Exhibit 99.1
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of this 30th day of
August, 2004, by and among ARCADIA HEALTH SERVICES, INC., a Michigan corporation
with its principal executive offices located at 00000 Xxxxxxx Xxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, and SECOND SOLUTIONS, INC., a Maine
corporation (collectively the "Buyer"), and MERIT STAFFING RESOURCES, INC., a
Maine corporation, with its principal place of business at 000 Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxxx 00000 (the "Seller"), and XXXXXXXXX XXXXXX, the majority
shareholder of Seller ("Shareholder"). Capitalized terms used but not defined
herein have the meaning ascribed to such terms in Article 7 hereof.
RECITALS
A. Shareholder owns a majority (see SCHEDULE 4.5) of the issued and
outstanding shares of the capital stock of Seller;
B. Seller is engaged in the health care staffing business in the
current geographic area detailed in SCHEDULE 1 (the "Business");
C. Seller desires to sell, and Buyer desires to purchase, the assets of
Seller described below, upon the terms and subject to the conditions,
representations and covenants contained in this Agreement; and
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
promises representations, warranties and covenants herein contained, the parties
agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
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1.1 SALE AND PURCHASE OF ASSETS. Seller hereby sells, transfers,
conveys and assigns to Buyer, and Buyer hereby purchases from Seller, effective
on the Closing Date, free and clear of all Encumbrances whatsoever and upon the
terms and conditions set forth in this Agreement, all of the assets, properties,
rights and claims, whether tangible or intangible, which are owned by Seller,
except for the Excluded Assets.
All of the foregoing assets, properties, rights and claims are
hereinafter referred to as the "Assets Purchased" and include, without
limitation, equipment, fixtures, furniture, computer hardware and software,
leasehold improvements and other tangible property owned or used by Seller,
supplies, accounts receivable (as specified herein), refunds, rebates, credits,
prepaid assets, notes, claims, suits, causes of action and all other receivables
or potential receipts of any type or nature, intellectual property assets,
including, without limitation, patents, trademarks, service marks, trade names,
internet domain names, e-mail addresses, internet web pages,
slogans, brand names, telephone numbers, advertisements and listings,
copyrights, customer and supplier lists, vendor numbers, proprietary and
intellectual rights, goodwill, trade secrets and licenses, transferable
governmental permits, consents, authorizations, approvals and licenses,
organizational records, employee lists, sales literature, catalogs, plans,
drawings, purchase orders, agreements, contracts (whether oral or written) and
contract rights, invoices, brochures, receipts, all marketing, accounting,
certain financial and business records reasonably needed to operate the
Business, client information, personnel files, operational procedures, and all
other materials relating in any manner to the operation of the Business.
1.1.1 ASSUMED CONTRACTS. Sellers' oral and written agreements,
contracts and contract rights (the "Contracts") relating to the
Business, including, without limitation, those relating specifically to
the provision of services by the Seller, shall be referred to herein as
the "Assumed Contracts". To the extent that the assignment of any
Assumed Contract, or permit, license, approval, qualification or the
like to be assigned to Buyer shall require the consent of any other
party, Seller shall use its best efforts to obtain any and all consents
("Consents") necessary to such assignments and deliver them at Closing.
Seller shall reasonably cooperate with Buyer in obtaining any such
Consents necessary subsequent to Closing.
1.1.2 EXCLUDED ASSETS. Notwithstanding the foregoing, the
Assets Purchased shall not include those assets described on SCHEDULE
1.1.2 (collectively the "Excluded Assets"), including but not limited
to receivables due to Seller for operations of the Business prior to
the Closing Date which are greater than 120 days outstanding as of the
Closing Date (the "Aged Accounts Receivable"), which Aged Accounts
Receivables are listed as part of SCHEDULE 1.1.2.
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1.2 XXXX OF SALE AND ASSIGNMENT. Seller shall sell, transfer, convey
and assign the Assets Purchased to Buyer by Xxxx of Sale and Assignment, in the
form attached as EXHIBIT 1.2, so as to vest in Buyer good title in and to the
Assets Purchased, free and clear of all Encumbrances.
1.3 NO ASSUMPTION OF LIABILITIES. Any and all claims, obligations,
costs and liabilities against either the Seller or the Shareholder or otherwise
arising out of the Assets Purchased or the Business prior to Closing, whether
fixed or contingent and whether now existing or hereafter arising ("Seller's
Liabilities") shall be and remain the Seller's sole obligation and
responsibility and the Buyer assumes no Seller's Liabilities whatsoever. Seller
shall fully pay and discharge all Seller's Liabilities as and when due. With
respect to the Assumed Contracts, Buyer shall assume and perform the obligations
of Seller which accrue following the Closing under such Contracts and Buyer
shall only be obligated for Buyer's own future performance under such Contracts.
Buyer shall have no duties, obligations or liabilities whatsoever resulting from
or arising out of any partial or full performance or default by Seller or
Shareholder or any other party in any Assumed Contract, nor shall Buyer have any
duties, liabilities or obligations whatsoever under any contract of Seller that
is not an Assumed Contract.
ARTICLE 2
PURCHASE PRICE
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2.1 PURCHASE PRICE. In consideration of the sale and transfer by Seller
to Buyer of the Assets Purchased pursuant hereto, the aggregate purchase price
(the "Purchase Price") to be paid by Buyer for the Assets Purchased shall be:
2.2.1 Cash at closing equal to 85% of the amount of Seller's
accounts receivable under 120 days outstanding as of the day prior to
the Closing Date, which accounts receivable are listed in SCHEDULE 4.11
(the "Accounts Receivable"), plus the sum of $200,000, subject to a
total maximum cash payment at Closing of $1.6 Million (the "Accounts
Receivable Payment"); plus
2.1.2 Forty-eight (48) monthly payments, commencing one month
subsequent to the Closing Date, with a minimum total payment over said
48-month period of $864,000 and a maximum total payment over such
48-month period of $1.6 Million, the total payment amount being
calculated and being paid in the manner provided herein (the "48-Month
Payment"), and evidenced by the Promissory Note attached as EXHIBIT
2.1.2.
however, to the extent that 85% of Accounts Receivable outstanding on the
Closing Date exceeds $1.4 Million and the Accounts Receivable payment is capped
at $1.6 Million as set forth above, those excess accounts receivable shall, if
and when collected by Buyer, be added to the payment to be made to Seller under
Section 2.4.2.
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2.2 ALLOCATION OF PURCHASE PRICE. The parties mutually agree that the
consideration for the Assets Purchased shall be allocated as provided in
SCHEDULE 2.2, which allocation shall be adhered to for income tax purposes in
all Tax returns and governmental statements and filings of the parties.
2.3 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be payable in
the following manner:
2.3.1 The Accounts Receivable Payment shall be payable at
Closing by bank cashier's or certified check or by inter-bank wire
transfer.
2.3.2 The 48-Month Payment shall be paid monthly, in amounts
to be determined as provided hereunder, for 48 months, commencing one
month after the Closing Date; provided, that any installment of the
48-Month Payment otherwise payable on a day that is not a Business Day
shall be paid on the next succeeding Business Day.
2.4 THE ACCOUNTS RECEIVABLE COLLECTION.
2.4.1 [INTENTIONALLY OMITTED].
2.4.2 From and after the Closing Date, Buyer shall use
reasonable efforts to collect the Accounts Receivable. To the extent
that within 120 days of the Closing Date, Buyer collects Accounts
Receivable in an aggregate amount greater than an amount equal to the
Accounts Receivable Payment minus the sum of $200,000, Buyer shall pay
Seller any excess collected (including, to the extent that 85% of
Accounts Receivable outstanding on the Closing Date exceeded $1.4
Million, any excess collected on Accounts Receivable not otherwise part
of the Purchase Price on the Closing Date due to the $1.6 Million cap
in Section 2.1.1 above) within thirty (30) days of receipt of such
excess amount. Conversely, to the extent that within 120 days of the
Closing Date Buyer shall collect Accounts Receivable in an aggregate
amount less than an amount equal to the Accounts Receivable payment
minus the sum of $200,000, any deficit shall, in Buyer's sole
discretion, be reimbursed to Buyer (i) in the form of deductions from
any portion of the 48-Month Payment otherwise owing, or (ii) by
immediate payment from Seller to Buyer.
2.4.3 In connection with Buyer's attempt to collect the
Accounts Receivable, Seller will be provided with an Aged Trial Balance
Report on a monthly basis, for a minimum of 120 days after the Closing
Date. At such time, after a minimum of 120 days after the Closing Date,
that Buyer, using its reasonable efforts, has determined that all
possible Accounts Receivable have been collected, any uncollected
Accounts Receivable shall be returned to the Seller and any
deficiencies in collecting Accounts Receivable in an aggregate amount
equal to the Accounts Receivable Payment minus the sum of $200,000
shall be reimbursed to Buyer as set forth in Section 2.4.2. For any
account receivable which is part of the Accounts Receivable and for
which Buyer has established a payment plan which extends beyond 120
days after Closing, so long as Buyer has collected Accounts Receivable
in an aggregate amount equal to the Accounts Receivable Payment minus
the sum of $200,000, Buyer shall send any additional payments received
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after such 120 day period to Seller within 30 days of receipt of such
payments by Buyer. Likewise, assuming Buyer has collected Accounts
Receivable in an aggregate amount equal to the Accounts Receivable
Payment minus the sum of $200,000, Buyer will then forward to Seller
within 30 days of receipt, any payments that come to Buyer for those
receivables which were returned to Seller.
2.4.4 Seller may, at its own expense, conduct an independent
audit to verify Buyer's collection efforts and the receipt by Buyer of
the Accounts Receivable, until such time as all money has been
collected from those customers pursuant to an agreed upon payment plan
and/or receivables have been returned by Buyer to Seller for follow up.
2.4.5 For accounts receivable of the Seller which are over 120
days outstanding as of the Closing Date ("Aged Accounts Receivable"),
although such receivables are Excluded Assets and Buyer shall not
advance any funds to Seller on such receivables as part of the
calculation of Purchase Price, Buyer will control and manage in its
sole discretion the collection of such Aged Accounts Receivable,
excepting only receivables from or on behalf of Braintree Landing and
Xxxxx House. Any monies received on Aged Accounts Receivable may be
utilized to offset any amounts otherwise owing Buyer hereunder. Buyer
shall control and manage the collection of such receivables until an
amount equal to the Accounts Receivable Payment minus the sum of
$200,000 has been fully recouped by Buyer, at which time all remaining
Aged Accounts Receivables will be turned over to Seller for follow up.
2.4.6 At or prior to Closing, Seller shall provide Buyer with
all invoices evidencing the Accounts Receivable and Aged Accounts
Receivable, such invoices being attached hereto as SCHEDULE 2.4.6.
2.5 THE 48-MONTH PAYMENT. The minimum amount of each monthly
installment of the 48-Month Payment shall be $18,000, subject to Buyer's rights
of set-off/recoupment as set forth herein. The 48-Month Payment shall be
determined by calculating the dollar amount of the gross margin on the
annualized revenue of the Business purchased herein for the four one year
periods immediately following the Closing Date, multiplied by 28% ("Yearly Gross
Margin Amount"). The Yearly Gross Margin Amount shall be determined within
thirty (30) days of the end of each annual period, for each of the four years
immediately subsequent to the Closing Date. For each year, to the extent the
Yearly Gross Margin Amount shall exceed $216,000, such incremental amount (on a
dollar-for-dollar basis) shall be payable to Seller within thirty (30) days of
the end of such year period. The Yearly Gross Margin Amount shall be capped at a
maximum of $400,000 and in no event shall the 48-Month Payment exceed $1.6
Million.
Based upon the above, the minimum annual payment to Seller pursuant to
the 48-Month Payment shall be $18,000 x 12 = $216,000. To the extent the Yearly
Gross Margin Amount for a given year exceeds $216,000, the payment for that year
pursuant to the 48-Month Payment shall be increased dollar-for-dollar to a
maximum of $400,000 per year, for a maximum 48-Month Payment of $1.6 Million
over the four year period. The minimum 48-Month Payment over the four year
period shall be $18,000 x 48 = $864,000. All payments made by Buyer to Seller
under the 48-Month Payment shall be subject to Buyer's right of
recoupment/set-off hereunder.
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2.6 EMPLOYEES/REPRESENTATIVES. The Buyer may, but shall be under no
obligation to, hire or retain the services of any of Seller's employees, agents
or representatives following the execution of this Agreement. The Buyer shall
have no liabilities arising out of any termination of Seller's employees, agents
or representatives, nor shall Buyer have any liabilities arising out of any
employee benefit plans, severance or other agreements or arrangements with
respect to any such Persons, and Seller shall fully pay and discharge all such
liabilities.
2.7 INTEREST ON PAYMENT. ANY PAYMENTS TO ANY PARTY NOT PAID AS AND WHEN
DUE HEREUNDER SHALL BEAR SIMPLE INTEREST AT THE RATE OF SIX PERCENT (6%) PER
ANNUM.
2.8 USE OF PURCHASE PRICE PROCEEDS. Seller and Shareholder shall use
the Purchase Price received at Closing and otherwise to pay all material
liabilities of Seller. The parties agree that the proceeds to be received by
Seller at Closing shall be disbursed directly as set forth in Exhibit 2.8.
ARTICLE 3
CLOSING AND CLOSING DATE
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3.1 CLOSING AND CLOSING DATE. The consummation of the transactions
contemplated by this Agreement (the "Closing"), shall occur on or before August
30, 2004 (the "Closing Date").
3.2 CONSENTS; APPROVALS. From the date hereof, the parties shall in
good faith use their respective best efforts, to the full extent of their
ability and at their sole cost and expense, to obtain all required consents and
governmental approvals, including, without limitation, responding promptly to
inquiries and comments, furnishing all documents and information requested and
making their premises, personnel, files and business records available for
inquiry and inspection in connection with seeking such approval.
3.3 CLOSING OBLIGATIONS.
3.3.1 Seller, and Shareholder (where applicable), will deliver
to Buyer (collectively the "Seller's Closing Deliveries"):
a. Such bills of sale, assignments, certificates of
title, UCC termination statements and other discharge
documents and instruments reasonably requested by Buyer in
order to effectuate the transfer of marketable title to the
Assets Purchased, free of all Encumbrances, to the Buyer and
to effectuate and evidence the terms and provisions of this
Agreement, consistent always with the terms and provisions of
this Agreement;
b. Non-competition agreements from Xxxxxxxxx Xxxxxx,
Xxxxxxxx Xxxxxx and Xxxxxx X. Xxxxxx in the form of EXHIBIT
3.3.1 (the "Non-Competition Agreements");
c. Written, valid, binding and enforceable Consents
executed by all Persons whose consent, authorization and/or
approval is necessary or appropriate in order to validly
transfer all of Seller's rights under the Assumed Contracts to
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the Buyer, to validly transfer the Assets Purchased, and to
consummate the transactions contemplated herein;
d. Certified Resolutions of the Seller's Board of
Directors and shareholders approving the transactions
contemplated hereunder;
e. An opinion of legal counsel to the Seller, dated
as of the Closing Date, in the form of EXHIBIT 3.3(E);
f. Releases from shareholders of the Seller, of the
Buyer from all liability, except any liability arising from a
breach of this Agreement or any document executed in
connection herewith;
g. Such other documents as Buyer may reasonably
request in connection with the transactions contemplated
hereunder.
3.3.2 Buyer will deliver to Seller ("Buyer's Closing
Deliveries")
a. The Accounts Receivable Payment;
b. Such agreements for the assumption of the Assumed
Contracts as reasonably requested by Seller and reasonably
approved by Buyer, consistent with the provisions of this
Agreement.
c. Certified Resolutions of the Buyer's Board of
Directors and Shareholder approving the transactions
contemplated hereunder; and
d. Such other documents as Seller may reasonably
request in connection with the transactions contemplated
hereunder.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
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As a material inducement to Buyer entering into this Agreement and
knowing and acknowledging that Buyer is relying upon the same, Seller makes as
of the Closing Date, the following representations and warranties to Buyer.
4.1 ORGANIZATION AND GOOD STANDING. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Maine, with full power and authority to conduct its business as it is now being
conducted, to own, lease and use the Assets Purchased and Excluded Assets and to
perform all its obligations under this Agreement. Seller is and has been duly
qualified to do business as a foreign corporation and is and has been in good
standing under the laws of each state during all such times in which either the
ownership, leasing or use of the Assets Purchased, or the nature of the
activities conducted by them, required such qualification.
4.2 AUTHORITY/ENFORCEABILITY. This Agreement constitutes the legal,
valid, and binding obligation of Seller and, enforceable in accordance with its
terms. Seller has the
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absolute and unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and to perform their respective obligations under this
Agreement.
4.3 NO CONFLICT. Neither the execution and delivery of this Agreement
nor the consummation or performance of any of the transactions contemplated
hereunder will, directly or indirectly (with or without notice or lapse of
time): (a) contravene, result in a violation of or have any adverse affect upon
(i) any provision of the organizational documents of Seller, or (ii) any
resolution adopted by the Board of Directors or shareholders of Seller; (b)
contravene, conflict with, or result in a violation of, or give any governmental
body or other Person the right to challenge any of the transactions contemplated
hereunder or to exercise any remedy or obtain any relief under any legal
requirement, any order to which Seller, shareholders or any of the Assets
Purchased may be subject; or (d) contravene, conflict with, result in a
violation or breach of any provision of, give any Person the right to declare a
default or exercise any remedy under, or to cancel, any Contract.
4.4 CONSENTS. Except for the Consents described in SCHEDULE 4.4
("Consents"), the Seller is not and shall not be required to give any notice to
or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement, the transfer of the Assets Purchased, the transfer
of Seller's rights in the Assumed Contracts to the Buyer or the consummation or
performance of any of the transactions contemplated hereunder.
4.5 OWNERSHIP OF SELLER. The shareholders set forth in SCHEDULE 4.5
own, legally and beneficially, one hundred percent (100%) of all of the
outstanding voting and other stock and securities of Seller.
4.6 FINANCIAL STATEMENTS. Seller has delivered to Buyer the following
financial statements of the Seller ("Financial Statements"): (a) the audited
balance sheets of Seller as of December 31, 2002 and December 31, 2003, and the
related statements of income, changes in stockholders' equity, and cash flow for
each of the fiscal years then ended, together with the accountant's report and
opinion therein, and (b) unaudited balance sheets of Seller as of June 30, 2003
and June 30, 2004, and the related unaudited statements of income, changes in
stockholders' equity, and cash flow for the periods then ended (the "Interim
Financial Statements"). All Financial Statements are materially true, accurate,
complete and fully and accurately present the properties, financial condition,
results of operation, changes in stockholders' equity, and cash flow of the
Seller as of the respective dates of and for the periods referred to in such
Financial Statements, all in accordance and pursuant to GAAP, consistently
applied.
4.7 BOOKS AND RECORDS. The books of account, business and accounting
records, minute books and other records of Seller, all of which have been made
available to Buyer, are complete, accurate and correct.
4.8 TITLE TO ASSETS PURCHASED. Seller owns and has absolute, good and
marketable title to all of the Assets Purchased, free and clear of all
Encumbrances. The Assets Purchased are (i) in good operating condition, (ii) all
located at the offices of Seller, and (iii) the only assets, except for the
Excluded Assets, which are (a) used in the Business or operations of Seller, and
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(b) reflected in the books, records and Financial Statements and Interim
Financial Statements of Seller.
4.9 REAL PROPERTY.
4.9.1 Seller does not own any real property.
4.9.2 SCHEDULE 4.9.2 lists and describes all real property
leased or subleased to or by Seller ("Leased Property"). The Seller has
delivered to the Buyer correct and complete copies of the leases and
subleases listed in SCHEDULE 4.9.2. With respect to each such leased
property which is leased to Seller: (i) the leases are in full force
and effect and have not been amended and neither the Seller nor any
other party thereto, is in default under any such lease; (ii) there are
no pending or threatened condemnation proceedings, or lawsuits or
administrative actions relating to any parcel of Leased Property which
could effect the current use or occupancy thereof; (iii) there are no
public improvements which should have been ordered, threatened,
announced or contemplated which have not been completed, assessed and
fully paid for; (iv) there are no parties (other than the Seller) in
possession or control of any parcel of Leased Property; and (v) each
parcel of Leased Property abuts on and has direct vehicular access to a
public road, and access to the property is provided by a paved public
right-of-way with adequate curb cuts available.
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4.10 CONDITION, MAINTENANCE AND USE OF ASSETS PURCHASED. The Assets
Purchased are structurally sound, in good operating condition and repair, and
are adequate for the uses to which they are being put, and none of such Assets
Purchased are in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cause. The Assets
Purchased are sufficient for the continued conduct of the Business by Buyer
after the Closing in substantially the same manner as conducted by Seller during
the twelve (12) months prior to the Closing Date. During the twelve month period
prior to the date hereof, there has been no material deviation or reduction in
the historical practices of Seller with respect to the amount or nature of the
maintenance and repair performed with respect to the Assets Purchased.
4.11 ACCOUNTS RECEIVABLE. All Accounts Receivable included in the
Assets Purchased represent valid obligations arising from sales actually made or
services actually performed in the Ordinary Course of Business, are current and
collectible, in full, subject to no offsets or defenses and are expected to be
collected in full, without any set-off, within 120 days after the date on which
such Accounts Receivable were first created. Such Accounts Receivable are set
forth in SCHEDULE 4.11 attached hereto.
4.12 INVENTORY. Seller has no inventory.
4.13 NO UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE 4.13,
the Seller has no Liabilities except for liabilities reflected in the Interim
Financial Statements and current liabilities for trade payables and accrued
operating expenses incurred in the Ordinary Course of Business since the date of
the Interim Financial Statements.
4.14 TAXES.
4.14.1. Seller has filed or caused to be filed, on a timely
basis, all Tax returns that are or were required to be filed by or with
respect to Seller, pursuant to applicable Legal Requirements.
4.14.2. All Taxes that Seller is or was required by Legal
Requirements to pay, withhold or collect have been duly paid, withheld
or collected and, to the full extent required, have been timely paid to
the proper Governmental Body or other Person.
4.14.3. There have been no audits of or proposed or actual
adjustments to any Tax returns of Seller.
4.14.4. All Tax returns filed by Seller are true, correct, and
complete, and true copies of all Tax Returns filed by Seller within the
three (3) year period prior to the date hereof have been made available
to Buyer.
4.14.5. Seller has filed a valid election to be taxed under
subchapter C of the IRC ("C election") and the Seller's C election and
status as a C corporation for federal income tax purposes has been
continuously and validly in effect since election and shall remain in
effect through the Closing Date.
4.15 NO MATERIAL ADVERSE CHANGE. During the twelve (12) month period
immediately preceding the date hereof, there has not been any material adverse
change to the Business or the
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Assets Purchased, and no event has occurred or circumstance exists that may
result in a material adverse change to the Business or the Assets Purchased.
4.16 EMPLOYEE BENEFITS. SCHEDULE 4.16 describes each Employee Benefit
Plan that Seller maintains or to which Seller contributes and each Employee
Benefit Plan that Seller formerly maintained or to which the Seller ever
contributed in the past. Each Employee Benefit Plan (and each related trust,
insurance contract or fund) complies in form and in operation in all respects
with the applicable requirements of ERISA, the IRC and all other Legal
Requirements. Seller has delivered to Buyer correct and complete copies of all
Employee Benefit Plans, including without limitation, all agreements, plan
documents and summary plan descriptions. The Seller has no liability arising
from any Employee Benefit Plan, except for any liability reflected in the
Seller's most recent Interim Financial Statements or which is accrued in the
Ordinary Course of Business since the date of such Interim Financial Statements.
4.17 COMPLIANCE WITH LEGAL REQUIREMENTS. Seller is, and at all times
has been, in full compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its Business or the ownership
or use of any of its assets, or relating to employment.
4.18 GOVERNMENTAL AUTHORIZATIONS.
4.18.1. SCHEDULE 4.18.1 contains a complete and correct list
of each Governmental Authorization that is held by the Seller or that
otherwise relates to the business of, or to any of the assets owned or
used by, the Seller. Each Governmental Authorization listed or required
to be listed in SCHEDULE 4.18.1 is valid and in full force and effect.
The Seller has fully complied with all conditions and requirements for,
or relating to, all Governmental Authorizations.
4.18.2. The Governmental Authorizations listed in SCHEDULE
4.18.1 collectively constitute all of the Governmental Authorizations
necessary to permit the Seller to lawfully conduct and operate the
Business in the manner as currently conducted, and as conducted during
the previous three (3) years, and to permit the Seller to own and use
the Assets Purchased in the manner in which they are currently owned
and used.
4.18.3. The Seller has not received any notice or other
communication regarding any actual, alleged or potential (i) violation
or failure to comply with any Governmental Authorization, or (ii)
revocation, withdrawal, suspension, cancellation, termination or
modification of any Governmental Authorization.
4.19 LEGAL PROCEEDINGS; ORDERS.
4.19.1 Except as described in SCHEDULE 4.19.1 there is no
pending Proceeding: (a) that has been commenced by or against the
Seller or that otherwise relates to or may affect the Business or any
of the Assets Purchased; or (b) that challenges, or that may have the
effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the transactions contemplated hereunder.
Except as described in SCHEDULE 4.19.1, no such Proceeding has been
threatened and no Proceeding has been determined (by adjudication,
settlement or otherwise) within the last five (5) years. No event has
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occurred or circumstance exists that may give rise to or serve as a
basis for the commencement of any such Proceeding; and
4.19.2. There is currently no Order to which Seller or any of
the Assets Purchased, is subject. The Seller has complied with all
Orders to which they, or any of the assets owned or used has been
subject.
4.20 ORDINARY COURSE; ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as
set forth in SCHEDULE 4.20, during the twelve (12) month period immediately
preceding the date hereof, the Seller has conducted its business only in the
Ordinary Course of Business and there has not been any:
4.20.1 Amendment to the organizational documents of the
Seller;
4.20.2 Entry into, termination of, or receipt of notice of
termination of any Contract or transaction outside the Ordinary Course
of Business, or any Contract or transaction which involves a total
commitment by or to Seller in excess of $10,000; or
4.20.3 Change in any of the accounting methods or principles
used by the Seller.
4.21 CONTRACTS; NO DEFAULTS.
4.21.1 SCHEDULE 4.21.1 contains a complete and correct list,
and Seller has delivered to Buyer true and complete copies, of:
a. Each Contract that involves the furnishing or
performance of services, or the delivery, sale, lease or
transfer of goods, materials or products, by the Seller,
including, but not limited to, purchase orders received by
Seller;
b. Each Contract that involves the furnishing or
performance of services to, or the purchase, lease or receipt
of goods, materials, inventory, supplies, products or other
personal property by the Seller, including, but not limited
to, purchase orders issued by Seller;
c. Each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other
Contracts affecting the ownership of, leasing of, title to,
use of, or any leasehold or other interest in any real or
personal property;
d. Each licensing agreement or other Contract with
respect to any Intellectual Property Assets;
e. Each offer or agreement for the employment of or
receipt of any services from any Person on a full-time,
part-time, consulting, commission or any other basis;
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f. Each Contract containing covenants that in any way
purport to restrict the business activity of the Seller or any
of its employees, agents or representatives;
g. Each Contract for capital expenditures, if any;
h. Each warranty, guaranty, or other similar
undertaking extended by the Seller for or with respect to any
of the Seller's products or services or otherwise providing
any rights or benefits to any Person;
i. Each Contract with any employee, officer,
director, shareholder, sales representative, consultant,
distributor, Representative or agent of the Seller;
j. Each Contract relating to Intellectual Property
Assets;
k. Each Contract not entered into in the Ordinary
Course of Business;
4.21.2. Each Contract is in full force and effect and is valid
and enforceable in accordance with its terms.
4.21.3 Seller is, and at all times has been, in full
compliance with all applicable material terms and requirements of each
Contract, each other Person that has or had any obligation or liability
under any Contract is, and at all times has been, in material
compliance with all applicable terms and requirements of such Contract,
and no event has occurred or circumstance exists that (with or without
notice or lapse of time) may contravene, conflict with, or result in a
violation or breach of, or give the Seller or other Person the right to
declare a default or exercise any remedy under, or to accelerate,
cancel, terminate or modify, any Contract.
4.22 INSURANCE. SCHEDULE 4.22 sets forth a description of each
insurance policy of Seller, all insurance claims filed by Seller within the last
two (2) years and all open claims under such policies. With respect to each such
insurance policy, the policy is legal, valid, binding, enforceable and in full
force and effect, the policy shall be maintained by Seller without change
through the Closing Date, and neither Seller nor any other Person is in breach
or default, and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification
or acceleration, under the policy.
4.23 ENVIRONMENTAL MATTERS. Seller is, and at all times has been, in
full compliance with, and has never been in violation of or liable under, any
Environmental Law and has never engaged in any Hazardous Activity. To the best
of Seller's knowledge, its Facilities have never been in violation of or liable
under, any Environmental Law.
4.24 EMPLOYEES/REPRESENTATIVES.
4.24.1 SCHEDULE 4.24 contains a complete and accurate list of
the following information for each employee of the Seller, including
each employee on leave of absence or layoff status: (a) name; (b) job
title; (c) current compensation and bonus paid or payable; (d) vacation
accrued; (e) service credited for purposes of vesting and
13
eligibility to participate under any Employee Benefit Plan; and (f) all
other compensation, bonus and overtime pay, as applicable, for the
calendar year immediately preceding the date of the Interim Financial
Statements.
4.24.2. Except for Seller's Shareholder Agreement (a copy of
which has been provided to Buyer) and as otherwise set forth in
SCHEDULE 4.24.2, no officer or director or to Seller's knowledge,
employee of the Seller is a party to, or is otherwise bound by any
confidentiality noncompetition, or proprietary rights agreement,
between such employee, officer or director and any other Person.
4.24.3. SCHEDULE 4.24.3 lists each current sales
representative, commissioned salesperson, consultant or other agent or
representative of the Seller ("Representatives"), and all former
Representatives terminated within the last 3 years, to which the Seller
owes any Liability, together with a complete description of the
compensation or Liability payable to such Representatives and all
Contracts relating thereto, and Seller has delivered to Buyer a true
and complete copy of each such Contract and/or all amendments thereto.
4.24.4. To Seller's Knowledge, all Representatives (except
Shareholder, Xxxxxx X. Xxxxxx and Xxxx XxXxxxx) and employees of Seller
intend to continue their employment or other business relationship with
the Buyer following the Closing. The Seller has not received any notice
of termination or resignation from any current director, officer,
employee, agent or Representative of the Seller.
4.25 LABOR RELATIONS; COMPLIANCE. There has not been, there is not
presently pending or existing, and there is not threatened, any Proceeding
against or affecting the Seller relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the NLRB, the EEOC, or
any comparable Governmental Body, organizational activity or other labor or
employment dispute against or affecting the Seller or its Business. No event has
occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute. The Seller has complied in all respects with
all Legal Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and health
and plant closing. The Seller is not liable for the payment of any compensation,
damages, taxes, fines, penalties, or other amounts, however designated, for
failure to comply with any of the foregoing or other Legal Requirements.
4.26 INTELLECTUAL PROPERTY.
4.26.1. SCHEDULE 4.26.1 contains a complete and accurate list
and summary description of all Intellectual Property Assets owned by
Seller, relating to or included in the Assets Purchased or otherwise
used in the operation of the Seller's Business as it is currently
conducted and as it has been conducted during the five (5) year period
prior to the date hereof.
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4.26.2. Seller is the owner of all right, title, and interest
in and to each of the Intellectual Property Assets, free and clear of
all Encumbrances and Seller has the sole and undiminished right to the
use of the Intellectual Property Assets without any Liability for
royalties or other payments to a third party.
4.26.3 No patent, xxxx, copyright, trade secret or other
Intellectual Property Assets violates or infringes upon any rights of
any Person, or, to Seller's Knowledge, has been challenged or
threatened in any way or violates any law.
4.27 SUBSIDIARIES; PARTNERSHIPS; JOINT VENTURES. Except as disclosed in
SCHEDULE 4.27, the Seller has never owned, directly or indirectly, any voting,
equity, profit or other interest in any subsidiary, partnership, joint venture
or other Person.
4.28 FINDERS OR BROKER FEES. Other than the fee owed by Seller to
Xxxxxx X. Xxxxxx & Associates as a result of the Consultation Fee Agreement
entered into by Seller with said broker on or about April 26, 2004, which fee
shall be payable by Seller at the Closing and taken out of the proceeds which
would have otherwise been delivered to Seller and/or Seller's shareholders at
the Closing, there are no broker commissions, finders fees or other payments of
like nature payable to any Person in connection with the transactions
contemplated hereunder, and in no event will the Buyer have any Liability for
any fee or commission including, but not limited to, any finders, originators or
brokers fee in connection with the transactions contemplated hereby.
4.29 RELATED PARTY TRANSACTIONS/COMPETITIVE INTEREST. All of the
transactions entered into by Seller have been conducted on an arms length basis.
No portion of the sales or other ongoing business relationships of the Seller is
dependent upon any familial or other personal relationship of Seller,
shareholders or of any of the officers, directors or other employees of the
Seller or shareholders. Neither Seller, Shareholder, Xxxxxx X. Xxxxxx, Xxxx
XxXxxxx, or any officer or director of Seller, nor to Seller's Knowledge, other
employee of the Seller, own(s), directly or indirectly, any interests or have
any business or enterprise which is a competitor or potential competitor of the
Seller.
4.30 DISCLOSURE.
4.30.1. No representation or warranty of Seller in this
Agreement and no statement in the Schedules hereto omits to state any
fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
4.30.2. No notice given pursuant to this Agreement or
otherwise will contain any untrue statement or omit to state a material
fact necessary to make the statements therein or in this Agreement, in
light of the circumstances in which they were made, not misleading.
4.30.3. There is no fact known to Seller that has application
to the Seller (other than general economic or industry conditions) and
that may have a material adverse affect on the assets, business,
prospects, financial condition, or operations of the Seller or on the
Buyer's conduct of Seller's business and use of the Assets Purchased
that has not been set forth in this Agreement or the Schedules.
15
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
As a material inducement of Seller entering into this Agreement and
knowing and acknowledging that Seller is relying upon the same, Buyer hereby
makes, as of the date hereof, the following representations and warranties to
Seller:
5.1 ORGANIZATION AND GOOD STANDING. Buyer is a Michigan corporation and
a Maine corporation, respectively, duly organized, validly existing, and in good
standing under the laws of such respective states.
5.2 AUTHORITY; NO CONFLICT. This Agreement constitutes the legal,
valid, and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement. Neither the execution and delivery of this Agreement by
Buyer, nor the consummation or performance of any of the transactions
contemplated hereunder by Buyer will give any Person the right to prevent,
delay, or otherwise interfere with any of the transactions contemplated
hereunder pursuant to:
5.2.1. Any provision of Buyer's organizational documents; or
5.2.2. Any resolution adopted by the Board of Directors or the
shareholders of Buyer;
Buyer is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the transactions contemplated hereunder.
5.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated hereunder. To Buyer's knowledge, no such Proceeding
has been threatened.
ARTICLE 6
INDEMNIFICATION, REMEDIES AND POST CLOSING COVENANTS
----------------------------------------------------
6.1 SURVIVAL, RIGHT TO INDEMNIFICATION. All representations,
warranties, covenants, and obligations in this Agreement, the Schedules, the
supplements to the Schedules, any certificate delivered pursuant to this
Agreement, and any other certificate or document delivered pursuant to this
Agreement will survive the Closing and continue in perpetuity and in full force
and effect thereafter, except for the representations and warranties contained
in Sections 4.6, 4.7, 4.9, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19,
4.20, 4.21, 4.22, 4.24, 4.25, 4.26, 4.27 and 4.29 which shall survive the
Closing and continue for a period of two (2) years thereafter. The right to
indemnification, payment of Damages (as hereinafter defined) or other remedy
based on such representations, warranties, covenants, and obligations will not
be affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or
16
the Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant, or obligation.
6.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER. Seller will
indemnify, defend and hold harmless Buyer and its respective representatives,
stockholders, controlling Persons, and affiliates (collectively the "Indemnified
Persons") for, and will pay to the Indemnified Persons the amount of, any loss,
Liability, claim, Damage (including incidental and consequential damages),
expense (including costs of investigation, defense and reasonable attorneys'
fees) or diminution of value, whether or not involving a third-party claim
(collectively "Damages"), arising, directly or indirectly, from or in connection
with:
6.2.1 Any breach of any representation or warranty made by
Seller or Shareholder in this Agreement, the Schedules, the supplements
to the Schedules, the Exhibits or any other certificate or document
delivered by Seller, Seller's shareholders or Representatives, pursuant
to this Agreement;
6.2.2. Any Liability of the Seller and any liability which
otherwise relates to or arises out of the Business, Assets Purchased or
Leased Property, or any activities, occurrences, circumstances or
events prior to the Closing.
6.2.3. Any Liability arising out of any Contract of Seller,
except for the performance due by Buyer under the Assumed Contracts
following the Closing.
6.2.4. Any breach by Seller and/or Shareholder of any covenant
or obligation of Seller or Shareholder in this Agreement;
6.2.5. Any Excluded Liability;
6.2.6. Any Liability or claim for any Tax which relates to any
period prior to or including the Closing Date;
6.2.7 Any Liabilities in any way arising from any Hazardous
Activity conducted or allegedly conducted with respect to the Leased
Property or the operation of the Seller company prior to the Closing,
and/or any Liability resulting from a breach by Seller of any other
Environmental Laws;
6.2.8 Any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Seller
or the Seller's shareholders (or any Person acting on their behalf) in
connection with any of the transactions contemplated hereunder or any
other transaction, including any claim by Xxxxxx X. Xxxxxx & Associates
for any such fees or commissions;
6.2.9 Reliance by Buyer on any books or records of the Seller
or information furnished by Seller or any of the directors or officers
of Seller, or any shareholders, to Buyer, to the extent any of such
information should prove to be incorrect or false;
17
6.2.10. Any Liability or claim for any compensation, damages,
bonuses, remuneration, workers' compensation benefits, health, life or
other insurance benefits, or any other employee benefits or claims by
or for any of the agents, employees or Representatives of the Seller
arising from or relating to any Employee Benefit Plan, or any other
accrual, event or occurrence;
6.2.11. Any Liability or claim arising from the services,
treatment, employment or termination of any employee, agent or
Representative of the Seller on or as of the Closing Date; and
6.2.12. Any Liability arising from any breach, violation or
non-compliance of any Legal Requirement prior to the Closing.
6.2.13. Any Liability arising from claims made against Buyer,
its agents, representatives and affiliated parties by any shareholder
of Seller.
6.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will
indemnify and hold harmless Seller, and will pay to Seller the amount of any
loss, Liability, claim, Damage (including incidental and consequential damages),
expense (including costs of investigation, defense and reasonable attorneys'
fees), arising, directly or indirectly, from or in connection with (a) any
breach of any representation or warranty made by Buyer in this Agreement or in
any certificate delivered by Buyer pursuant to this Agreement, or (b) any Breach
by Buyer of any covenant or obligation of Buyer in this Agreement.
6.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SHAREHOLDER. Shareholder
will indemnify, defend and hold harmless Buyer, its agents, representatives and
affiliated parties, and will pay to them the amount of any loss, Liability,
claim, Damage (including incidental and consequential damages), expense
(including costs of investigation, defense and reasonable attorneys' fees),
arising directly or indirectly, from or in connection with any claim brought by
any shareholder of Seller relating to the Seller, any of its other shareholders,
and/or its Business, except claims relating to Buyer's breach of this Agreement.
ARTICLE 7
DEFINITIONS
-----------
For purposes of this Agreement, the following terms have the following
meanings:
18
7.1 "Agreement" shall mean this Asset Purchase Agreement together with
all Schedules, documents, Exhibits and instruments delivered in connection with
this Asset Purchase Agreement.
7.2 "Breach" shall mean a breach of a representation, warranty,
covenant, obligation, or other provision of this Agreement, any Schedule or any
instrument delivered pursuant to this Agreement and will be deemed to have
occurred if there is or has been (a) any inaccuracy or error in, failure or
breach of, or any failure to perform or comply with, such representation,
warranty, covenant, obligation, or other provision, whether material or
otherwise, or (b) any claim by any Person or other occurrence or circumstance
that is or was inconsistent with such representation, warranty, covenant,
obligation or other provision.
7.3 "Business Day" means a day, other than a Saturday or Sunday, on
which commercial banks in Detroit, Michigan are open for the general transaction
of business.
7.4 "Employee Benefit Plan" shall mean any qualified and/or
non-qualified fringe benefit, disability, health, medical, life insurance,
supplemental compensation, incentive, wage continuation, retirement, pension,
profit sharing, bonus, deferred compensation, stock ownership or other plan,
trust, policy or arrangement involving any past, present or future employee,
consultant, representative, or agent of the Seller, including without limitation
any plan, program or arrangement defined in or relevant to any provision of
ERISA.
7.5 "Encumbrance" shall mean any charge, claim, community property or
dower interest, mortgage, equitable interest, lien, encumbrance, option, pledge,
security interest, right of first refusal, contract, Liability or restriction of
any kind, including any restriction on use, voting, transfer, receipt of income,
or exercise of any other attribute of ownership.
7.6 "Governmental Authorization" shall mean any approval, consent,
license, permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
7.7 "Governmental Body" shall mean any: (a) federal, state, local,
municipal, foreign, or other government; or (b) governmental or
quasi-governmental authority of any nature, including without limitation, (i)
any governmental agency, branch, department, official, or entity, (ii) any
court, judicial authority or other tribunal, and (iii) any arbitration body or
tribunal.
7.8 "Hazardous Materials" shall mean any waste or other substance that
is listed, regulated, defined, designated, or classified under, or otherwise
determined to be, hazardous, radioactive, toxic, or a pollutant or a contaminant
pursuant to, any Environmental Law and shall include materials or equipment
containing polychlorinated biphenals or asbestos in any form.
7.9 "Intellectual Property Assets" shall include the following assets:
(a) Seller's name, all fictional business names, trade names, registered and
unregistered trademarks, service marks and applications; (b) all patents, patent
applications, and inventions and discoveries that are or may be patentable; (c)
all copyrights in both published works and unpublished works; and (d) all
know-how, trade secrets, confidential information, customer lists, software,
technical information, data, process technology, plans, drawings, and blue
prints, owned, used or licensed by the Seller, or otherwise referenced in or
affected by any Contract.
19
7.10 "Knowledge" of any Person shall be deemed to include a particular
fact or other matter if: (a) such Person is actually aware of such fact or other
matter; or (b) a prudent Person could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact or
other matter. A Person other than an individual will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact or other matter.
7.11 "Legal Requirement" shall mean any federal, state, local,
municipal, foreign, or other administrative order, law, charter, ordinance,
code, principle of common law, case, decision, regulation, or statute.
7.12 "Liability" shall mean any present or future liability or
obligation whether known or unknown, foreseeable or unforeseeable, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due.
7.13 "Ordinary Course of Business" shall mean an action taken by a
Person that is consistent with the past practices of such Person and is taken in
the ordinary course of the normal day-to-day operations of such Person and such
action is similar in nature and magnitude to actions customarily taken, without
any authorization by the board of directors (or by any Person or group of
Persons exercising similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of business as
such Person.
7.14 "Person" shall mean any individual, corporation, general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or Governmental Body.
7.15 "Proceeding" shall mean any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator or Person.
7.16 "Tax" shall mean any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, customs, duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated or
other tax, assessment or charge by a Governmental Body of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not.
ARTICLE 8
GENERAL PROVISIONS
------------------
8.1 CONFIDENTIALITY. Given that a certain affiliate of Buyer is
publicly traded, among other reasons, the Seller and Shareholder will maintain
and hold in confidence and not disclose any information concerning the business
and affairs of the Seller and the Buyer that is not already generally available
to the public and is not otherwise used in the business of Seller
20
("Confidential Information"), refrain from using any Confidential Information
except in connection with this Agreement, and deliver promptly to the Buyer or
destroy, at the request and option of the Buyer, all tangible embodiments (and
all copies) of the Confidential Information which are in its possession. In the
event that Seller and Shareholder are requested or required (by oral question or
request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, such party will notify the Buyer promptly of the
request or requirement so that the Buyer may seek an appropriate protective
order or waive compliance with the provisions of this Section. If, in the
absence of a protective order or the receipt of a waiver hereunder, any of the
aforementioned parties is, on the written advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, such party may without liability hereunder, disclose that portion of
the Confidential Information which such party is required to disclose. In
addition, the Confidentiality Agreement entered into by and among the parties
dated April 26, 2004 shall remain in full force and effect unless contradictory
to this Agreement, in which case the confidentiality provisions of this
Agreement shall control.
8.2 EXPENSES. Except as otherwise expressly provided in this Agreement,
the Seller and Shareholder, on the one hand, and the Buyer, on the other hand,
shall bear their own respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the transactions
contemplated hereunder, including, but not limited to fees and expenses of
agents, representatives, investment bankers, advisors, consultants, legal
counsel and accountants (collectively "Transaction Costs"). In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a Breach of
this Agreement by another party.
8.3 SCHEDULES. The Schedules are numbered to correspond to the various
sections of this Agreement relating to the representations and warranties
contained in this Agreement and certain other information called for by this
Agreement. Unless otherwise specified, no disclosure made in any particular
Schedule shall be deemed made in any other Schedule unless expressly made
therein.
8.4 [INTENTIONALLY OMITTED].
8.5 PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement or the transactions contemplated hereunder will
be issued, if at all, at such time and in such manner as determined by Buyer.
Unless consented to by each party hereto in advance or required by Legal
Requirements prior to the Closing, all parties shall keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
Person. Shareholder and Buyer will consult with each other concerning the means
by which the Seller's employees, customers, and suppliers and others having
dealings with the Seller will be informed of the transactions contemplated
hereunder, and Buyer will have the right to be present for any such
communication.
8.6 ARBITRATION. Any and all disputes, controversies or claims arising
out of or relating to this Agreement shall be resolved exclusively and
conclusively by binding arbitration in accordance with the rules of the American
Arbitration Association. Such arbitration shall be held at the office of the
American Arbitration Association located in Southfield, Michigan. The
21
Arbitrator shall include as part of any award, that the non-prevailing party (as
to a particular issue) reimburse all reasonable expenses and attorney fees to
the prevailing party relating to such issue. Any award or decision as a result
of such arbitration shall be final and binding upon the parties, shall not be
subject to appeal and shall be enforceable by entry of a judgment by any court
of competent jurisdiction.
8.7 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by facsimile (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), or (d) three (3) business days following the deposit of
same in the U.S. mail, in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Seller: Merit Staffing Resources, Inc.
c/o Xxxxxxxxx Xxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax No. ___________________
With a copy to: Xxxxx X. Xxxxxxx, Esq.
Givertz, Hambley, Scheffee and Xxxxxx, P.A.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax No. (000) 000-0000
Shareholders: c/o Xxxxxxxxx Xxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax No. __________________
Buyer: Arcadia Health Services, Inc.
00000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, XX/Xxxxx Xxxxxxxx
Fax No. (000) 000-0000
With a copy to: Xxxx, Xxxxxxx and Xxxxx, PLC
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxx, Esq.
Fax No. (000) 000-0000
Buyer: Second Solutions, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax No. __________________
22
8.8 CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement and the transactions
contemplated herein, shall be paid by Seller when due, and Seller will, at its
own expense, file all necessary Tax Returns and other documentation with respect
to all such transfer, documentary, sales, use, stamp, registration and other
Taxes and fees.
8.9 RECOUPMENT. Seller and Shareholder hereby agree and acknowledge
that in the event that any amount is or becomes due or payable by Seller to the
Buyer as Damages or otherwise, the Buyer shall have the option (but not
obligation) to elect to reduce, on a dollar-for-dollar basis, any amount owed,
due or payable under this Agreement, under the excess Accounts Receivable
Payments or the 48-Month Payment or otherwise, by any such amount due or payable
to Buyer, which recoupment may be applied against one or more payments due,
and/or treated as a prepayment under the excess Accounts Receivable Payments or
the 48-Month Payment, or otherwise, as the Buyer may elect from time to time.
This elective right of setoff shall be cumulative and in addition to any and all
additional remedies to which Buyer may be entitled at law or in equity.
8.10 FURTHER ASSURANCES. The parties agree (i) to furnish upon request
to each other such further information, (ii) to execute and deliver to each
other such other documents, and (iii) to do such other acts and things, all as
the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
8.11 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged,
in whole or in part, by a waiver or renunciation of the claim or right, unless
done so in writing signed by the party asserting such claim or right; (b) no
waiver that may be given by a party will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand on one party will
be deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
8.12 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
8.13 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this
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Agreement shall be construed as if drafted jointly by the parties and no
presumptions or burden of proof shall arise favoring or disfavoring any party by
virtue of the authoring of any of the provisions of this Agreement. Any
reference to any federal, state, local or foreign statute of law shall be deemed
to also refer to all rules and regulations promulgated thereunder, unless the
context expressly provides otherwise. The word "including" shall mean including
without limitation. All words used in this Agreement will be construed to be of
such gender or number as the circumstances may require. If any party has
Breached any representation, warranty or covenant contained in this Agreement,
the fact that such party may not have Breached another representation, warranty
or covenant contained in this Agreement which also relates to the same or
similar subject matter shall not detract from or mitigate the fact that the
party is in Breach of the first representation, warranty or covenant (regardless
of the relative levels of specificity among such various representations,
warranties or covenants). In the event of any inconsistency between the
statements in the body of this Agreement and those in the Schedules, the
statements in the body of this Agreement will control.
8.14 ASSIGNMENTS; SUCCESSORS; NO THIRD PARTY RIGHTS. No party may
assign any of its rights under this Agreement without the prior consent of the
other parties, except that Buyer may assign any of its rights under this
Agreement to any subsidiary, parent or affiliate of Buyer. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing contained in this Agreement will be construed to give any
Person other than the parties to this Agreement (and their successors and
assigns) and those Persons expressly identified herein as receiving or obtaining
rights or benefits hereunder, any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provision of this Agreement.
8.15 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction or arbitrator, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
8.16 SECTION HEADINGS. The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement.
8.17 GOVERNING LAW. This Agreement will be governed by the internal
laws of the State of Michigan without regard to conflicts of laws principles.
8.18 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents
and warrants to all other parties hereto that (a) before executing this
Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement, (b) said party has relied solely and
completely upon its own judgment in executing this Agreement, (c) said party has
had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement, (d) said party has acted voluntarily and of its own
free will in executing this Agreement, (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement, and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
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8.19 SELLER/SHAREHOLDER COOPERATION POST CLOSING. Seller and
Shareholder agree to provide the necessary time needed for a smooth transition
of the Business in a timely manner, including but not limited to (a) conducting
with Buyer a meeting with current field employees and staff to explain the
changes occurring, (b) introducing Buyer to all business contacts, (c)
introducing Buyer, in person, to all clients and potential clients in process,
(d) being available for questions and problem resolution the first ninety (90)
days after Closing, as needed.
8.20 COUNTERPARTS/FACSIMILE SIGNATURES. This Agreement may be executed
in one or more counterparts, each of which will be deemed to be an original of
this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement. A facsimile signature of any party shall
be immediately binding upon such party and have the same legal effect as a
original signature of such party.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
WITNESSES: BUYER:
-----
ARCADIA HEALTH SERVICES, INC.,
A MICHIGAN CORPORATION
/s/ Xxxxxxx Xxxxxxx By: /S/ XXXXX XXXXXXXX
-------------------------- ------------------------------
Xxxxxxx Xxxxxxx Xxxxx Xxxxxxxx
Its: Chief Operating Officer
SECOND SOLUTIONS, INC.,
A MAINE CORPORATION
/s/ Xxxxxxxx X. Xxxxxx By: /S/ XXXXXXXX XXXX
-------------------------- -----------------------------
Xxxxxxxx X. Xxxxxx Xxxxxxxx Xxxx
Its: President
SELLER:
-------
MERIT STAFFING RESOURCES, INC.,
A MAINE CORPORATION
/s/ Xxxxxxxx X. Xxxxxx By: /S/ XXXXXXXXX XXXXXX
------------------------- -----------------------------
Xxxxxxxx X. Xxxxxx Xxxxxxxxx Xxxxxx
Its: President
SHAREHOLDER:
------------
/S/ XXXXXXXXX XXXXXX
-----------------------------
Xxxxxxxxx Xxxxxx
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