and effect the sale, assignment, transfer,
conveyance and delivery of the Purchased Assets to Buyer.
In addition to the above deliveries, Seller, Parent and the Shareholders shall
take all steps and actions as Buyer may reasonably request or as may otherwise
be necessary to put Buyer in actual possession or control of the Purchased
Assets.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER, PARENT
AND THE SHAREHOLDERS
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller, Parent and the
Shareholders jointly and severally represent and warrant to Buyer and agree as
follows:
5.1. Organization of Parent and Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida. Parent and Seller are duly
qualified to transact business and in good standing in the jurisdictions listed
in Schedule 5.1, which jurisdictions are the only ones in which the ownership or
leasing of the Purchased Assets or the conduct of the Business requires such
qualification. No other jurisdiction has demanded, requested or otherwise
indicated that Seller or Parent is required so to qualify on account of the
ownership or leasing of the Purchased Assets or the conduct of the Business.
Seller has full power and authority to own or lease and to operate and use the
Purchased Assets and to carry on the Business as now conducted. Parent owns all
of the issued and outstanding shares of capital stock of Seller, and the
Shareholders own all of the issued and outstanding shares of capital stock of
Parent.
True and complete copies of the certification and articles of
incorporation and all amendments thereto and of the by-laws, as amended to date,
of each of Seller and Parent have been delivered to Buyer.
5.2. Subsidiaries and Investments. Seller does not, directly or
indirectly, (i) own, of record or beneficially, any outstanding voting
securities or other equity interests in any corporation, partnership, joint
venture or other entity or (ii) control any corporation, partnership, joint
venture or other entity.
5.3. Authority of Parent, Seller and the Shareholders. (a) Each of
Parent and Seller has full power and authority to execute, deliver and perform
this Agreement and all of the Seller Ancillary Agreements to be executed,
delivered and performed by it. The execution, delivery and performance of this
Agreement and the Seller Ancillary Agreements by each of Parent and Seller have
been duly authorized and approved by its board of directors and by Parent as the
sole shareholder of Seller and do not require any further authorization or
consent of Parent, Seller or their stockholders. This Agreement has been duly
authorized, executed and delivered by each of Parent and Seller and is its
legal, valid and binding obligation enforceable in accordance with its terms,
and each of the Seller Ancillary Agreements to be executed, delivered and
performed by it has been duly authorized by it and upon execution and delivery
by it will be its legal, valid and binding obligation enforceable in accordance
with its terms.
(b) Each Shareholder has the legal right, power and capacity to
execute, deliver and perform this Agreement and all of the Seller Ancillary
Agreements to be executed, delivered and performed by such Shareholder. The
execution, delivery and performance of this Agreement and each such Seller
Ancillary Agreement by such Shareholder do not require any
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further authorization or consent of such Shareholder. This Agreement has been
duly executed and delivered by each Shareholder and is the legal, valid and
binding obligation of such Shareholder enforceable in accordance with its terms,
and each of the Seller Ancillary Agreements to be executed, delivered and
performed by such Shareholder, upon execution and delivery by such Shareholder,
will be a legal, valid and binding obligation of such Shareholder enforceable in
accordance with its terms.
(c) Except as set forth in Schedule 5.3, neither the execution and
delivery of this Agreement or any of the Seller Ancillary Agreements or the
consummation of any of the transactions contemplated hereby or thereby nor
compliance with or fulfillment of the terms, conditions and provisions hereof or
thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under, or result in the creation or imposition of any Encumbrance
upon any of the Purchased Assets, under (A) the certificate or articles of
incorporation or by-laws of Parent or Seller, (B) any Seller Agreement, (C)
any other material note, instrument, agreement, mortgage, lease, license,
franchise, permit or other authorization, right, restriction or obligation
to which Parent, Seller or any Shareholder is a party or any of the
Purchased Assets is subject or by which Parent, Seller or any Shareholder
is bound, (D) any Court Order to which Parent, Seller or any Shareholder is
a party or any of the Purchased Assets is subject or by which Parent,
Seller or any Shareholder is bound, or (E) any Requirements of Laws
affecting Parent, Seller or any Shareholder or the Purchased Assets; or
(ii) require the approval, consent, authorization or act of, or the
making by Parent, Seller or any Shareholder of any declaration, filing or
registration with, any Person.
5.4. Financial Statements. Schedule 5.4 contains (i) the unaudited
balance sheets of the Seller as of December 31, 1999, 2000 and 2001 and the
related statements of income and cash flows for the years then ended, together
with the appropriate notes to such financial statements, and (ii) the unaudited
balance sheet of Seller as of the Balance Sheet Date and the related statements
of income and cash flows for the seven months then ended. Except as set forth
therein or in the notes thereto, such balance sheets and statements of income
and cash flow, have been prepared in conformity with the Agreed Accounting
Principles consistently applied, and such balance sheets and related statements
of income and cash flow present fairly the financial position and results of
operations of Seller as of their respective dates and for the respective periods
covered thereby.
5.5. Operations Since Balance Sheet Date. (a) Except as set forth in
Schedule 5.5(A), since the Balance Sheet Date, there has been
(i) no material adverse change in the Purchased Assets, the Business
or the operations, liabilities, profits, prospects or condition (financial
or otherwise) of Seller, and, to the knowledge of Seller, Parent or any
Shareholder, no fact or condition exists or
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is contemplated or threatened which might reasonably be expected to cause
such a material adverse change in the future; and
(ii) no damage, destruction, loss or claim, whether or not covered by
insurance, or condemnation or other taking adversely affecting any of the
Purchased Assets or the Business.
(b) Except as set forth in Schedule 5.5(B), since the Balance Sheet
Date, Seller has conducted the Business only in the ordinary course and in
conformity with past practice. Without limiting the generality of the foregoing,
since the Balance Sheet Date, except as set forth in such Schedule, Seller has
not:
(i) sold, leased (as lessor), transferred or otherwise disposed of
(including any transfers from Seller to any of its Affiliates), or
mortgaged or pledged, or imposed or suffered to be imposed any Encumbrance
on, any of the assets reflected on the Balance Sheet or any assets acquired
by Seller after the Balance Sheet Date, except for minor amounts of
personal property sold or otherwise disposed of for fair value in the
ordinary course of the Business consistent with past practice and except
for Permitted Encumbrances;
(ii) cancelled any debts owed to or claims held by Seller (including
the settlement of any claims or litigation) other than in the ordinary
course of the Business consistent with past practice;
(iii) created, incurred or assumed, or agreed to create, incur or
assume, any indebtedness for borrowed money or entered into, as lessee, any
capitalized lease obligations (as defined in Statement of Financial
Accounting Standards No. 13);
(iv) accelerated or delayed collection of notes or accounts
receivable generated by the Business in advance of or beyond their regular
due dates or the dates when the same would have been collected in the
ordinary course of the Business consistent with past practice;
(v) delayed or accelerated payment of any account payable or other
liability of the Business beyond or in advance of its due date or the date
when such liability would have been paid in the ordinary course of the
Business consistent with past practice;
(vi) made, or agreed to make, any payment of cash or distribution of
assets to Parent, any Shareholder or any of their respective Affiliates,
other than the payment of salaries at levels no greater than the annualized
levels paid as of the Balance Sheet Date and other than the cash payments
specified on Schedule 5.5(B); or
(vii) instituted any increase in any compensation payable to any
employee of Seller or in any profit-sharing, bonus, incentive, deferred
compensation, insurance, pension, retirement, medical, hospital,
disability, welfare or other benefits made available to employees of
Seller; or
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(viii) prepared or filed any Tax Return inconsistent with past
practice or, on any such Tax Return, taken any position, made any election,
or adopted any method that is inconsistent with positions taken, elections
made or methods used in preparing or filing similar Tax Returns in prior
periods (including positions, elections or methods which would have the
effect of deferring income to periods for which Buyer is liable pursuant to
Section 7.2(a) or accelerating deductions to periods for which Seller is
liable pursuant to Section 7.2(a)); or
(ix) made any change in the accounting principles and practices used
by Seller from those applied in the preparation of the Balance Sheet and
the related statements of income and cash flow for the period then ended.
5.6. No Undisclosed Liabilities. Except as set forth in Schedule
5.6, Seller is not subject to any liability (including unasserted claims,
whether known or unknown), whether absolute, contingent, accrued or otherwise,
which is not shown or which is in excess of amounts shown or reserved for in the
Balance Sheet, other than liabilities of the same nature as those set forth in
the Balance Sheet and the notes thereto and reasonably incurred after the
Balance Sheet Date in the ordinary course of the Business consistent with past
practice.
5.7. Taxes. (a) Except as set forth in Schedule 5.7, (i) Seller has
filed all Tax Returns which are required to be filed and has paid all Taxes
which have become due pursuant to such Tax Returns or pursuant to any assessment
which has become payable; (ii) all such Tax Returns are complete and accurate
and disclose all Taxes required to be paid; (iii) there is no action, suit,
investigation, audit, claim or assessment pending or proposed or threatened with
respect to Taxes and, to the knowledge of Seller and the Shareholders, no basis
exists therefor; (iv) Seller has not waived or been requested to waive any
statute of limitations in respect of Taxes; (v) all monies required to be
withheld by Seller (including from employees of the Business for income Taxes
and social security and other payroll Taxes) have been collected or withheld,
and either paid to the respective taxing authorities, set aside in accounts for
such purpose, or accrued, reserved against and entered upon the books of the
Business; (vi) no transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code and no sales Taxes, use Taxes, real
estate transfer Taxes or other similar Taxes will be imposed on the transfer of
the Purchased Assets or the assumption of the Assumed Liabilities pursuant to
this Agreement; (vii) none of the Purchased Assets is properly treated as owned
by persons other than Parent or Seller for income Tax purposes pursuant to
Section 168(f)(8) of the Code (as in effect prior to its amendment by the Tax
Reform Act of 1986) or otherwise; (viii) none of the Purchased Assets is
"tax-exempt use property" within the meaning of Section 168(h) of the Code, or
subject to a so-called "TRAC lease" under Section 7701(h) of the Code (or any
predecessor provision); (ix) following the Closing Date, pursuant to any
agreement or arrangement entered into by Parent or Seller or any Affiliate
thereof prior to the Closing Date, Buyer will not be obligated to make a payment
to an individual that would be a "parachute payment" to a "disqualified
individual" as those terms are defined in Section 280G of the Code, without
regard to whether such payment is reasonable compensation for personal services
performed or to be performed in the future; (x) Seller is properly treated as
the owner, for all federal, state, local and other income Tax purposes, of all
property of which Seller is the lessor; (xi) Seller is not a party to any Tax
allocation or sharing agreement; and (xii) Seller has not been a member of an
affiliated group filing a consolidated federal Tax Return (other than a group
the
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common parent of which was Parent), or has any liability for the Taxes of any
Person (other than Parent or Seller) under Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(b) Parent has made a valid election under Section 1362 of the Code
to be treated as an "S corporation" and has at all times since January 1, 2001
qualified as an "S corporation" for purposes of Subchapter S of the Code; with
respect to all states which for state tax purposes allow a corporation to be
treated as an "S corporation" or similar entity entitled to special tax
treatment, all elections for such treatment have been properly and validly made
in such states and Parent has maintained compliance at all times with all
applicable qualifications and filing procedures for such treatment. All
subsidiaries of Parent (including Seller) have made a valid election under
Section 1362 of the Code to be treated as an "S corporation" for purposes of
Subchapter S of the Code, or have a valid election to be treated as a qualified
subchapter S subsidiary (QSSS) under the Code. Except as disclosed on Schedule
5.7, Parent will not be subject to any Tax, including any Tax under Section 1374
of the Code, with respect to the transactions contemplated by this Agreement.
5.8. Availability of Assets. (a) Except as set forth in Schedule 5.8
and except for the Excluded Assets, the Purchased Assets constitute all the
assets used in the Business (including all books, records, computers and
computer programs and data processing systems) and are in good condition
(subject to normal wear and tear) and serviceable condition and are suitable for
the uses for which intended.
(b) Schedule 5.8 sets forth a description of all material services
provided by Seller or any Affiliate of Seller utilizing either (i) assets not
included in the Purchased Assets or (ii) employees not listed in Schedule
5.18(J) (other than those employees not listed by reason of clause (i) of
Section 5.18(j)) and the manner in which the costs of providing such services
have been allocated to the Business. Except for cash and cash equivalents and
other Excluded Assets, Parent holds no assets or properties of any kind, real,
personal or mixed, tangible or intangible.
5.9. Governmental Permits. (a) Seller owns, holds or possesses all
licenses, franchises, permits, privileges, immunities, approvals and other
authorizations from a Governmental Body which are necessary to entitle it to own
or lease, operate and use the Purchased Assets and to carry on and conduct the
Business substantially as currently conducted (collectively, the "Governmental
Permits"). Schedule 5.9 sets forth a list and brief description of each
Governmental Permit. Complete and correct copies of all of the Governmental
Permits have heretofore been delivered to Buyer by Seller.
(b) Except as set forth in Schedule 5.9, (i) Seller has fulfilled and
performed its obligations under each of the Governmental Permits, and no event
has occurred or condition or state of facts exists which constitutes or, after
notice or lapse of time or both, would constitute a breach or default under any
such Governmental Permit or which permits or, after notice or lapse of time or
both, would permit revocation or termination of any such Governmental Permit, or
which might adversely affect the rights of Seller under any such Governmental
Permit; (ii) no notice of cancellation, of default or of any dispute concerning
any Governmental Permit, or of any event, condition or state of facts described
in the preceding clause, has been received by, or is known to, Seller or any
Shareholder; and (iii) each of the Governmental Permits is valid,
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subsisting and in full force and effect and may be assigned and transferred to
Buyer in accordance with this Agreement, to the extent a Governmental Permit may
be assigned pursuant to the laws, ordinances or rules of the Governmental Body
issuing such Governmental Permit and, if so assignable, will continue in full
force and effect thereafter, in each case without (x) the occurrence of any
breach, default or forfeiture of rights thereunder, or (y) the consent,
approval, or act of, or the making of any filing with, any Governmental Body.
5.10. Real Property. Seller does not own any real property or hold any
option to acquire any real property.
5.11. Real Property Leases. Except for the leases listed on Schedule
5.11, Seller has no lease or similar agreements under which Seller is lessee of,
or holds or operates, any real property owned by any third Person (including
Parent or any Shareholder).
5.12. Condemnation. Neither the whole nor any part of the Business is
subject to any pending suit for condemnation or other taking by any public
authority, and, to the knowledge of Parent, Seller or any Shareholder, no such
condemnation or other taking is threatened or contemplated.
5.13. Personal Property. Schedule 5.13 contains a list of all
machinery, equipment, vehicles, furniture and other personal property owned by
Seller having an original cost of $5,000 or more and used in or relating to the
Business.
5.14. Personal Property Leases. Schedule 5.14 contains a list and
description of each lease or other agreement or right, whether written or oral
(showing in each case the annual rental, the expiration date thereof and a brief
description of the property covered), under which Seller is lessee of, or holds
or operates, any machinery, equipment, vehicle or other tangible personal
property owned by a third Person (including Parent or any Shareholder).
5.15. Intellectual Property; Software. (a) Schedule 5.15 contains a
list and description (showing in each case the registered or other owner,
expiration date and registration or application number, if any) of all
Copyrights, Patents and Trademarks (including all assumed or fictitious names
under which Seller is conducting the Business or has within the previous five
years conducted the Business) owned by, licensed to or used by Seller.
(b) Schedule 5.15 contains a list and description (showing in each
case any owner, licensor or licensee) of all Software owned by, licensed to or
used by Seller, provided that Schedule 5.15 does not list mass market Software
licensed to Seller that is available in consumer retail stores or otherwise
commercially available and subject to "shrink-wrap" or "click-through" license
agreements.
(c) Schedule 5.15 contains a list and description of all agreements,
contracts, licenses, sublicenses, assignments and indemnities which relate to
(i) any Copyrights, Patent Rights or Trademarks listed in Schedule 5.15, (ii)
any Trade Secrets owned by, licensed to or used by Seller or (iii) any Software
listed in Schedule 5.15.
(d) Except as disclosed in Schedule 5.15, Seller either: (i) owns
the entire right, title and interest in and to the Intellectual Property and
Software included in the Purchased
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Assets, free and clear of any Encumbrance, or (ii) has the perpetual,
royalty-free right to use the same. Except as set forth in Schedule 5.15, Seller
is listed in the records of the appropriate United States, state or foreign
registry as the sole current owner of record for each application or
registration identified in Schedule 5.15 as being owned by Seller.
(e) Except as disclosed in Schedule 5.15: (i) all registrations for
Copyrights, Patent Rights and Trademarks identified in Schedule 5.15 as being
owned by Seller are valid and in force, and all applications to register any
unregistered Copyrights, Patent Rights and Trademarks so identified are pending
and in good standing, all without challenge of any kind; (ii) the Intellectual
Property owned by Seller has not been cancelled or abandoned and is valid and
enforceable; and (iii) Seller has the sole and exclusive right to bring actions
for infringement, misappropriation, dilution, violation or unauthorized use of
the Intellectual Property and Software owned by Seller, and to the knowledge of
Parent, Seller or any Shareholder, there is no basis for any such action.
Correct and complete copies of: (x) registrations for all registered Copyrights,
Patent Rights and Trademarks identified in Schedule 5.15 as being owned by
Seller; and (y) all pending applications to register unregistered Copyrights,
Patent Rights and Trademarks identified in Schedule 5.15 as being owned by
Seller (together with any subsequent correspondence or filings relating to the
foregoing) have heretofore been delivered by Seller to Buyer.
(f) Except as set forth in Schedule 5.15, (i) no infringement,
misappropriation, dilution, violation of any Intellectual Property, or any
rights of publicity or privacy relating to the use of names, likenesses, voices,
signatures or biographical information, of any other Person has occurred or
results in any way from the operations of the Business, (ii) no claim of any
infringement, misappropriation, dilution, violation of any Intellectual Property
or any such rights of any other Person has been made or asserted in respect of
the operations of the Business and (iii) neither Parent, Seller nor any
Shareholder has had notice of, or knowledge of any basis for, a claim against
Seller that the operations, activities, products, software, equipment, machinery
or processes of the Business infringe, misappropriate, violate or dilute any
Intellectual Property or any such rights of any other Person.
(g) Except as disclosed in Schedule 5.15: (i) the Software included in
the Purchased Assets is not subject to any transfer, assignment, change of
control, site, equipment, or other operational limitations; (ii) Seller has
maintained and protected the Software included in the Purchased Assets that it
owns (the "Owned Software") (including all source code and system
specifications) with appropriate proprietary notices (including the notice of
copyright in accordance with the requirements of 17 U.S.C. ss. 401),
confidentiality and non-disclosure agreements and such other measures as are
necessary to protect the proprietary, trade secret or confidential information
contained therein; (iii) the Owned Software has been registered or is eligible
for protection and registration under applicable copyright law and has not been
forfeited to the public domain; (iv) Seller has copies of all releases or
separate versions of the Owned Software so that the same may be subject to
registration in the United States Copyright Office; (v) Seller has complete and
exclusive right, title and interest in and to the Owned Software; (vi) Seller
has developed the Owned Software through its own efforts and for its own account
without the aid or use of any consultants, agents, independent contractors or
Persons (other than Persons that are employees of Seller); (vii) the Owned
Software does not infringe, misappropriate, violate or dilute any Intellectual
Property of any other Person; (viii) any Owned
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Software includes the source code, system documentation, statements of
principles of operation and schematics, as well as any pertinent commentary,
explanation, program (including compilers), workbenches, tools, and higher level
(or "proprietary") language used for the development, maintenance,
implementation and use thereof, so that a trained computer programmer could
develop, maintain, support, compile and use all releases or separate versions of
the same that are currently subject to maintenance obligations by Seller; (ix)
there are no agreements or arrangements in effect with respect to the marketing,
distribution, licensing or promotion of the Owned Software by any other Person;
(x) the Owned Software complies with all applicable Requirements of Laws
relating to the export or reexport of the same; and (xi) the Owned Software may
be exported or reexported to all countries without the necessity of any license,
other than to those countries specified as prohibited destinations pursuant to
applicable regulations of the U.S. Department of Commerce and/or the United
States State Department.
(h) Except as disclosed in Schedule 5.15, all employees, agents,
consultants or contractors who have contributed to or participated in the
creation or development of any Intellectual Property or Software on behalf of
Seller or any predecessor in interest thereto either: (i) created such materials
in the scope of his or her employment; (ii) is a party to a "work-for-hire"
agreement under which Seller is deemed to be the original owner/author of all
rights, title and interest therein; or (iii) has executed an assignment or an
agreement to assign in favor of Seller (or such predecessor in interest, as
applicable) of all right, title and interest in such material.
5.16. Accounts Receivable. All accounts receivable of Seller have
arisen from bona fide transactions by Seller in the ordinary course of the
Business consistent with past practice. All accounts receivable reflected in the
Balance Sheet are good and collectible in the ordinary course of the Business at
the aggregate recorded amounts thereof, net of any applicable allowance for
doubtful accounts reflected in the Balance Sheet; and all accounts receivable to
be included in the Purchased Assets will be good and collectible in the ordinary
course of the Business at the aggregate recorded amounts thereof, net of any
applicable allowance for doubtful accounts, which allowance will be determined
on a basis consistent with the basis used in determining the allowance for
doubtful accounts reflected in the Balance Sheet.
5.17. Title to Property. Seller has good and marketable title to all
of the Purchased Assets, free and clear of all Encumbrances, except for
Permitted Encumbrances. Upon delivery to Buyer on the Closing Date of the
instruments of transfer contemplated by Section 4.4, Seller will thereby
transfer to Buyer good and marketable title to the Purchased Assets, subject to
no Encumbrances, except for Permitted Encumbrances.
5.18. Employees and Related Agreements; ERISA. (a) Schedule 5.18(A)
sets forth a list of each retirement, savings, thrift, deferred compensation,
severance, stock ownership, stock purchase, stock option, performance, bonus,
incentive, vacation or holiday pay, hospitalization or other medical,
disability, life or other insurance, or other welfare, retiree welfare or
benefit plan, policy, trust, understanding or arrangement of any kind, whether
written or oral, to which Seller is a party or by which it is bound or pursuant
to which it may be required to make any payment at any time, other than plans of
the type described in Section 5.18(d) ("Seller's Non-ERISA Plans").
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(b) Schedule 5.18(B) sets forth a list of each (i) employee collective
bargaining agreement, and (ii) agreement, commitment, understanding, plan,
policy or arrangement of any kind, whether written or oral, with or for the
benefit of any current or former officer, director, employee, subcontractor or
consultant (including each employment, compensation, deferred compensation,
severance, supplemental pension, life insurance, termination or consulting
agreement or arrangement and any agreements or arrangements associated with a
change in control), to which Seller is a party or by which it is bound or
pursuant to which it may be required to make any payment at any time, other than
Seller's Non-ERISA Plans and other than plans of the type described in Section
5.18(d) ("Seller's Compensation Commitments").
(c) Copies of all written Seller's Non-ERISA Plans and Seller's
Compensation Commitments and of all related insurance and annuity policies and
contracts and other documents with respect to each Seller's Non-ERISA Plan and
Seller's Compensation Commitment have been delivered to Buyer. Schedules 5.18(A)
and 5.18(B) contain a description of all oral Seller's Non-ERISA Plans and
Seller's Compensation Commitments.
(d) Schedule 5.18(D) sets forth a list of each "employee pension
benefit plan" (as such term is defined in Section 3(2) of ERISA) and each
"employee welfare benefit plan" (as such term is defined in Section 3(1) of
ERISA) covering any employee or former employee of Seller (collectively,
"Seller's ERISA Plans"). Except as set forth in Schedule 5.18(D), (i) Seller has
never maintained any employee pension benefit plan and (ii) Seller has never
been required to contribute to any "multiemployer plan"
(e) Seller has delivered to Buyer, with respect to each Seller's ERISA
Plan, correct and complete copies, where applicable, of (i) all plan documents
and amendments, trust agreements and insurance and annuity contracts and
policies, (ii) the most recent IRS determination letter, (iii) the Annual
Reports (Form 5500 Series) and accompanying schedules and actuarial reports, as
filed, for the most recently completed three plan years, (iv) the summary plan
description currently in use and any other summary plan description in use at
any time since January 1, 1997 and (v) copies of correspondence from the IRS,
the Department of Labor or the Pension Benefit Guaranty Corporation regarding
any plan audit or investigation or any intent to conduct a plan audit.
(f) Each Seller's ERISA Plan which is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter from
the IRS that such Plan is so qualified under the Code; and no circumstance
exists which might cause such Plan to cease being so qualified.
(g) Each Seller's ERISA Plan complies, and has been administered to
comply, with all Requirements of Law, and there has been no notice issued by any
Governmental Body questioning or challenging such compliance, and there are no
actions, suits or claims (other than routine claims for benefits) pending or, to
the knowledge of Parent, Seller or any Shareholder, threatened involving any
such Plan or the assets of any such Plan.
(h) Seller has no obligations under any of Seller's Non-ERISA Plans,
Seller's Compensation Commitments or Seller's ERISA Plans or otherwise to
provide health or death
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benefits to or in respect of former employees of Seller, except as specifically
required by the continuation requirements of Part 6 of Title I of ERISA.
(i) Seller has no liability of any kind whatsoever, whether direct,
indirect, contingent or otherwise, on account of (i) any violation of the health
care requirements of Part 6 of Title I of ERISA or Section 4980B of the Code,
(ii) under Section 502(i) or Section 502(l) of ERISA or Section 4975 of the
Code, (iii) under Section 302 of ERISA or Section 412 of the Code or (iv) under
Title IV of ERISA. Assuming that each of Seller's ERISA Benefit Plans which is
subject to Title IV of ERISA were terminated as of the Closing Date, Seller
would have no liability under Title IV of ERISA as a result of such termination.
(j) Schedule 5.18(J) contains: (i) a list of all employees of the
Seller as of January 1, 2002; (ii) the then current annual compensation of, and
a description of the fringe benefits (other than those generally available to
employees of Seller) provided by Seller to any such employees; (iii) a list of
all present or former employees of Seller paid in excess of $50,000 in calendar
year 2001 who have terminated or given notice of their intention to terminate
their relationship with Seller since January 1, 2001; (iv) a list of any
increase, effective after January 1, 2002, in the rate of compensation of any
employees or commission salespersons; and (v) a list of all substantial changes
in job assignments of, or arrangements with, or promotions or appointments of,
any employees or commission salespersons whose compensation as of January 1,
2002 was in excess of $50,000 per annum.
(k) Except as set forth in Schedule 5.18(K), (i) to the knowledge of
Parent, Seller and any Shareholder, Seller is not involved in any transaction or
other situation with any employee, officer, director or Affiliate of Seller
which may be generally characterized as a "conflict of interest", including
direct or indirect interests in the business of competitors, suppliers or
customers of Seller (other than ownership of not in excess of 2% of any class of
capital stock of any corporation if such stock is publicly traded and listed on
any national or regional stock exchange or on the NASDAQ national market, so
long as such ownership does not constitute practical or legal control of such
corporation), and (ii) there are no situations with respect to the Business
which involved or involves (A) the use of any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
political activity; (B) the making of any direct or indirect unlawful payments
to government officials or others from corporate funds or the establishment or
maintenance of any unlawful or unrecorded funds; (C) the violation of any of the
provisions of The Foreign Corrupt Practices Act of 1977, or any rules or
regulations promulgated thereunder; or (D) the receipt of any illegal discounts
or rebates or any other violation of the antitrust laws.
5.19. Employee Relations. Except as set forth in Schedule 5.19, Seller
has complied with all applicable Requirements of Laws relating to prices, wages,
hours, discrimination in employment and collective bargaining and to the
operation of the Business and is not liable for any arrears of wages or any
Taxes or penalties for failure to comply with any of the foregoing. Seller
believes that its relations with its employees are satisfactory. Seller is not a
party to, and the Business is not affected by or, to the knowledge of Parent,
Seller or any Shareholder, threatened with, any dispute or controversy with a
union or with respect to unionization or collective bargaining involving the
employees of Seller. Seller is not adversely affected by any dispute or
controversy with a union or with respect to unionization or collective
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bargaining involving any customer of the Business. Schedule 5.19 sets forth a
description of any union organizing or election activities involving any
non-union employees of Seller which have occurred since January 1, 1997 or, to
the knowledge of Parent, Seller and any Shareholder, are threatened as of the
date hereof.
5.20. Contracts. Except as set forth in Schedule 5.20 or any other
Schedule hereto, Seller is not a party to or bound by:
(i) any contract for the purchase, sale or lease of real property;
(ii) any contract for the purchase of services, materials, supplies
or equipment which involved the payment of more than $25,000 in 2001, which
Seller reasonably anticipates will involve the payment of more than $25,000
in 2002 or which extends beyond January 1, 2003;
(iii) any contract for the sale of goods or services which involved
the payment of more than $25,000 in 2001, which Seller reasonably
anticipates will involve the payment of more than $25,000 in 2002 or which
extends beyond January 1, 2003;
(iv) any contract for the purchase, licensing or development of
software to be used by Seller;
(v) any consignment, distributor, dealer, manufacturers
representative, sales agency, advertising representative or advertising or
public relations contract;
(vi) any guarantee of the obligations of customers, suppliers,
officers, directors, employees, shareholders, Affiliates or others;
(vii) any agreement which provides for, or relates to, the incurrence
by Seller of debt for borrowed money (including, without limitation, any
interest rate or foreign currency swap, cap, collar, hedge or insurance
agreements, or options or forwards on such agreements, or other similar
agreements for the purpose of managing the interest rate and/or foreign
exchange risk associated with its financing);
(viii) any contract not made in the ordinary course of the Business
consistent with past practice;
(ix) any contract or agreement which provides for a most favored
pricing provision for any customer or supplier of Seller;
(x) any contract which limits or restricts where or how Seller may
conduct the Business; or
(xi) any other contract, agreement, commitment, understanding or
instrument which is material to Seller or the Business.
5.21. Status of Contracts. Except as set forth in Schedule 5.21 or in
any other Schedule hereto, each of the leases, contracts and other agreements
listed in Schedules 5.11,
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5.14, 5.15 and 5.20 (collectively, the "Seller Agreements") constitutes a valid
and binding obligation of the parties thereto and is in full force and effect
and (except as set forth in Schedule 5.3) may be transferred to Buyer pursuant
to this Agreement and will continue in full force and effect thereafter, in each
case without breaching the terms thereof or resulting in the forfeiture or
impairment of any rights thereunder and without the consent, approval or act of,
or the making of any filing with, any other party. Seller has fulfilled and
performed its obligations under each of the Seller Agreements, and Seller is not
in, or alleged to be in, breach or default under, nor is there or is there
alleged to be any basis for termination of, any of the Seller Agreements and no
other party to any of the Seller Agreements has breached or defaulted
thereunder, and, to the knowledge of Seller, Parent or any Shareholder, no event
has occurred and no condition or state of facts exists which, with the passage
of time or the giving of notice or both, would constitute such a default or
breach by Seller or by any such other party. Seller is not currently
renegotiating any of the Seller Agreements or paying liquidated damages in lieu
of performance thereunder. None of the Seller Agreements contains terms unduly
burdensome to Seller or is harmful to the Business. Complete and correct copies
of each of the Seller Agreements have heretofore been delivered to Buyer by
Seller.
5.22. No Violation, Litigation or Regulatory Action. Except as set
forth in Schedule 5.22:
(i) the Purchased Assets and their uses comply with all applicable
Requirements of Laws and Court Orders;
(ii) Seller has complied with all Requirements of Laws and Court
Orders which are applicable to the Purchased Assets or the Business and
neither Seller, Parent nor any Shareholder has been excluded or debarred
from providing services to a Governmental Body or to any customer that
participates in a program sponsored by a Governmental Body;
(iii) there are no lawsuits, claims, suits, proceedings or
investigations pending or, to the knowledge of Parent, Seller or any
Shareholder, threatened against or affecting Seller nor, to the knowledge
of Parent, Seller or any Shareholder, is there any basis for any of the
same, and there are no lawsuits, suits or proceedings pending in which
Seller is the plaintiff or claimant;
(iv) there is no action, suit or proceeding pending or, to the
knowledge of Parent, Seller or any Shareholder, threatened which questions
the legality or propriety of the transactions contemplated by this
Agreement;
(v) to the knowledge of Parent, Seller or any Shareholder, no
legislative or regulatory proposal has been adopted or is pending which
could adversely affect the Business; and
(vi) neither Seller nor the Purchased Assets are subject to any
Court Order.
5.230. Environmental Matters. Except as set forth in Schedule 5.23:
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(i) the operations of the Business comply with all applicable
Environmental Laws;
(ii) Seller has obtained all environmental, health and safety
Governmental Permits necessary for its operation, and all such Governmental
Permits are in good standing and Seller is in compliance with all terms and
conditions of such permits;
(iii) none of Seller nor any of the present Business Property or
operations, or the past Business Property or operations, is subject to any
on-going investigation by, order from or agreement with any Person
(including without limitation any prior owner or operator of Business
Property) respecting (i) any Environmental Law, (ii) any Remedial Action or
(iii) any claim of Losses and Expenses arising from the Release or
threatened Release of a Contaminant into the environment;
(iv) Seller is not subject to any judicial or administrative
proceeding, order, judgment, decree or settlement alleging or addressing a
violation of or liability under any Environmental Law;
(v) Seller has not:
(A) reported a Release of a hazardous substance pursuant to
Section 103(a) of CERCLA, or any state equivalent;
(B) filed a notice pursuant to Section 103(c) of CERCLA;
(C) filed notice pursuant to Section 3010 of RCRA, indicating
the generation of any hazardous waste, as that term is defined under 40 CFR
Part 261 or any state equivalent; or
(D) filed any notice under any applicable Environmental Law
reporting a substantial violation of any applicable Environmental Law;
(vi) there is not now, nor to the knowledge of Parent, Seller or any
Shareholder has there ever been, on or in any Business Property:
(A) any treatment, recycling, storage or disposal of any
hazardous waste, as that term is defined under 40 CFR Part 261 or any
state equivalent, that requires or required a Governmental Permit
pursuant to Section 3005 of RCRA; or
(B) any underground storage tank or surface impoundment or
landfill or waste pile.
(vii) to the knowledge of Seller, Parent or any Shareholder, there is
not now on or in any Business Property any polychlorinated biphenyls (PCB)
used in pigments, hydraulic oils, electrical transformers or other
equipment;
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(viii) none of Parent, Seller nor any Shareholder has received any
notice or claim to the effect that it is or may be liable to any Person as
a result of the Release or threatened Release of a Contaminant;
(ix) no Environmental Encumbrance has attached to any Business
Property; and
(x) any asbestos-containing material which is on or part of any
Business Property is in good repair according to the current standards and
practices governing such material, and its presence or condition does not
violate any currently applicable Environmental Law.
5.24. Insurance. Schedule 5.24 sets forth a list and brief
description of all policies of insurance maintained, owned or held by Seller on
the date hereof. Seller has complied with each of such insurance policies and
has not failed to give any notice or present any claim thereunder in a due and
timely manner. Seller has delivered to Buyer correct and complete copies of the
most recent inspection reports, if any, received from insurance underwriters as
to the condition of the Purchased Assets.
5.25. Customers and Suppliers. Schedule 5.25 sets forth a list of
names and addresses of the ten largest customers and the ten largest suppliers
(measured by dollar volume of purchases or sales in each case) of Seller and the
percentage of the Business which each such customer or supplier represents or
represented during each of the years ended December 31, 1999, 2000 and 2001 and
the period from January 1, 2002 through July 31, 2002. Except as set forth in
Schedule 5.25, there exists no actual or, to the knowledge of Parent, Seller or
any Shareholder, threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship of Seller with any customer
or group of customers listed in Schedule 5.25, or whose purchases individually
or in the aggregate are material to the operations of the Business, or with any
supplier or group of suppliers listed in Schedule 5.25, or whose sales
individually or in the aggregate are material to the operations of the Business,
and there exists no present or future condition or state of facts or
circumstances involving customers, suppliers or sales representatives which
Parent, Seller or any Shareholder can now reasonably foresee would materially
adversely affect the Business or prevent the conduct of the Business after the
consummation of the transactions contemplated by this Agreement in essentially
the same manner in which it has heretofore been conducted.
5.26. Securities Law Matters. Each of the Shareholders, Parent and
Seller acknowledges that (a) he, she or it has been furnished with such
documents, materials and information as he, she or it deems necessary or
appropriate for evaluating an investment in Buyer (including, without
limitation, Buyer's 2001 Annual Report to Shareholders, its proxy statement
dated March 29, 2002 with respect to its 2002 Annual Meeting of Shareholders,
its Annual Report on Form 10-K for the fiscal year ended December 31, 2001, its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002 and June
30, 2002 and its Current Report on Form 8-K dated January 9, 2002 and the
description of Buyer's shares of common stock and associated preferred stock
purchase rights contained in the Registration Statements on Form 8-A filed by
the Company with the Securities and Exchange Commission on September 16, 1996
and on December 7, 1999, respectively) and confirms that he, she or it has made
such further
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investigation of Buyer as was deemed appropriate to evaluate the merits and
risks of this investment and (b) he, she or it has had the opportunity to ask
questions of, and receive answers from, the directors and officers of Buyer and
persons acting on Buyer's behalf, concerning the terms and conditions of the
offering of the Shares and the Additional Shares. Seller is acquiring the Shares
and the Additional Shares solely for its own account with the intention of
holding the Shares and the Additional Shares for purposes of investment only
(except as otherwise provided in Section 7.6(b) of this Agreement), and Seller
has no intention of selling the Shares or the Additional Shares in violation of
the federal securities laws or any applicable state securities laws. Except as
set forth in Schedule 5.26, each of the Shareholders, Parent and Seller is an
"accredited investor" as such term is defined in Rule 501(a) of Regulation D
under the Securities Act has such knowledge and experience in financial and
business matters that he, she or it is capable of evaluating the merits and
risks of an investment in the Shares and the Additional Shares. Each of the
Shareholders, Parent and Seller understands that the Shares and the Additional
Shares have not been registered under the Securities Act, or applicable state
securities laws, and are being issued in reliance on exemptions for private
offerings contained in Sections 3(b) and 4(2) of the Securities Act and the
provisions of Regulation D promulgated thereunder and in reliance on exemptions
from the registration requirements of certain state securities laws. Because the
Shares and the Additional Shares have not been registered under the Securities
Act or applicable state securities laws, the Shares and the Additional Shares
may not be re-offered or resold except through a valid and effective
registration statement or pursuant to a valid exemption from the registration
requirements under the Securities Act and applicable state securities laws. Each
of the Shareholders, Parent and Seller is fully aware (i) of the restrictions on
sale, transferability and assignment of the Shares and the Additional Shares as
described in this Agreement, (ii) that Seller or the Shareholders, as the case
may be, must bear the economic risk of the investment in Buyer for an indefinite
period of time, (iii) that Buyer is not obligated to register the Shares or the
Additional Shares under the Securities Act or any state securities laws, and
(iv) that because the sale of the Shares and the Additional Shares has not been
registered, an investment in the Shares and the Additional Shares may not be
readily liquidated. Each of the Shareholders, Parent and Seller acknowledges
that each certificate representing the Shares or the Additional Shares shall
bear a legend with respect to the restrictions described in this Section 5.26
and 7.6.
5.27. No Finder. None of the Shareholders, Parent or Seller nor any
Person acting on its behalf has paid or become obligated to pay any fee or
commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement other than to Xxxxxxxx Xxxxx Xxxxxx
& Xxxxx, whose fees and expenses, to the extent payable, shall be paid by
Seller.
5.28. Disclosure. None of the representations or warranties of Parent,
Seller or any Shareholder contained herein, none of the information contained in
the Schedules referred to in Article V, and none of the other information or
documents furnished to Buyer or any of its representatives by Parent, Seller or
any Shareholder or their representatives pursuant to the terms of this
Agreement, is false or misleading in any material respect or omits to state a
fact herein or therein necessary to make the statements herein or therein not
misleading in any material respect. To the knowledge of Seller, Parent or
Shareholders, there is no fact which adversely affects or in the future is
likely to adversely affect the Purchased Assets or the Business in any material
respect which has not been set forth or referred to in this Agreement or the
Schedules hereto.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Parent, Seller and the Shareholders to enter into
this Agreement and to consummate the transactions contemplated hereby, Buyer
hereby represents and warrants to Parent, Seller and the Shareholders and agrees
as follows:
6.1. Organization of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
[and is duly qualified to transact business and is in good standing in each of
the jurisdictions listed in Schedule 5.1 where Seller is so qualified]. Buyer
has full power and authority to own or lease and to operate and use its
properties and assets and to carry on its business as now conducted.
6.2. Authority of Buyer. (a) Buyer has full power and authority to
execute, deliver and perform this Agreement and all of the Buyer Ancillary
Agreements. The execution, delivery and performance of this Agreement and the
Buyer Ancillary Agreements by Buyer have been duly authorized and approved by
Buyer's board of directors and do not require any further authorization or
consent of Buyer or its stockholders. This Agreement has been duly authorized,
executed and delivered by Buyer and is the legal, valid and binding agreement of
Buyer enforceable in accordance with its terms, and each of the Buyer Ancillary
Agreements has been duly authorized by Buyer and upon execution and delivery by
Buyer will be a legal, valid and binding obligation of Buyer enforceable in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement or any of
the Buyer Ancillary Agreements or the consummation of any of the transactions
contemplated hereby or thereby nor compliance with or fulfillment of the terms,
conditions and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under (A) the Certificate of Incorporation or By-laws of Buyer, (B)
any material note, instrument, agreement, mortgage, lease, license,
franchise, permit or other authorization, right, restriction or obligation
to which Buyer is a party or any of its properties is subject or by which
Buyer is bound, (C) any Court Order to which Buyer is a party or by which
it is bound or (D) any Requirements of Laws affecting Buyer; or
(ii) require the approval, consent, authorization or act of, or the
making by Buyer of any declaration, filing or registration with, any
Person.
6.3. No Regulatory Actions or Litigation. Neither Buyer nor to Buyer's
knowledge any employee of Buyer has been excluded or debarred from providing
services to a Governmental Body or to any customer that participates in a
program sponsored by a Governmental Body, which exclusion or debarring would
reasonably be expected to have a material adverse effect on the operation of the
Business during the Additional Periods. There is no action, suit or proceeding
pending or to Buyer's knowledge threatened against Buyer which
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would reasonably be expected to have a material adverse effect on the operation
of the Business during the Additional Periods or which questions the legality or
propriety of the transactions contemplated by this Agreement.
6.4. No Finder. Neither Buyer nor any Person acting on its behalf has
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.
6.5. Capital Stock of Buyer. Subject in all respects to the terms and
conditions of this Agreement, the Shares and Additional Shares to be issued
pursuant to this Agreement (i) will be duly authorized, validly issued, fully
paid and non-assessable and not subject to preemptive rights created by statute,
or by Buyer's Certificate of Incorporation or By-laws or any agreement to which
Buyer is a party or is bound, and (ii) will, when issued, be listed on the New
York Stock Exchange.
6.6. Disclosure. Since December 31, 2001, Buyer has filed all reports
required to be filed with the Securities and Exchange Commission (the "Buyer
Reports"). The Buyer Reports did not, at the respective times they were filed,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Covenant Not to Compete or Solicit Business. (a) In furtherance
of the sale of the Purchased Assets and the Business to Buyer hereunder by
virtue of the transactions contemplated hereby and more effectively to protect
the value and goodwill of the Purchased Assets and the Business so sold, Parent,
Seller and each Shareholder covenants and agrees that, for a period ending on
the fifth anniversary of the Closing Date, neither Parent, Seller or any
Shareholder nor any of their respective Affiliates will:
(i) directly or indirectly (whether as principal, agent, consultant,
independent contractor, partner or otherwise) own, manage, operate,
control, participate in, perform services for, or otherwise carry on, a
business competitive with the Business anywhere in the world (it being
understood by the parties hereto that the Business is not limited to any
particular region of the world and that such business may be engaged in
effectively from any location in the world); provided that this Section
7.1(a)(i) shall not prohibit any Shareholder from accepting, after the
termination of such Shareholder's employment with Buyer, direct employment
in a management position (whether on a temporary, interim or permanent
basis) with any hospital system or other healthcare provider, so long as
such Shareholder complies with all of the other provisions of this
Agreement (including Section 7.1(a)(ii) and Section 9.2) and any employment
or other agreement between Buyer and such Shareholder; or
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(ii) induce or attempt to persuade any employee, consultant, agent or
customer of Seller to terminate such employment, consulting, agency or
business relationship in order to enter into any such relationship on
behalf of any other business organization in competition with the Business;
provided, however, that nothing set forth in this Section 7.1 shall prohibit
Parent, Seller or any Shareholder or their respective Affiliates from owning not
in excess of 2% in the aggregate of any class of capital stock of any
corporation if such stock is publicly traded and listed on any national or
regional stock exchange or on the NASDAQ national market. In addition, Parent,
Seller and each Shareholder covenants and agrees that it will not, and will not
permit any of its Affiliates to, divulge or make use of any trade secrets or
other confidential information of the Business other than to disclose such
secrets and information to Buyer or its Affiliates.
(b) If Parent, Seller or any Shareholder or any Affiliate of Parent,
Seller or such Shareholder violates any of its obligations under this Section
7.1, Buyer may proceed against it in law or in equity for such damages or other
relief as a court may deem appropriate. Parent, Seller and each Shareholder
acknowledges that a violation of this Section 7.1 may cause Buyer irreparable
harm which may not be adequately compensated for by money damages. Parent,
Seller and each Shareholder therefore agrees that in the event of any actual or
threatened violation of this Section 7.1, Buyer shall be entitled, in addition
to other remedies that it may have, to a temporary restraining order and to
preliminary and final injunctive relief against Parent, Seller or such
Shareholder or such Affiliate of Parent, Seller or such Shareholder to prevent
any violations of this Section 7.1, without the necessity of posting a bond. The
prevailing party in any action commenced under this Section 7.1 shall also be
entitled to receive reasonable attorneys' fees and court costs. It is the intent
and understanding of each party hereto that if, in any action before any court
or agency legally empowered to enforce this Section 7.1, any term, restriction,
covenant or promise in this Section 7.1 is found to be unreasonable and for that
reason unenforceable, then such term, restriction, covenant or promise shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency.
7.2. Taxes. (a) Parent, Seller and the Shareholders shall be liable
for and pay, and shall indemnify Buyer against, all Taxes (whether assessed or
unassessed) applicable to the Business, the Purchased Assets and the Assumed
Liabilities, in each case attributable to taxable years or periods ending prior
to the Closing Date and, with respect to any Straddle Period, the portion of
such Straddle Period ending on the day prior to the Closing Date. Subject to
Section 7.2(b), Buyer shall be liable for and shall pay all Taxes (whether
assessed or unassessed) applicable to the Business, the Purchased Assets and the
Assumed Liabilities that are attributable to taxable years or periods beginning
on or after the Closing Date and, with respect to any Straddle Period, the
portion of such Straddle Period beginning on or after the Closing Date;
provided, that Buyer shall not be liable for any Taxes for which Parent, Seller
or any Shareholder is liable under this Agreement. For purposes of this Section
7.2, and subject to Section 7.2(b), any Straddle Period shall be treated on a
"closing of the books" basis as two partial periods, one ending at the close of
business on the day prior to the Closing Date and the other beginning on the
Closing Date, except that Taxes (such as property Taxes) imposed on a periodic
basis shall be allocated on a daily basis.
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(b) Notwithstanding Section 7.2(a), any Tax attributable to the
sale or transfer of the Business, the Purchased Assets or the Assumed
Liabilities shall be paid by Seller, Parent and the Shareholders. Buyer agrees
to timely sign and deliver such certificates or forms as may be necessary or
appropriate to establish an exemption from (or otherwise reduce), or file Tax
Returns with respect to, such Taxes.
(c) Seller, Parent and the Shareholders or Buyer, as the case may
be, shall provide reimbursement for any Tax paid by one party all or a portion
of which is the responsibility of the other party in accordance with the terms
of this Section 7.2. Within a reasonable time prior to the payment of any said
Tax, the party paying such Tax shall give notice to the other party of the Tax
payable and the portion which is the liability of each party, although failure
to do so will not relieve the other party from its liability hereunder.
(d) After the Closing Date, each of Seller, Parent and the
Shareholders and Buyer shall (and cause their respective Affiliates to):
(i) assist the other party in preparing any Tax Returns which such
other party is responsible for preparing and filing;
(ii) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns of the Business or the
Purchased Assets;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to
Taxes of the Business or the Purchased Assets;
(iv) provide timely notice to the other in writing of any pending or
threatened Tax audits or assessments relating to Taxes of the Business or
the Purchased Assets for taxable periods for which the other may have a
liability under this Section 7.2; and
(v) furnish the other with copies of all correspondence received
from any taxing authority in connection with any Tax audit or information
request with respect to any such taxable period.
(e) Notwithstanding anything to the contrary in this Agreement, the
obligations of the parties set forth in this Section 7.2 shall be unconditional
and absolute and shall remain in effect without limitation as to time.
7.3. Discharge of Business Liabilities. Parent, Seller and each
Shareholder covenants and agrees that it will pay and discharge, and hold Buyer
harmless from, each and every liability and obligation of Seller arising from
events occurring prior to the Closing Date, excepting only those liabilities and
obligations expressly assumed by Buyer at the Closing pursuant to instruments of
assumption delivered to Seller at the Closing, it being understood and agreed
that Buyer is assuming no liabilities or obligations of Parent, Seller or any
Shareholder other than liabilities and obligations so expressly assumed by
Buyer.
7.4. Employees and Employee Benefit Plans. (a) Parent, Seller and
the Shareholders shall use their reasonable best efforts to have all of the
employees of Seller become
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employees of Buyer on the Closing Date. Buyer agrees to offer employment to (i)
the Shareholders at the level of "Principal," (ii) Seller's other field staff
(i.e., consultants and interim managers), including employees and selected
contractors of Seller, with titles consistent with their responsibilities
compared to other comparable employees of Buyer and (iii) Seller's office staff,
with titles comparable to their titles with Seller prior to the Closing Date,
reflecting, base salaries comparable to that provided by Seller prior to the
Closing Date and participation in Buyer's incentive plans. Assuming comparable
performance levels by the employees of Seller, participation in Buyer's
incentive plans for the period from the Closing Date until December 31, 2002 and
for the calendar year ending on December 31, 2003 (the "Post Closing Bonus
Periods") is expected to result in bonus amounts (prorated for the period from
the Closing Date until December 31, 2002) for the previous employees of Seller
(viewed in the aggregate) that are substantially similar to the bonus amounts
received by the employees of Seller (viewed in the aggregate) for the year ended
December 31, 2001, as set forth on Schedule 7.4. The amount of such bonus
amounts paid to any employee of the Practice will be determined by the Managing
Director of the Practice with the approval of the Executive Managing Director
responsible for the Practice. With respect to revenues and other factors
accounted for from time to time in Buyer's incentive plans for the Post-Closing
Bonus Periods, the aggregate determination under such plans will treat the
Practice as a separate business unit. For purposes of determining eligibility to
participate and vesting under any employee benefit plan of Buyer, employees of
Seller who become employees of Buyer and actually perform services for Buyer on
the Closing Date or within twelve (12) weeks immediately thereafter (the
"Transferring Employees") shall receive service credit for service with Buyer to
the same extent such credit was granted under the Seller's comparable employee
benefit plans. Notwithstanding anything set forth herein to the contrary, (i)
nothing in this Agreement shall create any obligation on the part of the Buyer
to continue the employment of any employee for any definite period following the
Closing Date and (ii) nothing in this Agreement shall preclude Buyer from
altering, amending or terminating any of its employee benefit plans, or the
participation of any of its employees in such plans, at any time.
(b) To the extent permitted therein, all Transferring Employees
shall be covered by Buyer's medical, prescription drug, dental, vision, life and
accidental death and dismemberment plans on the first day of the calendar month
immediately following the Closing Date. Parent, Seller and the Shareholders
shall pay any premiums and take any other actions necessary to continue coverage
under Seller's medical, prescription drug, dental, vision, life and accidental
death and dismemberment plans for the Transferring Employees until and including
the last day of the calendar month in which the Closing Date occurs. To the
extent permitted by the applicable insurance contracts, each Transferring
Employee shall receive credit under Buyer's medical, prescription drug, dental
and vision plans for all amounts paid during the current calendar year under
comparable plans maintained by Seller, including deductible amounts and
coinsurance amounts.
(c) With respect to each Transferring Employee, Seller shall retain
the obligation and liability for any workers' compensation or similar workers'
protection claims with respect to any such individual, whether incurred prior
to, on or after the Closing Date which are the result of an injury or illness
originating prior to the Closing Date. Buyer shall not assume or be obligated to
pay, perform or discharge any liability or obligation under any employee benefit
plan of Parent, Seller or their Affiliates.
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(d) Seller shall transfer to Buyer on the Closing Date complete
copies of the personnel records of Transferring Employees.
(e) Buyer shall have no liabilities: (i) related to the employees
of Seller who do not become Transferring Employees; (ii) related to Transferring
Employees to the extent such liability arises from any action, event or course
of conduct (except for any action, event or course of conduct by Buyer) that
occurs prior to the Closing Date; or (iii) to the extent such liability arises
under or relates to any employee benefit plan of Seller or any of its
Affiliates.
(f) Buyer shall not have responsibility for any severance or
termination pay obligations and damages for wrongful dismissal, including,
without limitation, obligations arising under the common law, incurred with
respect to any period of employment prior to the Closing Date for employees of
Parent, Seller or any of their respective Affiliates who do not become
Transferring Employees.
7.5. Change in Corporate Name. Seller agrees promptly after the
Closing Date to change its name to a name that does not include "Hunter" or
"THG" or any variation thereof.
7.6. Additional Transfer Restrictions. (a) In addition to the
restrictions described in Section 5.26, (i) Seller shall not, directly or
indirectly, offer, sell, contract to sell, transfer, assign, pledge or otherwise
dispose of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law), grant any option to purchase or otherwise
sell or reduce its risk with respect to (collectively, a "Transfer"), any Shares
or any Deferred Payment Shares for a period ending on the second anniversary of
the date of issuance thereof and (ii) Seller shall not, directly or indirectly,
Transfer any Earnout Shares for a period ending on the first anniversary of the
date of issuance thereof. Notwithstanding clause (i) of the preceding sentence,
(A) after the first anniversary of the Closing Date, Seller may Transfer up to
one-half of the Shares and (B) after the first anniversary of the date of
issuance of any Deferred Payment Shares, Seller may transfer up to one-half of
such Deferred Payment Shares, in any such case in compliance with applicable
federal and state securities laws.
(b) The restrictions on transfers of Shares and Additional Shares
of Section 7.6 shall not apply to any of the following Transfers:
(i) from Seller to Buyer or Parent or to a Shareholder; provided
that any Transfer of the Shares to Parent or a Shareholder shall not be
made unless Parent or such Shareholder has delivered to Buyer a written
agreement in form and substance satisfactory to Buyer agreeing to the
restrictions on such Shares or Additional Shares provided hereby and
containing representations similar to those provided in Section 5.26 of
this Agreement; or
(ii) pursuant to a tender offer, exchange offer, merger,
consolidation or other business combination involving Buyer or a sale of
all or substantially all of the outstanding shares of Buyer's common stock.
(c) The portion of the legend on the Shares or any Additional
Shares relating to sale of the Shares or any Additional Shares without
compliance with the registration
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provisions of the Securities Act shall be removed from a particular certificate
representing such Shares when an unqualified opinion of counsel reasonably
satisfactory to Buyer has been delivered to Buyer to the effect that any such
security may be freely sold to the public without compliance with the
registration provision of the Securities Act.
(d) Whenever the restrictions imposed by this Section 7.6 terminate
or lapse as to any particular Shares or Additional Shares, the holder thereof
shall be entitled to receive from Buyer, without expense, upon delivery to Buyer
of the existing certificate representing such Shares, a new certificate not
bearing the restrictive legend with respect to the restrictions described in
this Section 7.6.
7.7. Restrictions on Ownership. So long as Seller or Parent holds
any Shares or Additional Shares, neither Parent or Seller shall (i) permit the
transfer or assignment of any shares of its capital stock except in accordance
with the provisions of Section 3 of the Shareholders' Agreement among the
Shareholders (without modification or amendment after the date hereof), which
Sections are attached hereto as Schedule 7.7, (ii) issue additional capital
stock or (iii) permit any existing stockholder to Transfer any of its capital
stock, except in accordance with the provisions of such Sections, each without
the written consent of Buyer.
7.8. Hunter Employment Agreement. Each of Parent, Seller and each
Shareholder hereby represents, warrants, acknowledges and agrees that the
employment agreement between Buyer and Xxxxx X. Xxxxxx ("Xxxxxx") has been
independently negotiated and entered into between Buyer and Hunter and neither
such agreement nor any performance or nonperformance thereunder has been taken
into account in determining the Purchase Price (including the amount, structure
or calculation of any Deferred Payment or any Earnout Payment). Each of Parent,
Seller and each Shareholder shall not have any cause of action or claim arising
out of or relating to, and hereby covenants and agrees not to xxx, claim or
otherwise assert (whether against Hunter, any Buyer Group Member or otherwise)
any cause of action or claim arising out of or relating to (a) such employment
agreement or Hunter's employment by Buyer, including any performance or
nonperformance thereunder, (b) any expiration or termination of Hunter's
employment with Buyer or (c) any failure by Buyer to make to Seller any Deferred
Payment or any Earnout Payment based on performance or nonperformance under such
employment agreement. Notwithstanding the foregoing, if Xxxxx Xxxxxx asserts
against Parent, Seller or a Shareholder a claim relating to any expiration or
termination of such employment agreement, then Parent, Seller or a Shareholder
may assert as a counterclaim any cause of action or claim described in clauses
(a) through (c) above.
7.9. Lease Expense Reimbursement. Buyer hereby covenants and agrees
to reimburse Seller for the rental payments, reasonable utility expenses and
reasonable operating expenses incurred in the ordinary course of the Business
relating to the premises located at 0000 Xxx Xxxxxxxxx, Xxxxx 000, Xx.
Xxxxxxxxxx, Xxxxxxx 00000-0000 incurred after September 1, 2002 and before
January 31, 2003.
7.10. Management Committee. The Practice will initially operate under
the Hunter Group name as part of Buyer's healthcare consulting group, which is a
part of Buyer's Financial & Claims Practice. Buyer intends to manage its
healthcare consulting group through a management committee initially composed of
Xxxxx Xxxxxx (who will serve as the chairman of
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the committee), Xxxxxxxx Xxxxxxx, one representative selected by majority vote
of the Shareholders and three representatives selected by Buyer (provided that
each member of such committee must be an employee of Buyer or its subsidiaries),
which committee shall have responsibility for developing a business plan and
policies for guiding the Practice and for oversight of the Practice's
operations. Such committee shall report to the Executive Managing Director of
Buyer's Financial & Claims practice or his designee. The day-to-day management
of the Practice will be the responsibility of the Managing Director of the
Practice.
7.11. Application of Buyer Travel Policies. Each of the Shareholders
shall enroll in Buyer's travel and entertainment program and shall use
reasonable efforts to use such program and, if any Shareholder does not use such
program, such Shareholder shall exercise fiscally reasonable discretion in
choosing airlines, travel agents, upgrades and lodging, subject to the oversight
of the Managing Director of the Practice.
7.12. Assignment or Enforcement of Certain Agreements. In furtherance
of the sale of the Purchased Assets and the Business to Buyer hereunder by
virtue of the transactions contemplated hereby and more effectively to protect
the value and goodwill of the Purchased Assets and the Business so sold, each of
Parent and Seller covenants and agrees that, with respect to each employee of
Parent or Seller who does become an employee of Buyer after the Closing, Parent
and Seller shall either (a) assign to Buyer all rights of Buyer pursuant to all
agreements, covenants or other obligations of such employee relating to
noncompetition, nonsolicitation of employees or clients and similar matters or
(b) if such agreements, covenants or obligations cannot be assigned to Buyer,
then, upon Buyer's request and at Buyer's expense, enforce such agreements,
covenants and obligations to the maximum extent permitted by applicable law.
7.13. Payment to Xxxxx Xxxxxx. Seller hereby covenants and agrees to
pay $1,750,000 to Xxxxx Xxxxxx on the Closing Date.
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnification by Parent, Seller and the Shareholders. (a)
Parent, Seller and each Shareholder jointly and severally agree to indemnify and
hold harmless each Buyer Group Member from and against any and all Losses and
Expense incurred by such Buyer Group Member in connection with or arising from:
(i) any breach by Parent, Seller or any Shareholder of any of the
covenants in this Agreement or in any Seller Ancillary Agreement;
(ii) any failure of Parent, Seller or any Shareholder to perform any
of the obligations in this Agreement or in any Seller Ancillary Agreement;
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(iii) any breach of any warranty or the inaccuracy of any
representation of Parent, Seller or any Shareholder contained or referred
to in this Agreement or any certificate delivered by or on behalf of
Parent, Seller or any Shareholder pursuant hereto;
(iv) any failure of Seller to obtain prior to the Closing any consent
set forth in Schedule 5.3;
(v) the failure of Parent or Seller to comply with any applicable
bulk sales law, except that this clause shall not affect the obligation of
Buyer to pay and discharge the Assumed Liabilities; or
(vi) the failure of Seller to perform any Excluded Liability.
8.2. Indemnification by Buyer. (a) Buyer agrees to indemnify and hold
harmless each Seller Group Member from and against any and all Loss and Expense
incurred by such Seller Group Member in connection with or arising from:
(i) any breach by Buyer of any of its covenants or agreements in
this Agreement or in any Buyer Ancillary Agreement;
(ii) any failure by Buyer to perform any of its obligations in this
Agreement or in any Buyer Ancillary Agreement; or
(iii) any breach of any warranty or the inaccuracy of any
representation of Buyer contained or referred to in this Agreement or in
any certificate delivered by or on behalf of Buyer pursuant hereto.
8.3. Notice of Claims. (a) Any Buyer Group Member or Seller Group
Member (the "Indemnified Party") seeking indemnification hereunder shall give to
the party obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") a notice (a "Claim Notice") describing in reasonable detail the
facts giving rise to any claim for indemnification hereunder and shall include
in such Claim Notice (if then known) the amount or the method of computation of
the amount of such claim, and a reference to the provision of this Agreement or
any other agreement, document or instrument executed hereunder or in connection
herewith upon which such claim is based; provided, that a Claim Notice in
respect of any action at law or suit in equity by or against a third Person as
to which indemnification will be sought shall be given promptly after the action
or suit is commenced; provided further that failure to give such notice shall
not relieve the Indemnitor of its obligations hereunder except to the extent it
shall have been prejudiced by such failure.
(b) After the giving of any Claim Notice pursuant hereto, the amount
of indemnification to which an Indemnified Party shall be entitled under this
Article VIII shall be determined (i) by the written agreement between the
Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any
court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have expired
and no appeal shall have been taken or when all appeals taken shall have been
finally determined. The
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Indemnified Party shall have the burden of proof in establishing the amount of
Loss and Expense suffered by it.
8.4. Third Person Claims. (a) Subject to Section 8.4(b), the
Indemnified Party shall have the right to conduct and control, through counsel
of its choosing, the defense, compromise or settlement of any third Person
claim, action or suit against such Indemnified Party as to which indemnification
will be sought by any Indemnified Party from any Indemnitor hereunder, and in
any such case the Indemnitor shall cooperate in connection therewith and shall
furnish such records, information and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably
requested by the Indemnified Party in connection therewith; provided, that the
Indemnitor may participate, through counsel chosen by it and at its own expense,
in the defense of any such claim, action or suit as to which the Indemnified
Party has so elected to conduct and control the defense thereof; and provided,
further, that the Indemnified Party shall not, without the written consent of
the Indemnitor (which written consent shall not be unreasonably withheld), pay,
compromise or settle any such claim, action or suit, except that no such consent
shall be required if, following a written request from the Indemnified Party,
the Indemnitor shall fail, within ten (10) days after the making of such
request, to acknowledge and agree in writing that, if such claim, action or suit
shall be adversely determined, such Indemnitor has an obligation to provide
indemnification hereunder to such Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit without such consent, provided that in
such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless such consent is unreasonably withheld.
(b) If any third Person claim, action or suit against any Indemnified
Party is solely for money damages or, where Seller, Parent or any Shareholder is
the Indemnitor, will have no continuing effect on the Business or the Purchased
Assets, then the Indemnitor shall have the right to conduct and control, through
counsel of its choosing, the defense, compromise or settlement of any such third
Person claim, action or suit against such Indemnified Party as to which
indemnification will be sought by any Indemnified Party from any Indemnitor
hereunder if the Indemnitor has acknowledged and agreed in writing that, if the
same is adversely determined, the Indemnitor has an obligation to provide
indemnification to the Indemnified Party in respect thereof, and in any such
case the Indemnified Party shall cooperate in connection therewith and shall
furnish such records, information and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably
requested by the Indemnitor in connection therewith; provided, that the
Indemnified Party may participate, through counsel chosen by it and at its own
expense, in the defense of any such claim, action or suit as to which the
Indemnitor has so elected to conduct and control the defense thereof.
Notwithstanding the foregoing, the Indemnified Party shall have the right to
pay, settle or compromise any such claim, action or suit, provided that in such
event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless the Indemnified Party shall have sought the consent of the
Indemnitor to such payment, settlement or compromise and such consent was
unreasonably withheld, in which event no claim for indemnity therefor hereunder
shall be waived.
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8.5. Limitations on Indemnification Obligations. (a) The obligations
of Parent, Seller and the Shareholders pursuant to the provisions of Section 8.1
are subject to the following limitations:
(i) Seller and the Members shall be required to indemnify and hold
harmless under Section 8.1(a)(iii) with respect to Loss and Expense
incurred by Buyer Group Members (other than Loss and Expense incurred as a
result of inaccuracies of the representations and warranties contained in
Sections 5.1, 5.3, 5.7, 5.15, 5.17 and 5.27, as to which this subsection
(i) shall have no effect) only if the aggregate amount of such Loss and
Expense exceeds $50,000; provided that if the aggregate amount of Loss and
Expense incurred by Buyer Group Members exceeds $50,000, then this
subsection (i) shall not apply and Buyer Group Members shall be entitled to
indemnification for all Loss and Expense irrespective of this subsection
(i);
(ii) the aggregate amount that Parent, Seller and the Shareholders
shall be required to indemnify and hold harmless under Section 8.1(a)(iii)
shall not exceed an amount equal to the Purchase Price;
(iii) the aggregate amount that any Shareholder shall be required to
indemnify and hold harmless under Section 8.1(a)(iii) shall not exceed an
amount equal to the portion of the Purchase Price received by such
Shareholder as set forth on Schedule 8.5(a)(iii); and
(iv) the indemnification provided for in Section 8.1(a)(iii) shall
terminate two (2) years after the Closing Date (and no claims shall be made
by any Buyer Group Member under Section 8.1(a)(iii) thereafter), except
that the indemnification by Parent, Seller and the Shareholders shall
continue as to: (A) the representations and warranties set forth in
Sections 5.1, 5.3, 5.7, 5.15, 5.17 and 5.27 as to all of which no time
limitation shall apply and (B) any Loss or Expense of which any Buyer Group
Member has notified Parent, Seller or the Shareholders in accordance with
the requirements of Section 8.3 on or prior to the date such
indemnification would otherwise terminate in accordance with this Section
8.5, as to which the obligation of Parent, Seller and the Shareholders
shall continue until the liability of Parent, Seller and the Shareholders
shall have been determined pursuant to this Article VIII, and Parent,
Seller and the Shareholders shall have reimbursed all Buyer Group Members
for the full amount of such Loss and Expense in accordance with this
Article VIII.
(b) The obligations of Buyer pursuant to the provisions of Section
8.2 are subject to the following limitations:
(i) Buyer shall be required to indemnify and hold harmless under
Section 8.2(a)(iii) with respect to Loss and Expense incurred by Seller
Group Members (other than Loss and Expense incurred as a result of
inaccuracies of the representations and warranties contained in Sections
6.1, 6.2, 6.4 and 6.5, as to which this subsection (i) shall have no
effect) only if the aggregate amount of such Loss and Expense exceeds the
$50,000; provided, that if the aggregate amount of Loss and Expense
incurred by Seller Group Members exceeds $50,000, then this subsection (i)
shall not apply and Seller
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Group Members shall be entitled to indemnification for all Loss and Expense
irrespective of this subsection (i);
(ii) the aggregate amount that Buyer shall be required to indemnify
and hold harmless under Section 8.3(a)(iii) shall not exceed an amount
equal to the Purchase Price; and
(iii) the indemnification provided for in Section 8.2(a)(iii) shall
terminate two (2) years after the Closing Date (and no claims shall be made
by any Seller Group Member under Section 8.2(a)(iii) thereafter), except
that the indemnification by Buyer shall continue as to: (A) the
representations and warranties set forth in Sections 6.1, 6.2, 6.4 and 6.5,
as to which no time limitation shall apply and (B) any Loss or Expense of
which any Seller Group Member has notified Buyer in accordance with the
requirements of Section 8.3 on or prior to the date such indemnification
would otherwise terminate in accordance with this Section 8.5, as to which
the obligation of Buyer shall continue until the liability of Buyer shall
have been determined pursuant to this Article VIII, and Buyer shall have
reimbursed all Seller Group Members for the full amount of such Loss and
Expense in accordance with this Article VIII.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Obligations. All representations, warranties,
covenants and obligations contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement; provided,
however, that, except as otherwise provided in Article VIII, the
representations and warranties contained in this Agreement shall terminate
two (2) years after the Closing Date. Except as otherwise provided herein,
no claim shall be made for the breach of any representation or warranty
contained in this Agreement or under any certificate delivered with respect
thereto under this Agreement after the date on which such representations
and warranties terminate as set forth in this Section.
9.2. Confidential Nature of Information. Each party agrees that it
will treat in confidence all documents, materials and other information
which it shall have obtained regarding the other party during the course of
the negotiations leading to the consummation of the transactions
contemplated hereby (whether obtained before or after the date of this
Agreement), the investigation provided for herein and the preparation of
this Agreement and other related documents. Such documents, materials and
information shall not be communicated to any third Person (other than, in
the case of Buyer, to its counsel, accountants, financial advisors or
lenders, and in the case of Seller, to its counsel, accountants or
financial advisors). No other party shall use any confidential information
in any manner whatsoever except solely for the purpose of evaluating the
proposed purchase and sale of the Purchased Assets; provided, however, that
after the Closing Buyer may use or disclose any confidential information
included in the Purchased Assets or otherwise related to the Business or
the Purchased Assets. The obligation of each party to treat such documents,
materials and other information in confidence shall not apply to any
information which (i) is or becomes available to such party from a source
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other than such party, (ii) is or becomes available to the public other than as
a result of disclosure by such party or its agents, (iii) is required to be
disclosed under applicable law or judicial process, but only to the extent it
must be disclosed, or (iv) such party reasonably deems necessary to disclose to
obtain any of the consents or approvals contemplated hereby.
9.3. No Public Announcement. Neither Buyer, any Shareholder, Parent
nor Seller shall, without the approval of Buyer and Seller, make any press
release or other public announcement concerning the transactions contemplated by
this Agreement, except as and to the extent that any such party shall be so
obligated by law or the rules of any stock exchange, in which case the other
party shall be advised and the parties shall use their best efforts to cause a
mutually agreeable release or announcement to be issued; provided that the
foregoing shall not preclude communications or disclosures necessary to
implement the provisions of this Agreement or to comply with the accounting and
Securities and Exchange Commission disclosure obligations.
9.4. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally or when received (with refusal of receipt constituting
receipt) by registered or certified mail or by private courier addressed as
follows:
If to Buyer, to:
Navigant Consulting, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
with a copy (which shall not constitute notice), to:
Sidley Xxxxxx Xxxxx & Xxxx
Bank Xxx Xxxxx
00 X. Xxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxx
If to Parent, Seller or any Shareholder, to:
c/o Trenam, Kemker, Scharf, Barkin,
Frye, X'Xxxxx & Xxxxxx
000 Xxxx Xxxxxxx Xxxx.
Xxxxx 0000
Xxxxx, XX 00000
Attention: Xxx Xxxxxxxx
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
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9.5. Successors and Assigns. (a) The rights of either party under this
Agreement shall not be assignable by such party hereto without the written
consent of the other; provided that Buyer may assign any of its rights
hereunder, but no such assignment shall relieve it of its obligations hereunder.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. The successors
and permitted assigns hereunder shall include without limitation, in the case of
Buyer, any permitted assignee as well as the successors in interest to such
permitted assignee (whether by merger, liquidation (including successive mergers
or liquidations) or otherwise). Nothing in this Agreement, expressed or implied,
is intended or shall be construed to confer upon any Person other than the
parties and successors and assigns permitted by this Section 9.5 any right,
remedy or claim under or by reason of this Agreement.
9.6. Access to Records after Closing. For a period of six years after
the Closing Date, Seller and its representatives shall have reasonable access to
all of the books and records of Seller transferred to Buyer hereunder to the
extent that such access may reasonably be required by Seller in connection with
matters relating to or affected by the operations of Seller prior to the Closing
Date. Such access shall be afforded by Buyer upon receipt of reasonable advance
notice and during normal business hours. Seller shall be solely responsible for
any costs or expenses incurred by it pursuant to this Section 9.6. If Buyer
shall desire to dispose of any of such books and records prior to the expiration
of such six-year period, Buyer shall, prior to such disposition, give Seller a
reasonable opportunity, at Seller's expense, to segregate and remove such books
and records as Seller may select.
For a period of six years after the Closing Date, Buyer and its
representatives shall have reasonable access to all of the books and records
relating to the Business which Parent, Seller or any Shareholder or any of its
Affiliates may retain after the Closing Date. Such access shall be afforded by
Parent, Seller or any Shareholder and its Affiliates upon receipt of reasonable
advance notice and during normal business hours. Buyer shall be solely
responsible for any costs and expenses incurred by it pursuant to this Section
9.6. If Parent, Seller or any Shareholder or any of its Affiliates shall desire
to dispose of any of such books and records prior to the expiration of such
six-year period, Parent, Seller or such Shareholder shall, prior to such
disposition, give Buyer a reasonable opportunity, at Buyer's expense, to
segregate and remove such books and records as Buyer may select.
9.7. Entire Agreement; Amendments. This Agreement and the Exhibits and
Schedules referred to herein and the documents delivered pursuant hereto contain
the entire understanding of the parties hereto with regard to the subject matter
contained herein or therein, and supersede all prior agreements, understandings
or letters of intent between or among any of the parties hereto, including the
Letter of Intent. This Agreement shall not be amended, modified or supplemented
except by a written instrument signed by an authorized representative of each of
the parties hereto.
9.8. Interpretation. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or
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unenforceable in any respect, such provision shall be ineffective to the extent,
but only to the extent, of such invalidity, illegality or unenforceability
without invalidating the remainder of such invalid, illegal or unenforceable
provision or provisions or any other provisions hereof, unless such a
construction would be unreasonable.
9.9. Waivers. Any term or provision of this Agreement may be waived,
or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
9.10. Expenses. Each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with, including the fees, expenses and
disbursements of its counsel and accountants.
9.11. Execution in Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be considered an original instrument,
but all of which shall be considered one and the same agreement, and shall
become binding when one or more counterparts have been signed by each of the
parties hereto and delivered to each of Seller and Buyer.
9.12. Enforcement of Agreement. In the event of an action at law or in
equity between the parties hereto to enforce any of the provisions hereof, the
unsuccessful party to such litigation or proceeding shall pay to the successful
party all costs and expenses, including reasonable attorneys' fees, incurred
therein by such successful party on trial and appeal as adjudged by the court,
and if such successful party or parties shall recover judgment in any such
action or proceeding, such costs, expenses and attorneys' fees may be included
as part of such judgment.
9.13. Further Assurances. On the Closing Date Parent, Seller and each
Shareholder shall (i) deliver to Buyer such other bills of sale, deeds,
endorsements, assignments and other good and sufficient instruments of
conveyance and transfer, in form reasonably satisfactory to Buyer and its
counsel, as Buyer may reasonably request or as may be otherwise reasonably
necessary to vest in Buyer all the right, title and interest of Seller in, to or
under any or all of the Purchased Assets, and (ii) take all steps as may be
reasonably necessary to put Buyer in actual possession and control of all the
Purchased Assets. From time to time following the Closing, Parent, Seller and
each Shareholder shall execute and deliver, or cause to be executed and
delivered, to Buyer such other instruments of conveyance and transfer as Buyer
may reasonably request or as may be otherwise necessary to more effectively
convey and transfer to, and vest in, Buyer and put Buyer in possession of, any
part of the Purchased Assets, and, in the case of licenses, certificates,
approvals, authorizations, agreements, contracts, leases, easements and other
commitments included in the Purchased Assets (a) which cannot be transferred or
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assigned effectively without the consent of third parties which consent has not
been obtained prior to the Closing, to cooperate with Buyer at its request in
endeavoring to obtain such consent promptly, and if any such consent is
unobtainable, to use its best efforts to secure to Buyer the benefits thereof in
some other manner, or (b) which are otherwise not transferable or assignable, to
use its best efforts jointly with Buyer to secure to Buyer the benefits thereof
in some other manner (including the exercise of the rights of Seller
thereunder). Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any license, certificate,
approval, authorization, agreement, contract, lease, easement or other
commitment included in the Purchased Assets if an attempted assignment thereof
without the consent of a third party thereto would constitute a breach thereof.
9.14. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of Illinois.
9.15. Time is of the Essence. With respect to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
9.16. Offset. Any party hereto shall have the right to offset against
any payment obligation such party may have to any other party, any obligation
such other party may have to it, including without limitation any
indemnification obligation.
9.17. Submission to Jurisdiction. Parent, Seller, each Shareholder and
Buyer hereby irrevocably submit in any suit, action or proceeding arising out of
or related to this Agreement or any of the transactions contemplated hereby or
thereby to the jurisdiction of the United States District Court for the Northern
District of Illinois and the jurisdiction of any court of the State of Illinois
located in Chicago and waive any and all objections to jurisdiction that they
may have under the laws of the State of Illinois or the United States.
9.18. Dispute Resolution. Any dispute, controversy or claim (including
any dispute arising under Article VIII of this Agreement, but excluding any
dispute, controversy or claim as to Sections 3.2 and 3.4 which shall be resolved
as provided in such Sections), whether based on contract, tort, statute, fraud,
misrepresentation or any other legal theory (a "Dispute") between any Seller
Group Member, on the one hand, and any Buyer Group Member, on the other hand,
arising out of or relating to this Agreement, any obligations hereunder or the
relationship of the parties under this Agreement shall be resolved in accordance
with the procedures described in this Section and, if necessary, Section 9.19.
The parties hereto agree to establish an internal hierarchy to facilitate
resolution of these issues as set forth below:
(a) Upon written request of either Buyer, on the one hand, or
Parent, Seller or any such Shareholder, on the other hand, each will
appoint a designated representative whose task it will be to meet for the
purpose of endeavoring to resolve such Dispute.
(b) The designated representatives shall meet as often as the
parties reasonably deem necessary to discuss the Dispute in an effort to
resolve the Dispute without the necessity of any formal proceeding. During
the discussions, all reasonable requests by a party to another party for
non-privileged information reasonably related to
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the Dispute shall be honored in order that each party may be fully advised
of the other party's position.
(c) Formal proceedings for the resolution of a Dispute may not be
commenced until the earlier of:
(i) the designated representatives concluding in good faith that
amicable resolution through continued negotiation of the Dispute does not
appear likely; or
(ii) the expiration of the ten (10) day period immediately following
the initial request to negotiate the Dispute;
provided, however, that this Section 9.18 will not be construed to prevent a
party from instituting formal proceedings earlier to avoid the expiration of any
applicable limitations period, to preserve a superior position with respect to
other creditors or to seek temporary or preliminary injunctive relief pursuant
to Section 9.19(i) or Section 9.20.
9.19. Arbitration. If resolution of the Dispute still cannot be
achieved as contemplated by Section 9.18, the Dispute shall be settled by
binding arbitration conducted in Chicago, Illinois in accordance with the then
current Commercial Arbitration Rules of the American Arbitration Association
("AAA") as modified by the following provisions of this Agreement:
(a) If the amount in dispute exceeds $100,000, three neutral
arbitrators shall be selected by the parties from the AAA panel list in
accordance with the appointment rules of the AAA. If the amount in dispute
is less than $100,000, selection of one neutral arbitrator by the parties
shall be from the AAA panel list in accordance with appointment rules of
the AAA.
(b) The arbitration process shall be conducted on an expedited basis
by the regional office of the AAA located in Chicago, Illinois. Proceedings
in arbitration shall begin no later than thirty (30) days after the filing
of the Dispute with the AAA and shall be scheduled to conclude no later
than one-hundred eighty (180) days after the filing of the Dispute. All
hearings, unless otherwise agreed to by the parties, shall be held in
Chicago, Illinois.
(c) The arbitrator(s) may in his, her or their discretion order a
pre-hearing exchange of information, including, without limitation,
production of documents, exchange of summaries of testimony or exchange of
statements of position or depositions. The arbitrator(s) shall not be
authorized to place probative value on affidavits that are not supported by
other evidence unless the affidavit is made available for examination.
(d) The arbitration proceedings and all testimony, filings,
documents and information relating to or presented during the arbitration
proceedings shall be disclosed exclusively for the purpose of facilitating
the arbitration process and for no other purpose and shall be deemed to be
information subject to the confidentiality provisions of Section 9.2 of
this Agreement.
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(e) The award of the arbitrator(s) shall be made in a written
opinion containing a concise analysis of the basis upon which the award was
made.
(f) A judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
(g) The parties agree to equally split the cost of any arbitration,
including, without limitation, the administrative fee, the compensation of
the arbitrator(s) and the expenses of any witnesses or proof produced at
the direct request of the arbitrator(s).
(h) The parties shall each bear all their own costs and expenses,
irrespective of which party is the prevailing party in the arbitration.
(i) Notwithstanding the agreements contained in Sections 9.18 and
9.19, either party may apply to a court having jurisdiction to (i) enforce
this agreement to arbitrate, (ii) seek provisional injunctive relief so as
to maintain the status quo until the arbitration award is rendered or the
controversy is otherwise resolved, (iii) avoid the expiration of any
applicable limitations period, (iv) preserve a superior position with
respect to other creditors, or (v) challenge or vacate any final judgment,
award or decision of the arbitrator(s) that does not comport with the
express provisions of subparagraph (j) below.
(j) The arbitrator(s) are only authorized to, and only have the
consent of the parties to, interpret and apply the terms and conditions of
this Agreement in accordance with the governing law. The arbitrator(s) are
not authorized to, and shall not, order any remedy not permitted by this
Agreement and shall not change any term or condition of this Agreement,
deprive either party of any remedy expressly provided hereunder or provide
any right or remedy that has not been expressly provided hereunder. In the
event that the arbitrator(s) exceed their authority under this Agreement
and violate this provision, either party may petition a court of competent
jurisdiction to vacate the arbitration award on the grounds that the
arbitrator(s) exceeded their authority.
(k) The Federal Arbitration Act, 9 U.S.C. Sections 1 through 14 (as
amended and including any successor provision), except as modified hereby,
shall govern the interpretation and enforcement of this Section 9.19.
Notwithstanding the foregoing, Parent, Seller, each Shareholder and Buyer agree
to continue performing their respective obligations under this Agreement while
the Dispute is being resolved unless and until such obligations are terminated
or expire in accordance with the provisions hereof.
9.20. Judicial Procedure. Nothing in Sections 9.18 or 9.19 shall be
construed to prevent any party from seeking from a court of competent
jurisdiction a temporary restraining order or other temporary or preliminary
relief pending final resolution of a Dispute pursuant to such Section 9.18 or
9.19.
9.21. Seller Representative. Each of Parent, Seller and each of the
Shareholders hereby constitutes and appoints Xxxxxxxx Xxxxxxx, Jr. (the "Seller
Representative")
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as his, her or its representative, agent and attorney for and on his, her or its
behalf to (a) make any and all determinations and agreements and take or refrain
from taking any other actions for and on his, her or its behalf pursuant to this
Agreement or any Seller Ancillary Agreement including without limitation any
determinations, agreements or actions pursuant to Sections 3.2, 3.4, and 3.5, or
Article VII, (b) give and receive notices and communications, organize or assume
defense of third Person claims, agree to, negotiate, or enter into settlements
and compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to third Person claims including without
limitation pursuant to Article VIII and Sections 9.18 and 9.19 of this Agreement
and (c) take or refrain from taking any other actions specified in this
Agreement or any Seller Ancillary Agreement to be taken by Parent, Seller, any
Shareholder or the Seller Representative. Any decision, act, consent, agreement
or instruction of the Seller Representative shall constitute a decision, act,
consent, agreement or instruction of Parent, Seller and each Shareholder and
shall be final, binding and conclusive and Buyer may rely upon the same. This
power of attorney is coupled with an interest and shall be irrevocable. If
Xxxxxxxx Xxxxxxx, Jr. or any successor to him as Seller Representative dies or
is unwilling or unable to serve as Seller Representative, then within five (5)
days thereafter the Shareholders shall, by majority vote of the total number of
Shares then held by them, appoint a successor to act as the Seller
Representative and notify Buyer in writing of such appointment.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
NAVIGANT CONSULTING, INC.
By ___________________________________
Name:
Its:
HUNTER & ASSOCIATES MANAGEMENT
SERVICES, INC.
By ___________________________________
Xxxxxxxx Xxxxxxx, Jr.
President and COO
THG INVESTORS, INC.
By ___________________________________
Xxxxxxxx Xxxxxxx, Jr.
President
Each Shareholder who has signed a
Joinder in the form on the following
page
Shareholder Joinder and Signature Page
to
Asset Purchase Agreement,
among
Navigant Consulting, Inc.,
Hunter and Associates Management Services, Inc.,
and
THG Investors, Inc. and its Shareholders
As evidenced by execution and delivery of this Joinder and Signature
Page, the undersigned Shareholder, as the holder of the number of Shares that is
specified below of the common stock, par value $.01 per share, of THG Investors,
Inc., a Florida corporation ("Parent"), as an inducement to Navigant Consulting,
Inc., a Delaware corporation ("Buyer"), to purchase substantially all of the
assets of Hunter and Associates Management Services, Inc., a Delaware
corporation ("Seller"), which is a wholly owned subsidiary of Parent, and in
consideration for that portion of the purchase price to be paid to Seller that,
ultimately, will be distributed to Shareholder, hereby ratifies, approves and
joins in the Asset Purchase Agreement (the "Agreement") to which this Joinder
and Signature Page is attached. In connection therewith, the undersigned further
agrees that the undersigned will be subject to, and will be obligated for
indemnification under, the terms and conditions of the Agreement. The
undersigned further agrees to execute and deliver to Buyer any other document or
instrument reasonably requested by Buyer to facilitate Shareholder's joinder in
the Agreement.
IN WITNESS WHEREOF, Shareholder has executed this Joinder and Signature
Page to Asset Purchase Agreement as of the _____ day of September, 2002.
Sign: _____________________________
Print Name: _______________________
Address: _______________________
_______________________
_______________________
Number of Shares:
___________________________________