1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into
as of this 30th day of August, 2001 (the "CLOSING DATE"), by and between XXXX
XXXXXXXX & ASSOCIATES, INC., a Georgia corporation ("PURCHASER"), and PINNACLE
MEDSOURCE, INC., a Delaware corporation ("SELLER").
BACKGROUND
Seller is a wholly owned subsidiary and operates as a separate division
(the "DIVISION") of Medinex Systems, Inc., a Delaware corporation (the "PARENT
COMPANY"). Seller is engaged in the business of [the wholesale supply and
distribution of durable medical equipment to the home medical equipment market]
(the "BUSINESS"). Immediately following the Closing, Parent Company will cause
Seller to change its corporate name to a name that does not include and is not
confusingly similar to the words "Pinnacle Medsource." Seller wishes to sell,
and Purchaser wishes to purchase all of the assets used by the Division to
conduct the Business, subject to the Assumed Liabilities, on and subject to the
terms and conditions set forth in this Agreement.
AGREEMENT
Now, therefore, for and in consideration of the mutual representations,
warranties, covenants, and agreements contained herein and for other good and
valuable consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the parties hereto agree:
SECTION 1. PURCHASE AND SALE OF ASSETS
SECTION 1.1 PURCHASE OF ASSETS. On and subject to the terms and
conditions of this Agreement, Purchaser hereby purchases and Seller hereby
sells, assigns, grants, transfers, and conveys to Purchaser all of the right,
title, and interest of Seller in and to all of the assets of Seller assigned to
or used by the Division to conduct the Business, except for the Excluded Assets,
(collectively, the "PURCHASED ASSETS"), free and clear of any and all liens,
claims, charges, security interests, and encumbrances, except for the Assumed
Liabilities, as the same exist on the Closing Date, including without
limitation:
(a) All cash in hand, all cash in the bank accounts listed in
Section 3.4 of the Disclosure Schedule, and all cash in transit;
(b) All trade accounts, customer notes, chattel paper, and other
receivables of Seller relating to the Division (the "ACCOUNTS
RECEIVABLE");
(c) All goods held for resale, all goods in transit, samples,
promotional literature, and supplies wherever located (the "INVENTORY")
used or held for use by the Division in the conduct of the Business,
together with all rights of Seller against suppliers of Inventory
including, without limitation, Seller's rights to receive refunds or
rebates in connection with its purchase of such Inventory and all
assignable warranties of third parties with respect thereto;
(d) All furniture and fixtures used by or assigned to the
Division and any and all assignable warranties covering such Furniture
and Fixtures and all computers, machinery,
-1-
2
equipment, tools, parts, accessories, and the like used by or assigned
to the Division and any and all assignable warranties covering the
Equipment (the "FURNITURE, FIXTURES, AND EQUIPMENT");
(e) All of the contracts, agreements, and arrangements, whether
oral or written, pursuant to which Seller, with respect to the Division,
enjoys any right or benefit or undertakes any obligation in its
operation of the Business (each individually, a "CONTRACT" and
collectively, "CONTRACTS"), together with the right to receive income
with respect to the Contracts after the Closing Date.
(f) All data, databases, books, records, correspondence,
accounts, records of sales, customer lists, files, papers, employment
records relating to the Hired Employees, and related materials used or
held for use by the Division in the conduct of the Business, EXCLUDING,
all of Seller's corporate minute books, stock records, and other
documents which are not reasonably of use to Purchaser in the conduct of
the Business ("BOOKS AND RECORDS");
(g) All patents, designs, art work, designs-in-progress,
formulations, know-how, prototypes, inventions, trademarks, trade names,
trade styles, service marks, and copyrights both registered and
unregistered, foreign and domestic, including without limiting the
foregoing all right, title, and interest in and to the name "Pinnacle
Medsource"; all Trade Secrets, processes, and confidential and
proprietary information of Seller; all computer software and
modifications thereof, in both source and object code form, licensed to,
or authored by, Seller together with all documentation, manuals, flow
charts, and logic diagrams related thereto, and the domain name, the URL
address, and Internet website known as "xxx.xxxxxxxxxxxxxxxxx.xxx" and
its accompanying database and software in both source code and object
code versions (the "INTELLECTUAL PROPERTY");
(h) All catalogues and other printed sales materials, including
without limitation, all existing supplies of such catalogues and sales
materials and all rights to catalogues and sales materials relating to
the Division ("CATALOGUES"); and
(i) All claims and demands of Seller related to the Division, of
whatever nature, including rights to returned or repossessed goods and
rights as an unpaid vendor, arising out of the Business of Seller
conducted through the Division.
SECTION 1.2 EXCLUDED ASSETS. Seller shall not sell and Purchaser shall
not purchase or acquire, and the Purchased Assets shall not include the
corporate franchise of Seller, the stock record books, corporate record books
containing minutes of meetings of directors and stockholders, tax returns and
records, books of account and ledgers of Seller, and such other records having
to do with Seller's organization or capitalization; and any rights which accrue
or will accrue to Seller under this Agreement (collectively, the "EXCLUDED
ASSETS").
SECTION 1.3 ASSUMED LIABILITIES. Purchaser hereby assumes responsibility
for the prompt, complete and timely performance and satisfaction of (a) the
executory obligations of Seller under all Contracts, BUT EXCLUDING all
obligations or liabilities arising from or relating to any breach or default
thereunder by Seller prior to the Closing Date, AND (b) (i) all trade accounts
payable EXCEPT any trade accounts payable that constitutes an Excluded Liability
hereunder; (ii) all executory obligations under the office lease dated March 16,
1998, as amended by Lease Amendment #1 dated February 7, 2000 and Lease
Amendment #2 dated February 28, 2001, for the office and warehouse premises
located at 000 Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx; (iii) all executory
obligations for the current payroll period of August 18, 2001 to August 31,
2001, and additionally any accrued sick and vacation time for current
-2-
3
employees as of the Closing Date; and (iv) all obligations under financing
leases for vendor accounts payable for inventory purchases. The obligations and
liabilities described in this Section 1.3 are herein collectively referred to as
the "ASSUMED LIABILITIES."
SECTION 1.4 EXCLUDED LIABILITIES. PURCHASER SHALL NOT ASSUME OR BE OR
BECOME LIABLE FOR ANY LIABILITY OR OBLIGATION OF SELLER, WHETHER KNOWN, UNKNOWN,
ABSOLUTE, CONTINGENT, OR OTHERWISE, THAT IS NOT AN ASSUMED LIABILITY, including
without limitation any liability or obligation of Seller (i) arising from the
litigation between Seller and Xxxxxxx Xxxxxx pursuant to Case No. 00VS006191-E,
Xxxxxxx Xxxxxx v. Pinnacle Medsource, Inc. and Medinex Systems, Inc. filed in
the Clerk of Court's office for the State Court of Xxxxxx County, Georgia on
[July 6, 2001]; (ii) arising from that certain Letter of Intent dated July 15,
2001 between Seller/Parent Company and Simra Enterprises Inc.; (iii) arising
from Seller's or Parent Company's use and implementation of any web-based,
e-commerce transactions related to the Division and its conduct and operation of
the Business through the URLs "xxxxxxxxxxxxxxxxx.xxx" or "Xxxxxxx.xxx"; (iv)
arising from any invoices for Seller's and/or Parent Company's web hosting,
licensing, and services administration contract with "Sites That Sell",
providing for web hosting and administrative service and support; (v) for all
costs and expenses of continuing in full force and effect the existing health
insurance benefits provided to all Hired Employees immediately prior to the
Closing Date, through September 30, 2001; (vi) arising from any obligations and
liabilities of Seller to Parent Company, including without limitation any
payment or other obligation under the promissory note of Seller in favor of
Parent Company with a principal balance of approximately $85,896 as of June 30,
2001; and (vii) arising from any obligation of Seller to The Business House for
any broker, finder, or other fees associated with the making and execution of
this Agreement. The liabilities and obligations of Seller described in this
Section 1.4 are hereinafter collectively referred to as the "EXCLUDED
LIABILITIES."
SECTION 2. PURCHASE PRICE AND CLOSING
SECTION 2.1 PURCHASE PRICE. The Purchase price for the Purchased Assets
and the Restrictive Covenants is Three Hundred Twenty-Five Thousand Dollars
($325,000.00) (the "PURCHASE PRICE").
SECTION 2.2 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid
by payment of $50,000.000 in cash at Closing and $25,000.00 payable in cash on
September 7, 2001 (together, the "INITIAL PURCHASE PAYMENT"), with the
outstanding balance of the Purchase Price MINUS all amounts previously paid,
payable in cash (the "FINAL PURCHASE PAYMENT") by Purchaser on the earlier of
(i) the date on which Purchaser consummates its loan transaction with First
Colony Bank or other lender acceptable to Purchaser for this purpose, or (ii)
the 21st day after the Closing Date, PROVIDED HOWEVER, that this 21 day period
shall be tolled for any period during which any court or other governmental
entity issues any order or decision to prevent, prohibit, or otherwise
frustrate, or any other action is taken to prevent, prohibit, or otherwise
frustrate, the consummation of all the transactions contemplated by this
Agreement including without limitation any action taken by Xxxxxxx Xxxxxx or any
action related to the litigation against Seller and Parent Company by Xxxxxxx
Xxxxxx referenced in Section 1.4(i). All payments shall be made by certified
check payable to Seller or wire transfer to an account designated in writing by
Seller.
SECTION 2.3 TIME AND PLACE OF CLOSING. The closing of the purchase and
sale of the Purchased Assets (the "CLOSING") was held at the offices of Baker,
Donelson, Bearman & Xxxxxxxx, PC, 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx 00000, at 10:00 a.m. on the Closing Date. The effective time of the
closing and the transfer of the Purchased Assets to Purchaser was 12:00 a.m. on
the Closing Date. The parties exchanged original signatures at the Closing.
-3-
4
SECTION 2.4 DELIVERIES AT THE CLOSING.
(a) At the Closing, Purchaser delivered the following to Seller:
(i) The Agreement and such assumption agreements as were
reasonably requested by Seller, executed by Purchaser;
(ii) The Purchase Price in the manner described in
Section 2.2 hereof; and
(iii) A certificate of the Secretary of Purchaser dated
the Closing Date, attaching copies of resolutions of the Board
of Directors of Purchaser authorizing Purchaser's execution and
delivery of this Agreement and the consummation by Purchaser of
the transactions contemplated hereby.
(b) At the Closing, Seller delivered the following:
(i) The Agreement, and such bills of sale and
assignments as were reasonably requested by Purchaser, each
executed by Seller, all of which together effectively vest in
Purchaser good and valid title to each of the Purchased Assets
free and clear of all liens, restrictions, and encumbrances
except for Assumed Liabilities;
(ii) Written consents of all third parties necessary to
the Purchaser's use and enjoyment of the Purchased Assets, in
form, scope, and substance reasonably satisfactory to Purchaser;
(iii) Statement of Income and Expenses and Balance Sheet
of Seller for the twelve months then ended June 30, 2001,
prepared in accordance with GAAP (the "CLOSING BALANCE SHEET");
(iv) A search of filings made pursuant to Section 9 of
the Uniform Commercial Code (conducted through a date reasonably
proximate in time to the Closing Date) in each jurisdiction in
which any of the Purchased Assets are located; and
(v) A certificate of the Secretary of Seller dated the
Closing Date, attaching copies of resolutions of the Board of
Directors of Seller authorizing Seller's execution and delivery
of this Agreement and the consummation by Seller of the
transactions contemplated hereby.
SECTION 2.5 TRANSFER EXPENSES. Seller shall pay all sales and transfer
taxes levied on the transfer of the Purchased Assets, if any. Ad valorem taxes
relating to the Purchased Assets shall be prorated as of the Closing Date.
SECTION 2.6 ALLOCATION OF PURCHASE PRICE. The consideration paid for the
Purchased Assets shall be allocated among the Purchased Assets and the
Restrictive Covenants in accordance with the provisions contained in Treasury
Regulation Section 1.1060-1T(d). The parties agree to be bound by such
allocation and to report the transaction contemplated herein for federal income
tax purposes in accordance with such allocation. In furtherance of the
foregoing, the parties hereto agree to execute and deliver Internal Revenue
Service Form 8594 reflecting such allocation.
-4-
5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT COMPANY
For the purpose of inducing the Purchaser to purchase the Purchased
Assets and assume the Assumed Liabilities, Seller represents and warrants to
Purchaser as follows:
SECTION 3.1 ORGANIZATION AND QUALIFICATION. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all corporate power and authority to conduct the Business, and
to own, lease, or operate the Purchased Assets in the places where the Business
is conducted and the Purchased Assets are owned, leased, or operated. All of the
Purchased Assets are located at the address set forth on SECTION 3.1 of the
Disclosure Schedule.
SECTION 3.2 AUTHORITY. Each of Seller and Parent Company has full power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery, and performance of this Agreement
by each of Seller and Parent Company has been duly and validly authorized and
approved by all necessary action on the part of Seller and Parent Company.
Parent Company has taken all necessary corporate action authorizing Seller as a
wholly owned subsidiary of Parent Company, and further authorizing Parent
Company's its officers, agents, and representatives, to consummate the purchase,
sale, and delivery of the Business by Seller and all other transactions
contemplated by this Agreement. This Agreement is the legal, valid, and binding
obligation of each of Seller and Parent Company enforceable against Seller and
Parent Company in accordance with its terms, except as enforceability may be
limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally, and to the exercise of judicial discretion in accordance with general
equitable principles. Neither the execution and delivery of the Agreement by
Seller and Parent Company nor the consummation by Seller and Parent Company of
the transactions contemplated hereby will (i) violate either of Seller's and
Parent Company Certificate of Incorporation or Bylaws, both as currently in
effect, (ii) violate any provisions of law or any order of any court or any
governmental unit to which either of Seller or Parent Company is subject, or by
which any of the Purchased Assets are bound, or conflict with, result in a
breach of, or constitute a default under any indenture, mortgage, lease,
agreement, or other instrument to which Seller or Parent Company is a party or
by which it or any of the Purchased Assets are bound, including without
limitation that certain Letter of Intent dated July 15, 2001 between Pinnacle
Medsource, Inc. and Simra Enterprises, Inc., (iii) result in the creation of any
lien, charge, or encumbrance upon any of the Purchased Assets; or (iv) result in
the acceleration or increase in the amount of the Assumed Liabilities.
SECTION 3.3 PURCHASED ASSETS. Except as listed in SECTION 3.3 of the
Disclosure Schedule, Seller has good, merchantable title to the Purchased
Assets, free of any liens, claims, charges, security interests, and
encumbrances.
SECTION 3.4 DEPOSITORY ACCOUNTS. SECTION 3.4 of the Disclosure Schedule
contains a true, correct, and complete listing of each bank, savings and loan
association, brokerage house, or other financial institution with which Seller
has an account, line of credit, safe deposit box, or other relationship, the
account numbers thereof, and names of persons authorized to act in connection
therewith. Except as set forth in Section 3.4 of the Disclosure Schedule, Seller
has no bank account, brokerage account, line of credit, or safe deposit box.
Neither Seller nor Parent Company has taken or withdrawn or caused to be taken
or withdrawn from any depository account of Seller any amounts outside the
ordinary course of business consistent with past practice.
SECTION 3.5 ACCOUNTS RECEIVABLE. An aged listing of the Accounts
Receivable of Seller with respect to the Division is attached to SECTION 3.5 of
the Disclosure Schedule (the "ACCOUNTS RECEIVABLE"). All Accounts Receivable
represent sales actually made, or services actually performed, in
-5-
6
the ordinary course of business in bona fide transactions completed in
accordance with the terms and provisions contained in any documents or oral
agreements related thereto. The Accounts Receivable are collectible in full net
of any reserves accounted for on the Closing Balance Sheet. There are no
setoffs, counterclaims, and disputes asserted against, and no discounts or
allowances from, the Accounts Receivable except as set forth in the Closing
Balance Sheet.
SECTION 3.6 INVENTORY. Seller does not manufacture, sell, or lease any
goods, merchandise, or products which give rise to implied warranties or
products liability. All Inventory (i) is of a quantity and quality usable and
saleable in the regular and ordinary course of the Business, and is located on
the Leased Premises consistent with past practices, (ii) has been acquired by
Seller only in bona fide transactions entered into in the ordinary course of
business, (iii) is not valued in excess of the lower of cost (based on a
[First][Last]-In First-Out basis) or net realizable market value, (iv) as of the
Closing Date will be owned by Seller free and clear of any and all consignments,
liens, claims, charges, and encumbrances, and (v) is not obsolete, defective, or
damaged and is (or will be) merchantable and fit for its intended use. No
inventory in the hands of any reseller, distributor, or customer may be returned
for full or partial credit.
SECTION 3.7 MINIMUM NET WORKING CAPITAL. As of the Closing Date, the
value of existing Accounts Receivable PLUS existing Inventory MINUS current
trade payables as reflected on the Closing Balance Sheet is at least
$175,000.00.
SECTION 3.8 PERSONAL PROPERTY.
(a) Seller has good and marketable title to all of its
Furniture, Fixtures, and Equipment and other items of personal property
included among the Purchased Assets, free and clear of all liens,
claims, charges, security interests, and other encumbrances of any kind
or of any nature.
(b) SECTION 3.8 of the Disclosure Schedule contains a list of
all leases for Furniture, Fixtures, and Equipment, or other items of
personal property included among the Purchased Assets as of the Closing
Date. True and correct copies of each lease listed on Section 3.8 of the
Disclosure Schedule are attached thereto. Each of the Furniture,
Fixtures, and Equipment leases described on Section 1.3 of the
Disclosure Schedule is in full force and effect, there are no existing
defaults or events of default, real or claimed, or events which with
notice or lapse of time or both would constitute defaults with respect
to such leases. Except as shown on SECTION 3.14 of the Disclosure
Schedule, all such leases are fully assignable, however in some cases
consent, which shall not be unreasonably withheld, may be required.
(c) All Furniture, Fixtures, and Equipment, and other items of
personal property included among the Purchased Assets are in good
operating condition as of the Closing Date and none of the Purchased
Assets are in need of maintenance or repairs except for ordinary,
routine maintenance and repairs, the cost of which will not vary
materially from historic patterns. The Purchased Assets include all
rights, properties, interest in properties, and assets necessary to
permit Purchaser to carry on the Business as the same has heretofore
been conducted by Seller.
SECTION 3.9 LEASED PREMISES OF SELLER. SECTION 3.9 of the Disclosure
Schedule contains a description of the office and warehouse space leased by
Seller for the Division (the "LEASED PREMISES"). True and correct copies of the
current leases with respect to the Leased Premises are attached to Section 3.9
of the Disclosure Schedule. Each of the leases disclosed in Section 3.9 of the
Disclosure Schedule is in full force and effect and there are no defaults or
events of default, real or
-6-
7
claimed, or events which with notice or lapse of time or both would constitute
defaults thereunder. Seller's interest in each of such leases is free and clear
of any mortgages or liens, and is fully assignable without the consent of any
third party other than the lessor. The Leased Premises are occupied only by the
Division. Seller agrees to use its best efforts to (i) obtain the consent of the
lessor of the Leased Premises to the assignment of the lease to Seller but in
any event shall obtain such consent within ten (10) business days from the
Closing Date, and (ii) will deliver such consent to Purchaser once obtained.
SECTION 3.10 INTELLECTUAL PROPERTY. Seller owns, or is licensed or
otherwise has the full and exclusive right to use, all Intellectual Property,
including without limitation all patents, trademarks, trade names, copyrights,
technology, third-party licensed software, know-how and processes used in or
necessary for the conduct of the Business as heretofore conducted. SECTION 3.10
of the Disclosure Schedule contains an accurate and complete description of (a)
all patents, trademarks, trade names and copyrights used or proposed to be used
by Seller in conducting and operating the Business, all applications therefor,
and a summary of the terms of all licenses and other agreements relating thereto
and (b) a summary of the terms of all agreements relating to technology,
know-how or processes which the Seller is licensed or authorized to use by
others in relation to the Business. Except as set forth in Section 3.10 of the
Disclosure Schedule, Seller has the sole and exclusive right to use the patents,
trademarks, trade names, copyrights, technology, third-party licensed software,
know-how and processes referred to in Section 3.10 of the Disclosure Schedule,
and the consummation of the transactions contemplated hereby will not alter or
impair any such rights; no claims have been asserted by any person to the use of
any such patents, trademarks, trade names, copyrights, technology, third-party
licensed software, know-how or processes or challenging or questioning the
validity or effectiveness of any such license or agreement, and Seller does not
know of any valid basis for any such claim; and the use of such patents,
trademarks, trade names, copyrights, technology, third-party licensed software,
know-how or processes by Seller does not infringe on the rights of any person.
SECTION 3.11 COMPLIANCE WITH LAWS. Seller, to the best of its knowledge,
is not subject to any judgment, order, writ, injunction, or decree that
adversely affects, or might in the future reasonably be expected to adversely
affect any of the Purchased Assets or the Business. Seller is, to the best of
its knowledge, in substantial compliance with all laws applicable to the
Business and the Purchased Assets, including without limitation, all laws
related to zoning, occupational safety, labor, wages, working hours, working
conditions, environmental protection, and fair business practices. Seller, to
the best of its knowledge, has all permits, licenses, approvals, consents, and
authorizations which are required for the operation of Seller's business under
federal, state, or local laws, rules, and regulations.
SECTION 3.12 LITIGATION. Except as set forth in SECTION 3.12 of the
Disclosure Schedule, there are no formal or informal complaints, investigations,
claims, charges, arbitration, grievances, actions, suits, or proceedings
pending, or to the knowledge of Seller threatened against, or affecting the
Business, or any of the Purchased Assets at law or in equity or admiralty, or
before or by any federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign.
Seller is not subject to any order, writ, injunction, or decree of any federal,
state, municipal court, or other governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, affecting the Purchased
Assets or the Business.
SECTION 3.13 BROKERS AND FINDERS. Except for the broker/finder's fee set
forth in SECTION 3.13 of the Disclosure Schedule the payment for which Seller is
solely responsible, Seller has not incurred any obligation or liability to any
party for any brokerage fees, agent's commissions, or finder's fees in
connection with the transactions contemplated hereby.
-7-
8
SECTION 3.14 CONTRACTS. Each Contract pursuant to which Seller, with
respect to the Business, has any obligation which extends past the Closing Date,
the performance of which is to be assumed by Purchaser, is not terminable by
Seller without premium, penalty, or other obligation upon thirty (30) days
notice or less. Each of the Contracts is in full force and effect and there are
no existing defaults or events of default, real or claimed, or events which with
notice or lapse of time or both would constitute defaults, the consequences of
which, severally or in the aggregate, would have an adverse effect on the
Business or financial condition of Seller. Except as reflected in Section 3.14
of the Disclosure Schedule, each of the Contracts may be assigned to Purchaser
without the prior approval or consent of any other party, and any required
consents to assignment of the Contracts have been obtained. None of the
Contracts is for materials, supplies, equipment, or services in excess of the
normal requirements of the Business. Seller has not granted any power of
attorney with respect to the business, affairs, or assets of the Division that
remains outstanding, and Seller is not a guarantor, surety, co-signer, co-maker,
or indemnitor in respect of the obligation of any person, corporation,
partnership, joint venture, association, organization, or other entity as it
relates to the business of the Division. Seller has fulfilled all obligations
required pursuant to the Contracts to have been performed by Seller prior to the
date hereof;
SECTION 3.15 GOVERNMENTAL APPROVAL AND CONSENTS. Seller has obtained all
governmental approvals, authorizations, permits, and licenses required to permit
the operation of the Business as presently conducted. SECTION 3.15 of the
Disclosure Schedule contains a true and correct list of each such approval,
authorization, permit, and license. Except as indicated on Section 3.15 of the
Disclosure Schedule, no authorization, consent, approval, designation or
declaration by, or filing with, any public body, governmental authority, bureau,
or agency is necessary or required as a condition to the validity of this
Agreement and the consummation of the transactions contemplated hereby.
SECTION 3.16 ENVIRONMENTAL MATTERS. Seller, to the best of its knowledge
has been in substantial compliance with all laws, rules and regulations relating
to environmental protection, and Seller has not been notified or is otherwise
aware that it is potentially liable, or is considered potentially liable, under
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended, or any similar state law. To the knowledge of Seller, there are no
actions, suits, regulatory investigations, or other proceedings pending or
threatened against Seller relating to environmental protection nor does Seller
have any reason to believe any such proceedings may be brought against it. To
the best of Seller's knowledge, there have been no disposal, release or
discharge of hazardous or toxic substances, pollutants or contaminants, as any
of such terms may be defined under federal, state or local law, on, in, at or
about any of the facilities or properties of Seller.
SECTION 3.17 REVENUE AND EXPENSES OF THE DIVISION. True and correct
copies of the Statement of Income and Expenses and Balance Sheet of the Division
for the twelve months then ended June 30, 2001 and for the thirty day period
ended July 31, 2001 is attached as SECTION 3.17 to the Disclosure Schedule, and
were prepared from the books and records of Seller in accordance with generally
accepted accounting principles (except for the omission of footnotes) and
present fairly the financial condition of the Division and the results of
operations of the Division for the twelve months ended June 30, 2001 and the
thirty day period ended July 31, 2001.
SECTION 3.18 CORRECTNESS OF REPRESENTATIONS. To the best of its
knowledge, no representation or warranty of Seller in this Agreement or in any
Exhibit, certificate, or Schedule attached hereto or furnished to Purchaser
hereunder contains any untrue statement of fact, or omits to state any fact
necessary in order to make the statements contained therein not misleading. True
copies of all mortgages, indentures, notes, leases, agreements, plans,
contracts, and other instruments listed on or
-8-
9
referred to in the Schedules delivered or furnished to Purchaser pursuant to
this Agreement have been delivered to Purchaser.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Georgia and has all necessary power and authority to conduct its
business, to own, lease, or operate its properties in the places where such
business is conducted and such properties are owned, leased, or operated.
SECTION 4.2 AUTHORITY. Purchaser has full power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement by Purchaser has been
duly and validly authorized and approved by all necessary action on the part of
Purchaser, and this Agreement is the legal, valid, and binding obligation of
Purchaser enforceable against Purchaser in accordance with its terms, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
creditors' rights generally, and by the exercise of judicial discretion in
accordance with equitable principles. Neither the execution and delivery of this
Agreement by Purchaser nor the consummation by Purchaser of the transactions
contemplated hereby will (i) violate Purchaser's articles of incorporation or
bylaws, (ii) violate any provisions of law or any order of any court or any
governmental unit to which Purchaser is subject, or by which its assets may be
bound, or (iii) conflict with, result in a breach of, or constitute a default
under any indenture, mortgage, lease, agreement, or other instrument to which
Purchaser is a party or by which its assets or properties may be bound.
SECTION 4.3. LITIGATION. There is no suit, action, proceeding, claim or
investigation pending, or, to Purchaser's knowledge, threatened, against
Purchaser which would prevent Purchaser from consummating the transactions
contemplated by this Agreement.
SECTION 4.4. BROKERS AND FINDERS. Purchaser has not incurred any
obligation or liability to any party for brokerage fees, agent's commissions, or
finder's fees in connection with the transactions contemplated hereby.
SECTION 4.5. CORRECTNESS OF REPRESENTATIONS. No representation or
warranty by Purchaser contained in or made in connection with this Agreement or
the transactions herein contemplated contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein not misleading.
SECTION 5. INDEMNIFICATION
For the purposes of this Section 5, the terms "LOSS" and "LOSSES" shall
mean any and all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs, and expenses, including without limitation,
interest, penalties, and reasonable attorneys' and other professional fees and
expenses. All statements contained in any certificate, Exhibit or Schedule
delivered by or on behalf of Purchaser or Seller pursuant to this Agreement
shall be deemed representations and warranties hereunder by Purchaser or Seller
and Parent Company, as the case may be. Any inspection, preparation, or
compilation of information or Schedules, or audit of the inventories,
properties, financial condition, or other matters relating to Seller conducted
by or on behalf of Purchaser
-9-
10
pursuant to this Agreement shall in no way limit, affect, or impair the ability
of Purchaser to rely upon the representations, warranties, covenants, and
agreements of Seller set forth herein.
SECTION 5.1 AGREEMENT OF SELLER AND PARENT COMPANY TO INDEMNIFY
PURCHASER.
(a) Subject to the terms and conditions of this Section 5, each
of Seller and Parent Company hereby agrees to jointly and severally
indemnify, defend, and hold harmless Purchaser from, against, and in
respect of any and all Losses asserted against, relating to, imposed
upon, or incurred by Purchaser by reason of, resulting from, or based
upon: (i) the inaccuracy or untruth of any representation or warranty of
Seller or Parent Company contained in or made pursuant to this Agreement
or in any certificate, Schedule, or Exhibit furnished by Seller or
Parent Company, in connection with the execution and delivery of this
Agreement and the closing of the transactions contemplated hereby, (ii)
the breach by Seller or Parent Company of any covenant or agreement made
in or pursuant to this Agreement or any agreement executed by Seller or
Parent Company, and delivered to Purchaser in connection with the
Closing of the transactions contemplated hereby; and (iii) any Excluded
Liability including the failure to comply with the bulk sales law.
(b) Seller's obligation to indemnify Purchaser for Losses of the
type described in subsection (i) of Section 5.1(a) hereof is subject to
the condition that Seller shall have received notice of the Losses for
which indemnity is sought on or before August 30, 2002. Seller's
obligation to indemnify Purchaser for Losses of the type described in
subsection (ii) of Section 5.1(a) hereof is subject to the condition
that Seller shall have received notice of the Losses for which indemnity
is sought on or before the expiration date of the restrictive covenant
for which a Loss is claimed. Seller's obligation to indemnify Purchaser
for Losses of the type described in subsection (iii) of Section 5.1(a)
hereof is subject to the condition that Seller shall have received
notice of the Losses for which indemnity is sought on or before on or
before the third (3rd) anniversary of the Closing Date.
(c) Purchaser's remedies against Seller for any Losses hereunder
shall be cumulative, and the exercise by Purchaser of its right to
indemnification hereunder shall not affect the right of Purchaser to
exercise any other remedy at law or in equity, to recover damages, or to
obtain equitable or other relief, PROVIDED, that Seller shall not be
liable for damages in excess of the actual damages suffered by Purchaser
as a result of the act, circumstance, or condition for which
indemnification is sought AND Seller's maximum liability under this
Section 5 shall not exceed the Purchase Price.
SECTION 5.2 AGREEMENT OF PURCHASER TO INDEMNIFY SELLER.
(a) Subject to the terms and conditions of this Section 5,
Purchaser hereby agrees to indemnify, defend, and hold harmless Seller
from, against, for, and in respect of any and all Losses asserted
against, relating to, imposed upon, or incurred by Seller by reason of,
resulting from or based upon: (i) the inaccuracy or untruth of any
representation or warranty of Purchaser, contained in or made pursuant
to this Agreement or in any certificate, Schedule, or Exhibit furnished
by Purchaser, in connection with the execution and delivery of this
Agreement or the closing of the transactions contemplated hereby, (ii)
the breach by Purchaser of any covenant or agreement made in or pursuant
to this Agreement or any agreement executed by Purchaser, and delivered
to Seller in connection with the Closing of the transactions
contemplated hereby; and (iii) any Assumed Liability.
-10-
11
(b) Purchaser's obligation to indemnify Seller for Losses of the
type described in subsection (i) of Section 5.2(a) hereof is subject to
the condition that Purchaser shall have received notice of the Losses
for which indemnity is sought on or before August 30, 2002. Purchaser's
obligation to indemnify Seller for Losses of the type described in
subsection (ii) of Section 5.2(a) hereof is subject to the condition
that Purchaser shall have received notice of the Losses for which
indemnity is sought on or before the expiration date of the restrictive
covenant for which a Loss is claimed. Purchaser's obligation to
indemnify Seller for any Loss of the type described in subsection (iii)
of Section 5.2(a) is subject to the condition that Purchaser shall have
received notice of the Losses for which indemnity is sought on or before
the third (3rd) anniversary of the Closing Date.
(c) Seller's remedies against Purchaser for any Losses hereunder
shall be cumulative, and the exercise by Seller of its right to
indemnification hereunder shall not affect the right of Seller to
exercise any other remedy at law or in equity, to recover damages, or to
obtain equitable or other relief, PROVIDED, that Purchaser shall not be
liable for damages in excess of the actual damages suffered by Seller as
a result of the act, circumstance, or condition for which
indemnification is sought and Purchaser's maximum liability under this
Section 5 shall not exceed the Purchase Price.
SECTION 5.3 PROCEDURES FOR INDEMNIFICATION. As used herein, the term
"INDEMNITOR" means the party against whom indemnity hereunder is sought, and the
term "INDEMNITEE" means the party seeking indemnification hereunder. A claim for
indemnification hereunder ("INDEMNIFICATION CLAIM") shall be made by Indemnitee
by delivery of a written declaration to Indemnitor requesting indemnification
and specifying the basis on which indemnification is sought and the amount of
asserted Losses.
SECTION 6. POST CLOSING MATTERS
SECTION 6.1 FINANCING CONTINGENCY. In the event that Purchaser has not
consummated its financing with First Colony Bank or other lender on terms
satisfactory to Purchaser in its discretion, sufficient to pay the Final Cash
Payment required in Section 2.2 hereof, upon Seller's receipt of written notice
of such failure and request to rescind (the "RESCISSION NOTICE") the purchase
and sale of the Business and the other transactions contemplated by this
Agreement shall be rescinded in full. On or before thirty (30) days after
Seller's receipt of the Rescission Notice, Seller shall return to Purchaser the
Initial Purchase Payment MINUS any diminution in working capital as reflected on
the then current financial statements of the Division, and Purchaser immediately
upon receipt of such funds shall certify in writing that all steps necessary to
deliver the Business and all the Purchased Assets to Seller have been taken by
Purchaser. Purchase and Seller agree that in the event that Purchaser shall
rescind the purchase and sale of the Business under this Section 6.1, Purchaser
agrees that it shall cause the employment agreement of Xxxx Xxxxxxxx to be
assigned to any subsequent purchaser of the Division with the written consent of
Xxxx Xxxxxxxx, which consent shall not be unreasonably withheld.
SECTION 6.2 FURTHER ASSURANCES. From and after the date hereof, Seller
agrees, without further consideration, to execute and deliver promptly to
Purchaser, such further consents, waivers, assignments, endorsements, and other
documents and instruments, and to take all such further actions, as Purchaser
may from time to time reasonably request, with respect to the assignment,
transfer, and delivery to Purchaser of the Purchased Assets, and the fulfillment
of any condition precedent to the obligations of Purchaser that was waived by
Purchaser in order to close the transactions contemplated herein, and the
consummation in full of the transactions provided for herein.
-11-
12
SECTION 6.3 ASSIGNMENT OF PERMITS. Seller will use its best efforts to
assign and transfer the Permits associated with the operation of the Division to
Purchaser.
SECTION 6.4 EMPLOYMENT OF EMPLOYEES. On the Closing Date, Purchaser
shall offer employment to the seven (7) employees of Seller assigned to the
Division and listed on SECTION 6.4 of the Disclosure Schedule, at their current
rates of pay as set forth on Section 6.4 of the Disclosure Schedule, current
vacation accrued at the Closing Date on Section 6.4 of the Disclosure Schedule,
and Purchaser's standard benefits package, and from and after the date that
Purchaser's right of rescission has expired as provided for in Section 6.1
above, further specifically agrees to assume all the obligations under the
employment agreements for Xxxx Xxxxxxxx and Xxxxxx Xxxx III. Seller will use
best efforts to encourage such employees to accept employment with Purchaser and
will not attempt to retain or actually retain any employees assigned to the
Division, without the prior written consent of Purchaser. All employees
accepting Purchaser's offer of employment are referred to as the "Hired
Employees." Seller shall be responsible for the payment of wages and benefits to
Hired Employees, up to and including the Closing Date, PROVIDED that, Purchaser
shall be responsible for the August 31, 2001 payroll. Purchaser shall be
responsible for all costs and liabilities attributable to Hired Employees
accruing on and after the Closing Date and for accrued personal time through and
after the Closing Date. Purchaser agrees that none of the Hired Employees will
be terminated during the first six months after the Closing Date (except for
cause).
SECTION 6.5 DISCHARGE OF BUSINESS OBLIGATIONS. From and after the
Closing Date, Seller shall pay and discharge, in accordance with past practice
but not less than on a timely basis, all obligations and liabilities incurred
prior to the Closing Date in respect of the Business, its operations or the
assets and properties used therein (except for those expressly assumed by
Purchaser hereunder), including without limitation any liabilities or
obligations to employees (including any past-due payroll, payroll tax, and
related obligations but not including accrued employee sick and vacation time).
SECTION 7. RESTRICTIVE COVENANTS
SECTION 7.1 DEFINITIONS. As used herein, the following capitalized terms
are used with the meanings thereafter ascribed:
"AFFILIATE" means any person or entity directly or indirectly
Controlling, Controlled by, or under common Control with Seller.
"AREA" means the United States and Canada.
"COMPETING ENTERPRISE" means any person or entity that is substantially
engaged in the Business, except that any business related to any Excluded Assets
shall not be deemed a "Competitive Enterprise".
"CONTROL" means the power to direct the management and affairs of a
person.
"TRADE SECRETS" means information of the Division which derives economic
value, actual or potential, from not being generally known and not being readily
ascertainable by proper means to other persons who can obtain economic value
from its disclosure or use and which is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy or confidentiality,
but shall not include Excluded Information. Trade Secrets may include both
technical or non-technical data, including without limitation, (a) any process,
machine, pattern, compilation, program, method, technique, formula, chemical
formula, composition of matter, or device which (1) is not generally known or
which the Seller, with respect to the Division has a reasonable basis to believe
may not be generally known, (2) is being
-12-
13
used or studied by the Division and is not described in a printed patent or in
any literature already published and distributed externally by Seller with
respect to the Division, and (3) is not readily ascertainable from inspection of
a product of the Division; (b) any engineering, technical, or product
specifications including those of features used in any current product of the
Division or which may be so used, or the use of which is contemplated in a
future product of the Division; (c) any application, operating system,
communication system, or other computer software (whether in source or object
code) and all flow charts, algorithms, coding sheets, routines, subroutines,
compilers, assemblers, design concepts, test data, documentation, or manuals
related thereto, whether or not copyrighted, patented, or patentable, related to
or used in the Division; or (d) information concerning the customers, suppliers,
products, pricing strategies of the Division, personnel assignments and policies
of the Division, or matters concerning the financial affairs and management of
the Division; provided however, that Trade Secrets shall not include any
Excluded Information. As used herein, "Excluded Information" means Proprietary
Information (i) which has been voluntarily disclosed to the public by the
Division, (ii) independently developed and disclosed by parties other than the
Division, or (iii) that otherwise enters the public domain through lawful means
or without misappropriation by Seller.
SECTION 7.2 MUTUAL NON-SOLICITATION OF EMPLOYEES. Until the third (3rd)
anniversary of the Closing Date:
(a) Seller shall not directly or indirectly solicit, offer
employment to, or hire any employee of Purchaser or any of its
subsidiaries (including any Hired Employee) if (i) such employee is then
an employee of Purchaser or any of Purchaser's subsidiaries, or (ii)
such employee has terminated such employment within 180 days of such
solicitation or offer; and
(b) Purchaser shall not directly or indirectly solicit, offer
employment to, or hire any employee of Seller or any of its subsidiaries
if (i) such employee is then an employee of Seller or any of Seller's
subsidiaries, or (ii) such employee has terminated such employment
within 180 days of such solicitation or offer.
SECTION 7.3 NON-SOLICITATION OF CUSTOMERS BY SELLER. Until the third
(3rd) anniversary of the Closing Date, neither Seller nor any Affiliate shall,
within the Area, on such Seller's own behalf, on behalf of any Affiliate, or on
behalf of any Competing Enterprise, solicit, contact, call upon, communicate
with, or attempt to communicate with, any customer or prospect of the Division
or any representative of any such customer or prospect of the Division, with a
view to the sale or provision of any product, deliverable, or service
competitive with any product, deliverable, or service sold, provided, or under
development by the Division on the Closing Date, PROVIDED HOWEVER, this Section
7.3 shall not prohibit Seller from making solicitations in respect of Excluded
Assets.
SECTION 7.4 COVENANT NOT TO COMPETE BY SELLER. Until the third (3rd)
anniversary of the Closing Date, each of Seller and Parent Company agrees that
Seller, Parent Company, and/or any Affiliate of Seller or Parent Company shall
not directly or indirectly, own, manage, operate, join, control, or be employed
or engaged by, nor participate in the ownership, management, operation, or
control of, any Competing Enterprise.
SECTION 7.5 TRADE SECRETS. Seller for itself and each Affiliate
acknowledges and agrees that all Trade Secrets, and all physical embodiments
thereof, are a part of the Purchased Assets are confidential to and shall be and
remain the sole and exclusive property of Purchaser. Seller for itself and each
Affiliate agrees that all Trade Secrets will be held in trust and strictest
confidence, that each Affiliate shall protect such Trade Secrets from
disclosure, and that each Affiliate will make no use of such Trade Secrets
without prior written consent of Purchaser. The obligations of confidentiality
-13-
14
contained in this Section shall apply from the date of this Agreement and with
respect to all Trade Secrets at all times thereafter, until such Trade Secret is
not longer a trade secret under applicable law.
SECTION 7.6 REMEDIES. Seller for itself and any Affiliate covenants and
agrees that Purchaser by virtue of the consummation of the transactions
contemplated by this Agreement is engaged in the Business in and throughout the
Area, and that great loss and irreparable damage would be suffered by Purchaser
if Seller should breach or violate any of the terms or provisions of the
covenants and agreements set forth in this Section. Seller for itself and any
Affiliate, further acknowledges and agrees that each such covenant and agreement
is reasonably necessary to protect and preserve unto Purchaser the benefit of
its bargain in the acquisition of the Business, including, without limitation,
the good will thereof. Therefore, in addition to all the remedies provided in
this Agreement, or available at law or in equity, Seller for itself and any
Affiliate jointly and severally agrees Purchaser shall be entitled to a
temporary restraining order and a permanent injunction to prevent a breach or
contemplated breach of any of the covenants or agreements of Seller contained in
this Section 7. The existence of any claim, demand, action, or cause of action
of Seller against Purchaser shall not constitute a defense to the enforcement by
Purchaser of any of the covenants or agreements herein whether predicated upon
this Agreement or otherwise, and shall not constitute a defense to the
enforcement by Purchaser of any of its rights hereunder.
SECTION 7.7 BLUE PENCILING. In the event that any one or more of the
provisions, or parts of any provisions, contained in this Agreement shall for
any reason be held to be invalid, illegal, or unenforceable in any respect by a
court of competent jurisdiction, the same shall not invalidate or otherwise
affect any other provision hereof, and the parties hereto agree that such
provisions shall be reformed to set forth the maximum limitations permitted
under applicable law. Specifically, but without limiting the foregoing in any
way, each of the covenants of the parties to this Agreement contained herein
shall be deemed and shall be construed as a separate and independent covenant
and should any part or provision of any of such covenants be held or declared
invalid by any court of competent jurisdiction, such invalidity shall in no way
render invalid or unenforceable any other part or provision thereof or any other
covenant of the parties not held or declared invalid.
SECTION 8. GENERAL PROVISIONS
SECTION 8.1 BULK SALES LAW WAIVER. Purchaser and Seller each agree to
waive compliance by the other with the provisions of the bulk sales law or
comparable law of any jurisdiction to extent that the same may be applicable to
the transactions contemplated by this Agreement. Seller agrees to indemnify and
hold Purchaser harmless from and against any loss, damage, liability, cost,
expense or claim arising out of any failure to take any required actions under
the bulk sales or comparable law of any state.
SECTION 8.2 EXPENSES. Except as set forth in Section 2. hereof, all
expenses incurred by the parties hereto in connection with or related to the
authorization, preparation, and execution of this Agreement and the Closing of
the transaction contemplated hereby, including without limiting the generality
of the foregoing, all fees and expenses of agents, representatives, counsel, and
accountants employed by any such party, shall be borne solely and entirely by
the party which has incurred the same.
SECTION 8.3 NOTICE. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be delivered by hand or
mailed by first class registered or certified mail, return receipt requested,
first class postage prepaid, or by simultaneous telefax, as follows:
(a) If to Seller: Medinex Systems, Inc.
-14-
15
000 Xxxx Xxxxxxxxxx Xxxx
Xxxxx X
Xxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxx, President & CEO
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxx X. Xxxxxxxx, PA
0000 Xxxxxxxxx Xxxx.
Xxxxxxxx X, Xxxxx 000
C'xxxx d'Alene, ID
Attention:
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to Purchaser: Xxxx Xxxxxxxx & Associates, Inc.
000 Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Baker, Donelson, Bearman & Xxxxxxxx, PC
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx XX
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change the address to which notices are to be sent to it by giving
written notice of such change of address to the other parties in the manner
above provided for giving notice. If delivered personally, the date on which a
notice, request, instruction or document is delivered shall be the date on which
such delivery is made, and if delivered by mail, the date on which such notice,
request, instruction, or document is received shall be the date of delivery.
SECTION 8.4 ASSIGNMENT. Except as provided in this Section 8.4, this
Agreement shall not be assignable by any of the parties hereto without the
written consent of the other, except, Purchaser may, without prior consent of
Seller, (i) prior to Closing, assign all or part of Purchaser's rights and
obligations under this Agreement to any (A) subsidiary of Purchaser PROVIDED
that Purchaser guarantees the performance of all obligations due to Seller
hereunder, and (B) persons providing financing to Purchaser, and (ii) after the
Closing, assign its interest in this Agreement to any person or entity, without
the consent of Seller. From and after any such assignment, the word "PURCHASER"
shall mean such assignee.
SECTION 8.5 HEADINGS. The Section, subsection, and other headings in
this Agreement are inserted solely as a matter of convenience and for reference,
and are not a part of this Agreement.
-15-
16
SECTION 8.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one counterpart has been signed by each party and
delivered to the other party hereto.
SECTION 8.7 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Georgia without giving effect to its
conflicts of law principles. The parties agree that any appropriate state court
located in Xxxxxx County, Georgia or the Federal Court located in the Northern
District of Georgia, Atlanta Division shall have jurisdiction of any case or
controversy arising under or in connection with this Agreement and shall be a
proper forum in which to adjudicate such case or controversy. The parties
consent to the jurisdiction of such courts and agree not to object to forum or
venue.
SECTION 8.8 PARTIAL INVALIDITY. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal, or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
SECTION 8.9 SURVIVAL. The covenants, representations, warranties, and
agreements contained herein shall survive the Closing of the transactions
contemplated herein, for the length of time that Purchaser or Seller, as the
case may be, may assert an indemnification for a breach or violation of such
covenant, representation, warranty, or agreement pursuant to Section hereof.
SECTION 8.10 ARBITRATION. Any controversy, dispute, or claim arising out
of or relating to this Agreement or a claimed default hereunder, other than
requests for injunctive relief or damages for a breach of a Restrictive Covenant
including without limitation Sections 7.2, 7.3, 7.4, and 7.5 hereof, shall be
resolved by arbitration in accordance with the rules of the American Arbitration
Association (the "AAA"), by which each party will be bound.
SECTION 8.11 REPRESENTATION BY COUNSEL. Seller on one hand and Purchaser
on the other had the opportunity to be represented by counsel in the negotiation
and execution of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK, SIGNATURES ON NEXT PAGE]
-16-
17
SIGNATURE PAGE
TO
ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, each party hereto has executed this Agreement, or
caused this Agreement to be executed on its behalf by its duly authorized
officers, all as of the Closing Date.
SELLER:
PINNACLE MEDSOURCE, INC.
By:
---------------------------------
Xxxxxxx Xxxxxx, President
Attest:
----------------------------------
Xxxx Xxxxxx, Secretary
PURCHASER:
XXXX XXXXXXXX & ASSOCIATES, INC.
By:
---------------------------------
Xxxx X. Xxxxxxxx, President
Attest:
----------------------------------
Xxxxxxx X. Xxxxxxxx, Secretary
Parent Company joins in the making and execution of this Agreement for
the purpose of acknowledging and agreeing to the representations and warranties
made by it in Section 3 and its obligations under Section 5 and Section 7 of
this Agreement.
PARENT COMPANY:
MEDINEX SYSTEMS, INC.
By:
---------------------------------
Xxxxxxx Xxxxxx, President & CEO
Attest:
----------------------------------
Xxxx Xxxxxx, Secretary
-17-
18
SCHEDULE 1
TO
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.1 LOCATION OF PURCHASED ASSETS
000 Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx
SECTION 3.3 LIENS & ENCUMBRANCES ON PURCHASED ASSETS
UCC financing statements showing current liens are attached
SECTION 3.4 LIST OF BANK ACCOUNTS
1. First Colony Bank checking account no. 0000000
2. First Colony Bank savings account no. 0000000
SECTION 3.5 AGED ACCOUNTS RECEIVABLE AT CLOSING
[Attached aged listing of Accounts Receivable]
SECTION 3.8 PERSONAL PROPERTY LEASES
1. Lease with Pitney Xxxxx Credit Corporation dated August 4, 1999 for
Pitney Xxxxx photocopier, maintenance, and supplies.
SECTION 3.9 LEASED PREMISES
000 Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx; copy of current lease
dated March 16, 1998, Amendment #1 dated February 7, 2000, and Amendment #2
dated February 28, 2001.
SECTION 3.10 INTELLECTUAL PROPERTY
1. the trade name "Pinnacle Medsource"
2. "xxxxxxxxxxxxxxxxx.xxx"
3. customer catalog and design
4. Pinnacle Medsource logo
SECTION 3.12 LITIGATION
Employment related litigation between Seller and Xxxxx Xxxxxx, Case No.
00VS006191-E, Xxxxxxx Xxxxxx v. Pinnacle Medsource, Inc. and Medinex Systems,
Inc., filed in the Clerk of Court's office for the State Court of Xxxxxx County,
Georgia on [July 6, 2001]
-18-
19
SECTION 3.13 BROKERS AND FINDERS OF SELLER
$25,000 broker/finder fee due to The Business House
SECTION 3.14 CONTRACT CONSENTS TO ASSIGNMENT
1. The Offices Premises lease
SECTION 3.15 GOVERNMENTAL APPROVALS AND CONSENTS
None
SECTION 3.17 FINANCIAL STATEMENTS
[Attached hereto]
SECTION 6.4 EMPLOYEES ASSIGNED TO DIVISION
Xxxxxx Xxxx III
Xxxx Xxxxxxxx
XxXxx Xxxxxxxx
Xxx Xxxxxx
Xxxxx Xxxxxxxxx
Xxxxx XxXxxxx
Xxxxxx Xxxxxx
-19-
