Exhibit 2.1
ACQUISITION AGREEMENT
BY AND AMONG
SFBC INTERNATIONAL, INC.,
SOUTH FLORIDA KINETICS, INC.,
CLINICAL PHARMACOLOGY OF FLORIDA, INC.,
CLINICAL PHARMACOLOGY INTERNATIONAL, INC.,
XX. XXXXXXX XXXXXXXX,
XX. X. XXXXXX XXXXXXXX, AND
XX. XXXXX X. XXXXXX
August 1, 2003
TABLE OF CONTENTS
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Page
1. Definitions.........................................................1
2. Basic Transactions..................................................7
2.1 The Merger.................................................7
2.2 The Closing................................................8
2.3 Actions at the Closing.....................................8
2.4 Effect of Merger...........................................8
2.4.1 General...........................................8
2.4.2 Articles of Incorporation.........................8
2.4.3 Bylaws............................................8
2.4.4 Merger Consideration..............................8
2.4.5 Additional Merger Consideration...................9
2.4.6 Acquisition of CPI...............................11
2.4.7 Fractional Shares................................11
2.4.8 Adjustments......................................11
2.5 Procedure for Exchange of CPF Common Stock................11
2.6 Closing of Transfer Records...............................11
3. Representations and Warranties of CPF and CPI.....................11
3.1 Organization, Qualification, and Power....................11
3.2 Capitalization............................................12
3.3 Authorization of Transaction..............................12
3.4 Noncontravention..........................................13
3.5 Title to Assets...........................................13
3.6 Financial Statements......................................13
3.7 Compliance with Laws......................................14
3.8 Certain Business Relationships With CPF...................15
3.9 Absence of Questionable Payments..........................15
3.10 Employment Matters .......................................15
3.11 American With Disabilities Act............................16
3.12 Employees ................................................16
3.13 Employee Benefit Plans....................................16
3.14 Tangible Assets...........................................18
3.15 Tax Matters...............................................18
3.16 Real Property.............................................19
3.17 Environmental, Health, and Safety Matters.................20
3.18 Other Disclosures.........................................23
3.19 Undisclosed Liabilities...................................23
3.20 Litigation................................................23
3.21 Guaranties ...............................................23
3.22 Events Subsequent to December 31, 2002....................24
3.23 Major Clients.............................................26
3.24 Brokers' Fees.............................................26
3.25 Intellectual Property.....................................26
3.26 Condition of Assets.......................................27
3.27 Collectibility of Accounts Receivable.....................27
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3.28 No Third Party Option.....................................27
3.29 Restrictive Covenants.....................................27
3.30 Insurance.................................................28
3.31 Ancillary Corporation.....................................28
3.32 No Reliance on Xxxxxxx Xxxxx & Associates, Inc............28
3.33 Leases....................................................28
3.34 Disclosure................................................29
4. Representations and Warranties of SFBC and SFBC Miami..............29
4.1 Organization, Qualification, and Power....................29
4.2 Capitalization............................................30
4.3 Authorization of Transaction..............................30
4.4 Noncontravention..........................................31
4.5 Absence of Undisclosed Liabilities........................31
4.6 Filings with the SEC......................................31
4.7 Trailing 12 Month Revenues................................32
4.8 Brokers' Fees.............................................32
4.9 Status of the Shareholders................................32
4.10 Disclosure................................................32
5. Additional Covenants...............................................32
5.1 Covenant Not to Compete...................................32
5.2 Nondisclosure.............................................33
5.3 Cooperation in Third-Party Litigation.....................34
5.4 Working Capital Adjustment................................34
5.5 Rights of the Shareholders to Contest Certain Matters.....34
5.6 SFBC Guarantee............................................35
5.7 Reporting Obligations.....................................35
5.8 Listing of SFBC Shares....................................35
5.9 SFBC's Covenant to Capitalize and Operate SFBC Miami......35
5.10 Filing of Tax Returns.....................................36
5.11 Filing of SFBC SEC Reports................................36
6. Indemnification....................................................36
6.1 Indemnification by the Shareholders.......................36
6.2 Indemnification by SFBC and SFBC Miami....................36
6.3 Procedure.................................................36
6.4 Limitations on Indemnification............................37
7. Miscellaneous......................................................38
7.1 Survival..................................................38
7.2 Press Releases and Public Announcements...................38
7.3 Entire Agreement..........................................38
7.4 Assignment................................................38
7.5 Counterparts..............................................38
7.6 Headings..................................................38
ii
7.7 Notices and Addresses.....................................38
7.8 Governing Law.............................................39
7.9 Amendments and Waivers....................................39
7.10. Severability..............................................40
7.11 Expenses..................................................40
7.12 Construction..............................................40
7.13 Arbitration...............................................40
7.14 Force Majeure.............................................40
7.15 Plural and Gender.........................................40
7.16 Incorporation of Exhibits and Schedules...................41
Exhibits
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Exhibit A - Articles of Merger of South Florida Kinetics, Inc.
Exhibit B - Form of Legal Opinion for CPF, CPI, the Shareholders and the CPI
Shareholders
Exhibit C - Form of Legal Opinion from Counsel to SFBC and SFBC
Miami
Schedules
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3.1 Organization, Qualification, and Power
3.4 Non-Contravention
3.6 Financial Statements
3.8 Certain Business Relationships With CPF
3.13 Employee Benefit Plans
3.14 Tangible Assets
3.15.3 Tax Matters
3.16 Real Property
3.16.9 Direct Access to Public Road
3.16.10 Necessary Repairs
3.17.2 Environmental, Health, and Safety Matters
3.18 Indebtedness
3.20 Litigation
3.25 Intellectual Property
3.30 Insurance
3.33 Leases
4.1 Organization, Qualification, and Power
4.2 Capitalization
4.5 Absence of Undisclosed Liabilities
ACQUISITION AGREEMENT
---------------------
Acquisition Agreement entered into as of August 1, 2003 (this
"Agreement") by and among SFBC International, Inc. ("SFBC"), a Delaware
corporation, South Florida Kinetics, Inc., a Florida corporation ("SFBC Miami"),
Clinical Pharmacology of Florida, Inc. a Florida corporation ("CPF"), Clinical
Pharmacology International, Inc., a Florida corporation ("CPI"), and solely for
the purposes of the representations and warranties contained in Article 3, the
provisions of Sections 8.1 through 8.4, and the indemnification contained in
Section 9.1, Xx. Xxxxxxx Xxxxxxxx ("Xxxxxxxx"), Xx. X. Xxxxxx Xxxxxxxx
("Xxxxxxxx") and Xx. Xxxxx X. Xxxxxx ("Xxxxxx"). SFBC, SFBC Miami, CPF, CPI,
Xxxxxxxx, Xxxxxxxx and Xxxxxx are referred to individually or collectively
herein as the "Party" or "Parties".
WHEREAS, the respective boards of directors of SFBC and SFBC Miami and
the board of directors of CPF have each declared advisable the merger of CPF
with and into SFBC Miami (the "Merger"), upon the terms and subject to the
conditions set forth herein;
WHEREAS, the respective boards of directors of SFBC and SFBC Miami and
CPF have each determined that the Merger is in the best interest of their
respective shareholders and is in furtherance of and consistent with their
respective long-term business strategies; .
WHEREAS, the board of directors of SFBC on its own behalf and in its
capacity as the sole shareholder of SFBC Miami, the board of directors and
shareholders of CPF and Xxxxxxxx and Xxxxxxxx (Xxxxxxxx and Xxxxxxxx
collectively, the "Shareholders") each has approved this Agreement and the
Merger upon the terms and subject to the conditions set forth herein;
WHEREAS, SFBC Miami intends to acquire all of the issued and
outstanding Common Stock of CPI in accordance with Section 368(a)(1)(B) of the
Code, wherein the CPI Shareholders shall exchange their shares of Common Stock
of CPI in exchange for the C- Corp Consideration; and
WHEREAS, the Parties intend the Merger to comply with Section
368(a)(1)(A) or (a)(2)(D) of the Code.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. Definitions. As used in this Agreement, the following capitalized
words and terms have the referenced meanings:
"Abbreviated New Drug Applications" refer to applications filed with
the FDA for approval to market generic drugs.
"Acquisition Proposal" has the meaning set forth in Section 5.6.1.
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"Additional Merger Consideration" has the meaning set forth in Section
2.4.5(a).
"Adverse Consequences" means all injunctions, judgments, orders,
decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees
actually sustained by a Party or imposed thereon.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act, except that in Section 4.9 it
shall also have the meaning contained in Rule 144(a)(1) under the Securities
Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504(a) or any similar group defined under a similar provision of
state, local, or foreign law.
"Agreement" refers to this Acquisition Agreement.
"ADA" has the meaning set forth in Section 3.11.
"Area" has the meaning set forth in Section 5.1(a).
"Average Share Price" means (i) $18.62 for the purposes of
determining the Initial Merger Consideration, the Escrowed Merger
Payment and the C-Corp Consideration; and (ii) the average closing
price of SFBC's Common Stock on the Nasdaq Stock Market or other
principal market for SFBC's Common Stock for each day on which the
Nasdaq Stock Market or such other market is open for business during
the last month of the applicable 12-month period for the purpose of
determining the Additional Merger Consideration; or (iii) for purposes
of Section 6.3(c), the average closing prices of SFBC's Common Stock on
the Nasdaq Stock Market or other principal market for SFBC's Common
Stock for each day on which the Nasdaq Stock Market or such other
market is open for business for the 20 days immediately preceding the
day the Indemnifying Party receives written notification pursuant to
Article 6.
"C-Corp Consideration" has the meaning set forth in Section 2.4.6.
"Claim" shall mean any claims,, demands, actions, administrative or
arbitration proceedings, damages, losses including loss of value, obligations,
allegations, Liabilities, judgments, encumbrances, penalties, costs, and
expenses, including reasonable attorneys' fees and expenses that a Party is or
may be liable for or incurs in investigating or pursuing any of the foregoing.
"Client" means any Person for which SFBC Miami or CPF has (x) performed
any services during the two-year period prior to the Closing Date or the date on
which any of the Shareholders has allegedly violated a covenant contained in
Article 8, as the case may be, (y) agreed to perform such services within such
two-year period, or (z) any Persons with which any employee of SFBC Miami or CPF
has had discussions or other communications relating to the performance of such
services by SFBC Miami or CPF for such Persons or any Affiliates within such
two-year period.
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"Closing" shall have the meaning set forth in Section 2.2.
"Closing Date" shall have the meaning set forth in Section 2.2.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B and of any similar state law.
"Code" means the Internal Revenue Code of 1986, as amended and the
Regulations thereunder.
"Common Stock" means shares of common stock of SFBC, CPF or CPI, as the
case may be.
"Computations of Revenues" has the meaning contained in Section 5.7.
"Confidential Information" means any information concerning the
businesses and affairs of SFBC, SFBC Miami or CPF, as the case may be, including
their respective Subsidiaries, that is not already generally available to the
public and shall include, but shall not be limited to, trade secrets, processes,
policies, procedures, techniques, designs, drawings, know-how, show-how,
technical information, specifications, computer software (including, but not
limited to, computer programs developed, improved or modified by a Party or on
behalf of a Party for use in a Party's business, and source code), information
and data relating to the development, research, testing, costs, marketing and
uses of a Party's services, budgets and strategic plans, and the identity and
special needs of clients for a Party's services, databases, data, all technology
relating to a Party's business, systems, methods of operation, client lists,
client information, solicitation leads, marketing and advertising materials,
methods and manuals and forms, all of which pertain to the activities or
operations of a Party, including Confidential Information received from a
Party's Subsidiaries and Affiliates.
"CPA" has the meaning set forth in Section 5.5.
"CPI Shareholders" means the sole shareholders of CPI, namely, Xxxxxxxx
and Xxxxxx.
"Deferred Intercompany Transaction" shall have the meaning set forth in
Code Regulation Section 1.1502-13.
"DEA" means the United States Drug Enforcement Administration.
"DESA to NDA Submissions" refers to submissions to the FDA of drugs and
substances that were used prior to the time that approval by the FDA was
required.
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"Directly or Indirectly" shall include, but not be limited to, (i)
acting as an agent, officer, director, representative, consultant, independent
contractor, or employee of any Person, or (ii) participating as an owner,
partner, limited partner, member, joint venturer, material creditor or
shareholder (except as a shareholder holding less than five percent interest in
a corporation or entity whose shares are traded on a national securities
exchange or on the Nasdaq Stock Market unless CPF, CPI or any of the
Shareholders controls such corporation or entity, either alone or with others).
"Earn-Out Period" has the meaning set forth in Section 2.4.5(a).
"Effective Time" has the meaning set forth in Section 2.4.1.
"Employee" shall mean Xxxxxxxx, Xxxxxxxx or Xxxxxx.
"Employee Benefit Plan" means any employee benefit plan (as such term
is in ERISA Section 3(3)) and any other employee benefit plan, program or
arrangement of any kind set forth in Section 3.13.
"Employee Pension Benefit Plan" shall have the meaning set forth in
ERISA Section 3(2).
"Employee Welfare Benefit Plan" shall have the meaning set forth in
ERISA Section 3(1).
"Employment Agreements" shall mean the employment agreements that each
of Lasseter, Shamblen, and Xxxxxx shall enter into with SFBC Miami.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, regulation, control, or cleanup of any
hazardous materials, substances or wastes, chlorinated solvents, silver bearing
waste, flammable explosives, urea formaldehyde, chemical substances or mixtures,
pesticides, pollutants, contaminants, mold, toxic chemicals, petroleum products
or byproducts, asbestos, polychlorinated biphenyls, noise or radiation,
(hereinafter "Hazardous Materials"), each as amended and as now or hereafter in
effect.
"ERISA" shall mean Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" has the meaning set forth in Section 2.4.4(a).
"Escrow Agreement" shall mean the escrow agreement that the Parties to
this Agreement shall enter into pursuant to certain provisions of the Agreement
and also the specific provisions in Section 2.4.4 which will provide that funds
held in escrow shall be held in interest-bearing accounts and that the
distributions from such escrow will include the interest on the funds therein
and any dividends paid on shares of stock held in escrow.
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"Escrowed Merger Payment" has the meaning set forth in Section
2.4.4(a).
"Excess Loss Account" has the meaning set forth in Code Regulation
Section 1.1502-19.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FBCA" means the Florida Business Corporation Act, as amended.
"Financial Statements" has the meaning set forth in Section 3.6.
"FDA" means the United States Food and Drug Administration.
"GAAP" means United States Generally Accepted Accounting Principles as
in effect from time to time.
"Governmental Entity" has the meaning set forth in Section 3.4.
[*] has the meaning set forth in Section 2.4.5(b)(ii).
"Indemnified Party" has the meaning set forth in Section 6.3.
"Indemnifying Party" has the meaning set forth in Section 6.3.
"Initial Merger Consideration" has the meaning set forth in Section
2.4.4(a).
"Intellectual Property" shall mean to include, but not be limited to
trade names, fictitious names, trademarks, trade dress, copyrights, moral
rights, patents, protected software and databases, and other types of
intellectual property protected under United States state or federal law.
"IR to SR Conversions" refers to immediate release to sustained release
conversions.
"IRS" shall mean the United States Internal Revenue Service.
"Knowledge" means actual knowledge after reasonable investigation of a
Party (and, except where apparent from the context, its Subsidiaries), its
officers, directors and employees having responsibility of a subject matter.
Knowledge of CPF and/or CPI also includes the Shareholders."Leases" has the
meaning set forth in Section 3.33.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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"Legal Provisions" has the meaning set forth in Section 3.7.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Material Adverse Effect" means, when used with respect to SFBC and/or
SFBC Miami or CPF and/or CPI, as the case may be, any change or effect that is
materially adverse to the business, assets, Liabilities, results of operations,
condition (financial or otherwise), management or future prospects of such Party
or Parties.
"Measuring Period" has the meaning set forth in Section 5.1(a).
"Merger" shall have the meaning set forth in the first WHEREAS clause.
"Merger Consideration" shall have the meaning set forth in Section
2.4.4.
"Merger Filing" shall have the meaning set forth in Section 2.3.
"Multi-Employer Plan" shall have the meaning set forth in ERISA Section
3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" shall have the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" has the meaning set forth in Section 3.7.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, entity, a trust, a
joint venture, an unincorporated organization, or a Governmental Entity (or any
department, agency, or political subdivision thereof).
"Real Property" means the parcel of real estate located at 0000 XX 00xx
Xxxxxx, Xxxxx, Xxxxxxx and all other real property as described on Schedule
3.16.
"Regulations" means the rules and regulations under the Code.
"Release Date" has the meaning set forth in Section 2.4.4(c).
"Reportable Event" shall have the meaning set forth in ERISA Section
4043.
"Revenues" shall have the meaning in Section 2.4.5(b)(i).
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"SEC" means the United States Securities and Exchange Commission.
"SFBC SEC Documents" means any registration statement, report or other
document filed with the SEC by SFBC.
"Section 505(b)(2)" refers to a part of a new drug application filed
with the FDA.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (i) mechanic's, materialmen's,
landlord's and similar liens, (ii) liens for taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings, (iii) purchase money liens and liens securing rental payments under
capital lease arrangements, and (iv) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
"SFBC Financial Statements" has the meaning contained in Section 5.7.
"Shareholders" has the meaning contained in the third WHEREAS clause.
"Specialty Branded Generics" has the meaning set forth in Section
2.4.5(b)(iii).
"Subsidiary" means any corporation, limited liability company,
partnership or entity with respect to which a specified Person (or a Subsidiary
thereof) owns a majority of the Common Stock or equity interests or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors or similar persons or entities.
"Surviving Corporation" shall have the meaning set forth in
Section 2.1 .
"Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), 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 of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
2. Basic Transactions.
-------------------
2.1 The Merger. On and subject to the terms and conditions of
this Agreement, CPF shall merge with and into SFBC Miami at the Effective Time.
SFBC Miami shall be the corporation surviving the Merger (the "Surviving
Corporation"). Following the Merger, the separate corporate existence of CPF
7
shall cease and SFBC Miami shall continue as the Surviving Corporation under the
name "South Florida Kinetics, Inc." As a result of the Merger, SFBC Miami shall
acquire substantially all of the assets and Liabilities of CPF existing as of
the Effective Time, and in exchange therefor will pay to the Shareholders the
Merger Consideration.
2.2 The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of SFBC, 00000
Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxxx 00000, commencing at 10:00 a.m. local time on
the first business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
shall take at the Closing itself) or such place and other date as the Parties
may mutually determine (the "Closing Date").
2.3 Actions at the Closing. At the Closing, (a) CPF and CPI
shall deliver to SFBC and SFBC Miami the various certificates, instruments, and
documents referred to in Section 6.1 below and the CPI Shareholders shall
deliver their shares of Common Stock to SFBC Miami, (b) SFBC and SFBC Miami
shall deliver to CPF the various certificates, instruments, and documents
referred to in Section 6.2 below, (c) SFBC Miami and CPF shall file Articles of
Merger with the Secretary of State of the State of Florida in the form attached
hereto as Exhibit A (the "Merger Filing"), (d) SFBC Miami shall deliver (i) the
C-Corp Consideration to the CPI Shareholders; (ii) the Initial Merger
Consideration to the Shareholders and (iii) the Escrowed Merger Payment to the
Escrow Agent as provided in Sections 2.4.4. At the Closing, CPF shall provide
SFBC and SFBC Miami with a schedule of material assets owned by it and such
documents as are referred to in Article 3 and as SFBC and SFBC Miami may
reasonably request.
2.4 Effect of Merger.
----------------
2.4.1 General. The Merger shall become effective
at the time (the "Effective Time")
SFBC Miami and CPF complete the Merger Filing or at such time as the Parties
shall specify in the Merger Filing. The Merger shall have the effect set forth
in the FBCA. The Surviving Corporation may, at any time after the Effective
Time, take any action (including executing and delivering any document) in the
name and on behalf of either SFBC Miami or CPF in order to carry out and
effectuate the transactions contemplated by this Agreement.
2.4.2 Articles of Incorporation. The
Articles of Incorporation of SFBC Miami in effect at and as of the Effective
Time shall remain the Articles of Incorporation of the Surviving Corporation
without any modification or amendment in the Merger.
2.4.3 Bylaws. The bylaws of SFBC Miami in effect
at and as of the Effective Time shall remain the bylaws of the Surviving
Corporation without any modification or amendment in the Merger.
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2.4.4 Merger Consideration.
--------------------
(a) The Merger Consideration shall consist of (i)
$6,500,000 in cash and $6,500,000 in Common Stock of SFBC ("the Initial
Merger Consideration"), payable at the Closing, (ii) $1,000,000 in cash
and $1,000,000 in SFBC Common Stock to be held in escrow with Wachovia
Bank, National Association (the "Escrow Agent") in accordance with an
Escrow Agreement, contingent upon the satisfaction of the conditions
described in and otherwise in accordance with Section 2.4.4(c) (the
"Escrowed Merger Payment"), and (iii) up to $9,000,000 in contingent
earn-out payments (the "Additional Merger Consideration") as further
described in Section 2.4.5. In determining the number of shares of SFBC
Common Stock to be issued as the result of the transactions provided by
this Agreement, the value of the SFBC Common Stock to be issued shall
be divided by the Average Share Price.
(b) Each issued and outstanding share of capital
stock of CPF shall be entitled to share in the Merger Consideration on
a pro rata basis, based upon the number of shares of CPF Common Stock
owned as of the record date for the Merger.
(c) The Escrowed Merger Payment shall be held in
separate escrow accounts for a period of up to three years following
the Closing. On the six and 12-month anniversary dates of the Closing
each year (the "Release Date") he , on a pro rata basis as provided in
Section 2.4.4(b), shall receive his share of the portion of the
Escrowed Merger Payment to be released from escrow. The amount to be
released from escrow, subject to the prior sentence will be equal to
(i) one sixth of $1,000,000 or $166,666 , and (ii) one sixth of the
number of shares of SFBC Common Stock placed in escrow at the Closing.
The Escrow Agreement will make appropriate adjustments to the cash and
SFBC Common Stock so that the first payment to be released will be
increased to avoid paying cents and fractional shares.
2.4.5 Additional Merger Consideration.
(a) SFBC Miami shall pay the Shareholders Additional
Merger Consideration to the extent that Revenues for any of the three
12-month periods beginning on the first day of the calendar quarter
beginning July 1, 2003 (the "Earn-Out Period") exceed the Revenues
pursuant to the formula specified below:
(i) Year 1--[*] times each dollar of
Revenues above [*] up to [*], plus [*] times each dollar of
Revenues above [*];
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
9
(ii) Year 2 - [*] times each dollar of
Revenues above [*] up to [*], plus [*] of each dollar of Revenues
above [*]; and
(iii) Year 3 - [*] of each dollar of
Revenues in excess of [*].
(b) For purposes of calculating the Additional Merger
Consideration, the following terms shall have the meaning ascribed
thereto:
(i) "Revenues" shall mean any and all
revenues:
(A) Generated by SFBC Miami during
the Earn-Out Period,including, without limitation, revenues
attributable to [*][*][*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
(B) [*][*][*][*][*][*][*][*]; and
(C) From such other sources as the
Parties shall mutually agree.
(ii) For purposes of calculating the
Additional Merger Consideration, the phrase [*][*][*][*][*][*][*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
10
(iii) "Specialty Branded Generics" shall
mean single or combination oral, topical and other specialty dose
forms that require non-traditional bioavailability,
bioequivalency, pharmacodynamic, safety and/or clinical studies to
establish Abbreviated New Drug Applications or Section 505(b)(2)
Submissions including, without limitation, equivalent products, IR
to SR Conversions, new dose forms, DESI to NDA Submissions, new
dose strengths, and new dose combinations.
(c) The Additional Merger Consideration will be paid
50% in cash and 50% in SFBC Common Stock with the number of shares
calculated as provided in Sections 2.4.4(a) and 2.45(a) and (b). These
payments shall be made upon the earlier of (i) the time that SFBC files
its Form 10-Q with the Securities and Exchange Commission ("SEC") or
(ii) 45 days following the completion of the applicable 12-month
period.
(d) The maximum amount of Additional Merger
Consideration to be paid in any 12-month period shall be limited to
[*], subject to a total limit of $9,000,000.
(e) The Parties agree that the Additional Merger
Consideration provided for in this Section 2.4.5 shall be paid so as to
(i) preserve the economics and tax structure of the Merger and (ii)
provide for direct payments to the Shareholders.
2.4.6 Acquisition of CPI.
At the Closing, SFBC Miami shall acquire all of the
outstanding Common Stock of CPI from the CPI Shareholders (the "CPI
Transaction") in exchange for $750,000 of SFBC Common Stock (the
"C-Corp Consideration").
2.4.7 Fractional Shares. No fraction of a
share of SFBC Common Stock shall be issued. Each holder of CPF and CPI Common
Stock who would otherwise be entitled to a fraction of a share shall receive
from SFBC an amount of money (rounded to the nearest whole cent) equal to the
product of (a) such fraction multiplied by (b) the applicable Average Share
Price.
2.4.8 Adjustments. In the event of any
reclassification, recapitalization, stock split, stock dividend (including any
dividend or distribution of securities convertible into SFBC Common Stock) or
subdivision with respect to SFBC Common Stock, or any change or conversion of
SFBC Common Stock into other securities, (or if a record date with respect to
any of the foregoing should occur), prior to the Effective Time or another
period in which Average Share Price is calculated, appropriate and proportionate
adjustments shall be made to the number of shares of SFBC Common Stock issued in
accordance with this Agreement.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
11
2.5 Procedure for Exchange of Common Stock. At the Closing,
the Shareholders and the CPI Shareholders shall deliver to SFBC Miami
certificates for their shares of CPF and CPI Common Stock respectively,
endorsed in blank in exchange for the Merger Consideration and the
C-Corp Consideration.
2.6 Closing of Transfer Records. From and after the Closing,
the transfer books of CPF and CPI shall be closed, and no transfer of
CPF or CPI Common Stock or instruments convertible into or exchangeable
for CPF or CPI Common Stock shall occur thereafter.
3. REPRESENTATIONS AND WARRANTIES OF CPF AND CPI. CPF and/or CPI, as
applicable from the context, joined in by Xxxxxxxx, Xxxxxxxx and Xxxxxx,
represent and warrant to SFBC and SFBC Miami that the statements contained in
this Article 3 are correct and complete as of the date of this Agreement, and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article 3).
3.1 Organization, Qualification, and Power. Each of CPF and
CPI is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida. Each of CPF and CPI is
duly authorized to conduct business and is in good standing under the
laws of each jurisdiction where such qualification is required, except
where the lack of such qualification would not have a Material Adverse
Effect on CPF or CPI, as the case may be, or on the ability of CPF and
CPI to consummate the transactions. CPF and CPI are qualified to do
business in those jurisdictions listed on Schedule 3.1. Each of CPF and
CPI has full power and authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by them.
Each of CPF and CPI has all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby.
CPF and CPI have delivered to SFBC and SFBC Miami a true and correct
copy of their articles of incorporation, and bylaws, each as amended.
Neither CPF nor CPI has any Subsidiaries. Neither CPF nor CPI is in
default under or in violation of any of the provisions of its articles
of incorporation or bylaws, each as amended. The minute books
(containing the records of meetings of the shareholders, board of
directors, and any committees of the board of directors), the stock
certificate books, and the stock record books of each CPF and CPI are
correct and complete.
3.2 Capitalization. The entire authorized capital stock of CPF
consists of 50 shares of Common Stock, of which 50 shares are issued
and outstanding. The entire authorized capital stock of CPI consists of
50 shares of Common Stock of which 30 shares are issued and
outstanding. All of the issued and outstanding shares of CPF Common
Stock and CPI Common Stock have been duly authorized and are validly
issued, fully paid, and nonassessable and are free and clear of any
Security Interests, and are not subject to preemptive rights or rights
of first refusal created by statute, the articles of incorporation or
bylaws, each as amended, of CPF or CPI or any agreement to which CPF or
CPI is a party or by which either is bound. There are no outstanding
subscriptions, options, warrants, puts, calls, rights, exchangeable or
convertible securities
12
or other commitments or agreements of any character relating to the
issued or unissued capital stock or other securities of CPF or CPI, or
otherwise obligating CPF or CPI to issue, transfer, sell, purchase,
redeem or otherwise acquire any such securities. There are no
outstanding or authorized performance units, stock appreciation,
phantom stock, profit participation, or similar rights with respect to
CPF and CPI. There are no voting trusts or proxies relating to the
capital stock of CPF or CPI between or among any of the shareholders of
each corporation, except that each of the Shareholders by his signature
to this Agreement has voted his shares of Common Stock in favor of the
Merger and the CPI Shareholders agree to exchange their shares of CPI
Common Stock for the C-Corp Consideration. All outstanding shares of
CPF and CPI Common Stock were issued in compliance with all applicable
federal and state securities laws.
3.3 Authorization of Transaction. On or prior to the date of
this Agreement, the board of directors of CPF has declared the Merger
advisable and in the best interest of its shareholders and has approved
the execution and delivery of this Agreement in accordance with Florida
law. The execution and delivery by CPF and CPI of this Agreement and
the consummation by CPF and CPI of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of CPF and CPI subject to the filing of the Articles of Merger pursuant
to the FBCA. Upon execution and delivery, this Agreement shall
constitute the valid and binding obligation of CPF and CPI enforceable
against each in accordance with its terms.
3.4 Noncontravention. Except as set forth in Schedule 3.4,
neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, shall (i) violate
any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any, federal,
state and foreign court, commission, governmental body, regulatory or
administrative agency, authority or tribunal (each a "Governmental
Entity") to which either of CPF or CPI is subject or any provision of
the articles of incorporation or bylaws of either of CPF or CPI or (ii)
conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, mortgage, note, lease, license, instrument or
other arrangement to which either CPF or CPI is a party or by which
either is bound or to which any of either's assets is subject (or
result in the imposition of any Security Interest upon any of either's
assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, or failure to
give notice would not have a Material Adverse Effect on CPF or CPI or
the ability of CPF or CPI to consummate the transactions contemplated
by this Agreement. Other than in connection with the provisions of the
FBCA, neither of CPF nor CPI need give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any
Governmental Entity in order for CPF and CPI to consummate the
transactions contemplated by this Agreement.
3.5 Title to Assets. Each of CPF and CPI are the sole record
and beneficial owner of all the assets including the Real Property
reflected on their financial statements previously delivered to SFBC
and SFBC Miami, as such assets have changed in the Ordinary Course of
Business, and used by them in the Ordinary Course of Business, free and
clear of all Security Interests. In particular, without limiting the
generality of the foregoing, there has been no
13
assignment, subletting or granting of any license or in respect of
CPF's and CPI's assets or any granting of any agreement or right
capable of becoming an agreement or right for the purchase of any such
assets other than pursuant to the provisions of this Agreement.
3.6 Financial Statements. Except as disclosed in Schedule 3.6,
the financial statements of CPF and CPI (including the related notes
and schedules) for the year ended December 31, 2002, and any interim
period which have been delivered to SFBC and SFBC Miami (the "Financial
Statements") have been prepared in accordance with GAAP (except in the
case of the interim period financial statements which may lack
footnotes and other presentation items) applied on a consistent basis
throughout the periods covered thereby, and fairly present the
financial condition of CPF and CPI as of the indicated dates and the
results of operations of CPF and CPI for the indicated periods
(subject, in the case of unaudited statements, to normal and recurring
year-end adjustments), complied as to form in all material respects
with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto as of their respective
dates and are consistent with the books and records of CPF and CPI.
Except as set forth in the latest interim Financial Statements
delivered to SFBC and SFBC Miami, CPF and CPI have no liabilities or
obligations (whether accrued, absolute, contingent or otherwise) (i) of
a nature required to be disclosed on a balance sheet or in the related
notes to Financial Statements prepared in accordance with GAAP or (ii)
which, individually or in the aggregate, have had or could reasonably
be expected to have a Material Adverse Effect on CPF or CPI. The
Financial Statements do not contain any untrue statements of material
facts or omit to state any material facts required to be stated therein
or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading.
3.7 Compliance with Laws.
(a) CPF and CPI are, to their Knowledge, in
compliance with all statutes, laws, ordinances, rules,
regulations, judgments, orders and decrees (including, but not
limited to those applicable to pharmaceutical testing as
presently conducted by CPF ) of any Governmental Entity
applicable to each of their properties or other assets or
their business or operations including the FDA and DEA
(collectively, "Legal Provisions"), except for instances of
noncompliance or possible noncompliance that individually or
in the aggregate have not had and could not reasonably be
expected to have a Material Adverse Effect on CPF or CPI. CPF
and CPI have in effect all approvals, including all
authorizations, certificates, filings, franchises, licenses,
notices, permits easements, variances, exceptions, consents,
certificates, approvals, authorizations, orders and rights of
or with all Governmental Entities, including, as to CPF, all
authorizations from the FDA and DEA, and as to each of CPF and
CPI under Environmental Health and Safety Requirements
(collectively, "Permits"), necessary for each to own, lease or
operate their properties and assets and to carry on their
business and operations as presently conducted, except for
failures to have in effect such Permits that individually or
in the aggregate have not had and could not reasonably be
expected to have a Material Adverse Effect on CPF and CPI.
There has occurred no default under, or violation of, any such
14
Permit, except individually or in the aggregate as has not had
and could not reasonably be expected to have a Material
Adverse Effect on CPF and CPI. The Merger, in and of itself,
would not cause the revocation or cancellation of any such
Permit that individually or in the aggregate could reasonably
be expected to have a Material Adverse Effect on CPF or CPI.
(b) No action, demand, inquiry or investigation by
any Governmental Entity and no suit, action or proceeding by
any other Person, in each case with respect to CPF or CPI or
any of their properties or other assets under any Legal
Provisions is pending or, to the Knowledge of CPF or CPI
threatened, other than, in each case, those in which the
outcome individually or in the aggregate has not had and could
not reasonably be expected to have a Material Adverse Effect
on CPF or CPI.
(c) CPF has not used the services of any Person
debarred under the provisions of the Generic Drug Enforcement
Act of 1992, 21 U.S.C. Section 335 a; Neither CPF nor any of
its officers or employees nor, to the Knowledge of CPF, their
agents or Affiliates, has been convicted of any crime or
engaged in any conduct for which debarment is mandated by 21
U.S.C. Section 335 a (a) or authorized by 21 U.S.C. Section
335 a (b).
(d) To the Knowledge of CPF, neither CPF, nor any of
its officers, employees, agents or Affiliates have made an
untrue statement of material fact or fraudulent statement to
the FDA or the DEA, failed to disclose a material fact
required to be disclosed to the FDA or the DEA, or committed
an act, made a statement, or failed to make a statement that
could reasonably be expected to provide a basis for the FDA to
invoke its policy respecting "Fraud, Untrue Statements of
Material Facts, Bribery, and Illegal Gratuities," set forth in
56 Fed. Regulation 46191 (September 10, 1991).
(e) CPF has made available to SFBC and SFBC Miami
copies of any and all notice of inspectional observations (FD
483s), establishment inspection reports, warning letters and
any other documents received from or issued by the FDA or the
DEA within the last three years that indicate or suggest lack
of compliance with the FDA or the DEA regulatory requirements
by CPF, or Persons performing services for the benefit of CPF
with respect to services or products provided to CPF.
(f) Neither CPF nor CPI has received any written
notice that the FDA, the DEA, or the United States Department
of Justice has commenced or threatened to initiate (i) any
action against CPF or CPI, (ii) any action to enjoin testing
or research at any facility owned or used by CPF or CPI or
(iii) any civil penalty, injunction, seizure or criminal
action against either.
(g) As to each drug tested by CPF, it provides its
test sponsors, where required, with the certification
described in 21 U.S.C. Section 335a (k)(1) and (k)(2) and such
certification was in each case true and accurate when made.
(h) All clinical trials CPF has conducted or has had
conducted for it by third parties, to the Knowledge of CPF,
complied in all material respects with the requirements of
Good Clinical Practice, Informed Consent, and all requirements
relating to protection of human
15
subjects, found in 21 C.F.R. Sections 50, 54 and 56 and that
all non clinical laboratory testing complies with the
requirements of 21 C.F.R. Section 58.
3.8 Certain Business Relationships With CPF. Except as
disclosed on Schedule 3.8, none of the Shareholders nor any of their
family members including spouses and children have, Directly or
Indirectly, been involved in any business arrangement or conducted any
business with CPF or CPI since the beginning of their most recently
completed fiscal year, and none of the Shareholders nor any of such
family members own any assets, tangible or intangible, which are used
in the business of CPF or CPI.
3.9 Absence of Questionable Payments. If the Foreign Corrupt
Practices Act, as amended, were applicable to the business of CPF,
since January 1, 2001 neither CPF nor any of its officers, directors,
employees or agents have, Directly or Indirectly, made any payments of
the kind which are prohibited by such Act.
3.10 Employment Matters.
(a) At the Closing, CPF shall deliver to SFBC and
SFBC Miami a complete list of the employees, together with
their titles, service dates and material terms of employment
including current wages, salaries or hourly rate of pay,
benefits, vacation entitlement, commissions and bonus (whether
monetary or otherwise) or other material compensation paid
since January 1, 2003 payable to each such employee. As of the
Closing Date, CPF shall have no Liability to any employees for
any employee benefits including, but not limited to, vacation
leave, sick leave and personal leave. Except as disclosed at
the Closing to SFBC and SFBC Miami, no employee is on
short-term or long-term disability leave, family leave or
military leave.
(b) There are no employment agreements which are not
terminable, nor would CPF, upon termination of any employee
have any Liability to pay such employee any severance or other
compensation except for services actually rendered through the
date of termination.
(c) No person has alleged that CPF has committed any
act involving: (i) sexual misconduct or harassment in
violation of Title VII of the Civil Rights Act of 1964 or
amounting to an invasion of privacy under Florida law or (ii)
discrimination in violation of the United States and/or
Florida Constitutions or legislation.
3.11 Americans With Disabilities Act. CPF and CPI and all of
the Real Property do not have to comply with the Americans With
Disabilities Act of 1990, as amended ("ADA"), because there has not
been any alteration (as such term is defined in Section 36.402 of the
regulations promulgated under the ADA) to the Real Property since
January 26, 1992, nor has CPF or CPI designed and constructed any or
all of the Real Property for first occupancy after January 26, 1993.
There are no actions, suits, proceedings, hearings, investigations,
inquiries, charges, complaints, demands, or notices that have been
filed or commenced against CPF, CPI or any of the Real Property
16
alleging any failure to so comply, and to the Knowledge of CPF and CPI
none of the foregoing have been threatened nor have any Claims relating
to the ADA been asserted.
3.12 Employees. To the Knowledge of CPF, no executive, key
employee, or group of employees has any plans to terminate employment
with CPF except as contemplated by this Agreement. CPF is not a party
to or bound by nor has it experienced any strikes, grievances, claims
of unfair labor practices, or other collective bargaining disputes. CPF
has not committed any unfair labor practice. CPF has no Knowledge of
any organizational effort presently being made or threatened by or on
behalf of any labor union with respect to employees of any of CPF. CPI
has no employees.
3.13 Employee Benefit Plans.
3.13.1 Schedule 3.13 lists each Employee Benefit Plan
that CPF maintains, to which CPF contributes or has any
obligation to contribute, or with respect to which CPF has any
Liability or potential Liability.
(a) Since January 1, 1993 there has been a Defined
Benefit Plan which was adopted by Clinical Pharmacology of
Florida, Inc. at its inception. Said plan is maintained,
funded and administered in accordance with the terms of such
Employee Benefit Plan and complies in form and in operation in
all respects with the applicable requirements of ERISA, the
Code, the Regulations and other applicable laws. This plan is
referred to as the Clinical Pharmacology Associates Employees'
Retirement Plan.
(b) All required reports and descriptions (including
annual reports (IRS Form 5500), summary annual reports,
participant notice and election forms and summary plan
descriptions) have been timely filed and/or distributed in
accordance with the applicable requirements of ERISA, the Code
and the Regulations with respect to said Employee Benefit
Plan.
(c) All contributions which are due have been made
within the time period prescribed by ERISA, the Code and the
Regulations to said Employee Benefit Plan which is an Employee
Pension Benefit Plan. It is anticipated that the Employee
Benefit Plan will be terminated by CPF as of September 30,
2003.
(d) Each such Employee Benefit Plan which is intended
to meet the requirements of a "qualified plan" under Code
Section 401(a) has received a determination from the Internal
Revenue Service that such Employee Benefit Plan is so
qualified, and nothing has occurred since the date of such
determination that could adversely affect the qualified status
of any such Employee Benefit Plan.
(e) The market value of assets under said Employee
Benefit Plan which is an Employee Pension Benefit Plan equals
or exceeds the present value of all vested and non-vested
Liabilities thereunder determined in accordance with PBGC
methods, factors, and assumptions applicable to an Employee
Pension Benefit Plan terminating on the date for
determination. Since Internal Revenue Service approval is
17
necessary for termination of the plan the exact value required
is not known at this time but it is believed that the value
will be sufficient or the HCE members (Xxxxxxxx and Xxxxxxxx)
will reduce their benefit to assure that said value is
sufficient.
(f) CPF has delivered to SFBC and SFBC Miami correct
and complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received
from the Internal Revenue Service, the most recent annual
report (IRS Form 5500, with all applicable attachments), and
all related trust agreements, insurance contracts, and other
funding arrangements which implement each such Employee
Benefit Plan.
3.13.2 With respect to each Employee Benefit Plan
that CPF, and any ERISA Affiliate maintains, or to which it
contributes, ever has contributed or has any obligation to
contribute, or with respect to which it any Liability or
potential Liability:
(a) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No fiduciary has
any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration
or investment of the assets of any such Employee Benefit Plan.
No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims
for benefits) is pending or, to the Knowledge of CPF-
threatened. CPF has no Knowledge of any basis for any such
action, suit, proceeding, hearing, or investigation.
3.13.3 None of CPF, and any ERISA Affiliate
contributes to, has any obligation to contribute to, or has
any Liability (including withdrawal liability as defined in
ERISA Section 4201) under or with respect to any
Multi-Employer Plan.
3.14 Tangible Assets. CPF owns or leases all fixtures,
machinery, equipment, and other tangible assets necessary for the
conduct of its business as presently conducted. CPI owns the good,
marketable and insurable title to the Real Property upon which CPF
conducts its business. To the Knowledge of CPF and CPI , each such
tangible asset is free from defects (patent and latent), has been
maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and
is suitable for the purposes for which it presently is used and is free
and clear of any and all Security Interests except as provided on
Schedule 3.14.
3.15 Tax Matters.
3.15.1 Each of CPF and CPI has filed all Tax Returns
that it was required to file. All such Tax Returns were
correct and complete in all respects. All Taxes owed by CPF
and CPI (whether or not shown on any Tax Return) have been
paid. Neither CPF nor CPI currently is the beneficiary of any
extension of time within which to file any Tax Return. No
18
claim has ever been made by an authority in a jurisdiction
where either of CPF and CPI does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction. There
are no Security Interests on any of the assets of either of
CPF or CPI that arose in connection with any failure (or
alleged failure) to pay any Tax.
3.15.2 Each of CPF and CPI has withheld and paid all
Taxes required to have been withheld and paid in connection
with amounts paid or owing to any employee, independent
contractor, creditor, shareholder, or other third party.
3.15.3 Neither CPF nor CPI expects any authority to
assess any additional Taxes for any period for which Tax
Returns have been filed. There is no dispute or claim
concerning any Tax Liability of either of CPF or CPI either
(a) claimed or raised by any authority in writing or (b) as to
which either of CPF or CPI has Knowledge based upon personal
contact with any agent of such authority. Schedule 3.15.3
lists all Tax Returns filed with respect to CPF and CPI for
taxable periods ended on or after December 31, 2000, indicates
those Tax Returns that have been audited, and indicates those
Tax Returns that currently are the subject of audit. CPF and
CPI have delivered to SFBC and SFBC Miami correct and complete
copies of all Tax Returns, examination reports, and statements
of deficiencies assessed against or agreed to by any of CPF or
CPA since December 31, 2000.
3.15.4 Neither CPF nor CPI has waived any statute of
limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
3.15.5 The unpaid Taxes of CPF and CPI (a) did not,
as of December 31, 2002, exceed the reserve for Tax Liability
(rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set
forth on the face of the December 31, 2002, audited balance
sheets (rather than in any notes thereto) delivered to SFBC
and SFBC Miami and (b) do not exceed that reserve as adjusted
for the passage of time through the Closing Date in accordance
with the past custom and practice of CPF and CPI in filing
their Tax Returns.
3.15.6 Neither of CPF nor CPI has filed a consent
under Code Section 341(f) concerning collapsible corporations.
Neither of CPF nor CPI has made any payments, is obligated to
make any payments, or is a party to any agreement that under
certain circumstances could obligate it to make any payments
that will not be deductible under Code Section 280G. Neither
CPF nor CPI has been a United States real property holding
corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section
897(c)(1)(A)(ii). Each of CPF and CPI has disclosed on its
federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal
income Tax within the meaning of Code Section 6662. Neither
CPF nor CPI is a party to any Tax allocation or sharing
agreement. Neither CPF nor CPI has been a member of an
Affiliated Group filing a consolidated federal income Tax
Return (other than a group the common parent of which was CPF)
or has any Liability for the Taxes of any Person (other than
CPF or CPI) under Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
19
3.15.7 At the Closing, CPF and CPI shall disclose the
following information with respect to each of CPF and CPI or,
as of the most recent practicable date (a) the basis of CPF
and CPI in its assets; (b) the amount of any net operating
loss, net capital loss, unused investment or other credit,
unused foreign tax, or excess charitable contribution
allocable to CPF or CPI and (c) the amount of any deferred
gain or loss allocable to CPF or CPI arising out of any
Deferred Intercompany Transaction.
3.16 Real Property. Schedule 3.16 lists and describes briefly
all Real Property (including the land, buildings and improvements
thereon) that either of CPF or CPI owns. With respect to each such
parcel of leased or owned Real Property:
3.16.1 CPI has good marketable and insurable title to
the parcel of Real Property, free and clear of any Security
Interests, easements, covenants, liens, encumbrances,
mortgages or other restrictions, except for installments of
special assessments not yet delinquent and Permitted Title
Exceptions ;
3.16.2 There are no pending or, to the Knowledge of
CPI, threatened, condemnation proceedings, lawsuits, or
administrative actions relating to the Real Property or other
matters affecting materially and adversely the current use,
occupancy, or value thereof;
3.16.3 The legal description for the parcel contained
in the deed thereof describes such parcel fully and
adequately, including the land, buildings and improvements
thereon are located within the boundary lines of the described
parcels of land, are not in violation of applicable setback
requirements, zoning laws, and ordinances (and none of the
properties, land, buildings or improvements thereon are
subject to "permitted non-conforming use" or "permitted
non-conforming structure" classifications), and do not
encroach on any easement which may burden the land, the land
does not serve any adjoining property for any purpose
inconsistent with the use of the land, and the property is not
located within any flood plain or zone or subject to any
similar type restriction for which any permits or licenses
necessary to the use thereof have not been obtained, or which
would impede repairs or reconstruction of the improvements in
the event of a casualty of the improvements on the Real
Property;
3.16.4 All facilities have received all approvals of
Governmental Entities and Permits required in connection with
the ownership or operation thereof and have been operated and
maintained in all material respects in accordance with
applicable laws, rules, and regulations;
3.16.5 There are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to
any party or parties the right of use or occupancy of any
portion of the parcel of Real Property;
3.16.6 There are no outstanding options or rights of
first refusal to purchase the parcel of Real Property, or any
portion thereof or interest therein;
3.16.7 There are no parties (other than CPF and CPI)
in possession of the parcel of Real Property;
20
3.16.8 All facilities located on the parcel of Real
Property are supplied with utilities and other services
necessary for the operation of such facilities, including gas,
electricity, heat, water, telephone, sanitary sewer, and storm
sewer, all of which services are adequate in accordance with
all applicable laws, ordinances, rules, and regulations and
are provided via public roads or via permanent, irrevocable,
appurtenant easements benefiting the parcel of Real Property;
3.16.9 Except as disclosed in Schedule 3.16.9, each
parcel of Real Property abuts on and has direct vehicular
access to a public road, or has access to a public road via a
permanent, irrevocable, appurtenant easement benefiting the
Real Property, and access to the Real Property is provided by
paved public right-of-way with adequate curb cuts available;
and
3.16.10 Except as disclosed in Schedule 3.16.10,
there are no repairs necessary to the Real Property and any
improvements thereon or the machinery in excess of an
aggregate of $10,000 in order to permit CPF to operate its
business in the same manner (including the same degree of
efficiency) and at the same cost as it has since the beginning
of its most recently completed fiscal year.
3.17 Environmental, Health, and Safety Matters.
3.17.1 Each of CPF and CPI, and their respective
predecessors and Affiliates, has complied and is in compliance
with all Environmental, Health, and Safety Requirements.
3.17.2 Without limiting the generality of the
foregoing, each of CPF and CPI, and their respective
Affiliates has obtained and complied with, and is in
compliance with, all Permits, that are required pursuant to
Environmental, Health, and Safety Requirements for the
occupation of their facilities and the operation of their
business; a list of all such Permits, is set forth on the
attached Schedule 3.17.2.
3.17.3 Neither CPF nor CPI, nor their respective
predecessors or Affiliates has received any written or oral
notice, report or other information regarding any actual or
alleged violation of Environmental, Health, and Safety
Requirements, or any Liabilities or potential Liabilities
(whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or
corrective obligations, relating to any of them or its
facilities arising under Environmental, Health, and Safety
Requirements.
3.17.4 None of the following exists at any Real
Property or facility leased or owned or operated by CPF or
CPI: (a) underground storage tanks, (b) asbestos-containing
material in any form or condition, (c) materials or equipment
containing polychlorinated biphenyls, or (d) landfills,
surface impoundments, or disposal areas.
21
3.17.5 Neither CPF nor CPI, nor their respective
predecessors or Affiliates or any other Party has treated,
stored, disposed of, arranged for or permitted the disposal
of, transported, handled, or released any substance, including
without limitation any hazardous substance, Hazardous
Materials, or leased, owned or operated any property or
facility (and no such property or facility is contaminated by
any such substance) in a manner that has given or would give
rise to liabilities, including any liability for response
costs, corrective action costs, personal injury, property
damage, natural resources damages or attorney fees, pursuant
to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, the Solid Waste Disposal
Act, as amended, or any other Environmental, Health, and
Safety Requirements.
3.17.6 Neither this Agreement nor the consummation of
the transaction that is the subject of this Agreement will
result in any obligations for site investigation or cleanup,
or notification to or consent of government agencies or third
parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer"
Environmental, Health, and Safety Requirements.
3.17.7 Neither CPF nor CPI has, either expressly or
by operation of law, assumed or undertaken any liability,
including without limitation any obligation for corrective or
remedial action, of any other Person relating to
Environmental, Health, and Safety Requirements.
3.17.8 There areno facts, events or conditions
relating to the past or present leased or owned facilities,
properties or operations including the Real Property of CPF or
CPI that will prevent, hinder or limit continued compliance
with Environmental, Health, and Safety Requirements, give rise
to any investigatory, remedial or corrective obligations
pursuant to Environmental, Health, and Safety Requirements, or
give rise to any other liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to
Environmental, Health, and Safety Requirements, including
without limitation any relating to onsite or offsite releases
including releases by third parties that have migrated onto
the Real Property or threatened releases of hazardous
materials, substances or wastes, personal injury, property
damage or natural resources damage that have accrued at any
time.
3.17.9 That there are no violations or any
Environmental, Health and Safety Requirements past or present
with respect to the Real Property. Any of the following
individually or in any combination shall be a violation of the
representations being made herein that there are no violations
of the Environmental, Health and Safety Requirements as
follows:
(a) The release, presence or discharge in,
on, under or about the Real Property or other owned
or leased facilities or from the transportation or
disposal of any Hazardous Materials to or from the
Real Property by anyone, including agents,
predecessors in title, employees, licensees, invitees
or any other parties; or
(b) the Real Property's failure to comply
with any Environmental, Health and Safety
Requirements;
22
(c) That the Real Property and the ground
under it is contaminated with Hazardous Materials or
otherwise contain substances or materials that
violate the Environmental, Health and Safety
Requirements.
(d) That the Real Property has been used or
is currently used for the generation, transportation,
treatment, storage or disposal of Hazardous
Materials;
(e) that the Real Property contains any
conditions that could result in the recovery by any
governmental or private party of remedial or removal
costs, natural resource damages, property damages,
damages for personal injuries or other costs,
expenses or damages or that could result in
injunctive relief of any kind arising from any
alleged injury or threat of injury;
(f) that any part of the Real Property has
been used in connection with any Hazardous Materials;
(g) that there have been releases of
Hazardous Materials and/or that a threat of such
release exists;
(h) that there is use, generation, storage,
release or other disposal of Hazardous Materials on
the Real Property by anyone including migration from
adjacent Properties including any agents,
contractors, employees, invitees or by any prior
owner of the Real Property or any other party; or
(i) that there are Hazardous Materials
spills or contaminants affecting the surface or
subsurface of the Real Property or any property
adjoining or abutting the Real Property resulting
from the presence of any Hazardous Materials on the
Real Property.
(j) notwithstanding anything to the contrary
in this Section 3.17.9 the parties agree and
understand that in full compliance with all
Environmental, Health and Safety Requirements
substances and materials, including Hazardous
Materials, necessary for the CPF operations have been
stored on or used on the Real Property in the
ordinary course of CPF's business.
3.18 Other Disclosures. Schedule 3.18 is a true and correct
list: (a) relating to indebtedness for money borrowed by CPF excluding
trade credit or payables arising in the Ordinary Course of Business,
(b) creating any guarantee arrangement or other agreement to be liable
for the obligations of a Person other than CPF, (c) providing for
payment or the receipt of payment or the sale of purchase or exchange
of goods or services worth in excess of $50,000, (d) reflecting any
agreements with brokers or others relating to rights to sell, or
receive commissions or compensation from, the sale of CPF's services,
23
or (e) containing any provisions or covenant materially limiting the
ability of CPF or any other Person, to engage in business or compete
with or to obtain products or services from any Person or materially
limiting the ability of any Person to provide products or services to
CPF.
3.19 Undisclosed Liabilities. Neither CPF nor CPI has any
obligations or Liabilities (contingent or otherwise), except
obligations and Liabilities (a) that are fully accrued or provided for
in all material respects in the balance sheets of CPF and CPI as of
December 31, 2002 in accordance with GAAP, (b) that were incurred after
December 31, 2002 in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law), or (c) that either individually or
in the aggregate would not have a Material Adverse Effect on CPF or
CPI.
3.20 Litigation. Except as set forth on Schedule 3.20, neither
CPF nor CPI is (a) subject to any outstanding inquiry, investigation,
injunction, judgment, order, decree, ruling, or charge or (b) a party
to or, to the Knowledge of CPF or CPI, threatened to be made a party
to, any action, suit, proceeding, or hearing, inquiry or investigation
of, in, or before any Government Entity.
3.21 Guaranties. Neither CPF nor CPI is a guarantor or is
otherwise liable for any Liability or obligation (including
indebtedness) to any other Person.
3.22 Events Subsequent to December 31, 2002. Since December
31, 2002, there has not been any change or event which had or could
have a Material Adverse Effect on CPF or CPI. Without limiting the
generality of the foregoing, since that date:
(a) Neither CPF nor CPI has sold, leased,
transferred, or assigned any of its assets including the Real
Property, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(b) Neither CPF nor CPI has entered into any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving
more than $50,000 or outside the Ordinary Course of Business;
(c) No party (including CPF or CPI) has accelerated,
terminated, modified, or cancelled any agreement, contract,
lease, or license (or series of related agreements, contracts,
leases, and licenses) involving more than $50,000 to which
either CPF or CPI is a party or by which any of them is bound,
and no Client of CPF has communicated to CPF that there may be
a dispute relating to the performance of a clinical trial by
CPF or has requested or suggested that any amount paid or
payable to CPF involving $50,000 or more be refunded or
reduced;
(d) Neither CPF nor CPI has imposed any Security
Interest upon any of its assets including the Real Property,
tangible or intangible;
24
(e) Neither CPF nor CPI has made or committed to make
any capital expenditure (or series of related capital
expenditures) either involving more than $50,000 or outside
the Ordinary Course of Business;
(f) Neither CPF nor CPI has made any capital
investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions) either
involving more than $50,000 or outside the Ordinary Course of
Business;
(g) Neither CPF nor CPI has issued any note, bond, or
other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized
lease obligation either involving more than $10,000 singly or
$50,000 in the aggregate;
(h) Neither CPF nor CPI has delayed or postponed the
payment of accounts payable and other Liabilities outside the
Ordinary Course of Business;
(i) Neither CPF nor CPI has cancelled, compromised,
waived, or released any right or claim (or series of related
rights and claims) either involving more than $50,000 or
outside the Ordinary Course of Business;
(j) Neither CPF nor CPI has granted any license or
sublicense of any rights under or with respect to any
Intellectual Property;
(k) There has been no change made or authorized in
the articles of incorporation or bylaws of either CPF or CPI;
(l) Neither CPF nor CPI has issued, sold, or
otherwise disposed of any of its capital stock, or granted any
options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its
capital stock;
(m) Neither CPF nor CPI has declared, set aside, or
paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock
which would conflict with the minimum Actual Working Capital
provided by Section 8.4;
(n) Neither CPF nor CPI has experienced any damage,
destruction, or loss (whether or not covered by insurance) to
its property;
(o) Neither CPF nor CPI has made any loan to, or
entered into any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course of
Business;
(p) Neither CPF nor CPI has entered into any
employment contract or collective bargaining agreement,
written or oral, or modified the terms of any existing such
contract or agreement;
25
(q) Neither CPF nor CPI has granted any increase in
the base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
(r) Neither CPF nor CPI has adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive,
severance, or other plan, contract, or commitment for the
benefit of any of its directors, officers, and employees (or
taken any such action with respect to any other Employee
Benefit Plan);
(s) Neither CPF nor CPI has made any other change in
employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business;
(t) Neither CPF nor CPI has made or pledged to make
any charitable or other capital contribution outside the
Ordinary Course of Business;
(u) There has not been any other material occurrence,
involving CPF or CPI event, incident, action, failure to act,
or transaction outside the Ordinary Course of Business ; and
(v) Neither CPF nor CPI has committed to any of the
foregoing.
3.23 Major Clients. At the Closing, CPF will deliver to SFBC
and SFBC Miami a comprehensive listing of each Client of CPF to which
CPF billed (or from which it received) in excess of $50,000 in the
aggregate during the year ended December 31, 2002 or in excess of
$25,000 in the aggregate for the six months ended June 30, 2003,
together with, in each case, the amounts billable or paid. To the
Knowledge of CPF, none of these Clients has any intention to: (a)
reduce the amount of business it does with CPF, (b) change its
relationship with CPF, or (c) change the terms upon which it conducts
business with CPF, whether as the result of the transaction
contemplated by this Agreement or otherwise.
3.24 Brokers' Fees. Except with respect to payments to be made
by the Shareholders and the CPI Shareholders to X.X. Xxxxx & Co. from
the Merger Consideration received by them, neither CPF, CPI, nor any of
the Shareholders or the CPI Shareholders have any other liability or
obligation to pay any fees or commissions to any other broker, finder,
or agent with respect to the transactions contemplated by this
Agreement. SFBC and SFBC Miami shall have no liability or obligation
with respect to X.X. Xxxxx & Co. whatsoever.
3.25 Intellectual Property.
(a) Schedule 3.25 is a correct and complete list of
all (i) Intellectual Property material to the business of CPF,
including the status of all patents, patent applications and
registered Intellectual Property (ii) trade, corporate and
fictitious names used by CPF, (iii) computer software and
databases created or used by CPF (other than mass marketed
26
software with a license fee of less than $5,000), (iv)
material unregistered trademarks and copyrights owned or
presently used by CPF and (v) licenses and other rights
granted by or to CPF, in each case with respect to
Intellectual Property.
(b) CPF owns all right, title and interest in and to,
or has a valid and enforceable license to use, all
Intellectual Property necessary for the operation of the
business as currently conducted and as currently proposed to
be conducted free and clear of any liens or adverse claims.
(c) To the Knowledge of CPF and CPI, no claim by any
third party contesting the validly, enforceability, and
ownership, or use of any of the Intellectual Property owned or
used by CPF or claiming that the activities of CPF in
connection with the Intellectual Property constitutes unfair
competition has been made, is currently outstanding or is
threatened and there are no grounds for the same.
(d) CPF is not a party to any agreement or
understanding with respect to any Intellectual Property.
(e) Neither CPF nor any of its officers or employees
are parties to any agreement restricting the ability of CPF,
such officers and/or such employees from engaging in any
business or competing with any third parties.
(f) The loss or expiration of any individual
Intellectual Property right or related group of Intellectual
Property rights owned or used by CPF would not have a Material
Adverse Effect on CPF, and no such loss or expiration is
pending or reasonably foreseeable, or to CPF's Knowledge,
threatened.
(g) CPF has not received any written notice of, nor
to the Knowledge of CPF are there any facts that indicate any
likelihood of any infringement or misappropriation by, or
conflict with, and any third party with respect to the
Intellectual Property owned or used by CPF.
(h) To the Knowledge of CPF, CPF has not infringed,
misappropriated or otherwise conflicted with any Intellectual
Property of any third party, and to the Knowledge of CPF,
there is not any infringement, misappropriation or conflict
which will occur as a result of the continued operation of the
business as currently conducted or as currently proposed to be
conducted.
(i) Except as disclosed in Schedule 3.25, no person
other than CPF owns or has any proprietary, financial or other
interest, Directly or Indirectly, in whole or in part, in any
Intellectual Property that is owned by or licensed to CPF.
(j) Except as disclosed on Schedule 3.25, CPF is not
required to pay any royalty, license fee or similar
compensation with respect to the Intellectual Property that is
owned or licensed to CPF in connection with the current or
prior conduct of the business.
27
3.26 Condition of Assets. The fixed assets and Real Property
of CPF and CPI are free from defects (patent and latent), have been
maintained in accordance with normal industry practice, are in good
operating condition and repair (subject to normal wear and tear), have
been properly and regularly maintained and are suitable for the
purposes for which they are presently used.
3.27 Collectibility of Accounts Receivable. The accounts
receivable of CPF will be collected in the aggregate recorded amounts
reflected in the financial statements of CPF for the period ended June
30, 2003, and are not subject to any defense, deduction, reduction,
counterclaim or setoff. There are no agreements or other
understandings, whether oral or in writing, with respect to the
write-down, write-off or deferral of any accounts receivable.
3.28 No Third Party Option. There are no existing agreements,
options, commitments or rights with or to any Person to acquire any of
the assets of CPF or CPI or any interest therein.
3.29 Restrictive Covenants. Neither CPF nor any of the
Shareholders are a party to or bound or affected by any commitment,
contract or document containing any covenant expressly limiting the
freedom of CPF or any of the Shareholders to compete in any line of
business, acquire goods or services from any supplier, sell goods or
services to any Client or potential client, or transfer or move any of
its operations. CPF is not a party to or bound or affected by any
commitment, contract or document containing any covenant which
materially or adversely affects its business practices, operations or
financial condition or the continued operation of its business after
the Closing as presently carried out.
3.30 Insurance. CPF and CPI maintain such policies of
insurance, issued by responsible insurers licensed to do business in
Florida, as are appropriate to operations, property and assets, in such
amounts and again such risks as are customarily carried and insured
against by owners of comparable businesses, properties and assets. All
such policies of insurance are in full force and effect. Neither CPF
nor CPI is in default, as to the payment of premiums or otherwise,
under the terms of any such policy. Schedule 3.30 sets forth a complete
list of all policies of insurance which CPF and CPI maintain and the
particulars of such policies, including the name of the insurer, the
risk insured against, the amount of coverage and the amount of any
deductible and a summary of all claims under each such policy for the
past two years. No coverage provided in such policies of insurance
shall be diminished, lost or otherwise adversely affected as a result
of the change of control of CPF and CPI at the Closing.
3.31 Ancillary Corporations. To the Knowledge of CPF and CPI,
neither Clinical Pharmacology Associates, Inc., South Florida Drug
Research Corporation, Inc., nor Coastal Sales and Charters, Inc. have
within the past seven years been a party to any litigation,
arbitration, or bankruptcy proceeding, whatsoever.
3.32 No Reliance on Xxxxxxx Xxxxx & Associates, Inc. CPF, CPI
and the Shareholders acknowledge and agree that Xxxxxxx Xxxxx &
Associates, Inc., either on its own behalf or on behalf of SFBC and
SFBC Miami, has not made and specifically negates and disclaims any
representations, warranties, promises, covenants, agreements or
guarantees of any kind or character whatsoever, whether express or
28
implied, oral or written, of, as to concerning or with respect to the
transaction. CPF, CPI and the Shareholders further acknowledge and
agree that it has been given adequate opportunity and access to conduct
its own due diligence, and are relying on their own investigation and
due diligence, and the advice of their own experts in entering into
this transaction.
3.33 Leases. The leases reflected in the attached Schedule
3.33 list and describe any and all leases (the "Leases") whereby CPF
and/or CPI are either tenant or landlord. With respect to the Leases,
CPF and CPI hereby covenant as follows:
3.33.1. All of the Leases are either: (a) in writing,
and true and correct copies of which have been delivered to
SFBC Miami or are (b) cancelable and may be terminated by the
tenant or the landlord by providing 15 days prior written
notice.
3.33.2. All of the Leases are in full force and
effect in accordance with the respective terms, without
modifications or amendment, except as specified in this
Agreement, and without any default, event of default, claim of
default on the part of any party thereof, and no notice,
written or oral, of termination or intent to terminate has
been issued or received. The Leases do not contain any right
of first refusal or similar right or option to purchase the
Leased property.
3.33.3 There are no leases, tenancies, contracts,
license agreements, or other occupancies binding on CPI or
CPF.
3.33.4 Except as specified in the Leases, there are
no prepaid rentals, rent concessions or security deposits
under any of the Leases.
3.33.5 No written or oral undertakings, inducements,
representations, warranties, agreements, contracts, or
understandings, have been made, given, or entered into by any
party to the Leases which are not reflected in the Leases, and
no party to the Leases have any rights respecting the Leases
other than as set forth in the Leases.
3.33.6 The appropriate party under the Leases have
completed in all respects and paid for in full all
improvements, alterations, installations, decorations or
repairs required to be performed by such party pursuant to the
Leases, and all such work has been accepted by the other
party.
3.33.7 Neither the Leases nor the rents or other
amounts payable thereunder have been assigned, pledged or
encumbered by CPI or CPF.
3.33.8 There are no brokerage or leasing commissions
or other finders or agents fees payable or potentially payable
in connection with any of the Leases or any amendments or
renewals thereof or increases or other changes in space with
respect thereto.
3.33.9 CPI or CPF shall not suffer or permit any
default to exist or occur under the terms of the Leases or
modify, extend, or otherwise amend any of the Leases.
29
3.33.10 Other than the Leases, there are no leases,
tenancies, or other possessory agreements binding CPI or CPF.
3.34 Disclosure. The representations and warranties contained
in this Article 3 do not contain any untrue statements of a material
fact or omit to state any material fact necessary in order to make the
statements and information contained in this Article 3 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF SFBC AND SFBC MIAMI. SFBC and SFBC
Miami represent and warrant to CPF and CPI that the statements contained in this
Article 4 are correct and complete as of the date of this Agreement and shall be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Article 4):
4.1 Organization, Qualification, and Power. Each of SFBC and
SFBC Miami is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation.
Each of SFBC and SFBC Miami is duly authorized to conduct business and
is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification
would not have a Material Adverse Effect on SFBC or SFBC Miami. Each of
SFBC and SFBC Miami has all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby.
SFBC is the owner of all outstanding shares of capital stock or voting
securities of SFBC Miami. Except as disclosed in the SFBC SEC Documents
and Schedule 4.1, SFBC and SFBC Miami do not Directly or Indirectly own
any Subsidiary.
4.2 Capitalization. The entire authorized capital stock of
SFBC consists of 25,000,000 shares, of which 20,000,000 shares of
Common Stock, par value $0.001, are authorized and 7,308,235 are issued
and outstanding, and 5,000,000 shares of preferred stock are
authorized, none of which are outstanding. The shares of SFBC Common
Stock to be issued to the Shareholders and the CPI Shareholders
pursuant to Article 2 of this Agreement shall have been duly
authorized, and when issued, and delivered in accordance with this
Agreement, shall be validly issued, fully paid and non-assessable, and
not subject to any Security Interest except as otherwise specifically
provided in this Agreement. All of the issued and outstanding shares of
SFBC Common Stock have been duly authorized, provide the holder with
one vote per share and are validly issued, fully paid, and
nonassessable and are free and clear of any liens or encumbrances other
than any liens or encumbrances created by or imposed upon the holders
thereof, and are not subject to preemptive rights or rights of first
refusal created by statute, the certificate of incorporation or bylaws,
each as amended, of SFBC or any agreement to which SFBC is a party or
by which it is bound. Except as listed on Schedule 4.2, there are no
other outstanding shares of capital stock or voting securities and no
outstanding commitments to issue any shares of capital stock or voting
securities. To the knowledge of SFBC, there are no outstanding voting
trusts, proxies, or other agreements or other understandings with
respect to the voting of any capital stock of SFBC. Schedule 4.2 sets
forth the outstanding options and SFBC warrants, or other outstanding
or authorized purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require
SFBC to issue, sell, or otherwise cause to become outstanding any of
30
its capital stock. There are no outstanding or authorized performance
units, stock appreciation, phantom stock, profit participation, or
similar rights with respect to SFBC. There are no other options,
warrants, calls, rights, commitments or agreements of any character to
which SFBC is a party or by which it is bound obligating SFBC to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of capital stock of SFBC or
obligating SFBC to grant, extend, accelerate the vesting of, change the
price of, or otherwise amend or enter into any such option, warrant,
call, right, commitment or agreement.
4.3 Authorization of Transaction. On or prior to the date of
this Agreement, the board of directors of SFBC and SFBC Miami have each
declared the Merger advisable and in the best interest of its
shareholders and have each approved execution and delivery of this
Agreement in accordance with applicable law. SFBC, as the sole
stockholder of SFBC Miami, has approved this Agreement and the Merger
and no approval of SFBC's shareholders is required. The execution and
delivery by SFBC and SFBC Miami of this Agreement and the consummation
by SFBC and SFBC Miami of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
SFBC and SFBC Miami, subject to the filing of the Articles of Merger
pursuant to the FBCA. Upon execution and delivery of this Agreement by
SFBC and SFBC Miami, it shall constitute the valid and binding
obligation of each of SFBC and SFBC Miami enforceable against each of
them in accordance with its terms..
4.4 Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, shall (a) violate or conflict with the articles or
certificate of incorporation or bylaws, each as amended, of SFBC or
SFBC Miami, (b) violate any provision of law or any order or judgment
of any Governmental Entity, specifically applicable to SFBC or SFBC
Miami, (c) violate or result in a breach of or (with due notice or
lapse of time or both) a default under any contract, loan agreement,
mortgage, lease, security agreement, indenture, or other agreement or
instrument to which either of SFBC or SFBC Miami is a party or by which
they are bound or to which any of their respective assets are subject
(or result in the imposition of any Security Interest upon any of its
assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, or failure to
give notice would not have a Material Adverse Effect on the ability of
SFBC or SFBC Miami to consummate the transactions contemplated by this
Agreement. Other than in connection with the provisions of the FBCA,
and the Exchange Act, neither of SFBC nor SFBC Miami need to give any
notice to, make any filing with, or obtain any authorization, consent,
or approval of any Governmental Entity in order for the Parties to
consummate the transactions contemplated by this Agreement.
4.5. Absence of Undisclosed Liabilities. Except as disclosed
on Schedule 4.5, since the date of the last financial statements of
SFBC contained in a Form 10-Q filed with the SEC, neither SFBC nor SFBC
Miami has incurred any Liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature, except:
(a) Liabilities, obligations or contingencies which
were incurred after June 30, 2003 and were incurred in the
Ordinary Course of Business and consistent with past
practices;
31
(b) Liabilities, obligations or contingencies which
(i) would not, in the aggregate, have a Material Adverse
Effect on SFBC or SFBC Miami, or (ii) have been discharged or
paid in full prior to the date hereof; and
(c) Liabilities and obligations which are of a nature
not required to be reflected in the financial statements of
SFBC prepared in accordance with GAAP consistently applied and
which were incurred in the Ordinary Course of Business.
4.6 Filings with the SEC. SFBC has made all filings with the
SEC that it has been required to make under the Securities Act and the
Exchange Act. All documents required to be filed as exhibits to the
SFBC SEC Documents have been so filed, and all material contracts so
filed as exhibits are in full force and effect, except those which have
expired in accordance with their terms, and neither SFBC nor any of its
Subsidiaries is in material default with respect to such contracts.
Each of the SFBC SEC Documents has complied in all material respects
with the Securities Act and the Exchange Act in effect as of their
respective dates. None of the SFBC SEC Documents, 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 in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
4.7 Trailing 12 Month Revenues. The trailing 12 month Revenues
for SFBC Miami as of March 31, 2003 are approximately $21,800,000. SFBC
Miami has generated the following approximate historical revenues:
First Quarter of 2003 $5,100,000 vs. $3,800,000 for First Quarter of 2002
2002 $20,500,000
2001 $20,200,000
2000 $16,000,000
1999 $8,300,000
4.8 Brokers' Fees. None of CPF, CPI, the Shareholders and the
CPI Shareholders shall have any liability or obligation to pay any fees
or commissions to any broker, finder, or agent that is or was retained
by SFBC or SFBC Miami in connection with the transactions contemplated
by this Agreement.
4.9 Status of the Shareholders. Immediately after the Closing,
Xxxxxxxx, Xxxxxxxx and Xxxxxx shall not be considered Affiliates of
SFBC or executive officers of SFBC as that term is defined by Rule 3b-7
under the Exchange Act.
32
4.10 Disclosure. The representations and warranties contained
in this Article 4 do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements and information contained in this Article 4 not misleading.
5. ADDITIONAL COVENANTS.
5.1 Covenant Not to Compete.
(a) The Shareholders each covenant and agree that for
the period commencing with the Closing Date and ending five
years from such date (the "Measuring Period"), each of the
Shareholders shall not, Directly or Indirectly, own, manage,
operate, finance, join, control, or participate in the
ownership, management, operation, finance or control of, or be
connected with, in any manner, any entity, business enterprise
or operation engaged in (i) within any geographic area in
which SFBC Miami or CPF has done business (the "Area"),
designing, providing, marketing, selling, or performing Phase
I, II, III or IV clinical trials' services, or, (ii) within or
outside of the Area performing services for any Client or any
Affiliate of any Client.
(b) The Shareholders covenant and agree that during
the Measuring Period they shall not, Directly or Indirectly,
within the Area:(i) solicit business from any Person which was
a Client or; (ii) induce or attempt to induce or influence any
employee of SFBC or any Affiliate to terminate his or her
employment with SFBC or any Affiliate.
(c) The Shareholders during the Measuring Period
shall not, and shall not permit any of their Affiliates, to
own, manage, operate, join, control or participate in the
ownership, management, operation or control of or be connected
in any manner with, Directly or Indirectly, any business
conducted under a name using the words "Clinical
Pharmacology", or any similar name or any derivatives thereof,
without the prior written consent of SFBC and SFBC Miami.
(d) The Shareholders shall, and shall cause their
Affiliates, to hold in confidence and refrain from disclosing,
publishing or making use of all knowledge and information of a
confidential nature relating to the business of CPF prior to
the Closing Date, except knowledge and information which (i)
is or becomes generally available to the public other than as
a result of a disclosure prohibited hereby, or (ii) is
required to be disclosed by law.
(e) The Shareholders acknowledge that CPF's and the
Shareholders' expertise in the clinical trials business is of
a special, unique, unusual and extraordinary character, which
gives said expertise a peculiar value, and that a breach by
any of the Shareholders of the provisions of Sections 5.1 and
5.2 of this Agreement cannot reasonably or adequately be
compensated in damages in an action at law; and such a breach
of any of the foregoing provisions contained in this Agreement
will cause SFBC and SFBC Miami irreparable injury and damage.
The Shareholders further acknowledge that they possess unique
skills, knowledge and ability and that competition by any of
them, in violation of this Agreement or any other breach of
the provisions of this Agreement would be extremely
33
detrimental to SFBC and SFBC Miami. By reason thereof, the
Shareholders agree that SFBC and SFBC Miami shall be entitled,
in addition to any other remedies they may have under this
Agreement or otherwise, to temporary, preliminary and
permanent injunctive and other equitable relief to prevent a
breach or curtail any breach or threatened breach of this
Agreement by any of the Shareholders without having to plead
or prove irreparable harm, lack of an adequate remedy at law
or post a bond or other security. No specification in this
Agreement of a specific legal or equitable remedy shall be
construed as a waiver or prohibition against the pursuing of
other legal or equitable remedies in the event of such a
breach.
(f) Nothing contained herein shall bar the
Shareholders from performing duties for SFBC Miami under their
Employment Agreements executed in connection with this
Agreement.
5.2. Nondisclosure. If this Agreement and the transactions
provided for herein shall be terminated or abandoned for any reason
whatsoever, each Party shall return to the other Parties any and all
proprietary, confidential and secret information and data furnished to
such party in connection herewith and hold in confidence its knowledge
of any and all such proprietary, confidential and secret information or
data and not disclose or publish the same, directly or indirectly, (a)
without the prior written consent of such other Party or (b) until the
same has been theretofore publicly disclosed by such other Party or
otherwise ceased to be secret or confidential as evidenced by general
public knowledge; provided, however, that each Party shall have the
right to disclose such information, without consent but with prior
notice to the other Party, to the extent that (i) such Party is
required by law to do so, or (ii) such disclosure is required in
connection with litigation pertinent to such information and in either
event, at least five days prior written notice is given to the other
Parties or such lesser reasonable notice as may be available under the
circumstances. The foregoing provisions are intended to supplement and
not supercede any existing confidentiality agreement between the
Parties.
5.3. Cooperation in Third-Party Litigation.
(a) After the Closing, the Shareholders and the CPI
Shareholders shall provide such cooperation as SFBC and SFBC
Miami or their counsel may reasonably request in connection
with: (i) any proceedings related to the business of CPF or
CPI; (ii) CPF's or CPI's conduct of their business prior to
the Closing; or (iii) any proceedings for which SFBC and SFBC
Miami is entitled to indemnification from the Shareholders or
the CPI Shareholders under Section 9.1. Such cooperation shall
include, but not be limited to, allowing former employees of
CPF available upon the reasonable request of SFBC and SFBC
Miami or their counsel to consult with and assist SFBC and
SFBC Miami and their counsel in connection with any such
proceedings and to prepare for and testify in any such
proceedings, including depositions, trials and arbitration
proceedings.
(b) SFBC and SFBC Miami agree that after the Closing,
they shall provide such cooperation as the Shareholders or
their counsel may reasonably request in connection with: (i)
any proceedings for which the Shareholders and the CPI
Shareholders are entitled to indemnification from SFBC and
34
SFBC Miami under Section 6.2 hereof. Such cooperation shall
include, but not be limited to, making employees of SFBC and
SFBC Miami available upon the reasonable request of the
Shareholders and the CPI Shareholders or their counsel to
consult with and assist the Shareholders and the CPI
Shareholders and their counsel regarding any such proceedings
and to prepare for and testify in connection with any such
proceedings, including depositions, trials and arbitration
proceedings.
(c) The provisions of this Section 5.3 are not
intended to conflict with, and shall not override the other
provisions of this Agreement.
5.4 Working Capital Adjustment. As soon as reasonably
practicable following the Closing, SFBC Miami shall prepare a Closing
Date balance sheet showing the actual amount of working capital of CPF
("Actual Working Capital"). If the Actual Working Capital exceeds
$750,000 (the "Actual Working Capital Excess"), SFBC Miami shall pay
promptly in cash, but in no event later than 30 days following the
Closing, the amount of the Actual Working Capital Excess to the
Shareholders on a pro rata basis in accordance with their percentage
ownership of CPF Common Stock. In the event that the Actual Working
Capital is less than $750,000, the Shareholders, on a pro rata basis in
accordance with their percentage ownership of CPF Common Stock, shall
promptly, but in no event later than 30 days following the Closing, pay
in cash the amount of such difference to SFBC Miami. CPI shall have no
working capital and no Liabilities (other than usual and customary
Liabilities) at the Closing.
5.5 Rights of the Shareholders to Contest Certain Matters. In
the event that the Shareholders object to the Actual Working Capital
computation or the amount of any payment of Additional Merger
Consideration (or failure to make any such payment), they shall advise
SFBC and SFBC Miami in writing. If they are unable to resolve their
objection within 14 days, they may appoint a certified public
accountant licensed in Florida (a "CPA") by giving SFBC and SFBC Miami
notice within 14 days. SFBC and SFBC Miami shall select a CPA by giving
the Shareholders notice with 14 days. The two CPAs shall select a third
CPA, the third CPA shall be given reasonable access to all of SFBC's
financial books and records, customer agreements and other relevant
records in order to resolve the dispute and such third CPA's
determination shall be binding upon the Parties. If the amount owed to
the Shareholders is 10% or more than SFBC's or SFBC Miami's
computation, SFBC and SFBC Miami shall pay the reasonable fees and
expenses of the third CPA; otherwise the Shareholders shall pay the
reasonable fees and expenses.
5.6 SFBC Guarantee. SFBC guarantees payment of the Additional
Merger Consideration if and to the extent that it is earned, guarantees
performance of SFBC Miami's obligations under this Agreement and
covenants not to impair SFBC Miami's obligations under this Agreement,
and covenants to have at all times authorized and unissued shares of
Common Stock sufficient to fulfill its obligations to issue such shares
to the Shareholders pursuant to this Agreement.
5.7 Reporting Obligations. In addition to the dispute
resolution procedures provided in Section 5.5, SFBC shall provide the
Shareholders with copies of (a) SFBC's consolidated financial
statements ("SFBC Financial Statements") at the same time SFBC files
its periodic reports with the SEC, (b) monthly SFBC Financial
Statements, if they are prepared, within five days of issuance and (c)
statements of Revenues, calculated as provided in Section 2.4.5(b), for
35
SFBC Miami, SFBC Ft. Xxxxx, Inc. and any business which SFBC or any
Affiliate acquires, which business is engaged in the conduct of Phase I
or Phase II clinical studies in the United States ("Computations of
Revenues") on a quarterly basis at the same time as SFBC Financial
Statements are furnished or if monthly Computations of Revenues are
prepared, within five days of issuance. Following the Closing, SFBC and
SFBC Miami shall provide the Shareholders with reasonable access to
material agreements including clinical trial agreements.
5.8 Listing of SFBC Shares. SFBC shall use its best efforts to
cause the SFBC Common Stock that shall be issued in the Merger to be
approved for listing on the Nasdaq National Market, subject to official
notice of issuance within 12 months following issuance.
5.9 SFBC's Covenant to Capitalize and Operate SFBC Miami. (a)
SFBC shall adequately fund or otherwise capitalize SFBC Miami so as to
enable it to achieve the rate of growth assumed in determining the
Additional Merger Consideration; (b) SFBC Miami shall maintain its
books and records and continue to record its Revenues in a manner
consistent with those practices that are in effect as of the date of
Closing; (c) SFBC Miami shall operate following Closing in a manner
that is consistent with its past practices and the past practices of
CPF, including, without limitation, performing the Historical Clinical
Trials; (d) SFBC Miami shall use its best efforts to achieve the
Revenues during the Earn-Out Period that will result in payment of the
Additional Merger Consideration; and (e) All clinical trials which
generate Revenues shall be recorded, performed, and credited to SFBC
Miami in a manner that is consistent with past practices and taken on
by SFBC Miami at reasonable market rates, consistent with CPF's and
SFBC Miami's historical business and will be approved by SFBC Miami.
5.10 Filing of Tax Returns. As soon as practicable following
the Closing, the Shareholders shall prepare at their expense, execute
and file all Tax Returns required to be filed by CPF and CPI as the
result of their activities through the Closing. The Shareholders shall
pay any Taxes due and be entitled to receive any refunds due. SFBC and
SFBC Miami shall provide the Shareholders and their representatives
with access to all documents and records necessary to prepare the Tax
Returns.
5.11 Filing of SFBC SEC Reports. In order to permit the
Shareholders to sell their shares of SFBC Common Stock under Rule 144
of the Securities Act, SFBC covenants to take all actions necessary to
comply with Rule 144(c) under the Securities Act for a period of five
years following the Closing. Provided, however, this covenant shall not
apply if SFBC is no longer required to file periodic reports under the
Exchange Act because it has merged into (or consolidated with) another
entity or a third party has acquired at least 80% of the capital stock
of SFBC.
6. INDEMNIFICATION.
Section 6.1 Indemnification by the Shareholders. In the event
CPF, CPI or the Shareholders breach (or in the event any third party alleges
facts that, if true, would mean CPF, CPI or the Shareholders has breached) any
of their representations, warranties, and covenants contained in the Agreement
or in any document, certificate or affidavit delivered by CPF, CPI or the
36
Shareholders at or prior to the Closing, and, provided that SFBC or SFBC Miami
makes a written claim for indemnification against the Shareholders, pursuant to
Section 6.3 below, then the Shareholders, jointly and severally, agree to
indemnify SFBC and SFBC Miami from and against the entirety of any Adverse
Consequences SFBC and SFBC Miami may suffer through and after the date of the
claim for indemnification resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or the alleged breach).
Section 6.2. Indemnification by SFBC and SFBC Miami. In the
event SFBC or SFBC Miami breach (or in the event any third party alleges facts
that, if true, would mean SFBC or SFBC Miami has breached) any of their
representations, warranties, and covenants contained in the Agreement or in any
document, certificate or affidavit delivered by SFBC or SFBC Miami at or prior
to the Closing, and, provided that the Shareholders make a written claim for
indemnification against SFBC or SFBC Miami pursuant to Section 6.3 below, then
SFBC or SFBC Miami, jointly and severally, agree to indemnify the Shareholders
from and against the entirety of any Adverse Consequences the Shareholders may
suffer through and after the date of the claim for indemnification resulting
from, arising out of, relating to, in the nature of, or caused by the breach (or
the alleged breach).
Section 6.3. Procedure.
(a) Promptly (and in any event within five days after the
service of any summons or other document) after acquiring knowledge of
any Claim for which one or more of the Parties (the "Indemnified
Party") may seek indemnification against other Parties (the
"Indemnifying Party") pursuant to this Article 6, the Indemnified Party
shall give written notice thereof to the Indemnifying Party. Failure to
provide notice shall not relieve the Indemnifying Party of its
obligations under this Article 6, except to the extent that the
Indemnifying Party demonstrates actual damage caused by that failure.
The Indemnifying Party shall have the right to assume the defense of
any Claim with counsel reasonably acceptable to the Indemnified Party
upon delivery of notice to that effect to the Indemnified Party. If the
Indemnifying Party, after written notice from the Indemnified Party,
fails to take timely action to defend the action resulting from the
Claim or otherwise respond to the Claim, the Indemnified Party shall
have the right to defend the action resulting from the Claim by counsel
of its own choosing, but at the cost and expense of the Indemnifying
Party. The Indemnified Party shall have the right to settle or
compromise any Claim against it, and recover from the Indemnifying
Party any amount paid in settlement or compromise thereof, if it has
given written notice thereof to the Indemnifying Party and the
Indemnifying Party has failed to take timely action to defend the
Claim; otherwise, the Indemnified Party shall have no right to settle
or compromise any Claim. The Indemnifying Party shall have the right to
settle or compromise any claim against the Indemnified Party without
the consent of the Indemnified Party provided that the terms of the
settlement or compromise provide for the unconditional release of the
Indemnified Party and require the payment of monetary damages only.
(b) Upon its receipt of any amount paid by the Indemnifying
Party pursuant to this Article 6, the Indemnified Party shall deliver
to the Indemnifying Party such documents as it may reasonably request
assigning to the Indemnifying Party any and all rights, to the extent
37
indemnified, that the Indemnified Party may have against third parties
with respect to the Claim for which indemnification is being received.
(c) The Indemnifying Party if not SFBC or SFBC Miami, may
elect to pay any Claim in cash or SFBC Common Stock. If it elects to
use SFBC Common Stock, the value shall be the Average Share Price.
Section 6.4. Limitations on Indemnification. Notwithstanding
anything to the contrary contained herein, except as provided in this Section
6.4, no Indemnified Party shall be entitled to receive an indemnification
payment with respect to any Claim or Claims specified in this Article 6 unless
the Claim, or the aggregate amount of all Claims made by the Indemnified Party
hereunder, equals or exceeds $50,000 (in which case all of such Claim or Claims
back to the first dollar will be recoverable); provided, however, no Indemnified
Party shall recover more than the amount of Merger Consideration and the C-Corp
Consideration it has paid or received for all Claims brought against an
Indemnifying Party under this Agreement unless the Claims relate to fraud or
Liabilities involving taxes, environmental, and pension and employee benefits;
provided, further, any Claim involving a breach of the representation and
warranty contained in Section 3.27 shall be reduced by 50%.
7. MISCELLANEOUS.
7.1 Survival. All of the representations, warranties and
covenants of the Parties shall survive the Effective Time for a period
of one year; provided, however, in cases involving any Claim involving
fraud, taxes, environmental, and pensions and employee benefits
matters, the representations, warranties and covenants shall survive
the Effective Time for as long as the applicable statute of
limitations.
7.2 Press Releases and Public Announcements. Until the
Closing, no Party shall issue any press release or make any public
announcement relating to the subject matter of this Agreement without
the prior written approval of the other Parties; provided, however,
that SFBC may make any public disclosure it believes in good faith is
required by applicable law or any listing agreement concerning its
publicly-traded securities (in which case SFBC shall use its best
efforts to provide the other Parties and their counsel with as much
notice as is practical under the circumstances).
7.3 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the
Parties and supersedes any prior understandings, agreements, or
representations by or between the Parties, written or oral, to the
extent they related in any way to the subject matter hereof. A breach
of Section 3(b) of any of the Employment Agreements shall be a breach
of this Agreement.
7.4 Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties named herein and their respective
successors. No Party may assign either this Agreement or any of its
38
obligations hereunder without the prior written approval of the
Shareholders, except for any assignment including a merger or
consolidation which occurs by operation of law.
7.5 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
7.6 Headings. The Section and Article headings contained in
this Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
7.7 Notices and Addresses. All notices, offers, acceptance and
any other acts under this Agreement (except payment) shall be in
writing, and shall be sufficiently given if delivered to the addressees
in person, by Federal Express or similar receipted next business day
delivery, or by facsimile delivery (in which event a copy shall
immediately be sent by Federal Express or similar receipted delivery).
If to SFBC and SFBC Miami:
SFBC International, Inc.
00000 Xxxxxxxx Xxxx.
Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxxx Xxxxxx, P.A.
0000 Xxxx Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esquire
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to CPF, CPI and/or c/o the Shareholders:
Xxxxx XxXxxxxx, Esq.
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xx., Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telephone: 404-815-6l19
Facsimile: 000-000-0000
with a copy to:
Xxxxx XxXxxxxx, Esq.
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xx., Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telephone: 404-815-6l19
Facsimile: 000-000-0000
39
or to such other address as either of them, by notice to the other may
designate from time to time. Time shall be counted to, or from, as the
case may be, the delivery in person.
7.8 Governing Law. Except to the extent that rights of the
Shareholders and the transactions hereby contemplated are governed by
the FBCA, this Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware including its
conflicts of law provisions.
7.9 Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time
with the prior authorization of their respective board of directors. No
amendment of any provision of this Agreement shall be valid unless the
same shall be in writing and signed by all of the Parties. No waiver by
any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach
of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
7.10 Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully
severable and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part
hereof and the remaining provisions hereof shall remain in full force
and effect and shall not be affected by the illegal, invalid or
unenforceable provision by its severance herefrom.
7.11 Expenses. Each of the Parties shall bear its own costs
and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby. Provided
however, that the Actual Working Capital and balance sheet information
required by this Agreement shall be after payment of all transaction
costs including legal fees and expenses of CPF, CPI and the
Shareholders.
7.12 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
Agreement shall be construed as if drafted jointly by the Parties and
no presumption or burden of proof shall arise favoring or disfavoring
any Party by virtue of the authorship of any of the provisions of this
Agreement. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise
requires. The word "including" shall mean including without limitation.
7.13 Arbitration. Except as provided in Section 5.5, or any
action seeking equitable relief, any controversy, dispute or claim
arising out of or relating to this Agreement, or its interpretation,
application, implementation, breach or enforcement which the Parties
40
are unable to resolve by mutual agreement, shall be settled by
submission by any Party of the controversy, claim or dispute to binding
arbitration in Miami, Florida (unless the Parties agree in writing to a
different location), before three arbitrators in accordance with the
rules of the American Arbitration Association then in effect. In any
such arbitration proceeding, the Parties agree to provide all discovery
deemed necessary by the arbitrators. The decision and award made by the
arbitrators shall be final, binding and conclusive on all Parties
hereto for all purposes, and judgment may be entered thereon in any
court having jurisdiction thereof.
7.14 Force Majeure. No Party shall be responsible for failure
or delay in performance hereunder by reason of any strikes; labor
disputes; freight embargoes; interruption or failure in the Internet,
telephone or other telecommunications service or related equipment;
material interruption in the mail service or other means of
communication with the United States; if any Party shall have sustained
a material or substantial loss by fire, flood, accident, hurricane,
earthquake,; theft, sabotage or other calamity or malicious act,
whether or not such loss shall have been insured; acts of God; outbreak
or material escalation of hostilities or civil disturbances, national
emergency or war (whether or not declared), or other calamity or crises
including a terrorist act or acts affecting the United States; future
laws, rules, regulations or acts of any Governmental Entity (including
any orders, rules or regulations issued by any official or agency of
such Governmental Entity); or any cause beyond the reasonable control
of such Party.
7.15 Plural. Unless the context requires otherwise, the
singular shall include the plural, and vice versa.
7.16 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
__________________________ SFBC INTERNATIONAL, INC.
__________________________ By:_____/s/_____________________________
Xxxxxx Xxxxxxx, Chief Executive Officer
__________________________ SOUTH FLORIDA KINETICS, INC.
__________________________ By:_____/s/_____________________________
Xxxx Xxxxxxx, M.D., President
41
_________________________
CLINICAL PHARMACOLOGY OF FLORIDA, INC.
_________________________ By:______/s/__________________________
X. Xxxxxx Xxxxxxxx
President
CLINICAL PHARMACOLOGY
INTERNATIONAL, INC.
By:______/s/__________________________
X. Xxxxxx Xxxxxxxx
President
_________/s/__________________________
Xx. Xxxxxxx Xxxxxxxx
_________/s/__________________________
X. Xxxxxx Xxxxxxxx
_________/s/__________________________
Xxxxx X. Xxxxxx
42
EXHIBIT A
FORM OF
ARTICLES OF MERGER OF
SOUTH FLORIDA KINETICS, INC.
These Articles of Merger entered into as of this day of August 2003, by
and between Clinical Pharmacology of Florida, Inc. a Florida corporation (
"CPF") and South Florida Kinetics, Inc., a Florida corporation (the "Surviving
Corporation")(CPF and the Surviving Corporation are collectively the "Parties").
All capitalized terms not defined herein shall have the meaning set forth in the
Acquisition Agreement by and among SFBC International, Inc., South Florida
Kinetics, Inc., Clinical Pharmacology of Florida, Inc., Clinical Pharmacology
International, Inc., Xx. Xxxxxxx Xxxxxxxx, Xx. X. Xxxxxx Xxxxxxxx, and Xx. Xxxxx
X. Xxxxxx (the "Acquisition Agreement").
WHEREAS the Surviving Corporation has authorized capital stock
of 10,000 shares of common stock, par value $0.10 per share, of which 100 shares
have been duly issued and are outstanding; and
WHEREAS CPF has authorized capital stock consisting of 50
shares of common stock, of which 50 shares have been duly issued and are now
outstanding; and
WHEREAS the boards of directors of the Parties, deem it
advisable and generally to the advantage and welfare of the Parties and
recommend to the shareholders of the Parties that CPF merge with the Surviving
Corporation under and pursuant to the provisions of Florida Business Corporation
Act ("FBCA"); and
WHEREAS, the boards of directors and shareholders of the Parties have
approved the terms and conditions of the merger; and
NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the Parties have agreed, and do hereby agree, that
CPF shall merge into the Surviving Corporation upon the terms and conditions
below stated.
1. Adoption and Approval of Agreement. Pursuant to Sections 607.0702
and 607.0821, 607.1101 and 607.1103 of the FBCA, the directors of CPF by
unanimous written consent on _______, 2003 and the shareholders of CPF, by the
unanimous written consent of the shareholders entitled to vote, approved the
Acquisition Agreement on July __, 2003. Pursuant to Sections 607.0704, 607.0821,
607.1101 and 607.1103 of the FBCA, the board of directors at a meeting held on
July 23, 2003 at which a quorum was present and the sole shareholder of the
Surviving Corporation have adopted and approved this Agreement by unanimous
written consent on August 1, 2003.
43
2. Agreement to Merge. The Parties hereby agree that CPF shall be
merged with and into the Surviving Corporation.
3. Effective Date. The merger of the undersigned corporations shall
become effective upon the filing of the Articles of Merger with the Florida
Secretary of State (the "Effective Date").
4. Name of Merged Corporation. The name of the Surviving Corporation shall
remain South Florida Kinetics, Inc.
5. Agreement. The executed Acquisition Agreement is on file at the
principal place of business of the Surviving Corporation located at 00000
Xxxxxxxx Xxxx., Xxxxx, XX 00000.
6. Manner and Basis for Conversion of Shares. The authorized capital
and number of shares issued and outstanding of the Surviving Corporation shall
not change. As set forth in the Acquisition Agreement, the common stock of CPF
shall convert into $6.5 million in cash and 443,072 shares of common stock of
the parent of the Surviving Corporation. Further, CPF has the opportunity to
earn up to an additional $9 million over three years based upon increased
revenues.
7. Certifications of Board Approval. The undersigned secretary of CPF
hereby certifies that the board of directors of CPF adopted the Acquisition
Agreement by unanimous written consent on , 2003. The undersigned secretary of
the Surviving Corporation hereby certifies that the board of directors of the
Surviving Corporation adopted the Agreement at a meeting at which a quorum was
present on July 23, 2003.
8. Shareholder Approvals. The undersigned secretary of CPF hereby
certifies that the shareholders of CPF approved the Acquisition Agreement by
unanimous written consent on , 2003. The undersigned secretary of the Surviving
Corporation hereby certifies that the sole shareholder of the Surviving
Corporation approved the Acquisition Agreement by unanimous written consent on
August 1, 2003.
44
IN WITNESS WHEREOF, the parties hereto have caused these Articles of
Merger to be executed by the persons named below pursuant to authority given by
their respective boards of directors.
South Florida Kinetics, Inc., a Florida corporation
By: _____________________________________
Xxxx Xxxxxxx, M.D., President
By: _____________________________________
Xxxxx Xxxxx, Vice President and Secretary
Clinical Pharmacology of Florida, Inc., a Florida corporation
By: , President
By: , Secretary
45
EXHIBIT B
FORM OF LEGAL OPINION FOR CPF,
CPI, THE SHAREHOLDERS AND THE CPI SHAREHOLDERS
The legal opinion should cover the following areas:
1. Organization, good standing, power, and authorization, etc.
2. Authorized capital stock, outstanding capital stock and derivative
securities. No pre-emptive rights, fully paid, etc.
3. To counsel's knowledge, investigation, there is no litigation or
similar matters except that disclosed in the Agreement or that
which is not reasonably expected to have a Material Adverse
Effect.
4. Each of CPF and CPI have all power and authority to enter into the
Agreement and other transaction documents and carry out the
provisions. All consent, authorizations and approvals have been
obtained in connection with the Agreement and other transaction
documents. All necessary corporate proceedings have been taken to
authorize the execution and delivery of the Agreement and other
transaction documents.
5. Each of the Agreement and the other transaction documents have
been duly authorized, executed and delivered and are the legal,
valid and binding obligation of each of CPF and CPI, where
applicable, subject to the usual exceptions.
6. To such counsel's knowledge, each of CPF and CPI and the Real
Property are in compliance with applicable food and drug, medical
and environmental laws.
7. To the best of such counsel's knowledge after reasonable
investigation, the representations and warranties do not contain
any misstatements of a material fact, etc.
46
EXHIBIT C
FORM OF LEGAL OPINION
FROM COUNSEL TO SFBC AND SFBC MIAMI
The legal opinion should cover the following areas:
1. SFBC has been incorporated under the Delaware General Corporation
Law and its status is active. SFBC Miami has been incorporated under the Florida
Business Corporation Act and its status is active.
2. To our knowledge after limited investigation SFBC is required to be
qualified as a foreign corporation in the State of Florida and based on a copy
of the Certificate of Good Standing issued by the State of Florida, SFBC is
qualified as a foreign corporation to conduct business in the State of Florida.
3. SFBC and SFBC Miami each have the corporate power to conduct their
business, to execute and deliver the Transaction Documents to which they are a
party, and to perform their obligations under such Transaction Documents.
4. SFBC and SFBC Miami have authorized the execution, delivery and
performance of each of the Transaction Documents to which each is a party by all
necessary corporate action.
5. Subject to the limitations contained in the next paragraph, the
Transaction Documents have been, where applicable, executed by SFBC and SFBC
Miami, and are the valid and binding obligations of SFBC and SFBC Miami, where
applicable, and enforceable against SFBC and SFBC Miami under the laws of
Delaware and the federal laws of the United States.
Our opinion concerning the validity, binding effect and enforceability
of the Transaction Documents means that:
(a) the Transaction Documents constitute an effective contract
under applicable law,
(b) none of the Transaction Documents are invalid in their
entirety because of a specific statutory prohibition or public policy
and none is subject in its entirety to a contractual defense; and
(c) subject to the last sentence of this paragraph, some
remedies are available if SFBC or SFBC Miami is in material default
under the Transaction Documents. This opinion does not mean that (a)
any particular remedy is available upon a material default, or (b)
every provision of the Transaction Documents will be upheld or enforced
in any or each circumstance by a court. Furthermore, the validity,
binding effect and enforceability of the Transaction Documents may be
limited or otherwise affected by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar
statutes, rules, regulations or other laws affecting the enforcement of
creditors' rights and remedies generally and (b) the unavailability of,
or limitation on the availability of, a particular right or remedy
(whether in a proceeding in equity or at law) because of an equitable
principle or a requirement as to commercial reasonableness,
conscionability or good faith.
47
6. The execution and delivery of the Transaction Documents, performance
by SFBC and SFBC Miami of their respective obligations thereunder, and the
exercise by SFBC and SFBC Miami of the rights created by the Transaction
Documents do not (a) violate SFBC's Certificate of Incorporation or Bylaws or
any amendments thereto, or SFBC Miami's Articles of Incorporation or Bylaws or
any amendments thereto; (b) to our knowledge constitute a breach of or a default
under any agreement or instrument to which SFBC or SFBC Miami is a party or by
which they or their assets are bound, or result in the creation of a mortgage,
security interest or other encumbrance upon the assets of SFBC or SFBC Miami
except as set forth in the Transactions Documents; (c) to our knowledge, violate
a judgment, a decree or order of any court or administrative tribunal, which
judgment, decree or order is binding on SFBC or SFBC Miami or their assets; or
(d) violate any federal or Delaware law, rule or regulation.
7. No authorization, consent or approval of, notice to, or filing with,
any public body or governmental authority or any other person is necessary in
connection with the execution and delivery by SFBC or SFBC Miami of the
Transaction Documents to which they are a party or the performance by SFBC or
SFBC Miami of their respective obligations thereunder, except for the filing of
the Articles of Merger and the filing of Form D with the SEC.
48
DISCLOSURE SCHEDULES TO
ACQUISITION AGREEMENT
dated as of August 1, 2003 by and among
SFBC International, Inc., South Florida Kinetics, Inc.,
Clinical Pharmacology of Florida, Inc.,
Clinical Pharmacology International, Inc.,
Xx. Xxxxxxx Xxxxxxxx, Xx. X. Xxxxxx Xxxxxxxx, and Xx.
Xxxxx X. Xxxxxx
ANY MATTER DISCLOSED IN ANY SECTION OF THESE DISCLOSURE SCHEDULES WILL
BE DEEMED TO HAVE BEEN DISCLOSED AND INCORPORATED BY REFERENCE IN EACH OF THE
OTHER SECTIONS OF THESE DISCLOSURE SCHEDULES AS THOUGH MORE FULLY SET FORTH IN
SUCH OTHER SECTIONS, PROVIDED THAT A REASONABLE PERSON WOULD CONCLUDE FROM SUCH
DISCLOSURE THAT IT WOULD APPLY TO THE OTHER APPLICABLE SECTIONS OF THE
DISCLOSURE SCHEDULES, NOTWITHSTANDING THE FACT THAT SUCH OTHER SECTIONS MAY NOT
BE CROSS-REFERENCED IN THE DISCLOSURE SCHEDULES. In the event of any
inconsistency between the statements in the body of this Agreement and those in
these Disclosure Schedules (other than an exception expressly set forth as such
in these Disclosure Schedules with respect to a specifically identified
representation or warranty), the statements in the body of this Agreement will
control. Any and all disclosures contained in these Disclosure Schedules shall
be effective as of the date of this Agreement and as of the Closing Date.
No disclosure in these Disclosure Schedules relating to any possible
breach or violation of any agreement, law or regulation shall be construed as an
admission or indication that any such breach or violation exists or has actually
occurred. These Disclosure Schedules and the information and disclosures
contained herein are intended to qualify and limit the representations,
warranties and covenants of CPF, CPI, Xxxxxxxx, Xxxxxxxx and Xxxxxx contained in
the Agreement and shall not be deemed to expand in any way the scope or effect
of any of such representations, warranties or covenants.
The headings with the section numbers in these Disclosure Schedules are
included for convenience only and are not intended to limit the effect of the
disclosures contained herein or to expand the scope of the information required
to be disclosed herein. Unless the context otherwise requires, all capitalized
terms used in these Disclosure Schedules shall have the respective meanings
assigned to them in the Agreement.
SCHEDULE 3.1 - JURISDICTIONS IN WHICH CPF AND CPI ARE QUALIFIED TO DO BUSINESS
Florida
SCHEDULE 3.4 - NONCONTRAVENTION
Various of CPF's contracts relating to vendors, clients, real estate leases and
equipment leases, which includes contracts with customers, a copier lease, and a
month-to-month storage lease, may be breached or terminable because of or upon a
change of control of CPF. CPF has not secured waivers of any such breaches or
rights of termination.
SCHEDULE 3.6 - FINANCIAL STATEMENTS
The financial statements for CPF's fiscal year ended December 31, 2002 have been
compiled [REVIEWED STATEMENTS IS A TYPE OF ACCOUNTING STATEMENT (I.E., COMPILED,
REVIEWED, AND AUDITED) AND CONTAIN FOOTNOTES, BUT NOT AN OPINION. CPF'S
FINANCIAL STATEMENTS HAVE BEEN COMPILED, NOT REVIEWED.] in accordance with GAAP,
but have not been audited. No interim financial statements provided by CPF have
been prepared in accordance with GAAP. Neither the financial statements of CPF
for the fiscal year ended December 31, 2002 nor the interim financial statements
supplied by CPF may comply with applicable accounting requirements and with the
published rules and regulations of the SEC. None of the financial statements of
CPI have been prepared in accordance with GAAP and none of them may comply with
applicable accounting requirements or with the published rules and regulations
of the SEC
SCHEDULE 3.8 - RELATED PARTY TRANSACTIONS
Xxxxxx is the owner of XAM Research, an entity that was retained by CPF for
consulting services.
The primary Institutional Review Board used by CPF is Southern Institutional
Review Board, an entity owned by Xxxxxx Xxxxxxxx, wife of Xxxxxxxx.
Xxxxx Xxxxxx, a stepson of Xxxxxxxx, received a salary in 2002 from CPF.
SCHEDULE 3.13 - EMPLOYEE BENEFIT PLANS
CPF has a defined benefit plan "the Plan"), which was established effective
January 1, 1993. Benefit consultant for the Plan is Stanley, Hunt, Xxxxxx and
Xxxxx, Inc., a subsidiary of BB&T. The Plan has no anticipated liabilities.
Notice of plan termination was July 15, 2003 and the plan will be discontinued
on July 30, 2003 and terminated on September, 30, 2003.
Clinical Pharmacology of Florida, Inc. also offers all full-time employees
health and vision insurance and contributions are paid for by Clinical
Pharmacology of Florida, inc. Dental insurance is available to employees for
additional employee contributions. The health, vision and dental insurance is
offered through Aetna Health Insurance.
SCHEDULE 3.14 -- SECURITY INTERESTS
CPF leases a copier, the payments under which lease may be secured by a Security
Interest.
SCHEDULE 3.15.3 - LIST OF TAX RETURNS FILED WITH RESPECT TO CPF AND CPI FOR
TAXABLE PERIODS ENDED ON OR AFTER DECEMBER 31, 2000
CPF (Federal and Florida Returns)
December 31, 2000
December 31, 2001
December 31, 2002
CPI (Federal and Florida Returns)
September 30, 2000
September 30, 2001
September 30, 2002
SCHEDULE 3.15.7
(a) CPF: The tax basis of $1,051,162 for the company would be computed as
follows:
Cash $ 1,041,507
Net Fixed Assets 10,139
Other Payable (484)
-----------
Total $ 1,051,162
Common Stock 100
Shareholder Receivable ($ 25,000)
Less Shareholder Payable $ 27,977
Retained Earnings 1,048,085
-----------
Total $ 1,051,162
CPI: The basis of CPI in its assets as of September 30, 2002 was
approximately $79,222, calculated as follows:
September 2002 Tax Basis $ 31,856
+ Shareholder loan forgiveness 120,875
-Write-off of other assets (94,565)
+ Elimination of Mortgage 21,056
---------
Total 79,222
(b) CPF: None
CPI: $41,547 of depreciation should have been taken in the Fiscal
Years Ended 2000, 2001, and 2002, which would have resulted in a
reduction of taxable income over the same period.
(c) CPF: None
CPI: None
SCHEDULE 3.16 - LISTS OF REAL PROPERTY THAT EITHER OF CPF OR CPI OWNS
The building itself is: Lot 24 and 25, less the East 10 feet thereof, Block 8,
FIRST AMENDED PLAT OF XX. XXXXXXXX'X WINTER GARDENS, according to the Plat
thereof, as recorded in Plat Book 5, at page 22 of the Public Records of
Miami-Dade County, Florida.
The parking lot that is immediately adjacent to the building to the north is:
Lot 26, less the East 10 feet thereof, Block 8, FIRST AMENDED PLAT OF XX.
XXXXXXXX'X WINTER GARDENS, according to the Plat thereof, as recorded in Plat
Book 5, at page 22 of the Public Records of Miami-Dade County, Florida.
SCHEDULE 3.16.9 - DIRECT ACCESS TO PUBLIC ROAD
The parking lot (Lot 26 described above) abuts a public road and has the legal
right to access such road. However, a fence has been erected blocking access to
the road from the parking lot. Instead, the parking lot relies upon the parcel
on which the building is situated (Lots 24 and 25 described above) for access to
a public road.
SCHEDULE 3.16.10 - NECESSARY REPAIRS
Though not currently in need of repair, the roof on the building situated on
Lots 24 and 25 (described above) is nearing the end of its estimated useful
life.
SCHEDULE 3.17.2 - LIST OF ALL PERMITS
AUTHORITY
Miami-Date Occupational Xxxxxxx X. Xxxxxxxx, MD 108014-2 9/30/2003
Miami-Date Occupational Clinical Pharmacology Associates 059373-2 9/30/2003
Miami-Date Occupational Xxxxxx Xxxxxxxxx,MD 530863-0 9/30/2003
City of Miami Certificate of Use/Fire Safety Permit Clinical Pharmacology Associates 343341 12/31-2003
City of Miami Certificate of Use/Fire Safety Permit Clinical Pharmacology 343341 12/31/2003
City of Miami Physician/Surgeons and Doctors Xxxxxxx X. Xxxxxxxx, MD 093736-0001 12/31/2003
City of Miami Hospital/Sanitariums and Medical Qtrs. Clinical Pharmacology 093736-0002 12/31/2003
State of Florida Medical License Xxxxxxx X. Xxxxxxxx, MD ME15214 1/31/2004
State of Florida Medical License Xxxxxx Xxxxxxxxx, XX XX00000 1/31/2004
State of Florida Radioactive Material License Clinical Pharmacology Associates 3338-1 2/28/2007
State of Florida Operational Permit Biomedical Waste Program Clinical Pharmacology Associates 00-00-00000 9/30/2003
SCHEDULE 3.18 - LIST RELATING TO ALL INDEBTEDNESS, GUARANTEES, ETC.
(a) None
(b) None
(c) None (other than accounts receivable described in Schedule 3.23)
(d) None
(e) None
SCHEDULE 3.20 - LITIGATION
A volunteer has filed a claim with respect to injuries she received in a slip
and fall on CPF premises on May 21, 2002. Plaintiff claims injuries including
back pain, neck pain and headaches resulting from this accident and does not
know the amount of her medical expenses. There is no current demand for damages
and the trial date has not been set. CPF believes any losses related to the case
will be covered by insurance.
SCHEDULE 3.25 - LIST OF ALL INTELLECTUAL PROPERTY AND RELATED MATERIAL
(i) None
(ii) Clinical Pharmacology Associates, Clinical Pharmacology of
Florida, Inc., and Clinical Pharmacology International, Inc.
(iii) Volunteer pool database (iv) None (v) None
SCHEDULE 3.30 - LIST OF ALL POLICIES OF INSURANCE WHICH CPF AND CPI MAINTAin
-------------------------------------------------------------------------------------
INSURANCE COMPANY TYPE OF INSURANCE COVERAGE AMOUNT
-------------------------------------------------------------------------------------
CPI United States Fidelity & Guaranty Property $907,557.00
-------------------------------------------------------------------------------------
CPI St Xxxx Insurance Company Liability 1mil/2 mil
-------------------------------------------------------------------------------------
CPF Lloyds of London Property $50,000.00
-------------------------------------------------------------------------------------
CPF Lloyds of London Mt. Xxxxxx Gen Liability 1/1/50K/5K
-------------------------------------------------------------------------------------
CPF Mt. Xxxxxx Liability 1/1/50K/5K
-------------------------------------------------------------------------------------
CPF Ass. Industries Ins Co Xxxxxxx'x Comp 1M/1M/1M
-------------------------------------------------------------------------------------
CPF Pro National Malpractice 1M/3M
-------------------------------------------------------------------------------------
CPF Aetna Health Insurance Health Insurance see policy
-------------------------------------------------------------------------------------
CPF Blue Cross & Blue Shield Health Insurance see policy
-------------------------------------------------------------------------------------
[RESTUBBED]
---------------------------------------------------------------------------------------------------------------
INSURANCE COMPANY DEDUCTIBLE COVERAGE DATE POLICY # YEARLY PREMIUM
---------------------------------------------------------------------------------------------------------------
CPI United States Fidelity & Guaranty See Policy 7/21/02 to 7/21/03 BK01174134 $1,987.02
---------------------------------------------------------------------------------------------------------------
CPI St Xxxx Insurance Company See policy 7/21/03 to 9/4/03 BK01174134 $4,657.00
---------------------------------------------------------------------------------------------------------------
CPF Lloyds of London 1000 6/20/03-6/20/04 JH957657A $1,231.80
---------------------------------------------------------------------------------------------------------------
CPF Lloyds of London Mt. Xxxxxx 250/250 6/18/02-6/18/03 CL2251676 $11,003.85
---------------------------------------------------------------------------------------------------------------
CPF Mt. Xxxxxx 250/250 6/18/03 - 7/21/03 CL2251676 $977.19
---------------------------------------------------------------------------------------------------------------
CPF Ass. Industries Ins Co see policy 01/03 to 12/31/03 2002328271 $15,157.00
---------------------------------------------------------------------------------------------------------------
CPF Pro National see policy 8/1/03 to 8/1/04 MP38022 28,241.00
---------------------------------------------------------------------------------------------------------------
CPF Aetna Health Insurance see policy 6/03 to 6/04 119467-0001 varies
---------------------------------------------------------------------------------------------------------------
CPF Blue Cross & Blue Shield see policy not defined pending 1,260.00
---------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
POLICY # CLAIM SUMMARY
-----------------------------------------------------------------------------------------------------------------------------------
5/21/01 CL2551676 - Mt. Xxxxxx General Slip and fall claim from a volunteer which occurred on May 21, 2002. Plaintiff
Liability claims injuries including back pain, neck pain and headaches resulting from this
accident and does not know the amount of her medical expenses
and had been on social security disability for nineteen years due
to a nervous condition. There is no current demand and the trial
date has not been set. The entire claim is expected to be covered
by the policy.
-----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 3.33 - LEASES
CPF leases office space at 0000 XX 00xx Xxxxxx, Xxxxx, Xxxxxxx 00000 at a rate
of $1,500 per month plus tax. The lease terminates February 28, 2004.
SCHEDULE 4.1
TO
ACQUISITION AGREEMENT
BY AND AMONG
SFBC INTERNATIONAL, INC.,
SOUTH FLORIDA KINETICS, INC.,
CLINICAL PHARMACOLOGY OF FLORIDA, INC.,
CLINICAL PHARMACOLOGY INTERNATIONAL, INC.,
XX. XXXXXXX XXXXXXXX,
XX. X. XXXXXX XXXXXXXX, AND
XX. XXXXX X. XXXXXX
AUGUST 1, 2003
LIST OF SFBC SUBSIDIARIES
SFBC New Drug Services, Inc.
SFBC Analytical Laboratories, Inc.
SFBC Ft. Xxxxx, Inc.
South Florida Kinetics, Inc.
SFBC Canada, Inc.
Anapharm, Inc.
Daedal Management & Investment Inc.
Danapharm Clinical Research Inc.
SynFine Research Inc.
49
SCHEDULE 4.2
TO
ACQUISITION AGREEMENT
BY AND AMONG
SFBC INTERNATIONAL, INC.,
SOUTH FLORIDA KINETICS, INC.,
CLINICAL PHARMACOLOGY OF FLORIDA, INC.,
CLINICAL PHARMACOLOGY INTERNATIONAL, INC.,
XX. XXXXXXX XXXXXXXX,
XX. X. XXXXXX XXXXXXXX, AND
XX. XXXXX X. XXXXXX
AUGUST 1, 2003
SFBC OUTSTANDING OPTIONS, WARRANTS, AND RIGHTS TO PURCHASE,
CONVERT, SUBSCRIBE OR EXCHANGE VOTING SECURITIES
1,105,283 outstanding stock options under the SFBC International, Inc.'s Second
Amended and Restated 1999 Stock Option Plan.
121,213 outstanding stock options issued to three consultants and employees of
SFBC International, Inc. not issued under the Second Amended and Restated 1999
Stock Option Plan.
55,520 outstanding options to purchase common stock and 62,500 options to
purchase warrants issued in connection with SFBC International, Inc.'s initial
Public Offering in 2000.
G:\SFBC\CPA Aquisition\Agreements\Schedule 4.2 to Acquisition Agreement.doc
50
SCHEDULE 4.5
TO
ACQUISITION AGREEMENT
BY AND AMONG
SFBC INTERNATIONAL, INC.,
SOUTH FLORIDA KINETICS, INC.,
CLINICAL PHARMACOLOGY OF FLORIDA, INC.,
CLINICAL PHARMACOLOGY INTERNATIONAL, INC.,
XX. XXXXXXX XXXXXXXX,
XX. X. XXXXXX XXXXXXXX, AND
XX. XXXXX X. XXXXXX
AUGUST 1, 2003
LIABILITIES AND OBLIGATIONS
SFBC incurred $1,060,607.45 (Canadian) of debt in connection with the
acquisition of Daedal Management & Investment, Inc.
On July 30, 2003, SFBC entered into an Amended and Restated Revolving Credit and
Security Agreement (the "Loan Agreement") expanding the term loan to $8,000,000.
Subsequent to March 31, 2003, SFBC has borrowed approximately $1,800,000 under
the Loan Agreement.
