EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Agreement is executed on June ___, 2004 and made as of June 1,
2004 (the "Effective Date"), among XXXXXX AND ASSOCIATES, LLC, a Florida limited
liability company ("Seller"), XXXX XXXXXX and XXXX XXXXXX, individual residents
of Florida (together the "Members" and together with Seller, the "Seller
Parties"), and MEDTECH MEDICAL STAFFING OF ORLANDO, INC., a Delaware corporation
("Buyer"). Capitalized terms used herein are defined in the text; an index of
such terms is attached to the end of this Agreement.
PREAMBLE
Seller is engaged in the business of making temporary and permanent
placements of medical and/or nursing personnel under the trade name "CurleyMed
Staffing Solutions" (the "Business"). Members own all of the issued and
outstanding equity interests of Seller. Seller desires to sell to Buyer, and
Buyer desires to purchase from Seller, substantially all of Seller's assets used
in connection with, or otherwise relating to, the Business, all upon the terms
and subject to the conditions set forth herein. Therefore, the parties agree as
follows with the intent to be legally bound.
AGREEMENT
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.01. Purchase and Sale of Assets. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, Seller shall sell,
convey, transfer, assign and deliver to Buyer, and Buyer shall purchase and
accept from Seller, all of Seller's rights, title and interest in and to the
assets, properties and business of Seller used in connection with the Business,
other than the Excluded Assets (collectively, the "Assets"), free and clear of
any Liens, including without limitation:
(a) real property leased in connection with the Business located
at 0000 Xxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxx, which serves as Seller's office, and
all other rights associated therewith (the "Leased Real Property");
(b) all fixed assets used in connection with the Business,
including without limitation all equipment, machinery, fixtures, tools,
vehicles, computer hardware, furniture and other personal property
(collectively, the "Equipment"), and all supplies, spare parts and warranties
relating to any of the Equipment;
(c) all patents, registered and unregistered trademarks, service
marks, logos, company and trade names (including without limitation "CurleyMed
Staffing Solutions" and
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"Registry"), fictional business names, webpages, domain names (including without
limitation "xxxxxxxxx.xxx" and "xxxxxxxxxxxxxxx.xxx", "xxxxxxxxxxxxxxxxx.xxx",
xxxxxxxxxxxxxxxx.xxx", "xxxxxxxxxxxxx.xxx", "xxxxxxxxxxxxxxxx.xxx",
"xxxxxxxxxxxxx.xxx" and "xxxxxxxxxxx.xxx") and registered and common law
copyrights used in connection with the Business, and all rights in and relating
to applications, certifications, registrations, renewals, extensions,
combinations, divisions and reissues of all applications, certificates or
registrations therefor, used in connection with the Business;
(d) all inventions, discoveries, techniques, processes, methods,
formulae, designs, computer software, programs, trade secrets, confidential or
proprietary information, know-how, enhancements, improvements, works of
authorship, technical information, ideas and other intellectual property used in
connection with the Business and all files, data, materials, manuals, programmer
notes, studies, summaries, design notes and other items and documentation
related thereto or associated therewith (together with the items listed in
subsection (c) above, the "Intellectual Property");
(e) all rights of Seller under all contracts, agreements, leases,
licenses, indentures, commitments, purchase orders and other legally binding
business arrangements, whether written, oral or implied, relating to the
Business or any of the Assets (the "Business Agreements");
(f) all permits, licenses, franchises, certificates,
authorizations, qualifications, registrations, consents and approvals obtained
from or issued by any governmental, quasi-governmental, judicial, public or
statutory instrumentality, authority, agency, bureau, body or entity of the
United States of America or any state, country, municipality or other public
subdivision located therein (each, a "Governmental Entity") and which are
necessary for the ownership or operation of the Business or any of the Assets
(collectively, the "Business Permits");
(g) all books, records, customer and employee lists, files,
ledgers, drawings, specifications and manuals relating to the Business or any of
the Assets, all advertising materials relating to the Business and all other
information relating to the Business or any of the Assets, regardless of the
form in which such information appears;
(h) cash on hand on or after the Effective Date (other than cash
related to accounts receivable collected on or after the Effective Date and
retained by Seller under paragraph 10 of Schedule 1.02) and cash equivalents,
deposits, investments and securities (including marketable securities and short
term investments) to the extent purchased on or after the Effective Date.
(i) accounts receivable of the Business arising from services
performed and products sold on or after the Effective Date, including accounts
related to services provided to customers that have not yet been billed and thus
may not be reflected on Seller's books as a receivable (the "Receivables"),
advance payments, prepaid items and expenses and all other claims, causes of
action, choses in action and rights of recovery and setoff relating to the
Business or any of the Assets and arising on or after the Effective Date.
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(j) all goodwill of the Business or associated with any of the
Assets;
(k) Seller's current health insurance plan; and
(l) all other assets of Seller, tangible or intangible, which are
used in connection with the Business.
1.02. Excluded Assets. Notwithstanding any other provision hereof, the
Assets do not include the items listed on Schedule 1.02 (the "Excluded Assets").
1.03. Assumption of Liabilities. At the Closing, Buyer will assume and
become liable only for the liabilities listed on Schedule 1.03 (collectively,
the "Assumed Liabilities"). Except for the Assumed Liabilities, Buyer shall not
assume or become liable for any liabilities of Seller, whether or not relating
to the Assets, the Business or the Excluded Assets (collectively, the "Excluded
Liabilities").
1.04. Purchase Price. In consideration for the purchase of the Assets,
Buyer agrees to pay the following purchase price (the "Purchase Price"):
(a) At the Closing, Buyer shall pay to Seller $200,000 in
immediately available funds.
(b) At the Closing, Buyer shall pay to Seller $525,000 by
delivery to Seller of a Promissory Note of Buyer in substantially the form
attached hereto as Exhibit A (the "Note").
(c) No later than fifteen (15) days after the Closing Date, Buyer
will cause its parent, World Health Alternatives, Inc. ("Parent"), to issue to
Seller 662,025 shares of Parent's Common Stock.
(d) No later than twenty-one (21) days after the Closing Date,
Buyer shall pay to Seller $800,000 in immediately available funds.
(e) Following the Closing Date, Buyer shall pay to Seller the
Earn-Out Amounts, if any, as determined in accordance with the terms set forth
on Schedule 1.04(e).
1.05. Assignment of Value. Buyer and Seller will use their commercially
reasonable efforts to comply with the applicable requirements of the Internal
Revenue Code of 1986 and the regulations promulgated thereunder, as amended (the
"Code"), by preparing a schedule to be executed at the Closing reflecting the
allocation of the Purchase Price to the respective Assets, which allocation will
be reflected on IRS Form 8594 (Asset Acquisition Statement under Section 1060)
and will be used by them in preparing their respective income tax returns;
provided, that any failure to agree on such allocation will not relieve either
party of its obligations hereunder.
1.06. Non-Assignability of Purchased Assets. To the extent that any
assets which would otherwise be an Asset, or any claim, right or benefit arising
thereunder or resulting
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therefrom, is not capable of being sold, conveyed, assigned, transferred or
delivered without any approval, consent, license, permit, order, ratification,
waiver or authorization ("Consent") of any individual, firm, corporation,
partnership, company, limited liability company, trust, joint venture,
association or other entity or Governmental Entity ("Person") other than the
Buyer or the Seller Parties, and such Consent of such Person is not obtained
prior to the Closing or if such sale, conveyance, assignment, transfer or
delivery would constitute a breach or termination right thereof or violation of
any Governmental Rule or Governmental Order, this Agreement shall not constitute
a sale, conveyance, assignment, transfer or delivery thereof. Any such assets
shall be "Non-Transferable Assets". The parties will cooperate, at the Seller
Parties' expense, to effect a mutually agreeable arrangement under which Buyer
would obtain the benefits and assume the obligations with respect to any such
Non-Transferable Asset in accordance with this Agreement. Buyer and Seller
Parties will use their commercially reasonable efforts to obtain any such
Consents that Buyer deems necessary as promptly as practicable; provided,
however, that the Seller Parties shall bear the cost of all reasonable fees and
expenses required to be paid in connection with obtaining all such Consents
following reasonable advance notice thereof. As soon as practicable after such
Consents have been received, or are no longer required, Seller shall sell,
convey, assign, transfer or deliver such Non-Transferable Assets to Buyer for no
additional consideration.
1.07. Sales Taxes. Seller Parties shall pay and promptly discharge when
due any and all sales or other transfer Taxes that may become payable by reason
of or in connection with the purchase and sale of the Assets as contemplated by
this Agreement. Buyer shall provide Seller Parties with any necessary sales tax
exemption/resale certificates.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES
Seller Parties hereby jointly and severally represent and warrant to
Buyer as of the date hereof and as of the Closing Date, except as specifically
set forth in the Disclosure Letter delivered separately by Seller Parties to
Buyer and dated the date hereof (referring to the appropriate section numbers)
(the "Disclosure Letter"), as follows:
2.01. Organization and Qualification. Seller is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Florida. Seller is duly qualified to do business as a foreign
business entity and is in good standing in all jurisdictions in which the
ownership of its properties or the nature of its business makes such
qualification necessary, except to the extent that the failure to be so
qualified, individually or in the aggregate, has not resulted in and is not
reasonably likely to result in a Material Adverse Effect, and all of such
jurisdictions are listed in Section 2.01 of the Disclosure Letter. As used in
this Agreement, "Material Adverse Effect" means a material adverse effect on (a)
the business, assets, operations, financial condition or prospects of the
Business or (b) the ability of any Seller Party to perform its obligations under
the Transaction Documents. Except as otherwise set forth on Section 2.01 of the
Disclosure Letter, Seller does not have any subsidiaries and does not otherwise
own any shares of the capital stock or any other interests in, directly or
indirectly, any other corporation, partnership, limited liability company,
association, joint venture or other
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business entity.
2.02. Power and Authority. Seller has the power and authority to own
its properties and assets, to conduct its business as presently conducted and to
execute, deliver and perform the Transaction Documents.
2.03. Execution and Enforceability. This Agreement has been, and on the
Closing Date the other Transaction Documents to which it is a party will be,
duly authorized by all necessary action on the part of each Seller Party. This
Agreement has been, and on the Closing Date the other Transaction Documents to
which it is a party will be, validly executed and delivered by each Seller Party
and constitute (or upon such execution and delivery will constitute) legal,
valid and binding obligations of each Seller Party enforceable against such
Seller Party in accordance with their respective terms.
2.04. No Breach, Default, Violation or Consent. Except as set forth in
Section 2.04 of the Disclosure Letter, the execution, delivery and performance
by Seller Parties of the Transaction Documents do not and will not:
(a) violate Seller's certificate of organization, limited
liability company agreement or other organization documents;
(b) breach or result in a default (or an event which, with the
giving of notice or the passage of time, or both, would constitute a default)
under, require any Consent under, result in the creation of any Lien on the
Assets under or give to others any rights of termination, acceleration,
suspension, revocation, cancellation or amendment of any Business Agreement or
Business Permit;
(c) breach or otherwise violate any order, writ, judgment,
injunction or decree issued by any Governmental Entity (each a "Governmental
Order") which names a Seller Party or is directed to a Seller Party, the
Business or any of the Assets;
(d) violate any law, rule, statute, legislation, regulation,
ordinance or code of any Governmental Entity (each a "Governmental Rule"); or
(e) require any Consent, authorization, approval, exemption or
other action by, or any filing, registration or qualification with, any Person,
including without limitation any Governmental Entity.
2.05. Financial Matters.
(a) The books of account and other financial records of Seller,
all of which have been made available to Buyer, are correct and complete in all
material respects, represent actual, bona fide transactions and have been
maintained in accordance with sound business and accounting practices. Each
transaction is properly and accurately recorded in the books and records of
Seller, and each document upon which entries in Seller's books and records are
based is correct and complete in all material respects. Seller maintains an
adequate system of internal
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accounting controls and Seller does not engage in or maintain any off-the-books
accounts or transactions.
(b) Attached to Section 2.05(b) of the Disclosure Letter are correct
and complete copies of (i) Seller's consolidated balance sheets and statements
of income, retained earnings and cash flows as of and for its fiscal years ended
December 31, 2001, December 31, 2002 and December 31, 2003, including the
footnotes thereto, all as compiled by Xxxxx Xxxxxxxxxx, and (ii) Seller's
unaudited interim consolidated balance sheets and statements of income, retained
earnings and cash flows as of and for the three months ended March 31, 2004 (the
"Current Financial Statements" and, together with the items described in clause
(i) above, the "Financial Statements"). The Financial Statements fairly present
the financial condition of Seller as at the end of the periods covered thereby
and the results of its operations and the changes in its financial position for
the periods covered thereby, and are consistent with Seller's books and records
throughout the periods covered thereby subject, in the case of the Current
Financial Statements, to year-end audit adjustments (which will not be material
except as otherwise disclosed in Section 2.05(b) of the Disclosure Letter) and
the lack of footnotes and other presentation items.
(c) Except as and to the extent otherwise disclosed in the Current
Financial Statements or in Section 2.05(c) of the Disclosure Letter, Seller has
no liabilities of any kind, whether direct or indirect, fixed or contingent or
otherwise, other than (i) executory obligations under Business Agreements which
are not required to be set forth in the Current Financial Statements in
accordance with GAAP and (ii) liabilities incurred in the ordinary course of
business since March 31, 2004 (the "Financial Statement Date"). As used in this
Agreement, an action taken by a Person will be deemed to have been taken in the
"ordinary course of business" of such Person only if that action (A) is
consistent in nature, scope and magnitude with the past practices of such Person
and is taken in the ordinary course of the normal, day-to-day operations of such
Person, (B) does not require authorization by the board of directors or
shareholders of such Person (or by any Person or group of Persons exercising
similar authority) and does not require any other separate or special
authorization of any nature and (C) is similar in nature, scope and magnitude to
actions customarily taken, without any separate or special authorization, in the
ordinary course of the normal, day-to-day operations of other Persons that are
in the same line of business as such Person.
(d) Seller is not insolvent, and will not be rendered insolvent by
the consummation of the transactions contemplated by the Transaction Documents
2.06. Tax Matters.
(a) Seller has, duly and timely filed all federal, state and local
(United States and all foreign jurisdictions) tax returns required to be filed
by it ("Tax Returns") (unless a valid extension therefore has been granted).
Each such Tax Return has been prepared in compliance with applicable
Governmental Rules, and, except as set forth on Section 2.06(a) of the
Disclosure Letter, all such Tax Returns are true, complete and correct in all
material respects. Seller has duly and timely paid or made adequate provision
for the payment of all taxes, assessments and other governmental charges which
have been incurred by Seller as set forth in the Tax Returns or are
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otherwise due and payable by Seller with respect to periods ending on or prior
to the Closing Date. Seller has withheld and paid all taxes to the appropriate
Governmental Entities required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contract, creditor,
stockholder or other third party. All sales taxes required to be collected and
remitted by Seller with respect to periods ending on or prior to the Closing
Date have been (or will be) properly collected and remitted. All necessary sales
tax exemption certificates have been obtained by Seller and all such
certificates have been properly completed and maintained. No Tax Return is under
audit or examination by any taxing authority and there are no applications or
agreements for the extension of the time for the filing of any Tax Return or for
the assessment of any amounts of tax nor any consent to an extension of the
period of limitations applicable to such assessment or to the collection of any
tax. No issue or issues have been raised in connection with any prior inquiry
into, or audit of, any tax filings of Seller which may reasonably be expected to
be raised in the future by such taxing authorities and, to Seller Parties'
knowledge, no facts exist or have existed which would constitute grounds for the
assessment of any further tax liabilities, which individually or in the
aggregate are material. Seller has made available to the Buyer true and complete
copies of all federal, state and local (United States and foreign) income Tax
Returns which it has filed for each of the past three (3) fiscal years together
with copies of all schedules, work papers, elections, tax depreciation schedules
and other documents which were used in the preparation of each such Tax Return.
There are no liens for taxes upon the assets of Seller except for liens for
taxes not yet due.
(b) There is no tax sharing agreement, tax allocation agreement, tax
indemnity obligation or similar written or unwritten agreement, arrangement,
understanding or practice with respect to taxes (including any advance pricing
agreement, closing agreement or other arrangement relating to taxes) that will
require any payment by Seller. Seller (A) has not been a member of an 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) and (B) has no
liability for taxes of any person other than Seller under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor by contract or otherwise. Seller 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.
(c) As used herein, "taxes" means all net income, gross income, gross
receipts, sales, use, transfer, franchise, profits, withholding, payroll,
employment, excise, severance, property or windfall profits taxes, or other
taxes of any kind whatsoever, together with any interest, penalties or
additional amounts imposed by any taxing authority (domestic or foreign).
2.07. Litigation. Except as otherwise disclosed in Section 2.07 of the
Disclosure Letter, there is no pending or, to Seller Parties' knowledge,
threatened investigation, action, claim, demand or proceeding by or before any
Governmental Entity, mediator or arbitrator (a) against Seller, the Business or
any of the Assets, (b) involving any of Seller's current or former employees,
directors or officers, including without limitation outside employees (as
defined in Section 2.18(a)) and other staffing personnel in their capacity as
such, or (c) against Members, and the Seller Parties have no knowledge of any
reasonable basis for any such investigation,
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action, claim, demand or proceeding.
2.08. Absence of Certain Changes and Events. Except as otherwise disclosed
in Section 2.08 of the Disclosure Letter, since the Financial Statement Date:
(a) Seller has not incurred any material obligation or liability
except for normal trade obligations incurred in the ordinary course of business;
(b) no casualty, loss or damage has occurred with respect to any of
the Assets, whether or not covered by insurance;
(c) Seller has not sold, transferred, leased, licensed, pledged,
mortgaged or otherwise disposed of any of its properties or assets or any
interest therein, or agreed to do any of the foregoing;
(d) Seller has not written off as uncollectible any of the
Receivables, or written down the value of any of the Assets, except in each case
in the ordinary course of business and at a rate no greater than during the
12-month period ending on the Financial Statement Date;
(e) Seller has not waived or released any of its rights with respect
to the Business or the Assets or permitted any of such rights to lapse;
(f) no executive officer, employee or independent contractor of
Seller has left, or to Seller Parties' knowledge intends to leave, his or her
employment or service with Seller;
(g) Seller has not granted, and is not committed to grant, any
salary, wage or employee benefits increases to any of its employees or
independent contractors;
(h) Seller has not made, or committed to make, any capital
expenditures;
(i) Seller has not introduced any material change with respect to the
Business, including without limitation with respect to the products or services
it sells, the areas in which such products or services are sold, its methods of
providing such products or services, its marketing techniques or its accounting
methods;
(j) there has been no payment, discharge or other satisfaction of any
liabilities of Seller, whether direct or indirect, fixed or contingent or
otherwise, other than the satisfaction, in the ordinary course of business, of
liabilities reflected on the Current Financial Statements or incurred in the
ordinary course of business since the Financial Statement Date;
(k) no event has occurred and no condition exists which, individually
or in the aggregate, has had, or is likely to have, a Material Adverse Effect;
and
(l) none of the Seller Parties has entered into any agreement (in
writing or otherwise) to take any actions referred to in subsections (a) through
(k) above.
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2.09. Customers and Suppliers. Section 2.09 of the Disclosure Letter sets
forth a correct and complete list of each of the customers and suppliers of
Seller during its fiscal year ended December 31, 2003 and during the three
months ending on the Financial Statement Date, and indicated with respect to
each the name and address, dollar volume and nature of the relationship. Seller
is not required to provide any material bonding or other financial security
arrangements in connection with any of its transactions with any such customer.
Since the Financial Statement Date, no such customer or supplier has terminated
its relationship with, or materially reduced its purchases from, or supplies to,
Seller, and Seller Parties have no knowledge that any such customer or supplier
intends to terminate its relationship with, or materially reduce its purchases
from, or supplies to, Seller.
2.10. Constituent Documents and Governmental Rules.
(a) Seller is in compliance with (a) its charter and bylaws (correct
and complete copies of which have been delivered to Buyer) and (b) all
Governmental Rules applicable to Seller, the Business or the Assets.
(b) Members are the record and beneficial owner of all of the capital
stock of Seller, free and clear of any Liens. There are no options, warrants,
calls, preemptive rights, rights of first refusal or other rights, commitments
or agreements to which any Member a party or by which he or she is bound
obligating Seller to directly or indirectly issue, deliver, sell, repurchase,
redeem or grant any of the capital stock of Seller.
2.11. Governmental Orders. Section 2.11 of the Disclosure Letter sets forth
a correct and complete list of all Governmental Orders which (a) name Seller or
are directed to Seller, the Business or any of the Assets or (b) name Member or
any employee, director or officer of Seller and relate to Seller, the Business
or any of the Assets, together with the Governmental Entity who issued the same
and the subject matter thereof. Seller Parties are in full compliance with all
such Governmental Orders.
2.12. Business Permits. Section 2.12 of the Disclosure Letter sets forth a
correct and complete list of all Business Permits and indicates for each whether
the same are transferable to Buyer and, if so, whether Consent to such transfer
is required. Such Business Permits have been validly acquired, are in full force
and effect and represent all governmental permits, licenses, franchises,
certificates, authorizations, consents and approvals necessary under applicable
Governmental Rules for Buyer to conduct the Business as currently conducted and
to own, occupy or use the Assets. No violations have been recorded against any
such Business Permit, no citation, notice or warning has been issued by any
Governmental Entity with respect to any such Business Permit, no investigation
or hearing has been held by or before any Governmental Entity with respect to
any such Business Permit, Seller has not received any notice from any
Governmental Entity that it intends to cancel, revoke, terminate, suspend or not
renew any such Business Permit and Seller has no knowledge of any basis for any
of the foregoing. Seller is in compliance with all such Business Permits, except
for such non-compliance as, individually or in the aggregate, is not likely to
have a Material Adverse Effect.
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2.13. Real Property.
(a) Section 2.13(a) of the Disclosure Letter sets forth a correct and
complete list of all Leased Real Property and (ii) all leases, subleases and
other material agreements or rights pursuant to which Seller has the right to
occupy or use any Leased Real Property, together with the names of the lessors
or other grantors thereunder, the location of the property covered thereby, the
annual rental or other consideration payable thereunder and the duration
thereof, including any renewal options. All such leases are in full force and
effect, are valid and effective in accordance with their respective terms, and
there is not under any such leases, any existing default or event of default (or
event which with notice or lapse of time, or both, would constitute a default).
Seller has a valid leasehold interest in the Leased Real Property, free and
clear of Liens, and enjoys peaceful and undisturbed possession thereof.
(b) Except as otherwise disclosed on Section 2.13(b) of the
Disclosure Letter, all buildings and other improvements located on the Leased
Real Property (including without limitation all water, sewer, gas, electrical,
information technology, communications and HVAC systems servicing the same) are
in good repair and operating condition and are suitable for the purposes for
which they are used.
(c) All buildings and other improvements located on the Leased Real
Property, and the use of the Leased Real Property by Seller and all Persons
claiming under Seller, comply in all material respects with all Governmental
Rules relating to zoning and land use and with all easements, covenants and
other restrictions applicable to the Leased Real Property.
(d) The Leased Real Property: (i) is adequately serviced by all
utilities necessary for Seller to conduct its business as currently conducted
thereon; (ii) has adequate means of ingress and egress, either directly or by
means of perpetual easements or rights-of-way which run with the Leased Real
Property; (iii) has adequate parking that is sufficient to meet the needs of
Seller's employees and business invitees and to comply with applicable
Governmental Rules; and (iv) is not located in whole or in part within an area
identified as a flood hazard area by any Governmental Entity.
2.14. Personal Property.
(a) Section 2.14 of the Disclosure Letter sets forth a correct and
complete list of all leases and other agreements pursuant to which Seller leases
any of the Equipment. Except as otherwise disclosed in Section 2.14 of the
Disclosure Letter, the Equipment is in good repair and operating condition and
is suitable for the purposes for which it is used. The Equipment constitutes all
equipment, machinery, fixtures, vehicles, computer hardware and furniture
necessary to conduct the Business as currently conducted.
(b) Seller has no inventory.
2.15. Intellectual Property.
(a) Section 2.15 of the Disclosure Letter sets forth a correct and
complete list
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of (a) all patents, registered and unregistered trademarks,
service marks, logos, company and trade names, domain names and registered and
unregistered copyrights, and all applications therefor, included in the
Intellectual Property, (b) all licenses or other agreements pursuant to
which any Person has the right to use any Intellectual Property owned by Seller
and (c) all licenses or other agreements pursuant to which Seller has the right
to use any Intellectual Property owned by others (excluding "shrink-wrapped"
software applications that are generally available to the public). Seller has
the lawful right, title and interest to each item of Intellectual Property
purported to be owned by it, free and clear of any Liens. Seller has the lawful
right to use all of the Intellectual Property, and no such use infringes upon
the lawful rights of any other Person. To Seller Parties' knowledge, no Person
is using any Intellectual Property in a manner which infringes upon the lawful
rights of Seller. The Intellectual Property constitutes all intellectual
property necessary to conduct the Business as currently conducted.
(b) Except as set forth in Section 2.15 of the Disclosure Letter, all
employees and independent contractors (present and former) of Seller have
executed valid and enforceable confidentiality agreements or employee
proprietary information agreements. No present or former employee, officer or
director of Seller, or agent or outside contractor of Seller, holds any right,
title or interest, directly or indirectly, in whole or in part, in or to any
Intellectual Property. To the Seller Parties' knowledge, (i) none of the
Intellectual Property has been used, disclosed or appropriated to the detriment
of Seller for the benefit of any Person other than Seller, and (ii) no employee,
independent contractor or agent of Seller has misappropriated any trade secrets
or other confidential information of any other Person in the course of the
performance of his or her duties as an employee, independent contractor or agent
of Seller. Any programs, modifications, enhancements or other improvements,
inventions, discoveries, methods or works of authorship created in connection
with any of the Assets ("Works") that were created by employees of Seller were
made in the regular course of such employees' employment relationship with
Seller using Seller's facilities and resources and, as such, constitute works
made for hire or were created under explicit contracts assigning intellectual
property rights to Seller. Each such employee who has created Works or any such
employee who in the regular course of his or her employment with Seller may
create Works have signed an assignment or similar agreement with Seller
confirming Seller's ownership or, in the alternate, transferring and assigning
to Seller all right, title and interest in and to such programs, modifications,
enhancements or other inventions including copyright and other intellectual
property rights therein.
2.16. Title Matters.
(a) Except as set forth in Section 2.16 of the Disclosure Letter,
Seller (i) owns and has good and marketable title to all Assets purported to be
owned by it and (ii) has valid and subsisting good leasehold interests to all
Assets purported to be leased or licensed by it, in each case, free and clear of
all liens, claims, security interests, pledges, charges, options, rights of
first refusal, preemptive rights, mortgages, hypothecations, prior assignments,
use restrictions, imperfections in title or other encumbrances of any nature
whatsoever (collectively, "Liens"). On the Closing Date, Seller will transfer to
the Buyer title to the Assets, free and clear of all Liens.
(b) The Assets constitute all of the assets that are necessary to
operate the
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Business in the manner presently operated by Seller.
2.17. Pension and Welfare Plans.
(a) Section 2.17 of the Disclosure Letter sets forth a correct and
complete list of all Pension Plans and Welfare Plans (collectively, "Plans").
Seller does not have any plan or commitment to establish any new Plans or to
modify any existing Plans.
(b) Except as set forth on Section 2.17 of the Disclosure Letter, (i)
each Plan and each related trust has been established, maintained, administered
and funded in all material respects in compliance with all applicable
Governmental Rules; (ii) no transaction or omission has occurred with respect to
any Plan or related trust that could subject Seller to any tax or penalty under
applicable Governmental Rules; (iii) none of the Plans or related trusts have
any unfunded liabilities; and (iv) none of the Plans (A) is a "multiemployer
plan" (as defined in Section 3(37) of ERISA), (B) is a "defined benefit plan"
(as defined in Section 3(35) of ERISA), (C) is subject to the minimum funding
requirements of Section 302 of ERISA or Section 412 of the Code or (D) provides
medical, health, life insurance or other employee benefits to any Person upon
his or her retirement or termination of employment for any reason, except as may
be required by statute. Seller has never represented, promised or contracted
(whether in oral or written form) to any Person (either individually or as a
group) that such Person(s) would be provided with medical, health, life
insurance or other employee benefits upon their retirement or termination of
employment, except to the extent required by applicable Governmental Rules.
(c) There are no actions, suits, claims, investigations or other
proceedings pending or, to the Seller Parties' knowledge, threatened against any
Plan or related trust or any fiduciary thereof (other than routine claims for
benefits). There are no outstanding Governmental Orders which name any Plan or
related trust or any fiduciary thereof or are directed to any Plan or related
trust, any fiduciary thereof or any assets thereof.
(d) Each Plan and related trust that is intended to be tax-qualified
meets the requirements of a tax-qualified plan or tax exempt trust under Section
401(a) and Section 501(a), respectively, of the Code, has received a favorable
determination letter from the Internal Revenue Service ("IRS") as to the
qualification of such Plan and the tax-exempt status of the related trust (or
has filed with the IRS a request for such a determination letter within the
applicable remedial amendment period or is a standardized plan for which the
prototype plan sponsor has received a favorable determination letter from the
IRS as to the qualification of the standardized plan), and nothing has occurred
since the date of such determination letter that could reasonably be expected to
adversely affect the qualification of such Plan or the tax-exempt status of the
related trusts.
(e) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated herein, will (either alone or upon
the occurrence of any additional or subsequent events) constitute an event under
any Plan, trust, employment agreement or other agreement to which Seller is a
party or by which the Assets are bound that will result in any payment (whether
of severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits with
respect
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to any Person.
As used in this Agreement the following terms have the following meanings:
"ERISA" means the Employee Retirement Income Security Act of 1974 and
the regulations promulgated thereunder, as amended.
"ERISA Affiliate" means any trade or business which, together with
Seller, is treated as a single employer under Section 4001(b)(1) of ERISA or
Sections 414(b), (c), (m) or (o) of the Code.
"Pension Plan" means any "employee pension benefit plan" as defined
in Section 3(2) of ERISA which is maintained for past or present employees of
Seller or any ERISA Affiliate or with respect to which Seller or any ERISA
Affiliate has any current or potential liability, including without limitation
any withdrawal liability.
"Welfare Plan" means (i) any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA which is maintained for past or present
employees of Seller or any ERISA Affiliate or with respect to which Seller or
any ERISA Affiliate has any current or potential liability and (ii) any other
plan or program maintained for past or present employees of Seller, including
without any limitation health insurance plan, life insurance plan, option plan,
bonus plan, savings plan or severance plan.
2.18. Personnel Matters.
(a) Section 2.18(a) of the Disclosure Letter sets forth a correct and
complete list of (i) all directors and executive officers of Seller, (ii) all
other employees of or consultants or independent contractors to Seller related
to the Business, including "outside employees" (i.e., those employees who
provide services directly at the customers' site), (iii) the date of hire and
current job title or relationship to Seller of each such Person described in
clauses (i) and (ii) above, (iv) the amount of compensation (including bonuses
and commissions) paid to date for each such Person during Seller's current
fiscal year, (v) the annual compensation (including bonus and commissions) for
each such Person for Seller's entire current fiscal year and (vi) any employee
benefits or perquisites available to any such Person that are not generally
available to employees of Seller. To Seller Parties' knowledge, except as set
forth on Section 2.18 of the Disclosure Letter, no Persons identified pursuant
to the previous sentence has threatened to terminate his or her employment with
Seller.
(b) Except as otherwise disclosed in Section 2.18(b) of the
Disclosure Letter, Seller is not a party to any employment, consulting,
non-competition, confidentiality or similar agreement, written or oral, with any
Person described in clauses (i) and (ii) of paragraph (a) above.
(c) Except as otherwise disclosed in Section 2.18(c) of the
Disclosure Letter, (i) no employees of Seller are represented by any labor union
or similar organization, (ii) Seller is not party to any collective bargaining
or similar agreement covering any of its employees and
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(iii) no labor union or similar organization or group of employees has made a
demand for recognition, filed a petition seeking a representation proceeding,
given Seller notice of any intention to hold an election of a collective
bargaining representative or engaged in any organizing activities at any time
during the past three years.
(d) Except as otherwise disclosed in Section 2.18(d) of the
Disclosure Letter, (i) no strike, work stoppage, contract dispute or other labor
disturbance involving any employees of Seller currently exists or, to Seller
Parties' knowledge, is threatened and (ii) no investigation, action, claim,
demand or proceeding by or before any Governmental Entity, mediator or
arbitrator which relates to allegedly unfair or discriminatory employment or
labor practices by Seller or the violation by Seller of any Governmental Rule
relating to employment or labor practices is pending or, to Seller Parties'
knowledge, threatened.
(e) Seller (i) is in compliance in all material respects with all
applicable Governmental Rules respecting employment, employment practices, terms
and conditions of employment and wages and hours, in each case, with respect to
any current, former or retired employees or independent contractors of Seller,
(ii) has withheld all amounts required by law or agreement to be withheld from
the wages, salaries or other payments to such Persons, (iii) is not liable for
any arrears of wages or other taxes or any penalty for failure to comply with
any of the foregoing and (iv) is not liable for any payment to any trust or
other fund or to any Governmental Entity with respect to employment insurance
benefits or other benefits or obligations for such Persons (other than routine
payments to be made in the normal course of business and consistent with past
practices).
2.19. Insurance. Section 2.19 of the Disclosure Letter sets forth a correct
and complete list of all insurance policies of which Seller is the owner,
insured, loss payee or beneficiary and which relate to the Business or any of
the Assets and indicates for each such policy any pending claims thereunder.
Except as otherwise disclosed in Section 2.19 of the Disclosure Letter: (a)
there has been no failure to give any notice or present any material claim under
any such policy in a timely fashion or as otherwise required by such policy; (b)
all premiums under such policies which are due and payable have been paid in
full; (c) no such policy provides for retrospective or retroactive premium
adjustments; (d) Seller has not received notice of any material increase in the
premium under, cancellation or non-renewal of or disallowance of any claim under
any such policy; (e) Seller has not been refused any insurance, nor has its
coverage been limited by any carrier; and (f) since January 1, 1998, Seller has
maintained, or been the beneficiary of, general liability and professional
liability policies reasonable, in both scope and amount, in light of the risks
attendant to the Business and which provide coverage comparable to coverage
customarily maintained by others in similar lines of business, and such policies
have been "occurrence" policies and not "claims made" policies. Seller has
provided to Buyer a correct and complete loss run for each such policy during
the past five (5) years.
2.20. Business Agreements. Section 2.20 of the Disclosure Letter sets forth
a correct and complete list of all Business Agreements. The Seller Parties have
delivered to the Buyer accurate and complete copies of each Business Agreement,
and each such Business Agreement (i) is in full force and effect, (ii)
constitutes a legal, valid and binding obligation of Seller and (iii) is
enforceable against Seller and, to the best of the Seller Parties' knowledge,
the other
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parties thereto, in accordance with its terms. Seller is in compliance
with each such Business Agreement in all material respects. To the Seller
Parties' knowledge, all other parties to the such Business Agreements are in
compliance with the terms thereof in all material respects. Except as otherwise
disclosed in Section 2.20 of the Disclosure Letter: (i) each Business Agreement
may be assigned to the Buyer without the consent of any other Person; (ii)
neither Seller nor, to the Seller Parties'
knowledge, any other Person thereto has, violated or breached, or declared or
committed any default under, any Business Agreement; (iii) no event has
occurred, and no circumstance or condition exists, that might (with or without
notice or lapse of time) (A) result in a violation or breach of any of the
provisions of any Business Agreement by Seller nor, to the knowledge of the
Seller Parties', any other Person thereto, (B) give to Seller nor, to the
knowledge of the Seller Parties, any other Person thereto the right to declare
or exercise any remedy under any Business Agreement, (C) give to Seller, nor to
the knowledge of the Seller Parties, any other Person thereto the right to
accelerate the maturity of performance of any Business Agreement, or (D) give to
Seller nor, to the knowledge of the Seller Parties, any other Person thereto the
right to cancel, terminate or modify any Business Agreement; (iv) none of the
Seller Parties has received any notice or other communication (in writing or
otherwise) regarding any actual, alleged, possible or potential violation or
breach of, or default under, any Business Agreement; and (v) none of the Seller
Parties has waived any material right under any Business Agreement. There is no
agreement (noncompete or otherwise) or Governmental Order to which any of the
Seller Parties or any of their officers, directors or employees is a party or
otherwise binding upon any of the Seller Parties or any of their officers,
directors or employees that has or reasonably could be expected to have an
effect of prohibiting or impairing (i) the acquisition of the Assets by the
Buyer or (ii) the performance of any of the Seller Parties' obligations under
the Transaction Agreements.
2.21. Transactions with Related Parties. Except as otherwise disclosed in
Section 2.21 of the Disclosure Letter: (a) none of the customers, suppliers,
distributors or sales representatives of the Business are Related Parties; (b)
none of the Assets are owned or used by or leased to any Related Parties; (c) no
Related Party is a party to any Business Agreement; and (d) no Related Party
provides any legal, accounting or other services to Seller.
As used in this Agreement the following terms have the following meanings:
"Affiliate" of a Person means any other Person who controls, is
controlled by or is under common control with such Person, and "control" means,
with respect to any Person, the direct or indirect ability to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Related Party" means (i) any Affiliate of Seller, (ii) any director,
officer or equity holder of Seller or of any Affiliate of Seller, (iii) with
respect to any Person described above who is a natural person, any spouse and
any relative (by blood, adoption or marriage) within the second degree of
consanguinity of such Person and (iv) any Affiliate of any Person described in
clause (ii) above.
2.22. Brokers. No Seller Party has employed or retained, nor has any
liability to, any broker, agent or finder on account of this Agreement or any of
the other Transaction Documents
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or the transactions contemplated hereby or thereby. Seller Parties will be
solely liable for all amounts payable to any such broker, agent or finder and
all such amounts are Excluded Liabilities.
2.23. Delivery of Documents; Accurate Disclosure. Seller has previously
delivered to Buyer correct and complete copies of each Business Permit, each
Business Agreement listed in Section 2.13 through Section 2.20 of the Disclosure
Letter and each additional agreement, document and instrument which Buyer or any
of its representatives has requested in writing. None of the information
furnished by any Seller Party to Buyer or any of its representatives in
connection with this Agreement and the other Transaction Documents, and none of
the representations and warranties of Seller Parties set forth herein, in any
other Transaction Document or in any certificate delivered in connection
herewith or therewith, (a) is false or misleading in any material respect, (b)
contains any untrue statement of a material fact or (c) omits any statement of
material fact necessary to make the same not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller Parties as of the date
hereof and as of the Closing Date as follows:
3.01. Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
3.02. Power and Authority. Buyer has the corporate power and authority
to own its properties and assets, to conduct its business as presently conducted
and to execute, deliver and perform the Transaction Documents to which it is a
party.
3.03. Execution and Enforceability. This Agreement has been, and on the
Closing Date the other Transaction Documents to which Buyer is a party will be,
duly authorized by all necessary action on the part of Buyer. This Agreement has
been, and on the Closing Date the other Transaction Documents to which Buyer is
a party will be, duly and validly executed and delivered by Buyer and constitute
(or upon such execution and delivery will constitute) legal, valid and binding
obligations of Buyer enforceable against Buyer in accordance with their
respective terms.
3.04. No Breach, Default, Violation or Consent. The execution, delivery
and performance by Buyer of the Transaction Documents to which it is a party do
not and will not:
(a) violate Buyer's charter or bylaws;
(b) breach or result in a default (or an event which, with the
giving of notice or the passage of time, or both, would constitute a default)
under, require any Consent under, result in the creation of any Lien on any
assets of Buyer under or give to others any rights of termination, acceleration,
suspension, revocation, cancellation or amendment of any material
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agreement to which Buyer is a party or by which Buyer or any of its assets is
bound;
(c) breach or otherwise violate any Governmental Order which
names Buyer or is directed to Buyer or any of its assets;
(d) violate any Governmental Rule; or
(e) require any Consent, authorization, approval, exemption or
other action by any Person;
except in the case of clauses (b) through (e) above, for such matters as would
not, individually or in the aggregate, be likely to have a material adverse
effect on Buyer's ability to perform its obligations under the Transaction
Documents.
3.05. Brokers. Except for Crusader Investments, LLC, Buyer has not
employed or retained, and has no liability to, any broker, agent or finder on
account of this Agreement or any of the other Transaction Documents or the
transactions contemplated hereby or thereby. Buyer will be solely liable for all
amounts payable to Crusader Investments, LLC.
ARTICLE IV
SECURITIES REPRESENTATIONS AND COVENANTS
4.01. Access to Information. Seller recognizes that Parent has made
available to it the opportunity to examine such documents from Parent and to ask
questions of, and receive full answers from, Parent concerning, among other
things, Parent, its financial condition, its management, its prior activities
and any other information which Seller considers relevant or appropriate in
connection with entering into this Agreement. Seller further represents that the
oral information provided by Parent's and Buyer's management, if any, has been
consistent with the written information provided.
4.02. Risks of Investment. Seller acknowledges and understands that the
terms of this Agreement and the transactions contemplated hereby have not been
reviewed by the Securities Exchange Commission ("SEC") or by any state
securities authorities. Seller understands that the Shares are characterized as
"Restricted Securities" under the Securities Act of 1933, as amended (the
"Securities Act") inasmuch as they are being acquired from Parent in a
transaction not involving a public offering and that under the Securities Act
and applicable regulations thereunder such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this connection, Seller represents that Seller is familiar with Rule 144 of the
SEC as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act. Seller understands that Parent is under no
obligation to register any of the Restricted Securities.
4.03. Investment Experience. Seller understands that the acquisition of
the Shares pursuant to this Agreement involves substantial risk. Seller
acknowledges that it can bear the economic risk of its investment in the Shares,
and has such knowledge and experience in
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financial or business matters that Seller is capable of evaluating the merits
and risks of this investment in the Shares and protecting its own interests in
connection with this investment. Seller hereby represents that he is an
"accredited investor" as such term is defined under paragraph (a) of Rule 501 of
Regulation D promulgated under the Securities Act.
4.04. Investment Intent. Seller is receiving the Shares for investment
for its own account only and not with a view to, or for resale in connection
with, any "distribution" thereof within the meaning of the Securities Act, other
than pursuant to an effective registration statement under the Securities Act.
4.05. Further Limitations on Disposition. Without in any way limiting
the representations set forth above, Seller further agrees not to make any
disposition of all or any portion of the Shares issued to it unless and until:
(a) there is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or (b) Seller shall have notified Parent of
the proposed disposition and shall have furnished Parent with a statement of the
circumstances surrounding the proposed disposition, and, at Seller's expense,
with an opinion of counsel reasonably satisfactory to Parent, that such
disposition will not require registration of such securities under the
Securities Act.
4.06. Legends. Seller understands and agrees that there will be placed
on the certificates evidencing the ownership of the Shares, a restrictive
legend, in addition to any legends required by applicable securities laws or by
the charter documents of Parent. The legend set forth above may be removed by
Parent from any certificate evidencing Shares upon receipt by Parent of an
opinion by its counsel, or counsel reasonably satisfactory to Parent, that such
security can be freely transferred in a public sale without such a registration
statement being in effect.
4.07. Stop Transfer Instructions; No Requirement to Transfer. Seller
agrees that, in order to ensure compliance with the restrictions referred to
herein, Parent may issue appropriate "stop transfer" instructions to its
transfer agent. Parent shall not be required (a) to transfer or have transferred
on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (b) to treat as owner of
such Shares or to accord the right to vote or pay dividends to any purchaser or
other transferee to whom such Shares shall have been so transferred in violation
of any provision of this Agreement.
ARTICLE V
TRANSACTIONS PRIOR TO CLOSING
5.01. Conduct of Business Prior to Closing. Between the Effective Date
and the Closing Date, except as otherwise contemplated by this Agreement or
approved in writing by Buyer, the Seller Parties covenant and agree that Seller
will:
(a) operate the Business only in the ordinary course and
consistent with past practice;
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(b) use its best efforts to preserve the Business intact, to
keep available to the Buyer the services of its present officers and employees
and to preserve for the Buyer relationships with customers, suppliers,
resellers, partners and others having business relations with the Business;
(c) not (i) amend or propose to amend its articles of
incorporation or bylaws, (ii) split, combine or reclassify its outstanding
capital stock, (iii) declare, set aside or pay any dividend or distribution
payable in cash, stock, property or otherwise or (iv) redeem, purchase, acquire
or offer to purchase or acquire any shares of its capital stock or any options,
warrants or rights to acquire any of the capital stock thereof or any security
convertible into or exchangeable for such capital stock;
(d) not issue or sell or agree to issue or sell any additional
shares of, or any options, warrants or rights to acquire any shares of, capital
stock of Seller;
(e) maintain the Equipment in good repair and operating
condition, ordinary wear and tear excepted;
(f) maintain in full force and effect all Business Permits and
insurance policies;
(g) not enter into any contract or commitment except those made
in the ordinary course of business the terms of which are consistent with past
practice and reasonable in light of current conditions;
(h) not terminate, cause the termination of, amend, renew or
extend any Business Agreement unless in each case such action is in the best
interest of the Business;
(i) not waive or release any of its rights with respect to the
Business or any of the Assets or permit any of such rights to lapse;
(j) not sell, transfer or otherwise dispose of any of the Assets
or any interest therein or agree to do any of the foregoing, except in the
ordinary course of business, consistent with past practice;
(k) not (i) incur any indebtedness for borrowed money or (ii)
incur, make, assume or suffer to exist any Lien, tenancy or other matter
affecting title to any of the Assets;
(l) not make, change or revoke any tax election or make any
agreement or settlement with any taxing authority;
(m) not merge or consolidate Seller with or into any other
entity, recapitalize or issue securities to any other entity, or agree to do any
of the foregoing;
(n) comply with applicable Governmental Rules in all material
respects;
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(o) take no action, and use its best efforts to prevent the
occurrence of any event or the existence of any condition, which would result in
any of the representations and warranties of the Seller Parties herein not being
true and correct; and
(p) promptly inform the Buyer of the occurrence of any event or the
existence of any condition which constitutes or, with the giving of notice or
the passage of time, or both, is reasonably likely to constitute, a Material
Adverse Effect.
5.02. Casualty, Loss or Damage to Assets. If at any time prior to the
Closing Date any casualty, loss or damage shall occur with respect to any Asset
then Seller Parties shall promptly inform Buyer of the same and shall, at
Buyer's option, either (a) repair or replace such Asset such that the Asset to
be transferred to Buyer hereunder is in a condition at least as good as it was
in immediately prior to the occurrence of such casualty, loss or damage or (b)
transfer all insurance proceeds payable to Seller on account of such casualty,
loss or damage to Buyer at the Closing.
5.03. Due Diligence Investigation; Access to Information. At all times
prior to the Closing Date, Buyer and its employees, counsel, accountants and
other agents and consultants (collectively, "Agents") shall be permitted to
conduct a full and complete investigation of the legal and financial aspects of
Seller. Buyer and its Agents shall also have access, at reasonable times during
normal business hours and upon prior notice to Seller, to, among other things,
interview employees, review company books and records, tax returns and other
filings, employee files (except to the extent prohibited under applicable
Governmental Rule), customer files, employee benefits, existing contracts with
Seller's current customer base and vendors, leases, accounts payable and
receivable, financial statements for Seller, and all such other information
concerning the Business or the Assets as Buyer or its Agents may reasonably
request.
5.04 No Negotiation. Neither the Seller Parties, nor any officer,
director, Affiliate or agent on behalf of the Seller Parties, will, at any time
on and after the date here of and prior to May 31, 2004, directly or indirectly,
(a) enter into, or participate in, any discussions or negotiations, or solicit,
entertain or encourage any inquiries or proposals, which relate to the
acquisition of Seller, or the assets, properties, business or securities of
Seller (or any material portion thereof), by way of merger, reorganization, sale
of assets, stock sale or exchange or otherwise by any Person (other than Buyer)
or (b) provide any non-public information to any Person (other than Buyer)
relating to any such acquisition transaction. Promptly upon receiving any offer
or inquiry from a Person (other than the Buyer) to acquire Seller or any of its
assets, properties or securities, Seller Parties will notify Buyer of such offer
or inquiry, and, if requested, will provide the Buyer with all details relating
thereto. The parties acknowledge and agree that there would be irreparable
damage in the event that any of the provisions of this Section 5.04 are not
performed in accordance with their specific terms or are otherwise breached.
Accordingly, it is agreed that the non-breaching party shall be entitled to an
injunction or injunctions (or other appropriate equitable relief) to prevent
breaches of this Section 5.04, and each of the parties shall have the right to
specifically enforce this Section and the terms and provisions hereof against
the other party in addition to any other remedy to which they may be entitled at
law or in equity.
5.05. Reasonable Commercial Efforts. The parties agree to use their
reasonable
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commercial efforts to take or cause to be taken and to do or cause to be done
all such actions and things as shall be necessary or advisable, or as shall be
reasonably requested by the other party, in order to consummate the transactions
contemplated hereby and by the other Transaction Documents. Without limiting the
generality of the foregoing, the parties agree to take all reasonable actions
necessary in order to obtain any consent or approval of any third party,
including without limitation any Governmental Entity, which is required in
connection with this Agreement or the other Transaction Documents or any of the
transactions contemplated hereby or thereby.
ARTICLE VI
CLOSING AND CLOSING CONDITIONS
6.01. Closing. The closing of the transactions contemplated hereby (the
"Closing") will take place promptly on the satisfaction of the conditions
precedent in Section 5.02 and 5.03 at the offices of Xxxxx & Xxxxxxx, P.C., 00
Xxxxxxx Xxxxxx, 00/xx/ Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 or such other place
as the parties may mutually agree. The parties anticipate that the closing shall
take place on or before June 30, 2004. The date on which the Closing occurs is
referred to herein as the "Closing Date".
6.02. Conditions Precedent to Obligations of Buyer. Buyer's obligation to
proceed with the Closing is subject to the satisfaction by Seller Parties on or
prior to the Closing Date of each of the following conditions precedent, any one
or more of which may be waived by Buyer in its sole discretion:
(a) Accuracy of Representations and Warranties. The representations
and warranties of Seller Parties set forth herein will be true and correct on
and as of the date hereof and on and as of the Closing Date with the same force
and effect as though made on and as of such date (other than representations and
warranties made specifically with reference to a particular date, which shall
have been true and correct in all respects as of such date).
(b) Performance and Compliance. Seller Parties will have performed or
complied with each covenant and agreement required to be performed or complied
with by them hereunder on or prior to the Closing Date.
(c) Consents and Approvals. Seller will have obtained each Consent or
made each filing, registration or qualification, if any, listed in the
Disclosure Letter or which is otherwise necessary (under applicable Governmental
Rules or otherwise) for Seller to execute, deliver and perform the Transaction
Documents or, in the case of Business Permits and Business Agreements which are
not transferable or for which a consent to assignment cannot be obtained, Buyer
shall have satisfied itself that it will be able to obtain or enter into similar
permits and agreements in its own name, or to otherwise obtain the benefits of
such permits and agreements. Without limiting the generality of the foregoing,
on the Closing Date Seller shall deliver to Buyer evidence satisfactory to Buyer
of the repayment in full of all outstanding indebtedness owing to Wachovia Bank,
together with UCC-3 termination statements and such other documents evidencing
the release of Liens on the Assets existing thereunder.
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(d) Litigation. There will be no pending or threatened action,
claim, demand or proceeding by or before any Governmental Entity, mediator or
arbitrator seeking to restrain, prohibit or invalidate any of the transactions
contemplated by the Transaction Documents or seeking monetary relief against
Buyer by reason of the consummation of such transactions, and there will not be
in effect any Governmental Order which has such effect.
(e) Material Adverse Effect. No event will have occurred and no
condition will exist which has had, or is likely to have, a Material Adverse
Effect.
(f) Secretary's Certificate. Seller will have delivered to Buyer a
certificate of its Secretary dated the Closing Date and certifying (i) that
correct and complete copies of its charter and bylaws are attached thereto, (ii)
that correct and complete copies of each resolution of its board of directors
and members approving the Transaction Documents and authorizing the execution
thereof and the consummation of the transactions contemplated thereby are
attached thereto and (iii) the incumbency and signatures of the officers of
Seller authorized to execute and deliver the Transaction Documents on behalf of
Seller.
(g) Opinion of Counsel. Seller Parties will have delivered to Buyer
an opinion of Seller Parties' counsel dated the Closing Date and in form and
substance reasonably satisfactory to Buyer and its counsel with respect to the
matters in Sections 2.01, 2.02, 2.03, 2.04 and 2.07 and such other matters as
Buyer or its counsel may reasonably request.
(h) Other Transaction Documents. Seller Parties and any other parties
thereto (other than Buyer) will have executed and delivered to Buyer a Xxxx of
Sale and Assignment and Assumption Agreement in substantially the form of
Exhibit B (the "Xxxx of Sale and Assignment Agreement"), and such other
documents and instruments, in form and substance satisfactory to Buyer and its
counsel, as are necessary or desirable in order to consummate the transactions
contemplated hereby, each dated the Closing Date (together with this Agreement
and any agreements listed in Section 6.03(f), the "Transaction Documents").
(i) Employment Agreements. Xxxx Xxxxxx will have entered into an
employment agreement with Buyer which is satisfactory in form and substance to
Buyer and its counsel (the "Employment Agreement").
(j) Due Diligence. The Buyer will have completed its due diligence
review of Seller and will be satisfied, in its sole and absolute discretion,
with the results of such review.
6.03. Conditions Precedent to Obligations of Seller Parties. Seller
Parties' obligation to proceed with the Closing is subject to the satisfaction
by Buyer on or prior to the Closing Date of each of the following conditions
precedent, any one or more of which may be waived by Seller Parties in their
sole discretion:
(a) Accuracy of Representations and Warranties. The representations
and warranties of Buyer set forth herein will be true and correct on and as of
date hereof and on and as of the Closing Date with the same force and effect as
though made on and as of such date
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(other than representations and warranties made specifically with reference to a
particular date, which shall have been true and correct in all respects as of
such date).
(b) Performance and Compliance. Buyer will have performed or complied
with each covenant and agreement required to be performed or complied with by it
hereunder on or prior to the Closing Date.
(c) Consents and Approvals. Buyer will have obtained each Consent or
made each filing, registration or qualification, if any, necessary (under
applicable Governmental Rules or otherwise) for Buyer to execute, deliver and
perform the Transaction Documents.
(d) Litigation. There will be no pending or threatened action, claim,
demand or proceeding by or before any Governmental Entity, mediator or
arbitrator seeking to restrain, prohibit or invalidate any of the transactions
contemplated by the Transaction Documents or seeking monetary relief against
Seller Parties by reason of the consummation of such transactions, and there
will not be in effect any Governmental Order which has such effect.
(e) Secretary's Certificate. Buyer will have delivered to Seller
Parties a certificate of its Secretary dated the Closing Date and certifying (i)
that correct and complete copies of its charter and bylaws are attached thereto,
(ii) that correct and complete copies of each resolution of its board of
directors and shareholders approving the Transaction Documents and authorizing
the execution thereof and the consummation of the transactions contemplated
thereby are attached thereto and (iii) the incumbency and signatures of the
officers of Buyer authorized to execute and deliver the Transaction Documents on
behalf of Buyer.
(f) Other Transaction Documents. Buyer and any other parties thereto
(other than a Seller Party) will have executed and delivered to Seller the Xxxx
of Sale and Assignment Agreement, the Note, a side letter from Parent
acknowledging Seller's rights under Section 1.04(c) to receive shares of
Parent's Common Stock and such other documents and instruments, in form and
substance satisfactory to Seller and its counsel, as are necessary or desirable
in order to consummate the transactions contemplated hereby, each dated the
Closing Date.
(g) Employment Agreements. Buyer will have entered into the
Employment Agreements with Xxxx Xxxxxx which is satisfactory in form and
substance to Xxxx Xxxxxx and his counsel.
(h) Purchase Price. Buyer will have delivered to Seller the cash
portion of the Purchase Price pursuant to Section 1.04(a) and the Note.
ARTICLE VII
CERTAIN POST-CLOSING MATTERS
7.01. Non-Competition and Non-Solicitation. Seller and each Member jointly
and severally covenant and agree as follows:
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(a) During the five-year period commencing with the Closing Date (the
"Noncompete Period"), neither Seller nor any Member (either directly or
indirectly, through any of their respective Related Parties or otherwise) may
(i) engage in any Competing Business or (ii) own, be employed by, provide
financing to, consult with or otherwise render services to any Person who is
engaged in any Competing Business; provided, that the ownership of an equity
interest of not more than 5% in a publicly traded entity that is engaged in a
Competing Business is not a violation of this covenant so long as such Person
has no participation in the business of such entity.
(b) During the Noncompete Period, neither Seller nor any Member
(either directly or indirectly, through any of their respective Related Parties
or otherwise) may solicit or induce any Person that is or was at any time during
the Noncompete Period an existing employee or applicant, customer, sales
representative, distributor, agent or contractor of Buyer or any of its
Affiliates, or otherwise induce or persuade any such Person, to terminate his or
its employment or other relationship with Buyer or any of its Affiliates.
(c) If Seller or any Member is in breach of any of the provisions of
subsections (a) or (b) above, then the Noncompete Periods set forth in such
subsections will be extended by the length of time during which such Seller
Party is in breach of any of such provisions.
(d) Seller and Member acknowledge and agree that Buyer would be
irreparably damaged if any of the provisions of this Section are not performed
in accordance with their specific terms or are otherwise breached. Accordingly,
Seller and each Member agrees that Buyer is entitled to equitable relief,
including an injunction or injunctions to prevent breaches of this Section and
has the right to specifically enforce this Section against Seller and each
Member in addition to any other remedy to which Buyer may be entitled hereunder,
at law or in equity.
(e) Notwithstanding the foregoing, if any provision of the
restrictions stated in this Section, or any part thereof, is held to be
unenforceable, including without limitation because of the duration thereof or
the range of activities or geographic area covered thereby, the parties agree
that the court making such determination shall modify the offending provision,
including without limitation by reducing the duration of such provision or the
geographic area or activities to which it applies, only to the extent needed to
make the provision enforceable.
As used in this Agreement the following terms have the following meanings:
"Competing Business" means the marketing, provision or sale of
products or services or other related activities which are competitive with any
Products and which are directly or indirectly marketed, provided or sold in the
Territory.
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"Product" means any product or service which the Business is
marketing, providing, selling or developing on or after the Closing Date.
"Territory" means the United States and Canada.
7.02. Certain Employee Matters.
(a) Nothing in this Agreement (i) requires Buyer to hire, or to offer
to hire, any employees of Seller, (ii) constitutes an offer to employ such
employees or (iii) requires Buyer to pay any such persons severance pay in the
event of termination of employment. Notwithstanding the foregoing, and subject
to customary due diligence investigations, Buyer may make offers of employment
to certain of Seller's employees working in the Business, and Seller will use
its best efforts to persuade such employees to accept such offers. Prior to the
Closing Date, Seller will afford Buyer reasonable access to Seller's employees
to allow Buyer to interview such employees.
(b) Buyer does not and will not assume or be responsible for any
obligations or liabilities arising out of any employment relationship between
Seller and any employee or former employee of Seller. Without limiting the
generality of the foregoing, Buyer will have no liability or obligation in
connection with Seller's employees or former employees and their beneficiaries
for (i) contributions to or payments under employee benefit plans, stock
options, programs, arrangements or understandings, (ii) accrued, but unused,
sick leave, vacation pay and severance pay, if any, (iii) liabilities or
obligations under any collective bargaining agreement or bargaining relationship
or (iv) claims, demands, administrative proceedings or suits arising out of or
in connection with alleged unlawful employment practices or other alleged
improper acts of Seller, all of which are Excluded Liabilities.
7.03. Change of Seller's Name. Seller acknowledges that from and after the
Closing Date it has no right to use its present trade name "CurleyMed Staffing
Solutions" and the other trade names included in the Assets. Seller agrees that,
immediately after the Closing, it will take all such action as is necessary to
permit Buyer to have the exclusive right to such trade names.
7.04. Transition Services.
(a) As additional inducement for Buyer to enter into this Agreement,
upon the request of Buyer, Seller shall provide for the benefit of Buyer certain
administrative and transitional support services reasonably requested by Buyer
from time to time (the "Transition Services"). Seller shall use commercially
reasonable efforts to provide the Transition Services (i) at substantially the
same level and quality as conducted by Seller in the operation of the Business
as of the Closing Date, (ii) in a time frame consistent with Seller's past
practice, and (iii) in a good, workmanlike and professional manner.
(b) It is expressly agreed and understood that Seller (in carrying
out the Transition Services) is an independent contractor working for itself and
that neither it nor any of its employees, agents or affiliates is, shall be
deemed to be, or shall hold itself out as, an agent,
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legal representative or employee of Buyer. The parties hereto agree that the
Transition Services create neither a partnership nor a joint venture
relationship and neither Seller nor Buyer is granted any right or authority to
assume or to create any obligation, liability or responsibility, express or
implied, on behalf of or in the name of the other party or to bind the other
party in any manner to any contractual or other undertaking whatsoever.
7.05. Conduct of Business. Notwithstanding anything contained herein to the
contrary, after the Closing Buyer shall be entitled to operate the Business and
the Assets in any manner it deems necessary or desirable in its sole and
absolute discretion. Without limiting the generality of the foregoing, Buyer
shall maintain full discretion with respect to all operations of Buyer, the
Business and the Assets, including, without limitation, (i) determining the fees
charged by Buyer or the Business, (ii) determining the compensation paid to
employees or independent contractors of Buyer or the Business, (iii) determining
whether to discontinue or modify Buyer or the Business or any program related
thereto, (iv) making any decisions concerning the production, marketing, sales,
capital expenditures, expenses and related matters respecting Buyer or the
Business and (v) making any decisions pertaining to the personnel, staffing and
other resources of Buyer or the Business. In addition, Buyer shall be under no
obligation to use any efforts, personnel or other revenues of Buyer or any of
its Affiliates to realize any business or sales from the Business or the Assets.
ARTICLE VIII
INDEMNIFICATION
8.01. Indemnification by Seller Parties. Seller Parties will jointly and
severally defend, indemnify and hold harmless Buyer and its equity holders,
directors, officers, employees and agents (each a "Seller Indemnitee") from and
against any and all claims (including without limitation any investigation,
action or other proceeding, whether instituted by a third party against a Seller
Indemnitee or by a Seller Indemnitee for the purpose of enforcing its rights
hereunder), demands, damages, losses, liabilities, costs and expenses (including
without limitation reasonable attorneys' fees and court costs) (collectively
"Losses") that constitute, or arise out of or in connection with:
(a) any misrepresentation or breach of any representation or
warranty under Article II or Article IV (a "Seller Party Warranty Breach");
(b) any default by a Seller Party in the performance or observance of
any of its covenants or agreements hereunder or under any other Transaction
Document;
(c) any Excluded Assets or Excluded Liabilities.
8.02. Indemnification by Buyer. Buyer will defend, indemnify and hold
harmless Seller Parties (each a "Buyer Indemnitee") from and against any and all
Losses that constitute, or arise out of or in connection with:
(a) any misrepresentation or breach of any representation or warranty
under
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Article III (a "Buyer Warranty Breach");
(b) any default by Buyer in the performance or observance of any of
its covenants or agreements hereunder or under any other Transaction Document;
or
(c) any of the Assets or Assumed Liabilities.
8.03. Notice and Satisfaction of Indemnification Claims. Indemnification
claims against Seller Parties may, at Buyer's option, be satisfied by set-off
against any amounts due to Seller or any Member as earn-out amounts under
Section 1.04(e). No indemnification claim will be deemed to have been asserted
until the applicable Indemnitor has been given notice by the Indemnitee of the
amount of Losses related to such claim and the facts on which such claim is
based (a "Claim Notice"). For purposes of Section 8.06, notice of an
indemnification claim will be deemed to cover claims arising out of all related
Proceedings so long as, in the case of Proceedings instituted by third parties,
the Indemnitee complies with Section 8.05. If the Indemnitee is not Buyer or a
Seller Party, then such notice will be given on behalf of such Indemnitee by
Buyer or Seller Parties, as applicable. Indemnification claims (other than those
satisfied by set-off) will be paid within 30 days after the Indemnitor's receipt
of such notice and such evidence of the amount of such claim and the
Indemnitor's liability therefor as the Indemnitor may reasonably request.
8.04. Indemnification Procedures.
(a) If any Seller Indemnitees or Buyer Indemnitees, as the case may
be (the "Indemnitees"), delivers a Claim Notice to any Seller Party or Buyer
(each an "Indemnitor"), as applicable, in accordance with Section 8.03 above,
upon the expiration of thirty (30) calendar days after receipt of the Claim
Notice by such Indemnitor, subject to the provisions of paragraph (b) below and
the other limitations set forth in this Article VIII, the Indemnitor shall
satisfy such Losses by payment to the Indemnitees of an amount equal to such
Losses in immediately available funds of the United States or as otherwise set
forth herein.
(b) For a period of thirty (30) calendar days after the receipt of
such Claim Notice by Indemnitor, the Indemnitor shall be entitled to review the
Claim Notice and the basis of the underlying claim. If the Indemnitor desires to
dispute the claim or the Losses set forth in the Claim Notice, the Indemnitor
may do so by providing a written notice of such dispute to the Indemnitees prior
to the expiration of such thirty (30) day period, with the basis for such
dispute set forth in reasonable detail (the "Dispute Notice"). If, within thirty
(30) calendar days after the receipt of such Dispute Notice by the Indemnitor
("Dispute Period"), the Indemnitees receive a Dispute Notice from the
Indemnitor, the Indemnitor shall not be required to satisfy such Losses until a
Settlement Memorandum is executed by the Indemnitees and the Indemnoitor or
there is a final decision of a Governmental Entity, mediator or arbitrator after
all appeals have been exhausted or expired ("Final Judgment"). Upon the
execution of the Settlement Memorandum or the entry of the Final Judgment, the
Indemnitor shall pay such funds in accordance with such Settlement Memorandum or
Final Judgment and as otherwise set forth herein.
(c) If a Dispute Notice is received within the Dispute Period, the
Indemnitees
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and the Indemnitor shall attempt in good faith during the thirty (30) calendar
day period commencing after the receipt of such Dispute Notice ("Settlement
Period") to agree upon the rights of the respective parties with respect to each
such claim. In the event of resolution of such dispute, the Indemnitees and the
Indemnitor shall collectively execute a memorandum setting forth such resolution
and, if applicable, the amount of any Losses payable to the Indemnitees (a
"Settlement Memorandum"). If the Indemnitees and the Indemnitor are unable to
resolve such dispute within the Settlement Period, then the Indemnitees, on the
one hand, or the Indemnitor, on the other, may pursue its rights at law or in
equity.
8.05. Third Party Claims. If any investigation, action or other proceeding
(each a "Proceeding") is initiated against any Indemnitee by any third party and
such Indemnitee intends to seek indemnification from an Indemnitor under this
Article on account of its involvement in such Proceeding, then such Indemnitee
will give prompt notice to the applicable Indemnitor of such Proceeding;
provided, that the failure to so notify such Indemnitor will not relieve such
Indemnitor of its obligations under this Article, but will reduce such
obligations by the amount of Losses or increased costs and expenses attributable
to such failure to give notice. Upon receipt of such notice, such Indemnitor
will diligently defend against such Proceeding on behalf of such Indemnitee at
its own expense using counsel reasonably acceptable to such Indemnitee;
provided, that if such Indemnitor fails to diligently defend or refuses to
conduct such defense, or such Indemnitee has been advised by counsel that it may
have defenses available to it which are different from or in addition to those
available to such Indemnitor, or that its interests in such Proceeding are
adverse to such Indemnitor's interests, then such Indemnitee may defend against
such Proceeding at such Indemnitor's expense. Such Indemnitor or Indemnitee, as
applicable, may participate in any Proceeding being defended against by the
other at its own expense, and will not settle any Proceeding without the prior
consent of the other, which consent will not be unreasonably withheld; provided,
that the consent of an Indemnitor is not required if such Indemnitor failed or
refused to defend the Indemnitee in the Proceeding that is being settled. Such
Indemnitor and Indemnitee will cooperate with each other in the conduct of any
such Proceeding, including without limitation making available any
non-privileged documents and materials in its possession that may be necessary
to the defense of such claim or proceeding keeping the other party informed of
all material developments and events relating to such Proceeding.
8.06. Duration of Certain Indemnification Obligations. Claims for
indemnification under Section 8.01(a) and 8.02(a) may only be asserted within
the following time periods:
(a) claims arising out of any Seller Party Warranty Breach under
Section 2.01 (Organization and Qualification), Section 2.02 (Power and
Authority), Section 2.03 (Execution and Enforceability), Section 2.16 (Title
Matters) or Section 2.23 (Brokers) or (collectively, "Seller Parties'
Fundamental Warranties"), or out of any Buyer Warranty Breach under Section 3.01
(Organization), Section 3.02 (Power and Authority), Section 3.03 (Execution and
Enforceability) or Section 3.05 (Brokers) (collectively, "Buyer's Fundamental
Warranties"), may be asserted at any time;
(b) claims arising out of or in connection with any Seller Party
Warranty Breach under Section 2.06 (Tax Matters) may be asserted until ninety
(90) days after the running
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of the statute of limitations applicable to the taxable period to which a
particular claim relates;
(c) claims arising out of or in connection with any Seller Party
Warranty Breach under Section 2.17 (Pension and Welfare Plans) may be asserted
for a period of four (4) years after the Closing Date;
(d) claims arising out of or in connection with fraud (actual or
constructive) or intentional misrepresentation may be asserted at any time after
Closing, within the applicable statute of limitations;
(e) all other claims may be asserted for a period of eighteen (18)
months after the Closing Date.
Notwithstanding anything contained in this Section to the contrary, if one
or Claim Notices are given to any Indemnitor prior to the end of any applicable
indemnity period, such applicable indemnity period shall continue in full force
and effect solely with respect to the claim(s) set forth in such Claim Notice(s)
until such time as such claim has been fully and finally resolved in accordance
with Section 8.04.
8.07. Indemnification Threshold. Notwithstanding any other provision
hereof, no Indemnitor will have any indemnification obligations under Section
8.01(a) (exclusive of a Seller Party Warranty Breach involving any of Seller
Parties' Fundamental Warranties) or Section 8.02(a) (exclusive of a Buyer
Warranty Breach involving any of Buyer's Fundamental Warranties) unless and
until the claims asserted against such Indemnitor exceed $15,000 in the
aggregate (the "Threshold Amount"); thereafter, such Indemnitor will be liable
for all indemnification claims properly asserted against it, including those
comprising the Threshold Amount.
8.08. Tax Treatment. Any indemnification payments under this Article will
be treated, for tax purposes, as adjustments to the Purchase Price.
ARTICLE IX
GENERAL PROVISIONS
9.01. Assignment. Neither this Agreement nor any right, interest or
obligation hereunder may be assigned, pledged or otherwise transferred by any
party, whether by operation of law or otherwise, without the prior consent of
the other party or parties; provided, that Buyer may assign its rights hereunder
to (a) an Affiliate so long as Buyer remains liable hereunder, and may
collaterally assign its rights hereunder to any lender, and (b) a purchaser of
all or substantially all of its assets or any successor by merger.
9.02. Confidentiality.
(a) As used in this Section the "Confidential Information" of a party
means all information concerning or related to the business, operations,
financial condition or prospects of such party or any of its Affiliates,
regardless of the form in which such information appears
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and whether or not such information has been reduced to a tangible form, and
specifically includes (i) all information regarding the officers, directors,
employees (existing, former and prospective), equity holders, customers,
suppliers, distributors, sales representatives and licensees of such party and
its Affiliates, in each case whether present or prospective, (ii) all
inventions, discoveries, trade secrets, processes, techniques, methods,
formulae, ideas and know-how of such party and its Affiliates, (iii) all
financial statements, audit reports, budgets and business plans or forecasts of
such party and its Affiliates and (iv) the Transaction Documents and the
transactions contemplated thereby; provided, that the Confidential Information
of a party does not include (A) information which is or becomes generally known
to the public through no act or omission of the other party and (B) information
which has been or hereafter is lawfully obtained by the other party from a
source other than the party to whom such Confidential Information belongs (or
any of its Affiliates or their respective officers, directors, employees, equity
holders or agents) so long as, in the case of information obtained from a third
party, such third party was or is not, directly or indirectly, subject to an
obligation of confidentiality owed to the party to whom such Confidential
Information belongs or any of its Affiliates at the time such Confidential
Information was or is disclosed to the other party.
(b) Except as otherwise permitted by subsection (c) below, each party
agrees that it will not, without the prior written consent of the other party,
disclose or use for its own benefit any Confidential Information of the other
party.
(c) Notwithstanding subsection (b) above, each of the parties is
permitted to:
(i) disclose Confidential Information of the other party to its
officers, directors, employees, equity holders, lenders, agents and affiliates,
but only to the extent reasonably in order for such party to perform obligations
and exercise its and remedies under this Agreement, and such party will take all
such as are necessary or desirable in order to ensure that each of such Persons
maintains the confidentiality of any Confidential Information that is so
disclosed;
(ii) make additional disclosures of or use for its own benefit
Confidential Information of the other party, but only if and to the extent that
such disclosures or use are specifically contemplated by this Agreement;
(iii) disclose Confidential Information of the other party to
the extent, but only to the extent, required by Governmental Rules; provided,
that prior to making any disclosure pursuant to this subsection, the disclosing
party will notify the affected party of the same, and the affected party will
have the right to participate with the disclosing party in determining the
amount and type of Confidential Information of the affected party, if any, which
must be disclosed in order to comply with Governmental Rules; and
(iv) disclose to any and all Persons, without limitation of any
kind, the tax treatment and tax structure of the transactions contemplated by
the Transaction Documents and all materials of any kind (including opinions or
other tax analyses) that are provided to it relating to such tax treatment and
tax structure; provided, that such disclosure may not be made (A) until the date
of the public announcement of such transactions or (B) to the extent of
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restrictions on disclosure which are reasonably necessary to comply to any
applicable U.S. federal or state securities laws. For purposes of this
Agreement, the "tax treatment" of a transaction means the purported or claimed
U.S. federal income tax treatment of such transaction and the "tax structure" of
a transaction means any fact that may be relevant to understanding the purported
or claimed U.S. federal income tax treatment of such transaction.
(d) Notwithstanding subsection (b) above, each of the parties
and their respective representatives, after the execution and delivery of this
Agreement and the Transaction Documents, may (without consent of or consultation
with the other party) disclose to any and all persons, without limitation of any
kind, the "tax treatment" and any facts that may be relevant to the "tax
structure" of the transactions contemplated by this Agreement and the
Transaction Documents to the extent required by Treasury Regulation Section
1.6011-4.
9.03. Expenses. Except as otherwise specifically provided herein or in any
other Transaction Document, each party is responsible for such expenses as it
may incur in connection with the negotiation, preparation, execution, delivery,
performance and enforcement of the Transaction Documents. Any sales Tax,
transfer Tax or similar Tax payable as a result of the transfer of the Assets to
Buyer will be paid by Seller.
9.04. Further Assurances. The parties will from time to time do and perform
such additional acts and execute and deliver such additional documents and
instruments as may be required by applicable Governmental Rules or reasonably
requested by any party to establish, maintain or protect its rights and remedies
or to effect the intents and purposes of this Agreement and the other
Transaction Documents. Without limiting the generality of the foregoing, each
party agrees to endorse (if necessary) and deliver to the other, promptly after
its receipt thereof, any payment or document which it receives after the Closing
Date and which is the property of the other.
9.05. Knowledge Parties. References in this Agreement to Seller's knowledge
or words of similar import mean the knowledge of Xxxx Xxxxxx, Xxxx Xxxxxx and
any other officer or manager of Seller, assuming reasonable investigation and
inquiry as to the subject matter in question is made of Seller's other officers,
directors, management employees and outside counsel and accountants.
9.06. Notices. Unless otherwise specifically provided herein, all notices,
consents, requests, demands and other communications required or permitted
hereunder: (a) will be in writing; (b) will be sent by messenger, certified or
registered U.S. mail, a reliable express delivery service or telecopier (with a
copy sent by one of the foregoing means), charges prepaid as applicable, to the
appropriate address(es) or number(s) set forth below; and (c) will be deemed to
have been given on the date of receipt by the addressee (or, if the date of
receipt is not a business day, on the first business day after the date of
receipt), as evidenced by (i) a receipt executed by the addressee (or a
responsible person in his or her office), the records of the Person delivering
such communication or a notice to the effect that such addressee refused to
claim or accept such communication, if sent by messenger, U.S. mail or express
delivery service, or (ii) a receipt generated by the sender's telecopier showing
that such communication was sent to the appropriate number on a specified date,
if sent by telecopier. All such communications will be
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sent to the following addresses or numbers, or to such other addresses or
numbers as any party may inform the others by giving five business days' prior
notice:
If to Seller Parties: With a copy to:
Xxxx Xxxxxx Killgore, Pearlman, Stamp, Xxxxxxxx &
__________________________________ Xxxxxxx P.A.
__________________________________ 0 X. Xxxxxx Xxxxxx, 0/xx/ Xxxxx
Attn:_____________________________ Xxxxxxx, XX 00000
FAX No.:__________________________ Attn: Xxxxx X. Xxxxxxxx
FAX No.:(000) 000-0000
If to Buyer: With a copy to:
Xxxxxxx X. XxXxxxxx Xxxxx & Xxxxxxx, P.C.
World Health Alternatives, Inc. 00 Xxxxxxx Xxxxxx; 15/th/ Floor
000 Xxxx Xxxxxx Xxxxxxxxx Xxxxxxxxxx, XX 00000
Suite 111 Attn: Xxxx X. Xxxxx
Xxxxxxxxxx, XX 00000 Telecopier No.: (000) 000-0000
Telecopier No.: (000) 000-0000
9.07. Publicity. Seller Parties shall not make any press release or other
public announcement regarding this Agreement or the other Transaction Documents
or any transaction contemplated hereby or thereby until the text of such release
or announcement has been submitted to Buyer and Buyer has approved the same.
9.08. Miscellaneous. This Agreement: (a) may be amended only by a writing
signed by each of the parties; (b) may be executed in several counterparts, each
of which is deemed an original but all of which constitute one and the same
instrument; (c) together with the other Transaction Documents, contains the
entire agreement of the parties with respect to the transactions contemplated
hereby and thereby and supersedes all prior written and oral agreements, and all
contemporaneous oral agreements, relating to such transactions; (d) is governed
by, and will be construed and enforced in accordance with, the laws of the
Commonwealth of Pennsylvania, without giving effect to any conflict of laws
rules; (e) is deemed to have been entered into by the parties in Pennsylvania;
and (f) is binding upon, and will inure to the benefit of, the parties and their
respective heirs, successors and permitted assigns. The due performance or
observance by a party of any of its obligations under this Agreement may be
waived only by a writing signed by the party against whom enforcement of such
waiver is sought, and any such waiver will be effective only to the extent
specifically set forth in such writing. The waiver by a party of any breach or
violation of any provision of this Agreement will not operate as, or be
construed to be, a waiver of any subsequent breach or violation hereof. Each of
the parties hereby submits to the exclusive jurisdiction of the courts located
in Allegheny County, Pennsylvania for the purposes of any action or proceeding
arising out of or relating to this Agreement or the subject matter hereof. Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction will, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining portions
hereof
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or affecting the validity or enforceability of such provision in any
other jurisdiction.
[signature page follows]
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SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
XXXXXX AND ASSOCIATES, LLC D/B/A
CURLEYMED STAFFING SOLUTIONS
By:_________________________________
Name: ______________________________
Title:______________________________
____________________________________
Xxxx Xxxxxx, Member of Seller
____________________________________
Xxxx Xxxxxx, Member of Seller
MEDTECH MEDICAL STAFFING OF ORLANDO,
INC.
By:_________________________________
Name: Xxxxxxx XxXxxxxx
Title: President
INDEX OF DEFINED TERMS
The following terms are defined in the Agreement on the following page:
Definition Page
---------- ----
Affiliate ............................................................... 15
Agents .................................................................. 20
Assets .................................................................. 1
Assumed Liabilities ..................................................... 3
Xxxx of Sale and Assignment Agreement ................................... 22
Business ................................................................ 1
Business Agreements ..................................................... 2
Business Permits ........................................................ 2
Buyer ................................................................... 1
Buyer Indemnitee ........................................................ 27
Buyer Warranty Breach ................................................... 27
Buyer's Fundamental Warranties .......................................... 29
Claim Notice ............................................................ 27
Closing ................................................................. 21
Closing Date ............................................................ 21
Code .................................................................... 3
Competing Business ...................................................... 25
Confidential Information ................................................ 30
Consent ................................................................. 3
Current Financial Statements ............................................ 6
Disclosure Letter ....................................................... 4
Dispute Notice .......................................................... 28
Dispute Period .......................................................... 28
Effective Date .......................................................... 1
Employment Agreements ................................................... 23
Equipment ............................................................... 1
ERISA ................................................................... 13
ERISA Affiliate ......................................................... 13
Excluded Assets ......................................................... 3
Excluded Liabilities .................................................... 3
Final Judgment .......................................................... 28
Financial Statement Date ................................................ 6
Financial Statements .................................................... 6
Governmental Entity ..................................................... 2
Governmental Order ...................................................... 5
Governmental Rule ....................................................... 5
Indemnitees ............................................................. 27
Indemnitor .............................................................. 27
Definition Page
---------- ----
Intellectual Property ................................................... 2
IRS ..................................................................... 12
Leased Real Property .................................................... 1
Liens ................................................................... 12
Losses .................................................................. 26
Material Adverse Effect ................................................. 4
Noncompete Period ....................................................... 24
Non-Transferable Assets ................................................. 4
Note .................................................................... 3
ordinary course of business ............................................. 6
outside employees ....................................................... 13
Parent .................................................................. 3
Pension Plan ............................................................ 13
Person .................................................................. 4
Plans ................................................................... 12
Proceeding .............................................................. 28
Product ................................................................. 25
Purchase Price .......................................................... 3
Related Party ........................................................... 15
SEC ..................................................................... 17
Securities Act .......................................................... 17
Seller .................................................................. 1
Seller Indemnitee ....................................................... 26
Seller Parties .......................................................... 1
Seller Parties' Fundamental Warranties .................................. 29
Seller Party Warranty Breach ............................................ 27
Settlement Memorandum ................................................... 28
Settlement Period ....................................................... 28
Shareholders ............................................................ 1
Tax Returns ............................................................. 6
taxes ................................................................... 7
Territory ............................................................... 25
Threshold Amount ........................................................ 29
Transaction Documents ................................................... 22
Transition Services ..................................................... 26
Welfare Plan ............................................................ 13
Works ................................................................... 11
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SCHEDULE 1.02
EXCLUDED ASSETS
1. Any employee benefit plan, policy or arrangement, whether formal or
informal, sponsored, maintained, or contributed to by Seller, including
without limitation any retirement plan or 401(k) plan, and any trust fund,
account, or other amount related to or held in connection therewith;
provided, however, that Seller's current health insurance plan shall not be
an Excluded Asset.
2. Rights under all loans, lines of credit or similar obligations.
3. Claims (and benefits to the extent they arise therefrom) and litigation
against third parties to the extent that such claims and litigation relate
to any Excluded Assets
4. Any books and records that Seller is required by law to retain, and any
books and records relating solely to Excluded Assets or Excluded
Liabilities; provided, however, that Seller will promptly provide Buyer with
copies thereof upon Buyer's request.
5. Any rights that accrue or will accrue to Seller under this Agreement.
6. Real property leases other than the office lease for 0000 Xxxxxx Xxxx.,
Xxxxxxx, XX
7. Any investments in NBC Industries identified as "land purchases" by account
number 1516 as reported on Seller's January 31, 2004 balance sheet.
8. Any investments in a "time share unit" identified by account number 1519 as
reported on Seller's January 31, 2004 balance sheet.
9. Cash and cash equivalents, deposits, investments and securities (including
marketable securities and short term investments) to the extent reflected on
the books of the Business prior to the Effective Date or collected on or
after the Effective Date and retained by Seller under paragraph 10 below.
10. Accounts receivable of the Business arising from services performed or
products sold prior to the Effective Date, including accounts related to
services provided to customers that have not yet been billed and thus may
not be reflected on Seller's books as a receivable, advance payments,
prepaid items and expenses and all other claims, causes of action, choses in
action and rights of recovery and setoff relating to the Business or any of
the Assets and arising prior to the Effective Date.
SCHEDULE 1.03
ASSUMED LIABILITIES
1. All obligations to be performed by Seller on and after the Effective Date
under the Business Agreements which by the express terms and conditions
thereof are to be paid, discharged or performed at any time on and after the
Effective Date.
2. Balances on the personal credit cards of the Members in the aggregate amount
of $_________ that are directly attributable to payments for legitimate and
appropriate Business expenses.
SCHEDULE 1.04(e)
EARN-OUT AMOUNT
1. Definitions. As used in this Schedule 1.04(e), the following terms shall
have the following meanings:
(a) "Applicable Earn-Out Percentage" means the greater of (i) 25% of
Gross Profit during any Applicable Earn-Out Period and (ii) 50% of Net Income
during the same Applicable Earn-Out Period.
(b) "Applicable Earn-Out Period" means each of the following periods:
(i) Effective Date through December 31, 2004;
(ii) January 1, 2005 through December 31, 2005; and
(iii) January 1, 2006 through December 31, 2006.
(c) "Gross Profit" means (i) Buyer's revenue during the relevant period
minus (ii) Buyer's cost of sales during the relevant period, in each case
calculated in a manner consistent with Parent's consolidated financial
statements.
(d) "Net Income" means Buyer's net income during the relevant period as
calculated in a manner consistent with Parent's consolidated financial
statements.
2. Calculation of Earn-Out Amounts.
(a) Subject to Section 4 below, for each of the Applicable Earn-Out
Periods, Buyer will pay to Seller an earn-out amount for such Applicable
Earn-Out Period equal to the Applicable Earn-Out Percentage.
(b) Within 30 days after the end of each Applicable Earn-Out Period,
Buyer will prepare and deliver to Seller a copy of Buyer's calculation of the
earn-out amount for such Applicable Earn-Out Period or portion thereof (each, an
"Applicable Buyer's Calculation"). Seller will have a period of 30 days (each,
an "Earn-Out Review Period") after its receipt of the Applicable Buyer's
Calculation to review the same. As part of such review, Seller and its advisors
shall have access to Buyer's workpapers and to the preparers of the Applicable
Buyer's Calculation and to the books and records on which the Applicable Buyer's
Calculation is based, at reasonable times and upon reasonable prior notice.
(c) In the event that Seller disagrees with any Applicable Buyer's
Calculation, Seller
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must notify Buyer in writing of such disagreement (each, an "Earn-Out Dispute
Notice"), within the Earn-Out Review Period. Such Earn-Out Dispute Notice must
set forth in reasonable detail the items disputed in such calculation. If Buyer
has not received an Earn-Out Dispute Notice by the expiration of the applicable
Earn-Out Review Period, Seller shall be deemed to have agreed with the
Applicable Buyer's Calculation.
(d) If Seller delivers an Earn-Out Dispute Notice to Buyer in accordance
with subsection (c), then the parties will negotiate in good faith in an effort
to resolve such dispute. If the parties are unable to resolve such dispute
within 30 days after Buyer receives the applicable Earn-Out Dispute Notice, then
either party may submit such dispute to an independent accounting firm of
recognized national or regional standing mutually acceptable to Buyer and Seller
for resolution or, if they cannot agree, a Big Four accounting firm chosen by
lot (after elimination of those Big Four accounting firms having relationships
with the parties). Each of Buyer and Seller will be afforded the opportunity to
present to such accounting firm any material related to the determination and to
discuss the determination with such accountants. The determination by such
accounting firm will be conclusive and binding upon the parties. The fees and
expenses of such accounting firm will be shared equally by Seller and Buyer.
3. Payment of Earn-Out Amounts. Payment of earn-out amounts hereunder, if
any, for any Applicable Earn-Out Period will be made by Buyer to Seller within
30 days after the Applicable Buyer's Calculation has been delivered to Seller
and any disputes with respect thereto have been
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resolved, subject to offset for (a) indemnification claims as set forth in
Section 6.04, and (b) other liabilities of Member to Buyer from time to time,
whether arising as a result of this Agreement or otherwise.
4. Maximum Aggregate Earn-Out Amounts. Buyer's obligation to pay earn-out
amounts to Seller, and all related obligations under this Schedule, shall cease
when all such payments equal $2,500,000 in the aggregate.
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EXHIBIT A
FORM OF PROMISSORY NOTE
5
EXHIBIT B
XXXX OF SALE AND ASSIGNMENT AGREEMENT
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