AMENDED AND RESTATED AGREEMENT
for
PURCHASE AND SALE OF ASSETS
among
PATIENT INFOSYSTEMS, INC. (PATI)
and
AMERICAN CARESOURCE CORPORATION formerly known as
HEALTH DATA SOLUTIONS, INC.
and
THE STOCKHOLDERS SIGNATORY HERETO
Dated
April 10, 2003
-i-
TABLE OF CONTENTS
Page
ARTICLE 1 PURCHASE AND SALE OF ASSETS........................................2
1.1 Transfer of Assets...............................................2
1.1.1 Tangible Personal Property.......................................2
1.1.2 Contracts and Related Rights.....................................2
1.1.3 Warranties.......................................................2
1.1.4 Advances.........................................................3
1.1.5 Prepaid Items....................................................3
1.1.6 Receivables......................................................3
1.1.7 Governmental Authorizations......................................3
1.1.8 Trade Names......................................................3
1.1.9 Intellectual Property............................................3
1.1.10 Records..........................................................3
1.1.11 Office Leases....................................................3
1.1.12 Tax Refunds......................................................3
1.1.13 Other Assets.....................................................4
1.2 Excluded Assets..................................................4
1.2.1 Corporate Matters................................................4
1.2.2 Transaction Documents............................................4
1.2.3 Funded Plans.....................................................4
1.2.4 Other Excluded Assets............................................4
ARTICLE 2 PAYMENT FOR THE ASSETS.............................................4
2.1 Delivery of the Purchase Consideration...........................4
2.2 Assumption of Liabilities........................................5
2.3 Retained Liabilities.............................................5
2.4 Allocation of Purchase Consideration.............................5
ARTICLE 3 CLOSING 5
3.1 Closing Date.....................................................5
3.2 Conditions to PATI's Obligation to Consummate the Closing........6
3.2.1 Representations and Warranties...................................6
3.2.2 Covenants........................................................6
3.2.3 Deliveries by ACS................................................6
3.2.3.1 Closing Certificate.....................................6
3.2.3.2 Assignment of Contracts.................................6
3.2.3.3 Opinion of ACS Counsel..................................6
3.2.3.4 Shareholder Representation Letter.......................6
3.2.3.5 Conveyance Instruments..................................6
3.2.3.6 Customer Contracts......................................7
3.2.3.7 Vendor/supplier contracts...............................7
3.2.3.8 Contracts...............................................7
3.2.3.9 Consents................................................7
3.2.3.10 Authorizations..........................................7
3.2.4 Possession by PATI...............................................8
3.2.5 Failure to Obtain Third Party Consents...........................8
3.2.6 Voting Agreement.................................................8
3.2.7 Further Assurances by ACS........................................8
3.3 Conditions to ACS's Obligation to Consummate the Agreement.......8
3.3.1 Representations and Warranties...................................8
3.3.2 Covenants........................................................9
3.3.3 Deliveries by PATI...............................................9
3.3.3.1 Closing Certificate.....................................9
3.3.3.2 Assignment of Contracts.................................9
3.3.3.3 Vendor/supplier contracts...............................9
3.3.3.4 Customer Agreements.....................................9
3.3.3.5 Opinion of PATI's Counsel...............................9
3.3.3.6 Authorizations..........................................9
3.3.3.7 Other Agreements and Documents Required for Closing.....9
3.3.4 Private Placement................................................10
3.3.5 Voting Agreement.................................................10
3.3.6 Further Assurances of PATI.......................................10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES.....................................10
4.1 Representations and Warranties of PATI and PATI Stockholders.....10
4.1.1 Organization of PATI.............................................11
4.1.2 Power and Authority..............................................11
4.1.3 Execution, Delivery and Enforceability...........................11
4.1.4 Conflicts........................................................11
4.1.5 Litigation.......................................................11
4.1.6 No Broker........................................................12
4.1.7 Capitalization...................................................12
4.1.8 Filings with the SEC.............................................12
4.1.9 Financial Statements.............................................12
4.1.10 Undisclosed Liabilities..........................................13
4.1.11 Litigation.......................................................13
4.1.12 Legal Compliance.................................................13
4.1.13 Taxes............................................................13
4.1.14 Restrictions.....................................................14
4.1.15 Disclosure.......................................................14
4.2 Representations and Warranties of ACS and ACS Stockholders.......14
4.2.1 Organization of ACS..............................................14
4.2.2 Power and Authority..............................................14
4.2.3 Execution, Delivery and Enforceability...........................15
4.2.4 Conflicts........................................................15
4.2.5 Litigation.......................................................15
4.2.6 ACS Capitalization...............................................15
4.2.7 Subsidiaries.....................................................16
4.2.8 Financial Statements.............................................16
4.2.9 No Undisclosed Liabilities.......................................16
4.2.10 Premises.........................................................17
4.2.11 Title to and Character of Assets.................................17
4.2.12 Contracts........................................................17
4.2.13 Accounts Receivable..............................................18
4.2.14 Employee Matters; Employee Benefit Plans.........................18
4.2.15 Governmental Authorizations......................................19
4.2.16 Consents.........................................................19
4.2.17 Insurance........................................................19
4.2.18 Intellectual Property............................................19
4.2.19 Litigation.......................................................20
4.2.20 Legal Compliance.................................................20
4.2.21 Taxes............................................................20
4.2.22 ACS Restrictions.................................................21
4.2.23 No HSR Filing Required...........................................21
4.2.24 No Broker........................................................21
4.2.25 Solvency.........................................................21
4.2.26 Disclosure.......................................................21
4.2.27 Conditions Affecting Business....................................21
4.2.28 Sufficiency of Assets............................................22
4.2.29 No Corporate Practice............................................22
4.3 Representations and Warranties of Each Signing Stockholder.......22
4.3.1 Legal Capacity...................................................22
4.3.2 Execution, Delivery, and Enforceability..........................22
4.3.3 Conflicts........................................................22
4.3.4 Compliance With Applicable Laws..................................23
ARTICLE 5 COVENANTS..........................................................23
5.1 Best Efforts to Consummate the Sale..............................23
5.2 Access to ACS and PATI...........................................23
5.3 Operation of ACS and PATI Pending the Sale.......................23
5.3.1 Representations and Warranties...................................23
5.3.2 Operate the Business in the Ordinary Course......................24
5.3.3 Maintain Goodwill................................................24
5.3.4 No Material Adverse Change.......................................24
5.3.5 No Dividends.....................................................24
5.3.6 Maintain Assets..................................................24
5.3.7 Disposition of Assets............................................24
5.3.8 Acquisition of Assets............................................24
5.3.9 Borrow Money.....................................................24
5.3.10 Make Payments....................................................25
5.3.11 Pay Taxes........................................................25
5.3.12 No Liens.........................................................25
5.3.13 No Changes to Contracts..........................................25
5.3.14 Perform Obligations..............................................25
5.3.15 Insurance Coverage...............................................25
5.3.16 No Changes in Accounting Principles..............................25
5.3.17 Benefit Plans....................................................25
5.3.18 Loans to Affiliates..............................................26
5.3.19 Payments to Affiliates...........................................26
5.3.20 No Agreements Concerning the Foregoing...........................26
5.4 Changes to the Information Disclosed on the Schedules............26
5.5 Representations, Warranties, and Covenants.......................26
5.6 Satisfaction of the Closing Conditions...........................26
5.7 No Shopping......................................................27
5.8 Funding of Operations............................................27
5.9 Transferability of PATI Common Stock.............................27
ARTICLE 6 INDEMNIFICATION....................................................28
6.1 Survival; Indemnification Obligation.............................28
6.1.1 Survival.........................................................28
6.1.2 Indemnification by ACS and Sellers...............................28
6.1.3 Indemnification by PATI..........................................28
6.2 Indemnification Procedure........................................29
6.2.1 Defense of a Claim...............................................29
6.2.2 Participation of the Indemnitee..................................29
6.2.3 Settlement of Claims.............................................29
6.2.4 Cooperation......................................................29
ARTICLE 7 POST-CLOSING COVENANTS.............................................30
7.1 Tax Liabilities..................................................30
7.2 Assumed Liabilities..............................................30
7.3 Payments Received................................................30
7.4 Access to Records................................................30
7.5 Employees........................................................30
7.6 Use of Name......................................................31
7.7 Non-Competition..................................................32
7.8 No Disclosure of Confidential Information........................32
7.8.1 Non-Disclosure Obligation of Sellers.............................32
7.8.2 Non-Disclosure Obligation of PATI................................32
7.8.3 Judicial Enforcement.............................................32
7.9 Reasonableness...................................................33
7.10 Private Placement................................................33
7.11 Cooperation......................................................33
ARTICLE 8 TERMINATION........................................................34
8.1 Termination of this Agreement....................................34
8.1.1 Consent..........................................................34
8.1.2 Breach by the ACS................................................34
8.1.3 Breach by PATI...................................................34
8.1.4 Outside Date.....................................................34
8.2 Effect of Termination............................................34
8.3 Disclosure of this Agreement.....................................35
ARTICLE 9 MISCELLANEOUS......................................................35
9.1 Publicity........................................................35
9.2 Transaction Costs................................................35
9.3 Definitions......................................................35
9.3.1 Affiliate........................................................35
9.3.2 Applicable Law...................................................35
9.3.3 Assets...........................................................36
9.3.4 Assignment of Contracts..........................................36
9.3.5 Assumed Liabilities..............................................36
9.3.6 Audited Financial Statements.....................................36
9.3.7 Beneficial Stockholder...........................................36
9.3.8 Benefit Plans....................................................36
9.3.9 Business.........................................................36
9.3.10 Claims...........................................................36
9.3.11 Closing..........................................................37
9.3.12 Closing Date.....................................................37
9.3.13 COBRA............................................................37
9.3.14 Code.............................................................37
9.3.15 Confidential Information.........................................37
9.3.16 Consent..........................................................37
9.3.17 Contracts........................................................37
9.3.18 Covenant Not to Compete..........................................37
9.3.19 Customer Contracts...............................................37
9.3.20 Customer Services................................................38
9.3.21 Document.........................................................38
9.3.22 ERISA............................................................38
9.3.23 Excluded Assets..................................................38
9.3.24 Financial Statements.............................................38
9.3.25 GAAP.............................................................38
9.3.26 Governmental Authorizations......................................38
9.3.27 Governmental Authority...........................................39
9.3.28 Indemnitee.......................................................39
9.3.29 Indemnitor.......................................................39
9.3.30 Insurance Policy.................................................39
9.3.31 Intellectual Property............................................39
9.3.32 Lawsuit..........................................................39
9.3.33 Lien.............................................................39
9.3.34 Material Adverse Change..........................................40
9.3.35 Most Recent Balance Sheet........................................40
9.3.36 Non-Compete Period...............................................40
9.3.37 Non-Disclosure Obligation........................................40
9.3.38 Office Lease.....................................................40
9.3.39 PATI Indemnitees.................................................40
9.3.40 Person...........................................................40
9.3.41 Permitted Liens..................................................40
9.3.42 Premises.........................................................40
9.3.43 Purchase Consideration...........................................41
9.3.44 Retained Liabilities.............................................41
9.3.45 SEC..............................................................41
9.3.46 Seller Indemnitees...............................................41
9.3.47 Tangible Personal Property.......................................41
9.3.48 Tax..............................................................41
9.3.49 Tax Return.......................................................41
9.3.50 Transaction Documents............................................41
9.3.51 Vendor/supplier contracts........................................42
9.4 Property Taxes...................................................42
9.5 Entire Agreement.................................................42
9.6 Amendments.......................................................42
9.7 Assignments......................................................42
9.8 Further Assurances...............................................42
9.9 Binding Effect...................................................42
9.10 Headings.........................................................43
9.11 Notices..........................................................43
9.12 Severability.....................................................44
9.13 Waivers..........................................................44
9.14 Pronouns.........................................................44
9.15 Third Parties....................................................44
9.16 Enforcement Costs................................................44
9.17 Remedies Cumulative..............................................45
9.18 Counterparts.....................................................45
9.19 Governing Law....................................................45
9.20 Preparation of Agreement.........................................45
9.21 Survival.........................................................45
9.22 Inducement to Transaction........................................46
9.23 Arbitration......................................................46
a. Arbitrators...........................................................46
b. Applicable Rules......................................................46
9.24 Schedules........................................................47
AMENDED AND RESTATED AGREEMENT
FOR PURCHASE AND SALE OF ASSETS
THIS AMENDED AND RESTATED AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS
(this "Agreement") dated as of April 10, 2003, (the "Effective Date") is entered
into by and among Patient Infosystems, Inc., a Delaware corporation ("PATI"),
and each signatory stockholder of PATI executing this Agreement (each
individually and collectively, whether one (1) or more, the "PATI
Stockholders"), on the one hand, and American CareSource Corporation, an Indiana
corporation ("ACS"), and each signatory beneficial stockholder of ACS executing
this Agreement (each individually and collectively, whether one (1) or more, the
"ACS Stockholders"), on the other hand. ACS and the ACS Stockholders are
collectively referred to herein as the "Sellers." For purposes of this
Agreement, schedules attached hereto, as indicated, amend and/or restate the
schedules originally provided in the original Agreement for Purchase and Sale of
Assets dated as of September 23, 2002. If no change is indicated, the schedules
as initially attached to the original Agreement for Purchase and Sale of Assets
dated as of September 23, 2002 shall remain as the schedules for this Agreement.
RECITALS
A. Whereas, ACS is in the business (the "Business") of providing and servicing
modular software packages that fully automate claims processing for third
party payers and managed care organizations as well as managing a national
network of ancillary service providers including case management and a call
center.
B. Whereas, ACS has acquired by purchase all of the assets and assumed the
operating liabilities of the business of ACSC, Inc. formerly known as
American CareSource Corporation, a Delaware corporation ("ACSC, Inc.")
pursuant to an Agreement for the Purchase and Sale of the Assets of ACSC,
Inc. dated November 1, 2000, and closed as of July 31, 2001, pursuant to
which the business of ACS includes the operations, assets, and liabilities
of ACSC, Inc.; and
C. Whereas, PATI desires to purchase from ACS, and ACS desires to sell to
PATI, all of the Assets used by ACS in its Business and PATI desires to
assume all of the operating liabilities and other business related
liabilities of ACS as set forth in the Most Recent Balance Sheet at Closing
and as otherwise set forth herein, all in consideration and exchange for
PATI issuing to ACS 2,971,915 shares of common stock of PATI which amount
gives effect to and is to be issued after the completion of a 1 for 12
reverse stock split and as described more specifically in Schedule (i)
hereto); and
D. Whereas, as a material inducement to PATI to purchase the Assets and assume
the Liabilities, and to Sellers to sell the Assets, PATI and Sellers desire
to make certain representations and warranties to the other and agree to be
bound by certain covenants and obligations as hereinafter provided; and
E. Whereas, the parties to this Agreement acknowledge that it is their
intention that the entire business operation and all tangible and
intangible assets and liabilities together with all obligations to
employees of ACS are intended to be transferred and conveyed to PATI and
that ACS will have no remaining material business operations subsequent to
the Closing; and
F. Whereas, PATI has entered into a Credit Agreement dated of even date
herewith with ACS (the "Credit Agreement") pursuant to which PATI has
agreed to loan to ACS up to $2,500,000, for which it has received a warrant
to purchase common stock of ACS; and
G. Whereas, the parties have entered into an Agreement for Purchase and Sale
of Assets dated as of September 23, 2002 (the "Original Agreement")
providing for the purchase and sale of the assets in accordance therewith;
and
H. Whereas, the parties have determined to make amendments to the Original
Agreement as set forth herein, and to amend and restate the Original
Agreement such that the Original Agreement shall be replaced in its
entirety by this Agreement as follows.
NOW, THEREFORE, in consideration of the recitals, mutual covenants,
representations, warranties and agreements hereinafter set forth, the parties
hereby agree as follows: ARTICLE 1 PURCHASE AND SALE OF ASSETS 1.1 Transfer of
Assets
Subject to the terms and conditions set forth in this Agreement, and in
consideration for the issuance to ACS of 2,971,915 shares of common stock of
PATI which amount gives effect to and is to be issued after the completion of a
1 for 12 reverse stock split and as described more specifically in Schedule (i)
hereto (the "Initial Consideration"), ACS agrees to sell, convey, transfer,
assign and deliver to PATI, and PATI agrees to purchase from ACS as of the
Effective Date all of the Assets, including, without limitation, the following
(except to the extent any of the following are specifically enumerated as
Excluded Assets pursuant to Section 1.2.). 1.1.1 Tangible Personal Property.
All rights, title and interest in and to all Tangible Personal Property,
including, without limitation, all items listed on Schedule 1.1.1. 1.1.2
Contracts and Related Rights.
All rights, title and interest in and to each contract, agreement,
arrangement, lease, understanding or commitment, written or oral, set forth on
Schedule 1.1.2, including, without limitation, all Contracts; 1.1.3 Warranties.
All express or implied warranties received from vendors, manufacturers or
suppliers or other third parties with respect to any Asset; 1.1.4 Advances.
All utility and other deposits and advances made by ACS to any Person;
1.1.5 Prepaid Items.
All prepaid items including, without limitation, insurance, advertising and
business licenses; 1.1.6 Receivables.
All notes receivable and accounts receivable payable to ACS and all work in
progress; 1.1.7 Governmental Authorizations.
All Governmental Authorizations that relate to a Seller, the Business or
the Assets; 1.1.8 Trade Names.
All rights to trade names (including the name "American CareSource")
trademarks (or application therefor), logos, proprietary designs and service
marks (or application therefor), in each case together with all registrations
thereof, all common and civil law rights thereto, all rights to royalties or
fees paid by others in respect thereof, and all claims or causes of action for
infringement thereof; 1.1.9 Intellectual Property.
All rights, title and interest in and to all Intellectual Property,
including all software, computer programs, codes and the like; 1.1.10 Records.
All existing customer, supplier, manufacturer, provider and vendor lists,
files, payment invoices and billing records, all financial records, documents or
data of ACS and all other existing marketing information and accounting and
financial information; 1.1.11 Office Leases.
All rights, title and interest of ACS as tenant under or in connection with
the Leases described on Schedule 1.1.11 (the "Office Leases and Premises")
relating to the premises, also as described on Schedule 1.1.11; and 1.1.12 Tax
Refunds.
The rights to any of ACS's claims for any federal, state, local, or foreign
Tax refunds; 1.1.13 Other Assets.
All rights, title and interest in and to all other tangible and intangible
assets of ACS used in or related to the Business.
At Closing, the Assets shall be conveyed to PATI free and clear of all
Liens other than Permitted Liens.
1.2 Excluded Assets.
Notwithstanding the foregoing, the Assets shall not include any of the
following Excluded Assets: 1.2.1 Corporate Matters.
The corporate seals, certificates of incorporation, minute books, stock
books, tax returns, or other records having to do with the corporate
organization of ACS or any ACS Stockholder; 1.2.2 Transaction Documents.
The rights that accrue or will accrue to ACS under this Agreement or the
other Transaction Documents; 1.2.3 Funded Plans.
The funded portion, if any, of any pension or profit-sharing plan of ACS;
1.2.4 Other Excluded Assets.
The excluded assets described on Schedule 1.2.4.
ARTICLE 2
PAYMENT FOR THE ASSETS
2.1 Delivery of the Purchase Consideration.
In addition to, and without limiting any other provisions of this
Agreement, in consideration of the sale of the Assets to PATI by ACS, PATI
agrees to deliver to ACS or cause to be delivered to ACS at or prior to the
Closing, the common stock of PATI and a written assumption by PATI of the
Assumed Liabilities, as hereinafter defined, against delivery of the Assets, and
PATI agrees to issue to ACS 2,971,915 shares of common stock of PATI which
amount gives effect to and is to be issued after the completion of a 1 for 12
reverse stock split and as described more specifically in Schedule (i) hereto)
on the date of the Closing of the transaction as contemplated herein.
2.2 Assumption of Liabilities.
At the Closing, as part of the consideration for this transaction, ACS
shall assign to PATI all of its rights, title, interest and obligations in and
to, and PATI shall specifically assume for all purposes as of the Closing Date
and agree to pay when due and otherwise discharge and perform thereunder, or, at
PATI's option, satisfy as of the Closing Date, only the obligations and
liabilities set forth on Schedule 2.2 (the "Assumed Liabilities"). PATI agrees
to indemnify and hold Sellers harmless from any and all claims and liabilities
specifically assumed by PATI as set forth herein.
2.3 Retained Liabilities.
Except as specifically set forth in Schedule 2.3 "Retained Liabilities",
PATI shall assume, pay and discharge all liabilities of the Sellers as set forth
in Schedule 2.2 the "Assumed Liabilities". All liabilities, obligations,
commitments, debts or other amounts payable by Sellers not included in the
Assumed Liabilities shall not be transferred to PATI hereby. ACS shall retain
and discharge all Retained Liabilities, including but not limited to those
certain specified Retained Liabilities set forth on Schedule 2.3.
2.4 Allocation of Purchase Consideration.
The Purchase Consideration and the liabilities assumed by PATI pursuant to
Section 2.1 and Section 2.2 shall be allocated for Tax reporting purposes in the
manner set forth on Schedule 2.4 for all purposes, including the filing of any
Tax Returns.
ARTICLE 3
CLOSING
3.1 Closing Date.
Subject to the provisions of this Agreement, and subject to the approval by
the stockholders of PATI of all matters necessary for PATI to complete the
Closing, and the satisfaction by PATI of all requirements of the Securities and
Exchange Commission (the "SEC") in connection therewith, the Closing shall be
held as soon as practicable at the offices of American CareSource Corporation,
0000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, at 2:00 P.M., local time.
Notwithstanding anything herein to the contrary, if the Closing has not occurred
by August 31, 2003 for any reason other than the determination of the Securities
and Exchange Commission to review the proxy statement filed by PATI in
connection with soliciting approval from its stockholders for the transaction,
either ACS or PATI may terminate this Agreement by serving the other party with
written notice of such termination. In the event the Securities and Exchange
Commission has determined to review the proxy statement filed by PATI in
connection with soliciting approval from its stockholders for the transaction,
the Closing may occur at any time prior to November 30, 2003 and either ACS or
PATI may terminate this Agreement by serving the other party with written notice
of such termination after such date. PATI shall provide ACS with copies of any
proxy statement filed or to be filed with the SEC relating to this transaction,
all exhibits, amendments thereto and any and all correspondence between PATI and
the SEC relating thereto, as soon as reasonably possible.
3.2 Conditions to PATI's Obligation to Consummate the Closing.
PATI's obligation to consummate the Closing shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions, which
PATI may only waive in writing:
3.2.1 Representations and Warranties.
The representations and warranties of ACS set forth in this Agreement
shall have been correct and complete in all material respects as of the
date of this Agreement and shall be correct and complete in all material
respects as of the Closing Date as though made as of such time.
3.2.2 Covenants.
ACS shall have performed all agreements, covenants, and obligations
that it is required to perform under this Agreement prior to the Closing
Date.
3.2.3 Deliveries by ACS.
At or prior to the Closing Date, in consideration of the payment of
the Purchase Consideration and the execution and delivery by PATI of all
Transaction Documents to which PATI is a party, ACS shall execute and
deliver to PATI:
3.2.3.1 Closing Certificate.
A certificate, signed by an officer of ACS acceptable to PATI,
confirming the satisfaction of the conditions set forth in Sections
3.2.1 and 3.2.2.
3.2.3.2 Assignment of Contracts.
The Assignment of Contracts duly executed by ACS, pursuant to
which ACS shall assign to PATI or its designee all of ACS's rights,
title and interest in, to, and under the Contracts, free and clear of
all Liens.
3.2.3.3 Opinion of ACS Counsel.
An opinion of legal counsel acceptable to PATI, dated the Closing
Date, in the form attached hereto as Exhibit A.
3.2.3.4 Shareholder Representation Letter.
A representation letter in the form attached hereto as Exhibit B
executed by each ACS Stockholder.
3.2.3.5 Conveyance Instruments.
A xxxx of sale and such other deeds, certificates of title,
assignments, assurances and other instruments and documents as PATI
may reasonably request in order to effect the sale, conveyance,
transfer and assignment of the Assets to PATI, against delivery of the
Purchase Consideration therefor, and such other documents, instruments
or certificates as shall be reasonably requested by PATI or its
counsel.
3.2.3.6 Customer Contracts.
All customer contracts duly executed.
3.2.3.7 Vendor/supplier contracts.
The Vendor/supplier contracts, duly executed.
3.2.3.8 Contracts.
All of the Contracts and copies of all Documents relating to the
Assets.
3.2.3.9 Consents.
All Consents required to be obtained or given on behalf of ACS in
order to consummate the transactions contemplated by this Agreement
and the other Transaction Documents.
3.2.3.10 Shareholders Agreement.
Each of the PATI Shareholders and the ACS Stockholders shall have
executed the Shareholders Agreement, in the form attached as Exhibit I
hereto.
3.2.3.11 Letter of Credit.
ACS and Xxxx Xxxxxx will cause to be extended through a date no
earlier than March 31, 2004 the Letter of Credit issued by Bank of
America for the benefit of ACS to Pinnacol Assurance of the State of
Colorado. PATI shall agree to replace this Letter of Credit in the
event PATI completes a public or private offering the gross proceeds
of which exceed $15 million to PATI.
3.2.3.12 Today Financial Corporation.
Each of Xxxx Xxxxxx, Today Financial Corporation and each related
entity and Affiliate thereof, shall agree to hold all indebtedness
from ACS in abeyance until March 31, 2007, and to not demand repayment
of principal or accrued interest unless required in accordance with
the terms of the promissory note relating thereto. Any prepayments
made by PATI of the above debt shall be made pari passu among all of
the outstanding indebtedness to Xxxx Xxxxxxxxx, Xxxxxx Xxxxxxxx and
Today Financial Corporation and related entitled and affiliates owned
or controlled by Xxxx Xxxxxx.
3.2.3.12 Authorizations.
A certified resolution of the Board of Directors and stockholders
of ACS executed prior to the date of this Agreement (which consent of
stockholders shall be irrevocable) authorizing the execution, delivery
and performance of this Agreement and each other document, agreement,
instrument or certificate to which such person is a party and the
transactions contemplated herein and therein.
3.2.4 Possession by PATI.
Simultaneously with the consummation of the transfer of the Assets and
the assumption of the Assumed Liabilities, as well as the issuance of the
common stock of PATI to the Sellers, ACS and its respective officers,
partners, agents and employees, as appropriate, will put PATI into full
possession and enjoyment of all Assets to be conveyed and transferred by
this Agreement.
3.2.5 Failure to Obtain Third Party Consents.
To the extent that ACS's rights under any Contract, Governmental
Authorization or other Asset to be assigned to PATI hereunder may not be
assigned without the Consent of another person which has not been obtained
at Closing, this Agreement shall not constitute an agreement to assign the
same if an attempted assignment would constitute a breach thereof or be
unlawful, and ACS, at its expense, shall use its best efforts to obtain any
such required consent(s) as promptly as possible.
3.2.6 Voting Agreement.
The Voting Agreement in the form attached hereto as Exhibit D shall
have been executed by each of the ACS Stockholders on and as of the date of
this Agreement and shall remain in full force and effect on the date of the
Closing.
3.2.7 Further Assurances by ACS.
ACS at any time before or after the Closing Date will execute,
acknowledge and deliver any further assignments, conveyances and other
assurances, documents and instruments of transfer reasonably requested by
PATI, and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by PATI for the purpose of
assigning, transferring, granting, conveying and confirming to PATI, or
reducing to possession, any or all of the Business and Assets, including
contacting vendors/suppliers, customers and suppliers.
3.3 Conditions to ACS's Obligation to Consummate this Agreement.
ACS's obligation to consummate this Agreement shall be subject to and
conditioned upon the satisfaction, on or prior to the Closing Date of the
following conditions, which ACS may only waive in writing:
3.3.1 Representations and Warranties.
The representations and warranties of PATI set forth in this Agreement
shall have been correct and complete in all material respects as of the
date of this Agreement and shall be correct and complete in all material
respects as of the Closing Date as though made as of such time.
3.3.2 Covenants.
PATI shall have performed all agreements, covenants, and obligations
that it is required to perform under this Agreement prior to the Closing
Date, including but not limited to the covenant referenced in Section 7.10
hereof.
3.3.3 Deliveries by PATI.
In addition to, and without limiting any other provisions of this
Agreement, in consideration of the sale of the Assets to PATI by ACS, PATI
agrees to deliver or cause to be delivered at or prior to the Closing the
following:
3.3.3.1 Closing Certificate.
A certificate, signed by an officer of PATI, confirming the
satisfaction of the conditions set forth in Sections 3.3.1 and 3.3.2.
3.3.3.2 Assignment of Contracts
The Assignment of Contracts, duly accepted by PATI;
3.3.3.3 Vendor/supplier contracts.
The Vendor/supplier contracts, duly accepted by PATI.
3.3.3.4 Customer Agreements.
The Customer Agreements duly accepted by PATI.
3.3.3.5 Opinion of PATI's Counsel.
An opinion of legal counsel, acceptable to ACS, dated the Closing
Date, in the form attached hereto as Exhibit C.
3.3.3.6 Authorizations.
A certified copy of resolutions adopted by the Board of Directors
and PATI Stockholders authorizing the execution and delivery of this
Agreement and the transactions contemplated herein; and
3.3.3.7 Shareholders Agreement.
A Shareholders Agreement, in the form attached as Exhibit I
hereto, shall be executed as of the date of Closing, by and among
certain shareholders, including Xxxx Xxxxxxxxx and Xxxxxx Xxxxxxxx, of
PATI together with Xxxx Xxxxxx and the ACS Stockholders.
3.3.3.8 Amendment to By-Laws.
An executed corporate document and appropriate effectuated
changes to the corporate by-laws of PATI in the form attached hereto
as Exhibit E.
3.3.3.9 Indebtedness.
Each of Xxxx Xxxxxxxxx and Xxxxxx Xxxxxxxx, shall have agreed to
hold all indebtedness outstanding as of the date of this Agreement
from PATI to them in abeyance until September 30, 2004 (exclusive of
any indebtedness referred to in Section 5.3.9 hereto), and to not
demand repayment of principal or accrued interest unless required by
the terms of the promissory notes relating thereto. Any prepayments
made by PATI of the above debt shall be made pari passu among all of
the outstanding indebtedness to Xxxx Xxxxxxxxx, Xxxxxx Xxxxxxxx and
Today Financial Corporation and related entitled and affiliates owned
or controlled by Xxxx Xxxxxx.
3.3.3.10 Xxxxx Fargo Bank.
Written documentation shall have been provided that the bank debt
of PATI to Xxxxx Fargo Bank has been renegotiated so as to provide a
grace and forbearance period until December 31, 2003, before any
principal payments are required and that Xxxx Xxxxxxxxx and Xxxxxx
Xxxxxxxx will remain guarantors of such bank debt if required by Xxxxx
Fargo Bank.
3.3.4 Private Placement
The private placement of securities referred to in Section 7.10 of
this Agreement shall be funded to the full extent of the Minimum Amount
described therein into an escrow account to be released immediately
following the Closing.
3.3.5 Voting Agreement.
The Voting Agreement in the form attached hereto as Exhibit D shall
have been executed by each stockholder of PATI owning more than 10% of the
outstanding shares of the common stock of PATI on and as of the date of
this Agreement and shall remain in full force and effect on the date of the
Closing.
3.3.6 Further Assurances of PATI.
PATI shall at any time before or after the Closing Date cooperate with
ACS by furnishing any additional information, executing and delivering any
additional documents and instruments and doing any and all such other
things as may be reasonably required by ACS or its counsel to consummate or
otherwise implement the transactions contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of PATI and PATI Stockholders.
All representations and warranties of PATI and the PATI Stockholders made
herein shall survive for twelve (12) months after Closing shall be made as of
the date of this Agreement, subject generally to the exceptions provided for in
the Schedules hereto. Subject to the limitation of the preceding sentence, PATI
and the PATI Stockholders represent and warrant to ACS and the ACS Stockholders
as follows (it being agreed that all representations and warranties contained in
this Section 4.1 shall be made, with respect to the PATI Stockholders, to the
best knowledge of the PATI Stockholders):
4.1.1 Organization of PATI.
PATI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
4.1.2 Power and Authority.
PATI possesses the requisite power and authority to execute, deliver
and perform this Agreement and each other Transaction Document to which it
is a party without obtaining any approval, authorization, consent or waiver
or giving any notice, other than approvals which it has properly obtained
other than approvals of its Stockholders contemplated in Section 3.1
hereof. PATI possesses the requisite power and authority to own its
respective properties and carry on its respective business as presently
conducted.
4.1.3 Execution, Delivery and Enforceability.
PATI and the PATI Stockholders have duly authorized, executed and
delivered this Agreement and each other Transaction Document to which they
are a party and this Agreement and each other such Transaction Document
constitutes a valid, legal and binding obligation of PATI and the PATI
Stockholders enforceable against PATI and the PATI Stockholders in
accordance with its terms.
4.1.4 Conflicts.
PATI's execution, delivery or performance of this Agreement and the
other Transaction Documents to which it is a party will not conflict with
or constitute a breach or violation of, or result in a Lien against or give
rise to any default or right of acceleration, cancellation or termination
with respect to, any Document to which PATI is a party or by which PATI's
assets are bound (or give rise to an event that with notice, lapse of time
or both would result in such a conflict, breach, violation, Lien, default
or right) including the certificate of incorporation and the by-laws of
PATI.
4.1.5 Litigation.
No Lawsuit by or before any court or other Governmental Authority
exists or is pending or threatened that would prohibit PATI from
consummating the transactions contemplated by this Agreement and any other
Transaction Document to which PATI is a party or seeks damages with respect
to the transactions contemplated hereby and thereby. No lawsuit by or
before any court or other governmental authority exists or is pending or
threatened to which PATI is or may become a party.
4.1.6 No Broker.
Other than as set forth on Schedule 4.1.6, PATI and PATI Stockholders
have no obligation or liability to any broker, finder or other person for
any broker or similar services with respect to the transactions
contemplated by this Agreement and the other Transaction Documents.
4.1.7 Capitalization.
(a) Schedule 4.1.7 (a) sets forth the authorized capital stock of PATI and
the number of outstanding shares of capital stock of PATI as of the
Closing Date. All of the issued and outstanding shares of capital
stock of PATI have been duly authorized, validly issued and are fully
paid, non-assessable and free of preemptive rights with no personal
liability attaching to the ownership thereof. Except as set forth on
Schedule 4.1.7(a) PATI does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of
any shares of common stock of PATI or any other equity security of
PATI or any securities representing the right to purchase or otherwise
receive any shares of common stock of PATI or any other equity
security of PATI other than as provided for in this Agreement. Except
as set forth on Schedule 4.1.7(a), there are no bonds, debentures,
notes, shares of preferred stock or other indebtedness of PATI having
the right to vote (or convertible into, or exchangeable for securities
having the right to vote) on any matters on which the stockholders of
PATI may vote.
(b) Except as disclosed on Schedule 4.1.7(b), there are no agreements or
understandings, with respect to the voting of any shares of common
stock of PATI or which restrict the transfer of such shares, to which
PATI is a party and there are no such agreements or understandings to
which PATI is a party with respect to the voting of any such shares or
which restrict the transfer or such shares, other than applicable
federal and state securities laws.
4.1.8 Filings with the SEC.
PATI has made all filings with the SEC (the "Public Reports") that it
has been required to make under the Securities Act of 1933, as amended (the
"Securities Act") and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Each of the Public Reports has complied with the
Securities Act and Exchange Act in all material respects.
4.1.9 Financial Statements.
PATI has filed an annual report on Form 10-K for the fiscal year ended
December 31, 2002. The financial statements included in or incorporated by
reference into this annual report (including related notes and schedules)
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, present fairly the financial
condition of PATI as of the indicated dates and the results of operations
of PATI for the indicated periods, are correct and complete in all material
respects, and are consistent with the books and records of PATI.
4.1.10 Undisclosed Liabilities.
Except for (i) for liabilities incurred since the fiscal year ended
December 31, 2002 in the ordinary course of business consistent with past
practice, (ii) liabilities contemplated herein, (iii) liabilities that
would not have a material adverse effect on the business or financial
condition of PATI, or (iv) liabilities as disclosed on Schedule 4.1.10,
PATI does not have any liabilities or obligations, contingent or otherwise,
that would be required to be disclosed, reflected or reserved against in a
consolidated balance sheet of PATI (including the related notes thereto,
where appropriate) prepared in accordance with GAAP which are not
adequately reserved or reflected on the balance sheet of PATI for the
fiscal year ended December 31, 2002.
4.1.11 Litigation.
Schedule 4.1.11 attached hereto is a true and complete list of all
Lawsuits brought in the two years preceding the date of this Agreement,
currently pending or, to the knowledge of PATI or the PATI Stockholders,
threatened against or affecting PATI or any of its property or business, at
law or in equity, or before or by and federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. PATI has no knowledge of any state of
facts or contemplated event that may reasonably be expected to give rise to
any such claim, action, review, suit, proceeding or investigation. PATI is
not operating under, or subject to, or in default with respect to, any
order, writ, injunction or decree of any court or governmental agency or
body, domestic or foreign.
4.1.12 Legal Compliance.
(a) Except as set forth on Schedule 4.1.12, PATI is not now conducting or
carrying on its business or affairs, and has not at any prior time
conducted or carried on its business or affairs, in violation of any
Applicable Law, which violation could have a material adverse effect
on the financial condition, business, operations or prospects of PATI,
its assets or its business taken as a whole.
(b) Except as set forth on Schedule 4.1.12, neither PATI nor its
stockholders, directors, employees or agents, directly or indirectly,
have given any gift or similar benefit to any third party payer,
government representative, government employee or other person or
entity which might subject any person or entity to damages or
penalties in a civil or criminal proceeding or might have had a
material adverse effect on its business if not given or might have a
material adverse effect on the business if not continued.
4.1.13 Taxes.
PATI has filed federal, state, local or foreign Tax Returns that it
was required to file. All such Tax Returns were correct and complete in all
material respects. All Taxes (whether or not shown on any Tax Return) have
been paid. There are no Liens on any of the Assets that arose in connection
with any failure (or alleged failure) of PATI to pay any Tax.
4.1.14 Restrictions.
Except as disclosed on Schedule 4.1.14 attached hereto, PATI is not
party to any arrangement or Document, oral or written, or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, or decree which materially affects or restricts or may in the
future materially affect or restrict, the business, operations, assets,
properties, prospects or condition (financial or otherwise) of PATI's
business or assets after consummation of the transactions contemplated
hereby.
4.1.15 Disclosure.
Except as set forth in Schedule 4.1.15 PATI is not aware of any
material facts concerning PATI that it has not disclosed to ACS in this
Agreement. PATI has fully, accurately and completely provided ACS with all
information that ACS requested when deciding whether to enter into this
Agreement. No representation, warranty or statement of PATI contained in
this Agreement or the other Transaction Documents contains any untrue
statement or omits to state a fact necessary to make such representation,
warranty or statement not misleading in any material respect.
4.2 Representations and Warranties of ACS and ACS Stockholders.
All representations and warranties of ACS and ACS Stockholders made herein
shall survive for twelve (12) months after Closing and shall give effect to the
combination and consolidation of ACS with ACSC, Inc. and shall be made as of the
date of this Agreement, subject generally to the exceptions provided for in the
Schedules hereto. Subject to the limitations of the preceding sentence, each of
the Sellers represents and warrants to PATI and PATI Stockholders as follows (it
being agreed that all representations and warranties contained in this Section
4.2 shall be made, with respect to the ACS Stockholders, to the best knowledge
of the ACS Stockholders):
4.2.1 Organization of ACS.
ACS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Indiana. ACS is not required to
qualify to transact business as a foreign corporation in any jurisdiction
other than where it is currently qualified.
4.2.2 Power and Authority.
ACS possesses the requisite power and authority to execute, deliver
and perform this Agreement and each other Transaction Document to which it
is a party without obtaining any approval, authorization, consent or
waiver, or giving any notice, other than the approval of the Board of
Directors and the ACS Stockholders, which approval has been properly
obtained. ACS possesses the requisite power and authority to own its
properties and carry on its business as presently conducted.
4.2.3 Execution, Delivery and Enforceability.
Each Seller has duly authorized, executed and delivered this Agreement
and the other Transaction Documents to which it is a party and this
Agreement and each such other Transaction Document constitutes a valid,
legal and binding obligation of Sellers enforceable against Sellers in
accordance with its terms.
4.2.4 Conflicts.
Neither the execution, delivery or performance by Sellers of this
Agreement nor any other Transaction Document to which any Seller is a party
will (i) conflict with, constitute a breach or violation of, or give rise
to any default or right of acceleration, cancellation or termination with
respect to, any arrangement or Document to which any Seller is a party or
by which the Business or any of the Assets are bound or affected (or give
rise to an event that with notice, lapse of time or both would result in
such a conflict, breach or violation, default or right), including the
articles of incorporation and the by-laws of ACS; (ii) result in the
creation of a Lien upon any of the assets or properties of any Seller, or
(iii) violate any order, judgment, writ, injunction, decree, or any law,
statute, rule, ordinance or regulation applicable to any Seller.
4.2.5 Litigation.
No Lawsuit by or before any court or other Governmental Authority
exists or is pending or threatened that would prohibit ACS from
consummating the transactions contemplated by this Agreement and any other
Transaction Document to which ACS is a party or seeks damages with respect
to the transactions contemplated hereby or thereby. No lawsuit by or before
any court or other governmental authority exists or is pending or
threatened to which ACS is or may become a party.
4.2.6 ACS Capitalization.
(a) ACS Stockholders are the owners, beneficially and of record, of no
less than two-thirds of the issued and outstanding capital stock of
ACS as set forth on Schedule 4.2.6(a).
(b) Schedule 4.2.6(a) sets forth the authorized capital stock of ACS and
the number of outstanding shares of capital stock of ACS as of the
Closing Date and the stockholders thereof. All of the issued and
outstanding shares of capital stock of ACS have been duly authorized,
validly issued and are fully paid, non-assessable and free of
preemptive rights with no personal liability attaching to the
ownership thereof. Except as set forth on Schedule 4.2.6(a) ACS does
not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of common stock of ACS or
any other equity security of ACS or any securities representing the
right to purchase or otherwise receive any shares of common stock of
ACS or any other equity security of ACS other than as provided for in
this Agreement. Except as set forth on Schedule 4.2.6(a), there are no
bonds, debentures, notes, shares of preferred stock or other
indebtedness of ACS having the right to vote (or convertible into, or
exchangeable for securities having the right to vote) on any matters
on which the stockholders of ACS may vote.
(c) Except as disclosed on Schedule 4.2.6(b), there are no agreements or
understandings, with respect to the voting of any shares of common
stock of ACS or which restrict the transfer of such shares, to which
ACS is a party and there are no such agreements or understandings to
which ACS is a party with respect to the voting of any such shares or
which restrict the transfer or such shares, other than applicable
federal and state securities laws.
4.2.7 Subsidiaries.
ACS does not own, and did not own at any time covered by the Financial
Statements, directly or indirectly, either of record or beneficially, any
interest (including, but not limited to, capital stock, partnership
interests or other securities) in any association, business trust,
corporation, general partnership, joint stock company, joint venture,
limited liability company, limited partnership, professional association,
professional corporation or any other organization or entity.
4.2.8 Financial Statements.
(a) ACS has prepared the financial statements described on Schedule 4.2.8
(the "Financial Statements") from its books and records which
accurately and fairly reflect the transactions and dispositions of the
assets of ACS using sound accounting principles, applied on a
consistent basis for the periods presented and consistent with ACS's
past practices. The Financial Statements present fairly the financial
position, results of operations and cash flows of ACS as of the dates
and for the periods covered by such Financial Statements. ACS owns all
of the assets described in the Most Recent Balance Sheet. ACS does not
have any liabilities or obligations, absolute or contingent, other
than the liabilities and obligations described in such Financial
Statements. The Financial Statements of ACS and the financial records
of ACS are in the form and quality such that they may be audited in
accordance with the standards and requirements of GAAP as required by
the SEC or such an audit may be completed without any qualifications,
prior to the date of Closing.
(b) Included in Schedule 4.2.8 is the Balance Sheet dated December 31,
2001 and Statement of Operations, Stockholders' Equity and Cash Flows
for the year then ended (collectively, the "Audited Financial
Statements"), audited by BDO Xxxxxxx, X.X., independent certified
public accountants of ACS, each of which Audited Financial Statements
have been prepared in accordance with GAAP consistently applied and
fairly present the financial position of ACS as of the date of such
Audited Financial Statements and the results of operations for the
period covered thereby, subject only to the matters described in the
accountants' report attached thereto.
4.2.9 No Undisclosed Liabilities.
Except as disclosed in the Financial Statements and the Schedules
referred to herein, the Assets and Business are not subject to any
liabilities, obligations, assessments, charges or expenses of any kind or
nature whatsoever, absolute or contingent, or any facts that could give
rise to any liabilities, obligations, assessments, charges or expenses,
that could materially and adversely affect the Assets, the Business, or
cash flows, financial condition, prospects or operations of ACS.
4.2.10 Premises.
ACS does not own any real property. True and correct copies of all
arrangements and Documents relating to the Premises, including the Office
Leases, has been delivered to PATI. ACS has a good and marketable leasehold
interest in the Premises under and pursuant to the Office Leases. ACS has
performed all obligations required to be performed by it relating to the
Premises under and pursuant to the Office Leases, is not in breach of, or
default under, the Office Leases in any respect, and no event or action has
occurred, is pending, or is threatened, which after notice, or the lapse of
time would constitute or result in a breach or default by ACS under the
Office Leases. ACS has not received notice that any landlord of the
Premises intends to cancel, suspend or terminate any Office Lease. All
improvements to the leasehold created by the Office Leases are in good
operating condition and in a state of good repair, and are adequate and
suitable for the purposes for which they are being used. None of such
improvements (or any equipment therein), nor the operation or maintenance
thereof, nor the operation of the Business therein, violates any Documents
or restrictive covenants or any Applicable Law. No condemnation proceeding
is pending or, to the knowledge of any Seller, threatened which would
preclude or impair the use of any of the Premises for the Business as
presently conducted.
4.2.11 Title to and Character of Assets.
Schedule 1.1.1 is a true and complete list of all Tangible Personal
Property owned or leased by ACS which is related to or used in the Business
and specifies such items as are owned and such as are leased, the owner or
lessee thereof and, with respect to owned property, specifies its aggregate
cost or original value and the net book value, and, with respect to leased
property, specifies the identity of the lessor, the rental rate and the
unexpired term of the lease. Such Assets constitute all tangible personal
property necessary for the conduct of the Business by PATI. ACS owns and
has good and marketable title to all Assets purported to be conveyed by
them free and clear of all Liens except for Permitted Liens set forth on
Schedule 4.2.11. All Tangible Personal Property owned or leased by ACS is
in good operating condition and repair, subject to normal wear and tear.
There are no outstanding agreements, options or commitments of any nature
obligating ACS to transfer any of the Assets or rights or interests therein
to any other party. Other than the assets included in the schedules hereto,
ACS does not own any other assets or property of any kind.
4.2.12 Contracts.
All Contracts are listed and briefly described on Schedule 1.1.2. True
and complete copies of each Contract (including accurate descriptions of
oral Contracts) have been provided to PATI. Each Contract is valid, binding
and in full force and effect. No party to any such Contract has assigned
any of its rights or delegated any of its duties under such Contract. No
breach or default exists under any such Contract and no event has occurred
that with the lapse of time or action or notice would result in a breach or
a default under such Contract. Following the consummation of the
transaction contemplated hereby, all rights of ACS under each such Contract
shall inure to PATI free and clear of any Liens except for any Permitted
Liens and such Contract will be enforceable by PATI in accordance with such
Contract's terms.
4.2.13 Accounts Receivable.
To the best knowledge of ACS, and except to the extent disclosed in
Schedule 2.2, the accounts and notes receivable material to the Business
that are reflected on the Most Recent Balance Sheet or on the books and
records of ACS as of the date of the Most Recent Balance Sheet and all
accounts and notes receivable of ACS material to the Business arising after
the date of the Most Recent Balance Sheet, other than accounts and notes
receivable collected since then in the ordinary course of ACS's business
consistent with its past practices: (i) arose from bona fide transactions
by ACS in the ordinary course of its business consistent with its past
practices, (ii) represent bona fide indebtedness of the respective debtors,
(iii) are collectible in full net of the respective reserves shown on the
Most Recent Balance Sheet or on the books and records of ACS as of the
Closing Date (which reserves are adequate and calculated consistent with
past practice and, in the case of the reserve as of the Closing Date, will
not represent a materially greater percentage of the accounts and notes
receivable as of the Closing Date than the reserve reflected in the Most
Recent Balance Sheet or the books and records of ACS as of the date of the
Most Recent Balance Sheet and will not represent a material adverse change
in the composition of such accounts and notes receivable in terms of
aging), and (iv) are not subject to any defense or offset.
4.2.14 Employee Matters; Employee Benefit Plans.
(a) Schedule 4.2.14 is a true and complete list of (i) the names and
addresses of all officers, directors, independent contractors,
employees and agents of ACS, stating the positions, rates of
compensation, accrued vacation and bonuses payable by ACS to or with
respect to each and (ii) all Benefit Plans.
(b) ACS has fully performed all of its obligations under all such Benefit
Plans, all of which are in full force and effect.
(c) All group health plans have been operated in compliance with either
COBRA or state law regulations, as applicable, in all respects to the
extent such requirements are applicable. No group health plan provides
for past termination coverage except as required by COBRA.
(d) There has been no act or omission by ACS, any ERISA affiliate or any
Benefit Plan fiduciary that has given rise to or may give rise to
fines, penalties, taxes, or related charges.
(e) ACS is not now, and has not been, a party to any collective bargaining
agreement, and no such agreement determines the terms and conditions
of employment of any employee of ACS. There are no labor controversies
pending or, to the knowledge of ACS and the ACS Stockholders,
threatened against ACS.
(f) No Benefit Plan provides for any severance pay, accelerated payments,
deemed satisfaction of goals or conditions, new or increased benefits,
or vesting conditioned, in whole or in part, upon a change in control
of the Business.
(g) No agreement, commitment, or obligation exists to increase any
benefits under any Benefit Plan or to adopt any new Benefit Plan.
4.2.15 Governmental Authorizations.
Schedule 4.2.15 is a true and complete list of all Governmental
Authorizations issued to ACS. Such Governmental Authorizations comprise all
Governmental Authorizations to be used or necessary in connection with the
Assets or the lawful operation of the Business by PATI. All such
Governmental Authorizations, if any, have been duly and validly issued, are
in full force and effect and are assignable to PATI. All such Governmental
Authorizations are renewable by their terms or in the ordinary course of
business without the need to comply with any special qualification
procedures or to pay any amounts other than routine filing fees.
4.2.16 Consents.
All Consents and notices required to be obtained or given by or on
behalf of ACS before consummation of the transactions contemplated by this
Agreement in compliance with all applicable laws, rules, regulations,
orders or governmental or other agency directives, or the provisions of any
Document binding upon ACS are described on Schedule 4.2.16 and all such
Consents have been duly obtained and are in full force and effect except as
set forth on Schedule 4.2.16.
4.2.17 Insurance.
Schedule 4.2.17 is a true and complete list and summary of all
Insurance Policies of ACS, other than those, which relate solely to the
Excluded Assets, true and correct copies of which have been provided to
PATI. All Insurance Policies are in full force and effect in accordance
with their terms, no notice of cancellation has been received, and there is
no existing default or event which, with the giving of notice or lapse of
time or both, would constitute a default thereunder. No Seller has been
refused any insurance, nor has its coverage been limited, by any insurance
carrier to which it has applied for insurance or with which it has carried
insurance.
4.2.18 Intellectual Property.
All of ACS's interest in Intellectual Property which is used in or
related to the Business is listed and described on Schedule 4.2.18. Such
Intellectual Property constitutes all the Intellectual Property necessary
for the conduct of the Business. Neither ACS's use of the Intellectual
Property nor PATI's use of the Intellectual Property in the same manner
infringes on the rights of any person or entity. The Intellectual Property
is valid and in full force and effect and is not subject to any Taxes,
maintenance fees or other actions. All Intellectual Property set forth on
Schedule 4.2.18 as being proprietary in nature is proprietary in nature,
adequate steps have been taken to ensure its continued proprietary nature
and nothing has transpired that would compromise or call into question its
proprietary nature. Schedule 4.2.18 also sets forth a true and complete
list of all names under which ACS has conducted any business or which it
has otherwise used.
4.2.19 Litigation.
Schedule 4.2.19 attached hereto is a true and complete list of all
Lawsuits brought in the two years preceding the date of this Agreement,
currently pending or, to the knowledge of ACS or the ACS Stockholders,
threatened, against or affecting ACS or any of its property or business, at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. ACS has no knowledge of any state of
facts or contemplated event that may reasonably be expected to give rise to
any such claim, action, review, suit, proceeding or investigation. ACS is
not operating under, or subject to, or in default with respect to, any
order, writ, injunction or decree of any court or governmental agency or
body, domestic or foreign.
4.2.20 Legal Compliance.
(a) Except as set forth in Schedule 4.2.20, ACS is not now conducting or
carrying on its business or affairs, and has not at any prior time
conducted or carried on its business or affairs, in violation of any
Applicable Law, which violation could have a material adverse effect
on the financial condition, business, operations or prospects of ACS,
the Assets or the Business taken as a whole.
(b) Except as set forth in Schedule 4.2.20, neither ACS nor its
stockholders, directors, employees or agents, directly or indirectly,
have given any gift or similar benefit to any third party payer,
government representative, government employee or other person or
entity which might subject any person or entity to damages or
penalties in a civil or criminal proceeding or might have had a
material adverse effect on the Business if not given or might have a
material adverse effect on the Business if not continued.
4.2.21 Taxes.
ACS has filed federal, state, local or foreign Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all
material respects. All Taxes (whether or not shown on any Tax Return) have
been paid. There are no Liens on any of the Assets that arose in connection
with any failure (or alleged failure) of ACS to pay any Tax. The
consummation of the transactions contemplated by this Agreement and the
other Transaction Documents will not impose or create any Tax obligations
including withholding Tax obligations on behalf of PATI except for Tax
obligations that are Retained Liabilities.
4.2.22 ACS Restrictions.
Except as disclosed on Schedule 4.2.22 attached hereto, ACS is not
party to any arrangement or Document, oral or written, or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, or decree which materially affects or restricts or may in the
future materially affect or restrict, the business, operations, assets,
properties, prospects or condition (financial or otherwise) of the Business
or the Assets after consummation of the transactions contemplated hereby.
4.2.23 No HSR Filing Required.
The transactions contemplated by this Agreement are exempt from the
notification and waiting requirements under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, because the Sellers expect that the
aggregate consideration for the Assets pursuant to this Agreement will be
less than $50,000,000, ACS had total assets as of December 31, 2001, of
less than $25,000,000, and ACS had net sales during the year ended December
31, 2001, of less than $25,000,000, as required under 16 C.F.R. SS
802.20(b). Moreover, the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement do not
require any approval, consent, filing, registration, or other action by any
governmental entity.
4.2.24 No Broker.
ACS has no obligation or liability to any broker, finder or other
person or entity for any broker or similar services with respect to the
transactions contemplated by this Agreement and the other Transaction
Documents.
4.2.25 Solvency.
The consummation by ACS of the transactions contemplated by this
Agreement and the other Transaction Documents will not constitute a
fraudulent transfer or conveyance with respect to ACS.
4.2.26 Disclosure.
ACS is not aware of any material facts concerning ACS or the Business
that it has not disclosed to PATI in this Agreement. ACS has fully,
accurately and completely provided PATI with all information that PATI
requested when deciding whether to enter into this Agreement. No
representation, warranty or statement of ACS contained in this Agreement or
the other Transaction Documents contains any untrue statement or omits to
state a fact necessary to make such representation, warranty or statement
not misleading in any material respect.
4.2.27 Conditions Affecting Business.
There is no fact, development or threatened development with respect
to the markets, products, services, patients, clients, customers,
facilities, computer software, data bases, personnel, vendors, suppliers,
payers, vendors/suppliers, operations, assets or prospects of the Business
which are known to Sellers which would affect the business, operations or
prospects of the Business or the Assets in any material respect when
considered as a whole, other than such conditions as may affect the economy
generally. Sellers have no reason to believe that any loss of any employee,
agent, customer, supplier, payer or other advantageous arrangement will
result because of the consummation of the transactions contemplated hereby.
4.2.28 Sufficiency of Assets.
The Assets constitute all of the assets necessary for PATI to conduct
the Business after the Closing.
4.2.29 No Corporate Practice.
ACS has not received notice from any Governmental Authority, from its
counsel or from any other of its advisors that any party to this Agreement
could be precluded from receiving the benefits of this Agreement or the
other Transaction Documents as a result of the structure of the transaction
contemplated by this Agreement or the other Transaction Documents. ACS
agrees that it will not, in an attempt to void or nullify this Agreement or
the other Transaction Documents or any relationship involving PATI or any
of its Affiliates, xxx, claim, aver, allege or assert that this Agreement,
any other Transaction Document or any such relationship violates any
Applicable Law.
4.3 Representations and Warranties of Each Signing Stockholder.
Each signing ACS Stockholder and PATI Stockholder represents and warrants
to their actual knowledge, as of the Closing Date and as of the date of
execution hereof, to all signatories to this Agreement as follows:
4.3.1 Legal Capacity.
Such Stockholder possesses the legal capacity to execute, deliver and
perform this Agreement and each Transaction Document to which he/she/it is
a party, without obtaining any approval, authorization, consent, or waiver
or giving any notice.
4.3.2 Execution, Delivery, and Enforceability.
Such Stockholder has duly executed and delivered this Agreement and
each Transaction Document to which he/she/it is a party, and this Agreement
and each Transaction Document to which he/she/it is a party constitutes a
valid, legal and binding obligation of such Stockholder, enforceable
against such Stockholder in accordance with their respective terms.
4.3.3 Conflicts.
Such Stockholder's execution, delivery and performance of this
Agreement and each Transaction Document to which he/she/it is a party will
not conflict with, constitute a breach or violation of, result in a Lien
against, or give rise to any default or right of acceleration,
cancellation, or termination with respect to any Document to which such
Stockholder is a party.
4.3.4 Compliance With Applicable Laws.
Such Stockholder has complied, to the best of his/her/its knowledge,
with all Applicable Laws material to this Agreement and such Stockholder's
execution, delivery, and performance of this Agreement will not violate any
Applicable Laws.
ARTICLE 5
COVENANTS
5.1 Best Efforts to Consummate the Sale.
Each of the parties to this Agreement shall use its best efforts to take,
or cause to be taken, all actions necessary, proper or advisable to consummate
the transactions contemplated by this Agreement. The Sellers agree to cooperate
fully and completely with PATI in preparing a proxy statement for filing with
the SEC in order to solicit approval of the PATI stockholders for the matters
necessary to proceed with the Closing. To such end, the Sellers will exert their
best efforts in good faith to provide PATI on a timely basis all information
with respect to ACS as is required by the rules of the SEC to be presented
therein, including all financial statements so required. The Sellers agree and
covenant hereby that all information provided by the Sellers to PATI to be
included in the proxy statement and other filings to be made with the SEC, will
be true and correct in all material respects and will not omit any material fact
necessary to make the statements made, in the light of the circumstances under
which they are made, not misleading.
5.2 Access to ACS and PATI.
From the date of this Agreement through the Closing Date, ACS and PATI
shall permit the other party and its advisors and representatives access to the
Assets and Business, including ACS's and PATI's books and records. Moreover,
during this period, officers, employees, advisors and representatives of ACS and
PATI shall furnish promptly to the other party and its advisors and
representatives, at the sole cost and expense of the requesting party, such
financial and operating information as such Persons may reasonably request,
including copies of any requested Documents.
5.3 Operation of ACS and PATI Pending the Sale.
For the purposes of this section of this Agreement, the term "Business" and
the term "Assets" when used in this section shall refer to the assets and
business operations of both ACS and PATI. From the date of this Agreement
through the Closing Date, ACS and PATI shall:
5.3.1 Representations and Warranties.
Use reasonable efforts to operate and maintain the Assets and Business
of their respective companies in such a manner so that the representations
and warranties of ACS and PATI set forth in this Agreement shall continue
to be correct and complete in all material respects at all times prior to
the Closing Date as if made on and as of such times;
5.3.2 Operate the Business in the Ordinary Course.
Except as is otherwise provided for in this Agreement, operate the
Business of ACS and PATI in the ordinary course consistent with past
practices and this Agreement and in compliance with all Applicable Laws
material to the Business and Assets;
5.3.3 Maintain Goodwill.
Use reasonable efforts to preserve intact the Business and the
goodwill of the customers of the Business, the Vendors/suppliers, the
employees, and any other Person having business relations with ACS and
PATI;
5.3.4 No Material Adverse Change.
Use reasonable efforts to not cause or suffer to exist any Material
Adverse Change to the Business;
5.3.5 No Dividends.
Cause ACS or PATI to refrain from declaring or paying any dividends or
otherwise making any distributions or transfers of any amount including
cash to any employees, officers, directors or stockholders, except in the
ordinary course of business or as otherwise agreed to prior to the full
execution of this Agreement;
5.3.6 Maintain Assets.
Maintain the Assets in good order and repair in all material respects;
5.3.7 Disposition of Assets.
Refrain from disposing of, or committing to dispose of any Assets in
excess of $5,000 of fair market value at the time of disposition;
5.3.8 Acquisition of Assets.
Refrain from acquiring, or committing to acquire, any Assets, other
than Assets involving $25,000 or less in any one transaction or series of
related transactions;
5.3.9 Borrow Money.
Refrain from assuming, creating, guaranteeing, or incurring any
indebtedness, whether absolute or contingent, other than indebtedness
incurred in the ordinary course of the Business consistent with past
practices, except for, in the case of ACS, (i) a letter of credit to
Pinnacol Assurance from Bank of America for $500,000 for the benefit of ACS
and (ii) the loan from PATI to ACS under the Credit Agreement dated April
10, 2003 and related documents and, in the case of PATI, (i) the loan from
certain investors to PATI under the Note and Stock Purchase Agreement dated
April 10, 2003 and related documents, and (ii) the loan from Xxxx Xxxxxxxxx
or his Affiliates in the case of PATI, prior to the Closing Date of this
transaction unless otherwise provided for herein, which shall be provided
with notice to the other party (which notice may be provided at any time
prior to the Closing);
5.3.10 Make Payments.
Promptly pay when due all liabilities and obligations of every kind
and nature incurred by ACS and PATI in the ordinary course consistent with
past business practices;
5.3.11 Pay Taxes.
Timely and accurately file all required Tax Returns and timely pay all
Taxes owed with respect to such Tax Returns;
5.3.12 No Liens.
Refrain from granting any Liens except in the ordinary course of
business consistent with past practices;
5.3.13 No Changes to Contracts.
Refrain from amending, modifying, or terminating any of the Contracts
or other Documents outside the ordinary course of business consistent with
past business practices except as contemplated by this Agreement, including
articles of incorporation and by-laws, or entering into any new Document
that is material;
5.3.14 Perform Obligations.
Punctually perform all obligations under each Contract and each of the
other Documents, and keep each of them in full force and effect, free from
any right of cancellation, forfeiture or termination;
5.3.15 Insurance Coverage.
Continue in effect all Insurance Policies unless such insurance
coverage is replaced by a new or different policy of similar nature and
coverage;
5.3.16 No Changes in Accounting Principles.
Refrain from changing the accounting principles used when maintaining
accounting records or presenting its financial statements, or otherwise
altering the manner of keeping accounts, books, or records, except for
converting its accounting basis to the accrual method;
5.3.17 Benefit Plans.
Make full and timely payment of all amounts required under any Benefit
Plan;
5.3.18 Loans to Affiliates.
Refrain from making, changing, or forgiving any loan in excess of
$5,000 between ACS or PATI and any of their Affiliates, directors,
employees, officers, related parties, or stockholders.
5.3.19 Payments to Affiliates.
Refrain from making any payments in excess of $5,000 in any case or
$25,000 in the aggregate of any kind, including dividends, distributions,
bonuses, repayment of indebtedness to any Affiliates, directors, employees,
officers, related parties or stockholders, other than normal, recurring
payments of salary, commissions, bonuses, retainers, reimbursements,
repayment of indebtedness, and the like, in accordance with existing
contractual obligations or in the ordinary course of business consistent
with past practices.
5.3.20 No Agreements Concerning the Foregoing.
Refrain from entering into any agreement to take any of the actions
described in the foregoing Sections 5.3.1 through 5.3.20 of this Section
5.3.
5.4 Changes to the Information Disclosed on the Schedules.
From the Effective Date of this Agreement through the Closing Date: ACS and
PATI shall promptly notify the other party of any material changes to the
information disclosed to the other party during the due diligence process
relating to this Agreement, and on any schedule to this Agreement, including
changes occurring after the date of this Agreement (although such disclosure
shall not in any way amend or supplement any schedule).
5.5 Representations, Warranties, and Covenants.
Each party to this Agreement shall notify in writing each other Party to
this Agreement of any condition, circumstance, fact, or other information of
which such party has become aware that may cause the representations and
warranties of such Party contained in this Agreement to be incorrect or
incomplete in any material respect at any time prior to the Closing Date as if
made on and as of any such time or cause such Party to be unable to perform its
covenants contained in this Agreement that it is required to perform on or
before the Closing Date. Such Party shall then use reasonable efforts in good
faith to prevent or promptly cure any such breach.
5.6 Satisfaction of the Closing Conditions.
ACS shall use its best efforts in good faith to cause the conditions set
forth in Section 3.2 and Section 4.2 to be satisfied, including the delivery to
PATI of all of the Consents. PATI shall use its best efforts in good faith to
cause the conditions set forth in Section 4.1 to be satisfied as promptly as
possible.
5.7 No Shopping.
Unless and until this Agreement is terminated pursuant to ARTICLE 8, ACS
shall not, and no ACS Stockholder or any Affiliate thereof shall cause ACS to,
nor shall any ACS Stockholder, directly or indirectly encourage, solicit,
initiate, or participate in any discussions or negotiations with any Person
other than PATI concerning any merger, sale of substantially all assets,
business combination, sale of shares of capital stock, or similar transaction
involving ACS, or directly or indirectly disclose any Confidential Information
to any Person other than PATI and its advisors and representatives. If ACS or
any ACS Stockholder receives an offer or inquiry with respect to any of the
foregoing types of transactions, such Person shall promptly inform PATI of such
offer or inquiry.
5.8 Intentionally Omitted.
5.9 Transferability of PATI Common Stock.
ACS hereby agrees that, after the Closing as contemplated herein, ACS may
distribute shares of PATI common stock only to the ACS Stockholders that are
signatories to this Agreement and to any new shareholders of ACS who become
record and beneficial owners of common stock of ACS prior to the Closing. The
ACS Stockholders hereby agree that they, and any new shareholders of ACS who
become record and beneficial owners of common stock of ACS prior to the Closing,
may not distribute any shares of PATI common stock for a period of twelve (12)
months from the Closing Date. Notwithstanding anything contained to the contrary
herein, PATI and ACS agree that, in the event that any ACS Stockholder that is a
signatory to this Agreement elects to dissolve or liquidate itself as a
corporation after the Closing, then the respective shareholders of such
corporation shall be entitled to receive their respective and proper shares of
PATI represented by new stock certificates in their respective names with the
understanding that such shares and certificates will be subject to a twelve
month holding period as are the other previously mentioned ACS Stockholders and
will be subject to the Indemnification obligations of the ACS Stockholders that
are signatories hereto.
5.10 Raising of Additional Funds
TFC, and Xxxx Xxxxxx personally, hereby agree to raise from investors (or
invest personally) an aggregate of $1,500,000 (excluding debt conversion) for
investment in Series D Preferred Stock in accordance with Section 7.10 hereof
within the period of time that is the earlier of (i) 90 days from the
preparation and delivery to TFC and Xx. Xxxxxx by PATI of an offering memorandum
or (ii) 120 days from the closing of the loan contemplated by the Credit
Agreement, provided that an offering memorandum is delivered by PATI within 30
days of the date of the first closing transaction contemplated by the Credit
Agreement (although this obligation shall not be affected to the extent that an
offering memorandum is not delivered within such period, rather, such period
shall increase on a day-for-day basis for each day that the offering memorandum
is delivered after such 30-day period). In addition, each of TFC and Xxxx
Xxxxxx, personally and Xxxx Xxxxxxxxx, personally, agrees to use their
reasonable best efforts to raise additional new capital of an aggregate of up to
$1,500,000 (in addition to the amounts set forth herein) for investment in
Series D Preferred Stock in accordance with Section 7.10 hereof.
5.11 Credit Enhancement
Xxxx Xxxxxxxxx, personally, hereby agrees by April 30, 2003 to provide for
credit enhancement as may be necessary to secure a $500,000 letter of credit for
the benefit of ACS to Pinnacol Assurance of the State of Colorado.
ARTICLE 6
INDEMNIFICATION
6.1 Survival; Indemnification Obligation.
6.1.1 Survival
The representations and warranties contained in this Agreement shall
survive for a period of 12 months from the date of this Agreement.
6.1.2 Indemnification by ACS and Sellers.
ACS and, with respect to each matter enumerated below, each ACS
Stockholder, severally, but not jointly as to themselves, and only to the
extent of their respective ownership in PATI common stock, shall indemnify
and hold harmless PATI Indemnitees against and in respect of any and all
material Claims suffered, which may arise out of or be in respect of (i)
any material falsity, inaccuracy or misrepresentation in or breach of any
of the representations, warranties or covenants made in this Agreement or
any other Transaction Document or in any financial statements, certificate,
document or instrument delivered at or prior to the Closing by or on behalf
of ACS, or each ACS Stockholder, respectively, (ii) any action, event,
condition, omission or failure to act of or by Sellers, their officers,
directors, employees or agents prior to the Closing Date, (iii) any Tax
obligations imposed on a PATI Indemnitee attributable to ACS, or (iv) any
of the Retained Liabilities of or attributable or traceable to ACS. The
indemnification obligation of each ACS Stockholder shall not include any
personal liability but shall be limited only to (i) any matter enumerated
above with respect to which such ACS Stockholder had actual knowledge at or
prior to the time of the Closing (ii) and such liability shall be limited
to the total number of shares of PATI common stock received by such ACS
Stockholder in connection with the transactions contemplated hereby.
Notwithstanding the foregoing, ACS and each ACS stockholder shall have no
liability under this Section 6.1.2 unless and until the aggregate amount of
all Claims arising under the matters enumerated above exceeds $100,000.
6.1.3 Indemnification by PATI.
PATI and, with respect to each matter enumerated below, each PATI
Stockholder, severally, but not jointly as to themselves, and only to the
extent of their respective ownership in PATI common stock, shall indemnify
and hold harmless ACS Indemnitees against and in respect of any and all
material Claims suffered, which may arise out of or be in respect of (i)
any material falsity, inaccuracy or misrepresentation in or breach of any
of the representations, warranties or covenants made in this Agreement or
any other Transaction Document or in any financial statements, certificate,
document or instrument delivered at or prior to the Closing by or on behalf
of PATI, or each PATI Stockholder, respectively, (ii) any action, event,
condition, omission or failure to act of or by PATI, its officers,
directors, employees or agents prior to the Closing Date, (iii) any Tax
obligations imposed on an ACS Indemnitee attributable to PATI (specifically
not intended to include any tax payable by any ACS Stockholder as a result
of this transaction or any distributions by ACS following the Closing), or
(iv) the Assumed Liabilities. The indemnification obligation of each PATI
Stockholder shall not include any personal liability but shall be limited
only to (i) any matter enumerated above with respect to which such PATI
Stockholder had actual knowledge at or prior to the time of the Closing and
(ii) such liability shall be limited to the total number of shares of PATI
common stock owned by such PATI Stockholder in connection with the
transactions contemplated hereby. Notwithstanding the foregoing, PATI shall
have no liability under this Section 6.1.3 unless and until the aggregate
amount of all Claims arising under the matters enumerated above exceeds
$100,000.
6.2 Indemnification Procedure.
6.2.1 Defense of a Claim.
Within five (5) days after receiving notice of any Claim that may give
rise to an indemnification obligation under this Agreement the party in
receipt of such notice shall give each other party to this Agreement
written notice of such Claim together with a copy of all documents relating
to such Claim, and the Indemnitor shall immediately undertake the defense
of such Claim by representatives of its own choosing.
6.2.2 Participation of the Indemnitee.
If ten (10) days after delivering written notice of a Claim to the
Indemnitor (or if earlier five (5) days before an answer or other pleading
must be served to prevent judgment by default in favor of the Person
asserting the Claim) the Indemnitor has not begun to defend against such
Claim, the Indemnitee shall have the right to defend compromise or settle
such Claim on behalf of and for the account and risk of the Indemnitor.
Notwithstanding whether the Indemnitor commences at any time to defend
against a Claim the Indemnitee shall have the right to participate in such
defense by representatives of its own choosing.
6.2.3 Settlement of Claims.
An Indemnitor shall have the right at its own cost and expense to
compromise or settle any Claim provided that an Indemnitor shall not
compromise or settle any Claim or consent to the entry of any judgment if
such compromise, settlement or judgment does not include an unconditional
release by the person or entity asserting the Claim of each Indemnitee from
all liability with respect to such Claim.
6.2.4 Cooperation.
In connection with any indemnity obligation, each Indemnitee shall
cooperate with all reasonable requests of the Indemnitor.
ARTICLE 7
POST-CLOSING COVENANTS
7.1 Tax Liabilities.
Subsequent to Closing, ACS shall accurately prepare and file in the time
periods prescribed therefor all Tax Returns attributable to its business and
operations for all periods prior to the Closing Date, and pay when due all Taxes
due and owing with respect thereto.
7.2 Assumed Liabilities.
From and after the Closing Date, PATI shall have complete control over the
payment, settlement or other disposition of, or any dispute involving, any of
the Assumed Liabilities and PATI shall have the right to conduct and control all
negotiations and proceedings with respect thereto. Upon receipt of notice
thereof, ACS agrees to notify PATI immediately of any claim made with respect to
any such Assumed Liability and shall not, except with the prior written consent
of PATI, make any payment of, or settle or offer to settle, or consent to any
compromise with respect to, any such Assumed Liability. ACS agrees to cooperate
with PATI in any reasonable manner requested by PATI in connection with any
negotiations or proceedings involving any such Assumed Liability.
7.3 Payments Received.
From and after the Closing, PATI shall have the right and authority to
endorse without recourse the name of ACS on any check or any other evidences of
indebtedness received by PATI on account of the Business and the Assets
transferred to PATI hereunder. ACS agrees that it will hold and promptly
transfer and deliver to PATI, from time to time as and when received, any cash,
checks with appropriate endorsements (using its best efforts not to convert such
checks into cash), or other property that it may receive on or after the Closing
which properly belongs to PATI and will account to PATI for all such receipts.
7.4 Access to Records.
At all times after the date of Agreement, upon the request of PATI, and to
the extent that all ACS business records, documents and data have not been
transferred and conveyed to PATI pursuant to this Agreement, ACS shall make
available to PATI any remaining records, documents and data with respect to the
Business, Assets and Assumed Liabilities not otherwise transferred to PATI
hereunder. ACS shall preserve for three (3) years all records possessed or to be
possessed by ACS relating to any of the Business, Assets, Assumed Liabilities or
the Business prior to the Closing Date.
7.5 Employees.
7.5.1 Employment.
Schedule 7.5 sets forth a list of each employee of ACS, together with
salary, accrued benefits and vacation time for each such employee, that
PATI agrees to employ after the Closing for a period of at least 30 days at
the same compensation level together with the same or similar benefits as
each employee received from ACS immediately prior to Closing as set forth
on Schedule 7.5. As of the Closing Date, PATI shall enter into an
employment agreement with Xxxx Xxxxxx on the terms and conditions as set
forth in the form attached hereto as Exhibit F. ACS will terminate the
employment of each of its employees that will be employed by PATI,
effective at 12:01 a.m. on the day following the Closing Date and will pay
all liabilities relating to the employment of, and termination of, such
employees up to the Closing, with the understanding that PATI shall assume
the obligations of any salary continuation, severance pay, accrued vacation
time or other value or benefits as set forth on Schedule 7.5 that might
otherwise be due to any employee formerly employed by ACS in the event that
such employee is terminated by PATI subsequent to Closing. PATI shall
assume and be responsible for any and all written employment agreements in
force at Closing with management employees or executive employees, provided
such employment agreements are disclosed in detail and set forth in
Schedule 7.5 herein prior to the execution of this Agreement.
7.5.2. Benefit Plans.
Except as otherwise contemplated by Section 2.4, ACS shall pay
directly to each of such employees that portion of all benefits (including
the Benefit Plans) which has been accrued on behalf of that employee (or is
attributable to expenses properly incurred by that employee) as of the
Closing Date, and PATI shall assume no liability therefor. No portion of
the assets of any Benefit Plan, fund, program or arrangement, written or
unwritten, heretofore sponsored or maintained by ACS (and no amount
attributable to any such Benefit Plan, fund, program or arrangement) shall
be transferred to PATI, and PATI shall not be required to continue any such
Benefit Plan, fund, program or arrangement after the Closing Date. All such
employees of ACS who are re-employed by PATI on or after the Closing Date
shall be new employees of PATI and any prior employment by ACS of such
employees shall not affect entitlement to, or the amount of, salary or
other cash compensation, current or deferred, which PATI may make available
to its employees.
7.5.3 Stock Options.
PATI shall make eligible all ACS employees listed on Schedule 7.5.3 to
participate in the PATI employee stock option plan and shall grant on the
Closing Date, options to purchase the number of shares of PATI stock
indicated on Schedule 7.5.3 to each of the employees listed thereon.
7.6 Use of Name.
From and after the Closing, no Seller shall use the name "American
CareSource" for any business or professional reason whatsoever. ACS will not
grant to any other person or entity the right to use such name as part of the
name of any other business or entity or as part of any trade name or trademark
not belonging to PATI.
7.7 Non-Competition.
Each of the Sellers recognizes that the covenants of the Sellers contained
in the Non-Compete Agreement attached as Exhibit 7.7 (the "Covenant Not to
Compete") are an essential part of this Agreement and the other Transaction
Documents and that but for the agreement of the Sellers to comply with such
covenants, PATI would not have entered into this Agreement or the other
Transaction Documents. Each of the Sellers acknowledge and agree that its
Covenant Not to Compete is necessary to ensure the continuation of the Business
and the reputation of PATI and that irrevocable harm and damage will be done to
PATI if any Seller competes with PATI. Each of the ACS Stockholders (other than
any ACS Stockholder who has executed an Employment Agreement with ACS) hereby
agrees to enter into the Covenant Not to Compete substantially in the form
attached as Exhibit 7.7 on the Closing Date.
7.8 No Disclosure of Confidential Information.
7.8.1 Non-Disclosure Obligation of Sellers.
Each of the Sellers covenants not to disclose any Confidential
Information at any time to any Person other than PATI and its respective
advisors and representatives (the "Non-Disclosure Obligation"). This
Section 7.8 shall not preclude ACS from:
(a) Disclosing information to its accountants, lawyers and other
professional advisors;
(b) Disclosing information generally available to the public other than by
breach of this Section 7.8; or
(c) Disclosing information required by law or court order after promptly
notifying PATI of the requirement to disclose such information.
7.8.2 Non-Disclosure Obligation of PATI.
PATI and each PATI Stockholder covenants not to disclose any
Confidential Information at any time to any Person other than ACS and its
respective advisors and representatives (the "Non-Disclosure Obligation").
This Section 7.8 shall not preclude PATI from:
(a) Disclosing information to its accountants, lawyers and other
professional advisors;
(b) Disclosing information generally available to the public other than by
breach of this Section 7.8; or
(c) Disclosing information required by law or court order after promptly
notifying ACS of the requirement to disclose such information.
7.8.3 Judicial Enforcement.
Any breach or violation of the Non-Disclosure Obligation shall entitle
the non-breaching party to an injunction restraining any further or
continued breach or violation. Such right to an injunction shall be in
addition to and cumulative of (and not in lieu of) any other remedies to
which the non-breaching party is entitled because of such breach or
violation. If a court of competent jurisdiction determines that the
Non-Disclosure Obligation is partially or wholly inoperative, invalid or
unenforceable in a particular case because of its duration, geographical
scope, restricted activity or any other parameter such court may reform
such duration, geographical scope, restricted activity or other parameter
with respect to such case to permit enforcement of such reformed
Non-Disclosure Obligation to the greatest extent allowable.
7.9 Reasonableness.
Each seller acknowledges that the terms of the Covenant Not to Compete
and the Non-Disclosure Obligation are reasonable in all respects and
necessary to permit PATI to realize the benefits of the transactions
contemplated by this Agreement.
7.10 Private Placement.
PATI will complete a private placement of securities (the proceeds of which
shall have been deposited in escrow prior to the Closing) immediately following
the Closing that will result in gross proceeds of not less than four million
dollars ($4,000,000) (the "Minimum Amount") which shall include (i) two million
five hundred thousand dollars ($2,500,000) in the form of debt issued prior to
the Closing and (ii) $1,500,000 described below. The cash proceeds from the
aforementioned private placement will be used for the working capital of PATI
following the Closing. TFC, and Xxxx Xxxxxx personally, hereby agree to raise
from investors (or invest personally) an aggregate of $1,500,000 (excluding debt
conversion) for investment in Series D Preferred Stock in accordance herewith
within the period of time that is the earlier of (i) 90 days from the
preparation and delivery to TFC and Xx. Xxxxxx by PATI of an offering memorandum
or (ii) 120 days from the closing of the loan contemplated by the Credit
Agreement, provided that an offering memorandum is delivered by PATI within 30
days of the date of the first closing transaction contemplated by the Credit
Agreement (although this obligation shall not be affected to the extent that an
offering memorandum is not delivered within such period, rather, such period
shall increase on a day-for-day basis for each day that the offering memorandum
is delivered after such 30-day period). In addition, each of TFC and Xxxx
Xxxxxx, personally and Xxxx Xxxxxxxxx, personally, agrees to use their
reasonable best efforts to raise additional new capital of an aggregate of up to
$1,500,000 (in addition to the amounts set forth herein) for investment in
Series D Preferred Stock in accordance hereof. The issuance of the Series D
Preferred Stock in the private placement will occur following the Closing and
the ownership percentages of each of the PATI Stockholders and ACS Stockholders
will be reduced accordingly (inclusive of any anti-dilution adjustments). The
proposed form of Certificate of Designation for the Series D Preferred Stock
shall be in the form attached hereto as Exhibit 7.10. The form of Certificate of
Designation may be subject to revision at the discretion of PATI.
7.11 Cooperation.
ACS acknowledges that PATI, at its option, will be required to prepare
financial statements relating to the Business for periods prior to the Closing.
ACS agrees that PATI and its representatives and accountants shall have full
access to the books, records, properties and personnel of ACS to the extent
necessary for preparing financial statements. ACS agrees to cooperate with PATI,
its accountants and representatives in preparing such financial statements.
ARTICLE 8
TERMINATION
8.1 Termination of this Agreement.
ACS and PATI may not terminate this Agreement except under the specific
circumstances set forth below at any time prior to the Closing Date.
8.1.1 Consent.
ACS and PATI may mutually agree in writing to terminate this Agreement.
8.1.2 Breach by the ACS.
PATI may abandon or terminate this Agreement by written notice to ACS
if: (i) the representations and warranties set forth in this Agreement were
incorrect or incomplete, in any material respect, as of the execution date
of this Agreement or will be incorrect or incomplete, in any material
respect, on the Closing Date as though made as of such dates, or (ii) ACS
fails to perform timely, in all material respects, the covenants and
obligations that it is required to perform under this Agreement and that
are not waived by PATI in writing.
8.1.3 Breach by PATI.
ACS may abandon or terminate this Agreement by written notice to PATI
if: (i) the representations and warranties of PATI set forth in this
Agreement were incorrect or incomplete in any material respect as of the
execution date of this Agreement or will be incorrect or incomplete, in any
material respect, on the Closing Date as though made as of such dates, or
(ii) PATI fails to perform timely, in all material respects, the covenants
and obligations that it is required to perform under this Agreement that
are not waived by ACS in writing.
8.1.4 Outside Date.
ACS or PATI may abandon or terminate this Agreement by written notice
to the other parties to this Agreement if the Closing Date has not occurred
on or before August 31, 2003, unless however, the Closing does not occur
prior to such date because the SEC has determined to review the proxy
statement filed by PATI in connection with soliciting approval of the
transaction by PATI stockholders, then the Closing may occur any time prior
to November 30, 2003.
8.2 Effect of Termination.
If this Agreement is abandoned or terminated pursuant to Sections 8.1.1 or
8.1.4, no party to this Agreement shall possess any right against any other
party to this Agreement because of such termination. If any of the parties to
this Agreement abandon or terminate this Agreement other than pursuant to
Sections 8.1.1 or 8.1.4, however, then each party to this Agreement may pursue
any and all remedies that such party may have under this Agreement or at law or
in equity with respect to this Agreement and such abandonment or termination.
8.3 Disclosure of this Agreement.
If this Agreement is abandoned or terminated for any reason, the Sellers
shall not disclose to any Person (a) the contents of the negotiations among the
Sellers and PATI concerning this Agreement, or (b) the terms of this Agreement.
ARTICLE 9
MISCELLANEOUS
9.1 Publicity.
ACS and PATI shall not issue any press release or make any public statement
concerning this Agreement without obtaining the prior consent of the other party
unless such is compelled by the securities laws of the United States or the
securities law of any state.
9.2 Transaction Costs.
Except as otherwise provided herein, each Seller shall pay all of their
costs and expenses (including attorneys' fees and other legal costs and expenses
and accountants' fees and other accounting costs and expenses) incurred in
connection with this Agreement, the other Transaction Documents and the
transactions contemplated hereby and thereby, other than as specifically set
forth therein. Except as otherwise provided herein, PATI shall pay all of its
costs and expenses (including attorneys' fees and other legal costs and expenses
and accountants' fees and other accounting costs and expenses) incurred in
connection with this Agreement, the other Transaction Documents and the
transactions contemplated hereby and thereby, than as specifically set forth
therein.
9.3 Definitions.
Capitalized terms not otherwise defined in this Agreement shall have the
meanings set forth below
9.3.1 Affiliate.
The term "Affiliate" with respect to a Person, shall mean other Person
that directly or indirectly controls, is controlled by, or is under control
with such Person. The term "control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management and
policies of such person or entity, whether through the ownership of voting
securities, by contract or otherwise.
9.3.2 Applicable Law.
The term "Applicable Law" shall mean any applicable decree,
injunction, judgment, law, order, ordinance, regulation, rule, statute, or
writ of any federal, state, local, or foreign governmental entity (or any
agency, department, or political subdivision of any governmental entity),
including any such law relating to the Business.
9.3.3 Assets.
The term "Assets" shall mean collectively all of the assets owned or
used by ACS in connection with the ownership and operation of the Business,
including without limitation, all of the assets referred to in Section 1.1
of this Agreement.
9.3.4 Assignment of Contracts.
The term "Assignment of Contracts" shall mean an assignment of
contract substantially in the form attached hereto as Exhibit H.
9.3.5 Assumed Liabilities.
The term "Assumed Liabilities" shall mean all obligations and
liabilities set forth on Schedule 2.4.
9.3.6 Audited Financial Statements.
The term "Audited Financial Statements" shall mean the financial
statements set forth in Section 4.2.8(b).
9.3.7 Beneficial Stockholder.
The term "Beneficial Stockholder" shall mean a holder of stock, a
holder of any right to acquire stock or a holder of the right, directly or
indirectly, to vote or dispose of any of the stock.
9.3.8 Benefit Plans.
The term "Benefit Plans" shall mean all employee benefit plans and
employment agreements, if any, to which ACS is party or by which it is
bound.
9.3.9 Business.
The term "Business" shall have the meaning ascribed to it in the
recitals to this Agreement, except as otherwise specifically set forth
herein.
9.3.10 Claims.
The term "Claims" shall mean any and all direct or indirect damages,
claims, losses, liabilities and expenses, including, without limitation,
legal fees and disbursements, accounting fees and disbursements, expenses
of investigation, and other expenses.
9.3.11 Closing.
The term "Closing" shall mean the closing of the transactions
contemplated by this Agreement.
9.3.12 Closing Date.
The term "Closing Date" shall mean the date of the Closing of this
Agreement as set forth in Section 3.1.
9.3.13 COBRA.
The term "COBRA" shall mean the group health plan continuation
coverage requirements of Sections 601-609 and 4980B of the Code.
9.3.14 Code.
The term "Code" shall mean the Internal Revenue Code of 1986, as
amended.
9.3.15 Confidential Information.
The term "Confidential Information" shall mean any information
concerning ACS or PATI assets, cash flows, business, financial condition,
operations or prospects or the Business or the Assets, the contents of the
negotiations among PATI and ACS concerning this Agreement or any other
Transaction Documents and the transactions contemplated hereby, or the
terms of this Agreement and the other Transaction Documents.
9.3.16 Consent.
The term "Consent" shall mean any approval, consent, ratification,
waiver or other authorization including, but not limited to, any
Governmental Authorization.
9.3.17 Contracts.
The term "Contracts" shall mean customer contracts, vendor/supplier
contracts, security deposits, leases of real property or Tangible Personal
Property, management and executive employment agreements, and contracts and
agreements for services.
9.3.18 Covenant Not to Compete.
The term "Covenant Not to Compete" shall mean for ACS, the covenants
provided in Section 7.7 of this Agreement.
9.3.19 Customer Contracts.
The term "Contracts" shall mean all Documents to which ACS is a party
(or entered into on behalf of ACS) pursuant to which ACS provides services
to its customers.
9.3.20 Customer Services.
The term "Customer Services" shall mean all services offered by ACS in
connection with services provided through the customer contracts of ACS.
9.3.21 Document.
The term "Document" with respect to any Person, shall mean any
agreement, authorization, commitment, contract, decree, deed of trust,
franchise, instrument, judgment, lease, license, mortgage, order,
Governmental Authorization or other document or obligation of which such
Person is a party or by which such Person's assets are bound.
9.3.22 ERISA.
The term "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
9.3.23 Excluded Assets.
The term Excluded Assets" shall mean all Assets listed in Section 1.2
of this Agreement.
9.3.24 Financial Statements.
The term "Financial Statements" shall mean the financial statements
and related notes and schedules described in Schedule 4.2.8.
9.3.25 GAAP.
The term "GAAP" shall mean generally accepted accounting principles
set forth in the opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity or other practices and procedures as may be
approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of the determination. For
purposes of this Agreement, GAAP shall be applied on an accrual basis in a
manner consistent with historic practices of the person to which the term
applies.
9.3.26 Governmental Authorizations.
The term "Governmental Authorizations" shall mean any approval,
consent, license, permit, waiver or other authorization issued, granted, or
given or otherwise made available by or under the authority of any
Governmental Authority pursuant to Applicable Law.
9.3.27 Governmental Authority.
The term "Governmental Authority" shall mean any: (a) nation, state,
county, city, town, village, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government; (c)
governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity or any court
or other tribunal); (d) multi-national organization or body; (e) body
exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or Taxing authority or power of
any nature.
9.3.28 Indemnitee.
The term "Indemnitee" shall mean the party or parties entitled to
indemnification pursuant to ARTICLE 6 of this Agreement.
9.3.29 Indemnitor.
The term "Indemnitor" shall mean the party or parties responsible for
providing indemnification pursuant to ARTICLE 6 of this Agreement.
9.3.30 Insurance Policy.
The term "Insurance Policy" shall mean all insurance policies in
effect, which provide any type of insurance coverage for ACS with respect
to business casualties, errors and omissions, general business liabilities
or medical malpractice.
9.3.31 Intellectual Property.
The term "Intellectual Property" shall mean any patents, trademarks,
service marks or logos, trade names, software, computer software (including
documentation and related object and source codes), proprietary designs,
assumed names, copyrights, know-how, processes, inventions, or similar
intellectual property, and applications, registrations or licenses for any
of the foregoing.
9.3.32 Lawsuit.
The term "Lawsuit" shall mean any action, charge, claim, counterclaim,
decree, injunction, inquiry, investigation, legal action, litigation,
order, proceeding, suit or writ.
9.3.33 Lien.
The term "Lien" shall mean any charge, claim, equity, judgment, lease,
liability, license, lien, mortgage, pledge, restriction, security interest,
Tax lien, option, right of first refusal, right to acquire, restrictions
(whether on issuance, voting, sale, transfer, disposition or otherwise) or
encumbrance of any kind.
9.3.34 Material Adverse Change.
The term "Material Adverse Change" shall mean any event, occurrence,
fact, condition, change or effect that is materially adverse to business,
operations, prospects, results of operations, properties or assets taken as
a whole.
9.3.35 Most Recent Balance Sheet.
The term "Most Recent Balance Sheet" shall mean the most recent
balance sheet that is a part of the Financial Statements.
9.3.36 Non-Compete Period.
The term "Non-Compete Period" with respect to any Seller shall mean
the period beginning on the Closing Date and ending on the second
anniversary of the Closing Date.
9.3.37 Non-Disclosure Obligation.
The term "Non-Disclosure Obligation" shall mean, with respect to each
Seller, the covenants provided in Section 7.8 of this Agreement.
9.3.38 Office Lease.
The term "Office Lease" shall mean the certain leases described on
Schedule 1.1.11 of this Agreement.
9.3.39 PATI Indemnitees.
The term "PATI Indemnitees" shall mean PATI, its stockholders,
affiliates, officers, directors, employees and agents, and their respective
successors and assigns.
9.3.40 Person.
The term "Person" shall mean an association, business trust,
corporation, estate, general partnership, Governmental Authority (or any
agency, department or political subdivision of a Governmental Authority),
individual, joint stock company, joint venture, limited liability company,
limited partnership company, professional association, professional
corporation, trust or other organizational entity.
9.3.41 Permitted Liens.
The term "Permitted Liens" shall mean the assumed debt and security
interests as disclosed on Schedule 4.2.12.
9.3.42 Premises.
The term "Premises" shall mean the lease of the premises described on
Schedule 1.1.11.
9.3.43 Purchase Consideration.
The term "Purchase Consideration" shall mean the aggregate of any
common stock issued, cash paid, liabilities assumed, and guarantees issued
at Closing.
9.3.44 Retained Liabilities.
The term "Retained Liabilities" shall mean any debts, obligations,
contracts, loans, commitments, undertakings or liabilities of ACS, whether
fixed, unliquidated, contingent or otherwise, of any nature whatsoever
arising before or after the Closing or in connection with any of the Assets
or Business that are not Assumed Liabilities.
9.3.45 SEC.
The term "SEC" shall mean the Securities and Exchange Commission.
9.3.46 Seller Indemnitees.
The term "Seller Indemnitees" shall mean the Sellers and their
successors and assigns.
9.3.47 Tangible Personal Property.
The term "Tangible Personal Property " shall mean all furniture,
furnishings, computer hardware and software, supplies, equipment, fixtures,
inventory and other tangible personal property owned or leased by ACS.
9.3.48 Tax.
The term "Tax" shall mean any federal, state, local, foreign, or other
ad valorem, customs, documentary, duty, employment, excise, franchise,
gross income, gross receipts, lease, license, net income, payroll, premium,
profits, property, occupation, sales, service, service use, stamp,
severance, transaction privilege, transfer, use, or withholding Tax or
other assessment, charge, fee, impost, levy, or Tax of any kind whatsoever,
together with any related interest and penalties.
9.3.49 Tax Return.
The term "Tax Return" shall mean any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
9.3.50 Transaction Documents.
The term "Transaction Documents" shall mean each of this Agreement and
other documents delivered by ACS pursuant to Section 3.2.3 of this
Agreement, and any documents delivered by PATI pursuant to Section 3.3.3 of
this Agreement.
9.3.51 Vendor/supplier contracts.
The term "Vendor/supplier contracts" shall mean all Documents to which
ACS is a party pursuant to which the Vendors/suppliers are engaged to
provide services with respect to the Business.
9.4 Property Taxes.
At the Closing, all personal property Taxes on any Asset being conveyed
pursuant to this Agreement which is assessed as personal property shall be
prorated as of the Closing Date.
9.5 Entire Agreement.
This Agreement (including the exhibits hereto) and the other Transaction
Documents (and the exhibits thereto) represent the entire understanding and
agreement among the parties with respect to the subject matter hereof, and
supersedes all other negotiations, understandings and representations (if any)
made by and among such parties.
9.6 Amendments.
The provisions of this Agreement may not be amended, supplemented, waived
or changed orally, but only by a writing signed by the party as to whom
enforcement of any such amendment, supplement, waiver or modification is sought
and making specific reference to this Agreement.
9.7 Assignments.
No party shall assign his or its rights and/or obligations hereunder
without consent of each other party to this Agreement, except that PATI may
assign its rights hereunder to any Affiliate of PATI, or any corporation
resulting from the merger or consolidation of PATI with any entity that acquires
all of PATI's assets.
9.8 Further Assurances.
The parties hereby agree from time to time to execute and deliver such
further and other transfers, assignments and documents and do all matters and
things which may be convenient or necessary to more effectively and completely
carry out the intentions of this Agreement.
9.9 Binding Effect.
All of the terms and provisions of this Agreement, whether so expressed or
not, shall be binding upon, inure to the benefit of, and be enforceable by the
parties and their respective administrators, executors, legal representatives,
heirs, successors and permitted assigns.
9.10 Headings.
The headings contained in this Agreement are for convenience of reference
only, are not to be considered a part hereof and shall not limit or otherwise
affect in any way the meaning or interpretation of this Agreement.
9.11 Notices.
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
PATI and PATI Stockholders Xxxxx X. Xxxxxxxxxxxx
_________ ................46 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone No. 716/000-0000
Facsimile No. 716/244-1367
PATI Counsel: ................Xxxxxxx X. Xxxxxx
_________ ................XxXxxxxx & English, LLP
_________ ................Four Gateway Center
_________ ................100 Mulberry Street
_________ ................Newark, NJ 07102
_________ ................Telephone No. 973/000-0000
_________ ................Facsimile No. 973/622-7070
ACS and ACS Stockholders: Xxxxxx Xxxxxx
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone No. 972/000-0000
Facsimile No. 972/871-8632
ACS Counsel: Xxxxxxx Xxxxx, Xx.
_________ ................8080 Tristar Drive, Suite100
_________ ................Irving, TX 75063
_________ ................Telephone No. 972/000-0000, Ext. 226
_________ ................Facsimile No. 972/871-8632
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
electronic mail; (c) on the date of transmission with confirmed answer back if
by telex, telefax or other telegraphic method; and (d) on the date upon which
the return receipt is signed or delivery is refused or the notice is designated
by the postal authorities as not deliverable, as the case may be, if mailed.
9.12 Severability.
If any provision of this Agreement or any other agreement entered into
pursuant hereto is contrary to, prohibited by or deemed invalid under applicable
law or regulation, such provision shall be inapplicable and deemed omitted to
the extent so contrary, prohibited or invalid, but the remainder hereof shall
not be invalidated thereby and shall be given full force and effect so far as
possible. If any provision of this Agreement may be construed in two or more
ways, one of which would render the provision invalid or otherwise voidable or
unenforceable and another of which would render the provision valid and
enforceable, such provision shall have the meaning which renders it valid and
enforceable.
9.13 Waivers.
The failure or delay of any party at any time to require performance by
another party of any provision of this Agreement, even if known, shall not
affect the right of such party to require performance of that provision or to
exercise any right, power or remedy hereunder. Any waiver by any party of any
breach of any provision of this Agreement should not be construed as a waiver of
any continuing or succeeding breach of such provision, a waiver of the provision
itself, or a waiver of any right, power or remedy under this Agreement. No
notice to or demand on any party in any case shall, of itself, entitle such
party to any other or further notice or demand in similar or other
circumstances.
9.14 Pronouns.
In this Agreement, the use of any gender shall be deemed to include all
genders, and the use of the singular shall include the plural and vice versa,
wherever it appears appropriate from the content.
9.15 Third Parties.
Unless expressly stated herein to the contrary, nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties hereto and
their respective administrators, executors, other legal representatives, heirs,
successors and permitted assigns. Nothing to this Agreement is intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action over or against any party to this Agreement.
9.16 Enforcement Costs.
If any legal action or other proceeding is brought for the enforcement of
this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any provision of this Agreement, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees, sales and use Taxes, court costs and all expenses
even if not taxable as court costs (including, without limitation, all such
fees, Taxes, costs and expenses incident to arbitration, appellate, bankruptcy
and post-judgment proceedings), incurred in that action or proceeding, in
addition to any other relief to which such party or parties may be entitled.
Attorneys' fees shall include, without limitation, paralegal fees, investigative
fees, administrative costs, sales and use Taxes and all other charges billed by
the attorney to the prevailing party.
9.17 Remedies Cumulative.
Except as otherwise expressly provided herein, no remedy herein conferred
upon any party is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise. No single or partial exercise by any party of any right,
power or remedy hereunder shall preclude any other or further exercise thereof.
9.18 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Confirmation of execution by telex or by telecopy or
telefax of a facsimile signature page shall be binding upon any party so
confirming.
9.19 Governing Law.
THIS AGREEMENT AND ALL TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS AND VENUE
AND JURISDICTION FOR ANY AND ALL LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT SHALL BE IN DALLAS COUNTY, TEXAS.
9.20 Preparation of Agreement.
This Agreement shall not be construed more strongly against any party
regardless of who is responsible for its preparation. The parties acknowledge
each contributed and is equally responsible for its preparation.
9.21 Survival.
All representations, warranties, covenants and agreements made herein or
otherwise made in writing by any party pursuant hereto shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby for a period of 12 months from the Closing.
9.22 Inducement to Transaction.
All representations and warranties made by any party in this Agreement
shall be deemed made for the purpose of inducing the other party to enter into
this Agreement.
9.23 Arbitration.
The parties shall use good faith negotiation to resolve any controversy,
dispute or disagreement arising out of or relating to this Agreement or the
other Transaction Documents or the breach of this Agreement or the other
Transaction Documents. Any matter not resolved by negotiation shall be submitted
to binding arbitration pursuant to this Section 9.23; provided however, that the
terms and provisions of this Section 9.23 shall not preclude any party hereto
from seeking, or a court of competent jurisdiction from granting, a temporary
restraining order, temporary injunction or other equitable relief for any breach
of (i) any non-competition or confidentiality covenant in this Agreement or any
other Transaction Documents or (ii) any duty, obligation, covenant,
representation or warranty set forth in this Agreement or any other Transaction
Document, the breach of which may cause irreparable harm or damage.
a. Arbitrators.
In the event any claim or claims is brought by any of the parties
hereto, or there is any other claim, controversy, dispute or disagreement
arising out of or relating to this Agreement, and the parties are unable to
resolve such claim, controversy, dispute or disagreement within thirty (30)
days after notice is first delivered pursuant to the other party, the
parties agree to each select one arbitrator in Dallas County, Texas, to
hear and decide all such claims under this Section 9.23. The two (2)
arbitrators so chosen shall then select a third arbitrator who is
experienced in the matter or action that is subject to such arbitration.
Each of the arbitrators chosen shall be impartial and independent of all
parties to this Agreement. If either of the parties fails to select an
arbitrator within twenty (20) days after the end of such thirty-day period,
or if the arbitrators chosen fail to select a third arbitrator within
twenty days, then any party may in writing request the judge of the United
States District Court for the Northern District of Texas senior in term of
service to appoint the arbitrator or arbitrators and, subject to this
Section 9.23, such arbitrators shall hear all arbitration matters arising
under this Section 9.23.
b. Applicable Rules.
Each arbitration hearing shall be held at a place acceptable to a
majority of the arbitrators and the subject parties. The arbitration shall
be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association to the extent such rules do not conflict
with the terms of this Section 9.23. The decision of a majority of the
arbitrators shall be reduced to writing and shall be binding on the
parties. All privileges under Texas and federal law, including
attorney-client and work-product privileges, shall be preserved and
protected to the same extent that such privileges would be protected in a
federal court proceeding applying Texas law.
9.24 Schedules.
All references in this Agreement to Sections, Exhibits or Schedules
shall mean the sections, exhibits or schedules of this Agreement unless
otherwise expressly set forth. The Exhibits and Schedules to this Agreement
shall be deemed a part of this Agreement for all purposes. A disclosure of
an item in a Schedule or under a heading in a Schedule corresponding to a
particular Section or Subsection of this Agreement or a separate disclosure
item within such a Section or Subsection shall not be a disclosure under
any other Schedule, any other Section or Subsection of this Agreement or
separate disclosure item within such a Section or Subsection or any other
disclosure item of such Schedule. ACS has delivered to PATI a true and
complete copy of each arrangement, Document or other item described on each
Schedule to this Agreement.
[SIGNATURES INTENTIONALLY APPEAR ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PATI
By:/s/Xxxxx X. Xxxxxxxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxxxxxxx
Title:President
ACS
By:/s/Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
ACS STOCKHOLDERS
ACSC, Inc.
By:/s/Xxx Xxxxxxx
------------------------------
Xxx Xxxxxxx, President
/s/Xxxx Xxxxxx
---------------------------------
Xxxx Xxxxxx, individually
/s/Xxxx Xxxxxx
---------------------------------
Xxxx Xxxxxx, individually and as the
ultimate beneficial and majority owner and affiliate of ACSC, Inc.
PATI STOCKHOLDERS:
/s/Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx, individually
/s/Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx, individually
