ASSET PURCHASE AGREEMENT
DATED
SEPTEMBER 29, 2004
BETWEEN
RAMP CORPORATION
AND
THE XXXXXX GROUP, INC.
EXHIBITS AND SCHEDULES
EXHIBIT A-1 - Xxxx of Sale
EXHIBIT A-2 Xxxx of Sale
EXHIBIT B - Assignment and Assumption Agreement
EXHIBIT C-1 - Opinion of Counsel for Seller
EXHIBIT C-2 - Opinion of Counsel for Buyer
EXHIBIT D - Assignment and Assumption of Lease Agreement
EXHIBIT E - Domain Name Assignment Agreement
EXHIBIT F - Employee Release
SCHEDULE 2.1.1 - Permitted Encumbrances
SCHEDULE 2.1.1(d) - Financial Accounts
SCHEDULE 2.1.1(f) - Customer Deposits
SCHEDULE 2.1.1(g) - Prepaid Expenses
SCHEDULE 2.1.1(p) - Vehicle
SCHEDULE 2.2 Assumed Liabilities
SCHEDULE 4.1 Qualifications
SCHEDULE 4.2 - Permits; Approvals
SCHEDULE 4.3.1 - Material Adverse Changes
SCHEDULE 4.3.3 - Other Liabilities and Contingencies
SCHEDULE 4.5 - Assumed Contracts and Assumed Leases
SCHEDULE 4.6 - Title to and Condition of Purchased Assets
SCHEDULE 4.7 - Legal Proceedings
SCHEDULE 4.9 - Insurance
SCHEDULE 4.14 - Employment Contracts
SCHEDULE 4.17 - Customers and Suppliers
SCHEDULE 4.19 - Intellectual Property
SCHEDULE 4.20 - Dividends and Other Distributions
SCHEDULE 4.21 - Certain Interests
SCHEDULE 4.24 - Assumed Real Estate Lease
SCHEDULE 4.25 - Assumed Loans
SCHEDULE 6.7 - Allocation of Purchase Price
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS............................................................................................1
1.1 Definitions....................................................................................1
ARTICLE 2 SALE OF ASSETS; ASSUMPTION OF LIABILITIES AND RELATED TRANSACTIONS.....................................6
2.1 Purchase and Sale of Assets....................................................................6
2.2 Assumed Liabilities............................................................................7
2.3 Purchase Price.................................................................................8
2.4 Reimbursement..................................................................................8
ARTICLE 3 CLOSING ...............................................................................................8
3.1 Closing Date...................................................................................8
3.2 Seller's Closing Deliveries....................................................................8
3.3 Buyer's Closing Deliveries....................................................................10
3.4 Consents to Assignment of Third Party Contracts...............................................10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER..............................................................11
4.1 Organization..................................................................................11
4.2 Authorization; No Conflicts...................................................................11
4.3 Financial Statements; Changes; Contingencies..................................................11
4.4 Tax and Other Returns and Reports.............................................................12
4.5 Assumed Contracts and Assumed Leases..........................................................12
4.6 Title to and Condition of Purchased Assets....................................................12
4.7 Legal Proceedings.............................................................................13
4.8 Accounting Records; Internal Controls.........................................................13
4.9 Insurance.....................................................................................13
4.10 Intentionally Omitted.........................................................................13
4.11 Compliance; Business Practices; Permits.......................................................13
4.12 No Brokers or Finders.........................................................................14
4.13 Inventory.....................................................................................14
4.14 Employees.....................................................................................14
4.15 Accounts Receivable...........................................................................14
4.16 Accuracy of Information.......................................................................14
4.17 Customers and Suppliers.......................................................................15
4.18 Powers of Attorney............................................................................15
4.19 Intellectual Property.........................................................................15
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TABLE OF CONTENTS
(continued)
4.20 Dividends and Other Distributions.............................................................15
4.21 Certain Interests.............................................................................16
4.22 Compensation to Employees.................................................................. ..16
4.23 Environmental.................................................................................16
4.24 Assumed Real Estate Lease.....................................................................16
4.25 Assumed Loans.................................................................................16
4.26 Investment Intent.............................................................................17
4.27 Books and Records.............................................................................17
4.28 Employee Benefits.............................................................................17
4.29 Knowledge Limitation..........................................................................17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................17
5.1 Organization..................................................................................18
5.2 Authorization.................................................................................18
5.3 No Conflicts..................................................................................18
5.4 No Brokers or Finders.........................................................................18
5.5 Accuracy of Information.......................................................................18
5.6 Compensation to Employees.....................................................................18
5.7 No Other Liabilities or Contingencies.........................................................19
5.8 Assumed Contracts and Assumed Leases..........................................................19
5.9 Title to and Condition of Purchased Assets....................................................19
5.10 Legal Proceedings.............................................................................19
5.11 Environmental.................................................................................19
5.12 Assumed Real Estate Lease.....................................................................20
5.13 Assumed Loans.................................................................................20
5.14 Knowledge Limitation..........................................................................20
ARTICLE 6 COVENANTS.............................................................................................20
6.1 Transition Insurance..........................................................................20
6.2 Employment Matters............................................................................21
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TABLE OF CONTENTS
(continued)
6.3 Further Assurances............................................................................21
6.4 Passage of Title and Risk of Loss.............................................................21
6.5 Expenses and Taxes............................................................................21
6.6 Litigation Arising from the Business..........................................................21
6.7 Allocation of Purchase Price..................................................................21
6.8 Tax Cooperation...............................................................................21
6.9 Access to Information and Cooperation.........................................................22
6.10 Telephone Numbers.............................................................................22
6.11 Non-Competition...............................................................................22
6.12 Employee Releases.............................................................................23
ARTICLE 7 SURVIVAL OF OBLIGATIONS; BUYER'S CONDITIONS TO CLOSING................................................23
7.1 Survival of Representations and Warranties....................................................23
7.2 Covenants. Seller.............................................................................23
ARTICLE 8 REGISTRATION OF SHARES................................................................................23
8.1 Forfeitable Shares............................................................................23
8.2 Incentive Shares..............................................................................24
ARTICLE 9 COMPLETION OF BUSINESS RELATIONSHIP..................................................................24
9.1 Termination of Relationship...................................................................24
ARTICLE 10 GENERAL..............................................................................................25
10.1 Amendments; Waivers...........................................................................25
10.2 Entire Agreement..............................................................................25
10.3 Governing Law.................................................................................25
10.4 Headings......................................................................................26
10.5 Counterparts..................................................................................26
10.6 Publicity.....................................................................................26
10.7 Parties in Interest...........................................................................26
10.8 Notices.......................................................................................26
10.9 Expenses......................................................................................27
10.10 Assignment....................................................................................28
10.11 Remedies; Waiver..............................................................................28
10.12 Best Efforts; Further Assurances..............................................................28
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TABLE OF CONTENTS
(continued)
10.13 Knowledge Convention..........................................................................28
10.14 Confidentiality...............................................................................28
10.15 Representation by Counsel; Interpretation.....................................................28
10.16 Specific Performance..........................................................................28
10.17 Severability..................................................................................28
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into this 29th day of September
2004, by and between Ramp Corporation, a Delaware corporation ("SELLER"), and
The Xxxxxx Group, Inc., an Indiana corporation ("BUYER"), M. Xxxxx Xxxxxx and
Xxxxx X. Xxxxxx.
R E C I T A L S
WHEREAS, Buyer formerly owned and operated a business providing 24-hour
telephone answering, messaging and virtual office services for physicians and
other medically-related businesses under the name "Frontline Physicians
Exchange" ("FPE"), and 24-hour telephone answering, messaging and virtual office
services for the non-medical business and professional community under the name
"Frontline Communications" ("FC"); and
WHEREAS, pursuant to the terms of a certain Asset Purchase Agreement dated
November 7, 2003, Buyer sold its FPE and FC businesses to Medix Resources, Inc.,
a Colorado corporation ("Medix");
WHEREAS, pursuant to Articles of Merger filed with the Colorado Secretary
of State on December 18, 2003, Medix merged with Seller, and Seller was the sole
surviving entity of that merger;
WHEREAS, prior to the purchase on November 7, 2003, Buyer operated the FPE
and FC businesses as owner and following the purchase on November 7, 2003, the
Duncans were employed by the Seller to continue to operate the FPE and FC
businesses on behalf of Seller, and currently operate those businesses as
Seller's employees for the benefit of Seller under the names "OnRamp Medical
Communications" and "OnRamp Communications Exchange" (hereinafter "OnRamp");
WHEREAS, Seller desires to sell, and Buyer desires to purchase,
substantially all of the business and related assets of Seller's OnRamp business
(formerly the FPE and FC businesses) on the terms and conditions set forth in
this Agreement (the "ACQUISITION"); and
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants contained herein and intending to be legally bound, the parties
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. For all purposes of this Agreement, except as otherwise
expressly provided:
(a) the terms defined in this Agreement include the plural as well as the
singular;
(b) all accounting terms not otherwise defined herein have the meanings
assigned under GAAP;
(c) all references in this Agreement to designated "Articles," "Sections,"
"Subsections" and other subdivisions are to the designated Articles, Sections,
Subsections and other subdivisions of the body of this Agreement, and all
references to "Exhibits" and "Schedules" are to the Exhibits and Schedules
attached to this Agreement;
(d) pronouns of either gender or neuter shall include, as appropriate, the
other pronoun forms; and
(e) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section, Subsection or other subdivision.
As used in this Agreement and the Exhibits and Schedules, the following
definitions shall apply:
"2003 PURCHASE AGREEMENT" means the certain Asset Purchase Agreement dated
November 7, 2003, by and between Buyer and Seller, as amended in June 2004, and
all related agreements.
"ACCOUNTS RECEIVABLE" means the amounts owing to Seller as of the Closing
for services or products provided by the Business prior to the Closing, whether
or not Seller has submitted an invoice for such services or products.
"ACQUISITION" has the meaning specified in the Recitals.
"ACT" means the Securities Act of 1933, as amended and any successor
statute thereto, and the related regulations and published interpretations.
"ACTION" means any action, complaint, petition, investigation, suit or
other proceeding, whether civil or criminal, in law or in equity, or before any
arbitrator or Governmental Entity.
"AFFILIATE" means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
a specified Person.
"AGREEMENT" means this Asset Purchase Agreement between Buyer and Seller
and shall include all Exhibits and Schedules hereto and any amendments hereof.
"APPROVAL" means any duly executed approval, authorization, assignment or
Consent, or any waiver of any of the foregoing, required to be obtained from, or
any notice, statement or other communication required to be filed with or
delivered to, any Person or entity, the receipt of which is necessary to the
continued operation of the Business as it has been operated prior to and at the
Closing Date.
"ASSOCIATE" of a Person means:
(A) a corporation or organization (other than the parties to this
Agreement) of which such Person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10% or more of any class of equity
securities;
(B) any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a similar
capacity; and
(C) any relative or spouse of such Person or any relative of such spouse
who has the same home as such Person or who is a director or officer of Seller
or any of its Affiliates.
"ASSUMED CONTRACT" means each contract specifically identified on Schedule
4.5 to which Seller is a party.
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"ASSUMED LEASE" means each lease specifically identified on Schedule 4.5,
together with all amendments, modifications, alterations and other changes
thereto, except for the Assumed Real Estate Lease.
"ASSUMED LIABILITIES" means those liabilities of Seller expressly assumed
by Buyer pursuant to Section 2.2.
"ASSUMED LOAN" means each loan specifically identified on Schedule 4.25 to
the 2003 Purchase Agreement.
"ASSUMED REAL ESTATE LEASE" means the lease specifically identified on
Schedule 4.24 covering a real property leasehold interest used by Seller in
connection with its operation of the Business, together with all amendments,
modifications, alterations and other changes thereto.
"BUSINESS" means Seller's business, currently operated under the names
"On-Ramp Medical Communications" and "OnRamp Communications Exchange," involving
the 24-hour telephone answering, messaging and virtual office services for
physicians and other medically-related businesses, and the 24-hour telephone
answering, messaging and virtual office services for the non-medical business
and professional community, and the incidents of such business, including
income, cash flow, operations, condition (financial or other), assets,
properties, goodwill, anticipated revenues and prospects.
"BUYER" has the meaning specified in the introductory paragraph of this
Agreement.
"CASH EQUIVALENT SHARES" has the meaning specified in Section 2.3.3 of the
2003 Purchase Agreement.
"CLOSING" means the closing of the Acquisition contemplated by this
Agreement.
"CONTRACTS WITH THIRD PARTIES" OR "THIRD PARTY CONTRACT" means all the
contracts, arrangements, obligations and liabilities of and rights benefits and
licenses enjoyed by the Seller and which have been entered into between the
Seller and third parties or assigned to the Seller and are wholly or partly
unperformed at the Closing Date including leases for real estate and non-real
estate property with third parties.
"CLOSING DATE" means the date on which the Closing takes place as specified
in Section 3.1.
"CODE" means the United States Internal Revenue Code of 1986, as amended,
and the related regulations and published interpretations.
"CONSENT" means any duly executed, Approval of the assignment to Buyer of
an Assumed Contract, Assumed Lease or an Assumed Real Estate Lease which, under
the terms of such Assumed Contract, Assumed Lease or Assumed Real Estate Lease,
is required to be obtained from a party or parties other than Buyer or Seller in
connection with such assignment.
"CONTRACT" means any contracts, agreements, understandings and
arrangements, whether oral or written.
"DUNCANS" means M. Xxxxx Xxxxxx and Xxxxx X. Xxxxxx.
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"ENCUMBRANCE" means any claim, charge, easement, encumbrance, lease,
covenant, security interest, lien, mortgage, option, pledge, right, restriction,
adverse claim or preferential arrangement (whether on sale, transfer,
disposition or otherwise), whether imposed by agreement, understanding, law,
equity or otherwise.
"FPE" has the meaning specified in the introductory paragraph of this
Agreement.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States.
"GOVERNMENTAL ENTITY" means any government body agency, authority, bureau,
board, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"GROSS REVENUES" for any period means the "revenues" line of the income
statement for the Business prepared in accordance with GAAP for such period,
excluding any items not in the Ordinary Course.
"GROSS REVENUES PAYMENT AMOUNT" has the meaning specified in Section 2.3.5
of the 2003 Purchase Agreement.
"HAZARDOUS SUBSTANCE" means (but shall not be limited to) substances that
are defined or listed in, or otherwise classified pursuant to, any applicable
Laws as "hazardous substances," "hazardous materials," "hazardous wastes" or
"toxic substances," or any other formulation by any Governmental Entity which is
intended to define, list or classify substances by reason of deleterious
properties such as ignitibility, corrosivity, reactivity, radioactivity,
carcinogenicity, reproductive toxicity or "EP toxicity."
"INCENTIVE SHARES" have the meaning specified in Section 2.3.6 of the 2003
Purchase Agreement.
"INTELLECTUAL PROPERTY" means the names "OnRamp," "OnRamp Medical
Communications," "OnRamp Communications Exchange," "Frontline Physicians
Exchange," "Frontline Communications" and all trademarks, trade names, service
marks, logos, copyrights and registrations and applications therefore, and Trade
Secrets and know-how and confidential business information, processes and
techniques, research and development information, customer and supplier lists
and data, plans, proposals, technical data, computer software, copyrightable
works, financial, marketing and business data, pricing and cost information, and
business and marketing plans relating to the Business owned by Seller and its
Affiliates or on which they have any rights or licenses.
"INVENTORY" means all of Seller's inventories of the Business existing on
the Closing Date, including but not limited to, disposables, spare parts,
materials, work-in-process, active shipments, ordered goods and supply items,
that are (i) held for sale or rent, (ii) used in connection with the sale or
rental of other Purchased Assets, (iii) parts used in the repair of Purchased
Assets, or (iv) held by a third party under a rental arrangement whether located
on the premises of Seller, in transit to or from such premises, in warehouses,
in premises of manufacturers or otherwise.
"LAW" means any statute, law, ordinance, rule, regulation, guideline or
interpretation of any Governmental Entity and any Order.
4
"LOSS" means any action, cost, damage, disbursement, claim, expense,
liability, loss, deficiency, diminution in value, obligation, penalty, fine,
award, judgment, sanction, charge, demand, payment, assessment or settlement of
any kind or nature, whether foreseeable or unforeseeable, including, but not
limited to, interest or other carrying costs, penalties, reasonable legal,
accounting and other professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims, actual or
threatened, inquiries, hearings or other legal or administrative proceedings,
and amounts paid in settlement of any claim, lawsuit or arbitration, that may be
imposed on or otherwise incurred or suffered by the specified Person; provided,
however, that "Loss" shall not include any amount that is received by such
specified Person under a valid and collectible insurance policy.
"ORDER" means any decree, injunction, judgment, order, ruling, assessment
or writ issued by a Governmental Entity.
"ORDINARY COURSE" means the ordinary and usual course of the conduct of the
Business consistent with past custom and practice.
"OTHER EMPLOYEES" means only Shamess Xxxxxx, Xxxxxxxx Xxxxx, and Xxxxx
Xxxxxx.
"PARTY" means either Buyer or Seller or collectively, Buyer and Seller.
"PERMIT" means any license, permit, agreement, franchise, certificate of
authority, authorization or order, or any waiver of the foregoing, required by
any Person in connection with, and necessary to the operation of, the Business.
"PERMITTED ENCUMBRANCES" means those Encumbrances listed on Schedule 2.1.1.
"PERSON" means any association, corporation, individual, partnership, firm,
limited liability company, trust or any other entity or organization, including
a Governmental Entity.
"PURCHASE PRICE" has the meaning specified in Section 2.3.
"PURCHASED ASSETS" has the meaning specified in Section 2.1.1.
"RECORDS" has the meaning specified in Section 2.1.1(n).
"REIMBURSEMENT AMOUNT" has the meaning specified in Section 2.4.
"RETAINED BUSINESS" means Seller's business which is not being sold to
Buyer hereunder and which is centered around its Carepoint and Caregiver suite
of application service providers which is engaged in the development and
marketing of healthcare connectivity software and which provides internet based
communications data integration and transaction processing technologies,
electronic prescribing of drugs, laboratory orders and results, connectivity of
medical related information between physicians or caretakers and specific
healthcare value chain intermediaries.
"SEC" means the Securities and Exchange Commission.
"SECURITY INTEREST HOLDERS" means Cottonwood Ltd., Willows Bend Management
Ltd. and Hilltop Services Ltd.
"SELLER" has the meaning specified in the introductory paragraph of this
Agreement.
"SHORTFALL" has the meaning specified in Section 9.1 of the 2003 Purchase
Agreement.
5
"TAX" means any foreign, federal, state, county or local income, sales,
use, excise, franchise, real property, personal property, transfer, gross
receipt, capital stock, production, business, occupation, disability,
employment, payroll, severance or withholding tax or charge imposed by any
Governmental Entity, any interest and penalties (civil or criminal) related
thereto or to the non-payment late payment or underpayment thereof, and any Loss
in connection with the determination, settlement or litigation of any Tax
liability.
"TAX RETURN" means a report, return or other information required to be
supplied to a Governmental Entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for any group of
entities that include Seller.
"TRADE SECRETS" means formulas, devices, software or compilations of
information which are used in connection with or relating to the Business and
which give an opportunity to obtain an advantage over competitors who do not
know or use it, including, but not limited to, any forms, plans, drawings,
specifications, customer and supplier lists, computer software, marketing and
competition analysis and project management, inventory and cost control systems
and techniques.
ARTICLE 2
SALE OF ASSETS; ASSUMPTION OF LIABILITIES AND RELATED TRANSACTIONS
2.1 Purchase and Sale of Assets.
2.1.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, on the Closing Date, Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase from Seller free and clear of all
Encumbrances, except permitted Encumbrances as set forth on Schedule 2.1.1, all
right, title and interest of the Seller in, to and under all of the assets,
properties, privileges, claims and rights and business of Seller of every type
and description, real, personal and mixed, tangible and intangible, absolute or
contingent, wherever located and whether or not reflected on the books and
records of Seller relating to or used in connection with the Business, except
the Excluded Assets (the "PURCHASED ASSETS"). The Purchased Assets include but
are not limited to the following items:
(a) All Intellectual Property and internet domain names and URLs of
the Business, as set forth on Schedule 4.19;
(b) All tangible personal property, including, but not limited to,
equipment, products, furniture, fixtures, machinery, apparatus, furnishings,
parts, supplies, office equipment, and other equipment of every type owned or
leased by Sellers and used in connection with the Business;
(c) The goodwill of the Business;
(d) All cash, cash equivalents and bank and other deposit accounts of
the Business held or owned by Seller or by Buyer on behalf of Seller in any bank
or securities account as set forth on Schedule 2.1.1(d):
(e) All Inventory of the Business;
(f) All customer deposits of the Business as set forth on Schedule
2.1.1(f)
(g) All prepaid expenses of the Business as set forth on Schedule
2.1.1(g);
6
(h) Information services systems and computer hardware and software
and computer and other equipment of the Business;
(i) Sales data, including all sales representative account books, logs
and other documents reflecting sales strategies and appointments and suppliers'
names of the Business and all sales and promotional materials used by Seller in
connection with the Business;
(j) All of Seller's telephone numbers used in connection with the
Business as set forth on Schedule 2.19;
(k) Original customer files, documentation, insurance verification,
records, mailing lists and related documentation used in connection with the
Business;
(l) All of Seller's rights and interests arising under or in
connection with the Assumed Contracts, Assumed Leases and Assumed Real Estate
Lease, subject to any Consent of applicable third parties which has not been
obtained prior to Closing; and
(m) All Accounts Receivable of the Business;
(n) All books of account, general, financial, tax and personnel
records, invoices, shipping records, sales invoices, warranties on all supplies,
equipment correspondence and other documents, records and files and all computer
software and programs and any rights thereto owned, associated with or employed
by Seller or used in, or relating to, the Business, (collectively, the
"RECORDS");
(o) All claims, causes of action, rights of recovery and rights of
set-off of any kind (including rights to insurance proceeds and rights under and
pursuant to all warranties, service contracts, representations and guaranties
made by suppliers of products, materials or equipment, or components thereof and
third-party service providers), pertaining to or arising out of, the Business
and inuring to the benefit of the Seller with respect to the Business;
(p) The vehicle used in the Business, including without limitation the
vehicle listed on Schedule 2.1.1 (p).
(q) All regulatory Permits, owned, held, used, or otherwise possessed
by Seller, to the extent transferable to Buyer under applicable Law.
(r) All other assets, properties, rights and business of every kind
and nature owned or held by Seller which are used in the Business, or in which
Seller has an interest, known or unknown, fixed or unfixed, xxxxxx or inchoate,
accrued, absolute, contingent or otherwise, whether or not specifically referred
to in this Agreement.
2.2 Assumed Liabilities. Buyer shall not assume, shall not take subject to
and shall not in any way be liable for, any liabilities or obligations of any
kind or nature, whether absolute, contingent, accrued, known or unknown, of
Seller or any Affiliate of Seller except for the following liabilities which
Buyer shall assume: (a) the trade and accounts payables of the Business incurred
in the Ordinary Course before the Closing Date but not paid by Seller or Buyer
and set forth on Schedule 2.2; (b) the contractual obligations of the Seller set
forth on Schedule 2.2 incurred before the Closing Date which relate to the
operation of the Business; (c) the Assumed Contracts, Assumed Leases, Assumed
Real Estate Lease and Assumed Loans, including severance payments, if any, to
the employees of the Business; and (d) all liabilities and obligations arising
on or after the Closing Date with respect to the
7
operation of the Business by Buyer. Buyer is fully and solely responsible to
repay all of the Assumed Loans, and Buyer hereby discharges and forever holds
Seller harmless from any obligation with respect to the Assumed Loans.
Notwithstanding anything in this Agreement to the Contrary, Buyer shall not be
responsible for any liability or claim under this Agreement for which Seller
purchased insurance and such insurance defense or coverage exists and is not
declined, Seller shall cooperate fully in notifying its insurance carrier of any
such liability or claim. In addition, Buyer shall not be responsible for the
payment of any federal, state, or local taxes, including withholding taxes, or
any interest or penalties associated therewith, that were originally due from
November 7, 2003 through the Closing Date, including all taxes, penalties, and
interest associated with the notice issued by the Indiana Department of Revenue
before the Closing Date.
2.3 Purchase Price. The total purchase price for the Purchased Assets to be
paid to Seller by Buyer (the "PURCHASE PRICE") shall be paid as follows:
2.3.1 ..$500,000 shall be paid at the Closing, contemporaneously with
Seller's conveyance of the Purchased Assets, in immediately available funds by
wire transfer to:
JPMorganChase
1211 Avenue of the Xxxxxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Swift Code XXXXXX00
ABA routing # 000000000
for credit to the account, Xxxxxx Xxxxxxx & Xxxxxxx LLP
held in trust for Ramp Corporation
Account # 001046217
Reference: Client ID#
2.4 Reimbursement. Buyer shall reimburse Seller for payments made by Seller
in connection with dental and health insurance coverage for the employees of the
Business in the amount of Ten Thousand Dollars ($10,000.00) (the "REIMBURSEMENT
AMOUNT"). Buyer shall pay the Reimbursement Amount to Seller within seven (7)
days of Seller providing actual notice and proof to Buyer that the underlying
health premiums have been paid in full and that the health insurance coverage
has continuously been and, remains, in existence and effect for all
participating employees of OnRamp all through and including September 30, 2004.
ARTICLE 3
CLOSING
3.1 Closing Date. The Closing shall take place on the date hereof at the
offices of Xxxxx Xxxxxxx & Xxxxxx, LLP.
3.2 Seller's Closing Deliveries. The obligations of Buyer to effect the
Closing shall be subject to Seller's delivery of the following items to Buyer at
the Closing:
(a) Bills of Sale in the form of Exhibit A-1 and Exhibit A-2;
(b) Assignment and Assumption Agreement in the form of Exhibit B;
(c) Opinion of counsel for Seller in the form of Exhibit C-1 and the
certificates, consents and other documents referred to herein as then
deliverable by Seller;
8
(d) Assignment and Assumption of Lease Agreement relating to the Assumed
Real Estate Lease in the form of Exhibit D;
(e) Instruments of transfer in the form customarily used in commercial
transactions in the area in which the personal property is located, sufficient
to transfer each personal property interest owned by Seller and not otherwise
transferred by the Xxxx of Sale referred to in clause (a) above;
(f) Such other instruments of assignment, transfer and conveyance as Buyer
shall reasonably request to transfer to and vest in Buyer all of Seller's right,
title and interest in, to and under the Purchased Assets;
(h) The keys to all vehicles and all locks located on or in the Purchased
Assets (and any and all cards, codes, devices or things necessary to access any
of the Purchased Assets) not already in the possession of Buyer which shall be
surrendered on request to Buyer's representatives at the facilities where such
assets are located;
(i) Subject to the provisions of Section 3.3 of this Agreement, evidence of
the receipt of any Consents, including evidence of the receipt of the consent to
the assignment of any Permit requiring consent by its terms;
(j) Subject to the provisions of Section 3.3 of this Agreement, evidence of
the receipt of all Approvals;
(k) Certificate of Incorporation and good standing certificate of Seller,
as of a recent date, from its state of incorporation;
(l) Copy of resolutions duly adopted by the Board of Directors of Seller
authorizing and approving the execution and delivery of this Agreement, and the
performance of the transactions contemplated hereby, certified by an officer of
Seller as true and in full force as of the Closing;
(m) Certificate of incumbency of Seller, dated as of the Closing, of (i)
the directors of Seller and (ii) the officers of Seller executing this Agreement
or any related agreements or instruments or making certifications for Closing;
(n) Uniform Commercial Code termination statements, lease termination
statements, releases and any other documents necessary to evidence that each of
the Purchased Assets is being sold, conveyed, transferred, assigned and
delivered to Buyer free and clear of any Encumbrances except Permitted
Encumbrances, provided that in connection with security interests on the
Purchased Assets in favor of Cottonwood Ltd, Willow Bend Management Ltd and
Hilltop Ltd., Seller's delivery at Closing of an undertaking acceptable to Buyer
by the above mentioned creditors to terminate the security interest and file a
Form UCC 3 will suffice as a closing delivery. Seller will file all Form UCC 3
statements within ten (10) days of Closing, if necessary.
(n) Domain Name Assignment Agreement in the form of Exhibit E necessary to
transfer and assign each of the domain names and URLs of the Business to Buyer;
(o) Consent to removal of names and signatories of Seller and it employees
or agents from the bank or other deposit accounts of the Business.
9
Simultaneously with the deliveries referred to in this Section 3.2, Seller
shall take or cause to be taken all such actions as may reasonably be required
to put Buyer in actual possession and operating control of the Purchased Assets.
3.3 Buyer's Closing Deliveries. The obligations of Seller to effect the
Closing shall be subject to Buyer's delivery of the following items to Seller at
the Closing:
(a) Payment specified in Section 2.3.1
(b) Assignment and Assumption Agreement in the form of Exhibit B;
(c) Assignment and Assumption of Lease Agreements in the form of Exhibit D;
and
(d) Opinion of counsel for Buyer in the form of Exhibit C-2 and the
certificates, consents and other documents referred to herein as then
deliverable by Seller.
3.4 Consents to Assignment of Third Party Contracts. Buyer acknowledges and
agrees that the responsibility and costs involved in obtaining consents to Third
Party Contracts is the obligation of Buyer. If a Third Party contract cannot be
assigned to the Buyer except by an agreement or novation with, or consent to the
assignment from, one or more third parties:
3.4.1. this Agreement does not constitute an assignment or attempted
assignment of the Third Party Contracts;
3.4.2. the Seller shall at the Buyer's request use of all reasonable
endeavors with the co-operation of the Buyer as required to procure such
novation or consent;
3.4.3. subject to Section 3.3.4 thereof, unless and until the Third Party
Contract is novated or assigned with effect from the Closing Date:
(a) the Seller will hold the benefit of the Third Party Contracts in trust
for the Buyer and (so far as it lawfully may) give all reasonable assistance to
the Buyer to enable the Buyer to enjoy the benefits of the Third Party Contract
and to enforce its rights under it; and
(b) the Buyer will perform the Third Party Contract in accordance with its
terms and conditions as sub-contractor to the Seller so long as Buyer receives
the full benefit of such Third Party Contract.
3.4.4. if it is unlawful for Seller to hold the benefit of the Third Part
Contract in trust for the Buyer and/or for the/Buyer to perform the Contract as
sub-contractor to the Seller:
(a) this Agreement does not constitute a declaration of trust over the
Third Party Contract and/or (as the case may be) the appointment or attempted
appointment of a sub-contractor under the Third Party Contract; and
(b) the Seller and the Buyer shall each use all reasonable endeavors to do
or procure to be done all such further acts and things and execute or procure
the execution of all such other documents as may be necessary in order (as
nearly as may be possible) to put the Seller and the Buyer in the position in
which they would have been had the benefit and burden of the Third Party
Contract passed to the Buyer on Closing in the manner contemplated by Section
3.4.1 hereof, providing that all costs incurred are for the account of Buyer.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents, and warrants to Buyer as of the date hereof (except as
otherwise indicated) as follows:
4.1 Organization. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Seller has all
necessary corporate power and authority to execute, deliver and perform this
Agreement and any related agreements to which it is a party, to own and lease
its properties and assets and to conduct the Business as now conducted. Seller
is duly qualified or licensed to do business as a foreign corporation in good
standing in all jurisdictions in which the character or the location of the
assets owned or leased by it or the nature of the business conducted by it
requires licensing or qualification as listed on Schedule 4.1.
4.2 Authorization; No Conflicts. The execution, delivery and performance of
this Agreement and any related agreements by Seller has been duly and validly
authorized by Seller and by all other necessary corporate action on the part of
Seller. This Agreement and any related agreements constitute the legal, valid
and binding obligations of Seller, enforceable against Seller in accordance with
their respective terms. The execution, delivery and performance of this
Agreement by Seller and the execution, delivery and performance of any related
agreements or contemplated transactions by Seller shall not (i) conflict with or
result in a breach or violation of any term or provision of, or (with or without
notice or passage of time, or both) constitute a breach or default under, the
charter documents or bylaws of Seller, or, subject to the requirement to obtain
consents where required as specified in Schedule 4.2, any Assumed Contract, any
Assumed Lease, any Assumed Real Estate Lease, any Assumed Loan or any contract
of Seller in connection with the Business, (ii) result in the imposition of any
Encumbrance against any of the Purchased Assets or (iii) violate any Law or
Order of any Governmental Entity or any arbitrator having jurisdiction over
Seller or the Business. Schedule 4.2 recites where applicable all Permits and
Approvals required to be obtained by Seller to consummate the transactions
contemplated by this Agreement. Except for matters identified on Schedule 4.2 as
requiring that certain actions be taken by or with respect to a third party or a
Governmental Entity, the execution and delivery of this Agreement by Seller and
the performance of this Agreement and any related or contemplated transactions
by Seller will not require filing or registration with, or the issuance of any
Permit by, any Person or Governmental Entity under any applicable Law or
contracts to which Seller is a party.
4.3 Financial Statements; Changes; Contingencies.
4.3.1 No Material Adverse Changes. Except as set forth on Schedule 4.3.1,
since November 7, 2003, whether or not in the Ordinary Course, there has not
been, occurred or arisen:
(a) any sale, lease or other disposition of any of the Purchased
Assets, except in the Ordinary Course;
(b) any casualty, loss, damage or destruction (whether or not covered
by insurance) of any of the Purchased Assets;
(c) the Purchased Assets have not been mortgaged, pledged or subjected
to any Lien or Encumbrance except in favor of the Security Interest Holders,
whose interests, if any, in the Purchased Assets will be terminated on or before
the Closing Date; or
(d) any material adverse change in the prospects of the Business, the
Purchased Assets, the Assumed Contracts, the Assumed Leases, the Assumed Real
Estate Lease, the Assumed
11
Loans, the financial condition, results of operations, the accounting practices
historically used by Seller in connection with the Business (except to the
extent such changes in accounting practices were made at the request of Buyer as
part of transactions contemplated by this Agreement.
4.3.2 No Other Liabilities or Contingencies. To the best of Seller's
knowledge, there are no liabilities of any nature, whether accrued, unmatured,
absolute, contingent or otherwise, and whether due or to become due, probable of
assertion or not, relating to the Business, except liabilities that (i) are
reflected or disclosed in the most recent financial statements of the Business,
or (ii) are set forth on Schedule 4.3.3.
4.4 Tax and Other Returns and Reports. Seller has timely and properly
filed all required Tax Returns and has paid all Taxes due with respect to the
Business and the Purchased Assets for all periods ending on or before the
Closing Date. There are no Encumbrances with respect to Taxes upon any of the
Purchased Assets or the Business, except Encumbrances for current Taxes not yet
due. All required Tax Returns relating to the Business, including amendments to
date, have been prepared in good faith without negligence or willful
misrepresentation and are complete and accurate in all material respects. All
Taxes required by law to have been withheld or to be collected for payment have
been duly withheld and collected, and have been paid or accrued on Seller's
books.
4.5 Assumed Contracts and Assumed Leases. To the best of Seller's
knowledge: (i) Schedule 4.5 identifies each Assumed Contract and Assumed Lease
by date, parties signatory thereto and subject matter and which of the Assumed
Contracts and Assumed Leases require Consent to the assignment of such Assumed
Contract and Assumed Lease to Buyer; (ii) each Assumed Contract and Assumed
Lease was entered into in the Ordinary Course and on an arms-length basis; (iii)
the Assumed Contracts and Assumed Leases include each contract upon which the
Business is dependent and each contract which is otherwise material to the
Business; (iv) true, correct and complete copies of the Assumed Contracts and
Assumed Leases, including all amendments and supplements, have been delivered to
or is in the possession of Buyer; (v) each Assumed Contract is valid and
subsisting and, upon assignment pursuant to this Agreement, will be enforceable
by Buyer, subject to any Consent that is required but has not been obtained by
Seller or Buyer; (vi) there is no litigation pending or, to Seller's knowledge,
threatened by any Person with respect to any Assumed Contract or Assumed Lease;
(vii) seller has duly performed all obligations under each Assumed Contract to
the extent that such obligations to perform have accrued; and (viii) no breach
or default, alleged breach or default, or event which would (with notice or
passage of time, or both) constitute a breach or default under any Assumed
Contract or Assumed Lease by Seller (or, to the best knowledge of Seller, any
other Person or obligor with respect thereto), has occurred or as a result of
this Agreement or its performance will occur (assuming receipt of all required
Approvals and Consents). Except as set forth on Schedule 4.5, consummation of
the transactions contemplated by this Agreement shall not (and shall not give
any Person a right to) terminate or modify any rights of, or accelerate or
augment any obligation of, Seller under any of the Assumed Contracts or Assumed
Leases.
4.6 Title to and Condition of Purchased Assets. Except as set forth on
Schedule 4.6, Seller has, and is conveying to Buyer under this Agreement, good
and marketable title to each of the Purchased Assets, free and clear of any
Encumbrance, except Permitted Encumbrances. Seller has all right, power and
authority to sell, convey, assign, transfer and deliver the Purchased Assets to
Buyer in accordance with the terms of this Agreement. At the Closing, Seller
shall deliver the Purchased Assets to Buyer, subject only to Permitted
Encumbrances, provided that a letter from the Security Interest Holders
terminating their security interests in the Purchased Assets, and agreeing to
file form UCC-3 as necessary after Closing, will not constitute a breach of this
representation. Except as set forth on Schedule 4.6, the Purchased Assets have
been regularly and appropriately maintained, repaired and replaced in accordance
with the manufacturers' specifications and good business practice. Except for
Inventory that has been
12
written off or reserved against and for which no value has been reflected in the
financial statements, the Inventory is in good condition and repair (normal wear
and tear excepted). Schedule 4.6 sets forth a true and complete list of all
tangible personal property owned by Seller and used in connection with the
Business, including Inventory, furniture, fixtures and equipment.
4.7 Legal Proceedings. To the best of Buyer's knowledge, except as set
forth on Schedule 4.7, there is no Order or Action pending or, to the best
knowledge of Seller, threatened, against or affecting Seller or any aspect of
the Business that individually or when aggregated with one or more other Orders
or Actions has or may reasonably be expected to have a material adverse effect
on the Business, the Purchased Assets (or the use, operation or value thereof),
the Assumed Contracts, the Assumed Leases, the Assumed Real Estate Lease, the
Assumed Loans, Sellers' ability to perform this Agreement or any aspect of the
transaction contemplated by this Agreement.
4.8 Accounting Records; Internal Controls.
4.8.1 Accounting Records. Seller's records accurately and validly
reflect its transactions relating to the Business, and except as set forth in
Seller's public filings, Seller has accounting controls sufficient to insure
that such transactions are executed in accordance with management's general or
specific authorization and recorded so as to maintain accountability for assets.
4.8.2 Data Processing. The data processing equipment, data
transmission equipment, related peripheral equipment and software used by Seller
in the operation of the Business (including any disaster recovery facility) to
generate and/or retrieve such data or records are comparable in performance,
condition and capacity with those utilized by companies of comparable size in
similar lines of business.
4.9 Insurance. Seller is, and at all times since November 7, 2003, has
been, insured with reputable insurers against all risks involving the Business
normally insured against by companies in similar lines of business, and all of
the insurance policies and bonds maintained by Seller are in full force and
effect. Schedule 4.9 lists all insurance policies and bonds covering the
Business. Seller is not in default under any such policy or bond. Seller has
timely filed claims with its insurers with respect to all matters and
occurrences since November 7, 2003 for which it believes it has coverage with
respect to the Business. Since November 7, 2003 Seller has not received any
notice or other indication from any insurer or agent of any intent to cancel or
not to renew any of such insurance policies. There are no outstanding
requirements or recommendations by any insurance company that issued a policy
with respect to the Business or the Purchased Assets or by any fire department
or similar organization requiring or recommending any action which has not been
taken.
4.10 Intentionally Omitted.
4.11 Compliance; Business Practices; Permits.
4.11.1 Compliance with Laws and Regulations. To the best of Seller's
knowledge: (i) the Business has been conducted in accordance with all applicable
Laws, including, without limitation, Laws relating to occupational health and
safety, equal employment opportunities, fair employment practices and
discrimination, privacy, security and exchange of medical records or other
information applicable to the Business or any of its properties or assets; (ii)
Neither Seller nor the Business is subject to any Order issued by a Governmental
Entity which could impair its ability to consummate the transactions
contemplated hereby or adversely affect Buyer's ownership, use and enjoyment of
the Purchased Assets.
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4.11.2 Business Forms, Procedures and Practices. To the best of
Seller's knowledge, the forms, procedures and practices relating to the Business
are in compliance with all applicable Laws, which forms, procedures and
practices include, without limitation, Seller's written and verbal contracts
with all health care professionals and organizations of health care
professionals and other health care providers in a position to refer customers
to the Business.
4.11.3 Permits. To the best of Seller's knowledge, since November 7,
2003, Seller holds all Permits that are required by any Governmental Entity to
permit it to conduct the Business as now conducted and operate the Purchased
Assets as they are now operated, and all such Permits are valid and in full
force and effect, and Seller is in compliance with all such Permits. No
suspension, cancellation or termination of any of such Permit is threatened or
imminent.
4.12 No Brokers or Finders. No agent, broker, finder, or investment or
commercial banker, or other Person or firm engaged by or acting on behalf of
Seller or any Affiliate of Seller in connection with the negotiation, execution
or performance of this Agreement or the transactions contemplated by this
Agreement, is or shall be entitled to any broker's or finder's or similar fee or
other commission as a result of this Agreement or such transactions.
4.13 Inventory. All Inventory of the Business is of good merchantable
quality, reasonably in balance, and salable within 30 days (in the case of
Inventory held for sale) or currently usable (in the case of other Inventory) in
the Ordinary Course. The value of obsolete, damaged or excess Inventory and of
Inventory below standard quality has been written down on the most recent
balance sheet of the Business or, with respect to Inventory purchased since such
balance sheet date, on the books and records of Sellers with respect to the
Business, to ascertainable market value, or adequate reserves described on such
balance sheet have been provided therefor, and the value at which Inventory is
carried reflects the customary Inventory valuation policy of Seller in
connection with the Business (which fairly reflects the value of obsolete,
spoiled or excess Inventory) for stating Inventory.
4.14 Employees. Except as set forth on Schedule 4.14, there are no
employment, consulting, severance or indemnification Contracts relating to the
Business between Seller and any of its officers, directors, employees and
Affiliates. Seller is not a party to any union contract or collective bargaining
agreement relating to any aspect of the Business. Schedule 4.14 identifies those
employees of Seller who are deemed to be key employees to the operations of the
Business. Except as contemplated by this Agreement Seller has no plans to
terminate, and none of the key employees is expected to terminate his or her
employment with Seller in the foreseeable future. All liabilities or obligations
to any employee of Seller, if any, resulting from Buyer's failure to offer
employment to any employee shall be the sole responsibility and liability of
Buyer.
4.15 Accounts Receivable. All Accounts Receivable of Seller received
in connection with the Business, whether reflected on the balance sheet of the
Business as of August 31, 2004 or otherwise, represent sales actually made in
the Ordinary Course, and are current and are fully collectible net of any
reserves shown on said balance sheet, provided that this representation and
warranty does not apply to the collectibility of Seller's Accounts Receivable
due from Buyer, if any. Seller has delivered to Buyer or Buyer has in its
possession a complete and accurate aging list of all Accounts Receivable of the
Business as of a date not more than five (5) days prior to the Closing Date.
4.16 Accuracy of Information. Subject to the provision of Section 4.29
(knowledge limitation) all information provided by or on behalf of Seller in
connection with this Agreement, on the Schedules and in any related agreements
and the transactions contemplated hereby, is true and complete and does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make any statement therein not misleading. There is no fact or
information known to Seller that has or is
14
likely to have a material adverse effect on the Business or the Purchased Assets
or the ability of Seller to perform under this Agreement, and Seller has not
received notice of any deficiencies in the condition or operation of any of the
Purchased Assets and, after making due inquiry of its employees, Seller is not
aware of any notice having been given with respect to the foregoing, whether or
not in writing. None of the information supplied or to be supplied by or on
behalf of Seller (i) to any Person for inclusion in any document or application
filed with any Governmental Entity having jurisdiction over or in connection
with the transactions contemplated by this Agreement or (ii) to Buyer, its
agents or representatives in connection with this Agreement, the negotiations
leading up to this Agreement or the transactions contemplated by this Agreement
did contain any untrue statement of a material fact, or omitted or shall omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
4.17 Customers and Suppliers. Schedule 4.17 which has been provided by
Buyer: identifies each customer of Seller since November 7, 2003; for each such
customer, Schedule 4.17 lists the products and services supplied by Seller to
such customer; Seller is providing services to such customers on a direct xxxx
basis and Seller reasonably believes that such customers have the financial
capability to pay for such services; there are (i) no customers of Seller
accounting for more than 10% of the Gross Revenues of the Business for the last
twelve-month period, and (ii) no sole-source suppliers of significant goods or
services (other than electricity, gas, telephone or water) to Seller in
connection with the Business, with respect to which alternative sources of
supply are not readily available on comparable terms and conditions; neither
Seller nor it Affiliates have received in the last twelve-month period any
written or oral communications from any customer to the effect that such
customer intends to discontinue or reduce the amount of business conducted with
Seller or seeks to adjust downward the price of services and products supplied
by Seller to such customer.
4.18 Powers of Attorney. Seller has not given any power of attorney
(irrevocable or otherwise) to any Person or entity for any purpose relating to
the Business or the Purchased Assets, other than powers of attorney given to
regulatory authorities in connection with routine qualifications to do business.
4.19 Intellectual Property. Schedule 4.19 which has been provided by
Buyer: is a true and complete list of all Intellectual Property; Seller has
complete rights to and ownership of all Intellectual Property required for use
in connection with the Business except for computer software used under license
and listed on Schedule 4.5; Seller does not use any Intellectual Property, other
than such licensed software, by consent of any other Person and is not required
to and does not make any payments to others with respect thereto; except for the
security interest in the intellectual property held by the Security Interest
Holders, if, any, and which is being released on or before Closing, the
Intellectual Property of the Business is fully assignable free and clear of any
Encumbrances; Seller has in all material respects performed all obligations
required to be performed by it, and Seller is not in default in any material
respect under any Assumed Contract relating to any of the foregoing; Seller has
not received any notice to the effect (or is not otherwise aware) that the
Intellectual Property or any use by Seller in connection with the Business, of
any such Intellectual Property conflicts with or infringes (or allegedly
conflicts with or infringes) the rights of any Person.
4.20 Dividends and Other Distributions. Except as set forth on
Schedule 4.20, there has been no dividend or other distribution of assets of the
Business whether consisting of money, property or any other thing of value,
declared, issued or paid subsequent to the date of the most recent financial
statements with respect to the Business.
4.21 Certain Interests. No Affiliate of Seller nor any owner, officer
or director thereof, nor Associate of any such individual, has any interest in
any of the Purchased Assets or any property used in or pertaining to the
Business, except as set forth on Schedule 4.21.
15
4.22 Compensation to Employees. To the best of Seller's knowledge,
since November 7, 2003, the employees of the Business have been paid to date all
accrued wages, salary, bonus, commissions, vacation and sick pay due to be paid
on or before the Closing Date, including payroll overheads of the Business and
all payments in connection with any employee benefit plan entered into by the
Seller on behalf of the Business since November 7, 2003 have been paid,
excluding any employee claims which may be pending or not yet submitted by
employees.
4.23 Environmental. (i) To the best of Seller's knowledge, since
November 7, 2003, Seller, in connection with the Business, has not generated,
used, transported, treated, stored, released or disposed of, or has suffered or
permitted anyone else to generate, use, transport, treat, store, release or
dispose of, any Hazardous Substance in violation of any Law; (ii) to the best of
Seller's knowledge, there has not been any generation, use, transportation,
treatment, storage, release or disposal of any Hazardous Substance in connection
with the conduct of the Business or the use of any property or facility of
Seller or to any nearby or adjacent properties which has created or might
reasonably be expected to create any liability under any Law or which would
require reporting to or notification of any Governmental Entity; (iii) to the
best of Seller's knowledge, no asbestos or polychlorinated biphenyl or
underground storage tank is contained in or located at any facility occupied or
used by Seller; and (iv) any Hazardous Substance handled or dealt with in any
way in connection with the Business, whether before or during Seller's
ownership, has been and is being handled or dealt with in all respects in
compliance with all applicable Laws.
4.24 Assumed Real Estate Lease. To the best of Seller's knowledge, (i)
Schedule 4.24 sets forth a description of the premises which are subject to the
Assumed Real Estate Lease; (ii) except as set forth on Schedule 4.24, Seller has
not received notice of any proposed special assessments, nor any proposed
material changes in property tax or land use laws affecting the property
pursuant to the Assumed Real Estate Lease; (iii) the Assumed Real Estate Lease
is valid, binding and enforceable; (iv) Seller has delivered to Buyer or Buyer
has in its possession a true, correct and complete copy of the Assumed Real
Estate Lease, together with all amendments, modifications, alterations and other
changes thereto; (v) the Assumed Real Estate Lease constitutes the entire
agreement to which Seller is a party with respect to the property which is
referred to therein; (vi) there exists no breach or default, nor state of facts
which, with the passage of time, notice, or both, would result in a breach or
default on the part of Seller or the lessor thereunder; (vii) seller has no
knowledge that the space covered by the Assumed Real Estate Lease is subject to
any zoning, planning or other similar restrictions not disclosed on Schedule
4.24 which could adversely affect the Business conducted thereon; (viii) all
space and improvements leased by Seller have been fully and satisfactorily
completed and furnished in accordance with the provisions of the Assumed Real
Estate Lease and have received all required Permits under Law; and (ix)there are
no tenants, subtenants, occupants or licensees of space covered by the Assumed
Real Estate Lease, other than Seller.
4.25 Assumed Loans. Schedule 4.25 sets forth a description of any loan
agreement, credit agreement, line of credit on other similar contract relating
to the indebtedness for borrowed money, or any contract relating to any
guarantee of any of the foregoing relating to the Business, by which Seller is
bound or affected and which is being assumed by Buyer hereunder. Each Assumed
Loan is valid, binding and enforceable. Seller has delivered to Buyer a true,
correct and complete copy of each Assumed Loan, together with all amendments,
modifications, alterations and other changes thereto. Each Assumed Loan
constitutes the entire agreement to which Seller is a party with respect to the
indebtedness referred to therein. There exists no breach or default on the part
of Seller, nor state of facts which, with
16
the passage of time, notice or both, would result in a breach or default on the
part of Seller of lender thereunder.
4.26 Books and Records. The books of account and other financial and
corporate records (including, without limitation, general ledgers, sales
invoices, registers and ledgers, duplicate check vouchers and supporting
documents, payroll registers, check registers, bank statements, cost accounting
records, inspection reports and warranty and quality control records) of Seller
are in all material respects complete and correct, are maintained in accordance
with good business practices and have been accurately reflected in the balance
sheet for the Business. The minute books of the Seller contain accurate records
of all meetings and accurately reflect all other corporate actions of the
shareholders and directors of Seller.
4.27 Accuracy of Information. All information provided by or on behalf
of Seller in connection with this Agreement and in any related agreements and
the transactions contemplated hereby including information regarding the
Business known to Seller in its capacity as owner of the Business since November
7, 2003 and until the Closing Date, is true and complete and does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make any statement therein not misleading. There is no fact or
information known to Seller that has or is likely to have a material adverse
effect on the Business or the ability of Seller to perform under this Agreement.
None of the information supplied or to be supplied by or on behalf of Seller (i)
to any Person for inclusion in any document or application filed with any
Governmental Entity having jurisdiction over Seller or in connection with the
transactions contemplated by this Agreement or (ii) to Buyer, its agents or
representatives in connection with this Agreement, the negotiations leading up
to this Agreement or the transactions contemplated by this Agreement, contained,
or at the respective times such information is delivered, shall contain any
untrue statement of a material fact, or omitted or shall omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. All representations made in section 4.27 are subject to the
knowledge limitation contained in section 4.29.
4.28 Employee Benefits. All premiums and payments in connection with
any employee benefit plan, including without limitation the health and dental
plan of the Business, entered into by the Seller on behalf of the Business since
November 7, 2003 have been paid in full, and will remain in full force and
effect, through September 30, 2004, excluding any employee claims which may be
pending or not yet submitted by employees.
4.29 Knowledge Limitation. In view of the fact that prior to November
7, 2003 Buyer operated the Business as owner and subsequent thereto the Duncans
were employed by the Seller to continue to operate the Business which was not
integrated into the Retained Business, Buyer has knowledge of its operation of
the Business from such association. Accordingly, notwithstanding any of the
representations and warranties made by Seller in this Article 4 or elsewhere in
this Agreement, Seller will not be liable for any representation or warranty
made in this Article which is rendered untrue, or is untrue on the date hereof
as a result of any action of Buyer or fact or circumstance known to Buyer on or
prior to the Closing Date.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof (except
as otherwise indicated) as follows:
17
5.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Indiana. Buyer has
all necessary corporate power and authority to conduct its business as now
conducted. Buyer has the necessary corporate power and authority to execute,
deliver and perform this Agreement and any related agreements to which it is a
party.
5.2 Authorization. The execution, delivery and performance of this
Agreement and any related agreements by Buyer have been duly and validly
authorized by the Board of Directors of Buyer and by all other necessary
corporate action on the part of Buyer. This Agreement constitutes the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms.
5.3 No Conflicts. The execution, delivery and performance of this
Agreement by Buyer will not (with notice or passage of time, or both) violate
the provisions of, or constitute a breach or default under, (i) the charter
documents or bylaws of Buyer, (ii) any Law to which Buyer is subject, or (iii)
any contract to which Buyer is a party that is material to the financial
condition, results of operations or conduct Buyer's business.
5.4 No Brokers or Finders. No agent, broker, finder, or investment or
commercial banker, or other Person or firm engaged by or acting on behalf of
Buyer or any Affiliate of Buyer in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated by this
Agreement, is or will be entitled to any broker's or finder's or similar fee or
other commission as a result of this Agreement or such transactions.
5.5 Accuracy of Information. All information provided by or on behalf
of Buyer in connection with this Agreement and in any related agreements and the
transactions contemplated hereby including information regarding the Business
known to Buyer in its capacity as owner of the Business prior to November 7,
2003, or as operator of the Business on behalf of Seller since November 7, 2003
and until the Closing Date, is true and complete and does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
any statement therein not misleading. There is no fact or information known to
Buyer that has or is likely to have a material adverse effect on the Business or
the ability of Buyer to perform under this Agreement and Buyer, or the Duncans
in their capacity as employees operating the Business on behalf of Seller have
not received notice of any deficiencies in the condition or operation of the
employees who work for the Business, Buyer or the Duncans, acting in such
capacity, are not aware of any notice having been given with respect to the
foregoing. None of the information supplied or to be supplied by or on behalf of
Buyer (i) to any Person for inclusion in any document or application filed with
any Governmental Entity having jurisdiction over Buyer or in connection with the
transactions contemplated by this Agreement or (ii) to Seller, its agents or
representatives in connection with this Agreement, the negotiations leading up
to this Agreement or the transactions contemplated by this Agreement, contained,
or at the respective times such information is delivered, shall contain any
untrue statement of a material fact, or omitted or shall omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
5.6 Compensation to Employees. To the best of Buyer's knowledge,
except as set forth on Schedule 4.14 there are no employment, consulting
severance or indemnification Contracts relating to the Business between Seller
and any of its officers, directors, employees and Affiliates, none of the
employees who work in the Business are covered by any union contract or
collective bargaining agreement. To the best of Buyer's knowledge, since
November 7, 2003, the employees of the Business have been paid to date all
accrued wages, salary, bonus, commissions, vacation and sick pay due to be paid
on or before the Closing Date, including payroll overheads of the Business and
all payments in connection with any employee benefit plan entered into by the
Duncans or the Buyer on behalf of the
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Business since November 7, 2003 have been paid, excluding any employee claims
which may be pending or not yet submitted by employees.
5.7 No Other Liabilities or Contingencies. There are no liabilities of
any nature, whether accrued, unmatured, absolute, contingent or otherwise, and
whether due or to become due, probable of assertion or not, relating to the
Business, except liabilities that (i) are reflected or disclosed in the most
recent financial statements of the Business, or (ii) are set forth on Schedule
4.3.3.
5.8 Assumed Contracts and Assumed Leases.5.9 To the best of Buyer's
knowledge since November 7, 2003: (i) Schedule 4.5 identifies each Assumed
Contract and Assumed Lease by date, parties signatory thereto and subject matter
and which of the Assumed Contracts and Assumed Leases require Consent to the
assignment of such Assumed Contract and Assumed Lease to Buyer; (ii) each
Assumed Contract and Assumed Lease was entered into in the Ordinary Course and
on an arms-length basis; (iii) the Assumed Contracts and Assumed Leases include
each contract upon which the Business is dependent and each contract which is
otherwise material to the Business; (iv) true, correct and complete copies of
the Assumed Contracts and Assumed Leases, including all amendments and
supplements, have been delivered to or is in the possession of Buyer; (v) each
Assumed Contract is valid and subsisting and, upon assignment pursuant to this
Agreement, will be enforceable by Buyer, subject to any Consent that is required
but has not been obtained by Seller or Buyer; (vi) there is no litigation
pending or, to Buyer's knowledge, threatened by any Person with respect to any
Assumed Contract or Assumed Lease; (vii) all obligations under each Assumed
Contract of which Buyer was responsible for performance have been duly performed
to the extent that such obligations to perform have accrued; and, (viii) no
breach or default, alleged breach or default, or event which would (with notice
or passage of time, or both) constitute a breach or default under any Assumed
Contract or Assumed Lease by Seller (or, to the best knowledge of Seller, any
other Person or obligor with respect thereto), has occurred.
5.9 Title to and Condition of Purchased Assets. To the best of Buyer's
knowledge, since November 7, 2003; (i) except as set forth on Schedule 4.6, the
Purchased Assets have been regularly and appropriately maintained, repaired and
replaced in accordance with the manufacturers' specifications and good business
practice; (ii) except for Inventory that has been written off or reserved
against and for which no value has been reflected in the financial statements,,
the Inventory is in good condition and repair (normal wear and tear excepted);
and (iii) Schedule 4.6 sets forth a true and complete list of all tangible
personal property owned by Seller and used in connection with the Business,
including Inventory, furniture, fixtures and equipment.
5.10 Legal Proceedings. To the best of Buyer's knowledge, since
November 7, 2003, except as set forth on Schedule 4.7, there is no Order or
Action pending or, to the best knowledge of Buyer, threatened, against or
affecting Seller or any aspect of the Business that arises from the operation of
the Business by the Buyer or the Duncans on behalf of Seller that individually
or when aggregated with one or more other Orders or Actions has or may
reasonably be expected to have a material adverse effect on the Business, the
Purchased Assets (or the use, operation or value thereof), the Assumed
Contracts, the Assumed Leases, the Assumed Real Estate Lease, the Assumed Loans,
Sellers' ability to perform this Agreement or any aspect of the transaction
contemplated by this Agreement.
5.11 Environmental. To the best of Buyer's knowledge, since November
7, 2003, in connection with the operation of the Business by Buyer or the
Duncans as employees of Seller: (i) the Business has not generated, used,
transported, treated, stored, released or disposed of, or has suffered or
permitted anyone else to generate, use, transport, treat, store, release or
dispose of, any Hazardous Substance in violation of any Law; (ii) there has not
been any generation, use, transportation, treatment, storage, release or
disposal of any Hazardous Substance in connection with the conduct of the
Business or the use of any property or facility of the Business or to any nearby
or adjacent properties which has
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created or might reasonably be expected to create any liability under any Law or
which would require reporting to or notification of any Governmental Entity;
(iii) no asbestos or polychlorinated biphenyl or underground storage tank is
contained in or located at any facility occupied or used by the Business; and
(iv) any Hazardous Substance handled or dealt with in any way in connection with
the Business, during Seller's ownership, has been and is being handled or dealt
with in all respects in compliance with all applicable Laws.
5.12 Assumed Real Estate Lease. To the best of Buyer's knowledge,
since November 7, 2003: (i) Schedule 4.24 sets forth a description of the
premises which are subject to the Assumed Real Estate Lease; (ii) except as set
forth on Schedule 4.24, Buyer (on behalf of Seller) has not received notice of
any proposed special assessments, nor any proposed material changes in property
tax or land use laws affecting the property pursuant to the Assumed Real Estate
Lease; (iii) the Assumed Real Estate Lease is valid, binding and enforceable by
Seller; (iv) Seller has delivered to Buyer or Buyer has in its possession a
true, correct and complete copy of the Assumed Real Estate Lease, together with
all amendments, modifications, alterations and other changes thereto; (v) the
Assumed Real Estate Lease constitutes the entire agreement to which Seller is a
party with respect to the property which is referred to therein: (vi) there
exists no breach or default, nor state of facts which, with the passage of time,
notice, or both, would result in a breach or default on the part of Seller;
(vii) Buyer has no knowledge that the space covered by the Assumed Real Estate
Lease is subject to any zoning, planning or other similar restrictions not
disclosed on Schedule 4.24 which could adversely affect the Business conducted
thereon; (viii) there are no tenants, subtenants, occupants or licensees of
space covered by the Assumed Real Estate Lease, other than Seller.
5.13 Assumed Loans. Buyer has not since the commencement of its
operation of the Business on November 7, 2003 on behalf of the Seller indebted
or obligated Seller under any loan agreement, credit agreement, line of credit
or other similar contract relating to the indebtedness for borrowed money, or
any contract relating to any guarantee of any of the foregoing relating to the
Business, other than those set forth on Schedule 4.25 or assumed by Buyer
pursuant to this Agreement , by which Seller is bound or affected. Buyer has
received a true, correct and complete copy of each Assumed Loan, together with
all amendments, modifications, alterations and other changes thereto known to
Buyer. To the best of Buyer's knowledge; (i) each Assumed Loan constitutes the
entire agreement to which Seller is a party with respect to the indebtedness
referred to therein; (ii) there exists no breach or default on the part of
Seller caused by Buyer or the Duncans, nor state of facts which, with the
passage of time, notice or both, would result in a breach or default on the part
of Seller or lender thereunder.
5.14 Knowledge Limitation. Notwithstanding any of the representations
and warranties made by Buyer in this Article 4 or elsewhere in this Agreement,
Buyer will not be liable for any representation or warranty made in this Article
which is rendered untrue, or is untrue on the date hereof as a result of any
action of Seller or fact or circumstance known to Seller on or prior to the
Closing Date.
ARTICLE 6
COVENANTS
6.1 Transition Insurance. If requested by Buyer prior to the Closing
Date, and to the extent permissible under the subject insurance policies, Seller
shall maintain in effect for a period of sixty (60) days following the Closing
Date Seller's insurance policies covering the Purchased Assets at the same level
of coverage as in effect prior to and on the Closing Date provided that Buyer
shall arrange for
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equivalent insurance coverage after such 60 day period. Buyer shall reimburse
Seller for the out-of-pocket cost of maintaining such coverage after the Closing
Date.
6.2 Employment Matters. Seller and Buyer hereby represent and warrant
that for purposes of the Worker Adjustment and Retraining Notification Act and
with respect to employees performing services for the Business (i) in the
previous thirty (30) days there has been no employment loss at a single site of
fifty (50) or more employees, (ii) no single site of employment of the Business
has, or during the past ninety (90) days has had, fifty (50) or more employees.
6.3 Further Assurances. Seller and Buyer shall (a) file any notice,
statement or other communication, (b) execute and deliver all such other and
additional instruments, notices, releases, undertakings and other documents, and
(c) do all such other acts and things, all as may be reasonably required to
assure to Buyer all the rights and interests granted or intended to be granted
under this Agreement. Seller shall take or shall cause to be taken such other
reasonable actions as required more effectively to transfer, convey and assign
to, and vest in, Buyer, and put Buyer in possession of, the Purchased Assets as
contemplated by this Agreement.
6.4 Passage of Title and Risk of Loss. Legal title, equitable title
and risk of loss with respect to the property and rights to be transferred
hereunder shall not pass to Buyer until the property or right is transferred at
the Closing and possession thereof is delivered to Buyer.
6.5 Expenses and Taxes. Subject to Section 3.3 of this Agreement, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense. Any transfer, documentary, sales, use, registration, value-added and
other similar Taxes applicable to the conveyance and transfer from Seller to
Buyer of the Purchased Assets and related fees (including any penalties,
interest and additions to Tax) shall be paid by Seller.
6.6 Litigation Arising from the Business. The Parties recognize that,
in the future, litigation may arise relating to the Purchased Assets or the
Business and the conduct thereof which may relate in part, directly or
indirectly, both to the period prior to the Closing and the period subsequent to
the Closing. Each of the Parties agrees that, to the extent reasonable under the
circumstances and at the request of the other Party, it will provide to the
other Party information, records and documents in its possession relating to the
Purchased Assets and the Business to assist the other Party in connection with
any such litigation or potential litigation in which such other Party is or may
be involved.
6.7 Allocation of Purchase Price. The parties agree upon the
allocation of the Purchase Price, which is set forth on Schedule 6.7 and shall
be used in filing Internal Revenue Form 8594. The Parties further agree to make
no change or alteration of the Form 8594 without prior written consent of the
other Party.
6.8 Tax Cooperation. After the Closing, the Parties shall, and shall
cause each of their respective Affiliates to, cooperate fully with each other in
the preparation of all Tax Returns and shall provide or cause to be provided, to
the requesting Party any records and other information reasonably requested in
connection therewith as well as access to, and the cooperation of, such Party's
accountants and Affiliates and shall, and shall cause each of its respective
Affiliates to, cooperate fully with the other Party in connection with any Tax
investigation, audit or other proceeding relating to the Business. Any
information obtained pursuant to this Section 6.8 or pursuant to any other
Section hereof providing for the sharing of information or the review of any Tax
Return or other Schedule relating to Taxes shall be subject to Section 10.15.
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6.9 Access to Information and Cooperation. Each party shall provide to
the other, their counsel, accountants, consultants and other representatives
full access, during normal business hours, to all of their properties, books,
accounts, tax returns, contracts, commitments and records, and all such
information concerning the business and affairs of the Business as each party
reasonably may request. Buyer shall fully cooperate with and assist and provide
documentation and information concerning the Business, to the accountants and
other professional service providers or employees of Seller as necessary for the
Seller to prepare financial statements and reports as required by law.
6.10 Telephone Numbers. Seller agrees that Buyer shall have all of
Seller's right to use, if Buyer elects, the telephone numbers used in the
Business (local and toll free) which telephone numbers include Seller's
telephone number used for sending and receiving facsimile transmissions and all
interconnects to Seller's customers that allow Seller to answer telephone calls
directed to Seller's customers which numbers have been used through the date
hereof by Seller.
6.11 Non-Competition.
6.11.1 Restrictions on Competitive Activities. Seller agrees that,
after the Closing, Buyer shall be entitled to the goodwill and going concern
value of the Business and to protect and preserve the same to the maximum extent
permitted by Law. Seller also acknowledges that its contributions to the
Business have been uniquely valuable and involve proprietary information that
would be competitively unfair to use or to make available to any competitor of
the Business. For these and other reasons and as an inducement to Buyer to enter
into this Agreement, Seller agrees that for a period of five (5) years from the
date hereof in Indiana and two (2) years from the date hereof in the United
States, Seller shall not, directly or indirectly, through an Affiliate, for its
own benefit or as agent for another, engage in any activities, carry on or
participate in the ownership, management or control of, or allow its name or
reputation to be used in or by, any other present or future business enterprise
that competes with Buyer in the activities of or is substantially similar to the
Business in the United States provided that nothing herein contained shall limit
the right of Seller to continue to be engaged in and conduct all activities
connected with the Retained Business and to have full access to United Health
Services for purposes of the Retained Business. The Seller acknowledges the
reasonableness of the geographic scope of this Section 6.12 as technology would
allow Seller to operate a business anywhere in the Untied States and compete
with Business in whatever geographic areas Buyer may be doing Business in the
future.
6.11.2 Restrictions on Solicitation. Seller agrees that for a period
of five (5) years in Indiana and two (2) years from the date hereof in the
United States after the Closing Date Seller shall not, directly or indirectly,
either for itself or any other Person, (i) induce or attempt to induce any
employee of Buyer to leave the employ of Buyer, (ii) in any way interfere with
the relationship between Buyer and any employee of Buyer, (iii) employ or
otherwise engage, or offer to employ or otherwise engage, any Person who is then
(or was at any time within six months before the time of such employment,
engagement or offer thereof) an employee, sales representative or agent of
Seller (or of Buyer as successor to the Business), or (iv) induce or attempt to
induce any customer, supplier licensee, or business relation of Buyer to cease
its Business relationship with Buyer.
6.11.3 Exceptions. Nothing contained herein shall limit the right of
Seller as an investor to hold and make investments in securities of any
corporation or limited partnership that is registered on a national securities
exchange or admitted to trading privileges thereon or actively traded in a
generally recognized over-the-counter market, provided such Seller equity
interest therein does not exceed 1% of the outstanding shares or interests in
such corporation or partnership that is a competing business.
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6.11.4 Special Remedies and Enforcement. Seller recognizes and agrees
that a breach by Seller of any of the covenants set forth in this Section 6.12
could cause irreparable harm to Buyer, that Buyer's remedies at Law in the event
of such breach would be inadequate, and that, accordingly, in the event of such
breach a restraining order or injunction or both may be issued against Seller,
in addition to any other rights and remedies which are available to Buyer. If
this Section 6.12 is more restrictive than permitted by the Laws of any
jurisdiction in which Buyer seeks enforcement hereof, this Section 6.12 will be
limited to the extent required to permit enforcement under such Laws. In
particular, the parties intend that the covenants contained in the preceding
portions of this Section 6.12 shall be construed as a series of separate
covenants, one for each county and city specified. Except for geographic
coverage, each such separate covenant will be deemed identical in terms. If, in
any judicial proceeding, a court refuses to enforce any of the separate
covenants deemed included in this Section 6.12, then such unenforceable covenant
shall be deemed eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.
6.11.5 Termination and Release of Prior Non-Competition Provisions.
The non-competition provisions and non-solicitation provisions in section 6.12
of the 2003 Purchase Agreement, and any other related provisions, are hereby
terminated.
6.12 Employee Releases. Following the Closing, Seller and Buyer shall
use their best efforts to attempt to promptly secure signed releases from the
employees of the Business. The releases shall to the best of Buyer's ability,
release Seller and Buyer from all claims that could have been asserted by the
employees through and including the date of Closing, and will be in the form of
Exhibit F. The terms and conditions of the releases shall be governed by Indiana
law, and shall be given in consideration of Buyer's offer of future employment
to those employees on an at-will basis. Buyer shall incur no independent
liability to seller if it is unable to obtain a full release from an employee
unless assumed otherwise by Buyer in this Agreement.
ARTICLE 7
SURVIVAL OF OBLIGATIONS; BUYER'S CONDITIONS TO CLOSING
7.1 Survival of Representations and Warranties. The representations
and warranties contained in or made pursuant to this Agreement shall survive the
Closing and expire on the third anniversary of the Closing Date, except (i) as
to any matter as to which a claim has been submitted in writing to the other
party before such date, (ii) as to any matter which is based successfully upon
fraud with respect to which the cause of action shall expire only upon
expiration of the applicable statute of limitations, (iii) those representations
and warranties made by Seller contained in Section 4.6 (Title to and Condition
of Purchased Assets), which shall remain in full force and effect indefinitely,
and (iv) the representations and warranties contained in Section 4.4 (Tax and
Other Returns and Reports) shall continue through the expiration of the
applicable statute of limitation (or, if a claim has been asserted prior to such
expiration, until 24 months after the date of its final resolution).
7.2 Covenants. Subject to Section 3.3 hereof, Seller shall have
performed and complied in all respects with all covenants, agreements and
conditions set forth herein which are required to be performed or complied with
by it on or prior to the Closing Date.
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ARTICLE 8
REGISTRATION OF SHARES
8.1 Forfeitable Shares.
8.1.1 Forfeiture Condition Satisfied. In the 2003 Purchase Agreement,
Seller granted Buyer the right to receive certain Forfeitable Shares of Seller,
upon the satisfaction of the Forfeiture Condition. The Parties agree that the
Forfeiture Condition has been satisfied and shall be deemed satisfied in all
respects as of March 31, 2004, and that Buyer is entitled to the receipt of the
Forfeitable Shares.
8.1.2 Termination and Release of Restrictions. The one-year
restriction on the resale of the Forfeitable Shares, as provided in the 2003
Purchase Agreement, is hereby terminated, and Buyer is permitted to resell the
Forfeitable Shares at any time following, but not before, January 1, 2005
pursuant to the provisions of Rule 144 of the Securities Act of 1933. Seller
acknowledges that the Forfeitable Shares were issued in the name of Warshaw,
Bernstein, Xxxxx, Xxxxxxxxxxx and Kuh, LLP, as Escrow Agent pursuant to Joint
Escrow Instructions of November 7, 2003, pursuant to which the Escrow Agent was
instructed to deliver the shares to The Xxxxxx Group, Inc. if the Forfeiture
Condition was fulfilled, and should be eligible for sale without the necessity
of registration on or after November 7, 2004 pursuant to Rule 144 if all other
necessary conditions under Rule 144 are fulfilled (subject to the lockdown
agreed to in this subparagraph between the parties hereto) and that all holding
periods of Buyer should be deemed met and satisfied as of November 7, 2004. In
the event the Forfeitable Shares cannot be sold as of that date without
registration, Seller will perform all tasks necessary to permit the sale of the
Forfeitable Shares by Buyer, including the filing of a registration statement
for the Forfeitable Shares within twenty (20) days following the receipt of an
opinion of counsel for Buyer acceptable to counsel for Seller that the
Forfeitable Shares cannot be legally sold without a registration statement.
Seller shall be obligated to obtain from its counsel and provide to Buyer,
within seven (7) business days of receipt of Buyer's counsel's opinion, written
notice of Seller's counsel's acceptance of such opinion or, if not acceptable,
an opinion from Seller's counsel that the Forfeitable Shares can be sold without
the necessity of registration and the basis therefore.
8.2 Incentive Shares. In the 2003 Purchase Agreement, Seller granted
Buyer certain rights respecting Incentive Shares as defined in the 2003 Purchase
Agreement, upon the Business meeting certain performance expectations set forth
in section 9.3 of that Agreement (defined therein and herein as the "Qualifying
Events"). Buyer hereby releases and forever discharges Seller from its
obligations to issue any Incentive Shares to Buyer under the 2003 Purchase
Agreement.
ARTICLE 9
COMPLETION OF BUSINESS RELATIONSHIP
9.1 Termination of Relationship. The Parties agree that, as of the
Closing Date, their existing business relationship as it existed since November
7, 2003 is terminated. The Parties further agree to the following matters, which
are incidental to the termination of their business relationship:
9.1.1 Termination of Employment Agreements and Releases. As part of
the 2003 Purchase Agreement, Seller entered into two (2) employment agreements
with the Duncans dated November 7, 2003. Those employment agreements are
terminated as of the Closing Date, without any further obligation on the part of
the Seller or the Duncans except for the Confidentiality, Non-Disclosure and No
Disparagement provisions with respect to the Retained Business which shall
survive indefinitely.
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Seller hereby releases, fully discharges, and forever holds the Duncans harmless
from any claims or causes of action arising out of or from those employment
agreements, including the non-competition and non-solicitation provisions
contained in those employment agreements. The Duncans hereby release, fully
discharge, and forever hold Seller harmless from any claims or causes of action
arising out of or from the termination of those employment agreements, with the
exception of any claims arising out of Seller's obligation to indemnify the
Duncans as provided in Section 28 of the Duncans employment agreements and
except for any D & O insurance coverage provided to the Duncans in their
capacity as employees or officers of the Seller for any action taken on behalf
of the Seller by either of the Duncans.
9.1.2 Gross Revenues Payment Amount. As part of the purchase price of
the 2003 Purchase Agreement, Seller agreed to pay Buyer the Gross Revenues
Payment Amount in accordance with section 2.3.5 of the 2003 Purchase Agreement.
The Gross Revenues Payment Amount for calendar year 2003 has not been paid to
Buyer. The Parties agree that the Gross Revenues Payment Amount for calendar
year 2004 is not yet determined to be due and payable to Buyer by Seller, but
would become a future debt and obligation of Seller. Buyer hereby releases and
forever discharges Seller from its obligations to make the Gross Revenues
Payment Amounts for calendar year 2003 and for any Gross Revenue Payment which
may be due, if at all, for calendar year 2004.
9.1.3. Shortfall for Cash Equivalent Shares. As part of the purchase
price of the 2003 Purchase Agreement, Buyer received Cash Equivalent Shares from
Seller. Seller agreed that, in the event of a Shortfall following the sale of
the Cash Equivalent Shares, Seller would pay Buyer the amount of the Shortfall
in accordance with section 9.1 of the 2003 Purchase Agreement, as amended in
June 2004. The Shortfall has not been paid to Buyer. Buyer hereby releases,
fully discharges, and forever holds Seller harmless from its obligation to make
this or any other Shortfall payment. Buyer shall continue to be permitted to
resell the Cash Equivalent Shares at any time.
ARTICLE 10
GENERAL
10.1 Amendments; Waivers. This Agreement and any Schedule or Exhibit
may be amended only by agreement in writing of the Parties. No waiver of any
provision nor consent to any exception to the terms of this Agreement or any
agreement contemplated hereby shall be effective unless in writing and signed by
the Party to be bound and then only to the specific purpose, extent and instance
so provided.
10.2 Entire Agreement. This Agreement (together with its Schedules and
Exhibits) constitutes and contains the entire agreement and final understanding
between the Parties concerning the Acquisition and all other subject matters
addressed herein or pertaining thereto. This Agreement supersedes and replaces
all prior negotiations and all prior or contemporaneous representations,
promises or agreements, proposed or otherwise, whether written or oral,
concerning the Acquisition and all other subject matters addressed herein or
pertaining thereto. The Parties acknowledge that, unless expressly modified
herein or through other written agreement of the Parties, the provisions of 2003
Purchase Agreement remain in full force and effect.
10.3 Governing Law.
10.3.1 Applicable Law. This Agreement, the legal relations among the
parties and any Action, whether contractual or non-contractual, instituted by
any Party with respect to matters arising under or growing out of or in
connection with or in respect of this Agreement, including, but not limited to,
the negotiation, execution, interpretation, coverage, scope, performance,
breach, termination, validity
25
or enforceability of this Agreement, shall be governed by and construed and
interpreted in accordance with the laws of the State of New York applicable to
contracts made and performed in such State and without regard to principles of
conflicts of law.
10.3.2 Submission to Jurisdiction. Each party hereby irrevocably
submits to and accepts for itself and its properties, generally and
unconditionally, the exclusive jurisdiction of and service of process pursuant
to the laws of the State of Indiana and the rules of its courts, waives any
defense of forum non conveniens and agrees to be bound by any judgment rendered
thereby arising under or out of, in connection with or in respect of this
Agreement or any related document or obligation. Each Party further irrevocably
designates and appoints the individual identified in or pursuant to Section 10.8
to receive notices on its behalf, as its agent to receive on its behalf service
of all process in any such Action before any body, such service being hereby
acknowledged to be effective and binding service in every respect. If any agent
so appointed refuses to accept service, the designating party hereby agrees that
service of process sufficient for personal jurisdiction in any action against it
in the applicable jurisdiction may be made by registered or certified mail,
return receipt requested, to its address provided in Section 10.8. Each Party
hereby acknowledges that such service shall be effective and binding in every
respect.
10.4 Headings. The descriptive headings of the Articles, Sections and
Subsections of this Agreement are for convenience only and do not constitute a
part of this Agreement.
10.5 Counterparts. This Agreement and any amendment hereto or any
other agreement (or document) delivered pursuant hereto may be executed in one
or more counterparts and by different parties in separate counterparts and by
facsimile signature. All of such counterparts shall constitute one and the same
agreement become effective (unless otherwise therein provided) when one or more
counterparts have been signed by each party and delivered to the other parties.
10.6 Publicity. Buyer and Seller will coordinate all publicity
relating to the transactions contemplated by this Agreement, and the Parties
will not issue any press release, publicity statement or other public notice
relating to this Agreement, or the transactions contemplated by this Agreement,
without the written approval of the other Party except to the extent that legal
counsel to Seller or Buyer, as the case may be, delivers a written opinion to
the other Party to the effect that a particular action may be required by
applicable Law, in which event the Party taking the particular action shall give
reasonable notice to the other Parties and shall consult with such other Parties
regarding such action.
10.7 Parties in Interest. This Agreement will be binding upon and
inure to the benefit of each Party, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement. Nothing in this
Agreement is intended to relieve or discharge the obligation of any third person
to any Party to this Agreement.
10.8 Notices. Any notice or other communication hereunder must be
given in writing and either (i) delivered in person, (ii) transmitted by
telefacsimile, provided that any notice so given is also mailed as provided in
clause (iii), or (iii) mailed, postage prepaid, as follows:
(i) If to Buyer, to:
(i) if to the Company:
Ramp Corporation
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00 Xxxxxx Xxxx
Attention: Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
With a copy to:
Xxxxxx Xxxxxxx & Xxxxxxx LLP
0 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Facsimile No.: 000-000-0000
(ii) If to Sellers, to:
The Xxxxxx Group, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxx Xxxxxxx & Xxxxxx, LLP
000 Xxxx Xxxxxxxxxx Xxxxxx Xxxxxx Xxxxx- Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile No. (000) 000-0000
or to such other address or to such other person as any party shall have last
designated by such notice to the other parties. Each such notice or other
communication shall be effective (A) if given by mail, three days after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, (B) if given by facsimile, when transmitted to the
applicable number so specified in (or pursuant to) this Section 10.8 provided
that appropriate confirmation of receipt is generated by the facsimile and a
duplicate copy is mailed, postage prepaid, or (C) if given by any other means,
when actually delivered at such address.
10.9 Expenses. Each Party shall pay its own expenses incident to the
negotiation, preparation and performance of this Agreement and the transactions
contemplated hereby and thereby, including, but not limited to, the fees,
expenses and disbursements of its respective investment bankers or brokers,
accountants and counsel.
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10.10 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by either party
without the prior written consent of the other. Nothing contained herein,
express or implied, is intended to confer on any Person other than the parties
hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
10.11 Remedies; Waiver. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available under applicable law. No failure on the part of any party to
exercise, or delay in exercising, any right hereunder shall be deemed a waiver
thereof, nor shall any single or partial exercise preclude any further or other
exercise of such or any other right.
10.12 Best Efforts; Further Assurances. Subject to section 3.3 hereof,
each Party shall use its best efforts to perform and fulfill all obligations on
its part to be performed and fulfilled under this Agreement, to the end that the
transactions contemplated by this Agreement shall be effected substantially in
accordance with its terms as soon as reasonably practicable. The Parties shall
cooperate with each other in such actions and in securing requisite Approvals.
Each Party shall execute and deliver after the Closing such further
certificates, agreements and other documents and take such other actions as the
other parties may reasonably request to consummate or implement the transactions
contemplated hereby or to evidence such events or matters.
10.13 Knowledge Convention. Whenever any statement herein or in any
Schedule, Exhibit, certificate or other document delivered to any Party pursuant
to this Agreement is made "to its knowledge" or "to its best knowledge" or words
of similar intent or effect of any Party or its representative, such Person
shall make such statement only after conducting a diligent investigation of the
subject matter thereof, and each statement shall be deemed to include a
representation that such investigation has been conducted.
10.14 Confidentiality. All information disclosed by any Party (or its
representatives) to any other Party (or its representatives) in connection with
this Agreement shall be kept confidential by such other Party and its
representatives and shall not be used by any such Persons other than as
contemplated by this Agreement, except to the extent (i) that such information
was known by the recipient when received, (ii) that such information is or
hereafter becomes lawfully obtainable from other sources, (iii) it is necessary
or appropriate to disclose such information to a Governmental Entity having
jurisdiction over the Parties, (iv) required by Law, or (v) such duty as to
confidentiality is waived in writing by the other Party.
10.15 Representation by Counsel; Interpretation. Buyer, Seller, and
the Duncans each acknowledge that each Party to this Agreement has been
represented by counsel in connection with this Agreement and the transactions
contemplated by this Agreement. Accordingly, any rule of Law or any legal
decision that would require interpretation of any claimed ambiguities in this
Agreement against the party that drafted it has no application and is expressly
waived. The provisions of this Agreement shall be interpreted in a reasonable
manner to effect the intent of Buyer and Seller.
10.16 Specific Performance. Buyer, Seller and the Duncans each
acknowledge that, in view of the uniqueness of the Business and the transactions
contemplated by this Agreement, a Party would not have an adequate remedy at law
for money damages in the event that this Agreement has not been performed in
accordance with its terms. Each Party agrees that the other Party shall be
entitled to specific enforcement of the terms hereof in addition to any other
remedy to which it may be entitled, at law or in equity.
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10.17 Severability. If any provision of this Agreement is determined
to be invalid, illegal or unenforceable by any Governmental Entity, the
remaining provisions of this Agreement to the extent permitted by law shall
remain in full force and effect provided that the economic and legal substance
of the transactions contemplated are not affected in any manner materially
adverse to any party. In the event of any such determination, the Parties agree
to negotiate in good faith to modify this Agreement to fulfill as closely as
possible the original intents and purposes hereof. To the extent permitted by
law, the Parties hereby to the same extent waive any provision of law that
renders any provision hereof prohibited or unenforceable in any respect.
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IN WITNESS WHEREOF, each of the Parties hereto has caused this
Agreement to be executed as of the day and year first written above.
THE XXXXXX GROUP, INC.
RAMP CORPORATION By:
--------------------------
M. Xxxxx Xxxxxx,
Chief Executive Officer
By: ---------------------------
Xxxxxx Xxxxx,
President and Chief Executive Officer By:
--------------------------
Xxxxx X. Xxxxxx,
President
--------------------------
M. Xxxxx Xxxxxx
--------------------------
Xxxxx X. Xxxxxx
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