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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of May 25, 1999 (the "Agreement"),
among AIMCare, Inc., a Delaware corporation (the "Buyer"), and LifeServ
Technologies, Inc., a Florida corporation (the "Seller") a wholly owned
subsidiary of Medical Technology Systems, Inc. (the "Stockholder").
WHEREAS, the Stockholder owns 100% of the outstanding capital stock of the
Seller;
WHEREAS, Performance Pharmacy Systems, Inc., Medication Management Systems,
Inc., Cart-▇▇▇▇, Inc., Systems Professionals, Inc. and Medication Management
Technologies, Inc., are each wholly owned subsidiaries of the Seller each with
offices in Clearwater, Florida (individually referred to as a "Subsidiary", and
collectively, the "Subsidiaries");
WHEREAS, the Seller and its Subsidiaries provide software and computer
system design, development and implementation in the health care industry (the
"Purchased Business");
WHEREAS, this Agreement contemplates a transaction in which (i) the Seller
sells certain specified assets of Seller and its Subsidiaries to the Buyer, (ii)
the Buyer assumes certain specified liabilities of the Seller, and (iii)
thereafter the Buyer (or one or more nominees or subsidiaries of the Buyer)
operates the Purchased Business on the terms and conditions set forth below (the
"Acquisition");
WHEREAS, in connection with the negotiation and preparation of this
Agreement, the Seller and the Buyer have prepared a set of disclosure schedules,
dated the date hereof and delivered separately as one or more volumes (the
"Disclosure Schedule", with any reference herein to a Schedule being to the
Disclosure Schedule);
WHEREAS, the Board of Directors and the Shareholder of the Seller has
approved and adopted this Agreement and the transactions contemplated hereby;
WHEREAS, the Board of Directors of Buyer has determined that the
Acquisition is in the best interests of Buyer and its stockholders and has
approved and adopted this Agreement and the transactions contemplated hereby;
and
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained and intending to be legally bound hereby, the
Buyer, the Seller and the Stockholder hereby agree as follows:
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ARTICLE I
Closing, Purchase and Sale
SECTION 1.01. Closing.
(a) Time and Place. The closing of the transfer and delivery of all
documents and instruments necessary to consummate the transactions
contemplated by this Agreement (the "Closing") shall be held on May 25,
1999, or on such other date and time as shall be mutually agreed to by the
Buyer and the Seller, at the offices of Seller, it being understood and
agreed that time is of the essence of this Agreement. The date on which the
Closing is actually held hereunder is sometimes referred to herein as the
"Closing Date". The Closing will be deemed to be effective for purposes of
this Agreement as of the opening of business on the Closing Date.
(b) Transactions at Closing. At the Closing:
(i) The Seller shall duly execute and deliver to the Buyer or
its nominee or nominees such deeds, bills of sale,
certificates of title and other instruments of assignment or
transfer with respect to the Acquired Assets, as that term
is defined hereinbelow, as the Buyer may reasonably request
and as may be necessary to vest in the Buyer or its
nominee(s) good record and marketable title to all of the
Acquired Assets, in each case subject to no encumbrance;
these transfer instruments will include one or more Bills of
Sale in the form of Exhibit A hereto.
(ii) The Buyer shall duly execute and deliver to the Seller such
instruments of assumption with respect to the Assumed
Liabilities, as that term is defined hereinbelow, as the
Seller may reasonably request, including an Assumption
Agreement in the form of Exhibit B and Exhibit C hereto.
SECTION 1.02. Acquired Assets. Subject to the terms and conditions set
forth in this Agreement, at the Closing, the Seller shall sell, assign, transfer
and deliver to the Buyer, and the Buyer shall purchase, acquire and take
assignment and delivery of, the following assets of the Seller and each of its
Subsidiaries (for the purpose of the remainder of this Section 1.02 and Section
1.03, all references to Seller in Section 1.02 and Section 1.03 shall include by
such reference its Subsidiaries) used in or relating to the Purchased Business,
with the exception of the Excluded Assets (as defined in Section 1.03, with all
of such assets included in this Section 1.02 hereinafter referred to
collectively as the "Acquired Assets"):
(a) the machinery, equipment, tools, spare parts, supplies, materials
and other personal property owned by the Seller and either (i) reflected on
the Closing Balance Sheet (as
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defined in Section 3.05), or (ii) located at the job sites for or used
in connection with the performance of the Acquired Contracts (as defined
below) all of which are listed and briefly described in Schedule 1.02(a)
(collectively, the "Equipment");
(b) all of the Seller's title to, interest in and rights under any
personal property lease relating to the Purchased Business to which the
Seller is currently a party, to the extent such lease was entered into in
the ordinary course of business (the "Personal Property Leases") all of
which are listed and briefly described in Schedule 1.02(b);
(c) all of the Seller's rights under:
(i) the contracts, bids, subcontracts and other agreements for
the provision of software design and development, system
implementation and administration or similar services by
Seller (collectively, "Services"), together with all related
purchase orders and similar agreements;
(ii) any other contract for the provision of Services approved by
the Buyer in writing; and
(iii)in connection with the contracts, subcontracts and other
agreements described in any of (i) or (ii) above, all
related purchase orders, completed and uncompleted job
orders, subcontracts and similar agreements and any
ancillary contracts entered into in connection with such
contracts such as services agreements.
Schedule 1.02(c) lists and briefly describes the contracts, bids,
subcontracts, job orders and other agreements referred to in clauses
(i) - (iii) above and are referred to collectively in this Agreement
as the "Acquired Contracts";
(d) all of the Seller's rights under the miscellaneous contracts or
purchase orders, not related to the Acquired Contracts, issued by the
Seller in connection with the Purchased Business in the ordinary course of
business consistent with past practice, to the extent outstanding, on the
Closing Date, all of which are listed and briefly described in Schedule
1.02(d) (the "Miscellaneous Contracts");
(e) all of the Seller's rights under the licenses and permits used by
it in the operation of the Purchased Business, including those listed on
Schedule 1.02(e), to the extent that such licenses and permits are
transferable to the Buyer (the "Permits");
(f) all of the Seller's rights to registered and unregistered
copyrights, designs, licenses, inventions, patents and patent applications,
federally registered, state registered and common law trademarks, service
marks and applications therefor, the corporate name and all other
tradenames and all applications therefor, together with the production
records, technical information, software and system design and know-how,
processes, trade secrets, customer lists, telephone numbers and other
intangible assets of the Seller (the "Intangibles"), all of which are
listed and briefly described in Schedule 1.02(f);
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(g) all of the Seller's rights with respect to all prepaid assets
relating to the Purchased Business, including without limitation the
prepaid assets listed on Schedule 1.02(g) hereto, but only to the extent
such prepaid assets appear on the Closing Balance Sheet;
(h) the Seller's trade accounts receivable (billed and unbilled),
retentions and miscellaneous receivables relating to the Acquired
Contracts, including without limitation those listed on Schedule 1.02(h)
hereto, but only to the extent such receivables and retentions are not
collected on or before the Closing Date, and all of the Seller's trade
accounts receivable (billed and unbilled), retentions and miscellaneous
receivables relating to the Acquired Contracts and generated prior to the
Closing Date (the "Accounts Receivable");
(i) all of the Seller's cash and cash equivalents relating to the
Purchased Business, including cash and cash equivalents held as escrowed
retentions or in similar accounts and relating to the Acquired Contracts,
all of which are listed and briefly described in Schedule 1.02(i);
(j) all of the Seller's rights under the insurance policies listed on
Schedule 1.02(j) hereto (the "Insurance Policies");
(k) the assets relating to the Purchased Business listed on Schedule
1.02(k);
(l) any other asset reflected on the Closing Balance Sheet, all of
which are listed and briefly described in Schedule 1.02(l); and
(m) the Seller's accounting books, records and ledgers, and employment
and personnel records for all employees and all documents and records
relating to the Acquired Assets and the Purchased Business and originals of
the Personal Property Leases, the Insurance Policies, the Acquired
Contracts and the Miscellaneous Contracts.
SECTION 1.03. Excluded Assets. Notwithstanding the foregoing the Seller is
not selling and the Buyer is not purchasing pursuant to this Agreement, and the
term "Acquired Assets" shall not include, any of the following assets
(collectively, the "Excluded Assets"):
(a) the Seller's interest in the real property leased by the Seller
described on Schedule 1.03(a);
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(b) all other assets relating specifically to contracts which have
been expressly retained and unassigned.
(c) any capital stock or equity interest in the Seller;
(d) all foreign, federal, state or local Tax (as defined in Section
9.03) refunds, Tax refund claims and Tax credits, deductions or other Tax
benefits of the Seller relating to periods prior to the Closing Date;
(e) all indemnity and contribution rights granted to the Seller or
owed by third parties to the Seller with respect to Excluded Liabilities
(as defined in Section 1.04) and any and all rights or assets arising from
and related to the defense, release, compromise, discharge, administration,
management or satisfaction by the Seller of the Excluded Liabilities;
(f) all of Seller's rights, claims, actions, causes of action, vendor,
supplier and similar claims, judgments and demands of whatever nature
relating to Excluded Assets;
(g) all of Seller's deferred charges, advance payments, prepaid items,
security and other deposits, claims for refunds, rights of offset, and
credits of all kinds, relating specifically to the Excluded Assets or to
the Excluded Liabilities;
(h) the consideration received by the Seller pursuant to this
Agreement;
(i) advances to employees; and
(j) the rights of the Seller under this Agreement.
SECTION 1.04. Assumption Of Certain Obligations; Excluded Liabilities
(a) Except as otherwise provided herein, at the Closing the Buyer
shall assume, and agree to pay, perform, fulfill and discharge, the
following obligations of the Seller relating to the Purchased Business
(collectively, the "Assumed Liabilities"):
(i) all obligations of the Seller accrued prior to the Closing
under the Personal Property Leases, Acquired Contracts,
Miscellaneous Contracts and Insurance Policies
(collectively, the "Assumed Contracts"), but only to the
extent such obligations are reflected or specifically
reserved for on the Closing Balance Sheet as an account
payable or accrued expense;
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(ii) all obligations under the Assumed Contracts to the extent,
and only to the extent, such obligations accrue after the
Closing and relate to the operation of the Purchased
Business after the Closing;
(iii)all accrued expenses of the Seller relating to the
Purchased Business ("Assumed Expenses") and all account
payables of the Seller relating to the Purchased Business
(the "Assumed Payables"), to the extent, and only to the
extent, that such Assumed Expenses and Assumed Payables are
reflected on the Closing Balance Sheet as an account payable
or accrued expense, except as provided in Section 1.04(b)
hereof; and
(v) the obligations, along with the associated rights and
privileges, of Seller and Stockholder pursuant to a certain
asset acquisition agreement with Peritronics, Inc. dated
April 30, 1998.
(vi) the accrued amount for causes of action filed by Seller's
employees or former employees for unpaid wages, commissions,
benefits, and other obligations of Seller, to the extent,
and only to the extent, such claims are reflected on the
Closing Balance Sheet ("Employee Claims") and subject to the
terms of the Escrow Agreement referenced in Section 7.03(h).
Except as otherwise provided in Section 1.04 (a)(vii), Buyer
has no further obligation or liability for any amounts of
Employee Payables, as described in Section 1.04(a)(vii) or
Employee Claims or any other employee or consultant payables
that are not reflected on the Closing Balance Sheet.
(vii)the accrued and unpaid wages, commissions, benefits, and
other accrued and unpaid obligations of Seller to employees
and former employees of Seller, to the extent, and only to
the extent, such amounts are reflected on the Closing
Balance Sheet, and are not Employee Claims as described in
Section 1.04(a)(vi) hereof, together with any accrued and
unpaid vacation time of Seller employees existing on the
Closing Date (collectively "Employee Payables"), subject to
the terms of the Escrow Agreement referenced in Section
7.03(h).
(viii) the obligation of Seller to Linc Capital, Inc.
("LincCapital") for payment under a certain sale and
leaseback agreement between Seller and LincCapital dated
February 28, 1998 (the "LincCapital Obligation").
(ix) any other liability or obligation of the Seller relating to
the Purchased Business, but only to the extent of the amount
reflected as an account payable or accrued expense on the
Closing Balance Sheet for such obligation or liability,
except as otherwise provided herein.
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(b) Except as otherwise provided in this Section 1.04(b), the Buyer
shall not assume, and shall not be deemed to have assumed, any liability or
obligation of any nature, fixed or
contingent or known or unknown, of the Seller whatsoever other than as
specifically set forth in this Article I (with all such unassumed
liabilities and obligations referred to in this Agreement as the "Excluded
Liabilities").
Buyer shall not assume or be deemed to assume, and Stockholder hereby
forgives, releases and holds harmless Seller and Buyer from, Seller's
obligation of repayment of the outstanding principal and interest reflected
on the Closing Balance Sheet as due and owing to Stockholder (the
"Intercompany Debt"), provided however, the amount of the Intercompany Debt
forgiven by Stockholder shall not exceed the amount of $200,000.00. Any
amounts of the Intercompany Debt in excess of $200,000.00, to the extent
and only to the extent such amount of the Intercompany Debt in excess of
$200,000.00 is reflected on the Closing Balance Sheet, shall be payable by
Buyer to Stockholder upon the terms and conditions as are reasonable and
typical in a transaction of this nature, unless such excess amount is less
than $5,000.00 in which case Buyer shall pay such amount to Seller within
30 days of the Closing Date
(c) Stockholder and Seller shall indemnify, hold harmless and defend
Buyer as to all attachments, losses, liabilities, costs and expenses,
including attorney's fees, in excess of the amounts reflected on the
Closing Balance Sheet for any such Assumed Liabilities ("Indemnified
Expenses"), including without limitation, such Indemnified Expenses
incurred as part of any claims for employees' and independent contractors'
wages, commissions and legal fees.
ARTICLE II
SECTION 2.01 Consideration. In consideration of the Acquisition
contemplated herein, Buyer shall pay Seller $100.00 in cash and shall assume the
Assumed Liabilities described in Section 1.04 (hereinafter, the
"Consideration").
SECTION 2.02. Allocation. The Seller and Buyer agree to confer as to the
allocation for tax and accounting purposes of the Consideration, and agree that
such allocation will be consistent with the principles of Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code"), and Schedule 2.02
hereto.
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ARTICLE III
Representations and Warranties of the Seller and the Stockholder
The Seller and Stockholder, jointly and severally represent and warrant to
the Buyer that:
SECTION 3.01. Organization and Qualification; Subsidiaries. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority to own or lease its interest in the Acquired Assets and to operate its
properties and to carry on the Purchased Business as it is now being conducted.
The Seller is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction, each such jurisdiction
being listed in Schedule 3.01, where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except where such failure to be so duly qualified,
licensed and in good standing would not have a Material Adverse Effect. The term
"Material Adverse Effect" means any change or effect that is or is reasonably
likely to be materially adverse to the business, results of operations, or
financial condition of the Buyer or Seller, as the case may be, or otherwise
affect the ability of the Buyer or Seller, as the case may be, to consummate the
Acquisition.
SECTION 3.02. Authority Relative to This Agreement. The Seller has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Acquisition and the
other transactions contemplated hereby. The execution and delivery of this
Agreement by the Seller has been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Seller or
its Subsidiaries are necessary to authorize this Agreement or to consummate the
Acquisition. This Agreement has been duly and validly executed and delivered by
the Seller and, assuming the due authorization, execution and delivery by the
Buyer, constitutes a legal, valid and binding obligation of the Seller and its
Subsidiaries, enforceable against the Seller and its Subsidiaries in accordance
with its terms.
SECTION 3.03. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Seller does
not, and the performance of this Agreement by the Seller will not, (i)
conflict with or violate the Articles of Incorporation or By-laws or
equivalent organizational documents of the Seller; (ii) conflict with or
violate any domestic (federal, state or local) or foreign law, rule,
regulation, order, judgment or decree (collectively, "Laws") applicable to
the Seller or by which any property or Acquired Assets of the Seller are
bound or affected, except for such conflicts or violations which would not,
individually or in the aggregate, have a Material Adverse Effect; or (iii)
except as specified in Schedule 3.03(a)(iii) of the Disclosure Schedule,
result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any
property or Acquired Assets of the Seller pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or
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other instrument or obligation to which the Seller is a party or by which
the Seller or any property or Acquired Assets of the Seller are bound or
affected, except for any such breaches, defaults or other occurrences which
would not, individually or in the aggregate, have a Material Adverse
Effect.
(b) The execution and delivery of this Agreement by the Seller does
not, and the performance of this Agreement by the Seller will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic,
foreign or supranational, except (i) as specified in Schedule 3.03(b) of
the Disclosure Schedule; and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Acquisition,
and would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.04. Permits; Seller Products; Regulation. Except as set forth on
Schedule 3.04-1 of the Disclosure Schedule, the Seller is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders necessary for the
Seller to own, lease and operate its properties or to carry on its business as
it is now being conducted (the "Permits"), and no suspension or cancellation of
any of the Permits is pending or, to the knowledge of the Seller, threatened.
Except as provided in Schedule 3.04-2, the Seller is not in conflict with, nor
in default or violation of, (i) any Laws applicable to the Seller or by which
any property or Acquired Assets of the Seller are bound or affected; (ii) any of
the Permits; or (iii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Seller is a party or by which the Seller or any property or Acquired Assets of
the Seller are bound or affected, except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.05. SEC Filings; Financial Statements.
(a) Except as set forth on Schedule 3.05 of the Disclosure Schedule,
neither the execution, delivery or performance of this Agreement nor the
consummation of any transaction provided for in the Agreement is prohibited
by or requires Seller to obtain or make any consent, authorization,
approval, registration, or filing under any statute, law, ordinance,
regulation, rule, judgment, decree or order of any court or governmental
agency, board, bureau, body, department or authority, or of any other
person. The Seller is not required to file any form, report or other
document with the SEC.
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(b) Except as and to the extent set forth on the consolidated balance
sheet of the Seller as at May 15, 1999, including the notes thereto (the
"Closing Balance Sheet"), the Seller does not have any liability or
obligation of any nature (whether accrued, absolute, contingent or
otherwise) which would be required to be reflected on a balance sheet, or
in the notes thereto, prepared in accordance with generally accepted
accounting principles, except for liabilities and obligations (i) incurred
since May 15, 1999 which would not, individually or in the aggregate, have
a Material Adverse Effect; and (ii) incurred pursuant to this Agreement.
SECTION 3.06. Absence of Certain Changes or Events. Since May 15, 1999,
except as contemplated by this Agreement or set forth in Schedule 3.06 of the
Disclosure Schedule, the Seller has conducted the Purchased Business in the
ordinary course and in a manner consistent with past practice and, since May 15,
1999, there has not been (a) any event or events having, individually or in the
aggregate, a Material Adverse Effect on the Purchased Business or Acquired
Assets, (b) any change by the Seller in its accounting methods, principles or
practices, (c) any revaluation by the Seller of any Acquired Assets (including,
without limitation, any writing down of the value of inventory or writing off of
notes or accounts receivable), other than in the ordinary course of business
consistent with past practice, (d) any entry by the Seller into any commitment
or transaction material to the Seller, except in the ordinary course of business
and consistent with past practice, (e) any declaration, setting aside or payment
of any dividend or distribution in respect of any capital stock of the Seller or
any redemption, purchase or other acquisition of any of its securities, or (f)
any increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any officers or key employees of the Seller, except in the
ordinary course of business consistent with past practice. Without limiting the
foregoing, since May 15, 1999 there has been no material damage to, or
destruction of, or other material adverse change in the condition, capacity or
operation of, the Acquired Assets.
SECTION 3.07. Absence of Litigation. Except as listed and briefly described
in Schedule 3.07-1, there is no claim, action, proceeding or investigation
pending or, to the knowledge of the Seller, threatened against the Seller, its
Subsidiaries, or any other business or individual controlling or controlled by
the Seller ("Affiliate"), or any property or asset of the Seller or any
Affiliate, before any court, arbitrator or Governmental Authority (as defined in
Section 9.03), which (a) individually or in the aggregate, is reasonably likely
to have a Material Adverse Effect, or (b) seeks to delay or prevent the
consummation of the Acquisition and the other transactions contemplated hereby.
Except as listed and briefly described in Schedule 3.07-2, as of the date
hereof, neither the Seller nor any Affiliate nor any property or asset of the
Seller or Affiliate is subject to any order, writ, judgment, injunction, decree,
determination or award having, individually or in the aggregate, a Material
Adverse Effect.
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SECTION 3.08. Employee Benefit Plans. Schedule 3.08 of the Disclosure
Schedule lists (i) all the employee benefit plans, programs and arrangements
maintained for the benefit of any current or former employee, officer or
director of the Seller (the "Plans"); and (ii) all contracts and agreements
relating to employment and all severance agreements, with any of the directors,
officers or employees of the Seller (the "Employment Contracts"). Except as set
forth on Schedule 3.08 of the Disclosure Schedule, Buyer has been furnished with
a copy of each Plan, each material document prepared in connection with each
Plan and each Employment Contract. Except as set forth in Schedule 3.08 of the
Disclosure Schedule: (i) none of the Plans is a multiemployer plan within the
meaning of Section 4001(a)(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"); (ii) none of the Plans promises or provides retiree
medical or life insurance benefits to any person except as required by Part 6 of
Title I of ERISA, Section 4980B of the Code or similar state law relating to the
continuation of health insurance coverage; (iii) each Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service that it is so qualified
and nothing has occurred since the date of such letter to affect the qualified
status of such Plan; (iv) none of the Plans promises or provides severance
benefits or benefits contingent upon a change in ownership or control, within
the meaning, of Section 280G of the Code; (v) to the knowledge of the Seller,
each Plan has been operated in all material respects in accordance with its
terms and the requirements of applicable law; (vi) none of the Plans is subject
to Title IV of ERISA; (vii) the Seller has not incurred any direct or indirect
liability under, arising out of, or by operation of Title IV of ERISA in
connection with, the termination of, or withdrawal from, any Plan or other
retirement plan or arrangement; and (viii) the Seller has not incurred any
liability under, and has complied in all respects with, the Worker Adjustment
Retraining Notification Act.
SECTION 3.09. Labor Matters. The Seller is not a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Seller.
SECTION 3.10. Real Property and Leases.
(a) The Seller and its Subsidiaries each has sufficient title or
leasehold interests to all its properties and Acquired Assets to conduct
the Purchased Business as currently conducted or as contemplated to be
conducted, with only such exceptions as, individually or in the aggregate,
would not have a Material Adverse Effect.
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(b) All leases of real property leased for the use or benefit of the
Seller or any of its Subsidiaries to which the Seller or such Subsidiary is a
party requiring rental payments in excess of $10,000 during the period of the
lease, and all amendments and modifications thereto are in full force and effect
and have not been modified or amended, and there exists no default under any
such lease by the Seller, nor any event which with notice or lapse of time or
both would
constitute a default thereunder by the Seller, which would, individually or in
the aggregate, have a Material Adverse Effect.
SECTION 3.11. Intellectual Property. "Intellectual Property" means all
federal and state registrations and applications for common law rights to
trademarks, service marks, trade names, registrations and applications for
patents, inventions, registered or unregistered copyrights, trade secrets,
know-how, customer and potential customer lists, and other proprietary rights
and information used or held for use in connection with the Purchased Business
and Acquired Assets of the Seller and of each Subsidiary as currently conducted,
together with all applications currently pending for any of the foregoing.
Except as (i) set forth in Schedule 3.11-1 of the Disclosure Schedule; or (ii)
would not have, individually or in the aggregate, a Material Adverse Effect, the
Seller owns or possesses all of the Intellectual Property, and, to the knowledge
of the Seller, there is no assertion or claim (or basis therefor) challenging
the validity of any Intellectual Property. The Seller is not party to any
license or other agreement pursuant to which it has the right to use any
Intellectual Property utilized in connection with any product of the Seller.
Except as set forth on Schedule 3.11-2 of the Disclosure Schedule, there are no
pending, or to the knowledge of the Seller, threatened, interferences,
re-examinations, oppositions or nullifies involving any patents, patent rights
or applications therefor of the Seller that, individually or in the aggregate,
would have a Material Adverse Effect. To the Seller's knowledge, substantially
all employees of the Seller have executed confidentiality and development
assignment agreements in the forms previously delivered to the Buyer, each such
assignment is listed and briefly described in Schedule 3.11-3. Except as set
forth in Schedule 3.11-4 of the Disclosure Schedule, there are no notices
received by the Seller from third parties regarding actual or potential
infringements by the Seller's products or processes which, individually or in
the aggregate, would have a Material Adverse Effect. To the knowledge of the
Seller, except as disclosed in Schedule 3.11-5 of the Disclosure Schedule, there
are no claims of infringements, pending or threatened, of any Intellectual
Property. To the knowledge of the Seller, except as provided in Schedule 3.11-6
of the Disclosure Schedule, the Seller has not licensed or otherwise permitted
the use by any third party of any Intellectual Property. Seller and Stockholder
acknowledge that those representations and warranties set forth in the Software
License Agreement entered into by and between Seller and Stockholder are
included herein and incorporated by reference.
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SECTION 3.12. Taxes. Except as described in Schedule 3.12-1 of the
Disclosure Schedule, (i) the Seller has filed all federal, state, local and
foreign Tax returns and reports required to be filed by them and have paid or
accrued all Taxes shown as due thereon and have paid all applicable ad valorem
taxes as are due, other than (a) such payments as are being contested in good
faith by appropriate proceedings, a description of which is provided in Schedule
3.12-2 and (b) such filings, accruals, payments or other occurrences that,
individually or in the aggregate, would not have a Material Adverse Effect; (ii)
neither the Internal Revenue Service (the "IRS") nor any other taxing authority
or agency, domestic or foreign, is now asserting or, to the knowledge of the
Seller, threatening to assert against the Seller any deficiency or claim for
additional Taxes or interest thereon or penalties in connection therewith, which
claims or deficiencies, individually or in the aggregate, would have a Material
Adverse Effect; (iii) the Seller has not granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any federal, state, county, municipal or foreign income tax; (iv) the accruals
and reserves for Taxes reflected in the Closing Balance Sheet and the most
recent quarterly financial statements are adequate to cover all taxes accruable
through the date thereof (including interest and penalties, if any, thereon) in
accordance with generally accepted accounting, principles; (v) Seller has not
withheld or collected and paid over to the appropriate Governmental authorities
or are properly holding for such payment all Taxes required by law to be
withheld or collected, except for such failures to have so withheld or collected
and paid over or to be so holding for payment which would not, individually or
in the aggregate, have a Material Adverse Effect; and (vii) there are no
material liens for Taxes upon the assets of the Seller, other than liens for
Taxes that are being contested in good faith by appropriate proceedings
described in Schedule 3.12-2.
SECTION 3.13. Environmental Matters.
(a) For purposes of this Agreement, the following terms shall have the
following meaning: (i) "Hazardous Substances" means (A) those substances
defined in or regulated under the following U.S. federal statutes and their
state or foreign counterparts, as each may be amended from time to time,
and all regulations thereunder: the Hazardous Materials Transportation Act,
the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act, the Safe
Drinking Water Act, the Toxic Substances Control Act, the Marine
Protection, Research and Sanctuaries Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act;
(B) petroleum and petroleum products including crude oil and any fractions
thereof, (C) natural gas, synthetic gas, and any mixtures thereof, (D)
radon; (E) asbestos; (F) any other pollutant or contaminant; and (G) any
substance with respect to which a federal, state or local agency requires
environmental investigation, monitoring, reporting, or remediation; and
(ii) "Environmental Laws" means any U.S. or foreign federal, state or local
law relating to (A) releases or threatened releases of Hazardous Substances
or materials containing Hazardous Substances; (B) the manufacture,
handling, transport, use, treatment, storage or disposal of Hazardous
Substances or materials containing Hazardous Substances; or (C) otherwise
relating to pollution of the environment or the protection of human health.
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(b) Except as described in Schedule 3.13 of the Disclosure Schedule
(which description shall include an estimate of the Seller's potential
financial liability with respect to each matter so described) or as would
not, individually or in the aggregate, have a Material Adverse Effect: (i)
the Seller has not violated and is not in violation of any Environmental
Law;
(ii) there has been no contamination, disposal, spilling,
dumping, incineration, discharge, storage, treatment or
handling of any Hazardous Substance, on or from any of the
properties owned or leased by the Seller (including, without
limitation, soils and surface and ground waters); (iii) to
the knowledge of the Seller, the Seller is not liable for
any offsite contamination; (iv) the Seller is not liable
under any Environmental Law; (v) to the knowledge of the
Seller, the Seller has all permits, licenses and other
authorizations required under any Environmental Law
("Environmental Permits"); (vi) to the knowledge of the
Seller, the Seller has been and is in compliance with its
Environmental Permits; and (vii) there are no pending, or,
to the knowledge of the Seller, threatened claims against
the Seller or any Subsidiary relating to any Environmental
Law or Hazardous Substance.
SECTION 3.14. Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Seller Common Stock is the only vote of
the holders of any class or series of capital stock of the Seller necessary to
approve the Acquisition.
SECTION 3.15. Brokers. No broker, finder or investment banker (other than
Seller's Financial Advisors) is entitled to any brokerage, finder's or other fee
or commission in connection with the Acquisition based upon arrangements made by
or on behalf of the Seller. The Seller has heretofore furnished to Buyer a
complete and correct copy of all agreements between the Seller and Seller's
Financial Advisors pursuant to which such firm(s) would be entitled to any
payment relating to the Acquisition.
ARTICLE IV
Representations and Warranties of Buyer
Buyer hereby represents and warrants to the Seller that:
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SECTION 4.01. Organization and Qualification; Subsidiaries. Buyer is a
Corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power and authority would not,
individually or in the aggregate, have a Material Adverse Effect. Buyer is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in such jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing, that would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 4.02. Certificate of Incorporation and By-Laws. Buyer has
heretofore furnished to the Seller a complete and correct copy of the
Certificate of Incorporation and the By-laws, each as amended to date, of Buyer.
Such Certificates of Incorporation and By-laws are in full force and effect.
Buyer is not in violation of any provision of its Certificate of Incorporation
or By-laws.
SECTION 4.03. Authority Relative to this Agreement. Buyer has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Acquisition and the other
transactions contemplated hereby. The execution and delivery of this Agreement
by Buyer and the consummation by Buyer of the Acquisition have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of Buyer are necessary to authorize this Agreement or to
consummate the Acquisition. This Agreement has been duly and validly executed
and delivered by Buyer and, assuming the due authorization, execution and
delivery by the Seller, constitutes a legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms.
SECTION 4.04. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Buyer does not,
and the performance of this Agreement by Buyer will not, (i) conflict with
or violate the Certificate of Incorporation or By-laws of Buyer; (ii)
conflict with or violate any Law applicable to Buyer or by which any
property or asset of Buyer is bound or affected, except for such conflicts
or violations which would not individually or in the aggregate, have a
Material Adverse Effect; or (iii) except as specified in Schedule
4.04(a)(iii) of the Disclosure Schedule, result in any breach of or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Buyer
pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to
which Buyer is a party or by which Buyer or any property or asset of Buyer
is bound or affected, except for any such breaches, defaults or other
occurrences which would not, individually or in the aggregate, have a
Material Adverse Effect.
16
(b) The execution and delivery of this Agreement by Buyer does not,
and the performance of this Agreement by Buyer will not, require any
consent, approval, authorization or permit of, or filing with or
notification to, any Governmental or regulatory authority, domestic,
foreign or supranational, except (i) for applicable requirements, if any,
of the Exchange Act, the Securities Act, Blue Sky Laws and state takeover
laws, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, filing and
recordation of appropriate merger documents as required by Florida Law and
Delaware Law, respectively; (ii) as specified in Schedule 4.04(b) of the
Disclosure Schedule; and (iii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Acquisition,
and would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 4.05. SEC Filings; Financial Statements.
(a) Except as set forth on Schedule 4.05 of the Disclosure Schedule,
neither the execution, delivery or performance of this Agreement nor the
consummation of any transaction provided for in the Agreement is prohibited
by or requires Buyer to obtain or make any consent, authorization,
approval, registration, or filing under any statute, law, ordinance,
regulation, rule, judgment, decree or order of any court or governmental
agency, board, bureau, body, department or authority, or of any other
person. Buyer is not required to file any form, report or other document
with the SEC.
(b) Except as and to the extent set forth on the consolidated balance
sheet of the Buyer as at_______________, including the notes thereto (the
"Buyer Balance Sheet"), the Buyer does not have any liability or obligation
of any nature (whether accrued, absolute, contingent or otherwise) which
would be required to be reflected on a balance sheet, or in the notes
thereto, prepared in accordance with generally accepted accounting
principles, except for liabilities and obligations (i) incurred since
_____________ which would not, individually or in the aggregate, have a
Material Adverse Effect; and (ii) incurred pursuant to this Agreement.
SECTION 4.06. Absence of Certain Changes or Events. Since
_________________, except as contemplated by this Agreement, or as set forth in
Schedule 4.06 of the Disclosure Schedule, Buyer and its consolidated
subsidiaries have conducted their businesses in the ordinary course and in a
manner consistent with past practice and, since __________________, there has
not been (a) any event or events having, individually or in the aggregate, a
Material Adverse Effect, (b) any change by Buyer in its accounting methods,
principles or practices, (c) any revaluation by Buyer of any asset (including,
without limitation, any writing down of the value of inventory or writing off of
notes or accounts receivable), other than in the ordinary course of business
consistent with past practice, (d) any entry by Buyer into any commitment or
transaction material to Buyer, except in the ordinary course of business and
consistent with past practice, or (e) any declaration, setting aside or payment
of any dividend or distribution in respect of any capital stock of Buyer or any
redemption, purchase or other acquisition of any of its securities.
17
SECTION 4.07. Absence of Litigation. Except as disclosed in Section 4.07 of
the Disclosure Schedule, there is no claim, action, proceeding or investigation
pending or, to the
knowledge of the Buyer, threatened against the Buyer, or any property or asset
of the Buyer, before any court, arbitrator or Governmental Authority (as defined
in Section 9.03), which (a) individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect, or (b) seeks to delay or prevent the
consummation of the Acquisition and the other transactions contemplated hereby.
As of the date hereof, neither the Buyer nor any property or asset of the Buyer
is subject to any order, writ, judgment, injunction, decree, determination or
award having, individually or in the aggregate, a Material Adverse Effect.
SECTION 4.9. Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Acquisition based upon arrangements made by or on behalf of Buyer.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE ACQUISITION
SECTION 5.01. Conduct of Purchased Business by the Seller Pending the
Acquisition. The Seller covenants and agrees that, between the date of this
Agreement and the earlier of the termination of this Agreement or the Closing
Date, unless Buyer shall otherwise agree in writing, the businesses of the
Seller shall be conducted only in, and the Seller shall not take any action
except in, the ordinary course of business and in a manner consistent with past
practice; and the Seller shall use commercially reasonable efforts to preserve
substantially intact its business organization, to keep available the services
of the current officers, employees and consultants of the Seller and to preserve
the current relationships of the Seller with customers, suppliers and other
persons with which the Seller has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement or as
set forth in Schedule 5.01 of the Disclosure Schedule, the Seller shall not,
between the date of this Agreement and the earlier of the termination of this
Agreement or the Closing Date, directly or indirectly do, or propose to do, any
of the following without the prior written consent of Buyer:
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(a) amend or otherwise change the Seller's Articles of Incorporation
or By-laws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of any assets of
the Seller, except for sales in the ordinary course of business and in a
manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock;
(d) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof or any
material amount of assets; (ii) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any person,
or make any loans or advances, except in the ordinary course of business
and consistent with past practice; (iii) enter into any contract or
agreement material to the business, results of operations or financial
condition of the Seller, other than in the ordinary course of business,
consistent with past practice; (iv) authorize any single capital
expenditure which is in excess of $10,000 or capital expenditures which
are, in the aggregate, in excess of $25,000 for the Seller taken as a
whole; or (v) enter into or amend in any material respect any contract,
agreement, commitment or arrangement with respect to any matter set forth
in this subsection (d);
(e) increase (except in the ordinary course of business and consistent
with past practice) the compensation payable or to become payable to its
officers or employees generally, or grant any bonus, severance or
termination pay to, or enter into any employment or severance agreement
with any director, officer or other employee of the Seller, or establish,
adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit
of any director, officer or employee;
(g) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect
to accounting policies or procedures (including, without limitation,
procedures with respect to the payment of accounts payable and collection
of accounts receivable); or
(h) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or
reserved against in the Closing Balance Sheet, or subsequently incurred in
the ordinary course of business and consistent with past practice.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Appropriate Action; Consents; Filings.
(a) The Seller and Buyer shall use commercially reasonable efforts to
(i) take, or cause to be taken, all appropriate action, and do, or cause to
be done, all things necessary, proper or advisable under applicable Law or
otherwise to consummate and make effective the Acquisition as promptly as
practicable; (ii) obtain in a timely manner from any Governmental
Authorities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Buyer or the
Seller or any of their subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
Acquisition and the other transactions contemplated hereby; and (iii) as
promptly as practicable make all necessary filings, and thereafter make any
other required submissions, with respect to this Agreement and the
Acquisition required under any applicable Law; provided that Buyer and the
Seller shall cooperate with each other in connection with the making of all
filings, including providing copies of all such documents to non-filing
party and its advisors prior to filing and, if requested, to accept all
reasonable additions, deletions or changes suggested in connection
therewith. The Seller and Buyer shall furnish to each other all information
required for any application or other filing to be made pursuant to the
rules and regulations of any applicable Law in connection with the
transactions contemplated by this Agreement.
(b) (i) Each of Buyer and the Seller shall give (or shall cause its
respective subsidiaries to give) any notices to third parties, and use, and
cause its respective subsidiaries to use, their reasonable best efforts to
obtain any third party consents, (A) necessary, proper or advisable to
consummate the transactions contemplated in this Agreement, (B) disclosed
or required to be disclosed in the Disclosure Schedule or (C) required to
prevent a Material Adverse Effect from occurring prior to or after the
Closing Date.
(ii) In the event that either Buyer or the Seller shall fail to
obtain any third party consent described in subsection
(b)(i) above, it shall use its reasonable best efforts, and
shall take any such actions reasonably requested by the
other party, to minimize any adverse effect upon the Seller
and Buyer, their respective subsidiaries, and their
respective businesses resulting, or which could reasonably
be expected to result after the Closing Date, from the
failure to obtain such consent.
20
(c) Each party shall promptly notify the other party in writing of any
pending or, to the knowledge of the first party, threatened action,
proceeding or investigation by any Governmental Authority or any other
person (i) challenging or seeking, material damages in connection with the
Acquisition; or (ii) seeking to restrain or prohibit the consummation of
the Acquisition or otherwise limit the right of Buyer or, to the knowledge
of such first party, Buyer's subsidiaries to own or operate all or any
portion of the businesses or Acquired Assets of the Seller or its
subsidiaries, which in either case is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect prior to or
after the Closing Date.
SECTION 6.02. Access to Information; Confidentiality.
(a) Upon reasonable notice and subject to restrictions contained in
confidentiality agreements to which such party is subject (from which such
party shall use commercially reasonable efforts to be released), Buyer and
the Seller will each provide to the other (and their respective
representatives) reasonable access, to the extent appropriate with regard
to each of Buyer and Seller's relative size, to all information and
documents which the other may reasonably request regarding the business,
assets, liabilities, employees and other aspects of the other, other than
information and documents that in the opinion of such other party's counsel
may not be disclosed under applicable law. Each party shall keep such
information confidential in accordance with Section 6.07 hereof and such
obligations shall survive the Closing Date or any termination of this
Agreement.
(b) No investigation pursuant to this Section 6.02 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the Parties hereto.
SECTION 6.03. No Solicitation of Competing Transactions. The Seller shall
not, directly or indirectly, through any officer, director, agent or otherwise,
initiate, solicit or knowingly encourage (including by way of furnishing
non-public information or assistance), or take any other action to facilitate
knowingly, any inquiries about or making of any proposal that the Seller enter
into any Competing Transaction (as defined below), or enter into or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any person to take any such action
on, and the Seller shall notify Buyer orally (within one business day) and in
writing (as promptly as practicable) after receipt by any officer or director of
the Seller or any subsidiary or any investment banker, financial advisor or
attorney retained by the Seller or any subsidiary, of any inquiry concerning, or
proposal for, a Competing Transaction. For purposes of this Agreement,
"Competing Transaction" shall mean: (i) any merger, consolidation, share
exchange, business combination, or other similar transaction involving the
Seller or any Subsidiary; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 15% or more of the assets of the Seller and the
subsidiaries, taken as a whole, in a single transaction or series of
transactions;
21
SECTION 6.04. Directors' and Officers' Indemnification and Insurance.
(a) After the Closing Date, the Buyer shall, to the fullest extent
permitted under applicable law or under the Buyer's, as the case may be,
Articles of Incorporation or Bylaws, indemnify and hold harmless, each
present and former employee of the Seller or any of its subsidiaries (each
a "Potential Indemnified Party") against any reasonable costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative (collectively, "Losses"), arising out of or
pertaining to any action or omission by such party within the scope of such
employee's official capacity with the Seller occurring at or prior to the
Closing Date (including without limitation, the transactions contemplated
by this Agreement) for a period of three years after the date hereof,
provided, however, that the Buyer shall not be required to indemnify or
hold harmless any Potential Indemnified Party (i) for any Losses arising
out of or pertaining to any acts or omissions of such Potential Indemnified
Party determined in any judicial proceeding to be intentional misconduct or
a knowing violation of law, or with respect to which it is determined in
any judicial proceeding that such Potential Indemnified Party personally
received a benefit in money, property or services to which such Potential
Indemnified Party is not legally entitled; (ii) to the extent that the
Buyer determines in good faith that it would not indemnify or hold harmless
any similarly situated employee of the Buyer or any of its wholly-owned
subsidiaries under similar circumstances; or (iii) to the extent that the
Buyer reasonably determines that the Potential Indemnified Party did not
reasonably believe that the action or omission in question was in the
Buyer's best interest. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Closing
Date), (A) the Buyer shall be permitted to select counsel of its choosing
to conduct the defense of such claim, action, suit, proceeding or
investigation, (B) after the Closing Date, the Buyer shall pay the
reasonable fees and expenses of such counsel, promptly after statements
therefor are received unless the Buyer determines that one or more of the
circumstances described in any of (i) through (iii) of the previous
sentence is present, and (C) the Buyer will cooperate in the defense of any
such matter.
22
(d) The Buyer shall use commercially reasonable efforts to maintain in
effect for three years from the Closing Date, if available, (i) directors'
and officers' liability insurance in the amount of $1,000,000.00 covering
those persons who are currently covered by the Seller's directors' and
officers' liability insurance policy on terms comparable to those
applicable to the then current directors and officers of Buyer; or (ii) the
current directors' and officers' liability insurance policies maintained by
the Seller with respect to matters occurring prior to the Closing Date;
provided, however, that in no event shall the Buyer be required to expend
pursuant to this Section 6.04 more than an amount per year equal to 200% of
current annual premiums paid by the Seller for such insurance (which
premiums the Seller represents and warrants to be $______________ in the
aggregate).
(e) This Section 6.04 shall survive the consummation of the
Acquisition at the Closing Date, is intended to benefit the Seller, the
Buyer and the present and former directors and officers of the Seller (the
"Indemnified Parties"), shall be binding, jointly and severally, on all
successors and assigns of the Buyer, and shall be enforceable by the
Indemnified Parties.
SECTION 6.05. Notification of Certain Matters. Each party hereto shall
promptly notify the other party hereto by written update to its Disclosure
Schedule of (a) the occurrence, or nonoccurrence, of any event the occurrence,
or nonoccurrence of which would be likely to cause (i) any representation or
warranty made in this Agreement by such party, or any information furnished on
any Schedule in the Disclosure Schedule by such disclosing party, to be
inaccurate either at the time such representation or warranty is made, or such
information is furnished, or at the time of the occurrence or non-occurrence of
such event; or (ii) any failure by such party to comply with or satisfy any
condition to the obligations of such party to effect the Acquisition and the
other transactions contemplated by this Agreement, or (b) the failure of the
Seller or Buyer, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it pursuant to this
Agreement which would be likely to result in any condition to the obligations of
any party to effect the Acquisition and the other transactions contemplated by
this Agreement not to be satisfied; provided, however, that the delivery of any
notice pursuant to this Section 6.05 shall not be deemed to be an amendment of
this Agreement or any Schedule in the Disclosure Schedule and shall not cure any
breach of any representation or warranty requiring disclosure of such matter
prior to the date of this Agreement. No delivery of any notice pursuant to this
Section 6.05 shall limit or affect the remedies available hereunder to the party
receiving such notice, including the rights of Buyer under Section 7.02(a) and
those of the Seller under Section 7.03(a) in the event that a representation or
warranty made by the Seller or Buyer herein shall not be true and correct
(giving effect to any standards of materiality set forth in such sections) as of
the Closing Date.
23
SECTION 6.06. Announcements. Buyer and the Seller shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement or the Acquisition and related transactions and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by Law The parties will agree on
the text of a joint press release by which Buyer and the Seller will announce
the execution of this Agreement.
SECTION 6.07. Confidentiality. At all times from and after the Closing
Date, the Seller and the Stockholder shall keep secret and maintain in strictest
confidence and shall not use for its benefit or for the benefit of any third
party any confidential or proprietary information i) disclosed by Buyer during
the period of negotiations for this Agreement and after the Closing
Date, or ii) relating to the Purchased Business, including, without limitation,
all Intellectual Property and files and records, other than any of such
information that is in the public domain prior to the date of this Agreement or
thereafter comes into the public domain (unless any of such information is in or
becomes in the public domain in whole or in part due to action or inaction of
the Seller or the Stockholder in violation of this Agreement). The foregoing
shall not prohibit use of such information as is required by applicable law, or
as is necessary to prepare Tax Returns or other filings with governmental
authorities for the period (including all prior taxable years) ending on and
including the Closing Date, or to assert or protect any rights of the Seller and
the Stockholder under this Agreement, provided that the Buyer is given notice
and an adequate opportunity to contest such disclosure or to use any means
available to minimize such disclosure.
SECTION 6.08. Shared Services. Stockholder and Seller hereby agree to
provide "shared services" to Buyer for a period of 90 days following the Closing
Date in order to facilitate the transfer of Acquired Assets and Assumed
Liabilities pursuant to this Agreement. Buyer agrees to pay for any agreed upon
expenses incurred by Stockholder at Stockholder's reasonable cost for such
services, to be payable by Buyer upon 30 days of Stockholder's invoicing of such
expenses to Buyer.
SECTION 6.09. Stockholder Promissory Notes. Buyer agrees that, upon
Closing, the obligations of repayment by Stockholder and Seller under certain
Promissory Notes provided by Stockholder and Seller to Buyer dated April 2, 1999
and May 14, 1999, respectively, shall be null and void.
24
ARTICLE VII
CONDITIONS TO THE ACQUISITION
SECTION 7.01. Conditions to the Obligations of Each Party. The obligations
of the Seller and Buyer to consummate the Acquisition are subject to the
satisfaction of the following conditions:
(a) this Agreement and the Acquisition contemplated hereby shall have
been approved and adopted by the affirmative vote of the shareholders of
the Seller in accordance with Florida Law and the Seller's Articles of
Incorporation;
(b) all actions by or in respect of, or filings with, any Governmental
Authority required to permit the consummation of the Acquisition shall have
been obtained (other than those actions or filings which, if not obtained
or made prior to the consummation of the Acquisition, would not have,
individually or in the aggregate, a Material Adverse Effect prior to or
after the Closing Date or be reasonably likely to subject the Seller Buyer
or any of their respective subsidiaries or any of their respective officers
or directors to substantial penalties or criminal liability);
SECTION 7.02. Conditions to the Obligations of Buyer. The obligations of
Buyer to consummate the Acquisition are subject to the satisfaction of the
following, further conditions:
(a) (i) the Seller shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to
the Closing Date; (ii) each of the representations and warranties of the
Seller contained in this Agreement which is qualified as to materiality
shall be true and correct and each such representation and warranty that is
not so qualified shall be true and correct in all material respects, in
each case as of the Closing Date as if made at and as of such time, except
(A) for changes permitted by this Agreement, and (B) that the
representations and warranties made by the Seller in Section 3.03 which
address matters only as of a particular date shall remain true and correct
as of such date; and (iii) Buyer shall have received a certificate signed
by an executive officer of the Seller to the foregoing, effect;
(b) Buyer shall have received from Holland & Knight, L.L.P., counsel
to the Seller, a legal opinion, substantially in the form of Exhibit D;
(c) the Seller shall have obtained the consent or approval of each
person whose consent or approval shall be required in connection with the
Acquisition under all notes, bonds, mortgages, indentures, contracts,
agreements, leases, licenses, permits, franchises and other instruments or
obligations to which it or any of its subsidiaries is a party, except those
for which failure to obtain such consents and approvals would not have a
Material Adverse Effect prior to or after the Closing Date;
25
(d) no order, stay, decree, judgment or injunction shall have been
entered, issued or enforced by any Governmental Authority or court of
competent jurisdiction which prohibits consummation of the Acquisition, and
there shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Acquisition,
which makes the consummation of the Acquisition illegal or substantially
deprives the Buyer of any of the anticipated benefits of the Acquisition or
the related transactions.
SECTION 7.03. Conditions to the Obligations of the Seller. The obligations
of the Seller to consummate the Acquisition are subject to the satisfaction of
the following further conditions:
(a) (i) Buyer shall have performed in all material respects all of
their respective obligations hereunder required to be performed by them at
or prior to the Closing Date; (ii) the representations and warranties of
Buyer contained in this Agreement and any certificate or other writing
delivered by Buyer pursuant hereto which is qualified as to materiality
shall be true and correct and each such representation and warranty that is
not so qualified shall be true and correct in all material respects, in
each case as of the date hereof and at and as of the Closing Date as if
made at and as of such time, except (A) for changes permitted by this
Agreement, and (B) that the representations and warranties made by the
Buyer in Article IV which address matters only as of a particular date
shall remain true and correct as of such date; and (iii) the Seller shall
have received a certificate signed by an executive officer of Buyer to the
foregoing effect;
(b) the Seller shall have received from ▇▇▇▇▇▇▇▇ & Company, P.C.,
counsel to Buyer, a legal opinion, substantially in the form of Exhibit E;
(c) Buyer shall have obtained the consent or approval of each person
whose consent or approval shall be required in connection with the
Acquisition under all notes, bonds, mortgages, indentures, contracts,
agreements, leases, licenses, permits, franchises and other instruments or
obligations to which it or any of its subsidiaries is a party, except those
for which failure to obtain such consents and approvals would not have a
Material Adverse Effect after the Closing Date;
(d) No order, stay, decree, judgment or injunction shall have been
entered, issued or enforced by any Governmental Authority court of
competent jurisdiction which prohibits consummation of the Acquisition, and
there shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Acquisition,
which makes the consummation of the Acquisition illegal, provided, however,
that with respect to any court order, stay, decree, judgment or injunction
issued by or at the behest of any Governmental Antitrust Authority, the
Seller shall have performed its obligations under Sections 6.01(a) and (b),
subject to the terms of Section 6.01(c);
26
(e) Buyer shall have paid, settled or otherwise satisfied the
obligations of Seller pursuant to a certain note provided by Seller to ▇▇▇▇
▇▇▇▇▇, along with 245,000 of Seller Warrants, dated May 13, 1998, issued
pursuant thereto (collectively the "Kedan Obligation"). Buyer shall have
provided Stockholder and Seller with assurances of the satisfaction, or an
assumption and release of Stockholder and Seller from the Kedan Obligation;
(f) Buyer shall have obtained a guaranty of payment from On Lake
Investments, LLC ("On Lake") in the form and upon the terms and conditions
of the Guaranty attached hereto as Exhibit F, for the LincCapital
Obligation (the "On Lake Guaranty"). On Lake's obligation under the On Lake
Guaranty shall be limited to repayment of the LincCapital Obligation to
LincCapital only in the event LincCapital seeks repayment of the obligation
from Stockholder as a result of Buyer's default under the terms of the
LincCapital Obligation. The On Lake Guaranty shall be secured by a security
interest in the State of Connecticut contract subordinate to Linc Capital.
(g) Seller shall grant to Stockholder a license to use MedServ and
E-MAR software in connection with alternate care facilities, upon the terms
and conditions provided in the Software License Agreement attached hereto
as Exhibit G.
(h) Pursuant to Section 1.04 (a)(vi), Buyer shall have placed in
escrow an amount equal to the Employee Claims and the Employee Payables, to
the extent and amount and only to the extent and amount such Employee
Claims and Employee Payables are reflected on the Closing Balance Sheet
(the "Escrowed Funds"), to be held in accordance with the terms of the
Escrow Agreement in the form attached hereto as Exhibit H. The Escrowed
Funds shall be Buyer's sole liability or obligation for Employee Claims and
for accrued and owed Employee Payables. Buyer has no further obligation or
liability for the Employee Claims or for any other accrued employee or
contractor claims in excess of the Escrowed Funds. To the extent that
Seller and Stockholder are released by an employee from liability and
obligation for any Employee Claims or Employee Payables pursuant to the
General Release attached as Exhibit A to the Escrow Agreement and such
employee further agrees with Buyer to an alternative form or method of
payment therefor, all Escrow Funds allocated for such Employee Claims and
Employee Payables shall be released and paid forthwith to Buyer. Any
amounts of the Escrow Fund remaining in escrow after the expiration of 90
days from the Closing Date or, if after such time there are any outstanding
claims or disputed amounts for such Employee Claims or Employee Payables,
after the settlement, dismissal or final judgment of each such dispute,
shall be returned to Buyer, along with all accrued interest thereon.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated and the
Acquisition may be abandoned at any time prior to the Closing Date,
notwithstanding, any requisite approval
and adoption of this Agreement and the transactions contemplated hereby by the
shareholders of the Seller:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of Buyer and the Seller; or
(b) by either Buyer or the Seller if either (1) the Closing Date shall
not have occurred on or before May 30, 1999, provided, however, that the
right to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Closing
Date to occur on or before such date, (ii) there shall be any Law that
makes consummation of the Acquisition illegal or otherwise prohibited or if
any court of competent jurisdiction or Governmental Authority shall have
issued an order, decree, ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Acquisition and such order, decree,
ruling or other action shall have become final and nonappealable; provided
that the party seeking to terminate this Agreement pursuant to this
subsection (b)(ii) shall have complied with its obligations under Sections
6.01(a) and (b) of this Agreement, subject to the terms of Section 6.01(c);
or
(c) by the Seller, in the event of a material breach by Buyer of any
representation, warranty or agreement contained herein which has not been
cured or is not curable within 45 days of notice (or such later date as
provided in subparagraph (b) above); or
(d) by Buyer, in the event of a material breach by the Seller or any
subsidiary of any representation, warranty or agreement contained herein
which has not been cured or is not curable within 45 days of notice (or
such later date as provided in subparagraph (b) above).
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SECTION 8.02. Effect of Termination. Except as provided in Section 9.01 and
Sections 6.02 and 6.07, in the event of the termination of this Agreement
pursuant to Section 8.01, this Agreement shall forthwith become void, there
shall be no liability under this Agreement on the part of Buyer or the Seller or
any of their respective officers or directors and all rights and obligations of
any party hereto shall cease, subject to the sole and exclusive remedies of the
parties set forth in Section 8.03.
SECTION 8.03. Expenses. As used herein, "Expenses" means all reasonable and
documented out-of-pocket expenses and fees incurred by Buyer, on the one hand,
or the Seller, on the other hand, prior to the termination of this Agreement
(including, without limitation, all fees and expenses of counsel, financial
advisors, accountants, environmental and other experts and consultants to Buyer
or the Seller, and their affiliates, as the case may be) actually incurred or
accrued by them or on their behalf in connection with the Acquisition, and
actually incurred or
accrued by any of the foregoing persons and assumed by Buyer or the Seller or
their affiliates, as the case may be, in connection with the negotiation,
preparation, execution, performance and termination of this Agreement, the
structuring of the Acquisition and any agreements relating thereto. Except as
set forth in this Section 8.03, all costs and expenses incurred in connection
with this Agreement and the Acquisition shall be paid by the party incurring
such expenses, whether or not the Acquisition is consummated.
SECTION 8.04. Amendment. This Agreement may be amended by an instrument in
writing signed by the parties hereto.
SECTION 8.05. Waiver. At any time prior to the Closing Date, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any agreement or condition contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
ARTICLE IX
General Provisions
SECTION 9.01. Non-Survival of Representations Warranties and Agreements.
The representations, warranties and agreements in this Agreement and any
certificate delivered pursuant hereto by any person shall terminate at the
Closing Date or upon the termination of this Agreement pursuant to Section 8.01,
as the case may be, except that the agreements set forth in Articles III, VI,
and VII shall survive the Closing Date for a period of one year, provided
however, those representations, warranties and agreements provided in Sections
3.12, 6.02, and 6.07 shall survive indefinitely or until the earlier expiration
of any applicable statute of limitations,.
29
SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
facsimile, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 9.02):
if to Buyer:
AIMCare, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: R. ▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & Company, P.C.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Seller:
LifeServ Technologies, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
30
Holland & Knight, L.L.P.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
SECTION 9.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified person;
(b) "beneficial owner" with respect to any shares means a person who
shall be deemed to be the beneficial owner of such shares (i) which such
person or any of its affiliates or associates beneficially owns, directly
or indirectly; (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding; or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or any person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting, or disposing, of any such
shares;
(c) "business day" means any day on which banks are not required or
authorized to close in the City of Boston, Massachusetts;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) "Governmental Authority" means any United States (federal, state or
local) or foreign government, or governmental, regulatory or administrative
authority, agency or commission;
(f) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person, trust, association or entity or government,
political subdivision, agency or instrumentality of a Government; and
31
(g) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either above or through or together with any other subsidiary),
owns, directly or indirectly, more than 50% of the stock or other equity
interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.
(h) "Tax" means any federal, state, local, or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales,
use, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental,
customs, duties, real property, personal property, capital stock,
intangibles, social security, unemployment, disability, payroll, license,
employee, or other tax or levy, of any kind whatsoever, including any
interest, penalties, or additions to tax in respect of the foregoing.
SECTION 9.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the
economic or legal substance of the Acquisition is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the Acquisition be consummated as originally contemplated
to the fullest extent possible.
SECTION 9.05. Entire Agreement; Assignment. This Agreement constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise, except that
Buyer may assign all or any of their rights and obligations hereunder to any
affiliate of Buyer provided that no such assignment shall relieve the assigning
party of its obligations hereunder if such assignee does not perform such
obligations.
SECTION 9.06. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
32
SECTION 9.08. Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State.
SECTION 9.09. Arbitration; Consent to Jurisdiction.
(a) ANY DISPUTE ARISING UNDER OR IN ANY WAY RELATED TO THIS AGREEMENT
OR TO THE ACQUISITION OF THE PURCHASED BUSINESS BY BUYER SHALL BE SETTLED
BY BINDING ARBITRATION TO BE HELD IN WILMINGTON, DELAWARE, PURSUANT TO THE
RULES OF THE AMERICAN ARBITRATION ASSOCIATION.
(b) EACH OF BUYER, THE SELLER AND STOCKHOLDER IRREVOCABLY CONSENTS TO
THE SERVICE OF THE SUMMON AND COMPLAINT AND ANY OTHER PROCESS IN ANY OTHER
ACTION OR PROCEEDING RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, ON BEHALF OF ITSELF OR ITS PROPERTY, BY THE PERSONAL DELIVERY OF
COPIES OF SUCH PROCESS TO SUCH PARTY. NOTHING IN THIS SECTION 9.09 SHALL
AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
SECTION 9.10. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning, or interpretation of this Agreement.
SECTION 9.11. Counterparts. This Agreement maybe executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
SECTION 9.12. Waiver of Jury Trial. Each of Buyer, the Seller and
Stockholder hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the actions of Buyer, the Seller
or Stockholder in the negotiation, administration, performance and enforcement
thereof.
33
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Buyer, the Seller and Stockholder have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
AIMCare, Inc. Attest:
------------------------------- -------------------------------
By: R. ▇▇▇▇▇ ▇▇▇▇▇▇ By:
Title: President Title:
LifeServ Technologies, Inc. Attest:
----------------------------- -------------------------------
By: ▇▇▇▇ ▇▇▇▇▇▇ By:
Title: Secretary Title:
34
Medical Technology Systems, Inc. Attest:
------------------------------- -------------------------------
By: ▇▇▇▇ ▇▇▇▇▇▇ By:
Title: Chairman of the Board of Directors Title: