THIS PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of May __, 2021, by and among Anthony Cutting, a resident of Oregon (“Seller”), Olberding Chiropratic, LLC, a limited liability company (“Buyer”) and Active Chiropractic, LLC, an Oregon limited liability company (the “Company”).
W I T N E S S E T H:
WHEREAS, the Seller owns 100% of the limited liability company interests ( “LLC Interests”) of the Company”, which constitute all of the issued and outstanding limited liability company interests of the Company; and
WHEREAS, the Seller desires to sell to the Buyer, and the Buyer desires to purchase from the Seller, all of the LLC Interests, upon the terms and conditions set forth herein, subject to the exclusion of certain assets listed below.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE 1 – DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere herein, the terms below are defined as follows:
“Accounts Receivables” has the meaning set forth in Section 4.13(a).
“Accountants” has the meaning set forth in Section 2.4(a)(i).
“Action” means any claim, action, cause of action or suit (whether in contract, tort or otherwise), litigation (whether at law or in equity, whether civil or criminal), controversy, assessment, arbitration, investigation, hearing, charge, complaint, demand, notice or proceeding to, from, by or before any Governmental Authority.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with the first Person and, if such first Person is an individual, any member of the immediate family (including parents, spouse sibling and children, including any such relations that arise by adoption or marriage) of such individual and any trust whose principal beneficiary is such individual or one or more members of such individual’s immediate family, and any Person who is controlled by any such member or trust. For the purposes of this Agreement, “control,” when used with respect to any Person, means the possession, directly or indirectly, of the power to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or comparable positions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Agreement” means this Purchase Agreement and the schedules and exhibits hereto, including the Disclosure Schedules.
“Ancillary Agreements” means the Restrictive Covenant Agreement, the General Release, and all other instruments, certificates and other agreements to which the Seller may be a party in connection with the consummation of the transactions contemplated by this Agreement.
“Balance Sheet Date” means the balance sheet of the Seller dated .
“Books and Records” has the meaning set forth in Section 6.9.
“Business” means the business of providing commercial construction management services, including design-build program management, construction management-at-risk and general construction services.
“Buyer” has the meaning set forth in the preamble to this Agreement.
“Closing Certificate” has the meaning set forth in Section 2.2(b).
“Closing” has the meaning set forth in Section 3.1.
“Closing Date” has the meaning set forth in Section 3.1.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Company” has the meaning set forth in the recitals to this Agreement.
“LLC Interests” has the meaning set forth in the recitals to this Agreement.
“Contractual Obligation” means, with respect to any Person, any contract, agreement, promise, license, undertaking, arrangement, or obligation, whether written or oral and whether express or implied, to which or by which such Person is a party or otherwise subject or bound or to which or by which any property, business, operation or right of such Person is subject or bound.
“Current Balance Sheet” means the Company’s unaudited balance sheet as of the Balance Sheet Date.
“Damages” has the meaning set forth in Section8.2(a).
“Direct Claim” has the meaning set forth in Section 8.3(c).
“Dispute Notice” has the meaning set forth in Section 2.3(a).
“Employee Plans” has the meaning set forth in Section 4.11(a)(vii).
“Encumbrances” shall mean all liens, encumbrances, security interests, pledges, mortgages, deeds of trust, claims, rights of first refusal, options, charges, restrictions or conditions to transfer or assignment, liabilities, obligations, privileges, equities, easements, rights-of-way, limitations, reservations and any other restriction or covenant with respect to, or condition governing the use, construction, voting (in the case of any security or equity interest), transfer, receipt of income or exercise of any other attribute of ownership.
“Environmental Law” shall mean any and all applicable laws, rules, orders, regulations, statutes, ordinances, codes, decrees, and other legally enforceable requirements (including, without limitation, common law) of any Governmental Authority, regulating, relating to, or imposing environmental standards of conduct concerning protection of the environmental or human health, or employee health and safety as from time to time has been or is now in effect in any jurisdiction in which the Company has conducted business.
“Equipment” has the meaning set forth in Section 4.11(a)(ii).
“ERISA” has the meaning set forth in Section 4.23.
“ERISA Affiliate” means any entity, including but not limited to any corporation, partnership, limited liability company, sole proprietorship, or other legal entity that, together with the Company, is or at any time was, treated as a single employer under Sections 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA.
“Excluded Assets” has the Meaning in Section 2.1(b).
“Fundamental Representations” has the meaning set forth in Section 8.1.
“Governing Documents” has the meaning set forth in Section 4.1.
“Governmental Authority” means any domestic or foreign government or any regulatory agency, authority, bureau, commission, department, official or similar body or instrumentality of any government, or any governmental court, arbitral tribunal or other body administering alternative dispute resolution.
“Government Official” means any officer or employee of any non-U.S. Governmental Authority, or of any government-owned or government-controlled corporation or any public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, instrumentality, corporation or public international organization.
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any Governmental Authority in a judicial or administrative proceeding.
“Hazardous Materials” shall mean any substance that is subject to regulation under any Environmental Law, or has been designated or listed by any Governmental Authority or in or pursuant to any applicable Environmental Law to be radioactive, toxic, a pollutant or contaminant, hazardous or otherwise a danger to health or the environment, including PCBs, asbestos, oil, petroleum and petroleum products (including fractions thereof), urea-formaldehyde and all substances listed as hazardous substances pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or defined as a solid or hazardous waste pursuant to the Resource Conservation and Recovery Act of 1976, or regulated under the Occupational Safety and Health Act, or pursuant to analogous state Laws or regulations.
“Indemnified Party” has the meaning set forth in Section 8.2(b).
“Indemnifying Party” has the meaning set forth in Section 8.3(a).
“Intellectual Property” means the entire right, title and interest in and to all proprietary rights of every kind and nature anywhere, including all rights and interests pertaining to or deriving from: all trademarks, service marks, tradenames, product designations, logos, slogans, inventions, patents, trade secrets, copyrights, Trade Secrets, proprietary design or process, computer software and databases, Internet addresses or domain names (including any registrations or applications for registration or renewal of any of the foregoing), or any other similar type of proprietary intellectual property right; any and all registrations, applications, recordings, licenses, common-law rights and Contractual Obligations relating to any of the foregoing; and all Actions and rights to sue at law or in equity for any past, present or future infringement or other impairment of any of the foregoing, including the right to receive all proceeds and damages therefrom, and all rights to obtain renewals, continuations, divisions or other extensions of legal protections pertaining thereto.
“Knowledge of Seller,” “Seller’s Knowledge,” or any similar phrase regarding the knowledge, belief or understanding of the Seller means the knowledge of Seller after having made a reasonable investigation.
“Laws” has the meaning set forth in Section 4.4.
“Legal Requirement” means any federal, state, local or other administrative order, constitution, law, ordinance, regulation or statute.
“Liabilities” has the meaning set forth in Section 4.10.
“Material Adverse Effect” means any state of facts, change, development, event, effect, condition or occurrence individually or in the aggregate (i) that is materially adverse to the business, assets, liabilities, condition (financial or otherwise), results of operations or prospects of the Company or the Business; or (ii) that, directly or indirectly, prevents or materially impairs or delays the ability to perform the obligations hereunder or under any Ancillary Agreement.
“Permits” has the meaning set forth in Section 4.11(a)(x).
“Person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust or other entity or organization or Governmental Authority.
“Purchase Price” has the meaning set forth in Section 2.1(a).
“Reference Financial Statements” means, collectively, the (i) Current Balance Sheet; and (ii) the Unaudited Income Statements.
“Representative” means, with respect to any Person, any director, manager, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Seller” has the meaning set forth in preamble to this Agreement.
“Tax” or “Taxes” means any and all United States federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, escheat and unclaimed property, premium, windfall profits, environmental (including Taxes under Section 59A of the Code), custom duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not, including any obligation to indemnify or otherwise assume or succeed to the liability for Taxes of any other Person.
“Tax Return” means any return, declaration, designation, election, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Third-Party Claim” means any Action made or brought by any Person who or which is not an Indemnified Party under this Agreement.
“Unaudited Income Statements” means, collectively, the unaudited statements of income of the Company as of and for the periods ended and December 31, , and .
ARTICLE 2 – PURCHASE AND SALE
2.1 Purchase and Sale.
(a) Subject to the terms and conditions of this Agreement, at Closing, the Seller agrees to sell, assign, transfer, convey and deliver to the Buyer, free and clear of all Encumbrances, and the Buyer agrees to purchase and accept from the Seller, all of the LLC Interests, free and clear of all Encumbrances. In consideration of the sale of the LLC Interests, the Buyer shall pay to the Seller Twenty Nine Hundred Twenty-five Thousand Dollars ($925,000) (the “Purchase Price”). The sale of the LLC Interests will not include the assets listed and described in Section 2.1(b) below.
(b) All Assets of the LLC shall be purchased through this Agreement to the exclusion of the Seller’s cash and bank accounts, prepaid accounts, Accounts Receivable for services rendered in Practice by Seller before Closing, two vehicles, two computers, one desk from adjusting room, one Thuli adjusting table, one adjusting stool, Hypervolt, Zone slips, Zone posters, In-body machine, two telephones, one rowing machine, Barbells: 1: 45lb, 1: 35lb, 1: 15lb, Kettlebells: 1: 13lb, 1: 18lb, 1: 26lb, 1: 35lb, 1: 44lb, Bumper plates: 2: 2.5 lb, 2: 5lb, 4: 10lb, 2: 15lb, 2: 25lb, 2: 35lb, 2: 45lb, 4 barbell clamps, Dumbbells: 2: 10lb, 1: 15lb, 1 TRX strap set, 2 abmats, 1 squat sponge, 1 long foam roller, 4 resistance bands (one of each color), 1 box jump box, Med Balls: 1: 8lb, 1: 10lb, 1: 12lb, right to any utility and lease deposits or credits, and any other assets of the Practice not specified in Section 1 above (collectively, the “Excluded Assets”).
(c) At Closing the Buyer shall deliver to Seller the Purchase Price, by wire transfer of immediately available funds to one or more accounts designated in writing by the Seller.
(d) The parties agree that Buyer shall deposit a $9,000 refundable deposit, which was paid on , 2021, to be held in escrow Security 1st Title of Wichita, KS. The deposit will be applied to and reduce the Purchase Price accordingly.
ARTICLE 3 – CLOSING AND CLOSING DELIVERIES
3.1 Closing. The closing of the purchase and sale of the LLC Interests (the “Closing”) shall take place at the offices of at :00 a.m., Time, on the third (3rd) business day after all of the conditions to Closing set forth in Article 7 have been satisfied or waived. The date upon which the Closing occurs is herein called the “Closing Date.” The Closing shall be effective as of the close of business on the Closing Date. All deliveries by one party to any other party at the Closing shall be deemed to have occurred simultaneously and none shall be effective until and unless all have occurred. By agreement of the parties, the Closing may take place by delivery of documents required to be delivered hereby by facsimile or other electronic transmission.
3.2 Closing Deliveries of the Seller. At the Closing, the Seller shall deliver, or cause to be delivered, to the Buyer:
(i) an assignment agreement, dated as of the Closing Date, duly executed by the Seller, evidencing the assignment and transfer to the Buyer of the LLC Interests, free and clear of all Encumbrances and such other instruments of conveyance as the Buyer may reasonably request;
(ii) a Restrictive Covenant Agreement, on terms and conditions as mutually agreed upon by the Buyer and Seller (the “Restrictive Covenant Agreement”), duly executed by the Seller;
(iii) each other Ancillary Agreement required to be executed and delivered by the Seller or its Affiliates;
(iv) a certificate of a Manager or Secretary of the Company certifying as to the Company’s Governing Documents;
(v) original ownership documents, as applicable, for all Equipment owned by the Company (delivery of which shall be deemed satisfied if such original documents are included within the books and records of the Company located within the Company’s facilities at the Effective Time);
(vi) certificates of good standing of the Company in Oregon;
(vii) executed payoff letters, releases, discharges or other similar instruments providing for the repayment in full of all indebtedness of the Company and the release of all Encumbrances granted with respect thereto, together with all instruments, documents and UCC financing statements relating thereto;
(viii) evidence of the termination of all agreements between the Company, on the one hand, and the Seller or any of its Affiliates, on the other hand, and evidence of the payment or satisfaction of all Accounts Receivable owed by Seller to any Affiliate of Seller; and
(ix) such other documents, consents, instruments and agreements as may be reasonably required to consummate the transactions contemplated by this Agreement and the Ancillary Agreements or that are required by Law to transfer title to the LLC Interests contemplated hereby.
3.3 Closing Deliveries of the Buyer. At the Closing, the Buyer shall deliver, or cause to the delivered, to the Seller:
(i) the Purchase Price, by wire transfer of immediately available funds in accordance with Section 2.1;
(ii) each other Ancillary Agreement required to be executed and delivered by the Buyer or its Affiliates; and
(iii) such other documents, consents, instruments and agreements as may be reasonably required to consummate the transactions contemplated by this Agreement and the Ancillary Agreements.
3.4 Transition. Seller and Buyer agree to cooperate as reasonably requested by Buyer up to six months after Closing, to transition the business operations. This cooperation by Seller and Buyer includes, but is not limited to, (i) promptly responding to reasonable information requests from Buyer, (ii) signing any document reasonably necessary to carry out the terms of this Agreement, and (iii) encouraging any person (including employees) or entity currently doing business with Seller to continue doing business with Buyer.
ARTICLE 4 – REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller represents and warrants to the Buyer as follows:
4.1 Organization, Standing and Authority. The Company is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Oregon, has full limited liability company power and authority to carry on the Business as it has been historically conducted and as it is currently being conducted, and to own and operate the properties currently owned and operated by it. The Company is not qualified to do business in any other jurisdictions. True, correct and complete copies of the Articles of Organization and Limited Liability Company Agreement of the Company, in each case as amended to date (collectively, the “Governing Documents”), have been provided to the Buyer. The Company is not in default under or in violation of any provision of its Governing Documents.
4.2 Predecessors. There are no predecessor entities.
4.3 Names. The Company is operating as “Active Chriopractic” and the Company has no other names (i.e., “trading” or “doing business as” names) under which the Company is conducting the Business.
4.4 Agreement Authorized and its Effect on Other Obligations. Seller has the legal capacity and requisite power and authority to enter into, and perform its obligations under, this Agreement and each Ancillary Agreement to which the Seller is a party, and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and each Ancillary Agreement to which the Seller is a party have been duly and validly authorized by all necessary action, and no other action on the part of the Seller is necessary to authorize this Agreement or any Ancillary Agreement to which the Seller is a party or the consummation of the transactions contemplated hereby or thereby. This Agreement and each Ancillary Agreement to which the Seller is a party constitute valid and binding obligations of the Seller, enforceable against the Seller in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting enforcement of creditors’ rights generally and by general principles of equity (whether applied in a proceeding at law or in equity). For purposes of this Agreement, “Laws” shall mean any statute, law (including common law), constitution, treaty, ordinance, code, order, decree, judgment, rule, regulation and any other binding requirement or determination of any Governmental Authority.
4.5 Capitalization. The limited liability company interests of the Company consist of one class of common interests, all of which are issued and outstanding. All of the LLC Interests have been duly authorized and validly issued and are held beneficially and of record by the Seller. All of the LLC Interests were issued in compliance with applicable Laws, and none of the LLC Interests were issued in violation of any agreement, arrangement or commitment to which Seller or the Company is a party or is subject to or in violation of any preemptive or similar rights of any Person. The LLC Interests are the only outstanding equity securities of the Company. There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character (including conversion or preemptive rights and rights of first refusal and convertible debt instruments) relating to the equity securities of the Company or obligating Seller or the Company to issue or sell any limited liability company interests of, or any other interest in, the Company. The Company does not have outstanding or authorized any stock appreciation, phantom stock, profit participation or similar rights pursuant to
which any Person is or may be entitled to receive any payment or other value based on the revenues, earnings or financial performance or other attribute of the Company, its assets or the Business. None of the outstanding LLC Interests are subject to any voting trusts, voting agreement or other agreement or understanding with respect to the issuance, holding, acquisition, voting or disposition thereof, nor is any proxy in existence with respect thereto.
4.6 Ownership of the LLC Interests. The Seller holds good and valid title to the LLC Interests, free and clear of all Encumbrances. The Seller possesses full authority and legal right to sell, transfer and assign all of the LLC Interests to the Buyer, free and clear of all Encumbrances. Upon transfer to the Buyer by the Seller of the LLC Interests, the Buyer will own all of the LLC Interests free and clear of all Encumbrances. There are no claims pending or, to the Knowledge of the Seller, threatened, against the Company or the Seller that concern or affect title to the LLC Interests, or that seek to compel the issuance of LLC Interests or other securities of the Company and, to the Knowledge of the Seller, there is no basis for any such claim.
4.7 Non-Contravention; Consents.
(a) Except as set forth on Schedule 4.7, the execution and delivery by the Seller of this Agreement and each Ancillary Agreement to which the Seller is a party, and the performance by the Seller of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby do not and will not, directly or indirectly, (i) conflict with, or result in a breach or violation of, or default under, the Governing Documents, (ii) violate or conflict with any Law applicable to the Seller, the Company or the Business, (iii) require any filing or Permit, consent or approval of, or the giving of any notice to, any Person (including filings, consents or approvals required under any Permits of the Company or any licenses to which the Company is a party), (iv) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of the Company or to a loss of any benefit to which the Company is entitled under, any Contractual Obligation of the Company or the Seller or any license, franchise, Permit or other similar authorization held by the Company or held by the Seller with respect to the Business, (v) result in the creation or imposition of any Encumbrance on, or the forfeiture of, any asset of the Company or (vi) have a Material Adverse Effect on the Company or the conduct of the Business as currently conducted.
(b) Neither the execution, delivery and performance by the Seller of this Agreement or any Ancillary Agreement to which the Seller is a party, nor the consummation of the transactions contemplated hereby or thereby will, pursuant to a “change of control” provision, buy sell obligation, right of first offer or refusal, preferential purchase right or otherwise, (i) give rise to a default in or acceleration of any amount payable by, or give rise to any additional payment by or obligation of, the Company, or (ii) require the Company to redeem, repurchase, convert, exchange, offer for sale or sell any LLC Interests or other equity interest or any of its other assets or properties.
4.8 Subsidiaries. There is no Person in which the Company, either directly or indirectly through one or more intermediaries, owns or holds beneficial or record ownership of any equity interests, or any notes, obligations, instruments or other securities convertible into equity securities of, any other Person, and the Company does not have any obligation to acquire any such equity interests, notes, obligations, instruments or other securities.
4.9 Financial Statements.
(a) The Seller has made available to the Buyer the Reference Financial Statements. The Reference Financial Statements (i) have been prepared in accordance with the books and records of the Company, and (ii) fairly present the financial position of the Company at the date thereof and the results of the operations of the Company for the periods indicated. The Reference Financial Statements contain adequate reserves for the realization of all Assets and for all reasonably anticipated Liabilities. No financial statements of any other Person are required to be included in the Reference Financial Statements.
(b) The Company maintains books and records accurately reflecting in all material respects its assets and liabilities and maintains proper and adequate internal accounting controls that provide reasonable assurance that (i) transactions are executed with management’s authorization, (ii) transactions are recorded as necessary to permit preparation of the financial statements of the Company and to maintain accountability for the Company’s assets, (iii) access to the Company’s assets is permitted only in accordance with management’s authorization, (iv) the reporting of the Company’s assets is compared with existing assets at regular intervals and (v) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis. The Company makes and keeps books, records and accounts which, in reasonable detail, accurately and fairly reflect in all material respects actual bona fide transactions of the Company. The books of account (including financial records), minute books, ownership records and other records of the Company, copies of which have been made available to the Buyer, are complete and correct in all material respects, and have been maintained in accordance with sound business practices and applicable Law.
4.10 Undisclosed Liabilities. The Company does not have any liabilities or obligations of any kind, character or description, whether absolute or contingent, known or unknown, asserted or unasserted, accrued or unaccrued, executory, determined, determinable or otherwise (collectively, “Liabilities”), nor does the Seller have any knowledge of any potential Liabilities other than those (i) reflected or reserved against on the Current Balance Sheet, or (ii) incurred in the ordinary course of business since the Balance Sheet Date.
4.11 Additional Company Information.
(a) Attached as Schedule 4.11 hereto are true, complete and correct lists of the following items, in each case as of the date hereof:
(i) Real Estate. All real property and structures thereon owned, leased or subject to a contract of purchase and sale, or lease commitment, by the Company with a description of the nature and amount of any Encumbrances on the owned real property and structures thereon;
(ii) Equipment. All machinery, transportation equipment, tools, equipment, furnishings, and fixtures (collectively, “Equipment”) owned, leased or subject to a contract of purchase and sale, or lease commitment, by the Company that is material to the Business with a description of the nature and amount of any Encumbrances thereon;
(iii) Receivables. All Accounts Receivable of the Company, together with (A) aging schedules by invoice date and due date, (B) the amounts provided for as an allowance for bad debts, (C) the identity and location of any asset in which the Company holds a security interest to secure payment of the underlying indebtedness, and (D) a description of the nature and amount of any Encumbrances on such accounts and notes receivable;
(iv) Payables. All accounts, notes and contracts payables of the Company, together with an appropriate aging schedule as of the date hereof;
(v) Insurance. All insurance policies or bonds currently maintained by the Company with respect to the Company or the Business, as well as listing of any premiums, deductibles or retroactive adjustments due or pending on such policies or any predecessor policies and the name of the insurer of each such policy;
(vi) Contracts. All Contractual Obligations of the Company that are to be performed in whole or in part after the date hereof;
(vii) Employee Compensation Plans. All employee benefit plans (within the meaning of Section 3(3) of ERISA, including multiemployer plans within the meaning of Section 3(37) of ERISA) and all bonus, incentive compensation, deferred compensation, profit-sharing, retirement, pension, employee stock ownership, welfare, group insurance, death benefit, or other employee benefit or fringe benefit plans, arrangements or trust agreements, programs, policies or other arrangements, whether or not subject to ERISA (and all related insurance contracts or other funding agreements) sponsored, maintained or contributed to by the Company (or sponsored, maintained or contributed at any time prior to the Closing Date), or with respect to which the Company has had, has or may have any actual or contingent present or future liability or obligation, together with a list of the most recent reports with respect to such plans, arrangements, or trust agreements filed with any Governmental Authority and all IRS determination letters and other correspondence from Governmental Authorities that have been received with respect to such plans, arrangements or agreements (collectively, “Employee Plans”);
(viii) Salaries. The names, and salary rates of all present employees of the Company, and, to the extent existing on the date of this Agreement, all arrangements with respect to any bonuses to be paid to them from and after the date of this Agreement;
(ix) Employee Agreements. Any collective bargaining agreements of the Company with any labor union or other representative of employees, including amendments, supplements, and written or oral understandings, and all employment, consulting, change of control and severance agreements of the Company;
(x) Licenses and Permits. All permits, authorizations, certificates, approvals, registrations, variances, waivers, exemptions, rights-of-way, franchises, ordinances, and other rights of every kind and character (collectively, the “Permits”) of the Company under which it conducts the Business;
(xi) Guaranties. All indebtedness, liabilities and commitments of others and as to which the Company is a guarantor, endorser, co-maker, surety, or accommodation maker, or is contingently liable therefore and all letters of credit, whether stand-by or documentary, issued by any third party; and
(xii) Environmental. All environmental audits, assessments, investigations and reviews conducted by the Company within the last five (5) years or otherwise in the Company’s possession on any property owned, leased or used by the Company.
4.12 Contractual Obligations. Each Contractual Obligation of the Company that is to be performed in whole or in part after the date hereof is in full force and effect, and constitutes a valid and binding obligation of the Company and (as of the date on which such other parties entered into such Contractual Obligation) the other parties thereto, enforceable against the Company and (as of the date on which such other parties entered into such Contractual Obligation) the other parties thereto, in accordance with their respective terms. Except as set forth on Schedule 4.12, the Company is not and, to the knowledge of the Seller, no other party to any such Contractual Obligation is in breach or violation of, or default under, or has repudiated any provision of, such Contractual Obligation, and no event has occurred which (with notice, lapse of time, or the happening of any other event) would constitute a breach or violation thereof, or default thereunder, other than defaults which individually or in the aggregate, would not have, or reasonably be expected to have, a Material Adverse Effect. Neither the Company nor Seller has received notice from any other party to any Contractual Obligation of the Company that such party intends to terminate such Contractual Obligation or alter in any way the relationship of the parties under such Contractual Obligation.
4.13 Accounts Receivable. All of the accounts and notes receivable of the Company (the “Accounts Receivable”), reflected on the Current Balance Sheet (net of any applicable reserves set forth on the Current Balance Sheet) and all Accounts Receivable which have arisen since the Balance Sheet Date (net of any additional applicable reserves established since such date in the ordinary course of business of the Company), are valid and enforceable claims, and the goods and services sold and delivered which gave rise to such Accounts Receivable were sold and delivered in the ordinary course of business consistent with past practice. Such Accounts Receivable are subject to no defenses, offsets or recovery in whole or in part by the Persons whose purchase gave rise to such Accounts Receivable or by third parties and are fully collectible in accordance with the Company’s past practices without resort to legal proceedings, except to the extent of the amount of the reserve for doubtful accounts reflected on the Current Balance Sheet or as set forth on Schedule 4.13. The Current Balance Sheet does not contain any receivables, including any Accounts Receivable, from any of the Seller, any affiliate of the Seller or any employee of the Company.
4.14 Insurance Coverage. There is no material claim by the Company pending under any insurance policy or bond as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds, except as set forth on Schedule 4.14. All premiums due and payable under all such policies and bonds have been paid and the Company has complied with the terms and conditions of all such policies and bonds. Such policies of insurance and bonds (or other policies and bonds providing substantially similar insurance coverage) are in full force and effect. The Seller has no knowledge of any threatened termination of, or premium increase with respect to, any of such policies or bonds, other than in accordance with their terms and as set forth on Schedule 4.14. Since the last renewal date of any insurance policy, there has not been any change in the Company’s relationship with its insurers that would reasonably be expected to have a Material Adverse Effect.
4.15 Absence of Certain Changes and Events. Except as disclosed on Schedule 4.15 hereto, since the Balance Sheet Date, the Company has conducted the Business in the ordinary course of business consistent with past practice and there has not been any event, occurrence, development or circumstance which has had or which could reasonably be expected to have, a Material Adverse Effect. Since the Balance Sheet Date (i) there has not occurred any damage, destruction or casualty loss (whether or not covered by insurance) with respect to any material asset owned or operated by the Company, (ii) the Company has not sold, leased, licensed, transferred or otherwise disposed of any of its assets, except inventory in the ordinary course of business consistent with past practice, (iii) the Company has not made or committed to make any capital expenditure; (iv) Company has not (A) made any declaration, setting aside or payment of any dividend or other distribution with respect to, or any repurchase, redemption or other acquisition of, the LLC Interests or any other equity security of the Company or (B) entered into, or performed, any transaction with, or for the benefit of the Seller or any Affiliate of any Seller; (v) the Company has not materially changed any cash management practices or policies (including without limitation, the timing of collection of receivables and payment of payables and other current liabilities) or made any material changes in the maintenance of its books and records; (vi) no employee of the Company has been terminated or resigned from the Company, and (vii) the Company has not increased the compensation payable or paid, whether conditionally or otherwise, to any employee, consultant, independent contractor or agent of the Company other than in the ordinary course of business consistent with past practice.
(a) The Company has timely filed, or caused to be filed, all federal, state and local Tax Returns (including any Tax Returns required to be filed by an affiliated, consolidated, combined, unitary or similar group of which the Company is or was a member) required to be filed by or with respect to the Company or with respect to its assets or operations (or appropriate extensions requested) with the appropriate Governmental Authorities, for each period for which any such returns, reports, or estimates were due (taking into account any extensions of time to file before the date hereof); all such Tax Returns are materially true and correct. The Company and each of its subsidiaries has timely paid all Taxes required to be paid by it; and the Tax provision reflected on the Current Balance Sheet is, in the Company’s reasonable opinion, adequate, in accordance with generally acceptable accounting principles, to cover liabilities of the Company at the date thereof for all Taxes, including, but not limited to, interest and penalties, and additions to Taxes of any character whatsoever applicable to the Company, its assets or the Business. No waiver of any statute of limitations executed by the Company or any of its subsidiaries with respect to any income or other Tax is in effect for any period. The income Tax Returns of the Company have not been audited by the taxing authorities in any of the jurisdictions in which they have been filed. There are no Tax liens on any assets of the Company except for Taxes not yet currently due.
(b) No deficiencies for Taxes against the Company have been claimed, proposed or assessed by any Tax Authority that has not been finally resolved. There are no currently ongoing, pending or, to the Sellers’ Knowledge, threatened audits, assessments or other actions for or relating to any liability in respect of Taxes of the Company or any of its subsidiaries, except as set forth on Schedule 4.16. The Company has delivered or made available to Buyer complete and accurate copies of state income and material local Tax Returns of the Company for all Tax years ending on or after December 31, 2010 including pro forma federal returns of the Company and its Subsidiaries from the Seller’s Tax Returns, and a list of states where the Company is included in the consolidated state tax returns of the ultimate parent of the Company.
(c) The Company is not a party to or bound by or has any obligation under any Tax-sharing agreements or similar arrangements (including indemnity arrangements) or any Contractual Obligation to indemnify any Person with respect to Taxes.
(d) The Company has not been a member of an affiliated group filing a consolidated federal income Tax Return other than as set forth on Schedule 4.16. The Company has no material liability for the Taxes of any Person (i) under Treasury regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), (ii) as a transferee or successor, (iii) by contract, or (iv) otherwise.
(e) The Company (i) has not agreed to or is required to make any adjustment pursuant to Section 481 of the Code or any similar provision of state, local or foreign law, and (ii) has no liability under any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local, or non-U.S. income Tax law) executed on or prior to the Closing Date.
(f) The Company has not engaged in any transaction or taken a position that requires any disclosure on any Tax Return that constitutes a reportable transaction within the meaning of Treasury Regulations Section 1.6011-4.
(g) No taxing authority is asserting or, to the Seller’s Knowledge, threatening to assert a claim against the Company under or as a result of Section 482 of the Code or any similar provision of any foreign, state or local Tax law.
(h) The Company has withheld each Tax required to have been withheld under applicable Law and, to the extent required, has paid such Tax to the appropriate Governmental Authority.
4.17 Intellectual Property.
(a) Schedule 4.17 lists (i) all patents, registrations and pending applications for Intellectual Property owned by the Company, (ii) all Intellectual Property that is licensed to the Company and the applicable Contractual Obligation for same (other than “off-the-shelf” software that has a license purchase price of $5,000 or less and is not material to the Business as currently conducted or as currently contemplated to be conducted in the future); and (iii) all material unregistered Intellectual Property owned by the Company. The Company does not own or use any trade secrets. The Intellectual Property owned or licensed to the Company constitutes all Intellectual Property that is necessary for the conduct of the Business as currently conducted and as currently reasonably contemplated to be conducted in the twenty-four month period following the Closing.
(b) The Company exclusively owns all rights, title and interest in, or possesses all necessary licenses or otherwise has valid and enforceable rights to use all Intellectual Property used or held for use in connection with the Business as currently being conducted free and clear of any Encumbrance, and there are no assertions or claims challenging the Company’s ownership or rights to use, or the validity or enforceability of any of the foregoing, nor is there any basis for any such assertion or claim. The Company has not, whether through its employees or any independent contractor, developed or caused to be developed any Intellectual Property. The Company has not granted any licenses with respect to any Intellectual Property to any third party.
(c) Neither the use of any Company Intellectual Property nor the conduct of the Business as currently conducted infringes or otherwise violates any Intellectual Property rights of others. There is no infringement of any Intellectual Property right owned by or licensed by or to the Company. There have been no past claims or proceedings and there currently are no claims or proceedings involving the Company relating to Intellectual Property.
(d) The consummation of the transactions contemplated herein will not result in any reduction, loss, impediment or other adverse effect with respect to the Company’s ownership and rights with respect to any Intellectual Property.
[(e) Except as set forth on Schedule 4.17, all the computer systems, including the software, firmware, hardware, networks, interfaces, platforms and related systems owned or used by the Company (collectively, the “Company Systems”): (i) are in satisfactory working order and are scalable to meet current and reasonably anticipated capacity, including the ability to process current and anticipated peak volumes in a timely manner; (ii) have appropriate security, backups, disaster recovery arrangements, source code escrow arrangements and hardware and software support and maintenance to minimize the risk of material error, breakdown, failure or security breach occurring and to ensure if such event does occur it does not cause a material disruption to any portion of the Business; (iii) are configured and maintained to minimize the effects of viruses and, to the knowledge of the Company, do not contain viruses, Trojan horses, back doors or other malicious code; and (iv) have not suffered any failures, breakdowns, continued substandard performance or other adverse events that have caused or could reasonably be expected to result in the substantial disruption or interruption in or to the use of the Company Systems and/or the conduct of the Business.]
4.18 Assets; Properties, Sufficiency of Assets.
(a) The Company owns no real property. The Company has good, indefeasible and marketable title to, or, in the case of property held under a lease or other Contractual Obligation, a sole and exclusive, enforceable leasehold interest in, or right to use, all its properties, interests in properties and assets, real and personal, including without limitation all assets that are reflected on the Current Balance Sheet or that have been acquired after the Balance Sheet Date, in each case free and clear of any Encumbrance of any nature whatsoever, except Encumbrances reflected on the Current Balance Sheet. All leases pursuant to which the Company leases (whether as lessee or lessor) any personal property are in good standing, valid, and effective, and there is not, under any such leases, any existing default or event of default, or event that with notice or lapse of time, or both, would constitute a default by the Company and in respect to which the Company has not taken commercially reasonable steps to prevent a default from occurring. The Company has not violated any applicable Law relating to any such assets, nor has any notice of such violation been received by the Company except such as have been fully complied with.
(b) The owned and leased properties and assets described in this Section 4.18 and scheduled on Schedule 4.11 are in good operating condition and in a state of good maintenance and repair, ordinary wear and tear excepted; except as set forth on Schedule 4.18, constitute all of the material property, rights and assets used or held for use by the Company in the conduct of the Business consistent with past practice; are adequate and suitable for their present and intended uses; are in the possession and control of the Company. Except as set forth on Schedule 4.18, the assets and properties of the Company as of the date of this Agreement constitute, and as of the Closing Date will constitute, all of the assets and properties necessary to conduct the Business consistent with past practice and as currently conducted in all material respects.
4.19 Licenses and Permits. Except as set forth on Schedule 4.19, the Company possesses all Permits (other than where the failure to possess a permit would not have, or reasonably be expected to have, a Material Adverse Effect) required by Law for the Company to conduct the Business of the Company as has historically been conducted and as currently conducted and to construct, own, operate, maintain and use its assets in the manner in which they have been historically and as currently are constructed, operated, maintained and used. Each of the Permits and the Company’s rights with respect thereto is valid, subsisting and in full force and effect, and enforceable by the Company subject to administrative powers of regulatory agencies having jurisdiction. Except as set forth on Schedule 4.19, the Company is not in default under, and no condition exists that with notice or lapse of time or both could constitute a default or could give rise to a right of termination, cancellation or acceleration under, any Permit held by the Company. None of the Permits have been, or to the knowledge of the Seller, is threatened to be, revoked, canceled, suspended or modified.
4.20 Environmental Compliance. There are no environmental conditions or circumstances, including underground storage tanks, on any property or facility presently or previously owned or operated by the Company including, without limitation, the presence or release of any Hazardous Materials, on any property presently or previously owned, leased or operated by the Company, or on any property to which any Hazardous Materials or waste generated by the Company’s operations or its use of its assets was disposed of, which would constitute a violation of Environmental Law and would have a Material Adverse Effect on the business or business prospects of the Company. Each Company holds all permits, required pursuant to any Environmental Law, necessary for the conduct of any Hazardous Materials activities and other similar businesses operated by the Company, or operated on any property presently owned, leased, or operated by the Company (“Environmental Permits”). All fees required to be paid in connection with Environmental Permits have been paid and the Environmental Permits are valid and in full force and effect and no Governmental Authority intends to modify, cancel, terminate, or not renew any Environmental Permit.
4.21 Compliance with Laws. Except as disclosed on Schedule 4.21, (a) the Company is, and at all times since has been, in compliance in all material respects with each Legal Requirement that is or was applicable to it or the conduct or operation of the Business or the ownership or use of any of its assets, (b) no event has occurred or circumstance exists that (i) may constitute or result in a violation by the Company of, or a failure on the part of the Company to comply with, any Legal Requirement, or (ii) is reasonably likely to give rise to any obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature, and (c) the Company has not received, at any time since , any notice or other communication from any Governmental Authority regarding (i) any actual or alleged violation of, or failure to comply with, any Legal Requirement, or (ii) any actual or alleged obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature.
4.22 ERISA Plans and Non-ERISA Plans or Labor Issues. Except as set forth on Schedule 4.11, there are no Employee Plans or any employee benefit plan that is subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), in which any of the Company’s employees are or were participants (whether on an active or frozen basis) and which are contributed to, sponsored by or maintained by the Company. Each Employee Plan set forth on Schedule 4.11 currently complies in all material respects, and has complied in all material respects in the past, in form and operation, with the applicable provisions of ERISA, the IRS and other applicable Laws, including, without limitation, all qualification and reporting and disclosure requirements of the Code and ERISA. Each Employee Plan that is an employee pension benefit plan (as described in Section 3(2) of ERISA) (i) meets, and has met, in all respects, the requirements of a “qualified plan” under Section 401(a) of the Code whose income is exempt from taxation under Section 501(a) of the Code, (ii) has received a currently effective favorable determination letter from the IRS and (iii) nothing has occurred since the date of such determination letter that could adversely affect such qualification. No event has occurred and no condition exists that would subject the Company, to any Liability imposed by ERISA. All contributions required to be made to each Employee Plan under the terms of such Employee Plan, ERISA or other applicable Law have been timely made and there are no delinquent contributions as of the Closing Date. None of the Employee Plans (i) is a “multiemployer plan” (as defined in Section 3(37) of ERISA), (ii) is a defined benefit pension plan subject to Title IV of ERISA, (iii) is subject to the funding standards of Section 302 of ERISA or Section 412 of the Code, (iv) is a multiple employer plan (within the meaning of Section 413(c) of the Code), (v) is a “voluntary employees’ beneficiary association” within the meaning of Code Section 501(c)(9), (vi) is a “multiple employer welfare arrangement” (within the meaning of Section 3(40)(A) of ERISA), or (vii) provides for medical or other insurance benefits to current or future retired employees or former employees of the Company (other than as required for group health plan continuation coverage under Code Section 4980B or applicable state Law), or (vii) exists that, solely as a result of the consummation of the transactions contemplated by this Agreement, could result in payments under any Employee Plan which would not be deductible under Section 280G of the Code. During the six years preceding the Closing Date, (i) no under-funded pension plan subject to Section 412 of the Code has been transferred out of the Company, (ii) the Company has not participated in or contributed to, or had an obligation to contribute to, any multiemployer plan and has no withdrawal liability with respect to any multiemployer plan, and (iii) the Company has not maintained any pension plan subject to Title IV of ERISA. There are no material claims, lawsuits or regulatory actions that have been asserted, instituted or threatened against any Employee Plan by any fiduciary or participant of such plan, except routine claims for benefits thereunder, or by any Governmental Authority. Each Employee Plan that is an “employee welfare benefit plan,” as such term is defined in Section 3(1) of ERISA, may be unilaterally amended or terminated in its entirety without liability except as to benefits accrued thereunder prior to such amendment or termination.
(a) Except as set forth on Schedule 4.23, no present or past employee of the Company is bound to the Company by any non-competition, non-solicitation agreement or any other restrictive covenant. Except as set forth on Schedule 4.23, the Company is not a party to any Contractual Obligation with any current employee or former employee, officer, director, consultant or individual independent contractor.
(b) The Company is not a party to, or bound by, any collective bargaining agreement or similar contract, agreement or understanding with a labor union or similar labor organization. As of the date of this Agreement, to the Seller’s knowledge, there are no organizational efforts with respect to the formation of a collective bargaining unit presently being made or threatened.
(c) The Company has not received any written complaint of any unfair labor practice or other unlawful employment practice or any written notice of any material violation of any federal, state or local statutes, laws, ordinances, rules, regulations, orders or directives with respect to the employment of individuals by, or the employment practices of, the Company or the work conditions or the terms and conditions of employment and wages and hours of the Business. There are no unfair labor practice charges or other employee-related complaints against the Company pending or, to the knowledge of the Seller, threatened, before any Governmental Authority by or concerning the employees working in the Business.
(d) To the Sellers’ Knowledge, all employees of the Company are authorized to work in the United States. A Form I-9 has been properly completed and retained with respect to each employee or former employee as required by applicable Law.
(e) The Company is not delinquent in payments to any of its employees or consultants for any wages, salaries, overtime pay, commissions, bonuses, vacation pay, sick pay, severance and termination pay, benefits or other Compensation for any services or otherwise arising under any policy, practice, Contractual Obligation, plan, program or Legal Requirement.
4.24 Investigations; Litigation. No investigation or review by any Governmental Authority with respect to the Company or any of the transactions contemplated by this Agreement and any Ancillary Agreement is pending or, to the knowledge of the Seller, threatened, and no Governmental Authority has indicated to the Company or the Seller that it intends to conduct the same. Except as set forth on Schedule 4.24, there is no Action pending or, to the knowledge of the Seller, threatened by or against the Company, or affecting the Company or any of its properties or assets, at law or in equity, or before any Governmental Authority, that either individually or in the aggregate, does or is likely to result in a Material Adverse Effect on the Company. There is no Action pending or, to the knowledge of the Seller, threatened against or by the Company, Seller or any Affiliate of Seller that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. Except as set forth on Schedule 4.24, to the Knowledge of Seller, no event has occurred or circumstances exist that are reasonably expected to give rise to, or serve as a basis for, any Action described in this paragraph.
4.25 Leased Real Property. Schedule 4.25 describes each leasehold interest in real property leased, subleased by, licensed or with respect to which a right to use or occupy has been granted to or by the Company including the addresses thereof (such leased real property is referred to as the “Real Property”), and specifies the lessor(s) of such Real Property, and identifies each lease or any other Contractual Obligation under which such Real Property is leased by the Company (the “Real Property Leases”). Except as described on Schedule 4.25 there are no written or oral subleases, licenses, concessions, occupancy agreements or other Contractual Obligations granting to any other Person the right of use or occupancy of the Real Property, and there is no Person (other than the Company and/or any lessee(s) of the Real Property specifically identified on Schedule 4.25) in possession of the Real Property.
4.26 Anti-Corruption. No gifts, bribes, kickbacks or other payments, whether in money, property or services, have been made in violation of applicable Laws by the Company or any Representative of the Company in connection with the conduct of the Business, and neither the Company nor any Representative of the Company has received any such payments from vendors, suppliers or other persons.
4.27 Transactions with Affiliates. Except as set forth on Schedule 4.27, to the Knowledge of Seller, no current officer, employee, consultant, director, or Affiliate of Seller or the Company (a) owns, directly or indirectly, in whole or in part, any property, asset or right, real, personal or mixed, tangible or intangible, including any Intellectual Property, used in the conduct of the Business; (b) has an interest in or is, directly or indirectly, a party to any Contractual Obligation to which the Company is a party; or (c) has any cause of action or claim whatsoever against, or owes any amount to the Company or the Subsidiary.
4.28 Finder’s Fee; Broker. Except for Avontuur, Inc (DBA “Progressive Practice Sales”) and Crystal Misenheimer, which are under contract with Seller and the Company and not the Buyer, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of the Company or the Seller who might be entitled to any fee or other commission in connection with the transactions contemplated by this Agreement or any Ancillary Agreement.
ARTICLE 5 – REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Seller as follows:
5.1 Organization and Good Standing. The Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Oregon, has full requisite corporate power and authority to carry on its business as it is currently conducted, and to own and operate the properties currently owned and operated by it.
5.2 Agreement Authorized and its Effect on Other Obligations. The Buyer has the legal capacity and requisite power and authority to enter into, and perform its obligations under, this Agreement and each Ancillary Agreement to which it is a party, and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and each Ancillary Agreement to which it is a party has been duly and validly authorized by all necessary corporate action, and no other action on the part of the Buyer is necessary to authorize this Agreement or any Ancillary Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby. This Agreement and each Ancillary Agreement constitute valid and binding obligations of the Buyer enforceable against the Buyer in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting enforcement of creditors’ rights generally and by general principles of equity (whether applied in a proceeding at law or in equity).
5.3 Non-Contravention; Consents. The execution and delivery by the Buyer of this Agreement and each Ancillary Agreement to which it is a party, and the performance by the Buyer of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby do not and will not, directly or indirectly, (a) conflict with, or result in a breach or violation of, or default under, the Buyer’s limited liability company agreement, (b) violate or conflict with any Law applicable to Buyer, (c) require any filing or Permit, consent or approval of, or the giving of any notice to, any Person (including filings, consents or approvals required under any Permits of the Buyer or any licenses to which the Buyer is a party), or (d) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of the Buyer or to a loss of any benefit to which the Buyer is entitled under, any contract, agreement or other instrument binding upon the Buyer or any license, franchise, Permit or other similar authorization held by the Buyer.
5.4 Finder’s Fee. There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of the Buyer who might be entitled to any fee or other commission in connection with the transactions contemplated by this Agreement or any Ancillary Agreement.
ARTICLE 6 – CERTAIN COVENANTS
6.1 Collection of Payments. The Seller authorizes and empowers the Company, the Buyer and their Affiliates and Representatives from and after the Closing Date (a) to receive and open mail addressed to the Seller and (b) to deal with the contents thereof in any manner any such Person sees fit, provided such mail and the contents thereof relate to the Company or otherwise to the Business for periods following the Closing (and, solely with respect to matters for which Buyer could have liability in accordance with the provisions of this Agreement, for periods prior to the Closing so long as copies thereof are promptly provided to Seller). Following the Closing, the Seller will promptly, and in no event later than ten (10) business days following receipt thereof, forward to the Buyer any mail or other communications received by the Seller relating to the Business. The Buyer agrees to deliver, or cause the Company to deliver, to the Seller mail which the Company receives which is not related to the Company or the Business, whether addressed to Seller or reasonably appearing to relate to the Seller or to its business.
6.2 Conduct of Business Pending Closing.
(a) From the date of this Agreement until the Closing, the Company shall:
(i) carry on its Business in the ordinary course of business consistent with past practice and not introduce any new method of management, operation, or accounting which is material to the Company;
(ii) maintain its properties and facilities, including those held under leases, in as good working order and condition as at present, ordinary wear and tear excepted;
(iii) keep in full force comparable and effect, without interruption, all of its present insurance policies or other insurance coverage;
(iv) report periodically to the Buyer concerning the status of the Business of the Company;
(v) use reasonable best efforts to (x) maintain and preserve its business organization, business and franchise intact; (y) retain its present employees; and (z) maintain its relationship with its suppliers, subcontractors, customers and others having business relationships with it; and
(vi) comply with all applicable Laws.
(b) From the date of this Agreement until the Closing, without the written consent of the Buyer or as contemplated under this Agreement, the Company will not and will cause its Subsidiaries not to, and the Seller will cause the Company and its Subsidiaries not to:
(i) make any changes in the Company’s or any Subsidiary’s Governing Documents;
(ii) issue any of LLC Interests or other equity securities or issue or otherwise create any securities convertible into LLC Interests or other equity securities;
(iii) split, combine or reclassify any of its equity securities;
(iv) make any dividend or other distribution (whether or not in cash), except with respect to the Excluded Assets;
(v) make any investments in the securities or indebtedness of any Person;
(vi) enter into any contract or commitment, or incur or agree to incur any liability or make any capital expenditures in a single transaction or a series of related transactions, involving an aggregate amount of more than $500 other than in the ordinary course of its business and consistent with its past practice; provided however, that the Company may not enter into any customer or project-related contract if such customer is not an existing customer (unless such customer is an Affiliate of an existing customer and such contract is on substantially similar terms as those entered into by the Company in the ordinary course of its business) of the Company as of the date hereof;
(vii) increase or commit or promise to increase the compensation payable or to become payable to any officer, director, unitholder, member, manager, employee or agent, consultant or independent contractor of the Company or make any discretionary bonus or management fee payment to any such Person;
(viii) create or assume any Encumbrances upon any of its assets or properties, whether now owned or hereafter acquired;
(ix) adopt, establish, amend or terminate any Employee Plan or any other compensation plan or employee policies and procedures, or take any discretionary action, or omit to take any contractually required action under or with respect to any Employee Plan;
(x) sell, assign, lease or otherwise transfer or dispose of any of its owned or leased property, plant or equipment otherwise than in the ordinary course of its business and consistent with its past practice;
(xi) negotiate for the acquisition of any business or the start-up of any new business;
(xii) merge, consolidate or effect an exchange for securities with, or agree to merge, consolidate or effect an exchange for securities with, any other Person;
(xiii) waive any of its material rights or claims; provided, however, that it may negotiate and adjust bills in the course of good faith disputes with customers in a manner consistent with past practice;
(xiv) commit a material breach of or amend materially, terminate or fail to timely renew any Contract or any of its Permits;
(xv) threaten, commence, pay, discharge, settle or satisfy any Action, except that the Company may pay, discharge, settle or satisfy any bona fide Action;
(xvi) enter into any collective bargaining agreement or union contract with any labor organization or union;
(xvii) accelerate or defer any material obligation or payment by the Company or any of its Subsidiaries, or not pay any accounts payable or other obligation of the Company or any of its Subsidiaries when due, unless contested in good faith with full and complete appropriate reserves provided in the relevant books and records of the Company and its Subsidiaries;
(xviii) decrease or defer in any material respect, any required maintenance, repair or replacement of any property, plant or equipment or the level of costs expended in connection therewith;
(xix) fail to maintain insurance at levels at least comparable to current levels or otherwise in a manner inconsistent with past practice;
(xx) enter into any other transaction (A) outside the ordinary course of its business or inconsistent with its past practice or (B) prohibited hereby; or
(xxi) authorize or enter into a Contractual Obligation to do any of the foregoing.
(c) From the date of this Agreement until the Closing, without the written consent of the Buyer or as contemplated under this Agreement, the Seller will not:
(i) sell, lease, pledge, or otherwise transfer, dispose of or otherwise encumber or subject (or allow to become subject) to any Encumbrance any of the LLC Interests;
(ii) except as required to comply with applicable Tax Laws, make, revoke, amend or change any election in respect of Taxes, file any amendment to a Tax Return, settle any claim or assessment in respect of Taxes, or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes; or
(iii) authorize or enter into a Contractual Obligation to do any of the foregoing.
6.6 Access and Cooperation. From the date of this Agreement until the Closing, Seller shall, and shall cause the Company to: (i) afford to the Representatives of the Buyer reasonable access to the managers and executives of the Company and employees, (ii) provide the Buyer with such additional financial and operating data and other information relating to the Business and properties of the Company as the Buyer may from time to time reasonably request and (iii) shall use its commercially reasonable efforts to cause the Representatives of Seller and the Company to cooperate with Buyer in its investigation of the Company. Buyer and Seller shall negotiate in good faith the terms and conditions of the Restrictive Covenant Agreement, General Release, and each other Ancillary Agreement required to be executed and delivered at Closing, and shall use their commercially reasonable efforts to satisfy the conditions to Closing set forth in Article 7 for a Closing Date on or prior to .
6.7 Supplement to Disclosure Schedules. From time to time prior to the Closing, Seller shall promptly supplement or amend the Disclosure Schedules hereto with respect to any matter hereafter arising or of which it becomes aware after the date hereof which, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in the Disclosure Schedules (each a “Schedule Supplement”). Any disclosure in any such Schedule Supplement shall not be deemed to have cured any inaccuracy in or breach of any representation or warranty contained in this Agreement, including for purposes of the indemnification or termination rights contained in this Agreement or for determining whether or not the conditions set forth in Section 7.2 have been satisfied; provided, however, that if Buyer elects to waive any such conditions and to proceed with Closing within three business days of its receipt of such Schedule Supplement, then Buyer shall be deemed to have irrevocably waived its right to indemnification under Section 8.2 with respect to such matter.
6.8 Confidentiality. Subject to Section 10.3 and the remainder of this Section 6.8, neither the Buyer nor the Seller will, without the prior written consent of the other, directly or indirectly, disclose to any other Person any proprietary, confidential or non-public information of another party previously delivered or made available to such other party in connection with the transactions contemplated hereby (including the existence of this Agreement and the Ancillary Agreements), other than to the extent required by applicable Law and upon the advice of counsel, so long as, to the extent permitted under applicable law, reasonable prior notice is given by the disclosing party to the other party of such disclosure and a reasonable opportunity is afforded to such other party to contest the same. Each of the Seller and the Buyer will direct its members, managers, officers, employees and Representatives to keep all such information in strict confidence, and that it will be responsible for any breach or violation of the provisions of this Section 6.8 by any of its stockholders, members, officers, employees and Representatives. For the elimination of doubt, the covenants of the Seller pursuant to this Section 6.8 shall prohibit the disclosure by the Seller of any proprietary, confidential or non-public information involving or concerning the Company or the Business, including without limitation (a) customer and supplier information, including lists of names and addresses of customers and suppliers of the Company and its Affiliates relating to the Business; (b) business plans and strategies, compensation plans, compensation information, sales plans and strategies, pricing and other terms applicable to transactions between existing and prospective customers, suppliers or business associates; (c) market research and databases, sources of leads and methods of obtaining new business, and methods of purchasing, marketing, selling, performing and pricing products and services employed by the Company; (d) information concerning the configuration and architecture, technical data, networks, methods, practices, standards and capacities of the Company’s information systems, software and technology; (e) information identified as confidential and/or proprietary in internal documents of the Company and (f) all information that would be a trade Secret under any applicable Law. The information subject to the foregoing provisions of this Section 6.8 will not include any information generally available to, or known by, the public (other than as a result of disclosure in violation hereof). The Seller agrees that it will be responsible for any breach or violation of the provisions of this Section 6.8 by any of his or her Representatives and Affiliates.
6.9 Books and Records. Without limiting the generality of Section 6.6(a), from and after the Closing, upon reasonable notice and without undue interruption to the Company, the Buyer shall and shall cause the Company to (a) give Seller and their authorized Representatives reasonable access to all the books, records, documents, instruments, accounts, correspondence, writings, evidences of title and other papers (in each case, including electronic versions thereof) relating to the Company (the “Books and Records”), in each case existing as of the Closing, and (b) permit the Seller to make such copies and inspections thereof as the Seller may reasonably request, in each case (i) to comply with reporting, disclosure, filing or other requirements imposed on the Seller by a Governmental Authority having jurisdiction over the Seller or (ii) for use in any proceeding or in order to satisfy audit, accounting, regulatory, subpoena or other similar requirements; provided, that the Seller shall first notify the Buyer of the business purpose for requesting such access (to the extent permitted to do so under applicable Law); provided further, that (A) nothing herein shall obligate the Buyer to take any actions that (1) would or, in the determination of Buyer in its sole discretion, could, be commercially detrimental, (2) violate any Law or Contract or (3) waive any attorney-client privilege and (B) this Section 6.9 shall not apply with respect to disputes or proceedings between or among the parties.
6.10 Litigation Support. If and for so long as the Buyer or the Company is actively contesting or defending against any Action involving the Company or the Business relating to periods prior to Closing, the Seller will cooperate in the contest or defense and provide such testimony as may be reasonably necessary in connection with the contest or defense at the cost and expense of the Buyer (unless and to the extent the Buyer is entitled to indemnification therefor hereunder, in which event such costs and expenses shall be borne by the Seller).
6.11 Covenants With Respect To Taxes.
(a) The Buyer shall be responsible for preparing and filing, or causing the Company to prepare and file, all Tax Returns of the Company required to be filed for periods ending after the Closing Date. The Seller shall be responsible for filing all Tax Returns of the Company for taxable periods ending on or before the Closing Date. The Seller shall provide Buyer with a copy of all stand-alone Tax Returns of the Company filed by the Seller after the Closing Date promptly following the filing of such Tax Return. The Seller shall timely pay all Taxes required to be paid with respect to such pre-Closing Tax Returns and with respect to any period commencing before the Closing Date and ending after the Closing Date, pay to the Buyer, within five days of demand, Taxes with respect to the portion of such Tax Period ending on the Closing Date. For purposes of this Agreement, in the case of any period that begins before the Closing Date and ends after the Closing Date, any Tax based directly or indirectly on gross or net income or receipts or imposed in respect of specific transactions shall be allocated assuming that the Taxable period ended on the Closing Date, and any other Tax shall be allocated based on the number of days in the Taxable period ending on the Closing Date divided by the total number of days in the Taxable period.
(b) Buyer, the Company, and Seller shall cooperate (and cause their respective Affiliates to cooperate) fully, as and to the extent reasonably requested by the other Parties, in connection with the preparation and filing of Tax Returns pursuant to this Section 6.11 and any Tax audit, litigation, or other proceeding with respect to Taxes and payments in respect thereof.
6.12 Acquisition Proposals.
(a) Seller shall not, and shall not authorize or permit any of its Affiliates (including the Company) or any of its or their Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Seller shall immediately cease and cause to be terminated, and shall cause its Affiliates (including the Company) and all of its and their Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. For purposes hereof, “Acquisition Proposal” shall mean any inquiry, proposal or offer from any Person (other than Buyer or any of its Affiliates) concerning (i) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination transaction involving the Company; (ii) the issuance or acquisition of LLC Interests or other equity securities of the Company; or (iii) the sale, lease, exchange or other disposition of any significant portion of the Company’s properties or assets.
(b) In addition to the other obligations under this Section 6.12, Seller shall promptly (and in any event within three business days after receipt thereof by Seller or its Representatives) advise Buyer orally and in writing of any Acquisition Proposal, any request for information with respect to any Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in an Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the Person making the same.
(c) Seller agrees that the rights and remedies for noncompliance with this Section 6.12 shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Buyer and that money damages would not provide an adequate remedy to Buyer.
(a) Seller and Buyer covenant and agree that Seller shall not, for a period of 5 years from Closing:
(i) Except as otherwise provided in this Agreement, individually or as a principal, agent, manager, employee, shareholder, director, partner or in any other capacity, engage directly or indirectly in, including advertising and or patient solicitation, or have any interest in any chiropractic business, or business substantially similar to or competitive with Buyer within 25 miles of the existing practice of the Company.
(ii) Directly or indirectly suggest, request, or encourage any suppliers, vendors, distributors, representatives, or patients of Buyer to curtail, reduce, or cancel their business or customer relationships with Buyer.
(iii) Directly or indirectly reveal, communicate or divulge any information to any person or entity in any business competitive with Buyer relating to the business and patients of Buyer.
(iv) as of Closing, contact or attempt to contact, either directly or indirectly, the Buyer’s patients
(b) Interpretation of Restrictive Covenant. In the event a court of competent jurisdiction determines that any prohibition under this restrictive covenant is unenforceable for any reason, it is the intention of the parties that once such determination is made, then this restrictive covenant shall not be rendered void or unenforceable, but instead, the court shall enforce the covenant to the maximum extent allowed by law, including scaling down the time period and/or the geographic area, if appropriate, so as to preserve the validity of this restrictive covenant to the maximum extent possible.
(c) Enforcement of Restrictive Covenant. The parties acknowledge that damage in the event of breach of the covenant set forth in this paragraph 10 by of either party hereto would be difficult, if not impossible, to ascertain. It is agreed that, in addition to and without limiting any other remedy or right that the parties may have under this Agreement, the parties shall have the right to an injunction against the breaching party issued by a court of competent jurisdiction enjoining such breach.
(d) Survival. The covenant not to compete set forth in section 6.13 shall survive closing of this Agreement.
6.14 HIPAA Compliance. The parties agree to fully cooperate in order to comply with all relevant legal requirements, both federal and state, regarding the transfer of patient files from one chiropractic physician or clinic to another, including but not limited to any requirements regarding protected health information (“PHI”) as required in the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). Without limiting the foregoing, the parties agree as follows:
(i) Seller will comply with any applicable law or administrative rule of the Oregon Board of Chiropractic Examiners (“BCE”) pertaining to any required notice to patients regarding the transfer of ownership of the Practice, if any.
(ii) Buyer and Seller agree that Buyer shall assume responsibility for maintaining Seller’s original patient records for all legally required time periods, and in no event less than seven years, and Buyer agrees to comply with the Oregon BCE and HIPAA requirements regarding maintenance of all such patient records.
Buyer and Seller acknowledge that Seller’s patient files are confidential PHI within the meaning of HIPAA and patient written consent may be required for such files to be transferred to Buyer. Therefore, the parties agree that unless and until Buyer receives the written consent of a given patient to transfer the patient’s file to Buyer, such files are “Excluded Assets” hereunder. In such case, Buyer shall be a “Business Associate” of Seller within the meaning of HIPAA and shall execute a “Business Associate Agreement” in substantially the form of Exhibit A hereto with respect to such files unless and until the written consent of the patient is obtained by Buyer for the transfer of such patient’s file to Buyer.
6.15 Risk of Loss. The risk of loss, damage, or destruction to any of the Practice Assets shall be borne by Seller prior to Closing and by Buyer on and after Closing. Buyer shall have no claim on any insurance proceeds payable to Seller.
ARTICLE 7 – CONDITIONS TO CLOSING
7.1 Conditions to Obligations of Both Parties.
The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of the following condition:
(a) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.
7.2 Conditions to Obligations of Buyer. The obligations of the Buyer to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction of the following conditions at or before the Closing:
(a) Other than with respect to the Fundamental Representations, the representations and warranties of the Seller in Article 4 and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) as of Closing Date with the same effect as though made at and as of such date (provided that representations and warranties which speak as of a specified date shall speak only as of such date).
(b) The Fundamental Representations of Seller shall be true and correct in all respects as of Closing Date with the same effect as though made at and as of such date (provided that Fundamental Representations which speak as of a specified date shall speak only as of such date).
(c) The Seller shall have executed and delivered all documents and agreements to be executed and delivered by them pursuant to the terms of this Agreement and performed and complied in all material respects with all covenants required by this Agreement to be performed or complied with by them on or before the Closing Date.
(d) Seller shall have delivered to Buyer a certificate, dated the Closing Date and signed by Seller, that each of the conditions contained in paragraphs (a), (b) and (c) of this Section 7.2 have been satisfied.
(e) Each of the deliveries required by Section 3.2 shall have been made.
(f) No action, suit, litigation or proceeding affecting the Company, the Business, or the transactions contemplated hereby or seeking to restrain, prohibit interfere with, alter or materially delay the Closing or seeking material damages or other relief shall have been instituted or threatened by any Person.
(g) Prior to the Closing Date, no event shall have occurred which, individually or in the aggregate, has caused, or could reasonably be expected to have, a Material Adverse Effect.
(h) All approvals, consents and waivers that are listed on Section 4.7 of the Disclosure Schedules shall have been received, and executed counterparts thereof shall have been delivered to Buyer at or prior to the Closing.
(i) Buyer has received approval of loan terms from Avontuur, Inc. (dba “Progressive Practice Sales”) in the amount of the Purchase Price, with cash on hand for any down payment or other required cash portion deemed necessary by Avontuur, Inc. Within three (3) days of the execution of this Agreement, Buyer will make a $90,000 deposit towards the Purchase Price, which will be non-refundable except in the event of the Seller failing to meet any one or more of the conditions to Closing of Buyer set forth in this Section 7.2, which if not cured to the reasonable satisfaction of Buyer within ten (10) days of written notice to Seller, will cause the deposit to be fully refundable.
7.3 Conditions to Obligations of the Seller. The obligations of the Seller to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction of the following conditions at or before the Closing:
(a) The representations and warranties of the Buyer herein contained shall be true and correct in all material respects as of the Closing Date with the same effect as though made at and as of such date (provided that representations and warranties which speak as of a specified date shall speak only as of such date), except as affected by transactions permitted or contemplated by this Agreement.
(b) The Buyer shall have executed and delivered all documents and agreements to be executed and delivered by it pursuant to the terms of this Agreement and performed and complied in all material respects with all covenants required by this Agreement to be performed or complied with by it before the Closing Date.
(c) The Buyer shall have delivered to the Seller a certificate, dated the Closing Date and signed by a duly authorized officer of the Buyer, that each of the conditions set forth in paragraphs (a) and (b) of this Section 7.3 have been satisfied.
(d) Each of the deliveries required by Section 3.3 shall have been made.
ARTICLE 8 – SURVIVAL; INDEMNIFICATION
8.1 Survival. The representations and warranties of the parties contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith will survive the Closing for three (3) years following the Closing Date; provided, however, (i) the representations and warranties contained in Section 4.16 (Tax Matters), 4.20 (Environmental Compliance) and 4.22 (ERISA Plans and Non-ERISA Plans or Labor Issues) shall survive until 180 days after the expiration of the applicable statute of limitations covered thereby (after giving effect to any waiver, mitigation or extension thereof granted by the Buyer) and (ii) the representations and warranties contained in Sections 4.1 (Organization and Standing), 4.2 (Predecessors), 4.4 (Agreement Authorized and its Effects on Other Obligations), 4.5 (Capitalization), 4.6 (Ownership of the LLC Interests), 4.8 (Subsidiaries), and 4.28 (Finder’s Fees) (collectively, the representations referenced in clauses (i), (ii) and (iii), the “Fundamental Representations”) shall survive the Closing indefinitely. Notwithstanding the immediately preceding sentence, any representation or warranty in respect of which indemnification may be sought under this Agreement will survive the time at which it would otherwise terminate pursuant to the immediately preceding sentence if written notice of the inaccuracy or breach thereof giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time; provided, however, that the applicable representation or warranty will survive only with respect to the particular inaccuracy or breach specified in such written notice. All covenants and agreements of the parties contained in this Agreement will survive the Closing indefinitely.
(a) Subject to Section 8.2(d), the Seller will indemnify, defend and hold harmless the Buyer and its Affiliates (including the Company), and its and their respective Representatives (the “Buyer Indemnified Parties”), from, against and in respect of, and shall pay and reimburse each of them for, any and all Actions, costs (including without limitation costs of investigation, defense and enforcement of this Agreement), expenses, damages, losses and Liabilities, diminution of value, lost profits, consequential damages, expenses or amounts paid in settlement (in each case, including and reasonable attorneys’ and experts’ fees and expenses), threatened or actual, and whether or not involving a Third Party Claim (“Damages”), incurred or suffered by the Buyer Indemnified Parties or any of them (including any Damages sustained or incurred after the end of the applicable survival period, provided that a claim is made prior to the end of the applicable survival period in accordance with the terms of this Agreement) as a result of or arising out of (i) any breach of, or inaccuracy in, any representation or warranty made by the Seller in Article 4, (ii) the breach of any covenant or agreement made or to be performed by the Seller pursuant to this Agreement, (iii) all Taxes of the Company or relating to the business or the assets of the Company for all Pre-Closing Tax Periods, or portions of a Tax Period ending on the Closing Date, (iv) any claims made by clients of the Company under any insurance policy maintained by the Company, provided that the claim is made by such client on or prior to the thirty-six (36) month anniversary of the Closing, provided further that the underwriter of such program has determined the claim is valid and payable (except for any claims made prior to, and outstanding at, the thirty-six (36) month anniversary of the Closing for which the underwriter has not made a final determination of validity, for which the indemnification provisions of this Section 8.2(a)(iv) will apply upon a determination by the underwriter of such program that the claim is valid and payable, even if made after the thirty-six (36) month anniversary of the Closing), (v) amounts paid or payable by the Company with respect to bona fide claims made that are of the type of claim covered under the Company’s policies on or prior to the thirty-six (36) month anniversary of the Closing (whether or not paid under the policies, including claims for amounts that are below the deductible under the policies and are the subject of a reservation of claims) and (vi) any failure of the Permits listed on Schedule 4.20 to be in good standing and in full force and effect.
(b) Subject to Section 8.2(d), the Buyer will indemnify, defend and hold harmless the Seller and its Affiliates, and its and their respective Representatives (the “Seller Indemnified Parties” and, together with the Buyer Indemnified Parties, the “Indemnified Parties”) from, against and in respect of, and shall pay and reimburse each of them for, Damages incurred or suffered as a result of or arising out of (i) any breach of, or inaccuracy in, any representation or warranty made by the Buyer in Article 4, and (ii) the breach of any covenant or agreement made or to be performed by the Buyer pursuant to this Agreement.
(a) If any Indemnified Party receives notice of the assertion or commencement of any Third-Party Claim which would reasonably be expected to give rise to a claim for indemnity against the Buyer or the Seller (as applicable, the “Indemnifying Party”) under Section 8.2, the Indemnified Party will give such Indemnifying Party reasonably prompt written notice thereof before termination of the applicable survival period set forth in Section 8.1. Such notice by the Indemnified Party will describe the Third-Party Claim in reasonable detail, will include copies of all available material written evidence thereof and will indicate the estimated amount, if reasonably estimable, of the Damages that have been or may be sustained by the Indemnified Party.
(b) The Indemnifying Party will have the right, by giving written notice to the Indemnified Party, to assume, the defense of any Third-Party Claim at such Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel (which will be reasonably satisfactory to the Indemnified Party) so long as the Indemnifying Party gives written notice to the Indemnified Party within twenty (20) days after the Indemnified Party has given notice of the Third Party Claim, which notice includes an acknowledgement and agreement that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any and all Damages the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of or caused by the Third Party Claim and reasonable assurance of the financial capacity of the Indemnified Party to defend such Third Party Claim and provide indemnification with respect thereto; provided, however, that an Indemnifying Party shall not be entitled to assume the defense of a Third-Party Claim if: (i) the Indemnifying Party is also a party to such Third Party Claim and the Indemnified Party determines in good faith that joint representation would be inappropriate, (ii) such Third Party Claim seeks an injunction or other equitable relief against the Indemnified Party, (iii) the Indemnified Party reasonably believes that such Third Party Claim could negatively impact the Indemnified Party’s business, relationships with customers, vendors or other third Persons or future business prospects, or (iv) the Third Party Claim relates to or otherwise arises in connection with Taxes or any criminal or regulatory enforcement action. The Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim; provided, further, that the Indemnifying Party will pay the fees and expenses of separate co-counsel retained by the Indemnified Party only to the extent incurred prior to the Indemnifying Party’s assumption of control of the defense of the Third Party Claim.
(c) If, within twenty (20) days after giving notice of a Third-Party Claim to an Indemnifying Party pursuant to Section 8.3(a), an Indemnified Party receives written notice from the Indemnifying Party that the Indemnifying Party has elected to assume the defense of such Third-Party Claim as provided in Section 8.3(b), the Indemnifying Party will not be liable for any legal expenses subsequently incurred by the Indemnified Party in connection with the defense thereof; provided, however, that if the Indemnifying Party fails to take reasonable steps necessary to defend diligently such Third-Party Claim within twenty (20) days after receiving written notice from the Indemnified Party or if the Indemnified Party reasonably believes the Indemnifying Party has failed to take such steps, the Indemnified Party may assume its own defense, and the Indemnifying Party will be liable for all reasonable costs and expenses paid or incurred in connection therewith; provided, however, that the Indemnifying Party shall not be liable for the costs and expenses of more than one counsel for all Indemnified Parties in any one jurisdiction. Without the prior written consent of the Indemnified Party, the Indemnifying Party will not enter into any settlement of any Third-Party Claim which (i) would lead to liability or create any financial or other obligation on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder, (ii) does not include an unconditional general release of all Indemnified Parties from all Damages arising out of, relating to, or in connection with the Third-Party Claim or (iii) would involve a finding or admission of any violation of Law or the rights of any Person.
(d) Notwithstanding the foregoing, if an Indemnified Party determines in good faith that there is a reasonable probability that a Third Party Claim may adversely affect it or its Affiliates other than as a result of monetary Damages for which it would be entitled to indemnification under this Agreement, then the Indemnified Party may, by notice to the Indemnifying Party, assume the exclusive right to defend, compromise or settle such Third Party Claim, but the Indemnifying Party will not be bound by any determination of a Third Party Claim so defended or any compromise or settlement effected without its consent (which may not be unreasonably withheld).
(e) The Indemnified Party will provide the Indemnifying Party with reasonable access during normal business hours to books, records and employees of the Indemnified Party necessary in connection with the Indemnifying Party’s defense of any Third-Party Claim which is the subject of a claim for indemnification by an Indemnified Party hereunder.
(f) Any claim by an Indemnified Party on account of Damages which does not result from a Third-Party Claim (a “Direct Claim”) will be asserted by giving the Indemnifying Party reasonably prompt written notice thereof. Such notice by the Indemnified Party will describe the Direct Claim in reasonable detail, will include copies of all available material written evidence thereof and will indicate the estimated amount, if reasonably practicable, of Damages that has been or may be sustained by the Indemnified Party. The Indemnifying Party will have a period of 30 days within which to respond in writing to such Direct Claim. If the Indemnifying Party does not so respond within such 30 day period, the Indemnifying Party will be deemed to have rejected such claim, in which event the Indemnified Party will be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.
(g) A failure to give timely notice or to include any specified information in any notice as provided in Sections 8.3(a), 8.3(b), or 8.3(f) will not affect the rights or obligations of any party hereunder, except and only to the extent that, as a result of such failure, any party which was entitled to receive such notice was deprived of its right to recover any payment under its applicable insurance coverage or was otherwise materially prejudiced as a result of such failure.
8.4 Payment of Indemnification Payments. All indemnifiable Damages payable by the Seller under this Article 8 shall be net of amounts actually recovered by the Buyer or its Affiliates under any insurance policy. All indemnifiable Damages under this Agreement will be paid in cash in immediately available funds within five (5) business days after determination of such amount, provided the parties may elect the following during such five (5) business day period: (i) The Seller shall have the right to set off indemnifiable Damages payable by it against any amounts owed to the Seller, or any Affiliate of Seller, under the Transition Services Agreement; and (ii) Either party shall have the right to set off indemnifiable Damages payable by it against any indemnified Damages to which its Indemnified Parties are entitled under this Article 8. A party shall only have the right to exercise their right to set off indemnifiable Damages so long as such party has complied with the provisions of Section 8.3 with respect to the indemnified Damages against which it is offsetting its payment of indemnifiable Damages, if exercising their right to set off under clause (b) above. If either party elects to exercise its set off right pursuant to this Section 8.4, it shall provide the Indemnified Party written notice of the election, specifying in reasonable detail the basis for the set off and the amount to be set off. Any amounts so set-off shall be considered fully paid and satisfied under this Article 8. Neither the exercise nor the failure to exercise the right to set off constitutes an election of remedies, nor does it limit in any way any other right a party has to enforce a claim for indemnification, whether under this Article 8, at Law or otherwise.
8.5 Knowledge of Breach. The right of any Buyer Indemnified Party and any Seller Indemnified Party to indemnification pursuant to this Agreement will not be affected by any investigation conducted or knowledge acquired at any time, whether before or after the execution and delivery of this Agreement or the Closing, with respect to the accuracy of any representation or warranty, performance of or compliance with any covenant or agreement contained in this Agreement or otherwise.
8.6 Mitigation. Nothing in this Agreement shall be deemed or interpreted to limit or restrict Buyer’s general obligation at law to mitigate any Damages it may suffer or incur as a result of any event that may give rise to a claim for indemnification under this Article 8.
8.7 Remedies Cumulative. The indemnification rights of the parties under this Article 8 are independent of, and in addition to, such rights and remedies as the parties may have at Law or in equity or otherwise for any misrepresentation, breach of warranty or failure to fulfill any covenant, agreement or obligation hereunder on the part of any party hereto, including the right to seek specific performance, rescission or restitution, none of which rights or remedies shall be affected or diminished hereby.
ARTICLE 9 – TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior to the Closing:
(a) by the mutual written consent of Seller and Buyer;
(b) by Buyer by written notice to Seller if:
(i) Buyer is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Seller pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article 7 and such breach, inaccuracy or failure has not been cured by Seller within 10 days of Seller’s receipt of written notice of such breach from Buyer;
(ii) any of the conditions set forth in Section 7.1 or Section 7.2 shall not have been fulfilled by the Buyer, unless such failure shall be due to the failure of Buyer to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;
(c) by Seller by written notice to Buyer if:
(i) Seller is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Buyer pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article 7 and such breach, inaccuracy or failure has not been cured by Buyer within 10 days of Buyer’s receipt of written notice of such breach from Seller; or
(ii) any of the conditions set forth in Section 7.1 or Section 7.3 shall not have been fulfilled by the Seller, unless such failure shall be due to the failure of Seller to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;
(d) by Buyer or Seller in the event that (i) there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or (ii) any Governmental Authority shall have issued a Governmental Order restraining or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable.
9.2 Effect of Termination. In the event of the termination of this Agreement in accordance with this Article, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except, except for the provisions of this Section 9.2, Article 8 and Article 10, which shall survive such termination; provided, however, that nothing herein shall relieve any party from Liability for any breach of any representation, warranty, covenant or agreement contained in this Agreement.
ARTICLE 10 – MISCELLANEOUS
10.1 Entirety. This Agreement and the Ancillary Agreements, together with the schedules, exhibits and other agreements or documents to be executed and delivered in connection herewith or therewith, embody the entire agreement among the parties with respect to the subject matter hereof and thereof. This Agreement and the Ancillary Agreements supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.
10.2 Further Assurances. From time to time, as and when requested by any party hereto, any other party hereto shall execute and deliver, or cause to be executed and delivered, such documents and instruments and shall take, or cause to be taken, such further or other actions as may be reasonably necessary or desirable to effectuate the transactions contemplated by this Agreement and the Ancillary Agreements.
10.3 Public Announcements. In the event that either Buyer or Seller desires to issue a press release with respect to the execution and delivery of this Agreement and/or the consummation of the Closing, Buyer and Seller shall use commercially reasonable efforts to agree on the content of a joint press release announcing the existence of this Agreement and the timing of its release. Except for such joint press release or as otherwise mutually agreed, neither the Buyer, the Seller, nor any of their respective Affiliates or agents shall issue any press release or public announcement regarding the execution of this Agreement or the transactions contemplated thereby; provided, however, that nothing contained in this Agreement (including this Section 10.3) shall prohibit: any disclosure made in connection with the enforcement of any right or remedy relating to, or the performance of any obligation arising under, this Agreement, the Ancillary Agreements or the transactions contemplated hereby and thereby.
10.4 Counterparts. Any number of counterparts of this Agreement may be executed and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one instrument. Signature pages exchanged by e-mail or other electronic means shall be deemed originals.
10.5 Third Party Beneficiaries. Except as provided in Article 8, this Agreement is for the sole benefit of the parties hereto and their permitted successors and assigns, and nothing herein expressed or implied will give or be construed to give to any Person, other than the parties hereto and such permitted successors and assigns, any legal or equitable rights.
10.6 Notices and Waivers. Any notice or waiver to be given to any party hereto shall be in writing and shall be delivered by courier, sent by facsimile transmission or first class registered or certified mail, postage prepaid, return receipt requested:
If to the Seller:
If to the Buyer:
with a copy (which shall not constitute notice) to:
Liu, Brown & Firoozmand, P.C.
6430 Sunset Blvd., Suite 505
Los Angeles, CA 90028
Attn: Managing Attorney
Any communication so addressed and mailed by first-class registered or certified mail, postage prepaid, with return receipt requested, shall be deemed to be received on the third (3rd) business day after so mailed, and if delivered by courier or facsimile to such address, upon delivery during normal business hours on any business day.
10.7 Captions. The captions and headings contained in this Agreement are solely for convenient reference and shall not be deemed to affect the meaning or interpretation of any article, section, or paragraph hereof.
10.8 Successor and Assigns. Subject to the immediately following sentence, this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the successors and assigns of the parties hereto. No party may assign, delegate or otherwise transfer either this Agreement or any of its rights, interests, or obligations hereunder (other than transfers by operation of Law) without the prior written approval of the other parties; provided, however, that either party may, without the prior written consent of the other parties (a) assign any or all of its rights and interests hereunder to one or more of its Affiliates and (b) designate one or more of its Affiliates to perform its obligations hereunder. No assignment shall relieve the assigning party of any of its obligations hereunder.
10.9 Expenses. Whether or not the transactions contemplated by this Agreement are consummated, except as otherwise expressly provided herein, the parties will pay or cause to be paid all of their own fees and expenses incident to this Agreement and in preparing to consummate and in consummating the transactions contemplated hereby, including the fees and expenses of any broker, finder, financial advisor, investment banker, legal advisor or similar Person engaged by such party.
10.10 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such which may be hereafter declared invalid, void or unenforceable. If any provision hereof would, under applicable Law, be invalid or unenforceable in any respect, then each party hereto intends that such provision will be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable Law.
10.11 Amendments and Waivers. No amendment or waiver of any provision of this Agreement will be valid and binding unless it is in writing and signed, in the case of an amendment, by the Buyer and the Seller, or in the case of a waiver, by the party or parties against whom the waiver is to be effective. No waiver by any party of any breach or violation or, default under or inaccuracy in any representation, warranty or covenant hereunder, whether intentional or not, will be deemed to extend to any prior or subsequent breach, violation, default of, or inaccuracy in, any such representation, warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No delay or omission on the part of any party in exercising any right, power or remedy under this Agreement will operate as a waiver thereof.
10.12 Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Notwithstanding anything to the contrary contained in the Disclosure Schedules or in this Agreement, the information and disclosures contained in any Disclosure Schedule shall be deemed to be disclosed and incorporated by reference in any other Disclosure Schedule or representation or warranty of Seller contained in Article 4, as applicable, as though fully set forth in such Disclosure Schedule or representation or warranty for which applicability of such information and disclosure is reasonably apparent on its face notwithstanding the absence of a cross reference contained therein.
10.13 Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the applicable laws of the State of Texas.
10.14 Jurisdiction; Venue; Service of Process.
(a) Jurisdiction. Each party, by its execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction of the state courts of Harris County, Texas or the United States District Courts located in Harris County, Texas for the purpose of any Action between or among the parties (or any of them) arising in whole or in part under or in connection with this Agreement, (ii) hereby waives and agrees not to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such Action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred or removed to any court other than one of the above-named courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this Agreement or the subject matter hereof may not be enforced in or by such court and (iii) hereby agrees not to commence any such Action (including for a declaratory judgment or the like) other than before one of the above-named courts. Notwithstanding the previous sentence, a party may commence any Action in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts. Each party agrees that for any Action between the parties arising in whole or in part under or in connection with this Agreement, such party will bring Actions only in Harris County, Texas. Each party further waives any claim and will not assert that venue should properly lie in any other location within the selected jurisdiction.
(b) Service of Process. Each party hereby (i) consents to service of process in any Action between the parties arising in whole or in part under or in connection with this Agreement in any manner permitted by the Laws of the State of Texas, (ii) agrees that service of process made in accordance with clause (i) or made by registered or certified mail return receipt requested at its physical addresses specified pursuant to Section 10.6, will constitute good and valid service of process in any such Action and (iii) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such Action any claim that service of process made in accordance with clause (i) or (ii) does not constitute good and valid service of process.
(c) Waiver of Jury Trial. THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT, RESPONDENT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE THEIR RIGHTS TO TRIAL BY JURY IN ANY ACTION WHATSOEVER BETWEEN OR AMONG THEM RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHICH ACTION WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
10.15 Limitation of Liability. Notwithstanding anything to the contrary contained in this Agreement or otherwise, in no event shall Seller be liable to Buyer, or any of its officers, directors, shareholders, employees, agents, representatives, successors or assigns, for: (a) any claims, losses, damages, liabilities, demands, causes of action (including attorney fees) (collectively, “Losses”) until the aggregate dollar amount of all such Losses exceeds Ten Thousand Dollars ($10,000); and (b) any amount of Losses in excess of the amount of the Purchase Price.
[Signature page follows.]
IN WITNESS WHEREOF, each of the Seller and the Buyer have caused this Agreement to be signed in its corporate name by its duly authorized representative, all as of the day and year first above written.
Business Associate Agreement
BACKGROUND AND PURPOSE. Active Chiropractic, LLC, an Oregon limited liability company (“Covered Entity”) and Olberding Chiropractic , an Oregon corporation (“Business Associate”) hereby acknowledge and agree that, in addition to this Business Associate Agreement (the “Agreement”), they have entered into, one or more written agreements (collectively, the “Underlying Agreements”), pursuant to which Business Associate may, for or on behalf of Covered Entity, create, receive, maintain and/or transmit Protected Health Information (“PHI”) that is subject to federal regulations (collectively, the “HIPAA Regulations”) issued pursuant to the Health Insurance Portability and Accountability Act 42 USC §1320d, et seq. (“HIPAA”). The HIPAA Regulations include, without limitation, (i) the security regulations set forth in Subpart C of 45 CFR Part 164 (the “Security Rule”); (ii) the breach notification regulations set forth in Subpart D of 45 CFR Part 164 (the “Breach Notification Rule”); (iii) the privacy regulations set forth in Subpart E of 45 CFR Part 164 (the “Privacy Rule”); and (iv) the penalty regulations set forth in Subpart D of 45 CFR Part 160 (the “Enforcement Rule”), all as from time to time amended. This Agreement will supplement and/or amend each of the Underlying Agreements only with respect to Business Associate’s Use and/or Disclosure of PHI. Except as so supplemented and/or amended, the terms of the Underlying Agreements will continue unchanged and will apply with full force and effect to govern the matters addressed therein.
DEFINITIONS. Except as otherwise provided herein, all capitalized terms used in this Agreement have the meanings ascribed in the HIPAA Regulations.
OBLIGATIONS OF BUSINESS ASSOCIATE.
Compliance. To the extent Business Associate creates, receives, maintains or transmits PHI for or on behalf of Covered Entity, Business Associate will at all times comply with applicable provisions of the HIPAA Regulations and this Agreement. Without limiting the foregoing, Business Associate hereby specifically acknowledges and agrees as follows:
General; Safeguards. Business Associate (a) will not Use or Disclose PHI other than as permitted or required by this Agreement or the HIPAA Regulations; and (b) will implement and utilize reasonable and appropriate Administrative, Physical and Technical Safeguards, in accordance with the HIPAA Regulations, to comply with the foregoing (a).
Reporting Obligations. Business Associate will notify Covered Entity in writing regarding any Use or Disclosure of PHI not authorized by this Agreement, or any Security Incident, not later than 5 days after the date Business Associate discovers such Use or Disclosure or such Security Incident; provided, however, that, in the event Business Associate discovers a Breach, Business Associate will notify Covered Entity regarding the Breach as soon as reasonably practicable, but in no event later than 5 days after such discovery.
AGENTS AND SUBCONTRACTORS. Business Associate will ensure that (i) any agent, including a Subcontractor, of Business Associate that creates, receives, maintains, or transmits PHI for or on behalf of Business Associate agrees in writing, prior to creating, receiving, maintaining or transmitting any PHI, to restrictions and obligations regarding Uses and Disclosures of PHI that are the same as or exceed the restrictions and obligations applicable to Business Associate pursuant to this Agreement; and (ii) Covered Entity is identified in such writing as a third-party beneficiary with respect to any rights created thereby, including without limitation any rights to enforce such writing and any remedies available with respect to such enforcement.
ACCESS TO PHI. In the event an Individual requests that Covered Entity provide the Individual with access to his or her PHI as specified in the Privacy Rule, and Business Associate maintains such PHI in a Designated Record Set, Business Associate will provide access, within 10 days of Covered Entity’s request, to PHI in a Designated Record Set to Covered Entity in order to permit Covered Entity to provide access to the Individual in compliance with the Privacy Rule. In the event that an Individual makes a request for access directly to Business Associate, Business Associate will notify Covered Entity of such request within 5 days.
AMMENDMENT OF PHI. In the event an Individual requests that Covered Entity amend his or her PHI as specified in the Privacy Rule, and Business Associate maintains PHI in a Designated Record Set, Business Associate will make such amendment(s) to such PHI within 20 days of Covered Entity’s request for such amendment. In the event the Individual makes a request to amend his or her PHI directly to Business Associate, Business Associate will notify Covered Entity of such request within 3 days.
ACCOUNTING OF DISCLOSURES. Business Associate will (i) document Disclosures of PHI as necessary to enable Covered Entity to respond to a request by an Individual for an accounting of disclosures in accordance with the Privacy Rule; and (ii) provide such documentation to Covered Entity, within 20 days of Covered Entity’s request.
PERFORMANCE OF COVERED ENTITY OBLIGATIONS. To the extent Business Associate is carrying out Covered Entity’s obligations under the HIPAA Regulations, Business Associate will comply with the applicable requirements of such regulations.
PERMITTED USES AND DISCLOSURES OF PHI. Business Associate may not Use or Disclose PHI, except that Business Associate may (i) make any and all Uses and Disclosures of PHI necessary to perform its obligations under the Underlying Agreements or authorized pursuant to this Agreement; (ii) Use or Disclose PHI for its proper management and administration, or to carry out its legal responsibilities; provided, however, that, with respect to any such Disclosure, (a) the Disclosure must be required by the HIPAA Regulations; or (b) Business Associate must obtain reasonable assurances from the recipient of the Disclosure regarding the confidential handling of PHI as required under the Privacy Rule; (iii) provide Data Aggregation services relating to the Health Care Operations of Covered Entity; and (iv) de- identify any and all PHI obtained by Business Associate pursuant to this Agreement or the Underlying Agreements, and Use such de-identified data, all in accordance with the de- identification requirements of the Privacy Rule.
ACCESS AND INSPECTION. Without limiting any other obligation herein, Business Associate agrees to make its internal practices, books, and records, including without limitation policies and procedures relating to the Use and Disclosure of PHI, available to the Secretary (i.e., the Department of Health and Human Services), for purposes of determining compliance with the HIPAA Regulations.
TERM, TERMINATION AND REMEDIES.
TERM. This Agreement will be effective until Business Associate has obtained a patient’s written consent to transfer his or her PHI directly to Business Associate (who then becomes a Covered Entity under HIPAA Regulations with respect to such PHI) or so long as one or more Underlying Agreements remains effective, whichever is longer, unless terminated as provided herein.
TERMINATION. In the event Business Associate fails to comply with any obligation herein, Covered Entity will deliver a written notice to Business Associate that notifies Business Associate regarding the non-compliance and specifies a time period (not less than (10) business days) wherein Business Associate must correct the non-compliance. In the event Business Associate does not correct the non-compliance within the specified period, Covered Entity may terminate this Agreement; provided, however, that in the event (i) Business Associate makes a reasonable attempt to correct the non-compliance within the specified period; and (ii) taking into account the relevant facts and circumstances, the non-compliance may not be reasonably corrected within the specified period, Business Associate will be permitted a reasonable period of time to correct the non-compliance.
RETURN OR DESTRUCTION OF PHI. In the event this Agreement is terminated for any reason, Business Associate will, if feasible, return all other PHI, or all other PHI created, received, maintained or transmitted by Business Associate for or on behalf of Covered Entity to Covered Entity or destroy such PHI, if and to the extent Covered Entity authorizes such destruction in writing; provided, however, that Business Associate may retain PHI as necessary to enable Business Associate to continue its proper management and administration or to carry out its legal responsibilities. If it is not feasible for Business Associate to return PHI as provided in this Section 4.3 (and Business Associate is not authorized to destroy the PHI, as provided herein, or such destruction is not feasible), further Use or Disclosure of such PHI will be limited to those purposes that make return (or destruction) of the information not feasible.
INDEMNITY. Business Associate, for itself, its employees, contractors, subcontractors and agents, agrees to indemnify and hold harmless the Covered Entity from and against all judgments, costs, expenses, liabilities, claims, and demands, or any other loss of any kind whatsoever, which arise out of or are in any manner connected with this Business Associate Agreement and/or Business Associate’s obligations hereunder, their performance or breach, including without limitation Business Associates obligations under HIPAA or the HIPAA Regulations. Business Associate agrees to investigate, handle, respond to, and provide defense for and defend against, any such liability, claims, or demands at its sole expense, and to bear all costs and expenses related thereto, including attorneys’ fees and legal costs, and whether or not any such liability, claim, or demand alleged is groundless, false, mistaken or otherwise.
INTERPRETATION. The terms of this Agreement will prevail in the case of any conflict with the terms of any Underlying Agreement to the extent necessary to allow Covered Entity to comply with the HIPAA Regulations or other applicable laws.
NO THIRD PARTY BENEFICIARIES. Except as otherwise provided herein, nothing in this Agreement will confer upon any person other than the Parties and their respective successors or assigns, any rights, remedies, obligations, or liabilities whatsoever.
CHANGE IN LAWS. To the extent that any relevant provision of the HIPAA Regulations is materially amended in a manner that creates a likelihood that either Party is not in compliance with any applicable provision of HIPAA, the HIPAA Regulations, or other applicable laws, the Parties agree to negotiate in good faith appropriate amendment(s) to this Agreement to give effect to such revised provisions; provided, however, that if, notwithstanding good faith efforts as required by this Section 5.3, the Parties cannot negotiate such amendment(s) within a reasonable time (not to exceed 30 days) after such change in laws, either Party may immediately terminate this Agreement by delivering written notice thereof to the other.
ENTIRE AGREEMENT. This Agreement represents the entire agreement between Covered Entity and Business Associate in regard to the matters addressed herein.
REGULATORY REFERENCES. References to the Privacy Rule, Security Rule, the Enforcement Rule and/or the HIPAA Regulations mean the respective regulations, as amended from time to time.
COUNTERPARTS; ELECTRONIC SIGNATURES. This Agreement may be executed in counterparts, each of which will be deemed an original, and all of which collectively will constitute a single, binding agreement. Signatures to this Agreement delivered by email, facsimile or other electronic media will be deemed to be original signatures.
NOTICES. Notices required by this Agreement will be made via U.S. mail, commercial courier or hand delivery to Covered Entity or Business Associate, as the case may be, at the mailing address or email address specified below. Each Party will promptly notify the other regarding any change to its information set forth below, but in no event later than ten (10) days after such change. Any notice mailed or emailed to the appropriate address indicated below will be deemed delivered when mailed or emailed, as the case may be.
If to Covered Entity: Anthony Cutting
2105 West 29th Avenue Eugene, Oregon 97405
If to Business Associate: Colin Olberding Tracy Moretz
4808 N 143rd Street 701 Ocean Ave,
Basehor, Kansas 66007 Santa Monica, California 90402
(858) 295-2486 (713) 492-1118
or such normal business address used by Covered Entity in its dealings with Business Associate personal to the Underlying Agreement.
STATE LAW. To the extent State law is applicable to interpretation or enforcement of this Agreement, Covered Entity and Business Associate acknowledge and agree that such interpretation or enforcement will be governed by Oregon law.
COSTS. Each Party will be solely responsible for its costs incurred to enter into and comply with this Agreement.
AMENDMENT. Except as otherwise provided herein, this Agreement may only be amended or modified if and to the extent Covered Entity and Business Associate authorize such amendment or modification in a written agreement signed by Covered Entity and Business Associate.
TIME PERIODS. As used herein, “days” means calendar days.
IN WITNESS WHEREOF, Covered Entity and Business Associate have executed this Agreement as of the date first mentioned hereinabove.
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