ASSET PURCHASE AGREEMENT
by and among
C2P Acquisition Corp.
a Delaware Corporation
as Buyer
BORON, XxXXXX & ASSOCIATES, INC.
a Delaware Corporation
as Parent
CONSUMER2PATIENT, INC.
a North Carolina Corporation
as Seller
PHYSICIAN2PHYSICIAN, LLC
a North Carolina Limited Liability Company
as Seller
ALTERNATIVE MEDIA SOLUTIONS, LLC
a North Carolina Limited Liability Company
as Seller
and
XXXX XXXXXX
as Stockholder
May 4, 2000
TABLE OF CONTENTS
Page
SECTION 1. PURCHASE AND SALE OF ASSETS.................................................... 1
1.1 Sale of Assets................................................................. 1
1.2 Liabilities.................................................................... 3
1.3 Purchase Price and Payment; Post-Closing Adjustment............................ 4
1.4 Place of Closing; Closing Date................................................. 6
1.5 Transfer of Subject Assets..................................................... 6
1.6 Delivery of Records and Contracts.............................................. 6
1.7 Further Assurances............................................................. 7
1.8 Allocation of Purchase Price................................................... 7
1.9 Procedures for Assets not Transferable......................................... 7
1.10 Employees, Wages and Benefits.................................................. 7
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLERS AND STOCKHOLDER...................... 8
2.1 Making of Representations and Warranties....................................... 8
2.2 Organization and Qualification; Capital Stock.................................. 8
2.3 Authority...................................................................... 9
2.4 Title to Properties; Liens; Condition of Properties............................ 11
2.5 Location of Subject Assets..................................................... 11
2.6 Financial Statements; Undisclosed Liabilities.................................. 11
2.7 Tax Matters.................................................................... 12
2.8 Collectibility of Accounts Receivable.......................................... 12
2.9 Intellectual Property Rights; Employee Restrictions............................ 13
2.10 Business; Compliance with Laws................................................. 13
2.11 Insurance...................................................................... 14
2.12 Transactions with Affiliates................................................... 14
2.13 Employee Benefit Plans......................................................... 14
2.14 List of Certain Employees, Consultants and Suppliers........................... 15
2.15 Employees; Labor Matters....................................................... 15
2.16 Customers, Distributors, Meeting Moderators, Salespersons...................... 15
2.17 Litigation..................................................................... 16
2.18 Finder's Fee................................................................... 16
2.19 Material Adverse Change........................................................ 16
2.20 Contracts...................................................................... 17
2.21 Banking Relations.............................................................. 18
2.22 Disclosure..................................................................... 18
SECTION 3. COVENANTS OF STOCKHOLDER AND SELLERS........................................... 18
3.1 Making of Covenants and Agreements............................................. 18
3.2 Representation Disclaimer...................................................... 18
3.3 Non-Use of Trade Names, etc.................................................... 18
(i)
3.4 Non-Disclosure and Non-Competition............................................. 19
3.5 Payment of Obligations......................................................... 20
3.6 Collection of Assets........................................................... 20
3.7 Securities Filings............................................................. 20
3.8 Transfer of Cash............................................................... 20
3.9 Change of Name................................................................. 20
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT............................. 20
4.1 Making of Representations and Warranties....................................... 20
4.2 Organization of Buyer.......................................................... 21
4.3 Authority of Buyer............................................................. 21
4.4 Finder's Fees.................................................................. 22
4.5 Business; Compliance with Laws................................................. 22
4.6 SEC Reports.................................................................... 22
4.7 Material Adverse Change........................................................ 23
SECTION 5. COVENANTS OF BUYER AND PARENT.................................................. 23
5.1 Operation of Buyer............................................................. 23
5.2 Representation Disclaimer...................................................... 24
5.3 Collection of Accounts Receivable.............................................. 24
5.4 Cancellation of Sublease....................................................... 24
SECTION 6. SURVIVAL OF WARRANTIES......................................................... 24
6.1 Survival of Warranties......................................................... 24
SECTION 7. INDEMNIFICATION................................................................ 25
7.1 Indemnification by Stockholder................................................. 25
7.2 Indemnification by Buyer and Parent............................................ 27
7.3 Notice; Defense of Claims...................................................... 28
7.4 Sole Remedy.................................................................... 30
7.5 Satisfaction of Indemnification Obligations.................................... 30
SECTION 8. MISCELLANEOUS.................................................................. 30
8.1 Law Governing.................................................................. 30
8.2 Notices........................................................................ 30
8.3 Prior Agreements Superseded.................................................... 31
8.4 Assignability.................................................................. 31
8.5 Captions and Gender............................................................ 32
8.6 Certain Definitions............................................................ 32
8.7 Execution in Counterparts...................................................... 32
8.8 Amendments; Waivers............................................................ 32
8.9 Severability................................................................... 33
8.10 Publicity and Disclosures...................................................... 33
8.11 Dispute Resolution............................................................. 33
(ii)
8.12 Expenses....................................................................... 33
(iii)
SCHEDULES
Schedule 1.1(a)(i) - Intellectual Property Rights
Schedule 1.1(a)(ii) - Receivables
Schedule 1.1(a)(iv) - Assumed Contracts
Schedule 1.1(a)(v) - Certificates
Schedule 1.1(a)(vii) - Equipment
Schedule 1.1(b) - Excluded Liabilities
Schedule 1.2 - Contract Liabilities
Schedule 1.8 - Allocation of Purchase Price
Schedule 2.2 - Capitalization
Schedule 2.3 - Liens/Consents
Schedule 2.4 - Title to Properties
Schedule 2.6(a) - Financial Statements
Schedule 2.6(c) - Undisclosed Liabilities
Schedule 2.8 - Accounts Receivable
Schedule 2.9 - Intellectual Property Rights
Schedule 2.10 - Compliance with Laws
Schedule 2.12 - Transactions with Affiliates
Schedule 2.13 - Employee Benefit Plans
Schedule 2.14 - Employees and Suppliers
Schedule 2.15 - Employment Contracts
Schedule 2.16 - Customers, Distributors, Etc.
Schedule 2.17 - Litigation
Schedule 2.19 - Material Adverse Changes
Schedule 2.21 - Banking Relations
Schedule 4.5 - Compliance with Laws
Schedule 4.7 - Material Adverse Changes
(iv)
EXHIBITS
Exhibit A Contingent Payment
Exhibit B Form of Employment Agreement
Exhibit C Form of Non-Competition Agreement
Exhibit D Form of Transition Plan
Exhibit E Form of Opinion of Counsel of Seller
Exhibit F Form of Opinion of Counsel of Buyer
(v)
ASSET PURCHASE AGREEMENT (the "Agreement") dated as of May 4, 2000 by and
among Boron, XxXxxx & Associates, Inc., a Delaware corporation ("Parent"), C2P
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Buyer"), Consumer2Patient, Inc, a North Carolina corporation ("C2P"),
Physician2Physician, LLC, a North Carolina limited liability company and wholly
owned subsidiary of C2P ("P2P") and Alternative Media Solutions, LLC, a North
Carolina limited liability company and wholly owned subsidiary of C2P ("Media")
( C2P, P2P and Media are hereinafter sometimes referred to singularly as a
"Seller" and collectively as, the "Sellers") and Xxxx Xxxxxx ("Stockholder").
WHEREAS, Sellers are engaged in the business of providing marketing,
educational and other services in the physician and consumer markets (the
"Business");
WHEREAS, the Stockholder owns all of the issued and outstanding capital
stock of C2P;
WHEREAS, C2P owns all of the issued and outstanding membership interests of
P2P and Media; and
WHEREAS, subject to the terms and conditions set forth herein, Buyer
desires to purchase from Sellers, and the Sellers desire to sell, transfer and
assign to Buyer substantially all of the properties, assets and Business of
Sellers.
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS.
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1.1 Sale of Assets.
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(a) Subject to the provisions of this Agreement, at the Closing (as
defined in Section 1.4 hereof) the Sellers shall sell, transfer and assign to
Buyer and Buyer shall acquire all right, title and interest in and to all of the
properties, and assets of the Sellers used or held for use in the Business
(except as hereinafter provided in Section 1.1(b)) of every kind and
description, tangible and intangible, real, personal or mixed, and wherever
located, including without limitation, the following:
(i) all goodwill and intellectual property rights, including
the names "Consumer2Patient", "Physician2Physician", "Alternative Media
Solutions", "Pharma Solutions" and "Xxxxxx-Xxxxxxx Healthcare Group",
content development and meeting production materials and processes, trade
secrets, proprietary information, designs, styles, technologies,
inventions, know-how, formulae, processes, procedures, research records,
test information, software and software documentation, source and object
code, algorithms, promotional materials, customer lists, supplier and
dealer lists, market surveys, marketing know-how and manufacturing
information, research and technical
information, trade names, copyrights and copyright registrations, service
marks and trademarks (including applications and registrations therefor),
patents and patent applications (including without limitation the trade
names, copyrights and copyright registrations, service xxxx and trademark
registrations and applications and patents and patent applications
described in Schedule 1.1(a)(i) attached hereto), and all licenses to or
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from third parties with respect to the foregoing or rights related thereto,
in each case which is used or held for use in the Business and all
documentation and media constituting, describing or relating to the
foregoing, including without limitation, manuals, memoranda and records,
(collectively, the "Intellectual Property Rights");
(ii) all accounts receivable of the Business, all of which are
listed on Schedule 1.1(a)(ii) attached hereto;
-------------------
(iii) the amount of cash required to satisfy the Base Working
Capital (as defined below);
(iv) all of the Sellers' rights and interests in and to the
orders, commitments, contracts and agreements of the Business, all of which
are listed on Schedule 1.1(a)(iv) attached hereto (the "Contracts").
-------------------
Schedule 1.1(a)(iv) also sets forth those Contracts which require the
consent of any third party prior to the transfer of such Contracts to
Buyer;
(v) all of the Sellers' rights, title and interest in and to
all franchises, licenses, permits, certifications, approvals,
accreditations and authorizations relating to the Business all of which are
listed on Schedule 1.1(a)(v) attached hereto (the "Certificates");
------------------
(vi) all of the Sellers' work-in-progress including but not
limited to production and presentation materials, content development
materials, inventory, stock in trade, finished goods and raw materials;
(vii) all of the Sellers' equipment, tools, spare parts,
fixtures and other tangible assets related to or used in connection with
the Business, all of which are listed on Schedule 1.1(a)(vii) attached
--------------------
hereto;
(viii) all other assets and properties of every nature
whatsoever, tangible and intangible, and wherever located, used or held for
use in connection with the Business, including without limitation, rights
under contracts or agreements with representatives marketing and selling
the products and services of the Business, copies of customer lists,
customer records and histories, customer invoices, lists of suppliers and
vendors and all records relating thereto, market research information,
advertising matter, catalogues, photographs, sales materials, purchasing
materials, files, data, media materials and all records with respect to the
Business.
2
The assets, property and business of Sellers being sold to and purchased by
Buyer under this Section 1.1(a) are hereinafter sometimes referred to as the
"Subject Assets."
(b) Notwithstanding the foregoing, there shall be excluded from such
purchase and sale the following property and assets of the Sellers:
(i) C2P's corporate franchise and corporate record books
containing minutes of meetings of directors and stockholders and P2P's and
Media's corporate franchise and corporate record books containing minutes
of meetings of managers and members (collectively, the "Corporate Records")
and;
(ii) those certain assets specified in Schedule 1.1(b). The
---------------
assets, property and business of the Sellers which are excluded from the
Subject Assets under this Section 1.1(b) are hereinafter referred to as the
"Excluded Assets."
1.2 Liabilities. Except for the Contract Liabilities (as defined below),
-----------
Buyer shall not assume or be bound by any obligations or liabilities of the
Sellers or any affiliate of Sellers of any kind or nature, known, unknown,
accrued, absolute, contingent or otherwise, whether now existing or hereafter
arising whatsoever (the "Excluded Liabilities"). Except for the Contract
Liabilities, Sellers shall be responsible for and pay any and all losses,
damages, obligations, liens, assessments, judgments, fines, disposal and other
costs and expenses, liabilities and claims, including, without limitation,
interest, penalties and reasonable fees of counsel, engineers and experts, as
the same are incurred, of every kind or nature whatsoever (all of the foregoing
being a "Claim" or the "Claims"), made by or owed to any person to the extent
any of the foregoing relates to (a) the Excluded Assets, (b) the Excluded
Liabilities or (c) the operations or assets of the Business and arises in
connection with or on the basis of events, acts, omissions, conditions or any
other state of facts occurring or existing prior to or on the Closing Date
(including, in each case, without limitation, any Claim relating to or
associated with tax matters, pension and benefits matters, any failure to comply
with applicable laws and/or permitting or licensing requirements, environmental
and worker health and safety matters).
After the Closing Date Sellers and Stockholder shall not be responsible for
any obligations of a Contract Liability of any kind or nature, known, unknown,
accrued, absolute, contingent or otherwise relating to the operation of the
Business after the Closing Date. Buyer shall be responsible for any Claims
arising after the Closing Date made by any person to the extent such Claim
relates to any Contract Liability.
Upon the sale and purchase of the Subject Assets, Buyer agrees to perform
in accordance with their terms (i) the obligations of Sellers arising under the
Contracts from and after the Closing, and (ii) those liabilities specified in
Schedule 1.2 (collectively, the "Contract Liabilities"). The assumption of the
------------
Contract Liabilities by Buyer hereunder shall not enlarge any rights of third
parties under contracts or arrangements with Buyer or Sellers or any of their
respective affiliates or subsidiaries. No parties other than the Buyer, the
Parent, the Sellers and the Stockholder shall have any rights under this
Agreement. Notwithstanding anything contained
3
in this Section 1.2 to the contrary, the only liabilities and obligations of
Sellers existing on or prior to the Closing Date (including, without limitation,
contractual liabilities and obligations) to be assumed by Buyer under this
Agreement are the Contract Liabilities.
1.3 Purchase Price and Payment; Post-Closing Adjustment.
---------------------------------------------------
(a) In consideration of the sale by Sellers to Buyer of the Subject
Assets, subject to the assumption by Buyer of the Contract Liabilities, Buyer
shall pay to Sellers on the Closing Date (as hereinafter defined); (i) by wire
transfer to an account designated by Sellers, an amount equal to the difference
between (a) Two Million Dollars ($2,000,000) and (b) the outstanding balance
under that certain promissory note (the "Promissory Note") between Stockholder
as maker and Parent as payee, dated December 31, 1998, in the remaining
principal amount of $160,000 with interest due through the closing date, (the
"Initial Payment") as adjusted pursuant to Section 1.3 (b) as follows.
(b) At least five days prior to the Closing, Sellers will prepare and
deliver to Buyer a statement, subject to Buyer's reasonable approval (the
"Closing Statement"), setting forth a good faith estimate of Sellers' Working
Capital (as defined below) as of the close of business on the day immediately
preceding the Closing Date ("Estimated Closing Working Capital") and the
difference between Estimated Closing Working Capital and $250,000 ("Base Working
Capital"). The amount of the Initial Payment set forth in Section 1.3(a) above
payable to Sellers will be (i) decreased on a dollar-for-dollar basis by the
---------
amount by which Base Working Capital exceeds the Estimated Closing Working
Capital; or (ii) any amount by which the Estimated Closing Working Capital
exceeds the Base Working Capital shall be retained by the Sellers.
(i) "Working Capital" shall mean the difference between the
Current Assets and Current Liabilities of the Sellers.
(ii) "Current Assets" shall mean, in accordance with generally
accepted accounting principles (GAAP), the accounts receivable, cash, fixed
assets, prepaid expenses and revenue earned but not yet billed.
(iii) "Current Liabilities" shall mean, in accordance with GAAP,
the accounts payable of the Sellers (which accounts payable shall
include a reasonable reserve for anticipated expenses related to
revenue recognized by Sellers prior to the Closing to the extent not
otherwise included in accounts payable), and any assumed liabilities
to the extent such would be considered current liabilities in
accordance with GAAP.
(c) No later than 60 days after the Closing, Buyer will prepare and
deliver to Sellers a final statement (the "Final Statement") setting forth as of
the Closing Date Sellers' actual Closing Working Capital as of the Closing Date
(the "Actual Closing Working Capital"). Such Final Statement shall be prepared
in strict accordance with GAAP, as applied
4
on a basis consistent with Sellers' past practice, without the benefit of the
exceptions listed on Schedule 2.6(a) or where such practices did not otherwise
meet GAAP standards. Subject to Section 1.3(d) below, within 10 days following
the delivery of such Final Statement, (i) if the Actual Closing Working Capital
exceeds the Base Working Capital the Buyer shall pay such excess to the Sellers,
or (ii) if the Base Working Capital exceeds the Actual Closing Working Capital
the Sellers shall pay the difference to the Buyer ( in either case, the party
making the payment (the "Reconciliation Amount") being referred to herein as the
"Paying Party". The Paying Party shall pay to the other party the Reconciliation
Amount by certified or bank cashiers check or by wire transfer, as directed by
such other party.
(d) In the event Sellers object to the amounts shown on the Final
Statement, Sellers shall notify Buyer in writing of such objection within the
10-day period following the delivery thereof, stating in such written objection
the reasons therefor and setting forth Sellers' calculation of the
Reconciliation Amount. Upon receipt by Buyer of such written objection, the
parties shall attempt to resolve the disagreement concerning the Reconciliation
Amount through negotiation. If Buyer and Sellers cannot resolve such
disagreement concerning the Reconciliation Amount within 20 days following the
end of the foregoing 10-day period, the parties shall submit the matter for
resolution to a nationally recognized independent firm of certified public
accountants not affiliated with either Sellers or Buyer, with the costs thereof
to be shared equally by the parties. Such accounting firm shall deliver a
statement setting forth its own calculation of the Reconciliation Amount and of
the identity of the Paying Party within 30 days of the submission of the matter
to such firm (which calculation, absent manifest error, shall be binding and
conclusive on the parties and not subject to appeal). The Paying Party shall pay
to the other party the Reconciliation Amount shown to be due on the statement of
such accounting firm promptly in the manner provided above but in no event later
than 10 days following the delivery of such statement by such accounting firm to
the parties
(e) Upon the achievement of the performance goals listed in Exhibit A
---------
hereto and subject to the terms and conditions contained therein, Buyer shall
deliver to Sellers the amount of cash, if any, earned under Exhibit A, by check
---------
or wire transfer of immediately available funds in lawful money of the United
States of America (the "Contingent Payment").
(f) Buyer will collect the accounts receivable of the Business
promptly using normal business practices, and amounts collected will be applied
"as invoiced". Stockholder shall reimburse the Buyer in cash, on a dollar-for-
dollar basis, for any accounts receivable transferred to Buyer pursuant to
Section 1(a)(ii), which are uncollected as of 120 days after the Closing Date
(the "AR Shortfall"). Buyer shall give notice to Stockholder of any such AR
Shortfall, and Stockholder shall make payment to Buyer within ten (10) days
following such notice. Upon receipt of payment for any AR Shortfall, Buyer shall
assign the uncollected accounts receivables to Sellers.
5
All amounts actually payable to Sellers less any AR shortfall reimbursement
to Buyer pursuant to this Section 1.3, as adjusted in accordance with Exhibit A,
---------
is defined herein as the "Purchase Price."
1.4 Place of Closing; Closing Date. The closing of the purchase and sale
------------------------------
provided for in this Agreement (the "Closing") shall be held at the offices of
Xxxxxxx, Procter & Xxxx XXX, Xxx Xxxx, XX 00000 at 12:00 noon (local time) on
May 19, 2000, unless otherwise agreed to by Buyer and Sellers (the "Closing
Date").
1.5 Transfer of Subject Assets. As a condition to Closing, (a) Sellers
--------------------------
shall deliver or cause to be delivered to Buyer (i) good and sufficient
instruments of transfer transferring to Buyer title to all of the Subject Assets
and such instruments of transfer (w) shall be in the form which is usual and
customary for transferring the type of property involved under the laws of the
jurisdictions applicable to such transfers, (x) shall be in form and substance
reasonably satisfactory to Buyer and its counsel, (y) shall effectively vest in
Buyer good title to all of the Subject Assets free and clear of all mortgages,
pledges, security interests, charges, taxes, liens, restrictions and
encumbrances of any kind, except for liens for taxes not yet due and payable
(collectively, "Liens"), and (z) where applicable, shall be accompanied by
evidence of the discharge of all liens and encumbrances against the Subject
Assets; (ii) an employment agreement in the form of Exhibit B, executed by
---------
Stockholder, (the "Employment Agreement"); (iii) a non-competition agreement in
the form of Exhibit C, executed by Stockholder (the "Non-Competition
---------
Agreement"); (iv) a transition plan in the form of Exhibit D, executed by
---------
Stockholder (the "Transition Plan"); (v) an Opinion of Counsel of Sellers
substantially in the form attached hereto as Exhibit E; and (vi) such other
---------
documentation as may be reasonably agreed to by Buyer in connection with the
consummation of the transactions contemplated by this Agreement; and (b) Buyer
shall deliver to Sellers and the Stockholder, as applicable (i) the amount of
cash set forth in Section 1.3; (ii) the Employment Agreement executed by Parent;
(iii) the Non-Competition Agreement executed by Buyer and Parent; (iv) the
Promissory Note marked "canceled"; (v) an Opinion of Counsel of Buyer
substantially in the form attached hereto as Exhibit F; (vi) an assumption
---------
agreement with respect to the Contract Liabilities; and (vii) such other
documentation as may be reasonably agreed to by Sellers in connection with the
consummation of the transactions contemplated by this Agreement.
1.6 Delivery of Records and Contracts. As a condition to Closing, Sellers
---------------------------------
shall deliver or cause to be delivered to Buyer all of the Contracts listed on
Schedule 1.1(a)(iv). Sellers shall also deliver all authorizations, waivers and
consents required by such Contracts, as set forth on Schedule 1.1(a)(iv), to
effect the transfer of such Contracts to Buyer, in form and substance reasonably
satisfactory to Buyer, and no such authorizations, waivers and consents shall
impose any burdensome conditions or requirements on Buyer. Sellers shall also
deliver to Buyer at the Closing, all of the Sellers' business records, books and
other data relating to the assets, business and operations of the Business, to
the extent the same constitute part of the Subject Assets. For five years after
the Closing Date, Buyer shall not destroy any business records, books or data
delivered to it by Sellers in accordance with this Section 1.6 without first
giving notice to Sellers of the intention to destroy such records, books or
data.
6
1.7 Further Assurances. Each party agrees, from time to time after the
------------------
Closing and at the reasonable request of the other party, and without further
consideration, to (i) execute and deliver further instruments of transfer,
assumption and assignment (in addition to those delivered under Section 1.5) and
take such other actions as the other party may reasonably require to more
effectively transfer and assign to, including assignments in such forms as are
acceptable to the United States Patent and Trademark Office, and vest in, Buyer
each of the Subject Assets or to complete the assumption of the Contract
Liabilities by Buyer; and (ii) cooperate with and provide assistance to the
other party in transferring possession of the Subject Assets to Buyer and
assumption of the Contract Liabilities by Buyer.
1.8 Allocation of Purchase Price. The Purchase Price payable by Buyer
----------------------------
pursuant to Section 1.3 and the amount of the Contract Liabilities assumed by
Buyer shall represent payment for the Subject Assets in the amount set forth on
Schedule 1.8 hereto. The amounts reflected in said Schedule shall represent the
------------
fair market values of the Subject Assets at the Closing, to the best of the
knowledge and belief of the parties hereto. At or as soon as practicable after
the Closing, Buyer and Sellers shall execute an IRS Form 8594 in accordance with
the allocation set forth in said Schedule and in compliance with Section 1060 of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder. All tax returns and reports filed by Buyer and Sellers with respect
to the transactions contemplated by this Agreement shall be consistent with such
Schedule.
1.9 Procedures for Assets not Transferable. If any of the contracts or
--------------------------------------
agreements or any other property or rights included in the Subject Assets is not
assignable or transferable either by virtue of the provisions thereof or under
applicable law without the consent of some party or parties and any such consent
is not obtained prior to the Closing, this Agreement and the related instruments
of transfer shall not constitute an assignment or transfer thereof and, unless
otherwise agreed between Buyer and Sellers with respect to any such contract,
Buyer shall not assume the Sellers' obligations with respect thereto, but
Sellers shall use all commercially reasonable efforts to obtain any such consent
as soon as possible after the Closing or otherwise obtain for Buyer the
practical and economic benefit of such property or rights and Buyer shall use
all commercially reasonable efforts to assist in that endeavor.
1.10 Employees, Wages and Benefits.
-----------------------------
(a) Employees of the Business shall be terminated as of the Closing
Date, and those employees identified in the Transition Plan shall be offered
employment with the Buyer. Sellers shall be responsible for making all severance
and similar payments to such employees in respect of such terminations. Buyer
shall not assume or have any obligations or liabilities with respect to such
terminations.
(b) Those employees or other applicants to be hired pursuant to the
Transition Plan will be determined by Buyer in consultation with Stockholder.
Those employees or applicants who are offered employment following the Closing
will be employed on terms and conditions consistent with Parent's standard terms
of employment for its employees in similar
7
positions. Sellers acknowledge and agree that Buyer may interview and discuss
employment terms and issues with employees. Nothing in this Agreement shall be
construed as a commitment or obligation of Buyer to accept for employment, or
otherwise continue the employment of, any of the Sellers' employees.
(c) Sellers shall pay all wages, salaries, commissions, and the cost
of all fringe benefits provided to each employee of the Business which shall
have become due for work performed as of and through the day on which such
employee is terminated, and Sellers shall collect and pay all taxes in respect
of such wages, salaries, commissions and benefits.
(d) Sellers acknowledge and agree that unless otherwise provided for
in the Transition Plan, Buyer is not assuming and shall not have any obligations
or liabilities under, any benefit plan maintained by, or for the benefit of
employees of, the Business, including without limitation obligations for
severance, or vacation accrued but not taken as of the Closing Date.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLERS AND STOCKHOLDER.
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2.1 Making of Representations and Warranties. As a material inducement to
----------------------------------------
Buyer and Parent to enter into this Agreement and consummate the transactions
contemplated hereby, each Seller and Stockholder jointly and severally hereby
make the representations and warranties to Buyer and Parent contained in this
Section 2.
2.2 Organization and Qualification; Capital Stock. C2P is a corporation
---------------------------------------------
duly organized, validly existing and in good standing under the laws of the
State of North Carolina with full power and authority to own or lease its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is conducted by it. C2P is
not qualified to do business as a foreign corporation in any jurisdiction, no
such qualifications being necessary, except where the failure to be so qualified
would not have a material adverse effect on it or the Business. All of the
issued and outstanding stock of C2P is owned beneficially and of record as set
forth in Schedule 2.2, free and clear of any lien, restrictions or encumbrances,
------------
and there are no outstanding options, warrants, rights, commitments, pre-emptive
rights or agreements of any kind for the issuance or sale of, or outstanding
securities convertible into, any additional stock of any class of C2P.
Each of P2P and Media (the "Subsidiaries") is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of North Carolina with full power and authority to own or lease its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is conducted by it. The
Subsidiaries are not qualified to do business as a foreign limited liability
company in any jurisdiction, no such qualifications being necessary, except
where the failure to be so qualified would not have a material adverse effect on
the Subsidiaries or the Business. All of the issued and outstanding membership
interests of the Subsidiaries are owned beneficially and of record by C2P, free
and clear of any lien, restrictions or encumbrances, and there are no
8
outstanding options, warrants, rights, commitments, pre-emptive rights or
agreements of any kind for the issuance or sale of, or outstanding securities
convertible into, any additional membership interests of any class of the
Subsidiaries. Except for the ownership by C2P of the membership interests of the
Subsidiaries, neither C2P nor the Subsidiaries have any subsidiaries or own any
securities issued by any other business organization or governmental authority
or any direct or indirect interest in or, except as provided in Schedule 2.2,
------------
control over any corporation, partnership, limited liability company, joint
venture or entity of any kind relating to the Business conducted by Sellers.
2.3 Authority.
---------
(a) The Sellers have full power and authority to execute, deliver and
perform this Agreement and each other agreement or instrument contemplated
hereby and the execution and delivery of this Agreement and each other agreement
or instrument contemplated hereby and the performance of all obligations
hereunder and thereunder have been duly authorized by all necessary action of
Sellers. This Agreement and the transactions contemplated hereby have been duly
approved by Stockholder, the sole stockholder of C2P. This Agreement and each
other agreement, document and instrument executed by Sellers pursuant to or in
connection with this Agreement constitutes, or when executed and delivered will
constitute, the valid and binding obligation of Sellers, enforceable in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other rights affecting creditors' rights generally,
and general equitable principles. The execution, delivery and performance by the
Sellers of this Agreement and each other agreement, document and instrument
contemplated hereby:
(i) do not and will not violate any provision of C2P's Articles
of Incorporation or either of the Subsidiary's Articles of Organization,
each as amended or restated to date;
(ii) do not and will not violate any laws of the United States
or any state or other jurisdiction applicable to Sellers or require Sellers
to obtain any approval, authorization, declaration, consent or waiver of,
or make any filing with or give notice to, any person, entity or public or
governmental authority that has not been obtained, made or given, except
that no representation is made with respect to the necessity of making any
filing under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976
("HSR"); and
(iii) Except as set forth on Schedule 2.3, do not and will not
-------------
result in a breach of, constitute a default under, accelerate any
obligation under, require a consent under or give rise to a right of
termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit, license,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which any Seller is a party or by which each Seller or
the Business or the Subject Assets is bound or affected, or result in the
creation or imposition of any Lien on any of the Subject Assets.
9
(b) The Stockholder has full right, authority, power and capacity to
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by her or on her behalf pursuant to or as contemplated by
this Agreement and to carry out the transactions contemplated hereby and
thereby. This Agreement and each agreement, document and instrument executed and
delivered by the Stockholder pursuant to or contemplated by this Agreement
constitutes, or when executed and delivered will constitute, valid and binding
obligations of the Stockholder enforceable in accordance with their respective
terms, except as the same may be limited by bankruptcy, insolvency or
reorganization laws, or other laws relating to or affecting the availability of
the remedy of specific performance or equitable principles of general
application. The execution, delivery and performance by the Stockholder of this
Agreement and each such agreement, document and instrument:
(i) do not and will not violate any laws of the United States or
any state or other jurisdiction applicable to the Stockholder or require
the Stockholder to obtain any approval, consent or waiver of, or make any
filing with, any person or entity (governmental or otherwise) that has not
been obtained, made or given, except that no representation is made with
respect to the necessity of making an HSR filing; and
(ii) do not and will not result in a breach of, constitute a
default under, accelerate any obligation under or give rise to a right of
termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which the Stockholder is a party or by which the
property of the Stockholder is bound or affected, or result in the creation
or imposition of any mortgage, pledge, lien, security interest or other
charge or encumbrance on any of the Subject Assets.
(c) With respect to HSR, Stockholder is the "ultimate parent entity"
(as defined in HSR) of Sellers and she does not have annual net sales or total
assets for purposes of HSR (after taking into account the applicable attribution
rules of HSR) in excess of $10 million. For purposes of determining total assets
for HSR, Stockholder's ownership of Sellers is included at the book value of the
Sellers' assets and Stockholder's personal residence and other non-income
producing property are excluded.
2.4 Title to Properties; Liens; Condition of Properties.
---------------------------------------------------
(a) The Subject Assets do not include any real property. Schedule 2.4
sets forth the addresses and uses of all real property that the Sellers lease.
Sellers own all of the Subject Assets and Sellers have and are conveying to
Buyer hereunder good title to all of their personal property, tangible and
intangible, included in the Subject Assets. None of such property or assets of
Sellers, tangible or intangible, is subject to any Lien. No financing statement
under the Uniform Commercial Code with respect to any of the Subject Assets is
active in any jurisdiction, and Sellers have not signed any such active
financing statement or any security
10
agreement authorizing any secured party thereunder to file any such financing
statement. The Subject Assets and the Excluded Assets listed on Schedule 1.1(b)
---------------
are all of the assets used in the operation of the Business as the same has been
operated prior to the date hereof. The tangible Subject Assets (i) are in
working order (reasonable wear and tear excepted), (ii) have been and shall
through the Closing be maintained in a manner generally consistent with the past
maintenance practices of Sellers, and (iii) to Sellers' Knowledge (as defined in
Section 8.6), conform with all applicable state and federal statutes,
ordinances, regulations and laws. The tangible Subject Assets are being sold on
an "as is/where is" basis with no representation or warranty as to their
condition or fitness for a particular purpose.
(b) Upon delivery to Buyer of the instruments of transfer referred to
in Section 1.5 hereof, Buyer will receive good and valid title to all of the
Subject Assets, free and clear of all Liens.
2.5 Location of Subject Assets. The tangible Subject Assets are located
--------------------------
at Sellers' facility at 0000 Xxxxx Xxxx, Xxxx, Xxxxx Xxxxxxxx 00000.
2.6 Financial Statements; Undisclosed Liabilities.
---------------------------------------------
(a) Sellers have previously furnished to Buyer and Parent copies of
consolidated unaudited financial statements of C2P and the Subsidiaries
consisting of a balance sheet as of December 31, 1999, an income statement for
the fiscal year ended December 31, 1999 and the unaudited balance sheets and
income statements for the interim periods ending and as of January 31, 2000,
February 29, 2000 and March 31, 2000. Except as described in Schedule 2.6(a),
---------------
such financial statements referred to in this Section 2.6(a), were prepared in
strict accordance with generally accepted accounting principles and fairly and
accurately present the financial position of Sellers as of the dates thereof and
the results of operations and cash flows of Sellers for the periods shown
therein (subject to the absence of footnotes that would be required by generally
accepted accounting principles), and to Sellers' Knowledge, are complete,
correct and consistent in all material respects with the books and records of
Sellers.
(b) The projections which have been separately disclosed in writing
to Buyer and Parent represent good faith estimates of Sellers' performance for
the fiscal year ended December 31, 2000 and future years based upon assumptions
which are set forth therein and which were in good faith believed to be
reasonable when made and continue to be reasonable as of the date hereof.
Notwithstanding the foregoing, no representation is made that the projections
will be achieved.
(c) Except as and to the extent reflected or reserved against in the
unaudited balance sheet of C2P and the Subsidiaries at March 31, 2000 contained
in the financial statements referred to in Section 2.6(a) (the "Base Balance
Sheet") or as listed on Schedule 2.6(c), the Sellers do not have and are not
---------------
subject to any material liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise of the kind that would be
11
required to be disclosed in such financial statements or, to Sellers' Knowledge,
any other material liability or obligation.
2.7 Tax Matters. Sellers and the Stockholder have timely and properly
-----------
filed all federal, state, local and foreign income, excise and franchise tax
returns, real estate and personal property tax returns, sales and use tax
returns and other tax returns required to be filed in connection with the
Business and have paid all Taxes (as defined below) owing by either of them
(whether or not shown on any Tax Return), except Taxes which have not yet
accrued or otherwise become due, for which adequate provision has been made in
the pertinent financial statements referred to in Section 2.6 above. The
provision for taxes on the Base Balance Sheet is sufficient as of its date for
the payment of all accrued and unpaid federal, state, county and local taxes of
any nature of Sellers and Stockholder relating to the Business, and any
applicable taxes owing to any foreign jurisdiction (collectively, "Taxes"),
whether or not assessed or disputed. All Taxes and other assessments and levies
which Sellers or the Stockholder are required to withhold or collect have been
withheld and collected and have been paid over to the proper governmental
authorities. Sellers or Stockholder have never received notice of any audit or
of any proposed deficiencies from the Internal Revenue Service or any other
taxation authority. Neither the Internal Revenue Service nor any other taxing
authority is now asserting or, to Sellers Knowledge, threatening to assert
against the Sellers any deficiency or claim for additional Taxes or interest
thereon or penalties in connection therewith. C2P is and has been since January
12, 1998, a "corporation" within the meaning of the applicable laws of the Xxxxx
xx Xxxxx Xxxxxxxx, X0X is and has been since July 12, 1999, a limited liability
company under the laws of the State of North Carolina and Media is and has been
since October 13, 1999, a limited liability company under the laws of the State
of North Carolina. C2P has been a validly electing S corporation within the
meaning of Internal Revenue Code Sections 1361 and 1362 at all times during its
existence, and will be a S corporation up to the Closing Date.
2.8 Collectibility of Accounts Receivable. All of the accounts receivable
-------------------------------------
of the Sellers (less the reserve for bad debts set forth on the Base Balance
Sheet) are valid and enforceable claims, are not subject to set-off or
counterclaim, provided that, except to the extent provided for in Sections 1.3
and 5.3, the foregoing representation is not a guarantee of collectibility.
Sellers have no accounts receivable or loans receivable from any person, firm or
corporation which is affiliated with Sellers or from any stockholder, member,
manager, director, officer or employee of Sellers or any affiliates thereof.
Schedule 2.8 lists the accounts receivable of the Sellers as of March 31, 2000.
------------
2.9 Intellectual Property Rights; Employee Restrictions. Except as set
---------------------------------------------------
forth in Schedule 2.9:
------------
(a) To Sellers' and Stockholder's knowledge, Sellers have exclusive
ownership of, with the right to use, sell, license, dispose of, and bring
actions for infringement of, all patent, copyright, trade secret, trademark or
other proprietary rights ("Intellectual Property Rights") material to the
conduct of the Business, as presently conducted or currently
12
contemplated to be conducted (the "Seller Rights"), provided that no
representation is made with respect to "off the shelf" software used by Sellers
that is generally commercially available.
(b) The Business of Sellers as presently conducted does not violate
any agreements which Sellers have with any third party or infringe any patent,
trademark, copyright or trade secret or, to Sellers' Knowledge, any other
Intellectual Property Rights of any third party.
(c) No claim is pending or, to Sellers' Knowledge, threatened against
the Sellers nor have Sellers received any notice or claim from any person
asserting that any of the Sellers' present or contemplated activities infringe
or may infringe any Intellectual Property Rights of such person, and Sellers are
not aware of any infringement by any other person of any rights of Sellers under
any Intellectual Property Rights.
(d) Sellers have taken all commercially reasonable steps required to
establish and preserve their ownership of all of the Seller Rights; each current
and former employee of the Sellers who is a party to an employment agreement
with Sellers has executed an agreement regarding confidentiality and proprietary
information, and, to Sellers' Knowledge, none of such employees is in violation
of any agreement or in breach of any agreement or arrangement with former or
present employers relating to proprietary information.
All the registered patents, trademarks and copyrights constituting
Intellectual Property Rights have been duly registered in, filed in or issued by
the United States Patent and Trademark Office, the United States Register of
Copyrights or corresponding office of other countries identified on Schedule
--------
2.9, and have been properly maintained and renewed in accordance with all
---
applicable provisions of law and administrative regulations in the United States
and each such country.
2.10 Business; Compliance with Laws. Sellers have all necessary
------------------------------
franchises, permits, licenses and other rights and privileges necessary to
permit them to own their property and to conduct the Business as it is presently
conducted. Sellers are currently and have heretofore been in compliance in all
material respects with all federal, state, local and foreign laws, regulations
and guidelines, including without limitation all laws, regulations and
guidelines of the Food and Drug Administration, the Federal Trade Commission,
the Federal Communications Commission, the American Medical Association and the
Pharmaceutical Marketing Association, in each case to the extent applicable.
Except as set forth in Schedule 2.10, none of Sellers, the Stockholder or any
-------------
former subsidiary of any Seller has been: (a) convicted in a criminal proceeding
or named as a subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses); (b) subject to any order, judgment, or
decree (not subsequently reversed, suspended or vacated) of any court of
competent jurisdiction permanently or temporarily enjoining it or her from, or
otherwise imposing limits or conditions on its or her engaging in any
securities, investment advisory, banking, insurance or other type of business or
acting as an officer or director of a public company; (c) found by a court of
competent jurisdiction in a civil action or by the Securities and Exchange
Commission ("SEC") or the Commodity Futures Trading
13
Commission to have violated any federal or state commodities, securities or
unfair trade practices law, which such judgment or finding has not been
subsequently reversed, suspended, or vacated; or (d) involved in any other type
of legal proceeding that would require the Stockholder to disclose such
involvement under Item 401(f) of SEC Regulation S-K if the Stockholder were
subject to such Regulation. The Sellers are not subject to or bound by any
agreement, judgment, decree or order which may materially and adversely affect
any of the Subject Assets or the business, prospects or condition (financial or
otherwise) of the Business.
2.11 Insurance. Sellers have fire, casualty, product liability and business
---------
interruption and other insurance policies, with extended coverage, sufficient in
amount to allow it to replace any of its material properties which might be
damaged or destroyed or sufficient to cover liabilities to which Sellers may
reasonably become subject, on both a per occurrence and an aggregate basis, as
are appropriate for the Business. There is no default or event which could give
rise to a default under any such policy.
2.12 Transactions with Affiliates. There are no loans, leases, contracts or
----------------------------
other transactions between C2P and any officer, director or stockholder of C2P
or any family member or affiliate of the foregoing persons and there have been
no such transactions within the past three years except as set forth in Schedule
--------
2.12. There are no loans, leases, contracts or other transactions between the
----
Subsidiaries and any officer, manager or member of the Subsidiaries or any
family member or affiliate of the foregoing persons and there have been no such
transactions within the past three years except as set forth in Schedule 2.12.
-------------
2.13 Employee Benefit Plans. The Sellers do not maintain or contribute to
----------------------
any employee benefit plan, stock option, bonus or incentive plan, severance pay
policy or agreement, deferred compensation agreement, or any similar plan or
agreement (an "Employee Benefit Plan") other than the Employee Benefit Plans
identified in Schedule 2.13. The terms and operation of each Employee Benefit
-------------
Plan comply in all material respects with all applicable laws and regulations
relating to such Employee Benefit Plans. There are no unfunded obligations of
Sellers under any retirement, pension, profit-sharing, deferred compensation
plan or similar program. The Sellers are not required to make any payments or
contributions to any Employee Benefit Plan pursuant to any collective bargaining
agreement or, to Sellers' Knowledge, any applicable labor relations law, and all
Employee Benefit Plans are terminable at the discretion of Sellers without
liability to the Sellers upon or following such termination. The Sellers have
never maintained or contributed to any Employee Benefit Plan providing or
promising any health or other nonpension benefits to terminated employees except
with respect to the continuation of group health plan benefits to the extent
authorized by and consistent with 29 U.S.C. (S)1161 et seq. (commonly known as
"COBRA").
2.14 List of Certain Employees, Consultants and Suppliers. Schedule
---------------------------------------------------- --------
2.14 contains a list of all managers, employees and consultants and independent
----
contractors of Sellers who, individually, have received or are scheduled to
receive compensation or payments for the fiscal year ended December 31, 1999 in
excess of $35,000. In each case such Schedule includes the current job title and
aggregate annual compensation of each such individual. Schedule 2.14 sets
-------------
14
forth a list of all suppliers to whom Sellers made payments aggregating $35,000
or more during the fiscal year ended December 31, 1999 showing, with respect to
each, the name, address and dollar volume involved. No supplier has terminated
or materially reduced its business with Sellers or materially and adversely
modified its relationship therewith.
2.15 Employees; Labor Matters. Sellers employ approximately 9 full-time
------------------------
employees and 0 part-time employees, have 0 contracts with independent
contractors and to Sellers' Knowledge generally enjoy a good employer-employee
relationship. Sellers are not delinquent in payments to any of their employees
or independent contractors for any wages, salaries, commissions, bonuses or
other direct compensation for any services performed for them to the date hereof
or amounts required to be reimbursed to such employees or independent
contractors. Upon termination of the employment of any of said employees or
independent contractors who are not under a written contract as disclosed in
Schedule 2.15 hereto, no severance or other payments will become due. Sellers do
-------------
not have any policy, practice, plan or program of paying severance pay or any
form of severance compensation in connection with the termination of employment
or services. To Sellers' Knowledge, Sellers are in all material respects, in
compliance with all applicable laws and regulations respecting labor,
employment, fair employment practices, terms and conditions of employment, wages
and hours and federal and state withholding taxes. There are no changes pending,
or of which Sellers have knowledge threatened with respect to (including,
without limitation, resignation of) the senior management or key supervisory
personnel or independent contractors of Sellers nor have Sellers received any
notice or information concerning any prospective change with respect to such
senior management or key supervisory personnel.
2.16 Customers, Distributors, Meeting Moderators, Salespersons. Schedule
--------------------------------------------------------- --------
2.16 sets forth each sales representative and distributor of Sellers at the
----
date hereof (whether pursuant to a commission, royalty or other arrangement),
and each customer, salesperson and/or broker of the Sellers who accounted for
more than 5% of the sales of Sellers for the fiscal year ended December 31, 1999
(collectively, the "Customers, Distributors and Brokers"). To Sellers'
Knowledge, the relationship of Sellers with their Customers, Distributors and
Brokers are good commercial working relationships. Except to the extent
disclosed on Schedule 2.16, no Customer, Distributor or Broker of Sellers has
-------------
canceled or otherwise terminated its relationship with Sellers, or has during
the last twelve months decreased materially its services, supplies or materials
to Sellers or its usage or purchases of the services or products of Sellers.
Except to the extent disclosed on Schedule 2.16, since December 31, 1999, no
-------------
Customer, Distributor or Broker has, to Sellers' Knowledge, any plan or
intention to terminate, to cancel or otherwise materially and adversely modify
its relationship with Sellers or to decrease materially or limit its services,
supplies or materials to Sellers, or its usage, purchase or distribution of the
services or products of Sellers.
2.17 Litigation. Except as set forth on Schedule 2.17, there is no
---------- -------------
litigation, claim or governmental, arbitration or other proceeding,
investigation, order or decree pending or in effect or, to Sellers' Knowledge,
threatened against Sellers relating to or affecting any of the Subject Assets or
the Business in any material respect.
15
2.18 Finder's Fee. Sellers have not incurred or become liable for any
------------
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
2.19 Material Adverse Change. Except as specifically disclosed on Schedule
----------------------- --------
2.19 to this Agreement, since December 31, 1999:
----
(a) there has not been any material adverse change in the business,
results of operations, condition (financial or otherwise) properties,
assets, liabilities or obligations of the Business;
(b) there has not been any damage, destruction or loss (whether or
not covered by insurance), materially and adversely affecting the business,
prospects, results of operations, condition (financial or otherwise),
assets or properties of the Business;
(c) there has not been any change in the relationships of Sellers
with respect to their suppliers, distributors, licensees, licensors,
customers or others with whom they have business relationships which would
have a material adverse effect on the Business and Sellers do not have
knowledge of any fact or contemplated event which may cause any such
material adverse change.
(d) the Business has been conducted and carried on only in the
ordinary and regular course consistent with past practice;
(e) there has not been any payment made by Sellers to the Stockholder
or any affiliate thereof, including without limitation, any payment by
means of a dividend, distribution, redemption of capital stock or similar
payment; and
(f) there has not been any material alteration or change in the
methods of operation employed by the Business.
2.20 Contracts. Except for Contracts and Certificates listed in
---------
Schedule 1.1(a)(iv) and Schedule 1.1 (a)(v) (true and complete copies (or, in
------------------- -------------------
the case of verbal agreements, written descriptions) of which have been
delivered to Buyer), neither Sellers nor the Stockholder is a party to or
subject to any of the following contracts or agreements, in each case which
relates to, or is necessary in connection with the operation of, the Business:
(a) any contract or agreement which by its terms does not terminate
or is not terminable without penalty by Sellers or any successor or assign
within one year after the date hereof;
(b) any contract or agreement for the sale or lease of their products
or services, except orders in the ordinary course of the Business;
16
(c) any contract with any sales agent or distributor of products or
services of Sellers;
(d) any contract containing covenants limiting the freedom of Sellers
to compete in any line of business or with any person or entity;
(e) any license agreement (as licensor or licensee);
(f) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money and
any related security agreement;
(g) any contract or agreement with any officer, employee, director or
stockholder of C2P or with any affiliate thereof, or any contract or
agreement with any officer, employee, manager or member of the Subsidiaries
or with any affiliate thereof; or
(h) any material verbal contract, agreement, arrangement or
understanding with the suppliers or customers of the Business.
All of the Contracts are valid and are in full force and effect and
constitute legal, valid and binding obligations of the Sellers enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other rights affecting creditors'
rights generally, and general equitable principles. To Sellers' Knowledge, each
Contract constitutes the legal, valid and binding obligation of each party
thereto, other than Sellers, enforceable in accordance with its terms, subject
to applicable bankruptcy, reorganization, insolvency, moratorium and other
rights affecting creditors' rights generally, and general equitable principles.
To Sellers' Knowledge, neither Sellers nor any other party to any Contract is in
material default in complying with any provisions thereof, and no condition or
event or facts exist which, with notice, lapse of time or both would constitute
a material default thereof on the part of Sellers or, to Sellers' Knowledge, on
the part of any other party thereto.
2.21 Banking Relations. All of the arrangements which the Sellers have
-----------------
with any banking or similar institution are completely and accurately described
in Schedule 2.21 attached hereto, indicating with respect to each of such
-------------
arrangements the type of arrangement maintained (such as checking account,
borrowing arrangements, safe deposit box, etc.) and the person or persons
authorized in respect thereof.
2.22 Disclosure. The representations, warranties and statements made or
----------
contained in this Agreement, in the documents, certificates, filings, Schedules
and Exhibits given or delivered by Sellers and Stockholder in connection with
and pursuant to this Agreement do not, either individually or when taken
together, contain any untrue statement of a material fact, and do not omit to
state a material fact required to be stated therein or necessary in order to
make such representations, warranties and statements not misleading in light of
the circumstances in which they were made or delivered.
17
SECTION 3. COVENANTS OF STOCKHOLDER AND SELLERS.
------------------------------------
3.1 Making of Covenants and Agreements. Sellers and Stockholder hereby
----------------------------------
covenant and agree as set forth in this Section 3.
3.2 Representation Disclaimer. Sellers and Stockholder agree that
-------------------------
neither Buyer nor Parent shall be deemed to have made to Sellers or Stockholder
any representation or warranty other than those expressly made by either Buyer
or Parent pursuant to Section 4 hereof. Without limiting the generality of the
foregoing, except to the extent expressly set forth in this Agreement, neither
Buyer nor Parent has made any representation or warranty to Sellers or
Stockholder with respect to (i) any projections, estimates or budgets heretofore
delivered to or made available to either Sellers or Stockholder of future
revenues, expenses or expenditures or future results of operations; or (ii) any
other information or documents (financial or otherwise) made available to
Sellers, Stockholder, their counsel, accountants or advisors with respect to
Buyer or Parent.
3.3 Non-Use of Trade Names, etc. After the Closing Date, neither Sellers,
---------------------------
nor any affiliate of Sellers or Stockholder will for any reason, directly or
indirectly, for itself or any other person, without the prior written consent of
the Parent and Buyer, which consent shall not be withheld if such disclosure is
required by applicable law (a) use any Intellectual Property Rights transferred
pursuant to this Agreement, or (b) use or disclose any Intellectual Property
Rights or any trade secrets, confidential information, know-how, proprietary
information or other intellectual property described in Section 1.1(a)(i) hereof
and transferred pursuant to this Agreement or otherwise arising in connection
with the operation of the Business, except that Sellers may use such rights and
information and may disclose such information to Buyer and Parent in connection
with the operation of the Business by Buyer and Parent after the Closing Date.
3.4 Non-Disclosure and Non-Competition. Sellers, in order to induce Buyer
----------------------------------
and Parent to enter into this Agreement, expressly covenant and agree that
neither Sellers nor any of their affiliates will, directly or indirectly, (a)
for a period of five years following the Closing Date, disclose or furnish to
any person, other than Buyer or Parent, any proprietary information of, or
confidential information concerning, the Business, Sellers, Buyer or Parent or
any affiliate of Sellers, Buyer or Parent except as required by law; and (b) for
a period of three years following the Closing Date, without the express written
consent of the Buyer, directly or indirectly, anywhere in the United States,
engage in any activity which is, or participate or invest in, or provide or
facilitate the provision of financing to, or assist (whether as owner, part-
owner, shareholder, partner, director, officer, trustee, employee, agent or
consultant, or in any other capacity), any business, organization or person
other than the Buyer or Parent (or any affiliate of the Buyer or Parent) whose
business, activities, products or services are competitive with any of the
business, activities, products or services conducted or offered by Sellers
during any period, which business, activities, products and services shall
include in any event providing promotional, marketing and education programs or
providing other services currently provided by Sellers or contemplated to be
provided by Sellers. Without implied limitation, the foregoing
18
covenant shall include, during the three years following the Closing Date,
soliciting or attempting to solicit for or on behalf of itself or any such
competitor the employment of any officer or employee of the Buyer or Parent or
any of their direct and/or indirect subsidiaries, encouraging for or on behalf
of itself or any such competitor any such officer or employee to terminate his
or her relationship or employment with the Buyer or the Parent or any of their
direct or indirect subsidiaries, soliciting for or on behalf of itself or any
such competitor any client of the Buyer or Parent or any of their direct or
indirect subsidiaries and diverting to any person (as hereinafter defined) any
client or business opportunity (which business opportunity is known to Sellers
by virtue of Stockholder's employment with Parent) of the Buyer, the Parent or
any of any of their direct or indirect subsidiaries. Additionally, the Sellers
will not disparage the Buyer or Parent or any of their direct or indirect
subsidiaries, the Business, or the products or services conducted or offered by
the Buyer or Parent and their subsidiaries for a period of three years following
the Closing Date. Buyer agrees, for a period of three years following the
Closing Date, not to disparage the Sellers in any public statements made on
behalf of the Buyer or Parent. In the event that Buyer or Parent defaults in
their obligations to pay any amounts finally determined to be due and payable in
accordance with the provisions of this Agreement and Exhibit A when they are
---------
otherwise due and payable, or otherwise defaults in their other material
obligations under this Agreement or the Employment Agreement, and Sellers have
given written notice to Parent describing the event giving rise to such default
and Buyer and Parent have not cured such default within thirty days of receipt
of such notice, Seller shall be relieved of its obligations under Section 3.4 of
this Agreement.
3.5 Payment of Obligations. Subsequent to the Closing, Sellers or
----------------------
Stockholder and their affiliates shall pay all of the Excluded Liabilities in
the ordinary course of business as they become due. Sellers and Stockholder
agree that Sellers or Stockholder shall maintain sufficient net worth and
liquidity after the Closing in order to satisfy such Excluded Liabilities.
3.6 Collection of Assets. Subsequent to the Closing, Buyer and its
--------------------
assignees shall have the right and authority to collect all receivables and
other items transferred and assigned by Sellers hereunder and to endorse with
the name of Sellers or any of their affiliates any checks received on account of
such receivables or other items, and Sellers and Stockholder agree that they
will promptly transfer or deliver to Buyer and its assignees from time to time,
any cash or other property that it may receive on or after the Closing with
respect to any claims, contracts, licenses, leases, commitments, sales orders,
purchase orders, receivables of any character or any other items included in the
assets transferred to Buyer pursuant to this Agreement.
3.7 Securities Filings. Sellers and Stockholder shall reasonably cooperate
------------------
with Buyer and Parent to permit the Buyer, Parent and their subsidiaries in
accordance with applicable law to promptly prepare and file on or before the due
date or any extension thereof all filings required to be made by Buyer or Parent
with the NASDAQ Stock Market and the SEC, including without limitation, the 8-K
(and related financial statements) required to be filed with the SEC in
connection with the transactions contemplated by this Agreement, and to permit
Parent to include in its filings with the SEC all information which may be
required with respect to Sellers and Stockholder.
19
3.8 Transfer of Working Capital. At the Closing, Sellers shall transfer
---------------------------
to Buyer the amount of Working Capital necessary to satisfy the Base Working
Capital.
3.9 Change of Name. Sellers agree that promptly after Closing, they
--------------
will change their names to names which do not include the words
"Consumer2Patient", "Physician2Physician", "Alternative Media Solutions",
"Pharma Solutions" or "Xxxxxx-Xxxxxxx Healthcare Group" or are not otherwise
similar to such names, sold to Buyer in accordance with Section 1.1(a)(i).
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT.
--------------------------------------------------
4.1 Making of Representations and Warranties. As a material inducement
----------------------------------------
to Sellers and Stockholder to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer and Parent jointly and severally hereby
make the representations and warranties to Sellers and Stockholder contained in
this Section 4.
4.2 Organization of Buyer. Each of Buyer and Parent is a corporation
---------------------
duly organized, validly existing and in good standing under the laws of Delaware
with full corporate power and authority to own or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is conducted by it. Buyer and Parent are
qualified to do business as a foreign corporation in each jurisdiction in which
such qualification is necessary, except where the failure to be so qualified
would not have a material adverse effect on Buyer and Parent as a whole.
Immediately after the Closing, Buyer will have no material assets or liabilities
other than the Subject Assets and the liabilities assumed from Seller pursuant
to this Agreement. As of the Closing, there exist no liens or encumbrances
against Buyer's assets.
4.3 Authority of Buyer. Buyer and Parent have full corporate power and
------------------
authority to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by Buyer and Parent pursuant to this
Agreement and to carry out the transactions contemplated hereby and thereby. The
execution, delivery and performance by Buyer and Parent of this Agreement and
each such other agreement, document and instrument have been duly authorized by
all necessary action of Buyer and Parent and no other action on the part of
Buyer or Parent is required in connection therewith. This Agreement and each
other agreement, document and instrument executed and delivered by Buyer and
Parent pursuant to this Agreement constitutes, or when executed and delivered
will constitute, the valid and binding obligation of Buyer and Parent
enforceable in accordance with its terms. The execution, delivery and
performance by Buyer and Parent of this Agreement and each agreement, document
and instrument contemplated hereby:
(i) do not and will not violate any provision of the certificate
of incorporation or by-laws of Buyer or Parent;
20
(ii) do not and will not violate any laws of the United States,
or any state or other jurisdiction applicable to Buyer or
Parent or require Buyer or Parent to obtain any approval,
consent or waiver of, or make any filing with or give
notice to, any person or entity (governmental or otherwise)
that has not been obtained, made or given; and
(iii) do not and will not result in a breach of, constitute a
default under, accelerate any obligation under, require a
consent under or give rise to a right of termination of any
indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction,
decree, determination or arbitration award, whether written
or oral, to which Buyer or Parent is bound or affected, or
result in the condition or imposition of any Lien on any of
the Subject Assets.
4.4 Finder's Fees. Buyer and Parent have not incurred or become liable
-------------
for any broker's commission or finder's fee relating to or in connection with
the transactions contemplated by this Agreement.
4.5 Business; Compliance with Laws. Buyer and Parent have all necessary
------------------------------
franchises, permits, licenses and other rights and privileges necessary to
permit them to own their property and to conduct the Business as it is presently
conducted. Buyer and Parent are currently and have heretofore been in compliance
in all material respects with all federal, state, local and foreign laws,
regulations and guidelines, including without limitation all laws, regulations
and guidelines of the Food and Drug Administration, the Federal Trade
Commission, the Federal Communications Commission, the American Medical
Association and the Pharmaceutical Marketing Association, in each case to the
extent applicable. Except as set forth in Schedule 4.5, none of Buyer, Parent or
------------
any former subsidiary of Parent has been: (a) convicted in a criminal proceeding
or named as a subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses); (b) subject to any order, judgment, or
decree (not subsequently reversed, suspended or vacated) of any court of
competent jurisdiction permanently or temporarily enjoining it from, or
otherwise imposing limits or conditions on its or his engaging in any
securities, investment advisory, banking, insurance or other type of business;
or (c) found by a court of competent jurisdiction in a civil action or by the
Securities and Exchange Commission ("SEC") or the Commodity Futures Trading
Commission to have violated any federal or state commodities, securities or
unfair trade practices law, which such judgment or finding has not been
subsequently reversed, suspended, or vacated. The Buyer and Parent are not
subject to or bound by any agreement, judgment, decree or order which may
materially and adversely affect any of their respective assets, business,
prospects or condition (financial or otherwise).
21
4.6 SEC Reports. Parent's Form 10-K filed with the SEC on March 30,
-----------
1999 and all other forms, reports and documents filed with the SEC since March
30, 1999 (collectively, the "SEC Reports") have been prepared in accordance with
the applicable requirements of the Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and accurately state all material
facts with respect to finances, operation and management of Parent, as of their
respective dates. The balance sheets (including the related notes) included in
the SEC Reports are complete and correct in all material respects and fairly
present the financial position of Parent as of the respective dates thereof, and
the other related statements (including the related notes) included therein are
complete and correct in all material respects and fairly present the results of
operations and cash flows of Parent for the respective fiscal periods set forth
therein in accordance with generally accepted accounting principles applied on a
consistent basis, except in the case of interim financial statements for normal
recurring and certain non-recurring audit adjustments necessary for a fair
presentation of the financial position and operating results of Parent for the
interim periods which will not be materially adverse and for the omission of
footnotes to said interim financial statements that would be required by
generally accepted accounting principles. Parent will promptly prepare and file
on or before the due date or any extension thereof all filings required to be
made by Parent with the NASDAQ Stock Market and the SEC, including without
limitation, the Form 8-K (and related financial statements) in connection with
the transactions contemplated by this Agreement.
4.7 Material Adverse Change. Except as set forth on Schedule 4.7 or in
----------------------- ------------
Parent's public filings with the SEC, since March 30, 1999, (a) there has not
been any material adverse change in the business, results of operations,
condition (financial or otherwise), properties, assets, liabilities or
obligations of Parent that would be required to be disclosed in financial
statements prepared in accordance with GAAP; and (b) there is no material
litigation, claim or governmental, arbitration or other proceeding,
investigation, order or decree pending or, to the knowledge of Buyer or Parent,
threatened against Buyer or Parent.
SECTION 5. COVENANTS OF BUYER AND PARENT.
-----------------------------
5.1 Operation of Buyer. Following the Closing, the Stockholder will
------------------
operate the Buyer in a manner consistent with the Transition Plan. The
Stockholder will be provided with latitude in the operational control of Buyer
during the period beginning on the Closing Date and ending on May 31, 2001,
subject, however, to Parent's oversight with respect to financial controls.
Until May 31, 2001, Parent agrees, except for charges for direct expenses
actually incurred by Buyer, not to charge Buyer any general corporate overhead,
management fees, administrative charges, or expense allocations without the
consent of the Stockholder, which consent will not be unreasonably withheld.
Parent also agrees not to add any business to or incur any costs in Buyer during
this period without the consent of the Stockholder, which consent will not be
unreasonably withheld. Parent further agrees that, during this period, Buyer
will be permitted to employ, at a minimum, a staff equivalent in job title and
annual compensation to that set forth in Schedule 2.14. Notwithstanding the
-------------
foregoing, it is understood that if any employee listed on Schedule 2.14 is
-------------
replaced by a newly hired employee, such newly hired employee will be
compensated on no more favorable terms than Parent's current policies for
22
persons of like position without Parent's consent. In considering the
reasonableness of withholding consent in any of such situations, the parties
acknowledge that the purchase price for the Subject Assets, including the
Contingent Payment set forth on Exhibit A, is based upon EBIT and revenues, and
---------
Stockholder's reasonable belief of the significance of the impact of any
proposed action on Buyer's EBIT and revenues may be considered when deciding the
reasonableness of withholding consent. Buyer, Parent, Sellers and Stockholder
acknowledge that the purchase price for the Subject Assets is based upon an EBIT
and revenue calculation and it is the intention of all of such parties that
Stockholder will be granted operational control of Buyer throughout the period
ending on May 31, 2001 subject, however, to the following provisions. In no case
shall this Section be deemed an authorization for Buyer to incur any
indebtedness without the authorization of Parent. Notwithstanding the foregoing,
Parent shall be entitled to exercise operational control of Buyer to the extent
necessary to prevent the operations of Buyer from contradicting in any
significant way generally applicable policies of Parent or otherwise causing
significant harm to Parent's reasonable interests; provided, however, that
Parent shall not be authorized to take any such action unless Parent first
provides Stockholder with written notice thereof and Stockholder fails to
promptly take appropriate action within 30 days to remedy the situation.
5.2 Representation Disclaimer. Buyer and Parent agree that neither
-------------------------
Sellers nor Stockholder shall be deemed to have made to Buyer or Parent any
representation or warranty other than those expressly made by either Sellers or
Stockholder pursuant to Section 2 hereof. Without limiting the generality of the
foregoing, except to the extent expressly set forth in this Agreement, neither
Sellers nor Stockholder have made any representation or warranty to Buyer or
Parent with respect to (i) any projections, estimates or budgets heretofore
delivered to or made available to either Buyer or Parent of future revenues,
expenses or expenditures or future results of operations; or (ii) any other
information or documents (financial or otherwise) made available to Buyer,
Parent, their counsel, accountants or advisors with respect to Sellers or
Stockholder.
5.3 Collection of Accounts Receivable. Buyer and Parent agree that
---------------------------------
Buyer will collect the accounts receivable of the Business promptly using normal
business practices, and amounts collected will be applied "as invoiced".
Accounts receivable not collected after 120 of Closing shall be assigned back to
Sellers, and any amounts collected thereafter shall become the property of
Sellers.
5.4 Cancellation of Sublease. On the Closing Date, the sublease for the
------------------------
office space located in Cary, North Carolina, pursuant to which Sellers are
subletting that office space from Parent, shall be canceled.
SECTION 6. SURVIVAL OF WARRANTIES.
----------------------
6.1 Survival of Warranties. All representations, warranties,
----------------------
agreements, covenants and obligations herein or in any Schedule or Exhibit to
this Agreement or any certificate or other document specifically required to be
delivered under this Agreement by any party incident to the transactions
contemplated hereby are material, shall be deemed to have been relied upon by
the
23
parties receiving the same; provided, however, that all such representations and
warranties shall, except as otherwise specifically provided herein, survive the
Closing for a period of two years (subject to the provisions of Sections 7.1 and
7.2 hereof) regardless of any investigation and shall not merge into the
performance of any obligation by any party hereto; and provided further,
however, that the representations and warranties shall expire on the same dates
and to the extent that the rights to indemnification with respect thereto under
Section 7 shall expire.
SECTION 7. INDEMNIFICATION.
---------------
7.1 Indemnification by Stockholder.
------------------------------
(a) Sellers and Stockholder, jointly and severally, agree to defend,
indemnify and hold Buyer, Parent and their respective subsidiaries and
affiliates and persons serving as officers, directors, partners or employees
thereof and any person who controls any of them within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act (individually a "Buyer
Indemnified Party" and collectively the "Buyer Indemnified Parties") harmless
from and against any and all Claims (as defined in Section 1.2 hereof), and any
diminution in value of the Subject Assets or the Business occurring prior to the
Closing Date, whether or not arising out of third-party claims and including all
reasonable amounts paid in investigation, defense or settlement of the
foregoing, which may be sustained or suffered by any of them based upon, arising
out of, by reason of or otherwise in respect of or in connection with:
(i) any inaccuracy in or breach of any representation or
warranty made by Sellers or Stockholder in this Agreement, or in any
Schedule or Exhibit to this Agreement or any certificate or other document
delivered in connection with the consummation of the transactions
contemplated by this Agreement (collectively, "Buyer Representation and
Warranty Claims");
(ii) any breach of any covenant or agreement made by Sellers or
Stockholder in this Agreement or in any Schedule or Exhibit to this
Agreement or any certificate or other document delivered in connection with
the consummation of the transactions contemplated by this Agreement;
(iii) any Claim relating to the business or operations of
Sellers or the Subsidiaries other than the Business;
(iv) any Claim (other than the Contract Liabilities) relating
to the operations and assets of the Business which arises in connection
with or on the basis of events, acts, omissions, conditions or any other
state of facts occurring or existing on or prior to the Closing Date
(including, in each case, without limitation, any Claim relating to or
associated with the Business on or prior to the Closing Date);
(v) any Claim relating to Taxes for any period ending on or
prior to the Closing Date; and
24
(vi) any liability of Sellers other than the Contract
Liabilities.
The rights of Buyer Indemnified Parties to recover indemnification in
respect of any Claim arising under clause (ii), (iii), (iv), (v) or (vi) of this
Section 7.1(a) shall not be limited by the fact that such Claim may also
constitute a Buyer Representation and Warranty Claim.
(b) The rights of Buyer Indemnified Parties to recover
indemnification under this Section 7.1 shall be subject to the following
limitations:
(i) No indemnification shall be payable by Sellers or
Stockholder with respect to Buyer Representation and Warranty Claims unless
the total of all amounts payable by Sellers and Stockholder, taken as a
whole, pursuant to this Section 7.1 shall exceed $25,000 in the aggregate,
whereupon the total amount of such Claims shall be recoverable in
accordance with the terms thereof; provided, however, that such $25,000
limitation shall not apply with respect to Claims involving fraud or
intentional misrepresentation and provided further that any claim brought
under Sections 7.1(a)(ii), 7.1(a)(iii), 7.1(a)(iv), 7.1(a)(v) or 7.1(a)(vi)
above shall not be subject to such limitation notwithstanding that they are
also Buyer Representation and Warranty Claims; and
(ii) All rights to indemnification with respect to Buyer
Representation and Warranty Claims shall expire on the second anniversary
of the Closing Date, except that Buyer Representation and Warranty Claims
relating to or involving fraud or tax matters shall survive until and shall
expire on the date three months after the termination of the applicable
statute of limitations relating thereto. Notwithstanding the preceding
sentence, if on or prior to the second anniversary of the Closing Date a
specific state of facts shall have become known which may give rise to a
claim for indemnification under Section 7.1(a)(i) and a Buyer Indemnified
Party shall have given written notice of such facts known by such Buyer
Indemnified Party at such time to Sellers and Stockholder, then the right
to indemnification with respect thereto shall remain in effect without
regard to when such matter shall be finally determined and disposed of. The
limitations herein with respect to Buyer Representation and Warranty Claims
shall not limit the rights of any Buyer Indemnified Party with respect to
any Claims arising under Sections 7.1(a)(ii), 7.1(a)(iii), 7.1(a)(iv),
7.1(a)(v) or 7.1(a)(vi); and
(iii) Notwithstanding anything contained in this Section 7.1 to
the contrary, Sellers and Stockholder shall not be required to indemnify
Buyer Indemnified Parties with respect to Buyer Representation and Warranty
Claims in an aggregate amount in excess of the Purchase Price ( the
"Indemnity Cap"), except with respect to claims relating to or involving
fraud or tax matters, as to which no such limit shall apply.
7.2 Indemnification by Buyer and Parent.
-----------------------------------
(a) Buyer and Parent jointly and severally (subject to subsection (b)
of this Section 7.2) agree to defend, indemnify and hold Sellers and Stockholder
and persons serving as
25
officers, directors, stockholders, managers, members or employees thereof
(individually a "Seller Indemnified Party" and collectively the "Seller
Indemnified Parties") harmless from and against any and all Claims, whether or
not arising out of third-party claims and including all reasonable amounts paid
in investigation, defense or settlement of the foregoing, which may be sustained
or suffered by any of them based upon, arising out of, by reason of or otherwise
in respect of or in connection with:
(i) any inaccuracy in or breach of any representation or
warranty made by Buyer or Parent in this Agreement or in any Schedule or
Exhibit to this Agreement or any certificate or other document delivered in
connection with the consummation of the transactions contemplated by this
Agreement (collectively, "Seller Representation and Warranty Claims");
(ii) any breach of any covenant or agreement made by Buyer or
Parent in this Agreement or in any Schedule or Exhibit to this Agreement or
any certificate or other document delivered in connection with the
consummation of the transactions contemplated by this Agreement;
(iii) any Claim relating to the operations and assets of the
Business which arises in connection with or on the basis of events, acts,
omissions, conditions or any other state of facts occurring or coming into
existence after the Closing Date (including without limitation, any Claim
relating to or associated with the operation of the Business after the
Closing Date);
(iv) any Claim relating to Taxes for any period after the
Closing Date; and
(v) the non-performance of the Contract Liabilities to the
extent assumed by Buyer hereunder as they become due, in accordance with
their respective terms.
The rights of Seller Indemnified Parties to recover indemnification in
respect of any Claim arising under clause (ii), (iii), (iv) or (v) of this
Section 7.2(a) shall not be limited by the fact that such Claim may also
constitute a Seller Representation and Warranty Claim.
(b) The rights of Seller Indemnified Parties to recover
indemnification under this Section 7.2 shall be subject to the following
limitations:
(i) No indemnification shall be payable by Buyer or Parent with
respect to Seller Representation and Warranty Claims unless the total of
all amounts payable by Buyer and Parent taken as a whole pursuant to this
Section 7.2 shall exceed $25,000 in the aggregate, whereupon the total
amount of such Claims shall be recoverable in accordance with the terms
thereof; provided, however, that such $25,000 limitation shall not apply
with respect to Claims involving fraud or intentional
26
misrepresentation and provided further that any claim brought under
Sections 7.2(a)(ii), 7.2(a)(iii), 7.2(a)(iv) or 7.2(a)(v) above shall not
be subject to such limitation if they are also Seller Representation and
Warranty Claims.
(ii) All rights to indemnification with respect to Seller
Representation and Warranty Claims shall expire on the second anniversary
of the Closing Date, except that Seller Representation and Warranty Claims
relating to or involving fraud, or product liability matters shall survive
until and shall expire on the date three months after the termination of
the applicable statute of limitations relating thereto. Notwithstanding
the preceding sentence, if on or prior to the second anniversary of the
Closing Date a specific state of facts shall have become known which may
give rise to a claim for indemnification under Section 7.2(a)(i) and a
Seller Indemnified Party shall have given written notice of such facts
known by such Seller Indemnified Party at such time to Buyer, then the
right to indemnification with respect thereto shall remain in effect
without regard to when such matter shall be finally determined and disposed
of. The limitations herein with respect to Seller Representation and
Warranty Claims shall not limit the rights of any Seller Indemnified Party
with respect to any Claims arising under Section 7.2(a)(ii), 7.2(a)(iii)
7.2(a)(iv) or 7.2(a)(v); and
(iii) Notwithstanding anything contained in this Section 7.2 to
the contrary, Buyer and Parent shall not be required to indemnify Seller
Indemnified Parties with respect to Seller Representation and Warranty
Claims in an aggregate amount in excess of the Indemnity Cap, except with
respect to claims relating to or involving fraud, as to which no such limit
shall apply.
7.3 Notice; Defense of Claims.
-------------------------
(a) Notice of Claims. Promptly after receipt by an indemnified party
----------------
of notice of any claim, liability or expense to which the indemnification
obligations hereunder would apply, the indemnified party shall give notice
thereof in writing to the indemnifying party, but the omission to so notify the
indemnifying party promptly will not relieve the indemnifying party from any
liability except to the extent that the indemnifying party shall have been
prejudiced as a result of the failure or delay in giving such notice. Such
notice shall state the information then available regarding the amount and
nature of such claim, liability or expense and shall specify the provision or
provisions of this Agreement under which the liability or obligation is
asserted.
(b) Third Party Claims. With respect to third party claims, if
------------------
within twenty days after receiving the notice described in clause (a) above the
indemnifying party gives (i) written notice to the indemnified party stating
that (A) it would be liable under the provisions hereof for indemnity in the
amount of such claim if such claim were successful and (B) that it disputes and
intends to defend against such claim, liability or expense at its own cost and
expense and (ii) provides reasonable assurance to the indemnified party that
such claim will be promptly paid in full if required, then counsel for the
defense shall be selected by the indemnifying party (subject to the consent of
the indemnified party which consent shall not be
27
unreasonably withheld) and the indemnifying party shall not be required to make
any payment with respect to such claim, liability or expense as long as the
indemnifying party is conducting a good faith and diligent defense at its own
expense or the payment is required in accordance with any settlement or
adjudication in accordance with the provisions of this Section 7.3; provided,
however, that the assumption of defense of any such matters by the indemnifying
party shall relate solely to the claim, liability or expense that is subject or
potentially subject to indemnification. The indemnifying party shall have the
right, with the consent of the indemnified party, which consent shall not be
unreasonably withheld, to settle all indemnifiable matters related to claims by
third parties which are susceptible to being settled provided the indemnifying
parties' obligation to indemnify the indemnified party therefor will be fully
satisfied and such settlement does not involve the establishment of any
obligations or limitations applicable to the indemnified party. The indemnifying
party shall keep the indemnified party apprised of the status of the claim,
liability or expense and any resulting suit, proceeding or enforcement action,
shall furnish the indemnified party with all documents and information that the
indemnified party shall reasonably request and shall consult with the
indemnified party prior to acting on major matters, including settlement
discussions. Notwithstanding anything herein stated, the indemnified party shall
at all times have the right to fully participate in such defense at its own
expense directly or through counsel; provided, however, if the named parties to
the action or proceeding include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate under applicable standards of professional conduct, the expense of
separate counsel for the indemnified party shall be paid by the indemnifying
party. If no such notice of intent to dispute and defend is given by the
indemnifying party, or if such diligent good faith defense is not being or
ceases to be conducted, the indemnified party shall, at the expense of the
indemnifying party, undertake the defense of (with counsel selected by the
indemnified party), and shall have the right to compromise or settle (exercising
reasonable business judgment), such claim, liability or expense. If such claim,
liability or expense is one that by its nature cannot be defended solely by the
indemnifying party, then the indemnified party shall make available all
information and assistance that the indemnifying party may reasonably request
and shall cooperate with the indemnifying party in such defense.
(c) Non-Third Party Claims. With respect to non-third party claims,
----------------------
if within twenty days after receiving the notice described in clause (a) above
the indemnifying party does not give written notice to the indemnified party
that it contests such indemnity, the amount of indemnity payable for such claim
shall be as set forth in the indemnified party's notice. If the indemnifying
party provides written notice to the indemnified party within such thirty day
period that it contests such indemnity, the matter shall be resolved by
arbitration in accordance with Section 8.11 hereof.
7.4 Sole Remedy. Following the Closing, the parties agree that, except
-----------
for the availability of injunctive or other equitable relief and claims relating
to fraud or intentional misrepresentation, the rights to indemnification under
this Section 7 shall be exclusive of all rights of indemnification or other
remedies that any Seller Indemnified Party or Buyer
28
Indemnified Party would otherwise have in connection with the transactions
contemplated by this Agreement.
7.5 Satisfaction of Indemnification Obligations. In order to satisfy
-------------------------------------------
the indemnification obligations set forth in Section 7.1 above, a Buyer
Indemnified Party shall have the right (in addition to collecting directly from
the Sellers and the Stockholder) to set off its indemnification claims against
any and all amounts due under the Contingent Payments and the Employment
Agreement of Stockholder (whether or not then due and payable).
SECTION 8. MISCELLANEOUS.
-------------
8.1 Law Governing. This Agreement shall be construed under and governed
-------------
by the laws of the State of New Jersey without regard to the conflicts of laws
provisions thereof.
8.2 Notices. All communications, notices and consents provided for
-------
herein shall be in writing and be given in person, by facsimile (with request
for assurance of receipt in a manner typical with respect to such
communications) or by mail, and shall become effective (a) on delivery if given
in person, (b) on the date of transmission if sent by facsimile, or (c) four
business days after being deposited in the United States mails, with proper
postage, for first-class registered or certified mail, prepaid.
Notices shall be addressed as follows:
If to Buyer or Parent:
---------------------
Boron, XxXxxx & Associates, Inc.
00-00 Xxxxx 000 Xxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, President and COO
Facsimile Number: (000) 000-0000
With a copy to:
--------------
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile Number: (000) 000-0000
29
If to Sellers or Stockholder:
----------------------------
Xxxx Xxxxxx
0000 Xxxxx Xxxx
Xxxx, XX 00000
Facsimile Number: 000-000-0000
With a copy to:
--------------
Parker, Poe, Xxxxx & Xxxxxxxxx L.L.P.
First Union Capital Center
XX Xxx 000
000 Xxxxxxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile Number: (000) 000-0000
provided, however, that if any party shall have designated a different address
by notice to the others in accordance with this Section 8.2, then to the last
address so designated.
8.3 Prior Agreements Superseded. This Agreement supersedes all prior
---------------------------
understandings and agreements among the parties relating to the subject matter
hereof, including without limitation the letter of intent dated March 2, 2000
among Parent, Sellers and the Stockholder.
8.4 Assignability. This Agreement shall not be assignable by any party,
-------------
except by Buyer and Parent to an affiliate of Parent (which assignment shall not
relieve Buyer or Parent of any of their obligations hereunder), without the
prior written consent of the other parties hereto. This Agreement (including
without limitation the provisions of Section 7) shall be binding upon and
enforceable by, and shall inure to the benefit of, the parties hereto and their
respective successors, heirs, executors, administrators and permitted assigns.
8.5 Captions and Gender. The captions in this Agreement are for
-------------------
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter
pronoun, as the context may require.
8.6 Certain Definitions. For purposes of this Agreement, the term:
-------------------
(a) "affiliate" of a person shall mean a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person;
30
(b) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock, as
trustee, partner or executor, by contract or credit arrangement or
otherwise;
(c) "knowledge" means, after due inquiry, actual knowledge, the
conscious awareness of facts or other information of such person;
(d) "person" means an individual, corporation, partnership,
association, limited lability company, trust or any unincorporated
organization;
(e) "Sellers' Knowledge" means such knowledge as the Stockholder and
any employee of the Sellers with managerial responsibility or authority
has or reasonably ought to have in the prudent exercise of their duties.
(f) "subsidiary" of a person means any corporation more than 50
percent of whose outstanding voting securities, or any partnership, joint
venture or other entity more than 50 percent of whose total equity
interest, is directly or indirectly owned by such person.
8.7 Execution in Counterparts. For the convenience of the parties and to
-------------------------
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
8.8 Amendments; Waivers. This Agreement may not be amended or modified,
-------------------
compliance with any condition or covenant set forth herein may not be waived and
the consent to any action may not be given, except by a writing duly and validly
executed by Parent, Sellers and the Stockholder. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such right,
power or privilege, or any single or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
8.9 Severability. Each of the provisions contained in this Agreement
------------
shall be severable and the unenforceability of one shall not affect the
enforceability of any other provision or the remainder of this Agreement.
8.10 Publicity and Disclosures. Except as required by law or the rules and
-------------------------
regulations of the SEC or any state securities commission, or applicable NASDAQ
listing requirements, neither Buyer or Parent on the one hand, or Sellers or
Stockholder, on the other hand, shall make any public disclosure regarding the
proposed transaction without the prior written consent of Sellers or the Buyer,
respectively, which consent shall not be unreasonably withheld.
31
8.11 Dispute Resolution. Except with respect to matters as to which
------------------
injunctive relief is being sought, in the event of a dispute between the parties
concerning their respective rights and obligations under this Agreement, or the
breach, termination, negotiation, or validity hereof and/or the rights or
obligations of the parties arising out of or relating to this Agreement or the
breach, termination, negotiation or validity thereof, in any case that the
parties are unable to resolve amicably between themselves within sixty days of
proper notice from one party to another, such dispute shall be settled by
arbitration in the State of New Jersey in an expedited manner in accordance with
the Commercial Rules of the American Arbitration Association by a duly
registered arbitrator to be selected jointly by the parties. The decision of
the arbitrator shall be final and binding upon the parties. Each of the parties
consents to the jurisdiction of the courts of New Jersey for the purposes of
enforcing the dispute resolution provisions of this Section 8.11. Each party
further irrevocably waives any objection to proceeding before the American
Arbitration Association based upon lack of personal jurisdiction or to the
laying of venue and further irrevocably and unconditionally waives and agrees
not to make a claim in any court that dispute resolution before the American
Arbitration Association has been brought in an inconvenient forum. Each of the
parties hereto agrees that its or his submission to jurisdiction is made for the
express benefit of the other parties hereto.
8.12 Expenses. Buyer, Sellers and Stockholder shall each bear their own
--------
expenses in connection with the negotiation and performance of this Agreement
and the transactions contemplated hereby. All transfer, excise or other taxes
payable by any party to this Agreement to any jurisdiction by reason of the sale
and transfer of the Subject Assets pursuant to this Agreement, if any (excluding
any such taxes arising solely from the identity or location of Buyer or any
affiliate of Buyer), shall be paid by Sellers out of the proceeds of the sale of
the Subject Assets, and, no such expenses shall be payable by Buyer or Parent or
any of their affiliates.
32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above by their duly authorized
representatives.
BUYER:
-----
C2P ACQUISITION CORP.
By: /s/ Xxxxxxx X. XxXxxx
-------------------------------
Name: Xxxxxxx X. XxXxxx
Title: President
PARENT:
------
BORON, XXXXXX & ASSOCIATES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and COO
SELLERS:
-------
CONSUMER2PATIENT, INC.
By: /s/ Xxxx Xxxxxx
----------------------------
Name: Xxxx Xxxxxx
Title: President
PHYSICIAN2PHYSICIAN, LLC
By: CONSUMER2PATIENT, INC., its sole
member
By: /s/ Xxxx Xxxxxx
---------------------------
Name: Xxxx Xxxxxx
Title: President
S-1
ALTERNATIVE MEDIA SOLUTIONS, LLC
By: CONSUMER2PATIENT, INC., its sole
member
By: /s/ Xxxx Xxxxxx
---------------------------
Name: Xxxx Xxxxxx
Title: President
STOCKHOLDER, INDIVIDUALLY:
-------------------------
/s/ Xxxx Xxxxxx
--------------------------
Xxxx Xxxxxx
S-2
EXHIBIT A
---------
Contingent Payment
The Contingent Payment described in Section 1.3(e) of the attached Asset
Purchase Agreement shall be made by Buyer to Sellers, in cash, in the amount of
Two Million Dollars ($2,000,000) if: (i) the revenue achieved by the Buyer in
the one year period beginning on June 1, 2000 and ending on May 31, 2001 (the
"Contingency Period"), totals at least $7,750,000 (the "Revenue Target"); and
(ii) the EBIT achieved by Buyer in the Contingency Period is at least 16% (the
"EBIT Target"). Partial attainment of the Revenue Target will entitle the
Sellers to a pro rata amount of the Contingent Payment, provided that the actual
revenues for the year are at least 90% of the Revenue Target and the EBIT Target
is met. The Contingent Payment will increase proportionally as revenues rise
above the 90% threshold. Under no circumstances shall the Buyer pay the Sellers
a Contingent Payment if Contingency Period Revenues are less than 90%
($6,975,000) of the Revenue Target even if the EBIT Target is met.
The following examples are for purposes of illustration:
A. If the Buyer's Contingency Period revenues are 90% of the Revenue
Target (.90 x $7,750,000 = $6,975,000) and EBIT is at least 16%, the
Buyer shall pay to the Seller a Contingent Payment of 90% of
$2,000,000 (.90 x $2,000,000 = $1,800,000).
B. If the Buyer's Contingency Period revenues are 95% of the Revenue
Target (.95 x $7,750,000 = $7,362,500) and EBIT is at least 16%, the
Buyer shall pay to the Seller a Contingent Payment of 95% of
$2,000,000 (.95 x $2,000,000 = $1,900,000).
C. If the Buyer's Contingency Period revenues are 95% of the Revenue
Target (.95 x $7,750,000 = $7,362,500) and EBIT is 15%, the Buyer
shall not pay any Contingent Payment to the Seller.
For purposes of this Exhibit A, EBIT shall mean earnings before interest
---------
and taxes, with earnings determined net of all operating expenses and
commissions of the Buyer, however, EBIT shall exclude (i) amortization costs
related to this transaction; (ii) the one-time costs (relocation and recruiting)
of setting up the Buyer's operations in Philadelphia; (iii) any costs related to
the rental of the real estate located in Cary, North Carolina, currently
subleased by the Sellers from the Parent after that office has been closed; (iv)
Stockholder's employment and related costs; and (v) any indirect corporate
allocations. EBIT will include; (x) the costs of the employment and related
costs of a general manager to run Buyer; (y) the incremental costs (higher
salaries, etc.) of running the Buyer out of Philadelphia; and (z) any costs
related to the rental of the real estate located in Cary, North Carolina,
currently subleased by the Sellers from the Parent prior to the closing of that
office.
A-1
Except as may be mutually agreed to by Buyer and Sellers, revenue and
earnings shall be recognized by Buyer in its financial statements in accordance
with Parent's revenue recognition policy and generally accepted accounting
principles as applied by Parent, consistent with its past practice.
Determination of if and to what extent the Contingent Payment has been earned,
including whether revenue has been collected and recognized and is attributable
to the Buyer, and the appropriate EBIT percentage for the Contingency Period,
will be made by the Parent based on its good faith review of the audited
financial statements and supporting information for the Buyer. Parent shall
make its determinations in accordance with generally accepted accounting
principles as applied by Parent consistent with its past practice, following
completion of the audited consolidated financial statements of Parent for the
Contingency Period, with such modifications as may be agreed to by Buyer and
Sellers. Any and all determinations made by Parent shall be confirmed by
Parent's auditors.
Parent shall notify Sellers of its determination of the Contingent Payment
due, if any, by June 15, 2001. If Sellers do not object to Parent's
determination of the Contingent Payment, Parent shall make such payment within
10 days of the notification. In the event Sellers object to Parent's
determination, Sellers (or their successors) shall notify Parent in writing of
such objection within the 10 day period following the delivery of Parent's
determination, stating in such written objection the reasons therefor and
setting forth Sellers' calculation of the Contingent Payment. Upon receipt by
Parent of such written objection, the parties shall attempt to resolve the
disagreement concerning the amount of the Contingent Payment through
negotiation. If Sellers and Parent cannot resolve such disagreement concerning
the Contingent Payment within 30 days following the end of the foregoing 10 day
period, the parties shall submit the matter for resolution to a nationally
recognized firm of independent certified public accountants not affiliated with
either party. In the event the amount of the Contingent Payment calculated by
the Parent is confirmed or reduced by the accountants, the Sellers shall bear
the costs of such accountants, and in the event the amount of the Contingent
Payment calculated by the Parent is increased by such accountants, the Parent
shall bear the costs of such accountants. Such accounting firm shall deliver a
statement setting forth its own calculation of the Contingent Payment within 30
days of the submission of the matter to such firm (which calculation, absent
manifest error, shall be binding and conclusive on the parties and not subject
to appeal). The Parent shall then pay to the Sellers the Contingent Payment as
calculated by such accounting firm promptly in the manner provided above but in
no event later than 10 days following the delivery of such statement by such
accounting firm to the parties.
After the Contingent Payment has been made, any adjustment of relevant
revenue and earnings for the Contingency Period which was recognized shall
result in a corresponding adjustment to the amount of the revenue achieved by
the Buyer for the purposes of the Agreement; (i) Sellers agree to promptly
refund to Buyer the Contingent Payment to the extent such adjustment results in
the performance goals referenced above not being achieved; and (ii) Buyer agrees
to pay to Sellers such additional funds as may be required to fulfill the
Contingent Payment due, as adjusted.
A-2
EXHIBIT B
---------
EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement"), dated the ___ day of May, 2000 by and
between Xxxx Xxxxxx (the "Employee") and Boron, XxXxxx & Associates, Inc., a
Delaware corporation (the "Company"). Capitalized terms used in this Agreement
and not defined herein shall have the meanings ascribed to them in the Asset
Purchase Agreement (as defined below).
WITNESSETH
----------
WHEREAS, the Company, C2P Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of the Company ("C2P Acquisition"), the Employee,
Consumer2Patient, Inc., a North Carolina corporation ("C2P"),
Physician2Physician, LLC, a North Carolina limited liability company ("P2P") and
Alternative Media Solutions, LLC, a North Carolina limited liability company
("Media") have entered into that certain Asset Purchase Agreement (the "Asset
Purchase Agreement") dated as of May 4, 2000, pursuant to which C2P Acquisition
has agreed to purchase substantially all of the assets of C2P, P2P and Media in
return for $2 million in cash and an earn out provision described in the Asset
Purchase Agreement, subject to the terms and conditions set forth in the Asset
Purchase Agreement.
WHEREAS, the Employee has heretofore held a substantial interest in C2P and
will become an employee of the Company;
WHEREAS, as part of the consideration to be received by C2P Acquisition and
the Company under the Asset Purchase Agreement, the Employee has agreed to enter
into this Agreement;
WHEREAS, as part of the consideration to be received by C2P Acquisition and
the Company under the Asset Purchase Agreement, the Employee, C2P Acquisition
and the Company will enter into a Non-Competition Agreement ("Non-Competition
Agreement") dated as of even date herewith;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Employment.
----------
Subject to the provisions of Section 6, the Company hereby employs the
Employee and the Employee accepts such employment upon the terms and conditions
hereinafter set forth.
2. Term of Employment.
------------------
Subject to the provisions of Section 6, the term of the Employee's
employment pursuant to this Agreement shall commence on and as of the date
hereof (the "Effective Date") and shall terminate on the second anniversary of
the Effective Date; provided, however, that the term of the Employee's
employment pursuant to this Agreement shall be extended automatically for
successive one-year periods ending on the relevant anniversary of the Effective
Date unless either party gives the other notice no later than 90 days prior to
the scheduled termination date (i.e., the second anniversary of the Effective
Date or any later anniversary) of her or its determination not to extend the
term of the Employee's employment pursuant to this Agreement, whereupon such
term of employment shall terminate as of such anniversary date; and provided
further, however, that in the event a Change of Control (as defined in Section
10 hereof) shall occur, then (subject to Sections 6 and 10) such term of
employment shall not expire by reason of non-extension by the Company pursuant
to this Section 2 prior to the date which is 18 months following such Change of
Control. The period during which the Employee serves as an employee of the
Company in accordance with and subject to the provisions of this Agreement is
referred to in this Agreement as the "Term of Employment."
3. Duties.
------
During the Term of Employment, the Employee (a) shall serve as an
employee of the Company with the title of Senior Vice President and Managing
Director, and shall be responsible for the management of the Medical Education
Systems and Consumer2Patient subsidiaries of the Company, reporting to the
President of the Company, and shall implement the Transition Plan and perform
all obligations thereunder, and shall have such duties and have such
responsibilities directly connected thereto and, after April 30, 2001, may have
such additional or alternative duties and responsibilities as may be reasonably
determined by such officer, from time to time, consistent with the general area
of the Employee's experience and skills, provided, however, that in no event
shall Employee be reassigned from the management of the Medical Education
Systems and Consumer2Patient subsidiaries of the Company prior to April 30, 2001
or be assigned any additional or alternative duties prior to said date which
would materially interfere with her ability to manage the Medical Education
Systems and Consumer2Patient subsidiaries of the Company; (b) upon the request
of the Chief Executive Officer of the Company, shall serve as an officer and/or
director of one or more of the Company's subsidiaries; and (c) shall render all
services reasonably incident to the foregoing. The Employee hereby accepts such
employment, agrees to serve the Company in the capacities indicated, and agrees
to use her best efforts in, and shall devote her full working time,
2
attention, skill and energies to, the advancement of the interests of the
Company and its subsidiaries and the performance of her duties and
responsibilities hereunder.
4. Salary, Bonus and Relocation Allowance.
--------------------------------------
(a) During the Term of Employment, the Company shall pay the Employee
a salary at the annual rate of $225,000 per annum (the "Base Salary"). Such
Base Salary shall be subject to withholding under applicable law, shall be pro
rated for partial years and shall be payable in periodic installments not less
frequently than monthly in accordance with the Company's usual practice for
employees of the Company with operating division managerial responsibility, as
in effect from time to time. The Board of Directors or Compensation Committee
of the Company shall review the Base Salary of the Employee at least annually,
but such salary shall not be set at a rate lower than $225,000 per annum.
(b) Bonus. During the Term of Employment, the Employee shall be
-----
entitled to participate in such executive bonus program as may be established by
the Company and then in effect, subject to and in accordance with the terms
thereof, provided that the Employee's target bonus for each year, if any, shall
be established and approved by the Compensation Committee of the Company. For
the years ended December 31, 2000 and December 31, 2001, the target bonus shall
be 35% of salary earned during such period, with such bonus being achieved based
on the performance of both the Medical Education Systems and Consumer2Patient
subsidiaries of the Company, with the measurement criteria for such periods'
bonus to be established by the Chief Executive Officer of the Company. In the
event Employee exceeds the criteria established for the target bonus, she may be
entitled to additional bonuses as the Compensation Committee or the Chief
Executive Officer may determine in their sole discretion.
(c) Stock Options. During the Term of Employment, the Employee shall
-------------
be entitled to participate in such stock option plans or programs as may be
established by the Company for employees of the Company with operating division
managerial responsibility. Such participation shall be determined by the Company
in its sole discretion.
(d) Relocation Allowance. The Company shall pay the Employee a one
--------------------
time relocation allowance of $40,000 as a relocation bonus on the date which is
thirty days after the date hereof, provided that the Employee is still employed
by the Company on such date.
5. Benefits.
--------
(a) During the Term of Employment, the Employee shall be entitled to
participate in any and all medical, pension, dental and life insurance plans,
disability income plans, stock incentive plans, retirement arrangements and
other employment benefits as in effect from time to time for employees of the
Company with operating division managerial responsibility. Such participation
shall be subject to (i) the terms of the applicable plan
3
documents (including, as applicable, provisions granting discretion to the Board
of Directors of the Company or any administrative or other committee provided
for therein or contemplated thereby); and (ii) generally applicable policies of
the Company.
(b) Notwithstanding the foregoing, in accordance with the Company's
practices for employees of the Company with operating division managerial
responsibility, during the Term of Employment the Company shall reimburse the
Employee for a Company automobile, in the amount of $750 per month.
(c) The Company shall promptly reimburse the Employee for all
reasonable business expenses incurred by the Employee during the Term of
Employment in accordance with the Company's practices for employees of the
Company with operating division managerial responsibility, as in effect from
time to time.
(d) During the Term of Employment, the Employee shall receive paid
vacation annually in accordance with the Company's practices for employees of
the Company with operating division managerial responsibility, as in effect from
time to time, but in any event not less than four weeks per calendar year.
(e) Compliance with the provisions of Section 4(b), 4(c) or Section 5
shall in no way create or be deemed to create any obligation, express or
implied, on the part of the Company or any of its affiliates with respect to the
continuation of any particular benefit or other plan or arrangement maintained
by them or their subsidiaries as of or prior to the date hereof or the creation
and maintenance of any particular benefit or other plan or arrangement at any
time after the date hereof, except as provided in Sections 5(b), 5(c) and 5(d).
6. Termination of Employment of the Employee.
-----------------------------------------
Prior to the expiration of the Term of Employment as provided in
Section 2 hereof, this Agreement may or shall (as applicable) be terminated as
follows:
(a) At any time by the mutual consent of the Employee and the
Company.
(b) At any time for "cause" by the Company upon written notice to the
Employee. For purposes of this Agreement, a termination shall be for
"cause" if:
(i) the Employee shall commit an act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against the Company or
any of its subsidiaries, or shall be convicted by a court of competent
jurisdiction of, or shall plead guilty or nolo contendere to, any
felony or any crime involving moral turpitude; or
(ii) the Employee shall commit a material breach of any of the
covenants, terms or provisions hereof, which breach has not been
remedied
4
within thirty (30) days after delivery to the Employee by the Company
of written notice of the facts constituting the breach; or
(iii) the Employee shall have failed to comply substantially
with written instructions from the Company's Chief Executive Officer,
which are reasonable and consistent with Section 3, or shall have
substantially failed to perform an essential function of Employee's
duties hereunder for a period of thirty days after written notice from
the Company.
Upon termination for cause as provided in this Section 6(b), (A) all
obligations of the Company under this Agreement shall thereupon immediately
terminate other than any obligation of the Company with respect to earned
but unpaid Base Salary and benefits contemplated hereby to the extent then
accrued or vested, it being understood that upon any such termination the
Employee shall not be entitled to (1) receive any bonus or portion thereof
from the Company or any of its affiliates not then paid whether pursuant to
Section 4 or otherwise, or (2) any continuation of benefits except as may
be required by law, and (B) the Company and Employee shall have any and all
rights and remedies under this Agreement and applicable law; provided,
however, that termination of this Agreement by the Employee for Good Reason
(as defined in Section 10) within 18 months following a Change of Control
shall not be deemed grounds for termination pursuant to this Section 6(b).
(c) Upon the death of the Employee or upon the permanent disability
(as defined below) of the Employee continuing for a period in excess of one
hundred eighty consecutive days. Upon any such termination of the
Employee's employment as provided in this Section 6(c), all obligations of
the Company under this Agreement shall thereupon immediately terminate
other than (i) any obligation of the Company with respect to earned but
unpaid Base Salary and benefits contemplated hereby to the extent accrued
or vested through the date of termination; and (ii) the obligation of the
Company to pay the Employee or her estate a pro rated portion of the
Employee's target bonus if the criteria for earning such bonus are achieved
by a successor to the Employee following the termination of the Employee
pursuant to this Section 6(c). As used herein, the terms "permanent
disability" or "permanently disabled" shall mean the inability of the
Employee, by reason of injury, illness or other similar cause, to perform a
major part of her duties and responsibilities in connection with the
conduct of the business and affairs of the Company, as determined
reasonably and in good faith by the Company.
(d) By the Employee on at least sixty days' prior written notice to
the Company. Upon termination by the Employee as provided in this Section
6(d), all obligations of the Company under this Agreement thereupon
immediately shall terminate other than any obligation of the Company with
respect to earned but unpaid Base Salary and benefits contemplated hereby
to the extent accrued or vested through the date of termination, it being
understood that in the event of such a termination the
5
Employee shall not be entitled to (i) receive any bonus from the Company or
any of its affiliates whether pursuant to Section 4 or otherwise with
respect to any period during the Term of Employment or (ii) any
continuation of benefits except to the extent required by law.
(e) At any time without "cause" (as defined in Section 6(b)) by the
Company upon written notice to the Employee. In the event of termination
of the Employee by the Company pursuant to this Section 6(e), the Company
shall continue to make Base Salary payments to the Employee in the manner
contemplated by Section 4(a) from the date of termination through the first
anniversary of the date on which such termination occurs, and the Company
shall also remain obligated to pay the full amount of the target bonus
contemplated by Section 4(b) for the year in which such termination occurs,
whether or not such bonus is earned or would otherwise have been paid, at
the time it otherwise would have paid such bonuses; subject, however, to
the provisions of Section 10 in the event any such termination occurs
within 18 months following any Change of Control. Additionally, if Employee
is terminated pursuant to this Section 6(e) prior to April 30, 2001,
Employee shall receive a payment of $2 million which shall be in full
satisfaction of the Contingent Payment as defined in the Asset Purchase
Agreement. Notwithstanding the foregoing, if the Employee's employment
terminates pursuant to Section 6(e) or 6(f) in the 18 months following a
Change of Control and at the time of such termination no target bonus shall
be in effect or such target bonus shall be lower than the higher of the
Employee's target bonuses (whether paid or not) for each of the two most
recent years, then in such circumstances the bonus payment portion of the
Employee's severance payable pursuant to Section 10 of this Agreement shall
be the higher of the Employee's target bonuses for the two most recent
years and all amounts due shall be paid promptly following such termination
and in no event later than 15 days following such termination. Such
payments of bonus and Base Salary amounts contemplated by Section 6(e) or
6(f) are agreed by the parties hereto to be in full satisfaction,
compromise and release of any claims arising out of this Agreement or
termination thereof pursuant to this Section 6(e) or Section 6(f). In any
case the payment of all such amounts under Sections 6(e) or 6(f) shall be
contingent upon the Employee's compliance with Section 8 below and the
Employee's delivery of a general release upon termination of employment
covering all matters arising under or connection with this Agreement. Such
release shall be in a form reasonably satisfactory to the Company, it being
understood that no severance benefits shall be provided unless and until
the Employee executes and delivers such release.
(f) The Employee shall have the right to terminate her employment
hereunder (i) in the event of a material default by the Company in the
performance of its obligations hereunder, after the Employee has given
written notice to the Company specifying such default by the Company and
giving the Company a reasonable time, not less than 30 days, to conform its
performance to its obligations hereunder or (ii) without limitation of
clause (i), for Good Reason during the 18 months following any Change of
Control as contemplated by Section 10. The rights and obligations of the
6
parties shall be as set forth in Section 6(e) and Section 10, as
applicable, in the event of any such termination.
(g) In the event either party gives a notice of non-renewal to be
effective as of any anniversary hereof as contemplated by Section 2, then
all obligations of the parties hereunder shall terminate as of the end of
the Term of Employment except as contemplated by Sections 7, 8, 9, 11, 12,
13 and 14 hereof.
7. Confidentiality; Proprietary Rights.
-----------------------------------
(a) In the course of performing services hereunder, on behalf of the
Company (for purposes of this Section 7, including all predecessors of the
Company) and its affiliates, the Employee has had and from time to time will
have access to confidential records, data, customer lists, trade secrets and
other confidential information owned or used in the course of business by the
Company and its affiliates (the "Confidential Information"). The Employee
agrees (i) to hold the Confidential Information in strict confidence; (ii) not
to disclose the Confidential Information to any person (other than in the
regular business of the Company or its affiliates); and (iii) not to use,
directly or indirectly, any of the Confidential Information for any competitive
or commercial purpose other than on behalf of the Company and its affiliates;
provided, however, that the limitations set forth above shall not apply to any
Confidential Information which (A) is then generally known to the public; (B)
became or becomes generally known to the public through no fault of the
Employee; or (C) is disclosed in accordance with an order of a court of
competent jurisdiction or applicable law. Upon the termination of the
Employee's employment with the Company for any reason, all Confidential
Information (including, without limitation, all data, memoranda, customer lists,
notes, programs and other papers and items, and reproductions thereof relating
to the foregoing matters) in the Employee's possession or control, shall be
immediately returned to the Company or the applicable affiliate and remain in
its or their possession.
(b) The Employee recognizes that the Company and its affiliates
possess a proprietary interest in all of the information described in Section
7(a), subject to the provisions and limitations thereof, and have the exclusive
right and privilege to use, protect by copyright, patent or trademark, or
otherwise exploit the processes, ideas and concepts described therein to the
exclusion of the Employee, except as otherwise agreed between the Company and
the Employee in writing. The Employee expressly agrees that any products,
inventions, discoveries or improvements made by the Employee or her agents or
affiliates in the course of the Employee's employment, including any of the
foregoing which is based on or arises out of the information described in
Section 7(a), shall be the property of and inure to the exclusive benefit of the
Company. The Employee further agrees that any and all products, inventions,
discoveries or improvements developed by the Employee (whether or not able to be
protected by copyright, patent or trademark) during the course of her
employment, or involving the use of the time, materials or other resources of
the Company or any of its affiliates, shall be promptly disclosed to the Company
and shall become the exclusive property of the Company, and the Employee shall
execute and deliver any and all documents necessary or appropriate to
7
implement the foregoing.
(c) The Employee agrees, while she is employed by the Company, to
offer or otherwise make known or available to it, as directed by the Chief
Executive Officer of the Company and without additional compensation or
consideration, any business prospects, contacts or other business opportunities
that she may discover, find, develop or otherwise have available to her in any
field in which the Company or its affiliates are engaged.
8. Non-Competition.
---------------
In view of the fact that any activity of the Employee in violation of
the terms hereof would deprive the Company and its subsidiaries, if any, of the
benefits of their bargain under this Agreement, as a material inducement to and
a condition precedent of the Company's payment obligations hereunder and the
other covenants set forth herein, and to preserve the goodwill associated with
the Boron, XxXxxx business, the Employee and the Company have entered into the
Non-Competition Agreement. The terms of the Non-Competition Agreement are
hereby incorporated into this Agreement and any default by the Employee under
the terms of the Non-Competition Agreement shall be a default under this Section
8.
9. Specific Performance; Severability.
----------------------------------
It is specifically understood and agreed that any breach of the
provisions of Section 7 or 8 hereof by the Employee is likely to result in
irreparable injury to the Company and/or its affiliates, that the remedy at law
alone will be an inadequate remedy for such breach and that, in addition to any
other remedy it may have, the Company shall be entitled to enforce the specific
performance of this Agreement by the Employee and to seek both temporary and
permanent injunctive relief (to the extent permitted by law), without the
necessity of posting a bond or proving actual damages. In case any of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, any such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement, but this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had been limited or modified (consistent with its
general intent) to the extent necessary to make it valid, legal and enforceable,
or if it shall not be possible to so limit or modify such invalid, illegal or
unenforceable provision or part of a provision, this Agreement shall be
construed as if such invalid, illegal or unenforceable provision or part of a
provision had never been contained in this Agreement.
10. Assignability; Change of Control.
--------------------------------
This Agreement shall inure to the benefit of, and be binding upon and
assignable to, successors of the Company by way of merger, reorganization,
consolidation or other sale. In addition, if the Company sells all or
substantially all of its assets, the Company will cause this Agreement to be
assumed by the buyer and if the buyer does not assume this Agreement, such non-
assumption shall be treated as a material breach under Section 6(f). This
Agreement may
8
not be assigned by the Employee. Notwithstanding the foregoing or any other
provision of this Agreement to the contrary, in the event of (a) the sale of all
or substantially all of the assets of the Company and its Subsidiaries to
another person or entity; (b) the sale of all or substantially all of the assets
of the Consumer2Patient subsidiary prior to April 30, 2001; (c) a merger,
reorganization or consolidation in which the holders of the Company's
outstanding voting power immediately prior to such transaction do not own a
majority of the outstanding voting power of the surviving or resulting entity
immediately upon completion of such transaction; (d) the sale of all or
substantially all of the outstanding stock of the Company to an unrelated person
or entity in which the holders of the Company's outstanding voting power
immediately prior to such transaction do not own a majority of the outstanding
voting power of the surviving or resulting entity immediately upon completion of
such transaction; or (e) any other transaction or series of transactions where
the owners of the Company's outstanding voting power immediately prior to such
transaction do not own a majority of the outstanding voting power of the
surviving or resulting entity immediately upon completion of such transaction
(collectively, a "Change of Control"), if, and within 18 months of a Change of
Control, the Company terminates the Employee's employment pursuant to Section
6(e) or the Employee terminates her employment pursuant to Section 6(f),
including for Good Reason (as hereinafter defined), the Employee shall (i)
receive the Severance Payment (as defined below); and (ii) the bonus payment
contemplated by Section 6(e). For purposes of this Agreement, "Good Reason"
shall mean the occurrence of any of the following events: (A) a material adverse
change, directly or indirectly in the nature or scope of the Employee's
responsibilities, authorities, title, powers, functions, or duties; (B) a
reduction in the Employee's annual base salary at the end of any term of this
Agreement, except for across-the-board salary reductions similarly affecting all
or substantially all management employees; or (C) the relocation of the offices
at which the Employee is principally employed to a location more than fifty
miles from Philadelphia, Pennsylvania. "Severance Payment" shall mean the
greater of (i) one year's Base Salary, or (ii) the Employee's then Base Salary
per month, multiplied by (A) 18 months, reduced by (B) the number of full
calender months following the Change of Control, which Severance Payment shall
be payable in 12 equal monthly installments ending on the one year anniversary
of such termination.
11. Notices.
-------
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if faxed (with
transmission acknowledgment received), delivered personally or mailed by
certified or registered mail (return receipt requested) as follows:
To the Company: Boron, XxXxxx & Associates, Inc.
00-00 Xxxxx 000 Xxxxx
Xxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, President and CEO
To the Employee: At her last address as listed in the
9
Company's personnel records
or to such other address or fax number of which any party may notify the other
parties as provided above. Notices shall be effective as of the date of such
delivery, mailing or fax.
12. Dispute Resolution. In the event of a dispute between the parties
------------------
concerning their respective rights and obligations under this Agreement or under
any stock option agreement to which the Employee and the Company are party, that
the parties are unable to resolve amicably between themselves within sixty days
of proper notice from one party to another, such dispute shall be settled by
arbitration in the State of New Jersey in an expedited manner in accordance with
the Commercial Rules of the American Arbitration Association by a duly
registered arbitrator to be selected jointly by the parties. The decision of
the arbitrator shall be final and binding upon the parties. Notwithstanding
anything to the contrary herein, the provisions of this Section 12 shall not
apply to any equitable remedies to which any party may be entitled to hereunder.
13. Litigation and Regulatory Cooperation.
-------------------------------------
During and after Employee's employment, the Employee shall reasonably
cooperate with the Company in the defense or prosecution of any claims or
actions now in existence or which may be brought in the future against or on
behalf of the Company which relate to events or occurrences that transpired
while the Employee was employed by the Company; provided, however, that such
cooperation shall not materially and adversely affect the Employee or expose the
Employee to an increased probability of civil or criminal litigation. The
Employee's cooperation in connection with such claims or actions shall include,
but not be limited to, being available to meet with counsel to prepare for
discovery or trial and to act as a witness on behalf of the Company at mutually
convenient times. During and after the Employee's employment, the Employee also
shall cooperate fully with the Company in connection with any investigation or
review of any federal, state or local regulatory authority as any such
investigation or review relates to events or occurrences that transpired while
the Employee was employed by the Company. The Company shall also provide the
Employee with compensation on an hourly basis calculated at her final base
compensation rate (calculated by taking the final base compensation rate divided
by 48 weeks of 40 hours each) for requested litigation and regulatory
cooperation that occurs after her termination of employment, and reimburse the
Employee for all costs and expenses incurred in connection with her performance
under this Paragraph 13, including, but not limited to, reasonable attorneys'
fees and costs.
14. Miscellaneous.
-------------
This Agreement shall be governed by and construed under the laws of
the State of New Jersey, and shall not be amended, modified or discharged in
whole or in part except by an agreement in writing signed by both of the parties
hereto. The failure of either of the
10
parties to require the performance of a term or obligation or to exercise any
right under this Agreement or the waiver of any breach hereunder shall not
prevent subsequent enforcement of such term or obligation or exercise of such
right or the enforcement at any time of any other right hereunder or be deemed a
waiver of any subsequent breach of the provision so breached, or of any other
breach hereunder. This Agreement supersedes, terminates and in all respects
replaces all prior understandings and agreements, written or oral, between the
parties relating to the subject matter hereof. For purposes of this Agreement,
the term "person" means an individual, corporation, partnership, association,
trust or any unincorporated organization; a "subsidiary" of a person means any
corporation more than 50 percent of whose outstanding voting securities, or any
partnership, joint venture or other entity more than 50 percent of whose total
equity interest, is directly or indirectly owned by such person; and an
"affiliate" of a person shall mean, with respect to a person or entity, any
person or entity which directly or indirectly controls, is controlled by, or is
under common control with such person or entity.
[The remainder of this page has been left blank intentionally.]
11
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
BORON, XXXXXX & ASSOCIATES, INC.
By:_____________________________________________
Xxxxxx X. Xxxxxxx, President and COO
________________________________________________
XXXX XXXXXX
S-1
EXHIBIT C
---------
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT dated this ___ day of May, 2000 by and between
C2P Acquisition Corp., a Delaware corporation (the "Company"), Boron, XxXxxx &
Associates, Inc., a Delaware corporation (the "Parent"), and Xxxx Xxxxxx (the
"Employee"). Capitalized terms used in this Agreement and not defined herein
shall have the meanings ascribed to them in the Asset Purchase Agreement (as
defined below).
WITNESSETH
----------
WHEREAS, the Company, Parent, Employee, Consumer2Patient, Inc., a North
Carolina corporation ("C2P"), Physician2Physician, LLC, a North Carolina limited
liability company ("P2P") and Alternative Media Solutions, LLC, a North Carolina
limited liability company ("Media") have entered into that certain Asset
Purchase Agreement (the "Asset Purchase Agreement") dated as of May 4, 2000,
pursuant to which the Company has agreed to purchase substantially all of the
assets of C2P, P2P and Media in return for $2 million in cash and an earn out
provision described in the Asset Purchase Agreement, subject to the terms and
conditions set forth in the Asset Purchase Agreement.
WHEREAS, the Employee has heretofore held a substantial interest in C2P and
will become an employee of the Parent;
WHEREAS, as part of the consideration to be received by the Company and
Parent under the Asset Purchase Agreement, the Employee has agreed to enter into
this Non-Competition Agreement;
WHEREAS, as part of the consideration to be received by the Company and the
Parent under the Asset Purchase Agreement, the Employee and Parent will enter
into an Employment Agreement ("Employment Agreement") dated as of even date
herewith, providing for the employment of the Employee by the Parent in
accordance with the terms thereof;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Non-Competition Agreement. As a condition precedent to the
--------- -------------------------
Parent's payment obligations under the Employment Agreement, and in
consideration of the other covenants set forth herein, and to preserve the
goodwill associated with the C2P business, the Employee hereby agrees to the
following restrictions on her activities:
The Employee hereby agrees that during the period commencing on the date
hereof and ending (a) on the third anniversary of the date hereof, or (b) in the
event the Employee is employed by the Company, the Parent or any of their
subsidiaries on the second anniversary of the date hereof, then the first
anniversary of the date on which the Employee's employment with the Parent, the
Company or any of their subsidiaries terminates, the Employee will not, without
the express written consent of the Parent, directly or indirectly, anywhere in
the United States, engage in any activity which is, or participate or invest in,
or provide or facilitate the provision of financing to, or assist (whether as
owner, part-owner, shareholder, partner, director, officer, trustee, employee,
agent or consultant, or in any other capacity), any business, organization or
person other than the Company or the Parent whose business, activities, products
or services are competitive with (i) any of the business, activities, products
or services then conducted or offered by the Company or its subsidiaries, or
(ii) any of the business, activities, products or services which are then
conducted or offered by the Parent or its subsidiaries, in either such case
during any period in which the Employee serves as an officer or employee of the
Company, the Parent or any of their subsidiaries, which business, activities,
products and services shall include in any event services currently provided by
C2P or currently contemplated to be provided by C2P. Without implied limitation,
the forgoing covenant shall include soliciting or attempting to solicit for or
on behalf of herself or any such competitor any officer or employee of the
Company or Parent or any of their direct and/or indirect subsidiaries,
encouraging for or on behalf of herself or any such competitor any such officer
or employee to terminate his or her relationship or employment with the Company
or the Parent or any of their direct or indirect subsidiaries, soliciting for or
on behalf of herself or any such competitor any client of the Company or Parent
or any of their direct or indirect subsidiaries and diverting to any person (as
hereinafter defined) any client or business opportunity of the Company, the
Parent or any of their direct or indirect subsidiaries. In addition, the
Employee will not disparage the Company or Parent, the Business or the products
or services conducted or offered by the Company or Parent and their subsidiaries
during any period in which she serves as an officer or employee of the Company
or Parent or any of their subsidiaries.
Notwithstanding anything herein to the contrary, the Employee may make
passive investments in any enterprise the shares of which are publicly traded if
such investment constitutes less than five percent of the equity of such
enterprise.
Neither the Employee nor any business entity controlled by her is a party
to any contract, commitment, arrangement or agreement which could, following the
date hereof, restrain or restrict the Company, the Parent or any subsidiary or
affiliate of the Company or Parent from carrying on their business or restrain
or restrict the Employee from performing obligations under the Employee's
Employment Agreement with the Company and the Parent of even date, and as of the
date of this Agreement the Employee has no business interests in or relating to
the pharmaceutical industry whatsoever, other than her interest in the Parent,
other than interests in public companies of less than five percent.
2
For purposes of this Agreement, any reference to the subsidiaries of the
Company or Parent shall be deemed to include all entities directly or indirectly
controlled by either of them through an ownership of more than fifty percent of
the voting interests, and the term "person" shall mean an individual, a
corporation, an association, a partnership, an estate, a trust, and any other
entity or organization.
Section 2. Scope of Agreement. The parties acknowledge that the time,
--------- ------------------
scope, geographic area and other provisions of this Agreement have been
specifically negotiated by sophisticated commercial parties and agree that (a)
all such provisions are reasonable under the circumstances of the transactions
contemplated hereby, (b) are given as an integral and essential part of the
transactions contemplated by the Asset Purchase Agreement and (c) but for the
covenants of the Employee contained in this Agreement, the Company and the
Parent would not have entered into or consummated the transactions contemplated
by the Asset Purchase Agreement. The Employee has independently consulted with
her counsel and has been advised in all respects concerning the consequences of
the covenants contained herein, with specific regard to the business to be
conducted by Company, the Parent and their subsidiaries.
Section 3. Certain Remedies; Severability. It is specifically understood
--------- ------------------------------
and agreed that any breach of the provisions of this Agreement by the Employee
or any of her affiliates will result in irreparable injury to the Company, the
Parent and their subsidiaries, that the remedy at law alone will be an
inadequate remedy for such breach and that, in addition to any other remedy it
may have, the Company, the Parent and their subsidiaries shall be entitled to
enforce the specific performance of this Agreement by the Employee through both
temporary and permanent injunctive relief without the necessity of proving
actual damages, but without limitation of their right to damages and any and all
other remedies available to them, it being understood that injunctive relief is
in addition to, and not in lieu of, such other remedies. In the event that any
covenant contained in this Agreement shall be determined by any court of
competent jurisdiction to be unenforceable by reason of its extending for too
great a period of time or over too great a geographical area or by reason of its
being too extensive in any other respect, it shall be interpreted to extend only
over the maximum period of time for which it may be enforceable and/or over the
maximum geographical area as to which it may be enforceable and/or to the
maximum extent in all other respects as to which it may be enforceable, all as
determined by such court in such action. The existence of any claim or cause of
action which the Employee may have against the Company, the Parent or any of
their subsidiaries or affiliates shall not constitute a defense or bar to the
enforcement of any of the provisions of this Agreement. In the event that the
Company defaults in its obligation to pay any amounts finally determined to be
due and payable to the Employee in accordance with the provisions of the Asset
Purchase Agreement or the Employment Agreement when they are otherwise due and
payable, and Seller and the Employee have given written notice to Parent
describing the event giving rise to such default and Buyer and Parent have not
cured such default within thirty days of receipt of such notice, the Employee
shall be relieved of her obligations under this Agreement.
3
Section 4. Jurisdiction. In the event that an arbitrator finds that
--------- ------------
courts of any state would hold such covenants unenforceable (in whole or in
part) by reason of the breadth of such scope or otherwise, it is the intention
of the parties hereto that such determination shall not bar or in any way affect
the right of the Company, the Parent or any of their subsidiaries to the relief
provided for herein by applying the laws of any other state within the
geographic scope of such covenants, the above covenants as they relate to each
state being, for this purpose, severable into diverse and independent covenants.
Section 5. Notices. All notices, requests, demands and other
--------- -------
communications hereunder shall be deemed to have been duly given if delivered,
telecopied or mailed by certified or registered mail:
To the Company or the Parent: Boron, XxXxxx & Associates, Inc.
00-00 Xxxxx 000 Xxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, President and COO
To the Employee: At her last address as listed in the
Company's personnel records
or to such other address of which any party may notify the other parties as
provided above. Notices shall be effective as of the date of such delivery or
mailing.
Section 6. Dispute Resolution. In the event of a dispute between the
--------- ------------------
parties concerning their respective rights and obligations under this Agreement,
or the breach, termination, negotiation, or validity hereof and/or the rights or
obligations of the parties arising out of or relating to this Agreement or the
breach, termination, negotiation or validity thereof, in any case that the
parties are unable to resolve amicably between themselves within sixty days of
proper notice from one party to another, such dispute shall be settled by
arbitration in the State of New Jersey in an expedited manner in accordance with
the Commercial Rules of the American Arbitration Association by a duly
registered arbitrator to be selected jointly by the parties. The decision of
the arbitrator shall be final and binding upon the parties. Each of the parties
consents to the jurisdiction of the courts of New Jersey for the purposes of
enforcing the dispute resolution provisions of this Section 6. Each party
further irrevocably waives any objection to proceeding before the American
Arbitration Association based upon lack of personal jurisdiction or to the
laying of venue and further irrevocably and unconditionally waives and agrees
not to make a claim in any court that dispute resolution before the American
Arbitration Association has been brought in an inconvenient forum. Each of the
parties hereto agrees that its or her submission to jurisdiction is made for the
express benefit of the other parties hereto. Notwithstanding anything to the
contrary contained herein, the provisions of this Section 6 shall not apply with
regard to any equitable remedies to which any party may be entitled to
hereunder.
4
Section 7. Miscellaneous. This Agreement shall be governed by and
--------- --------------
construed under the laws of the State of New Jersey, and shall not be modified
or discharged in whole or in part except by an agreement in writing signed by
the Company, the Parent and the Employee. The prevailing party in any
controversy hereunder shall be entitled to reasonable attorneys' fees and
expenses. The failure of any of the parties to require the performance of a
term or obligation or to exercise any right under this Agreement or the waiver
of any breach hereunder shall not prevent subsequent enforcement of such term or
obligation or exercise of such right or the enforcement at any time of any other
right hereunder or be deemed a waiver of any subsequent breach of the provision
so breached, or of any other breach hereunder. This Agreement shall inure to
the benefit of, and be binding upon, successors of the Company and the Parent by
way of merger, consolidation or transfer of substantially all the assets of the
Company or the Parent, and may not be assigned by the Employee. This Agreement
supersedes all prior understandings and agreements between the parties relating
to the subject matter hereof.
[The remainder of this page has been left blank intentionally.]
5
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
C2P ACQUISITION CORP.
By:_______________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Secretary
BORON, XXXXXX & ASSOCIATES, INC.
By:_______________________________________
Name: Xxxxxx X. Xxxxxxx
Title: President and COO
__________________________________________
Xxxx Xxxxxx
S-1
EXHIBIT D
---------
Transition Plan
Transition Plan ("Plan"), dated the ___ day of May, 2000 by and between
Xxxx Xxxxxx (the "Employee") and Boron, XxXxxx & Associates, Inc., a Delaware
corporation (the "Company"). Capitalized terms used in this Agreement and not
defined herein shall have the meanings ascribed to them in the Asset Purchase
Agreement (as defined below).
WITNESSETH
----------
WHEREAS, the Company, C2P Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of the Company ("New C2P"), the Employee,
Consumer2Patient, Inc., a North Carolina corporation ("C2P"),
Physician2Physician, LLC, a North Carolina limited liability company ("P2P") and
Alternative Media Solutions, LLC, a North Carolina limited liability company
("Media") have entered into that certain Asset Purchase Agreement (the "Asset
Purchase Agreement") dated as of May 4, 2000, pursuant to which C2P Acquisition
has agreed to purchase substantially all of the assets of C2P, P2P and Media in
return for $2 million in cash and an earn out provision described in the Asset
Purchase Agreement, subject to the terms and conditions set forth in the Asset
Purchase Agreement.
WHEREAS, the Employee has heretofore held a substantial interest in C2P and
will become an employee of the Company;
WHEREAS, as part of the consideration to be received by New C2P and the
Company under the Asset Purchase Agreement, the Employee has agreed to enter
into this Plan; and
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Communication
-------------
. Press Release will be issued following closing.
. Internal announcement will be made to the employees of Boron, Xxxxxx &
Associates and Consumer2Patient with the following theme: "BLP has acquired
C2P. C2P will be operated as a wholly owned subsidiary of BLP with offices in
Philadelphia, PA and Cary, NC."
Page 1 of 5
. Senior management of BLP and C2P will meet with employees in PA (for
Medical Education Systems ("MES")) and NC for introductions and
discussions.
General Business Assumption
---------------------------
. Xxxx Xxxxxx will be responsible for the operations of MES and New C2P.
. Xxxxx Xxx will report to Xxxx Xxxxxx and will continue to be responsible
for the day-to-day operations of MES.
. A general manager will be hired to run the New C2P operations out of PA.
. The New C2P business will be transitioned from NC to PA as follows:
1. Existing and pending business will be completed out of NC office.
2. New business will be completed out of PA office.
Office Space
------------
. New C2P will occupy the space in the same building as MES in Philadelphia,
PA that is currently empty on the 6th floor. New C2P will be charged
directly for the lease and other related direct costs.
. New C2P will continue to occupy the existing space in Cary, NC until
operations are completely shifted to Philadelphia, PA. New C2P will be
directly charged for the lease and other related direct costs.
. The existing space in Cary, NC will be subleased following completion of
the transition, if practicable.
Employees
---------
. All C2P employees will be terminated by old C2P.
. General Manager who will run New C2P will be hired as soon as possible.
. Regarding the NC employees:
1. NC employees will be re-hired by New C2P that are needed to
satisfy existing and pending NC business. NC employees will be
hired in accordance with BLP's hiring practices.
2. C2P's existing benefit plans will be continued unless BLP's plans
provide better coverage at the same or better cost for the
employees. New C2P will be charged directly for the related share
of such costs.
3. NC employees will be offered stay bonuses, as needed.
4. NC employees will be considered for positions in PA as
appropriate.
. Regarding the PA employees:
1. PA employees will be hired, as needed, for New business.
2. PA employees will be offered benefits under BLP's plans. New C2P
will be charged directly for the related share of such costs.
Operations
----------
. Contracts - all Contracts, to the extent allowable, will be assigned to New
C2P.
Page 2 of 5
. Equipment Leases - New C2P will assume all of the leases on the attached
list. New C2P will be directly charged for such costs.
. Accreditation - New C2P will use MES's accreditation unless there is a
conflict. In the event of a conflict, New C2P would then use SII's
accreditation.
. Business Insurance:
1. All C2P's business insurance will be canceled.
2. BLP's business insurance will be amended to include New C2P and
the related coverage will be increased as necessary.
. Meeting Planning - New C2P will use:
1. Current arrangements for existing and pending business.
2. BLP's meeting planning services for new business as long as BLP
meets New C2P's service requirements.
. Moderators - New C2P will use BLP's moderators for all projects, as
practicable. New C2P will be charged directly for specific usage.
. Tele-recruiting - New C2P will use BLP's tele-recruiting center for all
projects. New C2P will be charged directly for specific usage.
. Travel Services - New C2P will use BLP's travel agency (VTS). New C2P will
be charged directly for specific usage.
. Honoraria - New C2P will use BLP's vendor (Total Health) to administer and
make honoraria payments. New C2P will be directly charged for specific
usage.
. Content Development - New C2P will use:
1. Current arrangements for existing and pending business.
2. BLP for New business, as determined on a case by case basis. In
the event, it is determined that BLP can not meet New C2P's
requirements, New C2P will then use its current arrangements or
other third party vendors.
. Information Technology:
1. New C2P will be connected to BLP's internal communication and
computer systems by BLP's Corporate Information Technology group.
2. BLP will be supported by BLP's Corporate Information Technology
group.
. Human Resources - New C2P will be supported by the BLP's Corporate Human
Resources group.
. Accounting and Finance:
1. All accounting functions for C2P will be moved to BLP's Corporate
Finance group. C2P will use existing accounting firm until such
transition is completed.
2. All accounting functions for MES will be moved to BLP's Corporate
-
Finance group. [TO BE FURTHER DISCUSSED WITH XXXXX XXX BEFORE
---------------------------------------------
FINAL DISCUSSION IS MADE.]
------------------------
3. BLP's Corporate Finance group will support all of the accounting
(including the proper assignment of direct costs between MES and
New C2P) and business analysis needs of both New C2P and MES.
Financial Statements
--------------------
. Balance sheet will be provided as of the end of the month following the
closing in accordance with GAAP and BLP's accounting policies consistently
applied. Such
Page 3 of 5
balance sheet will be adjusted for proper recognition of revenue and costs
consistent with BLP's policies.
. Financial Statements will be provided on a monthly basis in accordance with
BLP's current process.
. Xxxxxx Xxxxxxxx will complete required audit of C2P for SEC filing
purposes.
SEC Filings
-----------
. Form 8-K will be filed within 15 days of closing of the acquisition.
. Amended Form 8-K (with audited and related pro forma financial statements)
will filed with 75 days of closing of the acquisition.
This Plan is intended as a supplement to the Asset Purchase Agreement, any
conflict of terms between this Plan and the Asset Purchase Agreement shall be
controlled by the language of the Asset Purchase Agreement.
Page 4 of 5
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
BORON, XXXXXX & ASSOCIATES, INC.
By:_____________________________________
Xxxxxx X. Xxxxxxx, President and COO
________________________________________
XXXX XXXXXX
Page 5 of 5
EXHIBIT E
FORM OF OPINION OF SELLER'S COUNSEL
1. C2P is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina and has full right, power
and authority to own, lease and operate its properties and to conduct its
business as now conducted. C2P is duly qualified to do business as a foreign
corporation and is in good standing in [*** ***].
2. C2P has the corporate power to enter into and perform the Asset
Purchase Agreement and the other transaction documents.
3. Each of the Asset Purchase Agreement and the other transaction
documents have been duly authorized, executed and delivered by C2P, have been
adopted by all necessary corporate, director and stockholder action of C2P, and
are legal, valid and binding obligations of C2P, enforceable against C2P in
accordance with their terms.
4. Each of P2P and Media is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of North
Carolina and has full right, power and authority to own, lease and operate its
properties and to conduct its business as now conducted. P2P and Media are duly
qualified to do business as foreign limited liability companies and are in good
standing in [*** ***].
5. Each of P2P and Media has the corporate power to enter into and
perform the Asset Purchase Agreement and the other transaction documents.
6. Each of the Asset Purchase Agreement and the other transaction
documents have been duly authorized, executed and delivered by P2P and Media,
have been adopted by all necessary corporate, manager and member action of each
of P2P and Media, and are legal, valid and binding obligations of P2P and Media,
enforceable against P2P and Media in accordance with their terms.
7. The Asset Purchase Agreement, the Employment Agreement, and the Non-
Competition Agreement have been duly executed and delivered by Stockholder and
are legal, valid and binding obligations of the Stockholder, enforceable against
the Stockholder in accordance with their terms.
8. No consent, approval, authorization or filing with any corporate or
governmental authority is required for the due execution and delivery by the
Sellers of the
Asset Purchase Agreement and the other transaction documents or the consummation
by the Sellers of the transactions contemplated therein.
9. The execution and delivery by the Sellers of the Asset Purchase
Agreement and the other transaction documents and the consummation by the
Sellers of the transactions contemplated therein will not conflict with or
result in a violation or breach of (i) the Articles of Incorporation or By-laws
of C2P; (ii) the Articles of Organization or Operating Agreements of each of P2P
and Media; (iii) any existing law, rule or regulation of which we have knowledge
to which the Sellers or the Stockholder is subject; (iv) any permits, judgments,
orders or decrees of which we have knowledge and by which the Sellers or the
Stockholder is bound; or (v) any material agreement of which we have knowledge
to which the Sellers are a party.
10. To our knowledge, the Sellers are not in default under any of the
contracts or agreements listed in the Schedules to the Asset Purchase Agreement.
11. To our knowledge, there are no actions or proceedings against the
Sellers or the Stockholder, pending or threatened, which could affect the
enforceability of the Asset Purchase Agreement or the transactions contemplated
therein or, except as set forth in the Schedules to the Asset Purchase
Agreement, that could have a material adverse effect on the Sellers or the
Subject Assets.
12. To our knowledge, there is no lien, security interest or encumbrance
affecting the Subject Assets other than as disclosed in the Asset Purchase
Agreement.
13. The instruments being delivered to Buyer pursuant to the Asset
Purchase Agreement effectively sell, transfer and assign ownership of the
Subject Assets to Buyer, so far as is known to us, free and clear of all liens,
security interests and encumbrances.
EXHIBIT F
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FORM OF OPINION OF BUYER'S COUNSEL
1. Each of Parent and Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Buyer is
duly qualified to do business as a foreign corporation and is in good standing
in the State of Pennsylvania.
2. Each of Parent and Buyer has the corporate power to (i) enter into and
perform the Asset Purchase Agreement; and (ii) own and operate their properties
and assets.
3. The Asset Purchase Agreement, the Employment Agreement and the Non-
Competition Agreement have each been duly authorized, executed and delivered by
each of Parent and Buyer, have been adopted by all necessary corporate and
stockholder action of each of Parent and Buyer, and are legal, valid and binding
obligations of each of Parent and Buyer, enforceable against each of Parent and
Buyer in accordance with their terms.
4. Except as set forth in the schedule attached hereto [blue sky and
post-closing securities law filings], no consent, approval, authorization or
filing with any corporate or governmental authority which has not been made is
required for the due execution and delivery by either Parent or Buyer of the
Asset Purchase Agreement or the consummation by either Parent or Buyer of the
Transaction.
5. The execution and delivery by each of Parent and Buyer of the Asset
Purchase Agreement and the consummation by each of Parent and Buyer of the
transaction will not conflict with or result in a violation or breach of (i) the
respective Certificates of Incorporation or By-laws of Parent or Buyer; (ii) any
existing law, rule or regulation of which we have knowledge to which either
Parent or Buyer is subject; or (iii) any permits, judgments, orders or decrees
of which we have knowledge and by which either Parent or Buyer is bound.
6. To our knowledge, there are no actions or proceedings against either
Parent or Buyer, pending or threatened in writing, which could affect the
enforceability of the Asset Purchase Agreement or the transactions contemplated
therein or, except as set forth in the Schedules to the Asset Purchase
Agreement, that could have a material adverse effect on Parent and Buyer taken
as a whole.
