STOCK PURCHASE AGREEMENT
among
CERTIFIED SERVICES, INC.,
XXXX X. XXXXXXX, XXXXX X. XXXXXXX,
THE CURA GROUP, INC., THE CURA GROUP II, INC.
and THE CURA GROUP III, INC.
Dated as of July 1, 2002
TABLE OF CONTENTS
Section Page
1. Definitions....................................................2
2. Purchase and Sale..............................................8
3. Representations and Warranties of Shareholders................11
4. Representations and Warranties of Buyer.......................21
5. Covenants of Sellers and the Companies........................23
6. Covenants of Buyer............................................27
7. Mutual Covenants..............................................27
8. Conditions Precedent to Obligations of the Sellers............28
9. Conditions Precedent to Obligations of Buyer..................29
10. Indemnification...............................................29
11. Termination...................................................33
12. General Matters...............................................34
13. Remedies......................................................36
14. Notices.......................................................36
15. Governing Law.................................................38
SCHEDULES AND EXHIBITS
Schedule
2.4 FUB Liabilities
2.7 List of Regulated States
3.3 Required Consents
3.4 Stock Ownership
3.5 Financial Statements
3.7 Encumbrances
3.8 Real Property
3.9 Tangible Personal Property
3.10 Personal Property Leases
3.12 Equipment
3.13 Liabilities
3.14 Taxes
3.15 Litigation
3.16 Contracts
3.17 Insurance
3.18 Intellectual Property
3.19 Directors and Officers of the Company
3.20 ERISA
3.22 Certain Changes
3.23 Customers
3.27 Additional Information
Exhibit
A Stock Option Agreement
Dated March 8, 2002
B Promissory Note
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of July 1,
2002, by and among CERTIFIED SERVICES, INC., a Nevada corporation ("Buyer"), The
Cura Group, Inc., a Florida Corporation ("CURA"), its wholly-owned subsidiary
The Cura Group III, Inc., a Florida Corporation ("CURA III") and The Cura Group
II, Inc., a Florida Corporation ("CURA II") (collectively, the "Companies" or
individually a "Company") and Xxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx (the
"Shareholders") (the Shareholders are sometimes hereinafter referred to as the
"Sellers"). Certain other terms used herein are defined below in Section 1 or
elsewhere in this Agreement.
Recitals
Whereas, the Shareholders are the owners of all the issued and
outstanding capital stock of CURA and CURA II. On and subject to the terms and
conditions of this Agreement, Buyer desires to purchase from Shareholders, and
Shareholders desire to sell to Buyer, all of the issued and outstanding capital
stock of CURA and CURA II including those shares that were the subject of the
option described below (collectively, the "Cura Shares").
Whereas, Buyer shall purchase the Cura Shares in two (2) separate
transactions in which the Sellers shall initially deliver twenty percent (20%)
of the Cura Shares on or before July 29, 2002, and the remaining eighty percent
(80%) of the Cura Shares on or before December 30, 2002.
Whereas, Buyer has previously acquired from Sellers an option to
purchase seventy percent (70%) of the issued and outstanding capital stock of
CURA and CURA II (the "Option"), pursuant to the Stock Option Agreement executed
on March 8, 2002, by and among the Buyer and the Shareholders, attached hereto
as Exhibit "A".
WHEREAS, the Buyer and the Shareholders desire to cancel the Option
and, pursuant to the terms and conditions set forth herein, purchase the Cura
Shares.
Witnesseth
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties and covenants hereinafter set forth
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions
For convenience, certain terms used in more than one part of this
Agreement are listed in alphabetical order and defined or referred to below
(such terms as well as any other terms defined elsewhere in this Agreement shall
be equally applicable to both the singular and plural forms of the terms
defined).
"Acquisition Proposal" is defined in Section 5.3.
"Action" is defined in Section 10.5(a).
"Affiliates" means, with respect to a particular party, persons or
entities controlling, controlled by or under common control with that party, as
well as any officers, directors and majority-owned entities of that party or of
its Affiliates. For the purposes of the foregoing, ownership, directly or
indirectly, of 20% or more of the voting stock or other equity interest shall be
deemed to constitute control. Notwithstanding the foregoing, the term
"Affiliates" shall not include any entity other than CURA, CURA II and CURA III,
in which either of the Shareholders has any ownership interest.
"Agreement" means this Agreement and the Exhibits and Disclosure
Schedules attached hereto, as each may be amended, restated, supplemented or
modified from time to time.
"Assets" means all of the assets, properties, goodwill and rights of
every kind and description, real and personal, tangible and intangible, wherever
situated and whether or not reflected in the most recent Financial Statements,
that are owned or possessed by each of the Companies.
"Balance Sheet" is defined in Section 3.5.
"Balance Sheet Date" is defined in Section 3.5.
"Benefit Plan" means: (i) as to employees employed in the United
States, any (a) "employee benefit plan" as defined in Section 3(3) of ERISA, and
(b) supplemental retirement, bonus, deferred compensation, severance, incentive
plan, program or arrangement or other employee fringe benefit plan, program or
arrangement; and (ii) as to employees employed outside the United States of
America, all employee benefit, health, welfare, supplemental unemployment
benefit, bonus, pension, profit sharing, deferred compensation, stock
compensation, stock purchase, retirement, hospitalization insurance, medical,
dental, legal, disability and similar plans or arrangements or practices.
2
"Business" means the business of providing professional employer
organization services and co-employment, human resources and labor management
services.
"Buyer Indemnifiable Damages" is defined in Section 10.1.
"Buyer Indemnified Party" is defined in Section 10.1.
"Buyer Shares" is defined in Section 2.2.
"Charter Documents" means an entity's certificate or articles of
incorporation, certificate defining the rights and preferences of securities,
articles of organization, general or limited partnership agreement, certificate
of limited partnership, joint venture agreement or similar document governing
the entity.
"Claim Notice" is defined in Section 10.3(a).
"Claim Response" is defined in Section 10.3(a).
"Closing" is defined in Section 2.3.
"Closing Certificates" means the certificates to be delivered by
Shareholders under Section 8.3 and any other provisions hereof.
"Closing Date" may be used to refer to the date of the Initial Closing
or the Final Closing, as the case may be.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Releases" is defined in Section 2.4.
"Company Contracts" is defined in Section 3.16.
"Confidential Information" means any trade secrets of the Company and
any information concerning the businesses and affairs of the Company that is not
already generally available to the public, including personnel information,
know-how and other technical information, customer lists, customer information
and supplier information.
"Contract" means any written or oral contract, agreement, lease,
instrument, or other commitment that is binding on any person or its property
under applicable law.
"Court Order" means any judgment, decree, injunction, order or ruling
of any federal, state, local or foreign court or governmental or regulatory body
or authority that is binding on any person or its property under applicable law.
3
"Cura Shares" is defined in Section 2.1.
"Damages" is defined in Section 10.1.
"Default" means (a) a breach, default or violation, (b) the occurrence
of an event that with or without the passage of time or the giving of notice, or
both, would constitute a breach, default or violation, or (c) with respect to
any Contract, the occurrence of an event that with or without the passage of
time or the giving of notice, or both, would give rise to a right of
termination, renegotiation or acceleration or a right to receive damages or a
payment of penalties.
"Disclosure Schedule" means any of the schedules referred to herein
containing information relating to any of the Sellers that have been provided to
Buyer on the date hereof.
"EBITDA" means the earnings before interest, taxes, depreciation and
amortization of the Companies and their subsidiaries on a consolidated basis as
determined by independent certified public accountants or auditors in accordance
with GAAP.
"Encumbrances" means any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other claim, charge or
encumbrance of any nature whatsoever on any property or property interest.
"Environmental Condition" is defined in Section 3.15(b).
"Environmental Law" means all Laws and Court Orders currently
applicable to the Companies relating to pollution and protection of the public
or the environment as well as any principles of common law under which a party
may be held liable for the release or discharge of any Hazardous Substances into
the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" is defined in Section 10.4.
"Final Closing" is defined in Section 2.3(b).
"Finance Agreement" is defined in Section 2.7.
"Financial Statements" is defined in Section 3.5.
4
"FUB Liabilities" is defined in Section 2.4.
"GAAP" means generally accepted accounting principles in the United
States as in effect, from time to time.
"Governmental Permits" means all governmental permits, licenses,
registrations, certificates of occupancy, approvals and other governmental
authorizations.
"Hazardous Substances" means any toxic or hazardous gaseous, liquid or
solid material or waste that may or could pose a hazard to the environment or
human health or safety including (i) any "hazardous substances" as defined by
the federal Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. sec. 9601 et seq., (ii) any "extremely hazardous substance,"
"hazardous chemical," or "toxic chemical" as those terms are defined by the
federal Emergency Planning and Community Right-to-Know Act, 42 U.S.C. sec. 11001
et seq., (iii) any "hazardous waste," as defined under the federal Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act, 42
U.S.C. sec. 6901 et seq., (iv) any "pollutant," as defined under the federal
Water Pollution Control Act, 33 U.S.C. sec. 1251 et seq., as any of such laws in
clauses (i) through (iv) as amended, and (v) any regulated substance or waste
under any Environmental Laws or Court Orders that have been enacted, promulgated
or issued by any federal, state or local governmental authorities concerning
protection of the environment.
"Immaterial Lease" is defined in Section 3.10.
"Indemnifiable Loss" is defined in Section 10.6.
"Incentive Consideration" is defined in Section 2.2.
"Indemnified Party" is defined in Section 10.3(a).
"Indemnitor" is defined in Section 10.3(a).
"Indemnity Payment" is defined in Section 10.6.
"Initial Closing" is defined in Section 2.3(a).
"Intellectual Property" means any copyrights, patents, trademarks,
servicemarks, trade names, information, proprietary rights, processes,
technology rights and licenses, trade secrets, franchises, know-how, inventions
and other intellectual property.
"Knowledge" means actual knowledge.
"Inventory" means all inventory, including raw materials, supplies,
work in process and finished goods.
5
"Law" means any statute, law, ordinance, regulation, order or rule of
any federal, state, local, foreign or other governmental agency or body or of
any other type of regulatory body, other than an Environmental Law, including
those covering energy, safety, health, transportation, bribery, recordkeeping,
zoning, anti-discrimination, antitrust, wage and hour, and price and wage
control matters.
"Liability" means any direct or indirect liability, indebtedness,
obligation, claim, loss, damage, deficiency, guaranty or endorsement of or by
the Company, absolute or contingent, accrued or unaccrued, due or to become due,
liquidated or unliquidated.
"Liquidated Claim Notice" is defined in Section 10.3(a).
"Litigation" means any lawsuit, action, arbitration, administrative or
other proceeding, criminal prosecution or governmental investigation or inquiry.
"Loan Consideration" is defined in Section 2.2.
"Material Adverse Effect" means a material adverse effect on the
Business of the Companies taken as a whole, including the Assets, financial
condition, results of operations, competitive position and products.
"Minor Contract" means any Contract that is terminable by a party on
not more than 30 days' notice without any Liability and any Contract under which
the obligation of a party (fulfilled and to be fulfilled) involves an amount of
less than $10,000.
"Notes" is defined in Section 2.2(c).
"Ordinary course" or "ordinary course of business" means the ordinary
course of business that is consistent with past custom and practice (including
with respect to quantity and frequency).
"Patents" means all patents, patent applications, and inventions and
discoveries that may be patentable.
"Per Share Price" is defined in Section 2.2(d).
"Person" means any natural person, corporation, partnership, limited
liability company, proprietorship, association, trust or other legal entity.
"Personal Property Leases" is defined in Section 3.10.
"Prime Rate" means the prime lending rate as announced from time to
time in The Wall Street Journal.
6
"Pro Rata Portion" is defined in Section 2.2.
"Purchase Price" is defined in Section 2.1.
"Real Estate Leases" is defined in Section 3.8.
"Real Property" is defined in Section 3.8.
"Regulated State" is defined in Section 2.7.
"Response Period" is defined in Section 10.3(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers Indemnified Party" is defined in Section 10.2.
"Stock Consideration" is defined in Section 2.2.
"Taxes" means all taxes, duties, charges, fees, levies or other
assessments imposed by any taxing authority including, without limitation,
income, gross receipts, value-added, excise, withholding, personal property,
real estate, sale, use, ad valorem, license, lease, service, severance, stamp,
transfer, payroll, employment, customs, duties, alternative, add-on minimum,
estimated and franchise taxes (including any interest, penalties or additions
attributable to or imposed on or with respect to any such assessment).
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, estimate or declaration of estimated
tax relating to or required to be filed with any governmental authority in
connection with the determination, assessment, collection or payment of any Tax.
"Trade Secrets" means all know-how, trade secrets, confidential
information, customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints, owned, used or licensed (as
licensor or licensee) by the Companies, except for any such item that is (i)
generally available to the public, (ii) becomes available to a Person on a non-
confidential basis from a source other than the Companies or their
representatives, which has represented to the Person (and which the Person has
no reason to disbelieve after due inquiry) that it is entitled to disclose it or
(iii) was in the possession of or was known to the Person on a non-confidential
basis prior to the disclosure thereof to the Person by the Companies or its
representatives.
"Transaction Documents" means this Agreement and the documents
contemplated hereby including, without limitation, the Notes.
"Transactions" means the sale of the Cura Shares and the other
transactions contemplated by the Transaction Documents.
7
"Unliquidated Claim" is defined in Section 10.3(a).
"Welfare Plan" is defined in Section 3.20.
2. Purchase and Sale
2.1 Purchase and Sale. Subject to the terms and conditions contained in
this Agreement, Sellers shall sell, assign, transfer and deliver to Buyer, and
Buyer shall purchase from Sellers, all of the Sellers' issued and outstanding
shares of capital stock of any form, class or designation of CURA and CURA II
(the "Cura Shares"), in exchange for a minimum purchase price of Two Million
Four Hundred Fifty Thousand Dollars ($2,450,000) (the "Purchase Price"), which
shall be paid under the terms and conditions as set forth herein.
2.2 Purchase Price. The Purchase Price for the Cura Shares shall be
delivered to the Shareholders in two (2) separate closings as set forth herein
as follows: (i) two million (2,000,000) shares of Buyer's common stock, par
value $.001 per share ("Buyer Shares") ("Stock Consideration"); (ii) cash in the
amount of One Hundred Thirty Six Thousand One Hundred Eleven Dollars ($136,111)
("Cash Consideration"); (iii) promissory notes in the aggregate amount of Two
Million Three Hundred Thirteen Thousand Eight Hundred Eighty Nine Dollars
($2,313,889), as described below ("Loan Consideration"); and (iv) an earn-out
payment related to the EBITDA of the Companies as described below ("Incentive
Consideration").
The Purchase Price shall be paid to the Shareholders pro rata in
accordance with their ownership of the Cura Shares immediately prior to the
Initial Closing as set forth in SCHEDULE 3.4 (the "Pro Rata Portion").
Notwithstanding the foregoing, the Loan Consideration shall be reduced
dollar-for-dollar to the extent that at Closing (i) the Companies shall not have
properly accounted for sufficient reserves to satisfy all workers' compensation
claims incurred prior to July 1, 2002, and (ii) the Companies shall have any
material liabilities other than those incurred in the normal course of business
and not reflected in their financial statements dated June 30, 2002. Such
reduction shall be allocated against the first payment to be made to
Shareholders after determination and carried forward against any future payments
until the reduction is reduced to zero.
(a) Issuance of Stock Consideration. The Stock Consideration shall be
issued by the Buyer to the Shareholders as follows: on the Initial Closing, the
Buyer shall issue to Sellers two million (2,000,000) newly-issued Buyer Shares.
(b) Cash Consideration. Buyer shall deliver cash to the Sellers in the
amount of One Hundred Thirty-Six Thousand One Hundred Eleven Dollars
($136,111.00) to be paid in two (2) equal installments of Sixty Eight Thousand
Fifty-Five and 50/100 Dollars ($68,055.50). The first installment will be
delivered to the Sellers on or before November 1, 2002, and the second
installment will be delivered to the Sellers on or before December 1, 2002.
8
(c) Loan Consideration. On the Final Closing Date, Buyer shall execute
two (2) promissory notes, one in the favor of Xxxxx X. Xxxxxxx and one in the
favor of Xxxx X. Xxxxxxx, each for the principal amount of One Million One
Hundred Fifty Six Thousand Nine Hundred Forty-Four and 50/100 Dollars
($1,156,944.50), with interest at the rate of 6% per annum, payable in
thirty-four (34) equal monthly principal installments of $34,027.77 plus
applicable interest, the first of such installments to be paid on January 2,
2003, each such note shall be substantially in the form of Exhibit "C" (the
"Notes").
(d) Incentive Consideration. Incentive Consideration consisting of
Buyer Shares in the quantity set forth herein ("Incentive Shares") to be
delivered to the Shareholders, in accordance with their Pro Rata Portion, in the
event the EBITDA of the Companies for the period of July 1, 2002, to June 30,
2003, equals or exceeds $3,000,000 after exclusion of all income generated as
the results of Buyer's acquisitions not in the ordinary course and any
management fees Buyer may charge the Companies during this period. The number of
Incentive Shares to be delivered shall be the number of Buyer Shares that is
equal to One Million Dollars ($1,000,000) divided by a denominator equal to the
average closing sale price for the Buyer Shares on the principal securities
exchange or market on which the shares are traded for the thirty (30) trading
days prior to the delivery date (the "Per Share Price"). The Incentive Shares
shall be delivered by the Buyer fifteen (15) days after the Buyer has filed its
quarterly report for the second quarter of 2003 on Form 10-Q with the Securities
and Exchange Commission.
2.3 Closings. The purchase of the Cura shares shall occur in two
separate transactions as described below (each a "Closing"):
(a) On July 26, 2002 (the "Initial Closing"), in exchange for the Stock
Consideration and the Cash Consideration, the Sellers shall deliver to the Buyer
twenty percent (20%) of the Cura Shares as follows: (i) twenty (20) shares of
the common stock of CURA and (ii) ten thousand two hundred (10,200) shares of
the common stock of CURA II; and
(b) On December 30, 2002 (the "Final Closing"), in exchange for the
Loan Consideration, the Sellers shall deliver to the Buyer the remaining eighty
percent (80%) of the Cura Shares as follows: (i) eighty (80) shares of the
common stock of CURA and (ii) forty thousand eight hundred (40,800) shares of
the common stock of CURA II.
2.4 Payment of Indebtedness. On or before July 2, 2003, Buyer shall
cause all of the Companies' liabilities to First Union Bank that exist on the
date of the Final Closing (the "FUB Liabilities") and that are set forth in
SCHEDULE 2.4, to be replaced, cancelled or paid in full and shall have removed
9
as guarantors of the FUB Liabilities the Shareholders and any of their
affiliates that were listed as guarantors of the FUB Liabilities on the date of
the Final Closing (the "Collateral Releases"). Notwithstanding the foregoing,
obtaining the Collateral Releases shall in no manner be a condition precedent to
the closing or a ground for termination (such grounds for termination more fully
described in Section 11.1).
2.5 [Intentionally deleted.]
2.6 Items to be Delivered Immediately Prior to or at Closing.
(a) At or immediately prior to the Initial Closing: (i) Sellers shall
deliver to Buyer a certificate or certificates representing twenty percent (20%)
of the Cura Shares, duly endorsed in blank or accompanied by stock powers duly
executed in blank; (ii) Sellers shall deliver to Buyer, and Buyer shall deliver
to Sellers, the certificates referred to in Sections 8 and 9; (iii) Buyer shall
deliver to the Shareholders the Cash Consideration and certificates representing
the Buyer Shares evidencing the Stock Consideration.
(b) At or immediately prior to the Final Closing: (i) Sellers shall
deliver to Buyer a certificate or certificates representing the remaining eighty
percent (80%) of the Cura Shares, duly endorsed in blank or accompanied by stock
powers duly executed in blank; (ii) Sellers shall deliver to Buyer, and Buyer
shall deliver to Sellers, the certificates referred to in Sections 8 and 9;
(iii) Buyer shall deliver to the Shareholders the Notes; and (iv) Sellers shall
deliver to Buyer the written resignation of Xxxxx X. Xxxxxxx as a member of the
Board of Directors.
2.7 Acknowledgement of Change of Control. Buyer acknowledges and
understands that consummation of the Final Closing will constitute a "change of
control" of each of CURA, CURA II, and CURA III, pursuant to, among other
things, (a) that certain Finance Agreement, effective as of December 31, 2001,
by and between CURA and National Fire Insurance of Hartford, Continental
Casualty Company and Transcontinental Insurance Company (the "Finance
Agreement"), and (b) the provisions of various state laws governing professional
employer organizations in those states identified on SCHEDULE 2.7 (each a
"Regulated State"). Buyer agrees to assume all of the risks associated with such
changes of control, including without limitation, those risks arising under the
Finance Agreement and those risks arising under the laws and regulations of each
of the Regulated States. Sellers shall have no liability to Buyer or otherwise
for any costs or consequences resulting from any such "change in control," and
Seller shall be indemnified and held harmless by Buyer for any such costs or
other consequences in accordance with the indemnity provisions of Section 10.2.
10
3. Representations and Warranties of Shareholders
Each Shareholder, jointly and severally, hereby represents and warrants
to Buyer, with all such representations and warranties, other than those in
Sections 3.1, 3.2 and 3.4, being made as of June 30, 2002 only, as follows:
3.1 Corporate Status. The Companies are corporations duly organized,
validly existing and in good standing under the Laws of the State of Florida and
are qualified to do business as foreign corporations in the jurisdictions where
they are required to be so qualified unless the failure to be so qualified would
not have a Material Adverse Effect. The Charter Documents and bylaws of the
Companies that have been delivered to Buyer as of the date hereof are effective
under applicable Laws and are current, correct and complete.
3.2 Authorization Delivered. Each Seller has the requisite power and
authority to execute and deliver the Transaction Documents to which they are a
party and to perform the Transactions performed or to be performed. Each
Transaction Document executed and delivered by the Sellers has been duly
executed and delivered by each Seller and constitutes a valid and binding
obligation of the Sellers, enforceable against such Seller in accordance with
its terms, except as limited by applicable bankruptcy, creditor, insolvency and
other laws of similar effect and by general principles of equity.
3.3 Consents and Approvals. Except as set forth in Section 2.7 herein
and on SCHEDULE 3.3 attached hereto, neither the execution and delivery by any
Seller of the Transaction Documents to which it is a party, nor the performance
of the Transactions performed or to be performed by any Seller, require any
filing, consent or approval, constitute a Default or cause any payment
obligation to arise under (a) any Law or Court Order to which any Seller is
subject, (b) the Charter Documents or bylaws of the Companies or (c) any
material Contract, Governmental Permit or other document to which the Companies
are a party or by which the properties or other assets of the Companies may be
subject.
3.4 Stock Ownership.
(a) The Shareholders are the sole record and beneficial owners of all
of the issued and outstanding shares of capital stock of any form, class and
designation of CURA and CURA II, and the respective shares owned by the
Shareholders are specified on SCHEDULE 3.4. CURA is the sole record and
beneficial owner of all of the issued and outstanding shares of any form, class
and designation of CURA III. There exists no options, warrants, calls,
commitments or other rights of any character (including conversion or preemptive
rights) relating to the acquisition of any issued or unissued common stock or
other securities of the Companies other than the Option.
(b) The Sellers recognize that the Buyer would have no adequate remedy
at law if the Sellers have created, issued or otherwise transferred, any shares
of the capital stock not set forth in SCHEDULE 3.4. Therefore, the Sellers
hereby agree and covenant that the existence of any shares not set forth in
SCHEDULE 3.4 shall be retired, cancelled, and dispossessed of any voting,
liquidation, dividend or other rights.
11
3.5 Financial Statements. Attached hereto as SCHEDULE 3.5 are the
following consolidated financial statements of CURA (collectively, the
"Financial Statements"): (a) the balance sheets as of December 31, 1999, 2000
and 2001 (each a "Balance Sheet") and the audited related statements of
operations, shareholders' equity and cash flows for the fiscal years ended
December 31, 1999, 2000, and 2001 and (b) the unaudited profit and loss
statements for the six months ended June 30, 2002 (the "Balance Sheet Date").
The audited Financial Statements have been prepared in accordance with GAAP and
present fairly, in all material respects, the financial position of the
Companies, and the results of its operations and its cash flows for the period
then ended.
3.6 Financial Condition. As a material inducement to the Buyer, the
Shareholders represent that the Companies had a combined stockholders'
impairment of ($1,854,380) as of December 31, 2001. To the extent that the
Companies' stockholders' impairment as of December 31, 2001 is greater than
($1,854,380), the Purchase Price will be reduced, dollar for dollar.
3.7 Title to Assets and Related Matters. The Companies have good and
marketable title to, valid leasehold interests in or valid licenses to use, all
of their Assets, free from any Encumbrances except those specified in SCHEDULE
3.7.
3.8 Real Property. SCHEDULE 3.8 lists all real estate used in the
operation of the Business as well as any other real estate that is owned, in the
possession of or leased by the Companies and the improvements (including and
other structures) located on such real estate (collectively, the "Real
Property"), and lists any lease agreements to which any of the Companies is a
party (the "Real Estate Leases").
3.9 Certain Personal Property. SCHEDULE 3.9 lists each item of tangible
personal property that was reflected in the audited Financial Statements and
that has a fair market value in excess of $5,000. Except for those items subject
to the Personal Property Leases and certain computer hardware and software owned
by the Companies' employees or consultants with an aggregate value of less than
$5,000, no Person other than the Companies own any vehicles, material equipment
or other material tangible assets located on the Real Property that have been
used in the Business or that are necessary for the operation of the Business.
3.10 Personal Property Leases. SCHEDULE 3.10 lists all existing lease
agreements to which any of the assets or properties (other than Real Property)
used by the Companies in the operation of the Business are subject, except those
lease agreements under which the aggregate annual payments are less than $10,000
(each, an "Immaterial Lease"). All such leases (excluding Immaterial Leases) are
referred to herein as the "Personal Property Leases."
12
3.11 Accounts Receivable. All accounts receivable of the Companies (a)
are valid and genuine, (b) arise out of bona fide sales and deliveries of goods,
performance of services or other business transactions, (c) are not subject to
valid defenses, set-offs or counterclaims other than normal returns and
allowances, and (d) were generated only in the ordinary course of business.
3.12 Equipment. All equipment reflected on the Balance Sheet and all
equipment owned by the Companies was acquired and has been maintained in
accordance with the regular business practices of the Companies, consists of
items of a quality and quantity useable in the ordinary course of the Companies'
business consistent with past practice, and is valued in conformity with GAAP
applied on a consistent basis. Except as set forth on SCHEDULE 3.12, no
significant amount of such equipment is obsolete.
3.13 Liabilities. The Companies do not have any material Liabilities,
other than (a) Liabilities specified in SCHEDULE 3.13, (b) Liabilities specified
in their respective Balance Sheets (except as heretofore paid or discharged),
(c) Liabilities incurred in the ordinary course of business since the Balance
Sheet Date that, individually or in the aggregate, are not material to the
Business, or (d) Liabilities under any Contracts that were not required under
GAAP to have been specifically disclosed or reserved for on their respective
Balance Sheets.
3.14 Taxes. Except as set forth on SCHEDULE 3.14, the Companies' Tax
matters are described below:
(a) The Companies have timely filed all Tax Returns required to be
filed. All such Tax Returns are true, correct and complete in all respects. The
Companies have paid in full on a timely basis all Taxes owed by it, whether or
not shown on any Tax Return, except where the failure to file such return or pay
such taxes would not have a Material Adverse Effect. No claim has ever been made
by an authority in a jurisdiction where the Companies do not file Tax Returns
that the Companies are subject to taxation in that jurisdiction.
(b) There are no ongoing examinations or claims against the Companies
for Taxes, and no notice of any audit, examination or claim for Taxes, whether
pending or threatened, has been received. The Companies have not waived or
extended the statute of limitations with respect to the collection or assessment
of any Tax.
(c) From its date of incorporation, each of the Companies has operated
pursuant to a taxable year end of December 31 and has utilized the accrual
method of accounting for income Tax purposes.
13
(d) The Companies have withheld and paid all Taxes required to have
been withheld and paid, and have complied with all information reporting and
backup withholding requirements, including record maintenance requirements, in
connection with amounts paid to any employee, independent contractor, creditor,
or third party.
(e) Copies of (i) any Tax examinations, (ii) extensions of statutory
limitations for the collection or assessment of Taxes, and (iii) the Tax Returns
of the Companies for the last two fiscal years have been made available to
Buyer.
(f) There are no Liens on the Assets relating to or attributable to
Taxes. To the Shareholders' Knowledge, there is no basis for the assertion of
any claim relating to or attributable to Taxes, except for taxes not yet due,
which, if adversely determined, would result in a Lien on the Assets of the
Companies or otherwise have a material adverse effect on the Business of either
of the Companies.
(g) The Companies have not filed a consent under Section 341(f) of the
Code. The Companies are not and have not been a United States real property
holding company within the meaning of Section 897(c) of the Code during the
period specified in Section 897(c)(1)(A)(I) of the Code.
(h) The Companies have not been at any time, a party to a tax sharing,
tax indemnity or tax allocation agreement, and the Companies have not assumed by
contract the tax liability of any other person.
3.15 Legal Proceedings and Compliance with Law.
(a) To the Sellers' Knowledge, except as set forth on SCHEDULE 3.15 and
the Companies' non-compliance with the financial requirements of each of
Florida, Texas and South Carolina, (i) there is no Litigation that is pending
or, to Sellers' Knowledge, threatened against the Companies, (ii) no Default
exists under any Laws or Environmental Laws, and (iii) the Companies have not
received any notices from any governmental entity alleging any Defaults under
any Laws or Environmental Laws. To the Sellers' Knowledge, the Companies are not
in Default of any Court Order.
(b) Without limiting the generality of Section 3.15(a), to the Sellers'
Knowledge, there is not any Environmental Condition (i) at the premises at which
the Business has been conducted by the Companies (ii) at any property owned,
leased, occupied or operated at any time by the Companies, or (iii) at any
property at which wastes have been deposited or disposed of by or at the behest
or direction of the Companies, nor have the Companies received written notice of
any such Environmental Condition. "Environmental Condition" means any condition
or circumstance, including the presence of Hazardous Substances, whether created
by the Companies or a third party, at or relating to any such property or
premises specified in any of clauses (i) through (iii) above that did, does or
may reasonably be expected to give rise to any civil or criminal liability on
the part of the Companies under an Environmental Law.
14
(c) The Companies have delivered to Buyer complete copies of any
written reports, studies or assessments in the possession or custody of the
Companies or any Seller that relate to any Environmental Condition and SCHEDULE
3.15 lists all other reports, studies and assessments concerning the environment
of which any Seller has Knowledge.
(d) Except as set forth on SCHEDULE 3.15, to the Sellers' Knowledge,
(i) the Companies have obtained and are in substantial compliance with all
material Governmental Permits that are required in the operation of the Business
as currently operated or that relate to the Real Property, (ii) all of such
Governmental Permits are currently valid and in full force, and (iii) the
Companies have timely filed such renewal applications as may be required with
respect to its Governmental Permits. To the Sellers' Knowledge, no revocation,
cancellation or withdrawal of any Governmental Permit has been threatened.
3.16 Contracts.
(a) SCHEDULE 3.16 lists all Contracts of the following types to which
the Companies are a party or by which it is bound, except for Minor Contracts:
(i) Any contract with any present or former Seller,
director, officer, employee, partner or consultant of the
Companies or any Affiliate thereof.
(ii) Any contract for the future purchase of, or
payment for, supplies or products, or for the lease of any
real or personal property or for the performance of services
by a third party that involves an amount in excess of
$10,000;
(iii) Any contract to sell or supply products or to
perform services that involves an amount in excess of
$10,000;
(iv) Any contract to lease to or to operate for any
other party any real or personal property that involves an
amount in excess of $10,000;
(v) Any notes, debentures, bonds, conditional sale
agreements, equipment trust agreements, letter of credit
agreements, reimbursement agreements, loan agreements or
other Contracts for the borrowing or lending of money
(including loans to or from officers, directors, partners,
Shareholders or Affiliates of the Companies or any members
of their immediate families), agreements or arrangements for
a line of credit or for a guarantee of, or other undertaking
in connection with, the indebtedness of any other Person;
15
(vi) Any Contracts under which any Encumbrances exist;
and
(vii) Any other Contracts (other than Minor Contracts
and those described in any of (i) through (vi) above) not
made in the ordinary course of business.
(b) The Contracts listed in SCHEDULE 3.16 and the Minor Contracts
excluded from SCHEDULE 3.16 based on the term or amount thereof are referred to
herein as the "Company Contracts." Except as set forth on SCHEDULE 3.16, the
Companies are not in Default under any Company Contracts (including any Real
Estate Leases and Personal Property Leases) that would have a Material Adverse
Effect. The Companies have not received any communication from, or given any
communication to, any other party indicating that the Companies or such other
party, as the case may be, is in Default under any Company Contract. To the
Knowledge of the Sellers, (i) none of the other parties to any such Company
Contract is in Default thereunder, and (ii) each such Company Contract is
enforceable against the other parties thereto in accordance with the terms
thereof.
3.17 Insurance. All policies or binders of insurance held by or on
behalf of the Companies, specifying with respect to each policy the insurer, the
amount of the coverage, the type of insurance, the risks insured, the expiration
date, the policy number, and any pending claims thereunder have previously been
delivered to Buyer by the Companies. Except as set forth on SCHEDULE 3.17, to
the Sellers' Knowledge, there is no Default with respect to any such policy or
binder, nor has there been any failure to give any notice or present any claim
under any such policy or binder in a timely fashion or in the manner or detail
required by the policy or binder. The Companies have not received any notice of
nonrenewal or cancellation with respect to, or disallowance of any claim under,
any such policy or binder.
3.18 Intellectual Property
(a) Intellectual Property. The Companies have good and valid title to
and ownership of all Intellectual Property necessary for its Business and
operations (as now conducted and as proposed to be conducted). A list of all
Intellectual Property owned by the Companies is set forth on SCHEDULE 3.18.
There are no outstanding options, licenses or agreements of any kind to which
the Companies are a party or by which it is bound relating to any Intellectual
Property, whether owned by the Companies or another person, except as disclosed
on SCHEDULE 3.18. To the Knowledge of the Sellers, the Business of the Companies
as formerly and presently conducted did not and does not conflict with or
infringe upon any Intellectual Property right, owned or claimed by another.
16
(b) Contracts. SCHEDULE 3.18 lists all Contracts relating to
Intellectual Property to which a Company is a party or by which a Company is
bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs having a value of less
than $5,000 under which any Company is a licensee and lists any royalties paid
or received by the Companies. There are no outstanding and, to Sellers'
Knowledge, no threatened disputes or disagreements with respect to any such
agreement.
(c) Know-How Necessary for the Business. The Intellectual Property
included in the Assets constitutes all of the Intellectual Property that is, to
the Shareholders' Knowledge, necessary for the operation of the Business as it
is currently conducted. Except as described on SCHEDULE 3.18, the Companies are
the owners of all right, title and interest in and to each item of Intellectual
Property, free and clear of any Encumbrances, and to the Knowledge of the
Sellers, have the right to use without payment to a third party all of the
Intellectual Property.
3.19 Employees. No Company is (a) a party to, involved in or, to the
Sellers' Knowledge, threatened by, any labor dispute or unfair labor practice
charge, or (b) currently negotiating any collective bargaining agreement. The
Companies have not experienced during the last three years any work stoppage.
Sellers have delivered to Buyer a complete and correct list of the names and
salaries, bonus and other cash compensation of all employees (including
officers) of the Companies. SCHEDULE 3.19 lists the directors and officers of
the Companies.
3.20 ERISA
(a) SCHEDULE 3.20 contains a complete list of all Benefit Plans
sponsored or maintained by the Companies or under which the Companies are
obligated. Shareholders have delivered to Buyer (i) accurate and complete copies
of all such Benefit Plan documents and all other material documents relating
thereto, including (if applicable) all summary plan descriptions, summary annual
reports and insurance contracts, (ii) accurate and complete detailed summaries
of all unwritten Benefit Plans, (iii) to the Shareholders' knowledge, accurate
and complete copies of the most recent financial statements and actuarial
reports with respect to all such Benefit Plans for which financial statements or
actuarial reports are required or have been prepared, and (iv) accurate and
complete copies of all required annual reports for all such Benefit Plans
prepared within the last three years. SCHEDULE 3.20 denotes which such Benefit
Plans provide benefits that are funded through an insurance policy by placing
the word "insured" next to such Benefit Plan.
(b) To the Knowledge of any of the Sellers, all such Benefit Plans
conform (and at all times have conformed) in all material respects to, and are
being administered and operated (and have at all times been administered and
operated) in material compliance with, the requirements of ERISA, the Code and
all other applicable Laws. All returns, reports and disclosure statements
17
required to be made under ERISA and the Code with respect to all such Benefit
Plans have been timely filed or delivered. To the Knowledge of any of the
Sellers, there have not been any "prohibited transactions," as such term is
defined in Section 4975 of the Code or Section 406 of ERISA involving any of the
Benefit Plans, that would subject any Seller or the Company to any material
penalty or tax imposed under the Code or ERISA.
(c) Except as is set forth in SCHEDULE 3.20, any such Benefit Plan that
is intended to be qualified under Section 401(a) of the Code and exempt from tax
under Section 501(a) of the Code has been determined by the Internal Revenue
Service to be so qualified or an application for such determination is pending.
Any such determination that has been obtained remains in effect and has not been
revoked, and with respect to any application that is pending, the Companies do
not have any reason to suspect that such application for determination will be
denied. Nothing has occurred since the date of any such determination that is
reasonably likely to affect adversely such qualification or exemption, or result
in the imposition of excise taxes on the Companies or income taxes on unrelated
business income under the Code or ERISA with respect to any such Benefit Plan.
(d) The Companies do not sponsor a defined benefit plan subject to
Title IV of ERISA, nor do they have a current or contingent obligation to
contribute to any multi-employer plan (as defined in Section 3(37) of ERISA).
The Companies do not have any liability with respect to any employee benefit
plan (as defined in Section 3(3) of ERISA) other than with respect to such
Benefit Plans.
(e) There are no pending or, to the Sellers' Knowledge, any threatened
claims by or on behalf of any such Benefit Plans, or by or on behalf of any
individual participants or beneficiaries of any such Benefit Plans, alleging any
breach of fiduciary duty on the part of the Companies or any of their officers,
directors or employees under ERISA or any other applicable regulations, or
claiming benefit payments (other than those made in the ordinary operation of
such plans), nor is there, to the Sellers' Knowledge, any basis for such claim.
The Benefit Plans are not the subject of any pending (or to Seller's Knowledge,
any threatened) investigation or audit by the Internal Revenue Service or the
Department of Labor.
(f) The Companies have timely made all required contributions under
such Benefit Plans.
(g) With respect to any such Benefit Plan that is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) (a "Welfare Plan")
and except as specified in SCHEDULE 3.20, (i) each Welfare Plan for which
contributions are claimed by the Company as deductions under any provision of
the Code complies with all applicable requirements pertaining to such deduction,
(ii) with respect to any welfare benefit fund (within the meaning of Section 419
of the Code) related to a Welfare Plan, there is no disqualified benefit (within
the meaning of Section 4976(b) of the Code) that would result in the imposition
18
of a tax under Section 4976(a) of the Code, (iii) any Benefit Plan that is a
group health plan (within the meaning of Section 4980B(g)(2) of the Code)
complies, and in each and every case has complied, with all of the applicable
requirements of Section 4980B of the Code, ERISA, Title XXII of the Public
Health Service Act and the Social Security Act, and (iv) all Welfare Plans may
be amended or terminated at any time on or the Closing Date. Except as specified
in SCHEDULE 3.20, no Benefit Plan provides any health, life or other welfare
coverage to employees of the Companies beyond termination of their employment
with the Companies by reason of retirement or otherwise, other than coverage as
may be required under Section 4980B of the Code or Part 6 of ERISA, or under the
continuation of coverage provisions of the laws of any state or locality.
3.21 Corporate Records. The minute books of the Companies contain
complete, correct and current copies of their Charter Documents and bylaws and
of all minutes of meetings, resolutions and other proceedings of their Board of
Directors and Shareholders. The stock record books of the Companies are
complete, correct and current.
3.22 Absence of Certain Changes. Except as contemplated by this
Agreement, the Companies have conducted the Business in the ordinary course
since inception. Since the Balance Sheet Date, except as set forth on SCHEDULE
3.22, there has not been to the Sellers' Knowledge:
(a) any change that has had or is reasonably likely to have a Material
Adverse Effect;
(b) any declaration or payment of any dividend or purchase or
redemption of shares;
(c) any increase in the compensation payable or to become payable to
any director, officer, employee or agent, except for increases for non-officer
employees made in the ordinary course of business, nor any other change in any
employment or consulting arrangement except in the ordinary course of business;
(d) any sale, assignment or transfer of Assets, or any additions to or
transactions involving any Assets, other than those made in the ordinary course
of business;
(e) other than in the ordinary course of business, any waiver or
release of any claim or right or cancellation of any debt held;
(f) any material decrease in the Companies' working capital;
19
(g) other than in the ordinary course of business, any incurrence of
indebtedness for borrowed money or issuance of any debt securities; or
(h) any payments to any Affiliate of the Companies.
3.23 Customers. The Companies have used reasonable business efforts to
maintain, and currently maintains, good working relationships with all of its
customers except where the failure to have such a relationship would not have a
Material Adverse Effect on the Business. SCHEDULE 3.23 contains a list of the
names of each of the 10 customers that, in the aggregate, for the period from
January 1, 2001, through December 31, 2001, were the largest dollar volume
customers of products or services, or both, sold by the Companies. None of such
customers has given the Companies written notice terminating, canceling or
threatening to terminate or cancel any Contract or relationship with the
Companies or the Affiliates.
3.24 Previous Sales; Warranties. The Companies have not breached any
express or implied warranties in connection with the sale or distribution of
goods or the performance of services, except for breaches that, individually and
in the aggregate, are not material and are consistent with the past practices of
the Business.
3.25 Finder's Fees. Xxxxxx Xxxxx was retained by the Sellers to provide
investment advisory and consultive services to the Sellers in connection with
the Transactions and Buyer has agreed to pay the compensation due to Xxxxxx
Xxxxx notwithstanding that said compensation is the sole responsibility of the
Sellers. No other Person has been retained by the Sellers that will be entitled
to any commission or finder's or similar fee in connection with the
Transactions.
3.26 Accuracy of Information. To the Seller's Knowledge, no
representation or warranty by the Companies or any Seller in any Transaction
Document, and no information contained therein contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances under which such statements were made.
3.27 Additional Information SCHEDULE 3.27 accurately lists the
following:
(a) the names and addresses of every bank or other financial
institution in which the Companies maintain an account (whether checking, saving
or otherwise), or lock box or safe deposit box, and the account numbers and
names of Persons having signing authority or other access thereto; and
(b) all names under which the Companies have conducted the Business or
which it has otherwise used at any time during the past five years.
20
4. Representations and Warranties of Buyer
Buyer hereby represents and warrants to Sellers as follows:
4.1 Organizational Status. Buyer is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Nevada and
is qualified to do business in any jurisdiction where it is required to be so
qualified. The Charter Documents of Buyer that have been delivered to Sellers as
of the date hereof are effective under applicable Laws and are current, correct
and complete.
4.2 Authorization. Buyer has the requisite power and authority to own
its assets and to carry on its business. Buyer has the requisite power and
authority to execute and deliver the Transaction Documents to which it is a
party and to perform the Transactions performed or to be performed by it. Such
execution, delivery and performance by Buyer have been duly authorized by all
necessary corporate action. Each Transaction Document has been duly executed and
delivered by Buyer and constitutes a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
4.3 Consents and Approvals. Neither the execution and delivery by Buyer
of the Transaction Documents to which it is a party, nor the performance of the
Transactions performed or to be performed by Buyer, require any filing, consent
or approval, constitute a Default or cause any payment obligation to arise under
(a) any Law or Court Order to which Buyer is subject, (b) the Charter Documents
or bylaws of Buyer or (c) any Contract, Governmental Permit or other document to
which Buyer is a party or by which the properties or other assets of Buyer may
be subject.
4.4 No Proceedings. No suit, action or other proceeding is pending or,
to Buyer's knowledge, threatened before any Governmental Authority seeking to
restrain Buyer or prohibit Buyer's entry into this Agreement or prohibit the
Closing, or seeking damages against Buyer or its properties as a result of the
consummation of this Agreement.
4.5 Capitalization; Ownership of Shares. The authorized capital stock
of Buyer consists of 100,000,000 authorized shares of common stock, $.001 par
value and 5,000,000 shares of preferred stock, $.001 par value. As of July 1,
2002: (a) 4,192,845 shares of Buyer's common stock are issued and outstanding;
(b) 1,100 shares of Buyer's Series B preferred stock are issued and outstanding
and 406.667 shares of Buyer's Series C preferred stock are issued and
outstanding; (c) no options to acquire any Buyer Shares are outstanding; (d)
5,000,000 shares of Buyer Shares are reserved for issuance in connection with
Buyer's employee stock option plan; and (e) no warrants to purchase any Buyer
Shares are outstanding. The shares of Buyer Shares issued to the Sellers
pursuant to the terms of this Agreement will be duly authorized, validly issued,
fully paid, and nonassessable. None of such shares of Buyer Shares will be
issued to the Sellers in violation of any preemptive or preferential rights of
any Person.
21
4.6 No Liens on Shares of Buyer Shares. The Buyer Shares to be issued
to the Sellers pursuant to the terms of this Agreement (a) will be free and
clear of any liens, restrictions, security interests, claims, rights of another,
or Encumbrances of any kind whatsoever; (b) will not be subject to any
outstanding options, warrants, calls, or similar rights of any other person to
acquire the same; and (c) will not be subject to any restrictions on transfer
thereof. Buyer has the full power and authority to convey, and will convey to
the Sellers, good and marketable title to such shares of Buyer Shares, free and
clear of all such liens, restrictions, security interests, claims, rights of
another or Encumbrances of any kind whatsoever.
4.7 SEC Reports and Financial Statements. Buyer has timely filed all
reports required to be filed with the Securities and Exchange Commission (the
"SEC") pursuant to the Exchange Act since September 13, 2000 (collectively, the
"Buyer SEC Reports"). As of their respective dates, the Buyer SEC Reports
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Buyer SEC Reports. None of such Buyer
SEC Reports, as of their respective dates, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of the audited balance sheets of
Buyer and the related audited statements of operations, stockholders equity and
cash flows and unaudited interim financial statements included in the Buyer SEC
Reports complied as to form, as of their respective dates of filing with the
SEC, in all material respects, with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto and fairly
presented the consolidated financial position and the results of operations and
the changes in financial position of Buyer and its consolidated subsidiaries as
of the respective dates or for the respective periods set forth therein, all in
conformity with GAAP consistently applied during the periods involved, except as
otherwise noted therein.
4.8 Financing. Buyer has all funds necessary to perform its obligations
under this Agreement, and financing is not a condition to Buyer's obligations to
close.
4.9 Replacement Insurance. Buyer shall have the necessary insurance
policy in place at the Final Closing to replace all of CURA's obligations under
the Finance Agreement and related agreements.
4.10 Finder's Fees. Brentwood Capital Corporation was retained by Buyer
to provide investment advisory and consultive services to Buyer in connection
with this Transaction and its compensation therefore is the sole responsibility
of Buyer. Xxxxxx Xxxxx was retained by the Sellers to provide investment
advisory and consultive services to the Sellers in connection with the
Transactions and Buyer has agreed to pay the compensation due Xxxxxx Xxxxx
notwithstanding that said compensation is the sole responsibility of the
Sellers. No other Person has been retained by Buyer that will be entitled to any
commission or finder's or similar fee in connection with the Transactions.
22
4.11 Accuracy of Information. To Buyer's Knowledge, no representation
or warranty by Buyer in any Transaction Document, and no information contained
therein or otherwise delivered by or on behalf of Buyer to any other party in
connection with the Transactions contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances under which such statements were made.
5. Covenants of Sellers and the Companies
5.1 Conduct of the Business. Except as contemplated or otherwise
consented to by Buyer in writing, after the date of this Agreement, the
Companies shall carry on the Business in the ordinary course. In furtherance of
and in addition to such restriction, (a) the Companies shall not: amend their
Charter Documents or bylaws; merge or consolidate with, or purchase
substantially all of the assets of, or otherwise acquire any business of, any
corporation, partnership or other business organization or business division
thereof; split, combine or reclassify its outstanding capital stock; enter into
any Contract or otherwise incur any Liability outside the ordinary course of
business; discharge or satisfy any Encumbrance or pay or satisfy any material
Liability except pursuant to the terms thereof; compromise, settle or otherwise
adjust any material claim or litigation; make any capital expenditure involving
in any individual case more than $10,000; incur any indebtedness for borrowed
money or issue any debt securities; declare or pay any dividend or other
distribution on its capital stock; materially decrease its working capital;
increase the salaries or other compensation payable to any employee, or take any
action, or fail to take any reasonable action within its control, as a result of
which any of the changes or events listed in Section 3.21 would be likely to
occur, and (b) the Companies shall maintain and service the Assets consistent
with past custom and practice and preserve intact the current business
organization of the Companies.
5.2 Access to Information. From the date of this Agreement to the
Initial Closing, the Shareholders shall cause the Companies to give to Buyer and
its officers, employees, counsel, accountants and other representatives access
to and the right to inspect, during normal business hours, all of the assets,
records, contracts and other documents relating to the Companies as the other
party may reasonably request so long as such access does not interfere with the
normal business operations of the Companies. Buyer shall not use such
information for purposes other than in connection with the transactions
contemplated by this Agreement and shall otherwise hold such information in
confidence until such time as such information otherwise becomes publicly
available and will sign such standard and customary non-disclosure agreements as
are reasonably requested by the Companies.
23
5.3 No Solicitation. From and after the date hereof until the date of
termination of this Agreement pursuant to Section 11, without the prior written
consent of Buyer, each Seller and the Companies will not, and will not authorize
or permit any Seller Representative to, directly or indirectly, solicit,
initiate or encourage (including by way of furnishing information) or take any
other action to facilitate knowingly any inquiries or the making of any proposal
that constitutes or may reasonably be expected to lead to an Acquisition
Proposal from any Person, or engage in any discussion or negotiations relating
thereto or accept any Acquisition Proposal. The Companies or any Seller that
receives any such inquiries, offers or proposals shall (a) notify Buyer orally
and in writing of any such inquiries, offers or proposals (including the terms
and conditions of any such proposal and the identity of the person making it),
within 48 hours of the receipt thereof, (b) keep Buyer informed of the status
and details of any such inquiry, offer or proposal, and (c) give Buyer five
days' advance notice of any agreement to be entered into with, or any
information to be supplied to, any Person making such inquiry, offer or
proposal. As used herein, "Acquisition Proposal" means a proposal or offer
(other than pursuant to this Agreement) for a tender or exchange offer, merger,
consolidation or other business combination involving any or any proposal to
acquire in any manner a substantial equity interest in, or all or substantially
all of the Assets. Notwithstanding the foregoing, the Sellers will remain free
to participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner, any effort or attempt by any Person to do or seek any of the
foregoing to the extent their fiduciary duties may require.
5.4 Existing Employment Agreements and Other Liabilities. Each Seller,
effective as of the Final Closing, hereby consents to the cancellation of any
Contract that the Shareholders have with the Companies, including any employment
agreement, and also releases and discharges the Companies and the Buyer from any
and all Liabilities other than (a) those arising out of this Agreement or any
other Transaction Documents and (b) those related to wages due to the Sellers in
the ordinary course.
5.5 Expenses. Each party to this Agreement shall pay all of its legal,
accounting and other expenses incurred in connection with the Transactions.
5.6 Confidentiality.
(a) Each Shareholder recognizes and acknowledges that by reason of his
involvement with or employment in the Business, it or he has or may have had
access to Trade Secrets relating to the Business. Each Shareholder acknowledges
that such Trade Secrets are a valuable and unique asset and covenants that he
will not disclose any such Trade Secrets to any Person for any reason
whatsoever, unless such information (a) is in the public domain through no
wrongful act of such Shareholder, (b) has been rightfully received from a third
party without restriction and without breach of this Agreement, or (c) except as
may be required by law.
24
(b) The terms of this Section 5.6 shall apply to each Shareholder and
to any other Person controlled by any Shareholder and any of their respective
Affiliates that it or he controls to the same extent as if they were parties
hereto, and each such Shareholder shall take whatever actions may be necessary
to cause any such party or Affiliate to adhere to the terms of this Section 5.6.
(c) In the event of any breach or threatened breach by any party of any
provision of Section 5.6, Buyer shall be entitled to injunctive or other
equitable relief, restraining such party from using or disclosing any Trade
Secrets in whole or in part, or from engaging in conduct that would constitute a
breach of the obligations of a party under Section 5.6. Such relief shall be in
addition to and not in lieu of any other remedies that may be available,
including an action for the recovery of Damages, all of which may be sought only
in accordance with the arbitration provisions of this Agreement.
5.7 Non-Compete.
(a) Unless the context or subject matter otherwise requires, the
following terms shall have the following meanings:
(i) "Restricted Business" means the business of providing professional
employer organization services, co-employment, human resources, and labor
management services.
(ii) "Restricted Area" means the counties of Miami-Dade, Broward and
Palm Beach, within the State of Florida.
(iii) "Restricted Period" means from the date of this Agreement until
three (3) years from the Final Closing.
(b) Undertakings. Each Shareholder hereby undertakes to Buyer that he
will not, either alone or jointly with others, whether as principal, agent,
manager, equity holder or in any other capacity, directly or indirectly through
any other entity or person, for his own benefit or that of others:
(i) At any time during the Restricted Period engage in or carry on any
Restricted Business within the Restricted Area in competition with Buyer;
(ii) At any time during the Restricted Period knowingly assist any
competitor of the Buyer to a material extent with the primary purpose of
carrying on or developing any Restricted Business in the Restricted Area; and
(iii) At any time during the Restricted Period provide any financial
assistance to any person for the primary purpose of assisting such person to
carry on or develop a Restricted Business in the Restricted Area in competition
with Buyer.
25
Each of the covenants contained in this Section 5.7 is entirely
separate and severable and enforceable accordingly. The Sellers hereby agree
that each of such covenants is fair and reasonable in all circumstances. In the
event that any such restriction shall be found to be void and/or ineffective,
but would be valid and effective if some part thereof were deleted or the
duration or area of application reduced, such restriction shall apply with such
modification, as may be necessary to make it valid and effective.
Notwithstanding the foregoing, nothing set forth in this Section 5.7
shall prohibit or in any way limit or restrict either Shareholder from
participating in or funding any activity or business in which he participates as
a director, officer, shareholder or employee as of the date of this Agreement.
Notwithstanding the foregoing, nothing set forth in this Section 5.7
shall prohibit Sellers from owning not more than one percent (1%) in the
aggregate of any class of capital stock of any corporation other than Buyer, if
such stock is publicly traded and listed on any national or regional stock
exchange or on the NASDAQ national market.
6. Covenants of Buyer
6.1 Collateral Releases. Buyer shall have each Shareholder and any of
their Affiliates released from the FUB Liabilities and shall deliver the
Collateral Releases to Sellers on or before July 2, 2003.
6.2 Replacement Insurance. Buyer shall have the necessary insurance
policy in place at the Final Closing to replace all of CURA's obligations under
the Finance Agreement and related agreements.
6.3 Capital Requirements of Regulated States. Prior to the Closing
Date, Buyer shall meet any and all capital requirements of the Companies for
each of the Required States.
7. Mutual Covenants
7.1 Fulfillment of Closing Conditions. At and prior to the Closing,
Buyer shall use commercially reasonable efforts to fulfill the conditions
specified in Sections 8 and 9 to the extent that the fulfillment of such
conditions is within its control. In connection with the foregoing, each such
party will (a) refrain from any actions that would cause any of its
representations and warranties to be inaccurate in any material respect as of
the Closing, (b) execute and deliver the applicable agreements and other
documents referred to in Sections 8 and 9, (c) comply in all material respects
26
with all applicable Laws in connection with its execution, delivery and
performance of this Agreement and the Transactions, (d) use commercially
reasonable efforts to obtain in a timely manner all necessary waivers, consents
and approvals required under any Laws, Contracts or otherwise, and (e) use
commercially reasonable efforts to take, or cause to be taken, all other actions
and to do, or cause to be done, all other things reasonably necessary, proper or
advisable to consummate and make effective as promptly as practicable the
Transactions.
7.2 Disclosure of Certain Matters. Each Seller will give to Buyer and
Buyer will give to each of the Sellers prompt notice of any event or development
that occurs that (a) had it existed or been known on the date hereof would have
been required to be disclosed by such party under this Agreement, (b) would
cause any of the representations and warranties of such party contained herein
to be inaccurate or otherwise misleading, except as contemplated by the terms
hereof, or (c) gives any such party any reason to believe that any of the
conditions set forth in Sections 8 and 9 will not be satisfied prior to the
Termination Date (defined below).
7.3 Public Announcements. Shareholders and Buyer shall consult with
each other before issuing any press release or making any public statement with
respect to this Agreement and the Transactions and, except as may be required by
applicable federal or state securities laws, none of such Parties nor any other
parties shall issue any such press release or make any such public statement
without the consent of the other parties hereto.
7.4 Confidentiality. If the Transactions are not consummated, each
party shall treat all information obtained in its investigation of any other
party or any Affiliate thereof, and not otherwise known to them or already in
the public domain, as confidential and shall not use or otherwise disclose such
information to any third party and shall return to such other party or Affiliate
all copies made by it or its representatives of Confidential Information
provided by such other party or Affiliate.
8. Conditions Precedent to Obligations of the Sellers
The obligations of the Sellers to consummate the Transactions are
subject to the satisfaction prior thereto of each of the following conditions:
8.1 Representations and Warranties. The representations and warranties
of Buyer contained in this Agreement shall be true and correct in all material
respects on the date hereof and (except to the extent such representations and
warranties are expressly limited to an earlier date) shall also be true and
correct on and as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
27
8.2 Agreements, Conditions and Covenants. Buyer shall have performed or
complied with all agreements, conditions and covenants required by this
Agreement to be performed or complied with by it on or before the Closing Date.
8.3 Certificates. Sellers shall have received a certificate executed by
an executive officer of Buyer, dated the Closing Date, to the effect that the
conditions specified in Sections 8.1 and 8.2 have been satisfied, and shall have
received any other certificates reasonably requested by Sellers' counsel.
8.4 Legality. No Law or Court Order shall have been enacted, entered,
promulgated or enforced by any court or governmental authority that is in effect
and has the effect of making the purchase and sale of the Assets illegal or
otherwise prohibiting the consummation of such purchase and sale.
9. Conditions Precedent to Obligations of Buyer
All obligations of Buyer to consummate the Transactions are subject to
the satisfaction (or waiver) prior thereto of each of the following conditions:
9.1. Representations and Warranties. The representations and warranties
of Sellers contained in this Agreement shall be true and correct in all material
respects on the date hereof and (except to the extent such representations and
warranties are expressly limited to an earlier date) shall also be true and
correct on and as of the Closing Date, with the same force and effect as if made
on and as of the Closing Date.
9.2. Agreements, Conditions and Covenants. Sellers shall have performed
or complied in all material respects with all agreements, conditions and
covenants required by this Agreement to be performed or complied with by them on
or before the Closing Date.
9.3 Certificates. Buyer shall have received a certificate executed by
an executive officer of the Companies and each Seller, dated the Closing Date,
to the effect that the conditions specified in Sections 9.1 and 9.2 have been
satisfied, and shall have received any other certificates reasonably requested
by Buyer's counsel.
9.4 Legality. No Law or Court Order shall have been enacted, entered,
promulgated or enforced by any court or governmental authority that is in effect
and (a) has the effect of making the purchase and sale of the Assets illegal or
otherwise prohibiting the consummation of such purchase and sale or (b) has a
reasonable likelihood of causing a Material Adverse Effect.
9.5 Exhibits. The parties hereto expressly agree that, in the event
that all of the exhibits to this Agreement have not been finalized at the time
that this Agreement is executed, Buyer and Sellers shall use their best efforts
to negotiate in good faith the terms and conditions of such exhibits and shall
endeavor in good faith to provide any such exhibits as soon as possible.
28
10. Indemnification
10.1 By Sellers. From and after the Closing Date, the Sellers, jointly
and severally, shall indemnify and hold harmless Buyer and its successors and
assigns, and their respective officers, directors, employees, shareholders,
agents, Affiliates and any Person who controls any of such Persons within the
meaning of the Securities Act or the Exchange Act (each, a "Buyer Indemnified
Party") from and against any liabilities, claims, demands, judgments, losses,
costs, damages or expenses whatsoever (including reasonable attorneys',
consultants' and other professional fees and reasonable disbursements of every
kind, nature and description incurred by such Indemnified Party in connection
therewith) (collectively, "Damages") that such Buyer Indemnified Party may
sustain, suffer or incur and that result from, arise out of or relate to (a) any
breach of any of the respective representations, warranties, covenants or
agreements of any Seller contained in this Agreement or in the Closing
Certificates, and (b) any Liability of any Seller involving Taxes due and
payable by, or imposed on the Companies with respect to any Shareholder for any
and all taxable periods ending on or prior to the Initial Closing (whether or
not such Taxes have been due and payable) (collectively, "Buyer Indemnifiable
Damages"). Any Buyer Indemnifiable Damages, subject to the foregoing
indemnification rights of Buyer, may at Sellers' option be paid to such Buyer
Indemnified Party by delivery of all or a portion of Buyer Shares. In any such
instance, such Buyer Indemnifiable Damages shall be converted into a number of
shares equal to the amount of such Buyer Indemnifiable Damages divided by the
Per Share Price. Notwithstanding anything to the contrary set forth in this
Agreement, the maximum amount of Buyer Indemnifiable Damages for which the
Sellers shall be collectively liable hereunder shall in no event exceed Three
Million Dollars ($3,000,000).
10.2 By Buyer. From and after the Closing Date, Buyer shall, or in
connection with Section 10.2(c) shall cause the Companies to, indemnify and hold
harmless each Seller and his respective heirs, legal representatives, successors
and assigns, and (if any) their respective officers, directors, employees,
agents, Affiliates and any person who controls such Persons with the meaning of
the Exchange Act (each a Sellers Indemnified Party) from and against any Damages
that such Sellers Indemnified Party may sustain, suffer or incur and that result
from, arise out of or relate to: (a) any breach of any of the respective
representations, warranties, covenants or agreements of Buyer contained in this
Agreement; (b) the nonfulfillment of any covenant, undertaking, agreement or
other obligation of Buyer under this Agreement and (c) Sellers' capacities as
directors and officers of the Companies in respect to any acts or omissions
occurring at or prior to the Closing Date, to the fullest extent allowed by
applicable law.
29
10.3 Procedure for Claims.
(a) Any Person that desires to seek indemnification under any part of
this Section 10 (each, an "Indemnified Party") shall give notice (a "Claim
Notice") to each party responsible or alleged to be responsible for
indemnification hereunder (an "Indemnitor") prior to any applicable Expiration
Date specified below. Such notice shall explain with specificity the nature of
the claim, the specific section of this Agreement to which the claim relates and
the parties known to be involved, and shall specify the amount of the estimated
damages relating thereto. If the matter to which a claim relates shall not have
been resolved as of the date of the Claim Notice, the Indemnified Party shall
estimate the amount of the claim in the Claim Notice, but shall also specify
therein that the claim has not yet been liquidated (an "Unliquidated Claim"). If
an Indemnified Party gives a Claim Notice for an Unliquidated Claim, the
Indemnified Party shall also give a second Claim Notice (the "Liquidated Claim
Notice") within 60 days after the matter giving rise to the claim becomes
finally resolved, and the Second Claim Notice shall specify the amount of the
claim. Each Indemnitor to which a Claim Notice is given shall respond to any
Indemnified Party that has given a Claim Notice (a "Claim Response") within 60
days (the "Response Period") after the later of (i) the date that the Claim
Notice is given or (ii) if a Claim Notice is first given with respect to an
Unliquidated Claim, the date on which the Liquidated Claim Notice is given. Any
Claim Notice or Claim Response shall be given in accordance with the notice
requirements hereunder, and any Claim Response shall specify whether or not the
Indemnitor giving the Claim Response disputes the claim described in the Claim
Notice. If any Indemnitor fails to give a Claim Response within the Response
Period, such Indemnitor shall be deemed not to dispute the claim described in
the related Claim Notice. If any Indemnitor elects not to dispute a claim
described in a Claim Notice, whether by failing to give a timely Claim Response
or otherwise, then the amount of such claim shall be conclusively deemed to be
an obligation of such Indemnitor. For the purposes of the immediately preceding
sentence, an Indemnitor's failure to give a timely Claim Response shall not be
deemed an election not to dispute a Claim Notice unless the Indemnified Party
shall have given a second Claim Notice after expiration of the Response Period
and, another 20 days after the date on which the Indemnified Party shall have
given such second Claim Notice shall have expired without the Indemnitor's
having given a Claim Response within such period.
(b) If any Indemnitor shall be obligated to indemnify an Indemnified
Party hereunder, such Indemnitor shall pay to such Indemnified Party within 30
days after the last day of the Response Period the amount to which such
Indemnified Party shall be entitled. In the event of a dispute as to the amount
or manner of indemnification under this Section 10, the Indemnified Party may
pursue whatever legal remedies may be available for recovery of the Damages
claimed from any Indemnitor in accordance with the arbitration provisions of
this Agreement. If any Indemnitor fails to pay all or part of any
indemnification obligation when due, then such Indemnitor Party shall also be
obligated to pay to the applicable Indemnified Party interest on the unpaid
amount for each day during which the obligation remains unpaid at an annual rate
30
equal to the Prime Rate. The Prime Rate in effect on the first business day of
each calendar quarter shall apply to the amount of the unpaid obligation during
such calendar quarter.
10.4 Claims Period. Any claim for indemnification under this Section 10
shall be made by giving a Claim Notice under Section 10.3 on or before the first
anniversary of the Final Closing (the "Expiration Date"). So long as an
Indemnified Party gives a Claim Notice for an Unliquidated Claim on or before
the Expiration Date, such Indemnified Party shall be entitled to pursue its
rights of indemnification regardless of the date on which such Indemnified Party
gives the related Liquidated Claim Notice.
10.5 Third Party Claims.
(a) If any third party shall notify any Indemnified Party with respect
to any actions, suits or other administrative or judicial proceedings (each, an
"Action") which may give rise to a claim for indemnification against any
Indemnifying Party under this Section 10, then the Indemnified Party shall
promptly (and in any event within five Business Days' after receiving notice of
the Action) notify each Indemnifying Party thereof in writing.
(b) Any Indemnifying Party will have the right to assume and thereafter
conduct the defense of the Action with counsel of his or its choice reasonably
satisfactory to the Indemnified Party; provided, however, that the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Action without the prior written consent of the Indemnified
Party (which consent shall not be unreasonably withheld) unless the judgment or
proposed settlement involves only the payment of money damages and does not
impose an injunction or other equitable relief upon the Indemnified Party.
(c) Unless and until an Indemnifying Party assumes the defense of the
Action, the Indemnified Party may defend against the Action in any manner he or
it reasonably may deem appropriate.
(d) In no event will the Indemnified Party consent to the entry of any
judgment or enter into any settlement with respect to any Action without the
prior written consent of each of the Indemnifying Parties (which consent shall
not be unreasonably withheld).
10.6 Reduction for Insurance. The amount which an Indemnifying Party is
required to pay to, for, or on behalf of any Indemnified Party pursuant to this
Section 10 shall be reduced (including, without limitation, retroactively) by
any insurance proceeds actually recovered by or on behalf of the Indemnified
Party that reduces the related indemnifiable loss (the "Indemnifiable Loss"). An
amount required to be paid, as so reduced, is hereinafter sometimes referred to
as an "Indemnity Payment." If an Indemnified Party shall have received, or if an
Indemnifying Party shall have paid on its behalf, an Indemnity Payment in
31
respect of an Indemnifiable Loss and shall subsequently receive, directly or
indirectly, insurance proceeds in respect of such Indemnifiable Loss, then such
Indemnified Party shall promptly pay to the Indemnifying Party the amount of
such insurance proceeds, or, if less, the amount of the Indemnity Payment. The
parties hereto agree that the foregoing shall not affect the subrogation rights
of any insurance companies making payments hereunder.
10.7 Exclusive Remedy; Limitation of Liability. Buyer acknowledges and
agrees that its sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions set forth in this Section 10. No Seller shall have
any liability to Buyer or any Buyer indemnified person for any claim arising out
of the negotiation, execution or delivery of this Agreement, or the transactions
provided for herein, whether for defense, indemnification or otherwise, except
as provided for in this Section 10. In furtherance of the foregoing, Buyer
hereby waives, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action it or the Companies may have against Sellers
arising under or based upon any Law or Environmental Law, or otherwise except to
the extent specifically provided in this Section 10. Notwithstanding the
foregoing, nothing in this Agreement shall limit the rights of and remedies
available to Buyer in the event of fraud or intentional misconduct on the part
of the Companies or any Seller.
11. Termination
11.1 Grounds for Termination. This Agreement may be terminated at any
time before the Final Closing:
(a) By mutual written consent of Shareholders and Buyer;
(b) By Sellers or Buyer if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued a Court Order (which Court Order the parties shall use commercially
reasonable efforts to lift) that permanently restrains, enjoins or otherwise
prohibits the Transactions, and such Court Order shall have become final and
nonappealable;
(c) By Buyer, if any Seller shall have breached, or failed to comply
with, any of its or his obligations under this Agreement or any representation
or warranty made by any Shareholder shall have been incorrect when made, and
such breach, failure or misrepresentation is not cured within 20 days after
notice thereof; or
(d) By any Seller, if Buyer shall have breached, or failed to comply
with any of its obligations under this Agreement or any representation or
warranty made by it shall have been incorrect when made, and such breach,
failure or misrepresentation is not cured within 20 days after notice thereof.
32
11.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 11.1, the agreements contained in Section 7.4 shall survive the
termination hereof and any party may pursue any legal or equitable remedies that
may be available if such termination is based on a breach of another party.
12. General Matters
12.1 Arbitration.
(a) All disputes concerning this Agreement shall be determined by an
arbitration proceeding in accordance with the Commercial Arbitration Rules of
the American Arbitration Association ("AAA") (except to the extent such rules
and regulations are inconsistent with the provisions of this Section), at the
AAA offices located in either New York, New York or Fort Lauderdale, Florida.
(b) If the parties agree on one arbitrator, the arbitration shall be
conducted by such arbitrator. If the parties do not so agree, the parties shall
each select one independent, qualified arbitrator. For this purpose, all parties
whose interest in the matter being arbitrated are substantially identical shall
be treated as a single party entitled to select one arbitrator. If an even
number of arbitrators is selected, such arbitrators shall select an additional
arbitrator.
(c) Each party reserves the right to object to any individual
arbitrator who is employed by or affiliated with an organization that competes
with such party.
(d) The parties shall have the right to conduct discovery as specified
for up to three months. Such discovery shall include the right to take
depositions and subpoena witnesses.
(e) At the request of any party, arbitration proceedings shall be
conducted in the utmost secrecy. In such case, all documents, testimony, and
records shall be received, heard and maintained by the arbitrators in secrecy
under seal, available for the inspection only of the parties and their
respective attorneys and experts who have agreed in advance in writing to
receive and maintain all such information in confidence until such information
becomes generally known.
(f) The arbitrators shall act by majority vote. The arbitrators shall
issue a written opinion of their findings of fact and their conclusions of law
at the request of any party to the proceeding and at the expense of such
requesting party.
(g) The arbitrators shall be able to decree any and all relief of an
equitable nature, including without limitation such relief as a temporary
restraining order and a preliminary or permanent injunction, and shall also be
able to award damages, with or without an accounting, and costs, except that the
33
prevailing party shall be entitled to its reasonable attorneys' fees. The decree
or judgment of an award rendered by the arbitrators shall be binding upon the
parties and may be entered in any court having jurisdiction thereof.
(h) Reasonable notice of the time and place of arbitration shall be
given to all persons as required by law. Such persons and their authorized
representatives shall have the right to attend and participate in all the
arbitration hearings in such manner as the law requires.
12.2 Contents of Agreement. This Agreement, together with the other
Transaction Documents, sets forth the entire understanding of the parties with
respect to the Transactions and supersedes all prior agreements or
understandings among the parties regarding those matters.
12.3 Amendment, Parties in Interest, Assignment. This Agreement may be
amended, modified or supplemented only by a written instrument duly executed by
each of the parties hereto. If any provision of this Agreement shall for any
reason be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
hereof, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, legal representatives, successors and permitted assigns of the parties.
Nothing in this Agreement shall confer any rights upon any Person other than
Shareholders and Buyer and their respective heirs, legal representatives,
successors and permitted assigns. No party hereto shall assign this Agreement or
any right, benefit or obligation hereunder.
12.4 Further Assurances. At and after the Closing, Sellers and Buyer
shall execute and deliver any and all documents and take any and all other
actions that may be deemed reasonably necessary by their respective counsel to
complete the Transactions.
12.5 Interpretation. Unless the context of this Agreement clearly
requires otherwise, (a) references to the plural include the singular, the
singular the plural, and the part the whole, (b) references to any gender
include both genders, (c) "or" has the inclusive meaning frequently identified
with the phrase "and/or," (d) "including" has the inclusive meaning frequently
identified with the phrase "but not limited to," and (e) references to
"hereunder" or "herein" relate to this Agreement. The section and other headings
contained in this Agreement are for reference purposes only and shall not
control or affect the construction of this Agreement or the interpretation
thereof in any respect. Section, subsection, Schedule and Exhibit references are
to this Agreement unless otherwise specified. Each accounting term used herein
that is not specifically defined herein shall have the meaning given to it under
GAAP. Any reference to a party's being satisfied with any particular item or to
34
a party's determination of a particular item presumes that such standard will
not be achieved unless such party shall be satisfied or shall have made such
determination in its sole or complete discretion.
12.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be binding as of the date first written above,
and all of which shall constitute one and the same instrument. Each such copy
shall be deemed an original.
12.7 Schedules. Any items listed or described on SCHEDULES shall be
listed or described under a caption that identifies the Sections of this
Agreement to which the item relates.
12.8 Waiver. No failure of any party hereto to require, and no delay by
any such party in requiring the other to comply with any provision of this
Agreement shall constitute a waiver of the right to require such compliance. No
failure of any party hereto to exercise, and no delay by such party in
exercising any right or remedy under this Agreement shall constitute a waiver of
such right or remedy. No waiver by any party of any right or remedy under this
Agreement shall be effective unless made in writing. Any waiver by any party of
any right or remedy under this Agreement shall be limited to such specific
instance and shall not constitute a waiver of such right or remedy in the
future.
13. Remedies
The indemnification rights under Section 10 are independent of and in
addition to such rights and remedies as the parties may have at law or in equity
or otherwise (subject to Section 12 hereof) for any misrepresentation, breach of
warranty or failure to fulfill any agreement or covenant hereunder on the part
of any party hereto, including the right to seek specific performance,
rescission or restitution, none of which rights or remedies shall be affected or
diminished by Section 10. Buyer acknowledges that Section 10 shall be the
exclusive remedy of the Buyer for any breach of the representations and
warranties in Section 3 above with respect to such individuals, except for any
willful misrepresentation, willful breach of warranty or willful failure to
fulfill any agreement or covenant.
14. Notices
All notices that are required or permitted hereunder shall be in
writing and shall be sufficient if personally delivered or sent by mail, Federal
Express or other delivery service that confirms receipt of delivery. Any notices
shall be deemed given upon the earlier of the date when received, or the third
day after the date when sent by registered or certified mail, or the day after
the date when sent by Express carrier to the address set forth below, unless
such address is changed by written notice to the other party hereto:
35
If to the Sellers:
Xxxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
0000 Xxx Xxxx Xxxx
Xxxxxxx, XX 00000
with a required copy to:
Sellers' Counsel
Holland & Knight, LLP
Xxx Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
with a required copy to:
Sellers' Accountant
Xxxxxxx X. Xxxxxxxx, CPA
00000 X. Xxxxxx Xxxx
Xxxxx 000
Xxxxx Xxxxxxx, Xxxxxxx 00000
If to the Companies:
The Cura Group, Inc.,
The Cura Group II, Inc. and
The Cura Group II, Inc.
c/o 0000 XX 00xx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
with a required copy to:
Sellers' Counsel
Holland & Knight, LLP
Xxx Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
36
If to the Buyer:
Certified Services, Inc.
00000 Xxxxxxxxxx Xxxxxx, #0
Xxxxxxxxxx, Xxxxxxxx 00000
with a required copy to:
Levy, Boonshoft & Xxxxxxxx, P.C.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
15. Governing Law
This Agreement shall be construed and interpreted in accordance with
the laws of the State of New York without regard to its provisions concerning
conflict of laws.
(The remainder of this page intentionally left blank.)
37
IN WITNESS WHEREOF, this Stock Purchase Agreement has been executed by
the parties hereto as of the day and year first written above.
CERTIFIED SERVICES, INC.
/s/ BY: /s/
---------------------- ------------------------
Witness XXXXXXX X. XXXXX
President, CEO
THE CURA GROUP, INC.
/s/ BY: /s/
---------------------- ------------------------
Witness XXXX X. XXXXXXX
President
THE CURA GROUP II, INC.
/s/ BY: /s/
---------------------- ------------------------
Witness XXXX X. XXXXXXX
President
THE CURA GROUP III, INC.
/s/ BY: /s/
---------------------- ------------------------
Witness XXXX X. XXXXXXX
President
/s/ BY: /s/
---------------------- ------------------------
Witness XXXX X. XXXXXXX
/s/ BY: /s/
---------------------- ------------------------
Witness XXXXX X. XXXXXXX
38
