EXBIBIT 2.10
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of April 16, 2003 (this "AGREEMENT"), by
and among TRESTLE ACQUISITION CORP, a Delaware corporation ("PURCHASER"), MED
DIVERSIFIED, INC., a Nevada corporation ("MED"), and TRESTLE CORPORATION, a
Delaware corporation and wholly-owned subsidiary of Med ("TRESTLE" together with
Med, the "SELLERS").
WHEREAS, Trestle is engaged in the business of developing, owning, using,
licensing, marketing, and selling on a worldwide basis a series of microscopy
and telemedicine products and services, including without limitation, (i)
MedMicroscopy RT(TM), MedMicroscopy SL(TM), MedMicroscopy CL(TM) and other
products developed from the same technology for microscopy applications, (ii)
MedReach(TM) and other products developed from the same technology for
telemedicine applications, (iii) MedScanner, (iv) Digital Slide, (v)
MedWorkflow, (vi) High Throughput Scanner, (vii) Quality Control Image Analysis,
and (viii) Tox Screen Image Analysis (the "BUSINESS");
WHEREAS, Sellers collectively, or through certain inactive subsidiaries
known as Illumea Corporation, a Delaware corporation, and Vidimedix Acquisition
Corporation, a Nevada corporation (collectively, the "INACTIVE SUBS"), own all
right, title and interest in and to the Assets comprising the Business;
WHEREAS, on November 27, 2002, Med and Trestle, together with certain of
their respective Affiliates, filed voluntary petitions for relief with the
Bankruptcy Court under Chapter 11 of the Bankruptcy Code (the "FILINGS");
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, the Sellers desire to sell to Purchaser, and Purchaser desires to
purchase from Sellers, subject to the approval of the Bankruptcy Court, the
Assets of the Sellers comprising the Business, as more particularly described
herein, free and clear of any and all Encumbrances pursuant to Section 363 of
the Bankruptcy Code, in consideration for the payments from the Purchaser and
the assumption of certain liabilities of the Business each as specified herein;
and
WHEREAS, the Board of Directors of each of the Sellers has approved this
Agreement and has determined that the transactions contemplated hereby are
advisable and in the best interests of each Seller and their respective estates
and creditors, and Med, as the sole shareholder of each of Trestle, Illumea and
Vidimedix, has approved this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I.
PURCHASE AND SALE OF ASSETS
Section 1.01 PURCHASE AND SALE OF ASSETS. Except as set forth in
Section 1.02, upon the terms and subject to the conditions set forth herein, at
the Closing, Sellers shall sell, convey, transfer, assign, quitclaim and deliver
to the Purchaser, and the Purchaser shall purchase, acquire and accept from the
Sellers, free and clear of any and all Encumbrances, all worldwide right, title
and interest of Sellers in and to the following properties, assets, Contracts,
rights and choses in action, whether tangible or intangible, whether real,
personal or mixed, whether accrued, contingent or otherwise, and wherever
located, that are used or held for use in connection with the Business, as the
same may exist on the Closing Date (collectively, the "ASSETS"):
(a) all Intellectual Property, goodwill associated therewith,
licenses and sublicenses granted and obtained with respect thereto, and rights
thereunder, remedies against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions, including, without
limitation, the Intellectual Property identified on SCHEDULE 3.10;
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(b) all tangible personal property (including, without limitation,
inventory, machinery, equipment, appliances and furniture), including, without
limitation, the tangible personal property located at 000 Xxxxxxxx Xxx, Xxxxx X,
and 000 Xxxxxxxx Xxx, Xxxxxxx Xxxxx, Xxxxxxxxxx;
(c) all accounts receivable (on and off balance sheet), notes,
prepaid items and expenses, deferred charges, rights of offset, claims for
refund, and other receivables or right to payment of any nature whatsoever
(including any such item relating to the payment of taxes), relating to the
Business (collectively, "RECEIVABLES") existing on the Closing Date and all such
items arising thereafter, a true, correct and complete list of which, as they
existed on March 31, 2003, is set forth hereto as SCHEDULE 3.04(a);
(d) cash and cash equivalents of Sellers received from the Business
prior to, and existing on, the Closing Date;
(e) cash and cash equivalents of the Sellers received from the
Business on and after the Closing Date;
(f) the real and personal property lease agreements and leasehold
improvements identified on SCHEDULE 3.06(a) and 3.06(b) respectively;
(g) all Software and the Contracts related thereto used or held for
use in or relating to the Business, including, without limitation, the items
specified on SCHEDULE 3.10;
(h) all worldwide right, title and interest of the Sellers in and to
all Contracts, agreements, arrangements, instruments and documents specified on
SCHEDULE 3.11 (the "ASSUMED CONTRACTS");
(i) all goodwill of the Sellers in the Business;
(j) all books, records, files, manuals and other similar materials,
including, advertising materials, marketing materials, brochures, business and
marketing plans and proposals, production data, sales and promotional materials
and records, purchasing materials and records, files for past, existing and
contemplated projects, media materials, accounting, financial and fiscal records
(copies), sales order files, customer lists and customer records in any form
(and all software related to any such customer records, to the extent
transferable), whether of past or present customers or potential future
customers, of the Business, advertiser lists, receipts and computer records
relating to the Assets, standard operating procedures, correspondence, customer
relation information, and any other trade secrets, confidential or proprietary
information pertaining to the Business (the "BUSINESS RECORDS");
(k) all claims, choses in action, causes of action and judgments
relating to the Business, the Intellectual Property or other Assets, PROVIDED,
HOWEVER, that all avoidance actions available to the Sellers under applicable
law, including but not limited to those included under Sections 544, 545, 547,
548, 549, 550 and 553 of the Bankruptcy Code shall be retained by the Sellers;
(l) all certifications, franchises, approvals, permits licenses,
orders, registrations, certificates, variances and other similar permits or
rights obtained from any Governmental Entity or professional or trade
organization utilized in operating the Business and all pending applications
therefor;
(m) all third party warranties and guarantees with respect to any of
the Assets; and
(n) all rights to receive insurance proceeds relating to the damage,
destruction or impairment of any of the Assets subsequent to the date hereof but
prior to the Closing Date.
Section 1.02 EXCLUDED ASSETS. Notwithstanding anything else contained
herein, no Seller shall sell, transfer, convey or assign to the Purchaser the
following (the "EXCLUDED ASSETS"):
(a) the Assets set forth on SCHEDULE 1.02(d); and
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(b) assets of Sellers that are not directly used or held for direct
use by Sellers in connection with the Business.
Section 1.03 ASSUMED LIABILITIES. Subject to the terms and conditions
contained in this Agreement, at the Closing, the Purchaser agrees to assume, pay
and perform when due the following (the "ASSUMED LIABILITIES"): (i) the accounts
payable identified on SCHEDULE 1.03 hereto, as more fully described therein,
which schedule shall be updated as of the Closing Date, provided, however, the
parties acknowledge and agree that the aggregate total of all accounts payable
included in Assumed Liabilities as of the Closing Date shall not exceed 120% of
the aggregate total of such accounts payable on the date hereof; (ii) the
obligations of the Sellers arising under the Assumed Contracts, in accordance
with their terms, after the Closing Date with respect to acts or services to be
performed by Purchaser under such Assumed Contracts after the Closing Date,
except for any obligation, (a) that relates to any breach or default (or an
event which might, with the passing of time or the giving of notice, or both,
constitute a default) under any such Assumed Contract arising out of or relating
to periods on or prior to the Closing Date, which obligations shall be
obligations of the Sellers under Section 1.05 below, (b) for which the Business
owes any amounts to its Affiliates, other than for specific services, materials
or works in progress as set forth on SCHEDULE 1.03, or (c) that relates to any
indemnity, defense or hold harmless provision or agreement for occurrences prior
to the Closing Date; and (iii) all costs and expenses of maintaining or
preserving the Intellectual Property from and after the Closing Date.
Section 1.04 EXCLUDED LIABILITIES. Purchaser shall not assume or be
obligated to pay, perform or otherwise discharge any liability or obligation of
Sellers or any of their Affiliates, direct or indirect, known or unknown,
absolute or contingent, that are not expressly assumed by Purchaser pursuant to
this Agreement and any ancillary agreements entered into pursuant to the terms
hereof, including, without limitation, any accounts payable amounts as of the
Closing Date that exceed 120% of the aggregate total of all accounts payable
existing as of the date hereof (all such liabilities and obligations not being
assumed being herein called the "EXCLUDED LIABILITIES").
Section 1.05 ASSIGNMENTS; CURE AMOUNTS. Sellers shall assume and
assign all Assumed Contracts to Purchaser as of the Closing Date pursuant to
Section 365 of the Bankruptcy Code and the Sale Order. In connection with such
assumption and assignment, Sellers shall provide for cure of all monetary and
non-monetary defaults arising under such Assumed Contracts to the extent
required by Section 365(b) of the Bankruptcy Code. The amount of such cure
amount itemized by Assumed Contract is set forth on SCHEDULE 1.05, which
schedule will be updated as of the Closing Date. At Sellers' written request,
Purchaser shall provide funds at Closing to pay any such cure amount, and the
amount of the funds so provided shall be applied at Closing as a credit to
Purchaser against the Purchase Price. Notwithstanding anything in this Agreement
to the contrary, this Agreement shall not constitute an agreement to assign any
of the Assumed Contracts to Purchaser if an attempted assignment thereof without
the consent of a third Person (whose consent is neither obtained nor obviated by
the Sale Order) would constitute a breach thereof or preclude assignment of such
Assumed Contract to Purchaser. The cure amount under any Assumed Contract shall
be an amount determined by Sellers based upon their books and records; PROVIDED,
HOWEVER, if any non-debtor party to such Assumed Contract disputes such amount,
the cure amount for such Assumed Contract shall be the amount determined by the
Bankruptcy Court; PROVIDED FURTHER, HOWEVER, any dispute over the cure amount
shall not preclude or delay the Closing of the sale or the assignment of the
affected Assumed Contract to Purchaser.
Section 1.06 PURCHASE PRICE.
(a) The purchase price for the Assets shall be an amount equal to
One Million Dollars ($1,000,000), as reduced in accordance with SECTION 1.06(b)
(the "PURCHASE PRICE").
(b) The Purchase Price payable by Purchaser at Closing shall be
reduced dollar-for-dollar by any cure amounts funded by Purchaser at Closing
pursuant to SECTION 1.05.
Section 1.07 PAYMENT OF PURCHASE PRICE. Subject to the conditions,
representations and warranties and covenants hereof and at the Closing, the
Purchaser shall pay the Purchase Price as follows, each by federal funds wire
transfers of immediately available funds: (i) on the date hereof, One Hundred
Thousand Dollars ($100,000) (the "ESCROW AMOUNT") to Xxxxx Xxxxxx LLP, as escrow
agent, to be held in an escrow account pursuant to the provisions of the Escrow
Agreement as described in Section 1.08 hereof; (ii) on the Closing Date, the
Escrow
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Amount to the Sellers pursuant to the provisions of the Escrow Agreement;
and (iii) on the Closing Date, Nine Hundred Thousand Dollars ($900,000) minus
any adjustment pursuant to Section 1.06(b), if any, to the Sellers.
Section 1.08 ESCROW AGREEMENT. On the date hereof, the Sellers and
Purchaser shall enter into an escrow agreement, in the form attached hereto as
EXHIBIT A (the "ESCROW AGREEMENT"), with Xxxxx Xxxxxx LLP, counsel to the
Sellers, as escrow agent (the "ESCROW AGENT"), and Purchaser shall deposit the
Escrow Amount in cash, or by federal funds wire transfers of immediately
available funds, upon execution of this Agreement with the Escrow Agent pursuant
to the terms of the Escrow Agreement. The Escrow Agent shall deliver the Escrow
Amount to Sellers, or the Purchaser, in accordance with the terms of this
Agreement and the Escrow Agreement. Interest earned on the Escrow Amount shall
be paid to the Purchaser.
Section 1.09 TAXES. Sellers shall be responsible for, and shall pay on
or prior to their due date, all municipal, county, state and federal sales
taxes, use and transfer taxes incurred and the related costs of preparing or
documenting the same, if any, in connection with the Transactions contemplated
by the Agreement. Sellers shall prepare and in a timely manner sign and swear to
any return, certificate, questionnaire or affidavit as to matters required in
connection with the payment of any such tax.
Section 1.10 ALLOCATION OF PURCHASE PRICE. The consideration provided
for herein shall be allocated among the Assets in the manner required by
Treasury Regulation Section 1.1060-1 (the "ALLOCATION"). Such Allocation shall
be determined by Purchaser. Within ninety (90) days after the Closing Date,
Purchaser shall deliver to Sellers (a) a consolidated balance sheet of Purchaser
as of the Closing Date (the "CLOSING BALANCE SHEET") and (b) its determination
with respect to the Allocation (the "CLOSING ALLOCATION"). The parties hereto
agree that, except as otherwise required by law (i) the Closing Allocation shall
be binding on the parties for all federal, state, local and foreign tax purposes
and (ii) the parties shall file with its respective federal income tax returns
consistent Internal Revenue Service Forms 8594 - Asset Acquisition Statements
under Section 1060, including any required Internal Revenue Service forms,
schedules or amendments thereto which shall reflect the allocation set forth in
the Closing Allocation. The Allocation shall not be binding upon Sellers for the
purposes of the Bankruptcy Proceeding, including but not limited to,
distribution of the Purchase Price to Sellers' creditors.
ARTICLE II.
THE CLOSING
Section 2.01 CLOSING DATE. Unless this Agreement shall have been
terminated and the Transactions shall have been abandoned pursuant to Article X,
and subject to the satisfaction or waiver of the conditions set forth in
Articles VII and VIII, the closing of the Transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of Xxxxxx Xxxxxxxx &
Markiles, LLP, 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000 at
10:00 a.m., on Friday, May 16, 2003, or such other place, date and time as the
Sellers and Purchaser shall mutually agree in writing (such date and time of the
Closing is referred to herein as the "CLOSING DATE").
Section 2.02 DELIVERIES AT CLOSING.
(a) At the Closing, the Purchaser shall deliver or cause to be
delivered the following:
(i) to the Sellers, the amounts set forth in Section 1.07;
(ii) a certificate of Purchaser, duly executed by an
appropriate officer thereof, certifying to compliance with the covenants set
forth in Article VI, and satisfaction (or, as specified, waiver) of each of the
conditions set forth in VIII;
(iii) true, correct and complete copies of (1) the certificate
of incorporation, as amended to date, of the Purchaser, certified as of a recent
date by the Secretary of State of the State of Delaware, (2) the by-laws of
Purchaser, and (3) resolutions duly and validly adopted by the Board of
Directors of the Purchaser evidencing the authorization of the execution and
delivery of this Agreement, the other Transaction Documents to
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which it is a party and the consummation of the Transactions contemplated hereby
and thereby, in each case, accompanied by a certificate of the Secretary or
Assistant Secretary of the Purchaser, dated as of the Closing Date, stating that
no amendments have been made thereto from the date thereof through the Closing
Date;
(b) At the Closing, the Sellers shall deliver to the Purchaser:
(i) the source code underlying the Owned Software;
(ii) certificates from the appropriate governmental
official(s) or agencies, including without limitation, the relevant Secretaries
of State and Franchise Tax Boards, as applicable, as to the good standing of the
Sellers and the Inactive Subs as of a date within seven (7) days of the Closing
Date;
(iii) a duly executed Assignment, Xxxx of Sale and Assumption
Agreement in the form attached hereto as EXHIBIT B (the "ASSUMPTION AGREEMENT"),
executed by Sellers, the Inactive Subs and all such other instruments of
assignment, transfer or conveyance as shall, in the reasonable opinion of
Purchaser and its counsel, be necessary to vest in Purchaser, good, valid and
marketable title to the Assets, subject to no Encumbrances and to put Purchaser
in actual possession or control of the Assets;
(iv) a certificate of each Seller, and the Inactive Subs duly
executed by an appropriate officer thereof, certifying to compliance with the
covenants set forth in Articles V and VI, and satisfaction (or, as specified,
waiver) of each of the conditions set forth in Article VII;
(v) true, correct and complete copies of (1) the certificate
of incorporation, as amended to date, of each of the Sellers and the Inactive
Subs, certified as of a recent date by the Secretary of State of the applicable
state of incorporation, (2) the by-laws of each of the Sellers, (3) resolutions
duly and validly adopted by (a) the Board of Directors and (b) the majority of
the Shareholders of each of Trestle and the Inactive Subs evidencing the
authorization of the execution and delivery of this Agreement (in the case of
Trestle and Med), the other Transaction Documents to which it is a party and the
consummation of the Transactions contemplated hereby and thereby, and with
respect to the resolutions of the Board of Directors, accompanied by a
certificate of the Secretary or Assistant Secretary of each of the Sellers, and
the Inactive Subs, dated as of the Closing Date, stating that no amendments have
been made thereto from the date thereof through the Closing Date;
(vi) an executed letter addressed to each of Trestle's banking
institutions on behalf of Trestle directing such banks to deliver all amounts in
Trestle's bank accounts to an account designated in writing by Purchaser as of
the Closing Date and thereafter;
(vii) executed letters to each of Seller's customers, on behalf
of each Seller directing such customers to directly pay Purchaser as of the
Closing Date. Such payments to be made directly to Purchaser at Trestle
Acquisition Corp., 00000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Attn: Xxxx Xxxxxxx;
(viii) except to the extent that any Consent, waiver and
estoppel is obviated by the Sale Order, all Consents, waivers and estoppels from
third parties as required to consummate the Transactions contemplated by this
Agreement, all as set forth on SCHEDULE 3.02(c); and
(ix) such other instruments and certificates of transfer as
may be reasonably requested by the Purchaser.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF
THE SELLERS
The Sellers, jointly and severally, represent and warrant to and for
the benefit of the Purchaser, as of the date hereof and as of the Closing Date,
except with respect to any particular subsection of this Article III to
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the extent specifically described in the corresponding subsection or any other
subsection, if it is reasonably apparent from the disclosure that such other
subsection applies, of that certain schedule (the "SELLERS' DISCLOSURE
SCHEDULE"), dated as of the date of this Agreement, delivered to the Purchaser
on behalf of the Sellers, a copy of which is attached hereto and incorporated
herein by this reference, as follows:
Section 3.01 ORGANIZATION AND QUALIFICATION. Each of Med and Trestle
is a corporation duly organized, validly existing and in good standing under the
laws of its respective state of incorporation. Each of Med and Trestle has all
corporate or other power and authority, and is duly authorized by all necessary
regulatory approvals and orders, to own, lease and operate the Assets and
properties and to carry on the Business as it is being conducted, and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of the Business or the ownership or leasing of its Assets and properties
makes such qualification necessary. As of the Closing Date, each of the Inactive
Subs shall be a corporation duly organized, validly existing and in good
standing under the laws of its respective state of incorporation. As of the
Closing Date, each of the Inactive Subs shall have all corporate or other power
and authority, and shall be duly authorized by all necessary regulatory
approvals and orders, to own, lease and operate the Assets and properties and to
carry on the Business as it is being conducted, and shall be duly qualified and
in good standing to do business in each jurisdiction in which the nature of the
Business or the ownership or leasing of its Assets and properties makes such
qualification necessary. The copies of the certificate of incorporation and
bylaws of each of the Sellers, as heretofore made available to Purchaser, are
correct and complete in all respects.
Section 3.02 AUTHORITY.
(a) AUTHORITY.
(i) The Board of Directors of each of the Sellers has taken
all action to authorize and approve the Transaction Documents and the
Transactions. Subject to the entry of the Sale Order, each of the Sellers has
all requisite power and authority to enter into the Transaction Documents to
which it is a party and to consummate the Transactions contemplated hereby and
thereby.
(ii) The execution, delivery and performance by each of the
Sellers of each Transaction Document to which it is a party and the consummation
by each of the Sellers of the Transactions contemplated hereby and thereby have
been duly authorized by all corporate action on the part of each of the Sellers,
are in accordance with the Bankruptcy Code, and do not require any other
corporate proceedings on the part of the Sellers to authorize each Transaction
Document.
(iii) The affirmative vote or written consent of Med, as the
sole shareholder of each of Trestle, and the Inactive Subs, is the only vote of
the holders of any class or series of any securities of Trestleor either of the
Inactive Subs, necessary to approve this Agreement, the Transaction and the
other Transaction Documents contemplated hereby on behalf of those Sellers.
(iv) Each Transaction Document to which a Seller is a party
has been duly and validly executed and delivered by such Seller and, assuming
the due authorization, execution and delivery hereof by the other parties
hereto, and upon entry of the Sale Order, constitutes the valid and binding
obligation of such Seller, enforceable against it in accordance with its
respective terms.
(b) NON-CONTRAVENTION. Subject to the entry of the Sale Order,
neither the execution and delivery by any Seller of any Transaction Document to
which it is a party nor the consummation or performance by any Seller of any of
the Transactions contemplated hereby and thereby will contravene, conflict with
or result in any violation by such Seller under any provisions of or result in
acceleration, termination, cancellation or modification of, or constitute a
default under:
(i) the certificate or articles of incorporation, bylaws or
similar governing documents of such Seller; or
(ii) to the best of each Seller's knowledge, any Requirements
of Law; or
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(iii) other than the pledge of the stock and assets to Private
Investment Bank Limited ("PIBL"), any Assumed Contract, lease or other
instrument to which any Seller is now a party or by which the Business or the
Assets may be bound or affected.
Subject to the entry of the Sale Order, neither the execution nor the delivery
by any Seller of any Transaction Document will result in the creation or
imposition of any Encumbrance of any nature whatsoever upon the Business or
Assets.
(c) STATUTORY APPROVALS. The Sale Order obviates the need for any
declaration, filing or registration with, or notice to or Consent of, any
Governmental Entity or any other Person for the execution and delivery by any
Seller of any Transaction Document to which it is a party or the consummation by
any Seller of the Transactions contemplated hereby and thereby.
(d) Compliance.
(i) With regards to the Business and the Assets, to the best
of each Seller's knowledge, no Seller is, or have been in the last 2 years, in
violation of, and no Seller has been given notice or been charged with any
violation of, any law, order, regulation, ordinance or judgment of any
Governmental Entity.
(ii) To the best of each Seller's knowledge, each of the
Sellers has all material permits, licenses and franchises from Governmental
Entities necessary to conduct the Business as currently conducted and is in full
compliance with the terms thereof. To the best of each Seller's knowledge, no
violations exist and no violations have been reported in writing in respect of
such permits, licenses and franchises. To the best of each Seller's knowledge,
SCHEDULE 3.02(d)(ii) lists each material permit, license and franchise of each
Seller relating to the Business. A true and complete copy of each such material
permit, license and franchise of each Seller relating to the Business has been
provided to Purchaser and as of the date of the Closing each such permit,
license and franchise shall be in full force and effect.
Section 3.03 TITLE TO PROPERTIES; LIENS. Subject to the entry of the
Sales Procedure Order, each of the Sellers has good, valid and marketable title
to all of the Assets, free and clear of any Encumbrances (other than any
Encumbrances imposed as a result of the Filings or the Bankruptcy Proceedings).
At the Closing, the Sellers will convey to the Purchaser good, valid and
marketable title to the Assets, free and clear of any Encumbrances.
Section 3.04 RECEIVABLES AND ASSUMED LIABILITIES.
(a) SCHEDULE 3.04(a) sets forth a true, correct and complete aged
list of the Receivables of Trestle incurred through March 31, 2003, showing
separately those Receivables that, as of such date, had been invoiced or billed
by Trestle and are outstanding. At Closing, Sellers shall deliver a true,
correct and complete updated list of such Receivables as of the Closing Date.
Except as set forth on SCHEDULE 3.04(a), all Receivables outstanding as of March
31, 2003, and as of the Closing Date (i) arose from the sale of products or
services to Persons not affiliated with any Seller and in the ordinary course of
business consistent with past practice, (ii) constitute or will constitute, as
the case may be, only valid and enforceable claims of Trestle which pursuant to
the Sale Order shall not be subject to set-off, counterclaim or other defenses,
and (iii) are fully collectible in the ordinary course of business consistent
with past practice, after deducting the allowance for doubtful accounts of
$25,400, which such deduction is consistent with the allowance reflected in the
Trestle's audited financial statements in accordance with GAAP. Trestle shall on
a weekly basis from the date hereof through the Closing Date deliver to
Purchaser a schedule listing the Receivables collected on and after the date
hereof.
(b) SCHEDULE 3.04(b) sets forth a true, correct and complete list of
the Assumed Liabilities as such items exist as of March 31, 2003. At Closing,
Trestle shall deliver a true, correct and complete updated list of such Assumed
Liabilities as of the Closing Date. Each Assumed Liability (i) has arisen from
the operation of the Business in the ordinary course of business consistent with
past practice and (ii) is properly and accurately reflected in the Business
Records of the Sellers. Trestle shall on a weekly basis from the date hereof
through the Closing Date deliver to Purchaser an updated schedule identifying
the Assumed Liabilities.
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Section 3.05 ABSENCE OF CERTAIN EVENTS. Except with respect to any
actions taken in connection with this Agreement, the Filings and the Bankruptcy
Proceedings, since June 30, 2002 ("6/30/02"), each of the Sellers has conducted
the Business only in the ordinary course of business consistent with past
practice and there has not been any of the following, but solely insofar as they
relate to the Business or the Assets:
(i) any material damage, destruction or loss, whether or not
covered by insurance;
(ii) other than the pledge of the stock and assets of Trestle
to PIBL, any Encumbrance on any of the Business' property or Assets, tangible or
intangible;
(iii) any sale, transfer, lease or disposal of Assets or
incurrence, assumption, cancellation or compromise of any Indebtedness or claim
(other than accounts receivable compromised in the ordinary course of business
consistent with its past practice), or waiver or release of any right;
(iv) receipt of any notice or threat of termination of any
Assumed Contract;
(v) any change in any method of accounting or auditing
practice;
(vi) write-off as uncollectible any Receivable, except
write-offs in the ordinary course of business consistent with past practice;
(vii) any settlement or dismissal of any action, claim, demand
or lawsuit by or before any Governmental Entity for any amount, in any
individual case; or
(viii) execution of any Contract or letter of intent with
respect to, or otherwise committed or agreed to do, any of the foregoing.
Section 3.06 LEASED REAL PROPERTY; PERSONAL PROPERTY.
(a) SCHEDULE 3.06(a) sets forth a list of all leases of real
property used in connection with the Business (the "LEASED REAL PROPERTY"), and
no other real property is used in connection with the Business. None of such
Leased Real Property is subject to any pending suit for condemnation or other
taking by any public authority, and to the knowledge of Sellers, no such
condemnation or other taking has been threatened.
(b) SCHEDULE 3.06(b) sets forth a list of (i) each lease or other
agreement or right, whether written or oral (including in each case, the
expiration date thereof and a brief description of the property covered) under
which any Seller is lessee of, or holds or operates, any inventory, equipment or
other tangible personal property owned by a third Person and used, or held for
use in, or otherwise relating to the Business, and (ii) all inventory,
equipment, furniture and other personal property owned by Sellers having a fair
market value or book value of $10,000 or more and used in or relating to the
Business or the Assets.
Section 3.07 LITIGATION; INVESTIGATIONS. Except for the Filings and as
specifically set forth on SCHEDULE 3.07, there are: (i) no claims, actions,
suits, investigations or proceedings pending or, to the knowledge of the
Sellers, threatened against, relating to, or affecting either of the Sellers,
the Business or the Assets, or to the knowledge of the Sellers, any employee,
agent, officer or director of either of the Sellers relating to the Business,
and (ii) no orders of any Governmental Entity or arbitrator outstanding against
either of the Sellers, the Business or the Assets, or to the knowledge of the
Sellers, any employee, agent, officer or director of either of the Sellers
relating to the Business, or that could prevent or enjoin or delay in any
respect, consummation of the Transactions contemplated hereby.
Section 3.08 RESERVED.
Section 3.09 ABSENCE OF LIABILITIES. Other than attorney's fees in
connection with the preparation of this Agreement, the Bankruptcy Proceedings
and the consummation of the Transactions evidenced by this Agreement, no Seller
has Liabilities of a material nature, which are or may become material
Liabilities of the
8
Business, whether accrued, absolute, contingent, matured or otherwise, whether
due or to become due and whether or not the amount thereof is readily
ascertainable, that are not reflected as a Liability in the financial statements
provided to Purchaser.
Section 3.10 INTELLECTUAL PROPERTY.
(a) SCHEDULE 3.10 sets forth a list of all Copyrights, Patents,
Trademarks, Trade Secrets and Domain Names owned or used by Sellers or any of
their Affiliates that are material to the conduct of the Business or the Assets
as they are currently being operated.
(b) SCHEDULE 3.10 sets forth a list (showing in each case any owner,
licensor or licensee) of all Software owned by, licensed to or used by Sellers
(or any of their Affiliates, as the case may be) that are material to the
conduct of the Business or the Assets as they are currently being operated
(other than Software licensed to Sellers (or any of their Affiliates, as the
case may be) that is available in consumer retail stores or subject to
"shrink-wrap" license agreements).
(c) SCHEDULE 3.10 sets forth a list of all Contracts for the sale,
license or assignment of (i) any Copyrights, Patents, Trademarks or Domain Names
listed in SCHEDULE 3.10, (ii) any Trade Secrets owned by, licensed to or used by
Sellers (or any of their Affiliates, as the case may be) that are material to
the conduct of the Business or the Assets as they are currently being operated,
or (iii) any Software listed in SCHEDULE 3.10.
(d) Except as set forth in SCHEDULE 3.10, Sellers own all worldwide
right, title and interest in and to the Intellectual Property and Software
included in the Assets, free and clear of any Encumbrance.
(e) The Trade Secrets are not part of the public knowledge or
literature and, to the best of each Seller's knowledge, have not been used,
divulged or appropriated either for the benefit of any Person (other than the
Sellers) or to the detriment of the Sellers.
(f) Except as set forth in SCHEDULE 3.10: (i) all Copyrights,
Patents, Trademarks and Domain Names identified in SCHEDULE 3.10 as being owned
by Sellers are valid and in force, and all pending applications for any
Copyrights, Patents, Trademarks and Domain Names so identified are in good
standing; (ii) the Intellectual Property identified in SCHEDULE 3.10 as being
owned by Sellers or any of their Affiliates is valid and enforceable; and (iii)
Sellers have the right to bring actions for infringement or unauthorized use of
the Intellectual Property and Software identified in SCHEDULE 3.10 as being
owned by Sellers and included in the Assets, and to the knowledge of Sellers,
there is no basis for any such action. Correct and complete copies of: (x)
registrations for all registered Copyrights, Patents, Trademarks and Domain
Names identified in SCHEDULE 3.10 as being owned by Sellers; and (y) all pending
applications to register unregistered Copyrights, Patents or Trademarks
identified in SCHEDULE 3.10 as being owned by Sellers (together with any
subsequent filings relating to the pending applications) have heretofore been
made available to Purchaser by Sellers.
(g) Except as set forth in SCHEDULE 3.10, no Seller nor any of their
respective Affiliates has had notice of any claim against Sellers or any of
their Affiliates that the operations, activities, products, software, equipment,
machinery or processes of the Business infringe any Intellectual Property right
of any other Person and, to the knowledge of Sellers, no infringement of any
Intellectual Property right of any other Person has occurred or results in any
way from the operations of the Business.
(h) Except as set forth in SCHEDULE 3.10, (i) the Software included
in the Assets is not subject to any transfer or assignment limitations; (ii)
Sellers have maintained and protected the Software included in the Assets that
they own (the "OWNED SOFTWARE") (including all source code and system
specifications) with appropriate proprietary notices (including the notice of
copyright in accordance with the requirements of 17 U.S.C. Section 401),
confidentiality and non-disclosure agreements and such other measures as are
reasonably necessary to protect the proprietary, Trade Secret or confidential
information contained therein; (iii) the Owned Software has been registered or
is eligible for protection and registration under applicable copyright law and
has not been forfeited to the public domain; (iv) Sellers have copies of all
releases or separate versions of the Owned Software so that the same may be
subject to registration in the United States Copyright Office; (v) Sellers have
complete and exclusive right, title and
9
interest in and to the Owned Software; (vi) any Owned Software includes any or
all of the following: the source code, system documentation, statements of
principles of operation and schematics, as well as any pertinent commentary,
explanation, program (including compilers), workbenches, tools, and higher level
(or "proprietary") language used for the development, maintenance,
implementation and use thereof, so that a trained computer programmer could
develop, maintain, support, compile and use all releases or separate versions of
the same that are currently subject to maintenance obligations by Sellers; and
(vii) there are no agreements or arrangements in effect with respect to the
marketing, distribution, licensing or promotion of the Owned Software by any
other Person.
(i) Except as set forth in SCHEDULE 3.10, all employees, agents,
consultants or contractors who have contributed to or participated in the
creation or development of any material protected by Copyrights, Patents or
Trade Secrets that are material to the conduct of the Business as it is
currently being operated by Sellers either: (i) are a party to a "work-for-hire"
agreement under which Sellers (or any predecessors in interest, as applicable)
are deemed to be the original owner and/or the author of all property rights
therein; or (ii) have executed an assignment or an agreement to assign in favor
of Sellers (or any predecessor in interest, as applicable) all right, title and
interest in such material.
Section 3.11 CONTRACTS.
(a) SCHEDULE 3.11 sets forth a complete and accurate list of all
Assumed Contracts. Subject to the entry of an order from the Bankruptcy Court,
each of the Assumed Contracts is in full force and effect and is enforceable in
accordance with its terms. No Seller has received written notice of cancellation
of or intent to cancel, or notice to make a modification or intent to make a
modification in, any of the Assumed Contracts. The consummation of the
Transactions hereunder will not result in the early termination of any of the
Assumed Contracts. There exists no event of default or occurrence, condition or
act on the part of any Seller or, to the best knowledge of the Sellers, on the
part of the other parties to such Assumed Contracts which constitutes or would
constitute (with notice or lapse of time or both) a breach under, or cause or
permit acceleration of, any obligation of the Sellers and/or the Business,
except to the extent such event of default will be cured by Sellers as of the
Closing Date and/or pursuant to the Sale Order. The Sellers have delivered or
made available to Purchaser true and complete copies of each Assumed Contract
listed in SCHEDULE 3.11.
(b) No Seller is a party to or bound by any agreement containing
non-competition, confidentiality, standstill or similar restriction, "change of
control" or other limitations restricting the conduct of the Business.
(c) Except as set forth in SCHEDULE 3.11, no Seller is a party to or
bound by any of the following types of contractual obligations relating to the
Business or the Assets:
(i) any mortgage, indenture, note, installment obligation or
other instrument, agreement or arrangement for or relating to any borrowing of
money granting or evidencing a Lien on the Business and/or Assets or any other
Indebtedness;
(ii) any guaranty, direct or indirect, of any obligation for
borrowings or otherwise relating to the Business and/or the Assets, excluding
endorsements made for collection in the ordinary course of business;
(iii) any obligation of the Business to make payments,
contingent or otherwise, arising out of any prior acquisition of the business,
assets or stock of other persons;
(iv) any shareholders or joint venture agreement, or
partnership, joint venture, joint development, co-marketing, co-promotion,
co-packaging, or similar agreement involving the Business or the Assets;
(v) any Contracts involving any material resolution or
settlement of any actual or threatened litigation, arbitration, claim or other
dispute relating to the Business and/or the Assets;
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(vi) any powers of attorney, proxies or similar instruments to
which any Seller is bound; or
(vii) any other Contracts that are material to the Business
taken as a whole.
Section 3.12 RESERVED.
Section 3.13 MAJOR CUSTOMERS. SCHEDULE 3.13 lists the names of the
twenty largest customers (by revenues generated) for the Business and the amount
of revenues generated by each of them during the twelve months ended December
31, 2002 and December 31, 2001. Except as set forth in SCHEDULE 3.13, there have
been no adverse changes in the relationships between the Sellers and the
customers listed on SCHEDULE 3.13, since December 31, 2001.
Section 3.14 CUSTOMER FILES. All materials relating to the customers
of the Business (the "CUSTOMER FILES") who are currently or have been since
December 31, 2001 customers, are complete and accurate in all material respects.
Except as set forth on SCHEDULE 3.14, no Seller has any materials or information
relating to the customers of the Business other than the Customer Files.
Section 3.15 INSURANCE. There is no claim, nor to the Sellers'
knowledge, any set of facts and circumstances which would give rise to a claim,
by any Seller under any insurance policy related to the Business or the Assets.
Neither the Business nor the Assets has had any casualty loss or occurrence
which may give rise to any claim of any kind not covered by insurance and to the
Sellers knowledge, there are no occurrences which may give rise to any claim not
covered by insurance.
Section 3.16 PRODUCT LIABILITIES. Except as set forth in SCHEDULE
3.16, no Sellers nor any of their Affiliates have received a claim related to
the Business for or based upon breach of product warranty (other than warranty
service and repair claims in the ordinary course of business not material in
amount or significance), strict liability in tort, negligent manufacture of
product, negligent provision of services or any other allegation of liability,
including or resulting in product recalls, arising from the materials, design,
testing, manufacture, packaging, labeling (including instructions for use), or
sale of products or from the provision of services; and, to the knowledge of
Sellers, there is no basis for any such claim. Except as set forth in SCHEDULE
3.16, the products sold or delivered or services rendered by the Business comply
with all contractual requirements, warranties or covenants applicable thereto
and are not subject to any material term, condition, guaranty, warranty or other
indemnity beyond the applicable standard terms and conditions of sale for such
products and services.
Section 3.17 REGULATORY MATTERS. Except as set forth in SCHEDULE 3.17:
(a) (i) to the knowledge of Sellers, Sellers are in compliance in
all material respects with all current applicable statutes, regulations or rules
enacted, adopted, issued, promulgated or administered by the FDA or comparable
foreign Governmental Body with respect to or relating to the Business and (ii)
Sellers have not received any notice alleging any failure by Sellers to so
comply;
(b) to the knowledge of Sellers, there is no false information or
significant omission in any product application or product-related submission
made by Sellers in connection with the Business to the FDA or comparable foreign
Governmental Body;
(c) to the knowledge of Sellers, there is no reasonable basis for
any material regulatory action from the FDA or any comparable foreign
Governmental Body in each case, with respect to the Business; and
(d) there have been no recalls, field notifications, alerts,
seizures or other compliance or enforcement action requested or threatened
relating to the products of the Business.
Section 3.18 RECORDS. All Business Records of the Sellers are true,
accurate and complete in all material respects.
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Section 3.19 DISCLOSURE. No representation, warranty or statement made
by any Seller in (i) this Agreement or (ii) the Schedules attached hereto,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Purchaser represents and warrants to and for the benefit of the Seller, as
of the date hereof and as of the Closing Date, except with respect to any
particular subsection of this Article IV to the extent specifically described in
the corresponding subsection or any other subsection, if it is reasonably
apparent from the disclosure that such other subsection applies, of that certain
schedule (the "PURCHASER'S DISCLOSURE SCHEDULE"), dated as of the date of this
Agreement, delivered to the Sellers on behalf of the Purchaser, a copy of which
is attached hereto and incorporated herein by this reference, as follows:
Section 4.01 ORGANIZATION AND QUALIFICATION. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
Section 4.02 AUTHORITY.
(a) Authority.
(i) The Board of Directors of the Purchaser has taken all
action to authorize and approve the Transaction Documents and the Transactions.
The Purchaser has all requisite power and authority to enter into the
Transaction Documents to which it is a party and to consummate the Transactions
contemplated hereby and thereby.
(ii) The execution, delivery and performance by the Purchaser
of each Transaction Document to which it is a party and the consummation by the
Purchaser of the Transactions contemplated hereby and thereby have been duly
authorized by all corporate action on the part of the Purchaser and no other
corporate proceedings on the part of the Purchaser are necessary to authorize
each Transaction Document.
(iii) Each Transaction Document to which Purchaser is a party
has been duly and validly executed and delivered by Purchaser and, assuming the
due authorization, execution and delivery hereof by the other parties hereto,
constitutes the valid and binding obligation of Purchaser, enforceable against
it in accordance with its respective terms.
(b) NON-CONTRAVENTION. Subject to the entry of the Sale Order,
neither the execution and delivery by Purchaser of any Transaction Document to
which it is a party nor the consummation or performance by Purchaser of any of
the Transactions contemplated hereby and thereby will contravene, conflict with
or result in any violation by Purchaser under any provisions of or result in
acceleration, termination, cancellation or modification of, or constitute a
default under:
(i) the certificate or articles of incorporation, bylaws or
similar governing documents of Purchaser; or (ii) to the best of the Purchaser's
knowledge, any Requirements of Law; or
(iii) any Contract, lease or other instrument to which
Purchaser is now a party.
(c) STATUTORY APPROVALS. Subject to the entry of the Sale Order, no
declaration, filing or registration with, or notice to or Consent of, any
Governmental Entity or any other Person is necessary for the
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execution and delivery by Purchaser of any Transaction Document to which it is a
party or the consummation by Purchaser of the Transactions contemplated hereby
and thereby.
Section 4.03 DISCLOSURE. No representation, warranty or statement made
by Purchaser in (i) this Agreement or (ii) the Schedules attached hereto,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE V.
PRE-CLOSING COVENANTS OF SELLER
Except with the prior written consent of the Purchaser, the Sellers shall
comply with the provisions of this Article V after the date hereof and prior to
the Closing Date or earlier termination of this Agreement.
Section 5.01 ORDINARY COURSE OF BUSINESS. Each of the Sellers shall
conduct the Business in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted and use best efforts to preserve the
Assets and the Business, preserve relationships with customers, suppliers,
franchisors, distributors and others having business dealings with it and keep
available the services of their present officers and employees, in each case in
the ordinary course of business consistent with past practice. No Seller will
take any action with the purpose of causing any of the conditions to the
Purchaser's obligations set forth in Article VII hereof to not be satisfied.
Except as expressly contemplated by this Agreement, no Seller shall without the
prior written consent of the Purchaser:
(a) except to the extent permitted under the Bankruptcy Code, make
any payment with respect to, or in fulfillment of, any Liability, including
without limitation, any account payable;
(b) enter into any commitment or transaction relating to the
Business not in the ordinary course of business;
(c) acquire or agree to acquire by merging or consolidating the
Business with, or by purchasing any assets or equity securities of, or by any
other manner, any Person (other than purchases of marketable securities in the
ordinary course of business consistent with past practice);
(d) except to the extent consistent with the Bankruptcy Proceedings,
liquidate, dissolve or otherwise reorganize if such action would have any effect
whatsoever on the Business or the Assets;
(e) other than ordinary course revisions agreed to orally between
the contracting parties, enter into, modify, amend or waive any terms of any
Assumed Contract;
(f) take any action or engage in any transaction which would cause
any representation or warranty of the Sellers hereunder to be untrue as of the
Closing Date;
(g) accelerate the receipt of payment with respect to receivables or
slow down the payment of payables relating to the Business, provided, however,
that Purchaser's right to require prior written consent pursuant to the terms of
this Section 5.01(g) shall be deemed waived until such time, after the date
hereof, that Purchaser invokes such right, in its sole and absolute discretion,
by providing written notice to Sellers;
(h) revalue any of the Assets, including without limitation, writing
down the value of inventory or writing off notes or accounts receivable, except
as required under GAAP and in the ordinary course of business;
(i) declare, set aside or pay any dividend or distribution in
respect of any capital stock, or purchase or redeem any shares of capital stock
of any respective Seller (including any security convertible or
13
exchangeable into such capital stock) or issue, grant or otherwise create any
option or right to acquire any such capital stock; or
(j) enter into any agreement with Med or the Inactive Subs relating
to the Business.
Section 5.02 CAPITAL COMMITMENTS. Except for those expenditures
specifically set forth in SCHEDULE 5.02, no Seller shall make any capital
commitments relating to the Business.
Section 5.03 CERTAIN ACTIONS. No Seller shall sell, lease, transfer,
license, pledge, encumber or otherwise dispose of any Assets or incur any
Liabilities or obligations of any nature whatsoever relating to the Assets or
the Business (whether absolute, accrued, contingent or otherwise and whether due
or to become due), except for Liabilities or obligations incurred in the
ordinary course of business in substantially the same manner as heretofore
conducted.
Section 5.04 LOANS AND ADVANCES. No Seller shall make loans or
advances, capital contributions to, or investments in, any Person which relates
to the Business.
Section 5.05 ACCOUNTING. No Seller shall make any changes in its
accounting methods relating to the Assets or the Business, except as required by
law, rule, regulation or GAAP.
Section 5.06 INSURANCE. The Sellers shall maintain with financially
responsible insurance companies (or through self-insurance not inconsistent with
such party's past practice) insurance in such amounts and against such risks and
losses with respect to the Assets and the Business as is currently maintained by
the Sellers.
Section 5.07 PERMITS. Each of the Sellers shall use its best efforts
to maintain in effect all existing material permits pursuant to which each
Sellers operate the Business.
Section 5.08 ACTIONS. Except with respect to the Bankruptcy
Proceedings, no Seller shall institute, settle or dismiss any action, claim,
demand, lawsuit, proceeding, arbitration or grievance by or before any
Governmental Entity threatened against, relating to or involving the Assets or
the Business of the Sellers other than in the ordinary course of business
consistent with past practices.
Section 5.09 MAINTENANCE OF ASSETS. Each of the Sellers shall maintain
all the Assets in good repair and condition, except to the extent of wear or use
in the ordinary course of business and consistent with past practice or damage
by fire or other unavoidable casualty.
Section 5.10 ACCESS AND INVESTIGATION. Each of the Sellers shall use
its best efforts to ensure that at all times from the date hereof through the
Closing Date:
(a) each of the Sellers and their respective representatives shall
provide the Purchaser and its representatives with free and complete access at
reasonable times and upon reasonable notice, to the Assets, and to all existing
books, records, Tax Returns, work papers and other documents and information
relating to the Business;
(b) each of the Sellers and their respective representatives shall
provide the Purchaser and its representatives with such copies of existing
books, records, Tax Returns, work papers and other documents and information
relating to the Business as the Purchaser may reasonably request in good faith;
and
Section 5.11 BANKRUPTCY COURT APPROVALS. Sellers shall as soon as
practicable use their best efforts to obtain entry of the Sale Procedures Order.
Sellers shall use their best efforts to obtain Bankruptcy Court approval, in the
form of the Sale Order, of the Transactions.
Section 5.12 TRESTLE ATTORNEYS FEES. Notwithstanding any portion of
this Article V to the contrary, prior to the Closing, Trestle shall be permitted
to pay attorneys fees incurred on its behalf in an aggregate amount not to
exceed Seventy-Five Thousand Dollars ($75,000).
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ARTICLE VI.
PRE-CLOSING COVENANTS OF EACH PARTY
Section 6.01 NOTIFICATION OF CERTAIN MATTERS. During the period after
the date hereof but prior to the Closing (the "PRE-CLOSING PERIOD"), each party
hereto shall promptly notify the other in writing of:
(a) the discovery by it of any event, condition, fact or
circumstance that occurred, arose or existed on or prior to the date of this
Agreement or occurs, arises or exists after the date of this Agreement and that
caused or constitutes or could cause or constitute a breach of any
representation or warranty made by such party in this Agreement;
(b) any breach of any covenant or obligation made by it; and
(c) any event, condition, fact or circumstance that may make the
timely satisfaction of any of the conditions set forth in Article VII or Article
VIII impossible or unlikely.
Section 6.02 CONSENTS. To the extent that any of the following is not
provided for or satisfied by the Sale Order, each party hereto shall use its
best efforts to ensure that:
(a) each filing, notice or certificate required to be made or given
(pursuant to any applicable Legal Requirement, order or Contract, or otherwise)
by it in connection with the execution and delivery of this Agreement or in
connection with the consummation or performance of any of the Transactions is
made or given as soon as practicable after the date of this Agreement;
(b) each Consent required under SECTION 3.02(c) and SECTION 4.02(c),
if any, required to be obtained (pursuant to any applicable legal requirement,
order or Contract, or otherwise) by it in connection with the execution and
delivery of this Agreement or in connection with the consummation or performance
of any of the Transactions is obtained as soon as practicable after the date of
this Agreement and remains in full force and effect through the Closing Date;
(c) it shall promptly deliver to the other parties, a copy of each
filing made, each notice given and each Consent obtained by it during the
Pre-Closing Period; and
(d) during the Pre-Closing Period, it and its respective
representatives cooperate with the other parties and with the other parties'
representatives, and prepare and make available such documents and take such
other actions as the other parties may reasonably request in good faith, in
connection with any filing, notice or Consent that it is required or elects to
make, give or obtain.
Section 6.03 BREAK UP FEE.
(a) In consideration of Purchaser's entering into this Agreement,
and in recognition of the benefits that it provides Sellers in seeking to sell
the Business for the highest and best offer at the Auction, Sellers agree to pay
Purchaser up to $50,000 of Purchaser's reasonable out-of-pocket costs and
expenses (including attorney's fees) incurred in connection with the
transactions contemplated by this Agreement (the "BREAK UP FEE"), pursuant to
the terms of the Sale Procedures Order in the event that Sellers select a Person
other than Purchaser as the Successful Bidder.
(b) Except as provided in the Sale Procedures Order, any payment by
Sellers of all or a portion of the Break Up Fee shall be by wire transfer of
immediately available funds to an account specified in writing by Purchaser.
Section 6.04 NOTIFICATION TO THIRD PARTIES. During the Pre-Closing
Period, each of the Sellers covenants and agrees that it shall take any and all
steps necessary and appropriate to duly notice the sale of the Assets, in form
and substance reasonably satisfactory to Purchaser in all respects, to (i) all
federal, state and local
15
Governmental Entities to which such Sellers may be subject to taxation in
respect of the Assets or the Business, and (ii) the Pension Benefit Guarantee
Corporation or any other ERISA-related Governmental Entity to which the Assets
or the Business may be subject, each in accordance with the provisions of the
Sale Motion.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATION TO CLOSE
The obligation of the Purchaser to purchase the Business and the Assets is
subject to the satisfaction, at or before the Closing, of the conditions set out
below. The benefit of these conditions are for the benefit of the Purchaser only
and may only be waived in a writing signed by the Purchaser at any time in its
sole discretion.
Section 7.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Sellers shall be true and correct in all
material respects (except for representations and warranties that contain
qualifications as to materiality, which shall be true and correct in all
respects and except for representations and warranties that are subject to items
set forth on a Schedule hereto, which shall be true subject to such items) at
and as of the date when made and as of the Closing Date as though made at that
time, and the Purchaser shall have received a certificate attesting thereto from
the Sellers signed by a duly authorized officer of each of the Sellers.
Section 7.02 PERFORMANCE BY THE SELLERS. Each of the Sellers shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement and the
Purchaser shall have received a certificate signed by a duly authorized officer
of each of the Sellers attesting to that effect.
Section 7.03 NOTIFICATION TO THIRD PARTIES. Each of the Sellers shall
have taken any and all steps necessary and appropriate to duly notice the sale
of the Assets, in form and substance reasonably satisfactory to Purchaser in all
respects, to (i) all federal, state and local Governmental Entities to which
such Sellers may be subject to taxation in respect of the Assets or the
Business, and (ii) the Pension Benefit Guarantee Corporation or any other
ERISA-related Governmental Entity to which the Assets or the Business may be
subject, each in accordance with the provisions of the Sale Motion.
Section 7.04 SALE ORDER. Within 40 days of the date hereof, the Sale
Order shall have been entered and shall be in full force and effect, and all
conditions contemplated by the Sale Order to consummate the Transactions
contemplated hereby shall have been satisfied or waived.
Section 7.05 NO LITIGATION. There shall not have been issued and be in
effect any order of any court or tribunal of competent jurisdiction which (i)
prohibits or makes illegal the purchase by the Purchaser of the Assets, (ii)
would require the divestiture by the Purchaser of all or any portion of the
Assets or the Business as a result of the Transactions contemplated hereby, or
(iii) would impose limitations on the ability of the Purchaser to effectively
exercise full rights of ownership of the Assets or of all or any portion of the
Business as a result of the Transactions contemplated hereby.
Section 7.06 NO INJUNCTION. On the Closing Date there shall be no
effective injunction, writ, preliminary restraining order or any order of any
nature issued by a court of competent jurisdiction directing that the
Transactions provided for herein or any of them not be consummated as so
provided or imposing any conditions on the consummation of the Transactions
contemplated hereby.
Section 7.07 NO ENCUMBRANCES. At the Closing, Sellers shall deliver
the Assets free and clear of any Encumbrances whatsoever.
Section 7.08 NECESSARY CONSENTS. Except to the extent not obviated by
the Sale Order, Sellers shall have received all required consents, in form and
substance reasonably satisfactory to Purchaser in all respects, to the
transactions contemplated hereby from the other parties to all Assumed Contracts
and to the extent necessary to validly assign to Purchaser any permits or
licenses, the Intellectual Property and Software which are used in or held for
use in or relating to the Business or the Assets, and which are material to the
Business.
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Section 7.09 DELIVERIES. Each of the deliveries required to be made to
Purchaser pursuant to SECTION 2.02 shall have been so delivered.
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS TO CLOSE
The obligation of the Sellers to sell the Business and the Assets is
subject to the satisfaction, at or before the Closing, of the conditions set out
below. The benefit of these conditions are for the Sellers only and may be
waived by the Sellers in writing at any time in their sole discretion.
Section 8.01 PURCHASE PRICE. Subject to any adjustments pursuant to
Section 1.06, Sellers shall have received the amounts set forth in Section 1.07,
in accordance with the terms thereof and the provisions of the Escrow Agreement.
Section 8.02 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Purchaser shall be true and correct in all
material respects (except for representations and warranties that contain
qualifications as to materiality, which shall be true and correct in all
respects and except for representations and warranties that are subject to items
set forth on a Schedule hereto, which shall be true subject to such items) at
and as of the date when made and as of the Closing Date, as though made at that
time, and the Seller shall have received a certificate attesting thereto signed
by a duly authorized officer of the Purchaser.
Section 8.03 PERFORMANCE BY PURCHASER. The Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement and the Sellers shall have
received a certificate of a duly authorized officer of the Purchaser to such
effect.
Section 8.04 SALE ORDER. Within 40 days of the date hereof, the Sale
Order shall have been entered and shall be in full force and effect, and all
conditions contemplated by the Sale Order to consummate the transactions
contemplated hereby shall have been satisfied or waived.
Section 8.05 NO LITIGATION. There shall not have been issued and be in
effect any order of any court or tribunal of competent jurisdiction which (i)
prohibits or makes illegal the sale by the Sellers of the Assets or the Purchase
by the Purchaser of the Assets or (ii) would impose limitations on the ability
of the Sellers to effectively transfer full rights of ownership of the Assets or
of all or any portion of the Business as a result of the Transactions
contemplated hereby.
Section 8.06 NO INJUNCTION. On the Closing Date there shall be no
effective injunction, writ, preliminary restraining order or any order of any
nature issued by a court of competent jurisdiction directing that the
Transactions provided for herein or any of them not be consummated as so
provided or imposing any conditions on the consummation of the Transactions
contemplated hereby.
Section 8.07 DELIVERIES. Each of the deliveries required to be made to
Sellers pursuant to SECTION 2.02 shall have been so delivered.
ARTICLE IX.
SURVIVAL
Section 9.01 REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement shall terminate on the Closing Date, and
each of the covenants and agreements contained in this Agreement which
contemplate performance after the Closing Date shall survive the consummation of
the Transactions.
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ARTICLE X.
TERMINATION
Section 10.01 TERMINATION EVENTS. This Agreement may be terminated and
the Transactions may be abandoned at any time prior to the Closing:
(a) by mutual written consent of the Sellers and Purchaser;
(b) by Purchaser, if it determines, using its sole and absolute
discretion, that at the Closing it will be unable to obtain all right, title and
interest in and to any of the Intellectual Property or the Software necessary
for its operation of the Business and the Assets, free and clear of any
Encumbrances;
(c) by Purchaser, if the Sale Order has not been entered within 40
days after the date hereof;
(d) by Purchaser, if the Closing shall not have occurred within (i)
45 days after the date hereof, or (ii) 60 days after the date hereof, if the
failure of the Closing to occur by such date shall have been caused by a stay
issued by the Bankruptcy Court upon motion of a creditor or other party in
interest (other than Sellers) relating to the Transaction or the bidding
process, provided, in the case of clauses (i) and (ii) hereof, that the failure
of the Closing to occur by such applicable date shall not have been caused by,
or result from, a breach of this Agreement by Purchaser;
(e) by Purchaser, in the event of any material breach by Sellers of
any of Sellers' agreements, representations or warranties contained herein and
the failure of Sellers to cure such breach within five (5) business days after
receipt of written notice from Purchaser requesting such breach to be cured;
(f) by Sellers, in the event of any material breach by Purchaser of
any of Purchaser's agreements, representations or warranties contained herein
and the failure of Purchaser to cure such breach within five (5) business days
after receipt of notice from Sellers requesting such breach to be cured; or
(g) automatically, if the Bankruptcy Court deems a Person other than
Purchaser as the Successful Bidder.
Section 10.02 NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to SECTION 10.01 shall give notice of such termination
to the other parties to this Agreement.
Section 10.03 EFFECT OF TERMINATION.
(a) In the event that this Agreement shall be terminated pursuant to
this Article X, all further obligations of the parties under this Agreement
(other than Sections 6.03 and 12.02) shall be terminated without further
liability of any party to the other, PROVIDED that nothing herein shall relieve
any party from liability for its willful breach of this Agreement.
(b) Notwithstanding any portion of the foregoing to the contrary, if
this Agreement is terminated:
(i) pursuant to Sections 10.01(a), (c), (d), (e) or (g), the
Escrow Agent shall deliver the Escrow Amount to the Purchaser in accordance with
the provisions of the Escrow Agreement; or
(ii) pursuant to Section 10.01(b), the Escrow Agent shall
deliver (x) Fifty Thousand Dollars ($50,000) of the Escrow Amount, plus any
interest accrued on the Escrow Amount, to the Purchaser in accordance with the
provisions of the Escrow Agreement, and (y) the remaining Fifty Thousand Dollars
($50,000) of the Escrow Amount to the Sellers in accordance with the provisions
of the Escrow Agreement; or
(iii) pursuant to Section 10.01(f), the Escrow Agent shall
deliver the Escrow Amount to the Sellers in accordance with the provisions of
the Escrow Agreement.
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The parties acknowledge and agree that the provisions of this Section 10.03(b)
shall constitute the sole and exclusive remedy of Sellers with respect to any
claims resulting from or arising out of the termination of this Agreement.
ARTICLE XI.
OBLIGATIONS AFTER THE CLOSING
Section 11.01 FURTHER ASSURANCES.
(a) Sellers will, at any time, when called upon to do so by the
Purchaser, its successors, legal representatives, or assigns, execute and
deliver all documents, required for the filing of such papers as are necessary
to aid the Purchaser, its successors, legal representatives and assigns, to (i)
effectively vest in the Purchaser good title to the Assets, (ii) consummate the
Transactions contemplated hereby, and (ii) record, obtain, enforce and renew
proper copyright, trademark, patent and other intellectual property rights in
the Intellectual Property in all countries, all without further compensation but
at the expense of the Purchaser, its successors, legal representatives and
assigns.
(b) On and after the Closing Date, the Purchaser shall have the sole
right and authority to collect, for its own account and sole benefit, all monies
payable in respect of the Assets (with respect to Transactions or events
occurring after the Closing Date), but not to collect monies payable in respect
of Excluded Assets, and the Sellers shall have the sole right and authority to
collect, for their own account and sole benefit, all monies payable in respect
of such Excluded Assets. If either party shall receive any such monies of the
other, it shall hold all such monies in trust for the sole benefit of the other
party. Within five business days after receipt thereof, the Sellers shall cause
the transfer and delivery to the Purchaser of any monies or other property which
the Sellers may receive after the Closing Date in payment of monies payable in
respect of the Assets and the Purchaser shall (within five business days after
receipt thereof) cause the transfer and delivery to the Sellers of any monies
which the Purchaser may receive after the Closing Date in payment of Excluded
Assets.
(c) On and after the Closing Date, Purchaser shall provide access to
any books and records relating to the Business and copies of such books and
records to the extent reasonably necessary for Sellers to administer the
Bankruptcy Proceedings.
Section 11.02 NAME CHANGE. Trestle agrees to transfer, assign and
convey, and hereby does transfer, assign and convey, all rights in and to the
name "Trestle Corporation, a Delaware corporation," and any and all derivatives
thereof, to Purchaser, other than the right to use the name solely in connection
with the administration of Trestle's estate in the Bankruptcy Proceedings. In no
event later than twenty (20) days following the final conclusion and dismissal
of the Bankruptcy Proceedings, Trestle shall take all necessary and appropriate
action to amend its corporate charter to change its name to any name not
including the words "Trestle Corporation," at the direction of Purchaser and at
Purchaser's sole cost and expense.
Section 11.03 TAXES. Sellers covenant, acknowledge and agree that each
Seller shall be responsible for, and shall pay all municipal, county, state and
federal Taxes incurred and the related costs of preparing or documenting the
same, if any, in connection with the operation of the Assets and/or the Business
prior to the Closing Date. Sellers shall prepare and in a timely manner sign and
swear to any return, certificate, questionnaire or affidavit as to matters
required in connection with the payment of any such Taxes. Sellers shall jointly
and severally defend and hold Purchaser and its Affiliates, representatives,
agents and the successors and assigns harmless in respect of any costs or
expenses (including reasonable attorneys' fees), claims, and damages arising
from or in connection with Sellers' failure to pay in accordance with the terms
of this Section 11.03.
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ARTICLE XII.
MISCELLANEOUS
Section 12.01 PUBLICITY. Except as and to the extent that any such
party shall be so obligated by law or regulation, including as may be required
by the Bankruptcy Proceedings and the Sale Procedures Order, in which case the
other party shall be advised and the parties shall use their best efforts to
cause a mutually agreeable release or announcement to be issued, none of the
parties hereto may make any press release or other public announcement regarding
this transaction or its terms without the consent of the other parties hereto,
which consent shall not be unreasonably withheld or delayed.
Section 12.02 COSTS. Except as otherwise provided for herein, the
Purchaser, on the one hand, and the Sellers on the other, shall each pay its own
costs and expenses incurred by it in negotiating and preparing this Agreement
and in closing and carrying out the Transactions contemplated by this Agreement.
Section 12.03 HEADINGS. Subject headings are included for convenience
only and shall not affect the interpretation of any provision of this Agreement.
Section 12.04 NOTICES. Any notice, demand, request, waiver, or other
communication under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if personally served or sent by
facsimile transmission, on the business day after notice is delivered to a
courier or mailed by express mail if sent by courier delivery service or express
mail for next day delivery and on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered, return
receipt requested, postage prepaid and addressed as follows (or to such other
address of which any such party shall give notice pursuant to this Section
12.04):
If to the Sellers to:
Med Diversified, Inc.
000 Xxxxxxxxxx Xx, Xxx. 000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxx Xxxxxxx, Esq.
and
Trestle Corporation
000 Xxxxxxxx Xxx
Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxxxx
with a copy to:
Xxxxx Xxxxxx LLP
000 Xxxxxxxx Xxx., Xxx 000
Xxxxxx, XX. 00000
Fax: (000) 000-0000
Attn: Xxxx Xxxxx
If to the Purchaser, to:
Trestle Acquisition Corp.
00000 Xxxx Xxxxxxx Xxxx., Xxx 000
Xxx Xxxxxxx, XX 00000
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Fax: (000) 000-0000
Attn: Xxxx Xxxxxxx
with a copy to:
Xxxxxx Xxxxxxxx & Markiles, LLP
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
Section 12.05 ASSIGNMENT AND SUCCESSORS. Prior to Closing, neither the
Purchaser, on the one hand, or the Sellers, on the other, shall assign any
rights or delegate any duties hereunder without the prior written consent of the
other.
Section 12.06 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties.
Section 12.07 GOVERNING LAW/JURISDICTION. This Agreement shall be
construed in accordance with, and governed by, the laws of the State of
California as applied to contracts made and to be performed entirely in the
State of California without regard to principles of conflicts of law. The
parties hereto submit to the exclusive jurisdiction of the Bankruptcy Court with
respect to this Agreement and its enforcement and all matters relating thereto,
or any disputes arising hereunder.
Section 12.08 ENTIRE AGREEMENT. This Agreement, including the
Schedules and Exhibits hereto, sets forth the entire understanding and agreement
and supersedes any and all other understandings, negotiations or agreements
between the Purchaser and the Sellers relating to the sale and purchase of the
Business and the Assets.
Section 12.09 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute a single agreement. This Agreement may be evidenced by
facsimile signatures.
Section 12.10 SEVERABILITY. In the event that any one or more of the
immaterial provisions contained in this Agreement shall for any reason be held
to be invalid, illegal or unenforceable, the same shall not affect any other
provision of this Agreement, but this Agreement shall be construed in a manner
which, as nearly as possible, reflects the original intent of the parties.
Section 12.11 NO PREJUDICE. This Agreement has been jointly prepared
by the parties hereto and the terms hereof shall not be construed in favor of or
against any party on account of its participation in such preparation.
Section 12.12 WORDS IN SINGULAR AND PLURAL FORM. Words used in the
singular form in this Agreement shall be deemed to import the plural, and vice
versa, as the sense may require.
Section 12.13 PARTIES IN INTEREST. Nothing expressed or implied in
this Agreement is intended or shall be construed to confer upon or give to any
person, firm or corporation other than the parties hereto any rights or remedies
under or by reason of this Agreement or any transaction contemplated hereby.
Section 12.14 AMENDMENT AND MODIFICATION. This Agreement may be
amended or modified only by written agreement executed by all parties hereto.
Section 12.15 WAIVER. At any time prior to the Closing, the Purchaser
or the Sellers may (i) extend the time for the performance of any of the
obligations or other acts of the other, (ii) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered pursuant hereto, and
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(iii) waive compliance with any of the agreements or conditions of the other
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party granting such waiver but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
future failure.
ARTICLE XIII.
DEFINITIONS
Section 13.01 DEFINITIONS.
(a) AFFILIATE. "AFFILIATE" shall mean, when used with respect to any
Person, (i) if such Person is a corporation, any officer or director thereof and
any Person which is, directly or indirectly, the beneficial owner of more than
ten percent (10%) of any class of any equity security (as defined in the
Securities Act) thereof, and any officer, director, partner or Affiliate of such
beneficial owner, (ii) if such Person is a partnership, any partner thereof,
(iii) if such Person is a limited liability company or other unincorporated
association, any member or managing agent thereof, and (iv) any other Person
(other than the Purchasers) which, directly or indirectly, controls or is
controlled by or is under common control with such Person. For purposes of this
definition, "control" (including the correlative terms "controlling,"
"controlled by" and "under common control with"), with respect to any Person,
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, the ability to exercise voting power, or by
Contract or otherwise.
(b) ALLOCATION. "ALLOCATION" shall have the meaning set forth in
Section 1.10.
(c) ACQUISITION. "ACQUISITION" shall mean any offer or proposal for
or indication of interest in the purchase of or the acquisition of (whether by
operation of law or otherwise) any of the Assets constituting the Business or of
a substantial (more than 5%) equity interest in Trestle or any Person that
controls the Assets or the Business.
(d) ASSETS. "ASSETS" shall have the meaning set forth in
Section 1.01.
(e) ASSUMED CONTRACTS. "ASSUMED CONTRACTS" shall have the meaning
set forth in Section 1.01(g).
(f) ASSUMED LIABILITIES. "ASSUMED LIABILITIES" shall have the
meaning set forth in Section 1.03.
(g) ASSUMPTION AGREEMENT. "ASSUMPTION AGREEMENT" shall have the
meaning set forth in Section 2.02.
(h) AUCTION. "AUCTION" means the auction conducted pursuant to the
Sale Procedures Order.
(i) BANKRUPTCY CODE. "BANKRUPTCY CODE" means 11 U.S.C. Sections 101
et seq.
(j) BANKRUPTCY COURT. "BANKRUPTCY COURT" means the United States
Bankruptcy Court for the Eastern District of New York or any other court of
competent jurisdiction agreed to by Purchaser and Sellers.
(k) BANKRUPTCY PROCEEDINGS. "BANKRUPTCY PROCEEDINGS" means the
proceedings in the Bankruptcy Court involving Med and Trestle.
(l) Bidding Procedures. "BIDDING PROCEDURES" means the bidding
procedures set forth in the Order Approving the Motion of Med Diversified, Inc.
and Trestle Corp. for an Order Approving (A) Bidding Procedures in Connection
with the Contemplated Sale of All or Substantially All of Trestle Corp.'s Assets
and
22
Certain Assets of Med Diversified, Inc. and (B) Proposed Break Up Fee in
Connection with Such Sale dated March 5, 2003.
(m) Break Up Fee. "BREAK UP FEE" shall have the meaning set forth in
Section 6.03.
(n) BUSINESS. "BUSINESS" shall have the meaning set forth in the
Preamble.
(o) BUSINESS RECORDS. "BUSINESS RECORDS" shall have the meaning set
forth in Section 1.01(i).
(p) CLOSING. "CLOSING" shall have the meaning set forth in Section
2.01.
(q) CLOSING ALLOCATION. "CLOSING ALLOCATION" shall have the meaning
set forth in Section 1.10.
(r) CLOSING BALANCE SHEET. "CLOSING BALANCE SHEET" shall have the
meaning set forth in Section 1.10.
(s) CLOSING DATE. "CLOSING DATE" shall have the meaning set forth in
Section 2.01.
(t) CODE. "CODE" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, as in effect from time to
time.
(u) CONSENTS. "CONSENTS" shall mean all governmental and third party
consents, permits, approvals, orders, authorizations, qualifications, and
waivers necessary to be received by a Person for the consummation of the
Transactions contemplated by this Agreement.
(v) CONTRACTS. "CONTRACTS" shall mean all contracts, commitments,
agreements, arrangements and other instruments, whether written or oral.
(w) COPYRIGHTS. "COPYRIGHTS" means United States and foreign
copyrights, copyrightable works mask works, whether registered or unregistered,
and pending applications to register the same.
(x) CUSTOMER FILES. "CUSTOMER FILES" shall have the meaning set
forth in Section 3.14.
(y) DOMAIN NAMES. "DOMAIN NAMES" is any alphanumeric designation
registered with or assigned by a domain name registrar, registry, or domain name
registration authority as part of an electronic address on the Internet. A
Domain Name may or may not also be a Trademark.
(z) EMPLOYEE. "EMPLOYEE" shall mean any employee, officer, director
or independent contractor of any Seller.
(aa) ENCUMBRANCE. "ENCUMBRANCE" shall mean any claim, option, pledge,
security interest, Lien, charge, encumbrance, restriction (whether on voting,
sale, transfer or disposition or otherwise) whether imposed by agreement,
understanding, law or otherwise, except those arising under applicable federal
or state securities laws.
(bb) ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(cc) ESCROW AGREEMENT. "ESCROW AGREEMENT" shall have the meaning set
forth in Section 1.08.
(dd) ESCROW AGENT. "ESCROW AGENT" shall have the meaning set forth in
Section 1.08.
23
(ee) ESCROW AMOUNT. "ESCROW AMOUNT" shall have the meaning set forth
in Section 1.08.
(ff) EXCLUDED ASSETS. "EXCLUDED ASSETS" shall have the meaning set
forth in Section 1.02.
(gg) EXCLUDED LIABILITIES. "EXCLUDED LIABILITIES" shall have the
meaning set forth in Section 1.04.
(hh) FDA. "FDA" means the United States Food and Drug Administration.
(ii) FILINGS. "FILINGS" has the meaning specified in the recitals
hereto.
(jj) GAAP. "GAAP" shall mean U.S. generally accepted accounting
principles, applied on a consistent basis.
(kk) GOVERNMENTAL ENTITY. "GOVERNMENTAL ENTITY" shall mean the
government of the United States of America, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
(ll) INDEBTEDNESS. "INDEBTEDNESS" shall mean as to the Business and
the Assets and whether recourse is secured by or is otherwise available against
all or only a portion of the Business or Assets and whether or not contingent,
but without duplication: (i) every obligation relating to the Business for money
borrowed, including the current portion of all long-term indebtedness; (ii)
every obligation relating to the Business evidenced by bonds, debentures, notes
or other similar instruments, including obligations incurred in connection with
the acquisition of property, assets or businesses; (iii) every reimbursement
obligation relating to the Business with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of the Business; (iv)
every obligation of the Business issued or assumed as the deferred purchase
price of property or services (other than obligations incurred under purchase
orders relating to future deliveries of goods or services); (v) obligations or
commitments of the Business to repay deposits or other amounts advanced by and
owing to third parties; (vi) obligations of the Business under any interest
rate, currency or other hedging agreement; (vii) indebtedness secured by a Lien
on the Assets or properties of the Business; (vii) payments which become due as
a result of the execution of this Agreement, or the consummation of the
Transactions; and (viii) guarantees of Indebtedness.
(mm) INTELLECTUAL PROPERTY. "INTELLECTUAL PROPERTY" means Copyrights,
Patents, Trademarks, Trade Secrets and Domain Names and all Contracts that
relate or pertain to any of the foregoing.
(nn) KNOWLEDGE. All references to knowledge of a Seller shall mean to
the best of the knowledge of each of the Sellers, and, after due inquiry and
consultation, of the officers and/or employees of each of the Sellers who,
because of their management and supervisory positions, are best informed of the
affairs of any of the Sellers.
(oo) LIABILITIES. "LIABILITIES" shall mean any debt, obligation, duty
or liability of any nature including Indebtedness and any undisclosed,
unmatured, unaccrued, unasserted, contingent, indirect, conditional, implied,
vicarious, derivative, joint, several or secondary liability, regardless of
whether such debt, obligation, duty or liability would be required to be
disclosed on a balance sheet prepared in accordance with GAAP and regardless of
whether such debt, obligation, duty or liability is immediately due and payable.
(pp) LIEN. "LIEN" shall mean any security agreement, financing
statement (whether or not filed), security or other like interest, conditional
sale or other title retention agreement, lease or consignment or bailment given
for security purposes, lien, mortgage, deed of trust, indenture, pledge,
constructive or other trust or attachment.
(qq) MATERIAL ADVERSE EFFECT. "MATERIAL ADVERSE EFFECT" shall mean a
material adverse effect on (i) the Business or the Assets, liabilities,
operation, property, condition (financial or otherwise) or prospects of
24
the Business or (ii) the validity or enforceability of (A) this Agreement or (B)
the rights or remedies of the Purchaser hereunder.
(rr) PATENTS. "PATENTS" means United States and foreign patents,
patent applications, provisional applications, continuations,
continuations-in-part, divisions, reissues, patent disclosures, inventions
(whether or not patentable or reduced to practice) or improvements thereto (such
patent disclosures, inventions and improvements include only those made prior to
the Closing Date).
(ss) PERSON. "PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, limited
liability company, association, corporation, institution, entity, party, or
Governmental Entity or any other juridical entity of any kind or nature
whatsoever.
(tt) PURCHASE PRICE. "PURCHASE PRICE" shall have the meaning set
forth in Section 1.05.
(uu) PURCHASER. "PURCHASER" shall have the meaning set forth in the
Preamble.
(vv) RECEIVABLES. "RECEIVABLES" shall mean all of the accounts
receivable of Sellers arising from the Business.
(ww) REQUIREMENTS OF LAW. "REQUIREMENTS OF LAW" shall mean as to any
Person, provisions of the Articles or Certificate of Incorporation and By-laws
or regulations or other organizational or governing documents of such Person, or
any law, code, regulation, qualification, license or franchise or determination
of any Governmental Entity, in each case applicable or binding upon such Person
or any of such Person's property or to which such Person or any of such Person's
property is subject or pertaining to any or all of the Transactions contemplated
or referred to herein.
(xx) SALE MOTION. "SALE MOTION" means a motion filed with the
Bankruptcy Court seeking approval of the Transactions, including the sale of the
Assets to Purchaser pursuant to the terms of the Agreement.
(yy) SALE ORDER. "SALE ORDER" means a final, non-appealable order of
the Bankruptcy Court, in form and substance reasonably satisfactory to
Purchaser, approving this Agreement and any ancillary documents, and
authorizing, pursuant to all applicable sections of the Bankruptcy Code, all of
the transactions and agreements contemplated hereby and thereby.
(zz) SALE PROCEDURES ORDER. "SALE PROCEDURES ORDER" means a final,
non-appealable order entered by the Bankruptcy Court setting forth the
procedures for the sale of the Assets substantially similar to the provisions of
the Bidding Procedures and the Break-Up Fee.
(aaa) SELLERS. "SELLERS" shall have the meaning set forth in the
Preamble;
(bbb) SELLERS' DISCLOSURE SCHEDULE. "SELLERS' DISCLOSURE SCHEDULE"
shall have the meaning set forth in Article III.
(ccc) SOFTWARE. "SOFTWARE" means computer software programs and
software systems, including all databases, compilations, tool sets, compilers,
higher level or "proprietary" languages, related documentation, technical
manuals and materials, whether in source code, object code or human readable
form and any licenses or rights with respect to the foregoing.
(ddd) SUCCESSFUL BIDDER. "SUCCESSFUL BIDDER" means a Person selected
by Sellers, other than Purchaser, as the successful bidder pursuant to the Sale
Procedures Order.
(eee) TAXES. "TAXES" shall mean all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, property, sales, use, license, withholding, payroll, estimated, stamp,
unemployment insurance, ad valorem, disability, severance, social security and
franchise taxes, occupation or other taxes, fees, assessments or charges of any
kind whatsoever, together with any interest and any
25
penalties (including penalties for failure to file in accordance with applicable
information reporting requirements), and additions to tax by any authority,
whether federal, state or local or domestic or foreign.
(fff) TAX RETURN. "TAX RETURN" shall mean a report, return or other
information required to be supplied to a Governmental Entity in connection with
Taxes including, where permitted or required, combined or consolidated returns
for any group of entities that includes the Seller and relates to the Business.
(ggg) TRADE SECRETS. "TRADE SECRETS" means confidential ideas, trade
secrets, know-how, confidential information, concepts, methods, processes,
formulae, reports, data, customer lists, mailing lists, business plans, product
specifications, supplier lists or other proprietary information.
(hhh) TRADEMARKS. "TRADEMARKS" means United States, state and foreign
trademarks, service marks, logos, trade dress, trade names and Domain Names
(including all assumed or fictitious names under which the Business has been
conducted), whether registered or unregistered and pending applications to
register the foregoing.
(iii) TRANSACTION DOCUMENTS. "TRANSACTION DOCUMENTS" shall mean this
Agreement, the Escrow Agreement, the Assumption Agreement and each document
delivered pursuant to each of the foregoing.
(jjj) TRANSACTIONS. "TRANSACTIONS" shall mean the sale and purchase of
the Assets and any and all other transactions contemplated by the Transaction
Documents.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
SELLERS:
MED DIVERSIFIED, INC.,
a Nevada corporation
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------
Title: COO
----------------------------------
TRESTLE CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxxx
----------------------------------
Title: President
----------------------------------
PURCHASER:
TRESTLE ACQUISITION CORP.
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------
Name Xxxxxxx Xxxxxxx
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Title: Chairman
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