EXHIBIT 4.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of January 10,
1997, by CompScript, Inc., a Florida corporation ("Buyer"), Xxxx X. Xxxxxxx, an
individual resident in Florida ("Xxxxxxx"), Xxxxxxx Xxxxxxxx and Xxxxxxxx
Xxxxxxxx, each an individual resident in Florida (collectively, "Spritzer"),
Xxxx Xxxx and Xxxxxx Xxxx, each an individual resident in Florida (collectively,
"Eger"), Xxxxx Xxxxx and Xxxxxxx X. Xxxxx, each an individual resident in
Florida (collectively, "Xxxxx"), Xxx X. Xxxxxxx and Xxxxxxx Xxxxxxx, each an
individual resident in Florida (collectively, "Xxxxxxx"), Xxxxxxxxxx Xxxxxxx and
Xxxxx Xxxxxxx, each an individual resident in Florida (collectively, "Xxxxxxx"),
Xxxxxxx Xxxxxxxxx, an individual resident in Florida ("Xxxxxxxxx") and Xxxxxxx
Xxxxxxxxx, an individual resident in Florida ("Xxxxxxx"). Eger, Edelson,
Qureshi, Yelen, Spritzer, Xxxxxxx and Xxxxxxxxx are each a "Seller" and
collectively the "Sellers".
RECITALS
WHEREAS, Sellers desire to sell, and Buyer desires to purchase, all of
the issued and outstanding shares (the "Shares") of capital stock of Medical
Services Consortium, Inc., a Florida corporation (the "Company"), for the
consideration and on the terms set forth in this Agreement.
WHEREAS, the Parties intend to have this transaction treated as a
tax-free reorganization under the Internal Revenue Code of 1986, as amended.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:
"APPLICABLE CONTRACT"--any Contract (a) under which the Company
has or may acquire any rights, (b) under which the Company has or may become
subject to any obligation or liability, or (c) by which the Company or any of
the assets owned or used by it is or may become bound.
"BALANCE SHEET"--as defined in Section 3.4.
"BEST EFFORTS"--the reasonable efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to attempt to
assure that such result is achieved as reasonably expeditiously as possible,
without initiating any legal proceedings or actions, or expending a material
amount of money.
"BREACH"--a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to substantially perform
or comply with, such representation, warranty, covenant, obligation, or other
provision, or (b) any claim (by any Person) or other occurrence or circumstance
that is or was inconsistent with such representation, warranty, covenant,
obligation, or other provision, and the term "Breach" means any such inaccuracy,
breach, failure, claim, occurrence, or circumstance.
"BUYER"--as defined in the first paragraph of this Agreement.
"BUYER'S COMMON STOCK"--the common stock of the Buyer, par value
$.0001 per share, to be delivered to Sellers in payment of the Purchase Price,
as defined in Section 2.2.
"CLOSING"--as defined in Section 2.3.
"CLOSING DATE"--the date and time as of which the Closing
actually takes place.
"COMPANY"--as defined in the Recitals of this Agreement.
"CONSENT"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS"--all of the transactions contemplated
by this Agreement, including:
(a) the sale of the Shares by Sellers to Buyer;
(b) the delivery of the Buyers Common Stock to Sellers in
exchange for the Shares and the execution and delivery of the Stock Registration
Rights Agreement with respect to the Buyer's Common Stock;
(c) the execution, delivery, and performance of the
Employment Agreements and the Noncompetition Agreements; and
(d) the performance by Buyer and Sellers of their respective
covenants and obligations under this Agreement.
"CONTRACT"--any agreement, contract, obligation, promise, or
undertaking (whether express or implied) that is legally binding.
"DAMAGES"--as defined in Section 10.2.
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"DISCLOSURE LETTER"--the disclosure letter delivered by Sellers
to Buyer concurrently with the execution and delivery of this Agreement.
"EMPLOYMENT AGREEMENTS"--as defined in Section 2.4(a)(iii).
"ENCUMBRANCE"--any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"ENVIRONMENT"--soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"ENVIRONMENTAL LAW"--any Legal Requirement that requires or
relates to:
(e) advising appropriate authorities, employees, and the public
of intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;
(f) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(g) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(h) assuring that products are designed, formulated, packaged,
and used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(i) protecting resources, species, or ecological amenities;
(j) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(k) cleaning up pollutants that have been released, preventing
the threat of release, or paying the costs of such clean up or prevention; or
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(l) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"FACILITIES"--any real property, leaseholds, or other interests
currently owned or operated by the Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently owned or operated by the Company.
"GAAP"--generally accepted United States accounting principles.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY"--any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal); or
(d) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"HAZARDOUS ACTIVITY"--the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Company.
"HAZARDOUS MATERIALS"--any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous,
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radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"INTELLECTUAL PROPERTY ASSETS"--as defined in Section 3.22.
"INTERIM BALANCE SHEET"--as defined in Section 3.4.
"IRC"--the Internal Revenue Code of 1986 or any successor law,
and regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States Department of
the Treasury.
"KNOWLEDGE"--an individual will be deemed to have "Knowledge" of
a particular fact or other matter if (a) such individual is actually aware of
such fact or other matter or (b) a prudent individual could be expected to
discover or otherwise become aware of such fact or other matter in the course of
conducting a reasonable investigation concerning the existence of such fact or
other matter, but excluding in such investigation the obligation to contact any
governmental body or customers or suppliers.
For the purpose of this Agreement, the term "Knowledge of" as
used herein shall mean the Knowledge of Sellers and Xxxxxxx.
A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, or who has served, as a director, executive or senior officer, partner,
executor, or trustee of such Person or in any similar capacity has Knowledge of
such fact or other matter.
"LEGAL REQUIREMENT"--any federal, state, local, municipal or
other administrative order, constitution, law, ordinance, principle of common
law, regulation, statute, or treaty.
"MATERIAL"--when referenced to the Company shall mean any amount
of $15,000 or more either individually or in the aggregate or any act, action,
or violation which will result in a liability, loss, claim or damage in an
amount of $15,000 or more either individually or in the aggregate.
"NONCOMPETITION AGREEMENTS"--as defined in Section 2.4(a)(iv).
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and
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health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"ORDER"--any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person will
be deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past business practices of
such Person and is taken in the ordinary course of the normal day-to-day
operations of such Person; and
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority).
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"PERSON"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity.
"PROCEEDING"--any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted, or heard by or before,
or otherwise involving, any Governmental Body or arbitrator.
"RELATED PERSON"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and
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(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common control
with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, executive or senior
officer, partner, executor, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a Material
Interest; and
(e) any Related Person of any individual described in clause (b)
or (c).
(f) For purposes of this definition, (a) the "Family" of an
individual includes (i) the individual, (ii) the individual's spouse, and (iii)
the individual's children, and (b) "Material Interest" means direct or indirect
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934) of voting securities or other voting interests representing at least
50% of the outstanding voting power of a Person or equity securities or other
equity interests representing at least 50% of the outstanding equity securities
or equity interests in a Person.
"RELEASE"--any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
"REPRESENTATIVE"--with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT"--the Securities Act of 1933 or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"SELLERS"--as defined in the first paragraph of this Agreement.
"SHARES"--as defined in the Recitals of this Agreement.
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"STOCK REGISTRATION RIGHTS AGREEMENT"--the agreement to be
executed by the parties for the purposes of setting forth the rights of Sellers
and obligations of Buyer respecting the registration of the Buyer's Common Stock
delivered to Sellers in payment of the Purchase Price.
"SUBSIDIARY"--with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company.
"TAX RETURN"--any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE"--a substantial likelihood of a Release that
may require action in order to prevent or mitigate damage to the Environment
that may result from such Release.
"THREATENED"--a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or statement has
been made or any notice has been given (provided, however, that if such notice,
demand or statement is given verbally, then same shall not be deemed given as to
Sellers or the Company unless given to Sellers or Xxxxxxx), or if any other
event has occurred or any other circumstances exist, that would lead a prudent
Person to conclude that such a claim, Proceeding, dispute, action, or other
matter is likely to be asserted, commenced, taken, or otherwise pursued in the
reasonably foreseeable future.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at
the Closing, Sellers will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Sellers.
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2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Shares
will be 1,400,000 shares of Buyer's Common Stock.
2.3 CLOSING
The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Buyer's counsel at 000 Xxxx Xxx Xxxx
Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx, at 10:00 a.m. on January 10, 1997 or at a
time agreed upon by the parties.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares,
duly endorsed (or accompanied by duly executed stock powers);
(ii) an executed counterpart of the Stock
Registration Rights Agreement;
(iii) employment agreements in the form of
Exhibit 2.4(a)(iii), executed by Xxxx Xxxx, Xxxxxxxxxx Xxxxxxx and Xxx Xxxxxxx
(collectively, "Employment Agreements");
(iv) noncompetition agreements in the form
of Exhibit 2.4(a)(iv), executed by each Seller (collectively, the
"Noncompetition Agreements"); and
(v) a certificate executed by Sellers
representing and warranting to Buyer that, subject to the exculpation set forth
in Section 3.27 below and the exceptions set forth in the Disclosure Letter,
each of Sellers' representations and warranties in this Agreement are true and
correct in all material respects as of the Closing Date; and
(b) Buyer will deliver to Sellers:
(i) certificates representing, in the
aggregate, 1,400,000 shares of the Buyer's Common Stock as follows:
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Xxxxxxx 350,000 shares
Xxxx 175,000 shares
Xxxxxxx 29,166 shares
Xxxxxxx 350,000 shares
Xxxxxxxxx 437,500 shares
Spritzer 29,167 shares
Xxxxx 29,167 shares
If the Seller to whom the certificate is being issued is a husband and wife,
then unless Buyer is notified in writing to the contrary by such Seller prior to
Closing, the certificate delivered to such Seller shall be issued in the names
of both said husband and wife, as tenants by the entireties with full rights of
survivorship. At the request of any Seller Buyer will deliver such Seller
multiple certificates representing in the cumulative the shares of Buyer's
Common Stock provided to be delivered to such Seller as aforesaid.
(ii) a certificate executed by Buyer to the
effect that, except as otherwise stated in such certificate, each of Buyer's
representations and warranties in this Agreement are accurate in all respects as
of the date of this Agreement; and
(iii) a duly executed counterpart of the
Stock Registration Rights Agreement; and
(iv) the Employment Agreements, executed by
Buyer.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers and Xxxxxxx, each jointly and severally represent and
warrant to Buyer (all of which such representations and/or warranties are
subject to the provisions of Section 3.27, below, and such exceptions, if any,
as are set forth in the Disclosure Letter), as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) The Company is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under Applicable
Contracts. The Company is not qualified to do business as a foreign corporation
in any jurisdiction, except where the failure to so qualify would not have a
material adverse effect on the Company and except as disclosed in the Disclosure
Letter does not conduct business in any country other than the United States or
in any state other than Florida. The Company has no subsidiaries.
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(b) Sellers have delivered to Buyer copies of the
Organizational Documents of the Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid,
and binding obligation of Sellers and Xxxxxxx, enforceable against Sellers and
Xxxxxxx in accordance with its terms. Upon the execution and delivery by
applicable Sellers of the Employment Agreements, and the Noncompetition
Agreements, and the execution and delivery by Seller of the Stock Registration
Rights Agreement (collectively, the "Sellers' Closing Documents"), the Sellers'
Closing Documents will constitute the legal, valid, and binding obligations of
Sellers, enforceable against each Seller who is a party to the applicable
Sellers' Closing Document in accordance with their respective terms. Sellers and
Xxxxxxx have the absolute and unrestricted right, power, authority, and capacity
to execute and deliver this Agreement and the applicable Sellers' Closing
Documents and to perform their obligations under this Agreement and the
applicable Sellers' Closing Documents.
(b) Neither the execution and delivery of this
Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with, or result in
a violation of (A) any provision of the Organizational Documents of the Company,
or (B) any resolution adopted by the board of directors or the shareholders of
the Company;
(ii) contravene, conflict with, or result in
a violation of, or give any Governmental Body or to the Knowledge of Seller's
other Person the right to challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under, any Legal Requirement or any
Order to which the Company or any Seller, or any of the material assets owned or
used by the Company, may be subject;
(iii) contravene, conflict with, or
result in a violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or
modify, any Governmental Authorization that is held by the Company or that
otherwise relates to the business of, or any of the assets owned or used by, the
Company;
(iv) to the Knowledge of Seller's cause the
Company to become subject to, or to become liable for the payment of, any Tax,
other than as will result from the Company's loss of its Subchapter S status;
(v) contravene, conflict with, or result in
a violation or breach of any provision of, or give any Person the right to
declare a default or exercise
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any remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any material Applicable Contract; or
(vi) result in the imposition or creation of
any Encumbrance upon or with respect to any of the material assets owned or used
by the Company.
No Seller or the Company is or will be required to give
any notice to or obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.
(c) Sellers are acquiring the Buyer's Common Stock for
their own account and not with a view to their distribution within the meaning
of Section 2(11) of the Securities Act. Each Seller is an "accredited investor"
as such term is defined in Rule 501(a) under the Securities Act.
3.3 CAPITALIZATION
The authorized equity securities of the Company consist of
one hundred (100) shares of common stock, par value $5.00 per share, of which
forty-eight (48) shares are issued and outstanding and constitute the Shares.
Sellers are and will be on the Closing Date the record and beneficial owners and
holders of the Shares, free and clear of all Encumbrances. Xxxx owns six (6) of
the Shares, Xxxxxxx owns twelve (12) of the Shares, Xxxxxxx owns twelve (12) of
the Shares, Xxxxxxxxx owns fifteen (15) of the Shares, Spritzer owns one (1) of
the Shares, Xxxxx owns one (1) of the Shares and Xxxxxxx owns one (1) of the
Shares. All of the outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
Contracts relating to the future issuance, sale, or transfer of any equity
securities or other securities of the Company. None of the outstanding equity
securities or other securities of the Company was issued by the Company in
violation of the Securities Act or any other Legal Requirement. The Company does
not own or have any Contract to acquire, any equity securities or other
securities of any Person or any direct or indirect equity or ownership interest
in any other business.
3.4 FINANCIAL STATEMENTS
Sellers have allowed and will allow Buyer to cause Ernst
& Young, independent certified public accountants, to prepare, from the books
and records provided to it by the Company, and deliver to Sellers and Buyer: (a)
audited consolidated financial statements of the Company as at December 31st of
1995 and 1996 and the related audited consolidated statements of income, changes
in stockholders' equity, and cash flow for each of such fiscal years, together
with the report thereon of Ernst & Young and (b) a consolidated balance sheet of
the Company as at December 31, 1995 (including the notes thereto, the "Balance
Sheet"). Sellers have likewise caused an
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unaudited consolidated balance sheet of the Company as at November 30, 1996 (the
"Interim Balance Sheet") and the related unaudited consolidated statements of
income, changes in stockholders' equity, and cash flow for the eleven (11)
months then ended to be prepared and provided to Buyer. The Interim Balance
Sheet and all books and records provided to Ernst & Young in connection with
their review of the financial records of the Company fairly present the
financial condition and the results of operations, changes in stockholders'
equity, and cash flow of the Company as at the respective dates of and for the
periods referred to therein, all in accordance with the usual and customary
business operations of, and accounting practices followed by, the Company,
subject, in the case of interim financial statements, to normal recurring
year-end and audit adjustments. The Interim Balance Sheet and any prior year end
balance sheets prepared by the Company reflect the consistent application of
such accounting practices throughout the periods involved.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books,
and other records of the Company, all of which have been made available to
Buyer, are complete and correct and have been maintained in accordance with
sound business practices. The minute books of the Company contain accurate and
complete records of all meetings held of, and corporate action taken by, the
stockholders and the Boards of Directors of the Company, and no meeting of any
such stockholders or the Board of Directors has been held for which minutes have
not been prepared and are not contained in such minute books. At the Closing,
all of those books and records will be in the possession of the Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a complete and
accurate list of all leasehold interests in real property owned by the Company.
Sellers have delivered or made available to Buyer copies of the leases by which
the Company holds such interests. The Company owns no real property. Subject
only to the matters permitted below in this Section, all the leasehold interests
in real property and other assets (whether real, personal, or mixed and whether
tangible or intangible) that the Company purports to own are reflected in the
books and records of the Company, including all of the properties and assets
reflected in the Interim Balance Sheet (except for (i) assets held under
capitalized leases disclosed in the Disclosure Letter, (ii) personal property
sold since the date of the Interim Balance Sheet in the Ordinary Course of
Business, and (iii) assets purchased or otherwise acquired by the Company since
the date of the Interim Balance Sheet, excluding personal property acquired and
sold since the date of the Interim Balance Sheet in the Ordinary Course of
Business). All material properties and assets reflected in the Interim Balance
Sheet are free and clear of all Encumbrances except, with respect to all such
properties and assets, (a) mortgages or security interests shown on the Balance
Sheet or the Interim Balance
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Sheet as securing specified liabilities or obligations, with respect to which,
no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (b) mortgages or security interests incurred in
connection with the purchase of property or assets after the date of the Interim
Balance Sheet (such mortgages and security interests being limited to the
property or assets so acquired), with respect to which, no default (or event
that, with notice or lapse of time or both, would constitute a default) exists,
(c) liens for current taxes not yet due, and (d) with respect to real property,
(i) all rights of the owners of the fee title thereof; (ii) any encumbrances
placed thereon or assumed or taken subject to by the owner thereof; (iii) any
covenants, conditions, restrictions, easements, declarations and limitations of
record affecting the property; and (iv) zoning laws and other laws, rules and
regulations imposed by any Governmental Body with jurisdiction thereover.
3.7 CONDITION OF ASSETS
The facilities and equipment of the Company are in
reasonably good operating condition and repair, and are not, to the Knowledge of
Sellers, in need of maintenance or repairs except for ordinary, routine
maintenance and repairs.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are reflected
on the Interim Balance Sheet or on the accounting records of the Company as of
the Closing Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. To the Knowledge of
Sellers, the reserves shown on the Interim Balance Sheet or on the accounting
records of the Company as of the Closing Date are reasonably adequate and have
been calculated in a manner generally consistent with the past business
practices of the Company. Neither the Sellers nor the Company have received
written notice of any contest, claim, or right of set-off, other than returns in
the Ordinary Course of Business, under any Contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. Part 3.8 of the Disclosure Letter contains a substantially complete
and accurate list of all Accounts Receivable as of the date of the Interim
Balance Sheet, which list sets forth the aging of such Accounts Receivable.
3.9 INVENTORY
All inventory of the Company, whether or not reflected in
the Interim Balance Sheet or acquired since that date in the Ordinary Course of
Business, consists, to the Knowledge of Sellers, of goods of a quality and
quantity usable in the Ordinary Course of Business by the Company, except for
obsolete items and items of below-standard quality, and all such inventory is
maintained on the books and accounting
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records of the Company at its proper value consistent with past business and
accounting practices of the Company.
3.10 NO UNDISCLOSED LIABILITIES
To the Knowledge of the Sellers, the Company has no
material liabilities or obligations except for liabilities or obligations
reflected or reserved against in the Interim Balance Sheet and liabilities,
accrued, contingent or otherwise, incurred in the Ordinary Course of Business
since the date thereof.
3.11 TAXES
(a) The Company has made and maintained a valid
election under subchapter "S" of the IRC and has filed all informational tax
returns required to be filed by it. The Company has filed or caused to be filed
(on a timely basis since December 31, 1992) all other Tax Returns that are or
were required to be filed by it pursuant to applicable Legal Requirements.
Sellers have delivered to Buyer copies of, and Part 3.11 of the Disclosure
Letter contains a complete and accurate list of, all such Tax Returns filed
since December 31, 1992. The Company has paid, or made provision for the payment
of, all Taxes that have or may have become due from Company pursuant to those
Tax Returns or pursuant to any assessment received by the Company, except such
Taxes, if any, as are listed in the Disclosure Letter and are being contested in
good faith and as to which adequate reserves have been provided in the Interim
Balance Sheet.
(b) No returns filed to date by the Company have
been audited by the IRS or relevant state tax authorities. The Company has not
given or been requested to give waivers or extensions (or, to the Knowledge of
Sellers, is or would be subject to a waiver or extension given by any other
Person) of any statute of limitations relating to the payment of Taxes of the
Company or for which the Company may be liable.
(c) The charges, accruals, and reserves with respect
to Taxes on the respective books of the Company are reasonably adequate
(determined in accordance with prior consistent accounting practices of the
Company). To the Knowledge of Sellers, there exists no proposed tax assessment
against the Company except as disclosed in the Interim Balance Sheet or in the
Disclosure Letter. All Taxes that the Company is or was required by Legal
Requirements to withhold or collect have been duly withheld or collected and, to
the extent required, have been paid to the proper Governmental Body.
(d) All Tax Returns filed by (or that include on a
consolidated basis) the Company are true, correct, and complete in all material
respects. There is no
-15-
tax sharing agreement made by Company that will require any payment by the
Company after the date of this Agreement.
3.12 NO MATERIAL ADVERSE CHANGE
Since the date of the Interim Balance Sheet, there has not
been any material adverse change in the business, operations, properties,
assets, or condition of the Company, and, to the Knowledge of Sellers, no event
has occurred or circumstance exists that would be likely to result in such a
material adverse change.
3.13 EMPLOYEE BENEFITS
(a) The Company has no ERISA qualified employee
benefit plans. Part 3.13 of the Disclosure Letter lists and describes in
reasonable detail those non- qualified employee benefit plans maintained by the
Company. The Company has no ERISA affiliates.
(b) Sellers have caused the Company to deliver
to Buyer copies of all documents, if any, that set forth the terms of each
Company non-qualified employee benefit plan, including all insurance policies
purchased by, or to provide benefits under, any such Company employee benefit
plan.
(c) Except as set forth in the Disclosure Letter
the Company has, to the Knowledge of Sellers, performed all of its material
obligations that have arisen to date under all Company non-qualified employee
benefit plans.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS
(a) Except as set forth in the Disclosure Letter:
(i) the Company is, and at all times since
has been, in material compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the ownership
or use of any of its assets;
(ii) no event has occurred or circumstance
exists that (with or without notice or lapse of time) (A) may constitute or
result in a material violation by the Company of, or a failure on the part of
the Company to comply in all material respects with, any Legal Requirement, or
(B) may give rise to any material obligation on the part of the Company to
undertake, or to bear all or any portion of the cost of, any remedial action of
any material nature; and
(iii) the Company has not received, any written
notice or to Sellers' Knowledge other communication from any Governmental Body
or any other
-16-
Person regarding (A) any actual, alleged, possible, or potential material
violation of, or material failure to comply with, any Legal Requirement, or (B)
any actual, alleged, possible, or potential material obligation on the part of
the Company to undertake, or to bear all or any portion of the cost of, any
remedial action of any material nature.
(b) The Disclosure Letter contains a complete
and accurate list of each Governmental Authorization that is held by the Company
or that otherwise relates to the business of, or to any of the assets owned or
used by, the Company. Each Governmental Authorization listed in the Disclosure
Letter is valid and in full force and effect. Except as set forth in the
Disclosure Letter:
(i) the Company is, and at all times has
been, in material compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in the
Disclosure Letter;
(ii) no event has occurred or circumstance
exists that may (with or without notice or lapse of time) (A) constitute or
result directly or indirectly in a material violation of or a material failure
to comply with any material term or requirement of any Governmental
Authorization listed in the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Governmental Authorization listed in
the Disclosure Letter;
(iii) the Company has not received, at
any time any written notice, or to the Knowledge of Sellers, other communication
from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential material violation of or material failure to
comply with any material term or requirement of any Governmental Authorization,
or (B) any actual, proposed, possible, or potential revocation, withdrawal,
suspension, cancellation, termination of, or modification to any material
Governmental Authorization; and
(iv) all applications required to have been
filed by the Company for the renewal of the Governmental Authorizations listed
in Part 3.14 of the Disclosure Letter have been duly filed on a timely basis
with the appropriate Governmental Bodies, and all other filings required to have
been made with respect to such Governmental Authorizations have been duly made
on a timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed
in the Disclosure Letter collectively constitute all of the Governmental
Authorizations necessary to permit the Company to lawfully conduct and operate
its businesses in the manner it currently conducts and operates such businesses
and to permit the Company to own and use its assets in the manner in which it
currently owns and uses such assets.
-17-
3.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in the Disclosure Letter, there
is no pending Proceeding:
(i) that has been commenced by or against
the Company or that otherwise relates to or may materially affect the business
of, or any of the assets owned or used by, the Company; or
(ii) that challenges, or that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions.
To the Knowledge of Sellers and the
Company, (1) no such Proceeding has been Threatened, and (2) no event has
occurred or circumstance exists that could reasonably be expected to give rise
to or serve as a basis for the commencement of any such Proceeding. Sellers have
delivered to Buyer copies of all pleadings, correspondence, and other documents
relating to each Proceeding listed in the Disclosure Letter. To the Knowledge of
Sellers, the Proceedings listed in the Disclosure Letter will not, except as
disclosed in the Disclosure Letter, have a material adverse effect on the
business, operations, assets or condition of the Company.
(b) Except as set forth in the Disclosure Letter:
(i) there is no Order to which the Company,
or any of the assets owned or used by the Company, is subject;
(ii) no Seller is subject to any Order that
relates to the business of, or any of the assets owned or used by, the Company;
and
(iii) no officer, director, or to the
Knowledge of Sellers, any agent, or critical employee of the Company is subject
to any Order that prohibits such officer, director, agent, or critical employee
from engaging in or continuing any conduct, activity, or practice relating to
the business of the Company.
(c) Except as set forth in the Disclosure Letter:
(i) the Company is, and at all times has
been, in substantial compliance with all of the terms and requirements of each
Order to which it, or any of the assets owned or used by it, is or has been
subject;
(ii) no event has occurred or circumstance
exists that may constitute or result in (with or without notice or lapse of
time) a violation of or failure to
-18-
comply with any material term or requirement of any Order to which the Company,
or any of the assets owned or used by the Company, is subject; and
(iii) the Company has not received, at any time,
written notice or, to the Knowledge of Sellers, other communication from any
Governmental Body or any other Person regarding any actual, alleged, possible,
or potential violation of, or failure to comply with, any material term or
requirement of any Order to which the Company, or any of the assets owned or
used by the Company, is or has been subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Since the date of the Interim Balance Sheet, the Company
has conducted its businesses only in the Ordinary Course of Business and there
has not been any:
(a) change in the Company's authorized or issued
capital stock; grant of any stock option or right to purchase shares of capital
stock of the Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by the Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock (provided, however that the Company shall be
permitted to make distributions to its shareholders to meet their tax
liabilities as a result of the Company's status as a "S" corporation, which
distributions shall be $53,297 net of $17,500 contributed by the Sellers
relating to their agreed portion of the legal fees. For purposes of such
distributions the Company and the shareholders shall assume a 40% effective tax
rate and the Company shall use good faith in determining the estimated amounts
of the distributions to its shareholders to be made in advance of the Closing
hereunder;
(b) amendment to the Organizational Documents of
the Company;
(c) payment or increase by the Company of any
bonuses, salaries, or other compensation other than in the Ordinary Course of
Business consistent with prior business practices, to any stockholder, director,
officer, or employee, or entry into any employment, severance, or similar
Contract with any director, officer, or employee;
(d) adoption of, or increase in the payments to
or benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of the Company;
(e) damage to or destruction or loss of any asset or
property of the Company, whether or not covered by insurance, materially and
adversely affecting
-19-
the properties, assets, business, financial condition, or prospects of the
Company, taken as a whole;
(f) entry into, termination of, or receipt of notice
of termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to the
Company of at least $15,000 (other than contracts or transactions in connection
with a lease for new office space);
(g) sale (other than sales of inventory in the
Ordinary Course of Business), lease (other than a lease for new office space for
the Company), or other disposition of any asset or property of the Company or
mortgage, pledge, or imposition of any lien or other encumbrance on any material
asset or property of the Company, including the sale, lease, or other
disposition of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with
a value to the Company in excess of $15,000;
(i) material change in the accounting methods used by
the Company; or
(j) agreement, whether oral or written, by the Company
to do any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17 of the Disclosure Letter contains a
complete and accurate list, and Sellers have delivered to Buyer true and
complete copies, of:
(i) each Applicable Contract that involves
performance of services or delivery of goods or materials by the
Company of an amount or value in excess of $15,000;
(ii) each Applicable Contract that involves
performance of services or delivery of goods or materials to the
Company of an amount or value in excess of $15,000;
(iii) each Applicable Contract that was not
entered into in the Ordinary Course of Business and that involves expenditures
or receipts of the Company in excess of $15,000;
(iv) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or
-20-
personal property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate payments of
less than $20,000 and with terms of less than one year);
(v) each licensing agreement or other
Applicable Contract with respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the non-disclosure of
any of the Intellectual Property Assets;
(vi) each collective bargaining agreement and
other Applicable Contract to or with any labor union or other employee
representative of a group of employees;
(vii) each joint venture, partnership, and other
Applicable Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by the Company with any other Person;
(viii) each Applicable Contract containing
covenants that in any way purport to restrict the business activity of the
Company or any Affiliate of the Company or limit the freedom of the Company or
any Affiliate of the Company to engage in any line of business or to compete
with any Person;
(ix) each Applicable Contract providing for
payments to or by any Person based on sales, purchases, or profits, other than
direct payments for goods;
(x) each power of attorney of the Company
that is currently effective and outstanding;
(xi) each Applicable Contract entered into
other than in the Ordinary Course of Business that contains or provides for an
express undertaking by the Company to be responsible for consequential damages;
(xii) each Applicable Contract for capital
expenditures, by the Company in excess of $15,000;
(xiii) each written warranty, guaranty, and or
other similar undertaking with respect to contractual performance extended by
the Company other than in the Ordinary Course of Business; and
(xiv) each written amendment, supplement, and
modification in respect of any of the foregoing.
-21-
(b) Except as set forth in the Disclosure Letter:
(i) none of Sellers (and no Related Person
of Sellers) has or may acquire any rights under, nor has or may become subject
to any obligation or liability under, any Contract that relates to the business
of, or any of the assets owned or used by, the Company; and
(ii) no officer, director, or to the
Knowledge of Sellers, any agent, critical employee, consultant, or
Representative of the Company is bound by any Contract that purports to limit
the ability of such officer, director, agent, critical employee, consultant, or
Representative to (A) engage in or continue any conduct, activity, or practice
relating to the business of the Company, or (B) assign to the Company or to any
other Person any rights to any invention, improvement, or discovery.
(c) Except as set forth in the Disclosure
Letter, each Contract identified in Part 3.17 of the Disclosure Letter is in
full force and effect and is valid and substantially enforceable in accordance
with its terms.
(d) Except as set forth in the Disclosure Letter:
(i) the Company is, and at all times has
been, in compliance with all material terms and requirements of each Contract
under which the Company has or had any material obligation or liability or by
which the Company or any of the assets owned or used by the Company is bound;
(ii) to the Knowledge of Sellers, each other
Person that has or had any obligation or liability under any Contract under
which the Company has or had any rights is in compliance with all material terms
and requirements of such Contract;
(iii) to the Knowledge of Sellers, no event has
occurred or circumstance exists that (with or without notice or lapse of time)
may contravene, conflict with, or result in a material violation or breach of,
or give the Company or other Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; and
(iv) the Company has not given to or received
from any other Person, at any time since December 31, 1995 any written notice
or, to the Knowledge of Sellers, other communication regarding any actual,
alleged, possible, or potential violation or breach of, or default under, any
Contract.
(e) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to the Company
-22-
under current or completed Contracts with any Person and no such Person has made
written demand for such renegotiation.
(f) The Contracts relating to the sale, or provision of
products or services by the Company have been entered into in the Ordinary
Course of Business and, to the Knowledge of Sellers, have been entered into
without the commission of any act alone or in concert with any other Person, or
any consideration having been paid or promised, that is or would be in material
violation of any Legal Requirement.
3.18 INSURANCE
(a) Sellers have delivered to Buyer:
(i) true and complete copies of all policies of
insurance to which the Company is a party or under which the Company, or any
director of the Company (in such capacity) is covered;
(ii) true and complete copies of all pending
applications for policies of insurance; and
(iii) any statement by the auditor of the
Company's financial statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.
(b) Part 3.18 of the Disclosure Letter describes:
(i) any self-insurance arrangement by or
affecting the Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than
a policy of insurance, for the transfer or sharing of any risk by the Company;
and
(iii) all obligations of the Company to third
parties with respect to insurance (including such obligations under leases and
service agreements) and identifies the policy under which such coverage is
provided.
(c) To the Knowledge of Sellers, the Disclosure
Letter sets forth, by year, for the current policy year and the preceding
policy year:
(i) a summary of the material loss experience
under each policy;
(ii) a statement describing each claim under an
insurance policy for an amount in excess of $20,000, which sets forth:
-23-
(A) the name of the claimant;
(B) a description of the policy by
insurer, type of insurance, and period of coverage; and
(C) the amount and a brief description
of the claim; and
(iii) a statement describing the loss experience
for all material claims that were self-insured, including the number and
aggregate cost of such claims.
(d) To the Knowledge of Sellers, except as set forth
in the Disclosure Letter:
(i) all policies to which the Company is a
party or that provide coverage to the Company, or any director or officer of the
Company (in such capacity):
(A) are valid, outstanding, and
enforceable;
(B) are issued by an insurer that is
financially sound and reputable;
(C) taken together, provide reasonably
adequate insurance coverage for the assets and the operations of the Company;
(D) are sufficient for compliance with
all material Legal Requirements and material Contracts to which the Company is
a party or by which it is bound;
(E) will not be involuntarily
cancelled, pursuant to their terms, as a result of the consummation of the
Contemplated Transactions; and
(F) except as possibly to its worker's
compensation polic(ies), do not provide for any retrospective premium adjustment
or other experienced- based liability on the part of the Company;
(ii) the Company has not received (A) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other indication
(except for matters common to the insurance market in South Florida) that any
insurance policy is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to perform its obligations
thereunder;
-24-
(iii) the Company has paid all premiums due, and
has otherwise performed all of its material obligations, under each policy to
which the Company is a party or that provides coverage to the Company or a
director thereof; and
(iv) other than with respect to health
insurance claims or disability claims submitted by employees, the Company has
given notice to the insurer of all claims that it believes are appropriate to
assert under the policies.
3.19 ENVIRONMENTAL MATTERS
Except as set forth in the Disclosure Letter:
(a) The Company is, and at all times has been, in
compliance with, and has not been and is not in material violation of or liable
under, any Environmental Law.
(b) To the Knowledge of Sellers, there are no pending
or Threatened claims, Encumbrances, or other restrictions of any material
nature, resulting from, arising under, or pursuant to any Environmental Law,
with respect to or affecting any of the Facilities or any other properties and
assets (whether real, personal, or mixed) in which the Company has an interest.
(c) To the Knowledge of Sellers, the Company has no
knowledge of nor any basis to expect, that it would be held responsible for, nor
has it received any written citation, directive, inquiry, notice, Order,
summons, warning, or other communication that (i) relates to Hazardous Activity,
Hazardous Materials, or any alleged, actual, or potential violation or failure
of the Company to comply with any Environmental Law, or (ii) to undertake or
bear the cost of any environmental remediation with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which the Company has an interest, or (iii) with respect to any property or
facility to which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by the Company have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
(d) To the Knowledge of the Sellers, there has been no
Release or Threat of Release of any Hazardous Materials at or from the
Facilities or at any other locations where the Company has or had an interest,
or where any Hazardous Materials were generated, manufactured, refined,
transferred, produced, imported, used or processed by the Company.
(e) The Company has never ordered or received copies
of any reports, studies, analyses or tests pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or concerning compliance
by the Company, or
-25-
any other Person for whose conduct the Company is or may be held responsible,
with Environmental Laws.
3.20 EMPLOYEES
(a) Part 3.20 of the Disclosure Letter contains, to the
Knowledge of Sellers, a complete and accurate list of the following information
for each employee or director of the Company, including each employee on leave
of absence or layoff status: name; job title; current compensation paid or
payable and any change in compensation since December 31, 1995; vacation
accrued; and term of employment to date.
(b) To the Knowledge of Sellers, no employee or
director of the Company is a party to, or is otherwise bound by, any agreement
or arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee or director and any other Person
("Proprietary Rights Agreement") that in any way adversely affects or will
affect (i) the performance of his duties as an employee or director of the
Company, or (ii) the ability of the Company to conduct its business. To Sellers'
Knowledge, no director, officer, or other key employee of the Company intends to
terminate his employment with the Company.
(c) Part 3.20 of the Disclosure Letter also contains a
complete and accurate list of the following information for each retired
employee or director of the Company, or their dependents, receiving benefits or
scheduled to receive benefits in the future: name, retiree medical insurance
coverage, retiree life insurance coverage, and other benefits, if any.
3.21 LABOR RELATIONS; COMPLIANCE
The Company has not been nor is it currently a party to any
collective bargaining or other labor Contract. There is not presently pending or
existing, and there is not, to the Knowledge of Sellers, Threatened, (a) any
strike, slowdown, picketing, work stoppage, or employee grievance process, (b)
any Proceeding against or affecting the Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity Commission,
or any comparable Governmental Body, organizational activity, or other labor or
employment dispute against or affecting any of the Company or its premises,
except as disclosed in the Disclosure Letter, or (c) any application for
certification of a collective bargaining agent. To the Knowledge of Sellers, no
event has occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lockout of any employees by
the Company, and no such action is contemplated by the Company. To the Knowledge
of Sellers, the Company has complied in all material respects with all Legal
Requirements relating to
-26-
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant closing. To the
Knowledge of Sellers, the Company is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
3.22 INTELLECTUAL PROPERTY
(a) INTELLECTUAL PROPERTY ASSETS--The term
"Intellectual Property Assets" includes:
(i) the name Medial Services Consortium, Inc.,
and any and all of the Company's registered trademarks, service marks, and
applications (collectively, "Marks");
(ii) all patents, patent applications, and
inventions and discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published
works and unpublished works (collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential
information, customer lists, plans, drawings, and blue prints (collectively,
"Trade Secrets"); owned or licensed by the Company as licensee or licensor.
(b) AGREEMENTS--The Disclosure Letter contains a
complete and accurate list and summary description, including any royalties paid
or received by the Company, of all Contracts relating to the Intellectual
Property Assets to which the Company is a party or by which the Company is
bound. To the Knowledge of Sellers, there are no outstanding or Threatened
disputes or disagreements with respect to any such agreement.
(c) TRADEMARKS
(i) no Marks have been registered by the
Company with the United States Patent and Trademark Office;
(ii) no Xxxx has been or is now involved in
any opposition, invalidation, or cancellation and, to Sellers' Knowledge, no
such action is Threatened with the respect to any of the Marks;
(iii) to Sellers' Knowledge, there is
no trademark or trademark application of any third party that interferes with
the Company's business; and
-27-
(iv) the Company has not received any written
notice or other written communication alleging that any of the Marks used by the
Company infringes or is alleged to infringe upon any trade name, trademark, or
service xxxx of any third party.
(d) TRADE SECRETS:
(i) to the Knowledge of the Sellers, the
Company has taken all reasonable precautions to protect the secrecy,
confidentiality, and value of its Trade Secrets; and
(ii) the Company has the right to use the Trade
Secrets. To the Knowledge of Sellers, no Trade Secret is subject to any
Proceeding or written adverse claim nor has the Company received written notice
or other written communication challenging or threatening the Company's rights
thereto.
3.23 CERTAIN PAYMENTS
To the Knowledge of Sellers, neither the Company nor any
director, officer, agent, or employee of the Company, or any other Person acting
for or on behalf of the Company, has directly or indirectly (a) made any bribe,
illegal rebate, payoff, influence payment or kickback to any Person, private or
public, regardless of form, whether in money, property, or services in violation
of any Legal Requirement, or (b) established or maintained any fund or asset
that has not been recorded in the books and records of the Company.
3.24 DISCLOSURE
(a) No representation or warranty of Sellers in this
Agreement and no statement in the Disclosure Letter omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) There is no fact known to Sellers that has
specific application to any Seller or the Company (other than general economic
or industry conditions) and that materially adversely affects the assets,
business, prospects, financial condition, or results of operations of the
Company that has not been set forth in this Agreement or the Disclosure Letter.
-28-
3.25 RELATIONSHIPS WITH RELATED PERSONS
Except as disclosed in the Disclosure Letter, to the
Knowledge of Sellers, (a) no Seller or any Related Person of Sellers or of the
Company has, or since has had, any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining to
the Company's businesses; (b) no Seller or any Related Person of Sellers or of
the Company is, or has owned (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in, a Person that has (i) had
business dealings or a material financial interest in any transaction with the
Company or (ii) engaged in competition with the Company with respect to any line
of the products or services of the Company (a "Competing Business") in any
market presently served by the Company; and (c) no Seller or any Related Person
of Sellers or of the Company is a party to any Contract with, or has any claim
or right of any nature (except for items described in Section 11, below, items
reflected on the Interim Balance Sheet or monies due under existing employment
arrangements) against, the Company.
3.26 BROKERS OR FINDERS
Sellers and their agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
3.27 LIMITATION ON REPRESENTATIONS AND WARRANTIES OF
SPRITZER, YELEN AND XXXXXXX
The parties acknowledge that notwithstanding the fact that
the representations and warranties set forth in Sections 3.1 through 3.26,
inclusive, appear to be made by all Sellers, jointly and severally, none of
Spritzer, Yelen or Xxxxxxx possess sufficient knowledge to make the
representations and warranties applicable to the Company. Accordingly,
notwithstanding the provisions of the foregoing Sections of this Article 3,
Buyer and the other Sellers agree and acknowledge that Spritzer, Yelen and
Xxxxxxx shall not be deemed to have made, or be liable under, any
representations or warranties of Sellers to Buyer hereunder except that
Spritzer, Yelen and Xxxxxxx each represent, severally, that (i) they are selling
their Shares of the Company hereunder free and clear of any lien, assessment or
security interest; (ii) they have full right and authority to sell the Shares
being sold by them and the Agreement constitutes the legal, valid and binding
obligation of each of them, enforceable against them in accordance with these
terms; (iii) they have no actual knowledge of any violations of the
representations and warranties set forth in Sections 3.2(b)(i), 3.2(b)(v) or
3.15(a)(ii); (iv) neither they nor their agents have incurred any obligations or
liabilities, contingent or otherwise, for broker's, agent's or finder's fees or
other similar payments in connection with the Contemplated Transactions; (v)
they are acquiring the Buyer's Common Stock being acquired by them for their own
accounts and not with a view to distribution within the meaning of Section 2(11)
of the Securities Act; and (vi) each of them is an
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"accredited investor" as such term is defined in Rule 501(a) under the
Securities Act. The remaining Sellers and Buyer agree that in the event a claim
under the indemnity provisions of this Agreement arises as a result of an
inaccuracy in a representation or warranty not joined in by Spritzer, Yelen and
Xxxxxxx, then, any liability determined due Buyer from Sellers as a result
thereof shall be due solely from Eger, Edelson, Xxxxxxx and Xxxxxxxxx who shall
be responsible for the full amount of such liability.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND QUALIFICATION
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida, has all requisite power
and authority to own, lease and operate its properties and to carry on its
businesses as they are now being conducted, and Buyer is duly qualified to do
business and in good standing in each jurisdiction in which the nature of the
business conducted by it or the ownership or leasing of its properties makes
such qualification and being in good standing necessary except where the failure
to so qualify would not have a material adverse effect on the Buyer.
4.2 AUTHORITY
Buyer has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby to be consummated by Buyer. The
execution and delivery of this Agreement by Buyer and the consummation by Buyer
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Buyer are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Buyer and, assuming the due authorization, execution and delivery
hereof by each of Sellers constitutes the legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms, except as limited
by bankruptcy and insolvency laws or principles of equity generally.
4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) Except as set forth on Schedule 4.3, the
execution and delivery of this Agreement by Buyer does not, and the performance
by Buyer of its obligations hereunder will not:
(i) conflict with, breach or violate the
Certificate of Incorporation, By-Laws or any corporate resolution of Buyer;
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(ii) conflict with or violate any material
Legal Requirement or Order in effect as of the date of this Agreement applicable
to Buyer or by which any of its properties or assets is bound; or (iii) result
in any breach of, constitute a default (or an event that with notice or lapse of
time or both would become a default) under, give to any other entity any right
of termination, amendment, acceleration or cancellation of, require payment
under, or result in the creation of a lien or encumbrance on any of the material
properties or material assets of Buyer pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise, or
other material instrument or obligation to which Buyer is a party or by which
Buyer or any of its properties or assets is bound.
(b) Except as set forth in Schedule 4.3, the
execution and delivery of this Agreement by Buyer does not, and the performance
by Buyer of its obligations hereunder will not, require Buyer to obtain any
consent, registration, approval, authorization or permit of, to make any filing
with, or to give notification to, any person, including any Governmental Body,
based on any Legal Requirement, Order or other requirement of any Governmental
Body in effect as of the date of this Agreement.
4.4 CERTIFICATE OF INCORPORATION AND BY-LAWS
Buyer has heretofore furnished to Seller a complete and
correct copy of the Certificate of Incorporation and the By-Laws, as amended or
restated to date, and Buyer is not in violation of any of the provisions of its
Certificate or Incorporation or By-Laws, all of which are in full force and
effect.
4.5 CAPITALIZATION
The authorized capital stock of Buyer consists of
50,000,000 shares of common stock, par value $.0001 and 1,000,000 shares of
preferred stock. As of the date hereof, Buyer has issued and outstanding
10,879,138 shares of common stock, which are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights, pursuant to
its Certificate of Incorporation or By-Laws or any agreement to which Buyer is a
party or is bound.
4.6 INVESTMENT INTENT
Buyer is acquiring the Shares for its own account
and not with a view to their distribution within the meaning of Section 2(11) of
the Securities Act.
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4.7 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced
against Buyer and that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Buyer's Knowledge, no such Proceeding has been Threatened.
4.8 ABSENCE OF LITIGATION
Except as set forth on Schedule 4.8 hereto, there is no
claim, action, suit, litigation, proceeding, arbitration or investigation of any
kind, at law or in equity (including actions or proceedings seeking injunctive
relief), pending or, to the knowledge of Buyer, threatened against Buyer or any
properties or rights of Buyer (except for claims, actions, suits, litigations,
proceedings, arbitrations or investigations which, individually or in the
aggregate, would not reasonably be expected to have a material adverse effect on
Buyer), nor is there any judgment, order, writ, injunction, decree or award of
any Governmental Entity or arbitrator to which Buyer is subject that has had or
to Buyer's knowledge could reasonably be expected to have a material adverse
effect on Buyer.
4.9 REPORTS; FINANCIAL STATEMENTS
Buyer has delivered to Seller true, correct and complete
copies of (a) Buyer's balance sheets, income statements and statements of cash
flow as of and for the six (6) month periods ended June 30, 1995 and 1996, and
the nine (9) month periods ended September 30, 1995 and 1996, and (b) all of
Buyer's periodic and other reports, including, but not limited to, reports on
Form 8K, Form 10K, Form 10QSB and proxy statements, filed, since April 26, 1996,
with the Securities and Exchange Commission ("Buyer's SEC Reports"). Each of
such financial statements: (a) has been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, and (b) fairly
presents the financial position of Buyer as of the respective dates thereof and
its results of operations and cash flows for the periods indicated in accordance
for generally accepted accounting principles consistently applied. Each of the
Buyer's SEC Reports complies in form and content in all material respects with
all applicable legal requirements, contain no misstatement of a material fact
and does not omit to state any fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not materially
misleading. Buyer has delivered to Sellers copies of each of such SEC Reports.
4.10 ABSENCE OF CERTAIN CHANGES OR EVENTS
Except as disclosed in the Buyer's SEC Reports filed by the
Buyer with the Securities & Exchange Commission since September 30, 1996 to the
date of this Agreement, there has not been any material change in the financial
condition, results
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of operations or business of the Buyer that would have a material adverse effect
on the Buyer.
4.11 BROKERS OR FINDERS
Buyer and its officers and agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Sellers harmless from any such payment
alleged to be due by or through Buyer as a result of the action of Buyer or its
officers or agents.
5. This Section has been intentionally omitted.
6. This Section has been intentionally omitted.
7. This Section has been intentionally omitted.
8. This Section has been intentionally omitted.
9. This Section has been intentionally omitted.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations, warranties, covenants, and
obligations in this Agreement, the Disclosure Letter, any supplements to the
Disclosure Letter, the certificate delivered pursuant to Section 2.4(a)(v), and
any other certificate or document delivered pursuant to this Agreement will
survive the Closing for a period of one (1) year.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Subject to the provisions and limitations of this
Article 10, Sellers and Xxxxxxx, jointly and severally (except as to Spritzer,
Yelen and Xxxxxxx whose liability, if any, hereunder shall be several only, and,
their liability, if any, shall only arise hereunder as to any false
representations or warranties specifically made by them as contemplated in
Section 3.27, above) indemnify and hold harmless Buyer, the Company and its
controlling persons (collectively, the "Indemnified Persons") for, and will pay
to the Indemnified Persons the amount of, any loss, liability, claim, damage,
other than consequential damage, expense (including costs of investigation and
defense and reasonable attorneys' fees) whether or not involving a third-party
claim (collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
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(a) any Breach of any representation or warranty
made by Sellers in this Agreement, the Disclosure Letter, the supplements to the
Disclosure Letter, or any other certificate or document delivered by Sellers
pursuant to this Agreement;
(b) any Breach by Sellers of any covenant or
obligation of any Seller in this Agreement;
(c) any product shipped or manufactured by, or
any services provided by, the Company prior to the Closing Date including, but
not limited to any dispute by Company with West Gables over medicaid xxxxxxxx
irrespective of Sellers' notice to Buyer of such claim, which claim shall not be
subject to the minimum claim threshold set forth in Section 10.5(c);
(d) any costs, charges, expenses or excess rent
which results from the failure of MICC Venture to consent to the transfer of the
lease for the Company's new offices, which claim shall not be subject to the
minimum claim threshold set forth in Section 10.5(c). Provided, however, that
Sellers shall not be liable if landlord terminates such lease without liability
to Company; or
(e) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with any Seller or
the Company (or any Person acting on their behalf) in connection with the
Contemplated Transactions.
The maximum liability of the Sellers and Xxxxxxx
for indemnification hereunder is limited to the Market Value (as defined below)
of the Buyer's Common Stock delivered to Sellers at Closing (and such value
shall be determined as of the Closing and remain fixed for purposes of this
section) plus, if and only if the indemnity claim arises from a claim asserted
against the Company (or Buyer as owner of the Company) by an independent third
party, the sums advanced by Buyer for the Additional Closing Payments described
in Section 11, below. As used herein, Market Value at Closing means, as of the
Closing Date, the closing price of the Buyer's Common Stock as reported by the
principal exchange or market on which such securities trade on the trading date
immediately preceding the Closing Date, or if such market or exchange does not
report actual trades, the average between the closing bid and ask quotations on
such day. The indemnification provisions of this Section set forth the Seller's
exclusive liability for the inaccuracy or breach of any of Sellers'
representations, warranties, covenants and agreements in this Agreement. Sellers
shall each have the right to satisfy their indemnification liabilities to Buyer
either by payment of cash, or by delivery of the appropriate number of Shares of
Buyer's Common Stock acquired at the Closing (or any other security that the
Buyer has distributed in respect of or in exchange for such Buyer's Common Stock
pursuant to a stock split, dividend, merger, asset sale or otherwise) by such
Seller to the Buyer in payment of such claim (and the value of such Shares of
Buyer's Common Stock shall be determined as of the Closing and remain
-34-
fixed for purposes of this section). Notwithstanding anything to the contrary
contained elsewhere herein, the maximum liability that can be imposed against
Spritzer, Yelen or Xxxxxxx shall never exceed the Market Value of the portion of
Buyer's Common Stock acquired by them at Closing, respectively.
10.3 This Section has been Intentionally Omitted.
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, and will
pay to Sellers the amount of any Damages arising, directly or indirectly, from
or in connection with (a) any Breach of any representation or warranty made by
Buyer in this Agreement or in any certificate delivered by Buyer pursuant to
this Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer
in this Agreement, or (c) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with the Contemplated Transactions.
10.5 TIME LIMITATIONS; MINIMUM CLAIMS BASKET
(a) Sellers and Xxxxxxx will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation, unless on or before one (1) year from the date hereof
Buyer notifies Sellers of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Buyer. Buyer will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation, unless on or before one (1) year from
the date hereof, Sellers notify Buyer of a claim specifying the factual basis of
that claim in reasonable detail to the extent then known by Sellers.
(b) Nothing set forth herein shall relieve either
Buyer or Sellers from their obligations and liabilities arising under any
Closing Document delivered hereunder, including, but not limited to the Stock
Registration Rights Agreements, the Employment Agreements and/or the
Non-Competition Agreement, to the extent such Closing Documents require any
party thereto to take further actions or make further payments following the
Closing Date.
(c) Notwithstanding any conflicting or inconsistent
provisions hereof, neither party shall be liable in damages, indemnity or
otherwise to the other party in respect of the inaccuracy or breach of any
representations, warranties, covenants or agreements herein (excluding
liabilities, damages or obligations arising under Section 11 below or under any
Closing Documents as described in Section 10.5(b) above which shall be
recoverable regardless of whether the claim exceeds the amount set forth below)
except to the extent that the damages to the aggrieved party caused by such
inaccuracy or breach exceed the sum of $50,000; provided however, that if any
damages
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are incurred by an aggrieved party which are in excess of $50,000, then the
party or parties responsible to pay same shall be responsible for all damages
incurred by the aggrieved party which are in excess of $25,000.
10.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party
under Section 10.2, 10.4, or (to the extent provided in the last sentence of
Section 10.3) Section 10.3 of notice of the commencement of any Proceeding
against it, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying party of
the commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section 10.9(a)
is brought against an indemnified party and it gives notice to the indemnifying
party of the commencement of such Proceeding, the indemnifying party will be
entitled to participate in such Proceeding and, to the extent that it wishes
(unless the indemnifying party is also a party to such Proceeding and the
indemnified party determines in good faith that joint representation would be
inappropriate), to assume the defense of such Proceeding with counsel reasonably
satisfactory to the indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently conducts
such defense, be liable to the indemnified party under this Section 10 for any
fees of other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified party in
connection with the defense of such Proceeding. If the indemnifying party
assumes the defense of a Proceeding (i) no compromise or settlement of such
claims may be effected by the indemnifying party without the indemnified party's
consent unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (ii) the indemnified party will have no liability with respect to any
compromise or settlement of such claims effected without its consent. If notice
is given to an indemnifying party of the commencement of any Proceeding and the
indemnifying party does not, within thirty (30) days (or such shorter period
within which a response to the Proceeding is due in order to comply with the
applicable rules of such Proceeding, as said period may be extended) after the
indemnified party's notice is given, give notice to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
be bound by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
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(c) Notwithstanding the foregoing, if an indemnified
party determines in good faith that there is a reasonable probability that a
Proceeding 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, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld) therein.
(d) Sellers and Buyer hereby consent to the
non-exclusive jurisdiction of any court in which a Proceeding is brought against
any Indemnified Person for purposes of any claim that an Indemnified Person may
have under this Agreement with respect to such Proceeding or the matters alleged
therein, and agree that process may be served on them with respect to such a
claim anywhere in the world.
10.7 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim may be asserted only by written notice to the
party from whom indemnification is sought.
11. ADDITIONAL CLOSING PAYMENTS
(a) Buyer shall, at the Closing, satisfy, or provide the Company
with the funds sufficient to pay the "note payable other" as such term appears
on the Company's financial statements;
(b) Buyer shall, within thirty days after the Closing pay or
cause MSC to pay the amounts set forth on the financial statements in the line
items entitled "Shareholder Advances" and "Note Payable Shareholder";
(c) Buyer shall, within thirty days of Closing, either pay or
satisfactorily restructure all amounts due from the Company under the terms and
conditions of those certain loans dated August 9, 1995 and January 3, 1997 to
SunTrust Bank N.A. and in connection therewith Buyer shall cause the personal
guarantees of the Sellers to be released and discharged as part of any payment
or restructure.
12. GENERAL PROVISIONS
12.1 EXPENSES
Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated
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Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants.
12.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with
respect to this Agreement or the Contemplated Transactions will be issued, if at
all, at such time and in such manner as Buyer determines.
12.3 CONFIDENTIALITY
Buyer and Sellers will maintain in confidence, and will cause
the directors, officers, employees, agents, and advisors of Buyer and the
Company to maintain in confidence, and not use to the detriment of another party
or the Company any written, oral, or other information obtained in confidence
from another party or the Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by
legal proceedings.
12.4 NOTICES
All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand or the date such delivery is refused (with
written confirmation of receipt), (b) sent by telecopier (with electronically
generated confirmation of receipt), provided that a copy is also sent by one of
the other acceptable means of giving notice within twenty-four (24) hours
thereafter, or (c) when received or refused by the addressee, if sent by a
nationally recognized overnight delivery service or certified mail (in each case
with receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a party may designate by ten (10) days advance written notice to the
other parties):
Sellers: Medical Service Consortium
00000 X.X. 00xx Xxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxx, President
Facsimile No.: (000) 000-0000
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and c/o ASB of Miami, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to: Stroock & Stroock & Xxxxx
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Buyer: CompScript, Inc.
0000 Xxxxxx Xxxxx Xxxxxxx, X.X.
Xxxxx X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
with a copy to: Atlas, Xxxxxxxx, Trop & Borkson, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
12.5 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision
of, or based on any right arising out of, this Agreement may be brought against
any of the parties in the courts of the State of Florida, County of Dade, and
each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on any party anywhere in the world.
12.6 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each
other such further information, (b) to execute and deliver to each other such
other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
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12.7 WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
12.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the
parties with respect to its subject matter and constitutes (along with the
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by all parties hereto.
12.9 DISCLOSURE LETTER
A single disclosure in the Disclosure Letter, and those
in any Supplement thereto, are sufficient to qualify all of the representations
and warranties to which such disclosure relates regardless of whether such
disclosure specifically refers to all applicable representations and warranties
affected by such disclosure.
12.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this
Agreement without the prior consent of the other parties except that Buyer may
assign any of its rights under this Agreement to any Subsidiary of Buyer, but no
such assignment will relieve Buyer of delivering Buyer's Common Stock and the
Stock Registration Rights Agreement to Sellers at Closing and Buyer shall remain
fully liable to Sellers for all obligations and liabilities of Buyer hereunder,
including, but not limited to, those under Section 11 hereof, the Stock
Registration Rights Agreement and the Employment Agreements, to the same extent
as if such assignment never occurred. Further, if such assignment would
adversely affect the treatment of this transaction as a pooling
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transaction or otherwise adversely affect the status of this transaction as a
tax free exchange for Sellers, such assignment shall not be permitted. Subject
to the foregoing, this Agreement will apply to, be binding in all respects upon,
and inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
12.11 SEVERABILITY
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
12.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
12.13 TIME OF ESSENCE
With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
12.14 GOVERNING LAW
This Agreement will be governed by the laws of the State of
Florida without regard to conflicts of laws principles.
12.15 PARTICIPATION IN EXECUTIVE COMMITTEE AND BOARD OF
BUYER
One of Sellers, as determined by Sellers in their sole
discretion, shall, immediately following the Closing, be appointed as a member
of Buyer's Executive Committee and may serve as an observer of Buyer's Board of
Directors. Sellers may designate the same or different persons to the foregoing
positions, and may change
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such persons on ten (10) days advance written notice to Buyer. The observer to
the Board of Directors shall receive written notice of all meetings thereof and
be entitled to participate in all Board Meetings and proceedings. The rights of
Sellers to designate a person to serve as aforesaid shall continue for so long
as the Sellers continue to own, in the aggregate, at least 700,000 shares of the
common stock of Buyer, adjusted for any stock splits, reverse stock splits or
stock dividends.
12.16 COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER: SELLERS:
CompScript, Inc.
By: /S/ XXXXXX XXXXXXX /S/ XXXX XXXX
---------------------------- ---------------------------------
Name: XXXXXX XXXXXXX Xxxx Xxxx
Title: VICE PRESIDENT
/S/ XXXXXX XXXX
---------------------------------
Xxxxxx Xxxx
/S/ XXX X. XXXXXXX
---------------------------------
Xxx X. Xxxxxxx
/S/ XXXXXXX XXXXXXX
---------------------------------
Xxxxxxx Xxxxxxx
/S/ XXXXXXXXXX XXXXXXX
---------------------------------
Xxxxxxxxxx Xxxxxxx
/S/ XXXXX XXXXXXX
---------------------------------
Xxxxx Xxxxxxx
-21-
/S/ XXXXXXX XXXXXXXXX
---------------------------------
Xxxxxxx Xxxxxxxxx
/S/ XXXXXXX XXXXXXXXX
---------------------------------
Xxxxxxx Xxxxxxxxx
/S/ XXXXXXX XXXXXXXX
---------------------------------
Xxxxxxx Xxxxxxxx
/S/ XXXXXXXX XXXXXXXX
---------------------------------
Xxxxxxxx Xxxxxxxx
/S/ XXXXX XXXXX
---------------------------------
Xxxxx Xxxxx
/S/ XXXXXXX X. XXXXX
---------------------------------
Xxxxxxx X. Xxxxx
/S/ XXXX X. XXXXXXX
---------------------------------
Xxxx X. Xxxxxxx
-43-
EXHIBITS
Exhibit 1
Disclosure Letter
January __, 1997
CompScript, Inc.
0000 Xxxxxx Xxxxx Xxxxxxx, X.X.
Xxxxx X
Xxxx Xxxxx, Xxxxxxx 00000
Gentlemen:
We refer to the Stock Purchase Agreement (the "Agreement") to be entered
into today between the undersigned individuals (collectively, "Sellers") Xxxxxxx
Xxxxxxxx, Xxxxxxxx Xxxxxxxx, Xxxxx Xxxxx, Xxxxxxx X. Xxxxx and Xxxx X. Xxxxxxx
(collectively, "Additional Sellers") and Xxxxxxx Xxxxxxxxx ("Xxxxxxxxx") and
CompScript, Inc. ("Buyer") pursuant to which Sellers and Additional Sellers are
to sell and Buyer is to purchase all of the issued and outstanding capital stock
of Medical Services Consortium, Inc. (the "Company") as provided in the
Agreement.
This letter constitutes the Disclosure Letter referred to in Section 3
of the Agreement. The representations and warranties of Sellers and Xxxxxxxxx in
Section 3 of the Agreement are made and given subject to the disclosures in this
Disclosure Letter. The disclosures in this Disclosure Letter are to be taken as
relating to any applicable representation and warranty set forth in any Section
of the Agreement, as provided in Section 12.9 of the Agreement, regardless of
the Section number referenced herein.
Terms defined in the Agreement are used with the same meaning in this
Disclosure Letter. References to Appendices are to the Appendices to this
Disclosure Letter.
By reference to Section 3 of the Agreement (using the numbering in such
Section), the following matters are disclosed:
. . . . .
[describe particularly any exceptions]
Very truly yours,
SELLERS:
/S/ XXXX XXXX
---------------------------------
Xxxx Xxxx
/S/ XXXXXX XXXX
---------------------------------
Xxxxxx Xxxx
/S/ XXX X. XXXXXXX
---------------------------------
Xxx X. Xxxxxxx
/S/ XXXXXXX XXXXXXX
---------------------------------
Xxxxxxx Xxxxxxx
/S/ XXXXXXXXXX XXXXXXX
---------------------------------
Xxxxxxxxxx Xxxxxxx
/S/ XXXXX XXXXXXX
---------------------------------
Xxxxx Xxxxxxx
/S/ XXXXXXX XXXXXXXXX
---------------------------------
Xxxxxxx Xxxxxxxxx
/S/ XXXXXXX XXXXXXXXX
---------------------------------
Xxxxxxx Xxxxxxxxx
-2-
Buyer acknowledges receipt of the Disclosure Letter of which this is a
duplicate (including the Appendices referred to therein).
Dated: JANUARY 10, 1997
BUYER:
CompScript, Inc.
By: /S/ XXXXXX XXXXXXX
----------------------
Xxxxxx Xxxxxxx
Vice President
-3-
