Exhibit 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("AGREEMENT") is made as of December 22,
2003, among Better Solutions, Inc., a Pennsylvania corporation ("BUYER"),
Superior Staffing Solutions, Inc., a Pennsylvania corporation ("Seller"), Xxxxx
Xxxxxxx ("XXXXXXX"), Xxxxxxx Xxxxx ("XXXXX"), and Xxxxxxxx Xxxxxx ("XXXXXX")
(Xxxxxxx, Xxxxx and Belden shall be referred to collectively as "PRINCIPALS" and
together with the Seller, the "SELLER PARTIES"). Capitalized terms used herein
are defined in the text; an index of such terms is attached to the end of this
Agreement.
PREAMBLE
Seller is engaged in the business of making temporary and permanent
placements of nursing personnel in Pennsylvania (the "BUSINESS"). Seller desires
to sell to Buyer, and Buyer desires to purchase from Seller, substantially all
of Seller's assets used or useful in connection with, or otherwise relating to,
the Business, all upon the terms and subject to the conditions set forth herein.
Seller is also engaged in making temporary and permanent placements of nursing
personnel in North Carolina (the "NORTH CAROLINA OPERATIONS"), but none of the
assets, liabilities, or any other aspect of the North Carolina Operations will
be sold, assumed or otherwise transferred pursuant to this Agreement. Therefore,
the parties agree as follows with the intent to be legally bound.
AGREEMENT
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.01. Purchase and Sale of Assets. On the Closing Date, Seller will
sell to Buyer, and Buyer will purchase from Seller, all of Seller's rights,
title and interest in and to all of the assets and properties of Seller related
to or used or useful in connection with the Business other than the Excluded
Assets (collectively, the "ASSETS"), free and clear of any Liens, including
without limitation:
(a) all equipment, computer hardware, software, machinery,
fixtures, tools, and furniture used or useful in connection with, or otherwise
related to, the Business (collectively, the "EQUIPMENT"), and all supplies,
spare parts and warranties relating to any of the Equipment;
(b) all patents, registered and unregistered trademarks, service
marks, logos, designs, corporate and trade names, and registered and common law
copyrights, and all applications therefor, used or useful in connection with, or
otherwise related to, the Business;
(c) all inventions, discoveries, techniques, processes, methods,
formulae, designs, trade secrets, confidential information, know-how and ideas
used or useful in connection with or otherwise related to the Business (together
with the items listed in subsection (b) above, the "INTELLECTUAL PROPERTY");
(d) all accounts receivable of the Business, including accounts
related to services provided to customers that have not yet been billed and thus
may not be reflected yet on Seller's books as a receivable (the "RECEIVABLES"),
deposits, investments, securities, advance payments, and all other claims,
causes of action, choses in action and rights of recovery and setoff relating to
the Business or any of the Assets that the Seller has against any Person;
(e) to the extent transferable, all rights under (i) all
contracts, agreements, licenses, commitments and purchase orders with Seller's
customers for sales of Seller's services and (ii) all of Seller's contractual
provisions, agreements, licenses, or commitments constituting restrictive
covenants made by its employees, agents, representatives and Principals (the
"BUSINESS AGREEMENTS");
(f) to the extent transferable, all rights under all permits,
licenses, franchises, certificates, authorizations, consents and approvals
obtained from or issued by any governmental entity that are necessary or
desirable for the ownership or operation of the Business or the ownership,
operation or use of any of the Assets (collectively, the "BUSINESS PERMITS");
(g) all books, records, customer lists, files, ledgers, drawings,
specifications and manuals relating to the Business or any of the Assets, all
advertising materials relating to the Business and all other information
relating to the Business or any of the Assets, regardless of the form in which
such information appears; and
(h) all goodwill of the Business or associated with any of the
Assets.
1.02. Excluded Assets. Notwithstanding any other provision hereof, the
Assets do not include the following (the "EXCLUDED ASSETS"): (a) assets or
properties of Seller relating to the North Carolina Operations; (b) real
property; (c) automobiles; (d) any employee benefit plan, policy or arrangement,
whether formal or informal, sponsored, maintained, or contributed to by Seller,
including without limitation any retirement plan, 401(k) plan, or health plan,
and any trust fund, account, or other amount related to or held in connection
therewith; (e) leases (including without limitation leases for office space,
property (real or personal), equipment or any other asset); (f) rights under all
loans, lines of credit or similar obligations; (g) insurance policies; (h)
claims (and benefits to the extent they arise therefrom) and litigation against
third parties to the extent that such claims and litigation relate to any
Excluded Assets; (i) any books and records that such party is required by law to
retain, and any books and records relating solely to Excluded Assets or Excluded
Liabilities, provided, however, that Seller will
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promptly provide Buyer with copies thereof upon Buyer's request; (j) cash on
hand as of December 19, 2003; and (k) any rights that accrue or will accrue to
Seller under this Agreement.
1.03. Assumption of Liabilities. At the Closing, Buyer will assume and
become liable only for liabilities that (a) arise out of the Assets or the
Business as conducted after thirty (30) days after the Closing Date, (b) arise
out of events first occurring or conditions first existing thirty (30) days from
and after the date of the Closing, and (c) those expenses incurred in the
ordinary course of business during the thirty (30) day period from and after the
Closing Date and that are listed in Schedule 1.03, but excluding any contractual
liability or obligation to the provider billing for such expenses (collectively,
the "ASSUMED LIABILITIES"). All liabilities not meeting the forgoing conditions
or which arise out of or relate to the Excluded Assets (collectively, the
"EXCLUDED LIABILITIES"), will continue to be liabilities of Seller. Without
limiting the generality of the foregoing, Excluded Liabilities shall include (1)
Seller's accrued payroll liability for its administrative employees and outside
employees (as defined in Section 2.17) and (2) all loans, lines of credit ,
notes payable, trade payables and/or similar obligations (collectively
"PAYABLES").
1.04. Purchase Price. The purchase price for the Assets (the "PURCHASE
PRICE") will be four million, two hundred thousand U.S. Dollars ($4,200,000.00),
which amount is subject to adjustment in accordance with Section 1.05, exclusdes
certain interest amounts and is payable as follows:
(a) On the Closing Date, Buyer will pay one million, five hundred
thousand dollars ($1,500,000.00) to Seller.
(b) Within thirty (30) days after the Closing Date, Buyer will
pay Seller an amount equal to one half of Seller's Surplus Receivables, if any,
as determined pursuant to Section 1.05(b).
(c) On the Closing Date, Buyer will issue to Seller such number
of shares of Common Stock of World Health Alternatives, Inc. ("PARENT") as shall
be equal to (x) $400,000 divided by (y) the Average Trading Price. For purposes
of this Section 1.04, the "AVERAGE TRADING Price" means the average of the last
closing price of Parent's common stock on the OTC Bulletin Board for the ten
(10) trading days preceding and including the Closing Date, and rounded up to
the nearest whole number of shares (the "SHARES"). For example, if, over the ten
day period before the Closing Date, the Stock price closed at $1.10 for five
days and $1.00 for five days, the mean average Share price would be $1.05,
resulting in Seller receiving 380,952 Shares ($400,000/$1.05 = 380,952.38). No
fractional shares or cash in lieu of fractional shares will be issued. Buyer
will provide to Seller a certificate evidencing the Shares as soon as reasonably
practicable after the Closing Date, which certificate will contain a restrictive
legend in accordance with Section 4.06.
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(d) As soon as reasonably practicable following the Closing but
not later than thirty days thereafter, Buyer will pay one million, five hundred
thousand dollars ($1,500,000.00) to Seller.
(e) On the first business day of each calendar quarter commencing
with the first calendar quarter of 2004 and ending with the third calendar
quarter of 2006, Buyer will make quarterly payments to Seller in the amount of
ninety-five thousand and thirty dollars ($95,030.00).
(f) All payments to be made by Buyer hereunder shall be made via
wire transfer from PNC Bank (or other comparable commercial bank) to: Xxxxxx Law
Firm Escrow Account (held by Commercial National Bank).
1.05. Post-Closing Adjustments.
(a) Not more than ten (10) business days prior to the Closing
Date, Seller and Buyer shall, in good faith, using Seller's then available
financial information, jointly estimate in accordance with generally accepted
accounting principles ("GAAP") applied in a manner consistent with that used by
Seller in preparing its historical financial statements, (i) the amount of
Seller's Receivables as of such date (the "ESTIMATED RECEIVABLES (ii) the amount
of Seller's Payables as of such date (the "ESTIMATED PAYABLES", and (iii) the
positive difference, if any, between Estimated Receivables minus Estimated
Payables (the "ESTIMATED SURPLUS RECEIVABLES"). If Seller and Buyer cannot agree
on such estimates, then such estimates will be the average of their respective
good faith determinations.
(b) Within twenty-five days after the Closing Date, Buyer will
prepare and deliver to Seller a final statement (the "FINAL STATEMENT) of (i)
the amount of Receivables as of the Closing Date (the "FINAL RECEIVABLES), (ii)
the amount of Payables as of the Closing Date (the "FINAL PAYABLES"), (iii) the
positive difference, if any, between Final Receivables minus Final Payables (the
"FINAL SURPLUS RECEIVABLES"), and (iv) Seller's portion of Final Surplus
Receivables, if any, which portion shall equal one-half (1/2) of Final Surplus
Receivables ("SELLER'S SURPLUS RECEIVABLES"), which statement shall be prepared
in accordance with GAAP, applied in a manner consistent with that used by Seller
in preparing its historical financial statements. Seller will have a period of
five days after its receipt of the Final Statement to review the same and to
notify Buyer of any disputes regarding the same. As part of such review, Seller
and its advisors will have full access to Buyer's work papers, to the preparers
of the Final Statement and to the books and records on which the Final Statement
is based. If Seller notifies Buyer of any dispute within such five day period,
then (A) the parties will negotiate in good faith in an effort to resolve such
dispute and (B) Buyer's payment obligation under Section 1.04(b) shall be
suspended until the dispute is resolved. If the parties are unable to resolve
such dispute within five days after Buyer receives notice of
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the same, then either party may submit such dispute to an independent accounting
firm of recognized national or regional standing mutually acceptable to Buyer
and Seller for resolution or, if they cannot agree, a Big Four accounting firm
chosen by lot (after elimination of those Big Four accounting firms having
relationships with the parties) for determination within thirty days after
submission of such dispute to such firm. Each of Buyer and Seller will be
afforded the opportunity to present to such accounting firm any material related
to the determination and to discuss the determination with such accountants. The
determination by such accounting firm will be conclusive and binding upon the
parties. The fees and expenses of such accounting firm will be shared equally by
Seller and Buyer.
(c) Buyer shall have the right to assume all or any portion of
the Final Payables pursuant to written notice from Buyer to Seller. If Buyer
chooses to exercise this right, Seller shall take all reasonable actions
requested by Buyer in connection with effectuating this right.
(d) To the extent that Final Receivables are determined by Buyer
to be uncollectible, such uncollectible amounts may be offset by Buyer against
payments otherwise owing to Seller hereunder. An amount will be considered
"uncollectible" if, after Buyer's reasonable commercial efforts to collect the
same, it is 150 days past due and, if a reasonable payment arrangements exist,
the debtor is not fully complying with those arrangements.
(e) Seller shall use all funds provided pursuant to Section 1.04
on the Closing Date and all funds provided subsequent to the Closing Date to
satisfy its Payables within thirty (30) days after the Closing Date and shall
provide to Buyer proof of such satisfaction. Buyer shall have the right to make
any post-Closing payment(s) otherwise due to Seller under this Agreement
directly to Seller's creditor(s) for application against Seller's Payables in
lieu of paying Seller.
1.06. Assignment of Value. Buyer and Seller will use their best efforts
to comply with the applicable requirements of the Internal Revenue Code of 1986,
as amended (the "CODE"), by preparing a schedule to be executed at the Closing
reflecting the allocation of the Purchase Price to the respective Assets, which
allocation will be used by them in preparing their respective income tax
returns; provided, that any failure to agree on such allocation will not relieve
either party of its obligations hereunder.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller Parties, jointly and severally, hereby represent and warrant to
Buyer as of the date hereof and as of the Closing Date as follows:
2.01. Organization and Qualification. Seller is a corporation duly
organized, validly existing and in good standing in the State of Pennsylvania.
Seller is duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which the ownership of its properties or the
nature of its business makes such qualification necessary, except to the extent
that the failure to be so qualified has not resulted in, and is not reasonably
likely to result in, a material adverse change in the business, operations,
financial condition or prospects of the Assets or Business (a "MATERIAL ADVERSE
CHANGE"), and all of such jurisdictions are listed on Schedule 2.01.
2.02. Power and Authority. Seller has the corporate power and authority
to own its assets, to conduct its business as presently conducted and to
execute, deliver and perform this Agreement and the other Transaction Documents.
2.03. Execution and Binding Effect. This Agreement has been, and on the
Closing Date the other Transaction Documents will be, duly and validly executed
and delivered by the Seller Parties and constitute (or upon such execution and
delivery will constitute) legal, valid and binding obligations of the Seller
Parties enforceable against the Seller Parties in accordance with their
respective terms.
2.04. No Breach, Default, Violation or Consent. Except as otherwise
disclosed on Schedule 2.04, the execution, delivery and performance by Seller of
this Agreement and the other Transaction Documents do not and will not:
(a) violate Seller's charter or bylaws;
(b) breach or result in a default (or an event which, with the
giving of notice or the passage of time, or both, would constitute a default)
under any Business Agreement or Business Permit, or require any consent under or
give to others any rights of termination, acceleration, suspension, revocation,
cancellation or amendment of, any Business Agreement or Business Permit;
(c) breach or otherwise violate any order, writ, judgment,
injunction or decree issued by any governmental entity (each a "GOVERNMENTAL
ORDER") which names a Seller Party or is directed to a Seller Party, the
Business or any of the Assets;
(d) violate any law, rule, regulation, ordinance or code of any
governmental entity (each a "GOVERNMENTAL RULE"); or
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(e) require any consent, authorization, approval, exemption or
other action by, or any filing, registration or qualification with, any person
or entity (each a "PERSON").
2.05. Financial Statements. Seller has previously delivered to Buyer
correct and complete copies of (a) its reviewed balance sheets and statements of
income, retained earnings and cash flows as of and for its fiscal years ended
December 31, 2001 and 2002, including the footnotes thereto, and (b) unaudited
interim balance sheets and statements of income, retained earnings and cash
flows as of and for its three fiscal quarters ended September 30, 2003 (the
"CURRENT FINANCIAL STATEMENTS" and, together with the items described in clause
(a) above, the "FINANCIAL STATEMENTS"). The Financial Statements present fairly
the financial condition of Seller as at the end of the periods covered thereby
and the results of its operations and the changes in its financial position for
the periods covered thereby, and were prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby subject, in the
case of the Current Financial Statements, to year-end audit adjustments (which
will not be material except as otherwise disclosed on Schedule 2.05) and the
lack of footnotes and other presentation items. Except as and to the extent
otherwise disclosed in the Current Financial Statements and on Schedule 2.05,
Seller has no liabilities of any kind, whether direct or indirect, fixed or
contingent or otherwise, other than (i) executory obligations under Business
Agreements which are not required to be set forth in the Current Financial
Statements in accordance with GAAP and (ii) liabilities incurred in the ordinary
course of business since September 30, 2003 (the "FINANCIAL STATEMENT DATE").
2.06. Tax Matters. Except as otherwise disclosed on Schedule 2.06:
(a) all tax returns and reports required to be filed by Seller
have been properly prepared and filed;
(b) Seller has paid, or has made adequate reserves on its books
for the payment of, all taxes, interest, penalties, assessments and deficiencies
shown to be due on such tax returns and reports or claimed to be due by any
governmental entity or which Seller is required to withhold on behalf of any
other Person;
(c) the reserves and provisions for taxes on the books of Seller
are adequate for all open years and for its current fiscal period and properly
classify such tax obligations as either current or deferred;
(d) Seller has no knowledge of any proposed assessment of any
additional taxes by any governmental entity or of any basis for any such
assessment (whether or not reserved against);
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(e) the federal income tax liabilities of Seller have been
finally determined by the Internal Revenue Service (the "IRS"), or the time for
audit has expired, for all fiscal periods ending on or prior to September 30,
2003;
(f) Seller is not currently being audited by any governmental
entity, and no such audit is pending or, to Seller's knowledge, threatened;
(g) Except for its election to an S Corporation on _____________
, 2000, Seller has not made any tax elections which (i) were in effect in any
past year for which the time for audit has not expired, (ii) are currently in
effect or (iii) will be in effect at any future time; and
(h) Seller has not given any waiver or extension of any period of
limitation governing the time of assessment or collection of any tax.
2.07. Litigation. Except as otherwise disclosed on Schedule 2.07, there
is no pending or, to Seller's knowledge, threatened investigation, action,
claim, demand or proceeding against, involving or relating to Seller, Seller's
employees or agents or the Principals, involving or relating to the Business or
any of the Assets by or before any governmental entity, arbitrator, mediator or
other forum. Schedule 2.07 sets forth a correct and complete list of each
investigation, action, claim, demand and proceeding (a) described in the
preceding sentence; and (b) in which Seller has been involved since January 1,
1998, including without limitation as the plaintiff or initiating party,
together with the parties thereto, the alleged basis therefor, the relief sought
therein and the current status thereof.
2.08. Absence of Certain Changes and Events. Except as otherwise
disclosed on Schedule 2.08, since the Financial Statement Date:
(a) Seller has not incurred any material obligation or liability
with respect to the Business except for normal trade obligations incurred in the
ordinary course of business;
(b) no casualty, loss or damage has occurred with respect to any
of the Assets, whether or not the same is covered by insurance;
(c) Seller has not sold, transferred or otherwise disposed of any
of its properties or assets related to the Business or any interest therein, or
agreed to do any of the foregoing, except pursuant to sales of services in the
ordinary course of business;
(d) Seller has not written off as uncollectible any of the
Receivables, or written down the value of any of the Assets, except in each case
in the ordinary course of business and at a rate no greater than during the
12-month period ending on the Financial Statement Date;
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(e) Seller has not waived or released any of its rights with
respect to the Business or the Assets or permitted any of such rights to lapse;
(f) no executive officer or other key employee of Seller has left
his or her employment with Seller;
(g) since November 14, 2002, Seller has not granted, and is not
committed to grant, any salary or wage increases to any of its employees
employed in connection with the Business;
(h) Seller has not made, or committed to make, any capital
expenditures in excess of $750.00 in the aggregate;
(i) there has been no payment, discharge or other satisfaction of
any liabilities of Seller, whether direct or indirect, fixed or contingent or
otherwise, other than the satisfaction, in the ordinary course of business, of
liabilities reflected on the Current Financial Statements or incurred in the
ordinary course of business since the Financial Statement Date;
(j) Seller has not introduced any material change with respect to
the Business, including without limitation with respect to the products or
services it sells, the areas in which such products or services are sold, its
methods of providing its services, products, marketing techniques or its
accounting methods; and
(k) no Material Adverse Change, and no event which is reasonably
likely to result in a Material Adverse Change, has occurred.
2.09. Customers. Schedule 2.09 sets forth a correct and complete list
of each of Seller's top twenty (20) customers in terms of dollar volume of
services purchased during Seller's fiscal year ended December 31, 2002, and
during the nine months ending on the Financial Statement Date, and indicates
with respect to each the name and address, dollar volume and nature of the
relationship. Seller is not required to provide any material bonding or other
financial security arrangements in connection with any of its transactions with
any such customer. Since the Financial Statement Date, no such customer has
terminated its relationship with, or materially reduced its business activity
with, Seller, and Seller has no knowledge that any such customer intends to
terminate its relationship with, or materially reduce its business activity
with, Seller.
2.10. Constituent Documents and Governmental Rules. Seller is in
compliance with (a) its charter and bylaws and (b) all Governmental Rules
applicable to Seller, the Business or the Assets, except, in each case, for such
non-compliance as, individually or in the aggregate, has not resulted in, and is
not likely to result in, a Material Adverse Change.
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2.11. Governmental Orders. Schedule 2.11 sets forth a correct and
complete list of all Governmental Orders which name Seller or are directed to
Seller, the Business or any of the Assets, together with the governmental entity
who issued the same and the subject matter thereof. Seller is in compliance with
all such Governmental Orders, except for such non-compliance as, individually or
in the aggregate, has not resulted in, and is not likely to result in, any
Material Adverse Change.
2.12. Business Permits. Schedule 2.12 sets forth a correct and complete
list of all Business Permits and indicates for each whether the same are
transferable to Buyer and, if so, whether consent to such transfer is required.
Such Business Permits have been validly acquired, are in full force and effect
and represent all governmental permits, licenses, franchises, certificates,
authorizations, consents and approvals necessary under applicable Governmental
Rules for Buyer to carry on the Business as now being conducted and to own,
occupy or use the Assets. No violations have been recorded against any such
Business Permit, no citation, notice or warning has been issued by any
governmental entity with respect to any such Business Permit, no investigation
or hearing has been held by or before any governmental entity with respect to
any such Business Permit, Seller has not received any notice from any
governmental entity that it intends to cancel, revoke, terminate, suspend or not
renew any such Business Permit and Seller has no knowledge of any basis for any
of the foregoing. Seller is in compliance with all such Business Permits, except
for such non-compliance as, individually or in the aggregate, has not resulted
in, and is not likely to result in, a Material Adverse Change.
2.13. Personal Property.
(a) Schedule 2.13 sets forth a correct and complete list of all
agreements applicable to any of the Equipment.
(b) Except as otherwise disclosed on Schedule 2.13, the Equipment
is in good repair and operating condition and is suitable for the purposes for
which it is generally used. The Equipment constitutes all equipment, machinery,
fixtures, patterns, computer hardware and software and furniture necessary to
conduct the Business as currently conducted.
(c) Except as otherwise disclosed on Schedule 2.13, all
Receivables (i) represent amounts receivable for goods actually delivered or
services actually provided (or, in the case of non-trade receivables, represent
amounts receivable in respect of other bona fide business transactions), (ii)
are not subject to any material defenses, counterclaims or rights of setoff,
(iii) have been or will be billed and are or will be generally due and payable
within 30 days after billing and (iv) are fully collectible in the ordinary
course of business except, in the case of receivables arising prior to the
Financial Statement Date, to the extent of the reserves set forth in the
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Current Financial Statements and, in the case of receivables arising after such
date, to the extent of a reasonable allowance for bad debts. Schedule 2.13 sets
forth the total amount of Receivables outstanding as of the Closing Date,
together with the aging of such Receivables, from the due date thereof, based on
the following schedule: 0-30 days; 61-90 days; over 90 days; and over 150 days.
2.14. Intellectual Property. Schedule 2.14 sets forth a correct and
complete list of (a) all patents, registered and unregistered trademarks,
service marks, logos, corporate and trade names and registered and unregistered
copyrights, and all applications therefor, included in the Intellectual
Property, (b) all licenses or other agreements pursuant to which any Person has
the right to use any Intellectual Property owned by Seller and (c) all licenses
or other agreements pursuant to which Seller has the right to use any
Intellectual Property owned by others. Seller has the lawful right to use all of
the Intellectual Property, and no such use infringes upon the lawful rights of
any other Person. To Seller's knowledge, no Person is using any Intellectual
Property in a manner which infringes upon the lawful rights of Seller. The
Intellectual Property constitutes all intellectual property necessary to conduct
the Business as currently conducted.
2.15. Title Matters. Except as otherwise disclosed on Schedule 2.15,
Seller has good and marketable title to all Assets purported to be owned by it,
with such Assets being free and clear of all liens, claims and encumbrances of
any nature whatsoever (collectively, "LIENS"). On the Closing Date, Seller will
transfer to Buyer title to the Assets, free and clear of all Liens. The Assets
constitute all of the assets and properties, tangible and intangible, necessary
to operate the Business in the manner presently operated by the Seller.
2.16. Pension and Welfare Plans. Schedule 2.16 sets forth a true,
correct and complete list of all Pension Plans and Welfare Plans (collectively,
"PLANS"). Except as otherwise disclosed on Schedule 2.16:
(a) each Plan and each related trust has been established,
maintained, administered and funded in all material respects in compliance with
ERISA, the Code and all other applicable Governmental Rules;
(b) no transaction or omission has occurred with respect to any
Plan or related trust that could subject Seller or any other Person who owns or
operates the Business to any tax or penalty under ERISA, the Code or other
applicable Governmental Rules;
(c) none of the Plans or related trusts have any unfunded
liabilities;
(d) none of the Plans (i) is a "multiemployer plan" (as defined
in Section 3(37) of ERISA), (ii) is a "defined benefit plan" (as defined in
Section 3(35) of
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ERISA), (iii) is subject to the minimum funding requirements of Section 302 of
ERISA or Section 412 of the Code or (iv) provides medical, health, life
insurance or other welfare-type benefits to former employees of Seller or any
ERISA Affiliate;
(e) there are no actions, suits, claims, demands, investigations
or other proceedings pending or, to Seller's knowledge, threatened against any
Plan or related trust or any fiduciary thereof;
(f) there are no outstanding Governmental Orders that name any
Plan or related trust or any fiduciary thereof or are directed to any Plan or
related trust, any fiduciary thereof or any assets thereof; and
(g) each Plan and related trust that is intended to be
tax-qualified meets the requirements of a tax-qualified plan or tax exempt trust
under Section 401(a) and Section 501(a), respectively, of the Code, has received
a favorable determination letter from the IRS as to the qualification of such
Plan and the tax-exempt status of the related trust (or has filed with the IRS
for such a determination letter within the applicable remedial amendment period
or is a standardized plan for which the prototype plan sponsor has received a
favorable determination letter from the IRS as to the qualification of the
standardized plan), and nothing has occurred since the date of such
determination letter that could reasonably be expected to adversely affect the
qualification of such Plan or the tax-exempt status of the related trusts.
As used in this Agreement the following terms have the following
meanings:
"ERISA" means the Employee Retirement Income Security Act of
1974 and the regulations promulgated thereunder, as amended.
"ERISA AFFILIATE" means any trade or business which, together
with Seller, is treated as a single employer under Section 4001(b)(1) of ERISA
or Sections 414(b), (c), (m) or (o) of the Code.
"PENSION PLAN" means any "employee pension benefit plan" as
defined in Section 3(2) of ERISA which is maintained for past or present
employees of Seller or any ERISA Affiliate or with respect to which Seller or
any ERISA Affiliate has any current or potential liability, including without
limitation any withdrawal liability.
"WELFARE PLAN" means (i) any "employee welfare benefit plan"
as defined in Section 3(1) of ERISA which is maintained for past or present
employees of Seller or any ERISA Affiliate or with respect to which Seller or
any ERISA Affiliate has any current or potential liability and (ii) any other
plan or program maintained for past or present employees of Seller, including
without any limitation health insurance plan, life insurance plan, option plan,
bonus plan, savings plan or severance plan.
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2.17. Personnel Matters.
(a) Schedule 2.17 sets forth a correct and complete list of (i)
all directors, executive officers and Principals of Seller, (ii) all other
employees of or consultants to the Business, including "outside employees"
(i.e., those employees who provide services directly at the customers' site),
(iii) the current job title or relationship to Seller of each such Person
described in clauses (i) and (ii) above, (iv) the amount of compensation
(including bonuses and commissions) paid to each such Person during Seller's
fiscal year ended December 31, 2002, through the Financial Statement Date, and
what each of them is expected to receive in Seller's current fiscal year, (v)
any employee benefits or perquisites available to any such Person that are not
generally available to employees of Seller or which are utilized by any such
Person, and (vi) the number of hours billed by each outside employee during
Seller's fiscal year ended December 31, 2002, and through the Financial
Statement Date. To Seller's knowledge, no Persons identified pursuant to the
previous sentence have threatened to terminate his or her employment with the
Seller. Seller reasonably believes that at least 90% of the outside employees
will accept employment with Buyer after the Closing.
(b) Except as otherwise disclosed on Schedule 2.17, Seller is not
a party to any employment, consulting or similar agreement or obligation,
written or oral, with any Person related to the Business.
(c) Except as otherwise disclosed on Schedule 2.17, (i) no
employees of Seller related to the Business are represented by any labor union
or similar organization, (ii) Seller is not party to any collective bargaining
or similar agreement covering any of its employees related to the Business and
(iii) no labor union or similar organization or group of employees has made a
demand for recognition, filed a petition seeking a representation proceeding,
given Seller notice of any intention to hold an election of a collective
bargaining representative or engaged in any organizing activities at any time
during the past three years.
(d) Except as otherwise disclosed on Schedule 2.17, (i) no
strike, work stoppage, contract dispute or other labor disturbance involving any
employees of Seller related to the Business currently exists or, to Seller's
knowledge, is threatened and (ii) no investigation, action, claim, demand or
proceeding by or before any governmental entity which relates to allegedly
unfair or discriminatory employment or labor practices or the violation of any
Governmental Rule relating to employment or labor practices with respect to the
Business is pending or, to Seller's knowledge, threatened.
2.18. Insurance. Schedule 2.18 sets forth a correct and complete list
of all insurance policies of which Seller is the owner, insured, loss payee or
beneficiary and which relate to the Business or any of the Assets and indicates
for each such policy any pending claims thereunder. Except as otherwise
disclosed on Schedule 2.18: (a) there
13
has been no failure to give any notice or present any material claim under any
such policy in a timely fashion or as otherwise required by such policy; (b) all
premiums under such policies which were due and payable on or prior to the date
hereof have been paid in full; (c) no such policy provides for retrospective or
retroactive premium adjustments; (d) Seller has not received notice of
disallowance of any claim under any such policy; (e) Seller has not been refused
any insurance, nor has its coverage been limited by any carrier; and (f) since
January 1, 2000, Seller has maintained, or been the beneficiary of, general
liability and professional liability policies reasonable in both scope and
amount in light of the risks attendant to the Business and which provide
coverage comparable to coverage customarily maintained by others in similar
lines of business, and such policies have been "occurrence" policies and not
"claims made" policies. Seller has provided to Buyer a correct and complete loss
run for each such policy during the past five (5) years.
2.19. Other Material Business Agreements. Schedule 2.19 sets forth a
correct and complete list of all Business Agreements other than (a) Business
Agreements listed on any of Schedule 2.13 through Schedule 2.18, (b) Business
Agreements involving the payment by or to Seller, or creating any liability of
Seller (whether direct or indirect, fixed or contingent), of less than $2,500.00
over the term thereof (exclusive of Business Agreements which require
performance by the Company other than the payment of money or the delivery of
goods or services) and (c) Business Agreements which constitute, create,
evidence or secure any Excluded Assets or Excluded Liabilities.
2.20. Status of Business Agreements. Each Business Agreement is in full
force and effect and is enforceable against Seller and, to Seller's knowledge,
the other parties thereto, in accordance with its terms. Seller is in compliance
with each such Business Agreement in all material respects. To Seller's
knowledge, all other parties to such Business Agreements are in compliance with
the terms thereof in all material respects. Except as otherwise disclosed on
Schedule 2.20, each such Business Agreement may be assigned to Buyer without the
consent of any other Person.
2.21. Warranty Liability. Seller has previously delivered to Buyer a
correct and complete copy of each express warranty under which it has any
warranty obligations. Schedule 2.21 sets forth:
(a) a correct and complete list of all services performed by
Seller with respect to which Seller may have any liability, whether on account
of warranty obligations, liability claims or otherwise;
(b) the number of warranty claims which have been made against
Seller on account of such services during the five-year period ended November
21, 2003, together with the amount expended by Seller in each of such years in
satisfying such claims, the number of such claims outstanding on the date hereof
and the amount
14
which Seller reasonably believes will be necessary to satisfy such outstanding
claims; and
(c) the number of liability claims which have been made against
Seller on account of such services during the five-year period ended November
21, 2003, together with the amount expended by Seller in each of such years in
defending against or satisfying such claims, the number of such claims
outstanding on the date hereof and the amount which Seller reasonably believes
will be necessary to defend against or satisfy such outstanding claims.
2.22. Transactions with Affiliates. Except as otherwise disclosed on
Schedule 2.22: (a) none of the customers, outside employees or suppliers of the
Business are Affiliates of Seller or any of its officers, directors or
shareholders; (b) none of the Assets are owned or used by or leased to any
Affiliates of Seller or any of its officers, directors or shareholders; (c) no
Affiliate of Seller or any of its officers, directors or shareholders is a party
to any Business Agreement; and (d) no Affiliate of Seller or any of its
officers, directors or shareholders provides any legal, accounting or other
services to Seller. As used in this Section only, the term "AFFILIATE" means,
with respect to any Person, (i) any director, officer, employee, partner or
principal of such Person, (ii) any other Person of which such Person is a
director, officer, employee, partner or principal, (iii) any Person who directly
or indirectly controls or is controlled by, or is under common control with,
such Person and (iv) with respect to any Person described above who is a natural
person, any spouse and any relative (by blood, adoption or marriage) within the
third degree of consanguinity of such Person, and the term "CONTROL" means, with
respect to any Person, the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities, by contract or otherwise. As
used elsewhere in this Agreement, the term "AFFILIATE" has the meaning set forth
in clause (iii) above.
2.23. Brokers. Except for Xxxxxxx Xxxxx, Jr., Seller has not employed
or retained, and has no liability to, any broker, agent or finder on account of
this Agreement or any of the other Transaction Documents or the transactions
contemplated hereby or thereby. Seller will be solely liable for all amounts
payable to Xxxxxxx Xxxxx, Jr.
2.24. Delivery of Documents; Accurate Disclosure. Seller has previously
delivered to Buyer correct and complete copies of the items listed on Schedule
2.13 through Schedule 2.19 and of each additional agreement, document and
instrument which Buyer (or its accountants or attorneys) has requested in
writing. None of the information furnished by Seller to Buyer or any of its
representatives in connection with this Agreement and the other Transaction
Documents, and none of the representations and warranties of Seller set forth
herein, in any other Transaction Document or in any certificate delivered in
connection herewith or therewith, (a) is false or misleading in
15
any material respect, (b) contains any untrue statement of a material fact or
(c) omits any statement of material fact necessary to make the same not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
3.01. Organization. Buyer is a corporation duly organized, validly
existing and in good standing in the Commonwealth of Pennsylvania.
3.02. Power and Authority. Buyer has the corporate power and authority
to own its properties and assets, to conduct its business as presently conducted
and to execute, deliver and perform this Agreement and the other Transaction
Documents.
3.03. Execution and Binding Effect. This Agreement has been, and on the
Closing Date the other Transaction Documents will be, duly and validly executed
and delivered by Buyer and constitute (or upon such execution and delivery will
constitute) legal, valid and binding obligations of Buyer enforceable against
Buyer in accordance with their respective terms.
3.04. No Breach, Default, Violation or Consent. The execution, delivery
and performance by Buyer of this Agreement and the other Transaction Documents
do not and will not:
(a) violate Buyer's charter or bylaws;
(b) breach or result in a default (or an event which, with the
giving of notice or the passage of time, or both, would constitute a default)
under, require any consent under or give to others any rights of termination,
acceleration, suspension, revocation, cancellation or amendment of any contract,
agreement, instrument or document to which Buyer is a party or by which Buyer or
any of its properties or assets is bound;
(c) breach or otherwise violate any Governmental Order which
names Buyer or is directed to Buyer or any of its properties or assets;
(d) violate any Governmental Rule; or
(e) require any consent, authorization, approval, exemption or
other action by, or any filing, registration or qualification with, any Person.
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3.05. Brokers. Buyer has not employed or retained, and has no liability
to, any broker, agent or finder on account of this Agreement or any of the other
Transaction Documents or the transactions contemplated hereby or thereby.
ARTICLE IV
SECURITIES REPRESENTATIONS AND COVENANTS
4.01. Access to Information. Seller recognizes that Parent has made
available to it the opportunity to examine such documents from Parent and to ask
questions of, and receive full answers from, Parent concerning, among other
things, Parent, its financial condition, its management, its prior activities
and any other information which Seller considers relevant or appropriate in
connection with entering into this Agreement. Seller further represents that the
oral information provided by Parent's and Buyer's management, if any, has been
consistent with the written information provided.
4.02. Risks of Investment. Seller acknowledges and understands that the
terms of this Agreement and the transactions contemplated hereby have not been
reviewed by the SEC or by any state securities authorities. Seller understands
that the Shares are characterized as "Restricted Securities" under the
Securities Act of 1933, as amended (the "SECURITIES ACT") inasmuch as they are
being acquired from Parent in a transaction not involving a public offering and
that under the Securities Act and applicable regulations thereunder such
securities may be resold without registration under the Securities Act only in
certain limited circumstances. In this connection, Seller represents that Seller
is familiar with Rule 144 of the SEC as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act. Seller understands
that Parent is under no obligation to register any of the Restricted Securities.
4.03. Investment Experience. Seller understands that the acquisition of
the Shares pursuant to this Agreement involves substantial risk. Seller
acknowledges that it can bear the economic risk of its investment in the Shares,
and has such knowledge and experience in financial or business matters that
Seller is capable of evaluating the merits and risks of this investment in the
Shares and protecting its own interests in connection with this investment.
Seller hereby represents that he is an "accredited investor" as such term is
defined under paragraph (a) of Rule 501 of Regulation D promulgated under the
Securities Act.
4.04. Investment Intent. Seller is receiving the Shares for investment
for its own account only and not with a view to, or for resale in connection
with, any "distribution" thereof within the meaning of the Securities Act, other
than pursuant to an effective registration statement under the Securities Act.
4.05. Further Limitations on Disposition. Without in any way limiting
the representations set forth above, Seller further agrees not to make any
disposition of all
17
or any portion of the Shares issued to it unless and until: there is then in
effect a registration statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with such registration
statement; or Seller shall have notified Parent of the proposed disposition and
shall have furnished Parent with a statement of the circumstances surrounding
the proposed disposition, and, at Seller's expense, with an opinion of counsel,
if reasonably requested by Parent, reasonably satisfactory to Parent, that such
disposition will not require registration of such securities under the
Securities Act.
4.06. Legends. Seller understands and agrees that there will be placed
on the certificates evidencing the ownership of the Shares, a restrictive
legend, in addition to any legends required by applicable securities laws or by
the charter documents of Parent. The legend set forth above may be removed by
Parent from any certificate evidencing Shares upon receipt by Parent of an
opinion by its counsel, or counsel reasonably satisfactory to Parent, that such
security can be freely transferred in a public sale without such a registration
statement being in effect.
4.08. Stop Transfer Instructions; No Requirement to Transfer. Seller
agrees that, in order to ensure compliance with the restrictions referred to
herein, Parent may issue appropriate "stop transfer" instructions to its
transfer agent. Parent shall not be required (i) to transfer or have transferred
on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred in
violation of any provision of this Agreement.
ARTICLE V
TRANSACTIONS PRIOR AND SUBSEQUENT TO CLOSING
5.01. Conduct of Business Prior and Subsequent to Closing. At all times
prior to the Closing Date and for a transition period of sixty (60) days after
the Closing Date, Seller shall:
(a) operate the Business only in the ordinary course and
consistent with past practice;
(b) use its best efforts to preserve its business organization
intact, to keep available to Buyer the services of its present officers and
employees and to preserve for Buyer the good will of customers, consultants,
suppliers and others having business relations with the Business;
(c) maintain the Equipment and other property used in the
Business in good repair and operating condition, ordinary wear and tear
excepted;
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(d) maintain in full force and effect all Business Permits and
insurance policies;
(e) not enter into any contract or commitment except those
made in the ordinary course of business, the terms of which are consistent with
past practice and reasonable in light of current conditions;
(f) not terminate, cause the termination of, amend, renew or
extend any Business Agreement unless in each case such action is in the best
interest of the Business;
(g) not waive or release any of its rights with respect to the
Business or any of the Assets or permit any of such rights to lapse, except
pursuant to the terms of this Agreement;
(h) not sell, transfer or otherwise dispose of any of the
Assets or any interest therein or agree to do any of the foregoing;
(i) not incur, make, assume or suffer to exist any Lien,
tenancy or other matter affecting title to any of the Assets or any other
property needed to operate in the ordinary course of business;
(j) not make, change or revoke any tax election or make any
agreement or settlement with any taxing authority;
(k) not merge or consolidate Seller with or into any other
entity or agree to do any of the foregoing;
(l) comply with applicable Governmental Rules in all material
respects;
(m) take no action, and use its best efforts to prevent the
occurrence of any event or the existence of any condition, which would result in
any of Seller's representations and warranties herein not being true and
correct; and
(n) promptly inform Buyer of the occurrence of any event or
the existence of any condition which constitutes or, with the giving of notice
or the passage of time, or both, is likely to constitute, a Material Adverse
Change.
5.02. Casualty, Loss or Damage to Assets. If at any time prior to the
Closing Date or during the sixty (60) day transition period any casualty, loss
or damage occurs with respect to any Asset then Seller will promptly inform
Buyer of the same and, at Buyer's option, will either (a) repair or replace such
Asset such that the Asset to be
19
transferred to Buyer hereunder is in a condition at least as good as it was in
immediately prior to the occurrence of such casualty, loss or damage or (b)
transfer all insurance proceeds payable to Seller on account of such casualty,
loss or damage to Buyer at the Closing or, if the damage occurs during the
transition period, a reasonable time after receipt of insurance proceeds payable
to Seller on account of such casualty.
5.03. Access to Information. At all times prior to the Closing Date and
during the sixty (60) day transition period thereafter, Seller will furnish to
Buyer and its employees, counsel, accountants and other agents and consultants
(a) full access during normal business hours to the properties, books and
records and personnel of Seller relating to the Business or the Assets and (b)
all such information concerning the Business or the Assets as any of them may
reasonably request.
5.04. Revenues. All revenues, income or other benefits generated by or
otherwise accruing to the Business within the sixty (60) day transition period
following the Closing Date shall belong to Buyer.
5.05. Exclusivity. For as long as this Agreement is in effect, no
Seller Party shall, directly or indirectly, solicit or initiate or enter into
discussions or transactions with, or encourage, or provide any information to,
any Person concerning the Business or any of the Assets or provide any
information to any third party with respect to any such potential transaction.
The Seller Parties shall promptly notify Buyer of any solicitation, indication
of interest or request for information received at any time from any Person with
respect to any of the foregoing.
5.06. Commercially Reasonable Efforts. The parties agree to use their
commercially reasonable efforts to take or cause to be taken and to do or cause
to be done all such actions and things as are necessary or advisable, or as may
be reasonably requested by the other party, in order to consummate the
transactions contemplated hereby and by the other Transaction Documents. Without
limiting the generality of the foregoing, the parties agree to take all
commercially reasonable actions necessary in order to obtain any consent or
approval of any third party, including without limitation any governmental
entity, which is required in connection with this Agreement or the other
Transaction Documents or any of the transactions contemplated hereby or thereby.
ARTICLE VI
CLOSING AND CLOSING CONDITIONS
6.01. Closing. The closing of the transactions contemplated hereby (the
"CLOSING") will take place on December 19, 2003, at the offices of Xxxxx &
Xxxxxxx, P.C., 00 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, or
at such other place as
20
the parties may mutually agree upon. The date on which the Closing occurs is
referred to herein as the "CLOSING DATE".
6.02. Conditions Precedent to Obligations of Buyer. Buyer's obligation
to proceed with the Closing is subject to the satisfaction by Seller on or prior
to the Closing Date of each of the following conditions precedent:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Seller set forth herein shall be true and
correct on and as of the Closing Date with the same force and effect as though
made on and as of such date.
(b) Performance and Compliance. Seller shall have performed or
complied with each covenant and agreement to be performed or complied with by it
hereunder on or prior to the Closing Date.
(c) Consents and Approvals. Seller shall have obtained or made
each consent to assignment or transfer, authorization, approval, exemption,
filing, registration or qualification, if any, listed on any Schedule hereto
(including without limitation Schedule 2.04) or which are otherwise necessary
(under applicable Governmental Rules or otherwise) for Seller to execute,
deliver and perform the Transaction Documents or, in the case of Business
Permits and Business Agreements which are not transferable or for which a
consent to assignment cannot be obtained, Buyer shall have satisfied itself that
it will be able to obtain or enter into similar permits and agreements in its
own name, or to otherwise obtain the benefits of such permits and agreements.
(d) Litigation. There shall be no pending or threatened
action, suit, claim or demand by or before any governmental entity, arbitrator,
mediator or other such forum seeking to restrain, prohibit or invalidate any of
the transactions contemplated hereby or by any of the other Transaction
Documents or seeking monetary relief against Buyer by reason of the consummation
of such transactions, and there shall not be in effect any Governmental Order
which has such effect.
(e) Material Adverse Change. No event shall have occurred and
no condition shall exist which constitutes or, with the giving of notice or the
passage of time, or both, is likely to constitute, a Material Adverse Change.
(f) Documentation of Indebtedness. Seller shall have delivered
to Buyer documentation satisfactory to Buyer indicating the source of all items
of indebtedness set forth on the Seller's balance sheet as of the Closing Date.
(g) Secretary's Certificate. Seller shall have delivered to
Buyer a certificate of its Secretary dated the Closing Date and certifying (i)
that correct and complete copies of its charter and bylaws are attached thereto,
(ii) that correct and
21
complete copies of each resolution of its board of directors and shareholders
approving this Agreement and the other Transaction Documents to which it is a
party and authorizing the execution hereof and thereof and the consummation of
the transactions contemplated hereby and thereby are attached thereto and (iii)
the incumbency and signatures of the officers of Seller authorized to execute
and deliver this Agreement and the other Transaction Documents to which Seller
is a party on behalf of Seller.
(h) Opinion of Counsel. Seller shall have delivered to Buyer
an opinion of Seller's counsel dated the Closing Date and in form and substance
reasonably satisfactory to Buyer and its counsel with respect to the matters in
Sections 2.01, 2.02, 2.03, 2.04 and 2.07 and such other matters as Buyer or its
counsel may reasonably request.
(i) Other Transaction Documents. Seller and any other parties
thereto (other than Buyer) shall have executed and delivered to Buyer such
documents and instruments, in form and substance satisfactory to Buyer and its
counsel, as shall be necessary or desirable in order to consummate the
transactions contemplated hereby, each dated the Closing Date (together with
this Agreement and any agreements listed in Sections 6.02(j) and 6.03(g), the
"TRANSACTION DOCUMENTS").
(j) Employment Agreements; Retention of Employees. (i) Xxxxx
Xxxxxxx shall have entered into an employment agreement with Buyer that is
satisfactory in form and substance to Buyer and its counsel, and (ii) Buyer
shall be satisfied, in its reasonable discretion, that at least 90% of the
outside employees will accept employment with Buyer after the Closing.
6.03. Conditions Precedent to Obligations of Seller. Seller's
obligation to proceed with the Closing is subject to the satisfaction by Buyer
on or prior to the Closing Date of each of the following conditions precedent:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Buyer set forth herein shall be true and
correct on and as of the Closing Date with the same force and effect as though
made on and as of such date.
(b) Performance and Compliance. Buyer shall have performed or
complied with each covenant and agreement to be performed or complied with by it
hereunder on or prior to the Closing Date.
(c) Consents and Approvals. Buyer shall have obtained or made
each consent, authorization, approval, exemption, filing, registration or
qualification, if any, necessary (under applicable Governmental Rules or
otherwise) for Buyer to execute, deliver and perform the Transaction Documents.
22
(d) Litigation. There shall be no pending or threatened
action, suit, claim or demand by or before any governmental entity, arbitrator,
mediator or other such forum seeking to restrain, prohibit or invalidate any of
the transactions contemplated hereby or by any of the other Transaction
Documents or seeking monetary relief against Seller by reason of the
consummation of such transactions, and there shall not be in effect any
Governmental Order which has such effect.
(e) Secretary's Certificate. Buyer shall have delivered to
Seller a certificate of its Secretary dated the Closing Date and certifying (i)
that correct and complete copies of its charter and bylaws are attached thereto,
(ii) that correct and complete copies of each resolution of its board of
directors and shareholders approving this Agreement and the other Transaction
Documents to which it is a party and authorizing the execution hereof and
thereof and the consummation of the transactions contemplated hereby and thereby
are attached thereto and (iii) the incumbency and signatures of the officers of
Buyer authorized to execute and deliver this Agreement and the other Transaction
Documents to which Buyer is a party on behalf of Buyer.
(f) Opinion of Counsel. Buyer shall, upon Seller's advance
written request, have delivered to Seller an opinion of Buyer's counsel dated
the Closing Date and in form and substance reasonably satisfactory to Seller and
its counsel with respect to the matters in Sections 3.01, 3.02, 3.03 and 3.04
and such other matters as Seller or its counsel may reasonably request.
(g) Other Transaction Documents. Buyer and any other parties
thereto (other than Seller) shall have executed and delivered to Seller such
documents and instruments, in form and substance satisfactory to Seller and its
counsel, as shall be necessary or desirable in order to consummate the
transactions contemplated hereby, each dated the Closing Date.
(h) Purchase Price. Buyer shall have delivered to Seller the
payment pursuant to Sections 1.04(a) and (b).
ARTICLE VII
NON-COMPETITION AND NON-SOLICITATION
7.01. Non-Competition and Non-Solicitation.
(a) During the five-year period commencing with the Closing
Date, neither Seller nor any of its Affiliates or Principals may directly or
indirectly actually or attempt to (i) engage in any Competing Business or (ii)
own, be employed by, provide financing to, consult with or otherwise render
services to any Person who is engaged in any Competing Business; provided, that
the ownership of an equity interest of not more
23
than 1% in a publicly traded entity that is engaged in a Competing Business is
not a violation of this covenant.
(b) During the five-year period commencing with the Closing
Date, neither Seller nor any of its Affiliates or Principals may directly or
indirectly actually or attempt to (i) solicit the trade of, or trade with, any
person or entity that is or was within the four year period immediately prior to
the Closing Date a customer, employee or supplier of Buyer or any of its
Affiliates (including without limitation customers, employees and suppliers of
the Business) or (ii) solicit or induce any employee, distributor, sales
representative, agent or contractor of Buyer or any of its Affiliates to
terminate, reduce or limit his or its employment or other relationship with
Buyer or any of its Affiliates.
(c) If Seller or any Principal is in breach of any of the
provisions of subsections (a) or (b) above, then the time periods set forth in
such subsections, as they relate to the breaching party, will be extended by the
length of time during which the breaching party is in breach of any of such
provisions.
As used in this Agreement the following terms have the following
meanings:
"COMPETING BUSINESS" means the manufacture, marketing,
provision or sale of products or services which are competitive with any
products or services that are directly or indirectly marketed, sold or being
developed by the Business or the Buyer on the Closing Date in the Territory.
"TERRITORY" means the United States of America.
7.02. Equitable Relief. Seller and the Principals acknowledge and agree
that Buyer would be irreparably damaged if any of the provisions of Section 7.01
are not performed in accordance with their specific terms or are otherwise
breached. Accordingly, Seller and the Principals agree that Buyer is entitled to
an injunction or injunctions to prevent breaches of Section 7.01 and has the
right to specifically enforce Section 7.01 against them in addition to any other
remedy to which Buyer may be entitled hereunder, at law or in equity.
7.03. Severability. It is the intent of the parties that each provision
of Section 7.01 be enforced to the fullest extent permissible under the laws and
public policies of each jurisdiction in which enforcement of Section 7.01 is
sought. In furtherance of the foregoing, each provision of Section 7.01 is
severable from each other provision, and any provision thereof which is
unenforceable in any jurisdiction is subject to the following:
(a) if such provision is contrary to or conflicts with any
requirement of any statute, rule or regulation in effect in such jurisdiction,
then such requirement will
24
be incorporated into, or substituted for, such unenforceable provision to the
minimum extent necessary to make such provision enforceable;
(b) the court, agency, arbitrator or mediator considering the
matter is hereby authorized to (or, if such court, agency or arbitrator is
unwilling or fails to do so, then the parties will) amend such provision to the
minimum extent necessary to make such provision enforceable, and the parties
hereby consent to the entry of an order so amending such provisions; and
(c) if any such provision cannot be or is not reformed and
made enforceable pursuant to subsection (a) or (b) above, then such provision
will be ineffective in such jurisdiction to the minimum extent necessary to make
the remainder of Section 7.01 enforceable in such jurisdiction.
Any application of the foregoing provisions to any provision of Section 7.01
will not affect the validity or enforceability of any other provision thereof or
prevent such provision from being enforced as written in any other jurisdiction.
ARTICLE VIII
INDEMNIFICATION
8.01. Indemnification by Seller Parties. Seller Parties shall, jointly
and severally, defend, indemnify and hold harmless Buyer and its equity holders,
directors, officers, employees and agents (each a "SELLER INDEMNITEE") from and
against any and all claims (including without limitation any investigation,
action or other proceeding, whether instituted by a third party against a Seller
Indemnitee or by a Seller Indemnitee for the purpose of enforcing its rights
hereunder), damages, losses, liabilities, costs and expenses (including without
limitation reasonable attorneys' fees and court costs) that constitute, or arise
out of or in connection with:
(a) any Excluded Assets or Excluded Liabilities;
(b) any misrepresentation or breach of warranty under Article
II, Article IV or Section 6.02(a) (a "SELLER PARTY WARRANTY BREACH");
(c) any default by a Seller Party in the performance or
observance of any of its covenants or agreements hereunder or under any other
Transaction Document; or
(d) The Assets or the Business prior to the end of the thirty
(30) day transition period after the Closing Date.
25
8.02. Indemnification by Buyer. Buyer will defend, indemnify and hold
harmless the Seller Parties (each a "BUYER INDEMNITEE") from and against any and
all claims (including without limitation any investigation, action or other
proceeding, whether instituted by a third party against a Buyer Indemnitee or by
a Buyer Indemnitee for the purpose of enforcing its rights hereunder), damages,
losses, liabilities, costs and expenses (including without limitation reasonable
attorneys' fees and court costs) that constitute, or arise out of or in
connection with:
(a) any of the Assets or Assumed Liabilities after the thirty
(30) day transition period following the Closing Date has ended;
(b) any misrepresentation or breach of warranty under Article
III or Section 6.03(a) (a "BUYER WARRANTY BREACH"); or
(c) any default by Buyer in the performance or observance of
any of its covenants or agreements hereunder or under any other Transaction
Document.
8.03. Representation, Settlement and Cooperation. If any investigation,
action or other proceeding (each a "PROCEEDING") is initiated against any Seller
Indemnitee or Buyer Indemnitee (each an "INDEMNITEE") and such Indemnitee
intends to seek indemnification from Seller or Buyer (each an "INDEMNITOR"), as
applicable, under this Article on account of its involvement in such Proceeding,
then such Indemnitee will give prompt notice to the applicable Indemnitor of
such Proceeding; provided, that the failure to so notify such Indemnitor will
not relieve such Indemnitor of its obligations under this Article, but will
reduce such obligations by the amount of damages or increased costs and expenses
attributable to such failure to give notice. Upon receipt of such notice, such
Indemnitor will diligently defend against such Proceeding on behalf of such
Indemnitee at its own expense using counsel reasonably acceptable to such
Indemnitee; provided, that if such Indemnitor fails or refuses to conduct such
defense, or such Indemnitee has been advised by counsel that it may have
defenses available to it which are different from or in addition to those
available to such Indemnitor, or that its interests in such Proceeding are
adverse to such Indemnitor's interests, then such Indemnitee may defend against
such Proceeding at such Indemnitor's reasonable expense. Such Indemnitor or
Indemnitee, as applicable, may participate in any Proceeding being defended
against by the other at its own expense, and will not settle any Proceeding
without the prior consent of the other, which consent will not be unreasonably
withheld. Such Indemnitor and Indemnitee will cooperate with each other in the
conduct of any such Proceeding.
8.04. Notice and Satisfaction of Indemnification Claims.
Indemnification claims against Seller may be satisfied by set-off against any
amounts due to Seller under this Agreement prior to being satisfied out of any
other funds of Seller. No indemnification claim will be deemed to have been
asserted until the applicable Indemnitor has been given notice by the Indemnitee
of the amount of such claim and the facts on which such
26
claim is based. For purposes of Section 8.05, notice of an indemnification claim
will be deemed to cover claims arising out of all related Proceedings so long
as, in the case of Proceedings instituted by third parties, the Indemnitee
complies with Section 8.03. If the Indemnitee is not Buyer or Seller, then such
notice will be given on behalf of such Indemnitee by Buyer or Seller, as
applicable. Indemnification claims other than those satisfied by set-off will be
paid within thirty (30) days after the Indemnitor's receipt of such notice and
such evidence of the amount of such claim and the Indemnitor's liability
therefor as the Indemnitor may reasonably request.
8.05. Duration of Certain Indemnification Obligations. Claims for
indemnification under Section 8.01(b) may only be asserted within the following
time periods:
(a) claims arising out of or in connection with any Seller
Party Warranty Breach under Section 2.06 (Tax Matters) may be asserted until 90
days after the running of the statute of limitations applicable to the taxable
period to which a particular claim relates;
(b) claims arising out of any Seller Party Warranty Breach
under Section 2.15 (Title Matters) or Section 2.16 (Pension Plans) may be
asserted at any time;
(c) claims arising out of or in connection with any Seller
Party Warranty Breach may be asserted at any time if the applicable
representation or warranty was fraudulently or grossly negligently made; and
(d) all other claims may be asserted until the fourth
anniversary of the Closing Date.
8.06. Indemnification Threshold. Notwithstanding any other provision
hereof, no Indemnitor will have any indemnification obligations under Section
8.01(b) (exclusive of a Seller Party Warranty Breach under Section 2.23
(Brokers)) or Section 8.02(b) (exclusive of a Buyer Warranty Breach under
Section 3.05 (Brokers)) unless and until the claims asserted against such
Indemnitor exceed five thousand dollars ($5,000.00) in the aggregate (the
"THRESHOLD AMOUNT"); thereafter, such Indemnitor will be liable for all
indemnification claims properly asserted against it, including those comprising
the Threshold Amount.
8.07. Exclusive Remedy. Except for such equitable remedies as may be
available to enforce the provisions of Article VII and Section 9.03, the
indemnifications under this Article are the parties' sole and exclusive monetary
remedies, each against the other, with respect to matters arising under this
Agreement, of any kind or nature.
27
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01. Amendments. This Agreement may be amended only by a writing
signed by each of the parties, and any such amendment will be effective only to
the extent specifically set forth in such writing.
9.02. Assignment. Neither this Agreement nor any right, interest or
obligation hereunder may be assigned, pledged or otherwise transferred by Seller
or the Principals, whether by operation of law or otherwise, without the prior
consent of Buyer.
9.03. Confidentiality.
(a) As used in this Section the "CONFIDENTIAL INFORMATION" of
a party means all information concerning or related to the business, operations,
financial condition or prospects of such party or any of its Affiliates,
regardless of the form in which such information appears and whether or not such
information has been reduced to a tangible form, and specifically includes (i)
all information regarding the officers, directors, employees, equity holders,
customers, suppliers, distributors, sales representatives and licensees of such
party and its Affiliates, in each case whether present or prospective, (ii) all
inventions, discoveries, trade secrets, processes, techniques, methods,
formulae, ideas and know-how of such party and its Affiliates and (iii) all
financial statements, audit reports, budgets and business plans or forecasts of
such party and its Affiliates; provided, that the Confidential Information of a
party does not include (A) information which is or becomes generally known to
the public through no act or omission of the other party and (B) information
which has been or hereafter is lawfully obtained by the other party from a
source other than the party to whom such Confidential Information belongs (or
any of its Affiliates or their respective officers, directors, employees, equity
holders or agents) so long as, in the case of information obtained from a third
party, such third party was or is not, directly or indirectly, subject to an
obligation of confidentiality owed to the party to whom such Confidential
Information belongs or any of its Affiliates at the time such Confidential
Information was or is disclosed to the other party.
(b) Except as otherwise permitted by subsection (c) below,
each party agrees that it will not, without the prior written consent of the
other party, disclose or use for its own benefit any Confidential Information of
the other party.
(c) Notwithstanding subsection (b) above, each of the parties
is permitted to:
(i) disclose Confidential Information of the other
party to its officers, directors, employees, equity holders, lenders, agents and
Affiliates, but only to
28
the extent reasonably necessary in order for such party to perform its
obligations and exercise its rights and remedies under this Agreement, and such
party will take all such action as are necessary or desirable in order to ensure
that each of such Persons maintains the confidentiality of any Confidential
Information that is so disclosed;
(ii) make additional disclosures of or use for its
own benefit Confidential Information of the other party, but only if and to the
extent that such disclosures or use are specifically contemplated by this
Agreement; and
(iii) disclose Confidential Information of the other
party to the extent, but only to the extent, required by Governmental Rules;
provided, that prior to making any disclosure pursuant to this subsection, the
disclosing party will notify the affected party of the same, and the affected
party will have the right to participate with the disclosing party in
determining the amount and type of Confidential Information of the affected
party, if any, which must be disclosed in order to comply with Governmental
Rules.
9.04. Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts, and by each of the parties on separate
counterparts, each of which, when so executed, are deemed an original, but all
of which constitute but one and the same instrument. Delivery of an executed
counterpart of this Agreement by telefacsimile will be equally as effective as
delivery of a manually executed counterpart of this Agreement.
9.05. Entire Agreement. This Agreement contains the entire agreement of
the parties with respect to the transactions contemplated hereby and supersedes
all prior written and oral agreements, and all contemporaneous oral agreements,
relating to such transactions.
9.06. Expenses. Except as otherwise specifically provided herein or in
any other Transaction Document, each party is responsible for such expenses as
it may incur in connection with the negotiation, preparation, execution,
delivery, performance and enforcement of this Agreement and the other
Transaction Documents.
9.07. Further Assurances. The parties will from time to time do and
perform such additional acts and execute and deliver such additional documents
and instruments as may be required by applicable Governmental Rules or
reasonably requested by any party to establish, maintain or protect its rights
and remedies or to effect the intents and purposes of this Agreement and the
other Transaction Documents. Without limiting the generality of the foregoing,
each party agrees to endorse (if necessary) and deliver to the other, promptly
after its receipt thereof, any payment or document which it receives after the
Closing Date and which is the property of the other.
29
9.08. Governing Law. This Agreement is a contract under the laws of the
Commonwealth of Pennsylvania and for all purposes will be governed by and
construed and enforced in accordance with the laws of said Commonwealth,
regardless of any conflict of laws principles to the contrary. The parties
consent to personal jurisdiction in a court situated in Allegheny County,
Pennsylvania and agree that such forum is convenient.
9.09. Notices. Unless otherwise specifically provided herein, all
notices, consents, requests, demands and other communications required or
permitted hereunder: (a) will be in writing; (b) will be sent by messenger,
certified or registered U.S. mail, a reliable express delivery service or
telecopier (with a copy sent by one of the foregoing means), charges prepaid as
applicable, to the appropriate address(es) or number(s) set forth below; and (c)
will be deemed to have been given on the date of receipt by the addressee (or,
if the date of receipt is not a business day, on the first business day after
the date of receipt), as evidenced by (i) a receipt executed by the addressee
(or a responsible person in his or her office), the records of the Person
delivering such communication or a notice to the effect that such addressee
refused to claim or accept such communication, if sent by messenger, U.S. mail
or express delivery service, or (ii) a receipt generated by the sender's
telecopier showing that such communication was sent to the appropriate number on
a specified date, if sent by telecopier. All such communications will be sent to
the following addresses or numbers, or to such other addresses or numbers as any
party may inform the others by giving five business days' prior notice:
If to Seller Parties: With a copy to:
--------------------------------------------------- X'Xxxxxxx & Xxxxxx, LLP
--------------------------------------------------- 000 Xxxx Xxxxxxxxxx Xxxxxx
--------------------------------------------------- Xxxxxxxxxx, XX 00000-0000
Attn:---------------------------------------------- Attn: Xxxxx X. Xxxxxx, Esq.
Telecopier No.: ----------------------------------- Telecopier No.:(000) 000-0000
If to Buyer: With a copy to:
Xxxxxxx X. XxXxxxxx Xxxxx & Xxxxxxx, P.C.
Better Solutions, Inc. 00 Xxxxxxx Xxxxxx; 15th Floor
000 Xxxx Xxxxxx Xxxxxxxxx Xxxxxxxxxx, XX 00000
Suite 201 Attn: Xxxxx X. Xxxxxxxx
Xxxxxxxxxx, XX 00000 Telecopier No.: (000) 000-0000
Telecopier No.: (000) 000-0000
9.10. Publicity. Seller and the Principals shall not make any press
release or other public announcement regarding this Agreement or the other
Transaction
30
Documents or any transaction contemplated hereby or thereby unless Buyer, in its
sole discretion, permits such a release, in which case the text of such release
or announcement shall be submitted to Buyer for its written approval.
9.11. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
9.12. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of each of the parties and their respective heirs,
successors and permitted assigns.
9.13. Termination.
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by mutual agreement, in writing, of Buyer and
Seller;
(ii) by Buyer if there has been a misrepresentation
by Seller or the Principals hereunder, a breach by Seller or the Principals of
any of its warranties or covenants set forth herein or if any of the conditions
specified in Section 6.02 have not been fulfilled within the time required and
have not been waived by Buyer;
(iii) by Seller if there has been a misrepresentation
by Buyer hereunder, a breach by Buyer of any of its warranties or covenants set
forth herein or if any of the conditions specified in Section 6.03 have not been
fulfilled within the time required and have not been waived by Seller; or
(iv) by Buyer or Seller if the Closing has not
occurred prior to January 10, 2004; provided, that Buyer or Seller may terminate
this Agreement pursuant to this subsection only if the Closing has not occurred
on or prior to such date for a reason other than a failure by such party to
satisfy the conditions to Closing of the other party set forth in Section 6.02
or 6.03.
(b) If this Agreement is terminated by either Seller or Buyer
as provided above, then neither party will have any further obligations or
liabilities hereunder except for obligations or liabilities arising from a
breach of this Agreement prior to such termination or which survive such
termination by their own terms.
9.14. Waivers. The due performance or observance by the parties of
their respective obligations hereunder and under the other Transaction Documents
will not
31
be waived, and the rights and remedies of the parties hereunder and under the
other Transaction Documents will not be affected, by any course of dealing or
performance or by any delay or failure of any party in exercising any such right
or remedy. The due performance or observance by a party of any of its
obligations hereunder or under any other Transaction Document may be waived only
by a writing signed by the party against whom enforcement of such waiver is
sought, and any such waiver will be effective only to the extent specifically
set forth in such writing.
9.15. Termination of Seller's Operations. Seller acknowledges that from
and after the Closing Date it has no right to use its present corporate name or
any trade names included in the Assets, except to the extent permitted by Buyer
during the sixty (60) day transition period.
9.16. Certain Employee Matters.
(a) Nothing in this Agreement (i) requires Buyer to hire, or
to offer to hire, any employees or Principals of Seller, (ii) constitutes an
offer to employ such employees or Principals or (iii) requires Buyer to pay any
such persons severance pay in the event of termination of employment.
Notwithstanding the foregoing, Buyer may make offers of employment to certain of
Seller's employees working in the Business, and Seller will use its best efforts
to persuade such employees to accept such offers. Prior to the Closing Date and
during the transition period thereafter, Seller will afford Buyer reasonable
access to Seller's employees to allow Buyer to interview such employees.
(b) Buyer does not and will not assume or be responsible for
any obligations or liabilities arising out of any employment relationship
between Seller and any employee or former employee. Without limiting the
generality of the foregoing, Buyer will have no liability or obligation in
connection with Seller's past or present employees, officers, directors or
Principals and their beneficiaries for (i) contributions to or payments under
employee benefit, pension or welfare plans, stock options, programs,
arrangements or understandings, (ii) accrued, but unused, sick leave, vacation
pay and severance pay, if any, (iii) liabilities or obligations under any
collective bargaining agreement or bargaining relationship or (iv) claims,
demands, administrative proceedings or suits arising out of or in connection
with alleged improper or unlawful employment practices of Seller.
9.17 Knowledge Seller. References in this Agreement to Seller's
knowledge or words of similar import means the knowledge of Seller's Principals,
officers, directors and employees, assuming reasonable investigation and inquiry
as to the subject matter in question is made.
[SIGNATURE PAGE FOLLOWS]
32
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
SELLER:
-------
SUPERIOR STAFFING SOLUTIONS, INC.
By:
---------------------------------------
Title:
------------------------------------
PRINCIPALS:
-----------
XXXXX XXXXXXX
Signature:
--------------------------------
XXXXXXX XXXXX
Signature:
--------------------------------
XXXXXXXX XXXXXX
Signature:
--------------------------------
BUYER:
------
BETTER SOLUTIONS, INC.
By:
---------------------------------------
Title:
------------------------------------
INDEX OF DEFINED TERMS
The following terms are defined in the Agreement on the following page:
Definition Page
---------- ----
AFFILIATE........................................................................................................15
AGREEMENT.........................................................................................................1
ASSETS............................................................................................................1
ASSUMED LIABILITIES...............................................................................................3
BELDEN............................................................................................................1
BUSINESS..........................................................................................................1
BUSINESS AGREEMENTS...............................................................................................2
BUSINESS PERMITS..................................................................................................2
BUYER.............................................................................................................1
BUYER INDEMNITEE.................................................................................................26
BUYER WARRANTY BREACH............................................................................................26
CLOSING..........................................................................................................21
CLOSING DATE.....................................................................................................21
CODE..............................................................................................................5
COMPETING BUSINESS...............................................................................................25
CONFIDENTIAL INFORMATION.........................................................................................29
CONTROL..........................................................................................................15
CURRENT FINANCIAL STATEMENTS......................................................................................7
EQUIPMENT.........................................................................................................1
ERISA............................................................................................................12
ERISA AFFILIATE..................................................................................................12
ESTIMATED PAYABLES................................................................................................4
ESTIMATED RECEIVABLES.............................................................................................4
ESTIMATED SURPLUS RECEIVABLES.....................................................................................4
EXCLUDED ASSETS...................................................................................................2
EXCLUDED LIABILITIES..............................................................................................3
FINAL PAYABLES....................................................................................................4
FINAL RECEIVABLES.................................................................................................4
FINAL STATEMENT...................................................................................................4
FINAL SURPLUS RECEIVABLES.........................................................................................4
FINANCIAL STATEMENT DATE..........................................................................................7
FINANCIAL STATEMENTS..............................................................................................7
XXXXXXX...........................................................................................................1
GAAP..............................................................................................................4
GOVERNMENTAL ORDER................................................................................................6
GOVERNMENTAL RULE.................................................................................................7
Definition Page
---------- ----
INDEMNITEE.......................................................................................................27
INDEMNITOR.......................................................................................................27
INTELLECTUAL PROPERTY.............................................................................................2
IRS...............................................................................................................8
LIENS............................................................................................................11
MATERIAL ADVERSE CHANGE...........................................................................................6
NORTH CAROLINA OPERATIONS.........................................................................................1
OUTSIDE EMPLOYEES................................................................................................13
PARENT............................................................................................................3
PARENT DISCLOSURE PACKAGE........................................................................................17
PAYABLES..........................................................................................................3
PENSION PLAN.....................................................................................................12
PERSON............................................................................................................7
PLANS............................................................................................................11
PRINCIPALS........................................................................................................1
PROCEEDING.......................................................................................................27
PURCHASE PRICE....................................................................................................3
RECEIVABLES.......................................................................................................2
SECURITIES ACT...................................................................................................17
SELLER............................................................................................................1
SELLER INDEMNITEE................................................................................................26
SELLER PARTIES....................................................................................................1
SELLER PARTY WARRANTY BREACH.....................................................................................26
SELLER'S SURPLUS RECEIVABLES......................................................................................4
SHARES............................................................................................................3
XXXXX.............................................................................................................1
TERRITORY........................................................................................................25
THRESHOLD AMOUNT.................................................................................................28
TRANSACTION DOCUMENTS............................................................................................23
WELFARE PLAN.....................................................................................................13
