Exhibit 10.5
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[Portions of this agreement have been omitted and separately filed with the SEC
with a request for confidential treatment. The location of those omissions have
been noted by [**].
ASSET PURCHASE AGREEMENT
among
ADVANTAGE MEDICAL SERVICES, LLC
and
EMERGENT GROUP INC.
and
PRI MEDICAL TECHNOLOGIES, INC.
----------------------
Dated: November 11, 2005
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TABLE OF CONTENTS
Page
ARTICLE 1
PURCHASE AND SALE OF ASSETS.............................................................................1
1.1. Purchase and Sale..............................................................................1
1.2. Purchaser Not Successor to the Seller; Excluded Liabilities....................................2
1.3. Purchase Price.................................................................................3
1.4. Closing........................................................................................5
1.5. Instruments of Conveyance and Transfer.........................................................5
1.6. Post-Closing Assurances........................................................................5
1.7. Assignment of Contracts........................................................................5
ARTICLE 2
REPRESENTATIONS AND WARRANTIES..........................................................................6
2.1. Representations and Warranties by the Seller...................................................6
2.2. Representations and Warranties by the Principals...............................................9
2.3. Representations and Warranties by the Purchaser...............................................12
2.4. Representations and Warranties by the Purchaser's Parent......................................13
ARTICLE 3
ADDITIONAL AGREEMENTS..................................................................................15
3.1. Expenses; Taxes...............................................................................15
3.2. Further Assurances............................................................................15
3.3. Access and Information........................................................................15
3.4. Bulk Sales....................................................................................16
3.5. Public Announcements..........................................................................16
3.6. Non-Compete Agreement.........................................................................16
3.7. [**] of [**].......................................................................................16
3.8. Grant of Proxy................................................................................16
ARTICLE 4
CONDITIONS PRECEDENT...................................................................................16
4.1. Conditions of Obligations of the Purchaser Parties............................................16
4.2. Conditions of Obligations of the Seller.......................................................17
ARTICLE 5
INDEMNIFICATION........................................................................................18
5.1. Indemnification...............................................................................18
5.2. Certain Limitations...........................................................................20
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5.3. Procedures Relating to Third Party Claims.....................................................20
5.4. Procedures Related to Claims other than Third Party Claims....................................21
ARTICLE 6
MISCELLANEOUS..........................................................................................21
6.1. Entire Agreement..............................................................................21
6.2. Descriptive Headings; Certain Interpretations.................................................21
6.3. Notices.......................................................................................22
6.4. No Third Party Beneficiaries..................................................................23
6.5. Counterparts..................................................................................23
6.6. Survival......................................................................................23
6.7. Benefits of Agreement.........................................................................23
6.8. Amendments and Waivers........................................................................23
6.9. Assignment....................................................................................24
6.10. Enforceability................................................................................24
6.11. Governing Law; Jurisdiction...................................................................24
iii
EXHIBITS
Exhibit 1 - Form of Non-Compete Agreement
Exhibit 2 - Allocation of Purchase Price
Exhibit 3 - Form of Proxy
SCHEDULES
Schedule A - Fixed Assets
Schedule B - Vehicles
Schedule C - Inventory
Schedule D - Customer Lists
Schedule E - Goodwill
Schedule F - Equipment Leases and Maintenance Agreements
Schedule G - Customer Agreements
ANNEXES
Annex A - Customers for Net Service Revenue
iv
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of November 11, 2005,
among ADVANTAGE MEDICAL SERVICES, LLC, a California limited liability company
(the "Seller"), and the principals of the Seller named on the signature pages
hereto (each a "Principal" and, collectively, the "Principals"), and EMERGENT
GROUP INC., a Nevada corporation ("Purchaser's Parent"), and PRI MEDICAL
TECHNOLOGIES, INC., a Nevada corporation and a wholly-owned subsidiary of
Purchaser's Parent (the "Purchaser" and, together with Purchaser's Parent, the
"Purchaser Parties").
Introduction
The Seller is engaged in the business of renting lasers and other medical
equipment to hospitals and other medical providers in the States of California
and Arizona (the "Business"). The Principals are all of the members of the
Seller. Subject to the terms and conditions of this Agreement, the Seller
desires to sell to the Purchaser Parties, and the Purchaser Parties desire to
purchase from the Seller, certain assets, tangible and intangible, associated
with the Business.
In consideration of the mutual benefits to be derived from this Agreement
and of the representations, warranties, conditions, agreements and promises
contained herein and other good and valuable consideration, the parties agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1. Purchase and Sale.
(a) Acquired Assets. The Seller shall sell, convey, transfer, assign and
deliver to the Purchaser, and the Purchaser shall purchase, acquire and accept
from the Seller, on the Closing Date (as defined in Section 1.4), the Acquired
Assets, free and clear of all Liens (as hereinafter defined). "Acquired Assets"
means the following properties, assets (tangible or intangible), goodwill and
rights of the Seller used or held for use or intended to be used or held for use
in connection with the Business:
(i) the fixed assets of the Seller including all machinery, equipment
(including all office equipment and supplies), spare parts, replacement parts,
trade fixtures, tools, dies and furniture, owned or leased by the Seller,
together with all warranties related thereto, which are identified on Schedule A
attached hereto (the "Fixed Assets");
(ii) all automobiles and trucks owned or leased by the Seller, which are
identified on Schedule B attached hereto (the "Vehicles");
(iii) all finished goods and inventory of the Seller which are identified
on Schedule C attached hereto ("Inventory");
[**] - Confidential or proprietary information redacted.
(iv) all lists and records pertaining to customers of the Seller together
with all lists and records pertaining to suppliers, vendor contacts, purchasing
reports and purchase orders which are identified on Schedule D attached hereto
("Customer Lists"); and
(v) (A) all intellectual property owned by the Seller which is used
exclusively in the Business and which is identified on Schedule E attached
hereto, including, but not limited to, trade names, service marks, trademarks,
logos, patterns, designs, drawings, software, URLs, copyrights and patents; (B)
all licenses and sublicenses granted and obtained by the Seller with respect to
any of the foregoing and which are identified on Schedule D attached hereto; (C)
all goodwill associated with any of the foregoing; and (D) all telephone
numbers, web sites, email addresses and post office box numbers used by the
Business and identified on Schedule D attached hereto (collectively,
"Goodwill").
Except for the Acquired Assets, the Purchaser shall not be the successor to the
Seller and the Purchaser does not and will not acquire or accept any properties,
assets (tangible or intangible), and rights of the Seller used or held for use
or intended to be used or held for use in connection with the Business.
(b) Excluded Assets. Notwithstanding the foregoing, the Acquired Assets
shall not include, and the Purchaser shall not and will not acquire or accept,
any of the following (collectively, the "Excluded Assets"):
(i) any accounts receivable of the Seller; and
(ii) any other property, assets or rights of the Seller not described in
Section 1.1(a) hereof.
(c) As used herein, "Lien" means any lien, pledge, charge, option,
restriction on transfer, claim, mortgage, deed to secure debt, deed of trust,
conditional sale or other title retention agreement, or other security interest,
security title or encumbrance of any kind; provided, however, that a financing
statement filed by the lessor of equipment to evidence its leasehold interest in
such equipment shall not constitute a Lien.
1.2. Purchaser Not Successor to the Seller; Excluded Liabilities.
(a) Assumed Liabilities. On the Closing Date, the Seller shall transfer and
assign to the Purchaser, and the Purchaser shall assume from the Seller and
become responsible for, the Assumed Liabilities. "Assumed Liabilities" means
only the following liabilities of the Seller with respect to the Business:
(i) all liabilities of the Seller under those certain equipment leases
and related maintenance agreements to which the Seller is a party listed on
Schedule F attached hereto ("Equipment and Maintenance Agreements"); and
[**] - Confidential or proprietary information redacted.
2
(ii) all liabilities of the Seller under those certain open purchase
orders with customers of the Seller and all contracts and agreements with
customers to which the Seller is a party listed on Schedule G attached hereto
("Customer Agreements").
Except for the Assumed Liabilities, the Purchaser shall not be the successor to
the Seller and the Purchaser does not and will not assume or become liable to
pay, perform or discharge any obligation or liability whatsoever of the Seller
or relating to any of the Acquired Assets (all such obligations and liabilities
being, collectively, the "Excluded Liabilities").
(b) Risk of Loss. Until the Closing, any loss of or damage to the Acquired
Assets from fire, casualty or any other occurrence not covered by insurance
payable to the Purchaser shall be the total responsibility of the Seller.
1.3. Purchase Price.
(a) Purchase Price. The purchase price (the "Purchase Price") for the
Acquired Assets and the Assumed Liabilities shall be cash in the amount of
$100,000, plus cash in an amount equal to the lower of the Purchaser's original
acquisition cost for inventory similar to the Inventory and the Seller's
original cost for the Inventory net of all rebates, volume discounts and the
like (together, the "Cash Portion of the Purchase Price"). In addition, the
Principals shall receive payments in the aggregate principal amount of $375,000,
plus an aggregate of 324,000 shares of common stock, par value $0.04 per share,
of the Purchaser's Parent (the "Emergent Stock" or the "Stock Consideration")
pursuant to and in consideration of their agreement to sign a Noncompetition,
Nondisclosure and Nonsolicitation Agreement with the Purchaser in the form of
Exhibit 1 attached hereto (the "Non-Compete Agreement").
(b) Allocation of Purchase Price. The allocation of the Purchase Price
among the Acquired Assets, the Assumed Liabilities and the Non-Compete Agreement
shall be as set forth on Exhibit 2 attached hereto. The portion of the Purchase
Price allocated to the Non-Compete Agreement shall be referred to as the
"Non-Compete Consideration." The Purchaser Parties and the Seller shall follow
such allocation in determining and reporting their liabilities for federal,
state, local and foreign tax returns filed by them subsequent to the Closing
Date.
(c) Reduction of Purchase Price. Notwithstanding anything herein contained,
the Stock Consideration and the Non-Compete Consideration shall be reduced by
[**] ([**]), or [**] shares in the case of the Stock Consideration, in the event
that ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇ ▇. ▇▇▇ fail to [**] with the [**]
as called for in Section 3.7 of this Agreement. Moreover, notwithstanding
anything herein contained, the Stock Consideration and the Non-Compete
Consideration shall be reduced if the Net Service Revenue of the Business during
the 12 month period following the month including the Closing Date (the "Revenue
Period") does not equal or exceed [**] (the "Threshold"). For purposes of this
Agreement, "Net Service Revenue" shall mean the revenue of the Business during
the Revenue Period actually collected from the customers listed on Annex A on or
before the 90th day after the end of the Revenue Period, after all costs of
disposable supplies associated directly with the performance of the Business
[**] - Confidential or proprietary information redacted.
3
during the Revenue Period have been deducted. Should the Net Service Revenue of
the Business fall below the Threshold during the Revenue Period, the Stock
Consideration and the Non-Compete Consideration shall be reduced by a percentage
equal to the amount of such difference in Net Service Revenue for the Revenue
Period from the Threshold divided by the Threshold, as described below.
(i) Not later than 90 days after the last day of the last calendar month
in the Revenue Period, the Purchaser shall prepare and deliver to the Principals
a certificate setting forth the Purchaser's good faith reasonable estimate of
the Net Service Revenue (the "Certificate").
(ii) Following receipt of the Certificate, the Principals will be
afforded a period of 30 days to review the Certificate. To assist in any such
review, the Purchaser will make available to the Principals any books and
records, work papers prepared in connection with the Certificate and the
personnel involved in preparing the same. At or before the end of the 30 day
review period, the Principals will either (A) accept the Certificate in its
entirety or (B) deliver to the Purchaser a written notice setting forth a
detailed explanation of those items in the Certificate that the Principals
dispute (a "Notice of Dispute"). If the Principals do not deliver a Notice of
Dispute to the Purchaser within the 30-day review period, the Principals will be
deemed to have accepted the Certificate in its entirety. If the Principals
deliver a Notice of Dispute in which they disputes some, but not all, of the
items in the Certificate, the Principals will be deemed to have accepted all of
the items not disputed other than those not directly disputed but which are
affected by the items disputed.
(iii) For a period of 14 days after the delivery of a Notice of Dispute,
the parties will attempt to resolve in good faith any disputed items. If they
are unable to do so, the remaining disputed items will be referred to a mutually
acceptable recognized firm of independent accountants whose services have not,
at any time during the two (2) years prior to the date hereof, been utilized by
the parties hereto for resolution (the "Independent Public Accountants"). The
Independent Public Accountants shall be requested to reach a decision in good
faith in accordance with the terms of this Agreement as to whether it accepts
the position of Principals or the Purchaser as to the determination of the
aggregate value of the disputed items, and not later than 60 days after the
reference to it of the dispute. The Independent Public Accountants shall accept
the position of the Principals or the Purchaser that is closest in value to its
good faith determination of the aggregate value of the disputed items. The
determination by the Independent Public Accountants will be binding on the
parties. The fees, costs and expenses of the Independent Public Accountants
shall be borne by the party whose position did not prevail in such
determination. The Net Service Revenue, as accepted by the Principals or
adjusted to reflect the resolution of any dispute, is referred to as the "Final
Net Service Revenue."
(iv) At such time as the Final Net Service Revenue is determined, in the
event that the Final Net Service Revenue is less than the Threshold, then the
Non-Compete Consideration and the Stock Consideration shall be reduced by a
percentage equal to the amount of such difference in Final Net Service Revenue
from the Threshold divided by the Threshold and will be reflected in full as a
reduction in future quarterly payments of the Non-Compete Consideration pursuant
[**] - Confidential or proprietary information redacted.
4
to the Non-Compete Agreement and as a reduction in the Stock Consideration by
reducing the number of shares of Emergent Stock to be issued to the Principals
without regard to the price of the Emergent Stock or, if the reduction is such
that it would call for a repayment of any Non-Compete Consideration pursuant to
the Non-Compete Agreement, then the Principals will repay such Non-Compete
Consideration to the Purchaser promptly after the Final Net Service Revenue is
determined hereunder.
(d) Payment. The Purchaser shall pay the Cash Portion of the Purchase
Price, at Closing by certified check or wire transfer of immediately available
funds. If the Seller elects to receive a wire transfer of the Cash Portion of
the Purchase Price, it shall notify the Purchaser in writing no later than two
business days prior to the Closing Date and shall designate an account to which
such wire transfer shall be directed. On February 1, 2006, the Purchaser shall
deliver the first payment under the Non-Compete Agreement to the Principals. The
Purchaser shall issue the Stock Consideration on December 15, 2005 to be held by
the Purchaser who will deliver the Stock Consideration to the Principals after
the Final Net Service Revenue is determined after the conclusion of the Revenue
Period. The Stock Consideration shall not be invested for any dividends,
distribution or other occurrences with respect to the Emergent Stock between the
Closing Date and December 15, 2005.
1.4. Closing. The closing (the "Closing") for the consummation of the
transactions contemplated by this Agreement shall take place at the offices of
▇▇▇▇▇ Raysman ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, or such other place as the Seller, the Principals and the Purchaser
Parties shall agree, on the date hereof (such date of the Closing being
hereinafter called the "Closing Date"). The Closing shall be deemed to be
effective as of the close of business on the Closing Date.
1.5. Instruments of Conveyance and Transfer. At the Closing, the Seller
shall deliver to the Purchaser such bills of sale, endorsements, assignments and
other instruments of transfer, conveyance and assignment (in a form satisfactory
to the Seller and the Purchaser) as shall be necessary in the reasonable
judgment of the Purchaser to transfer, convey and assign the Acquired Assets to
the Purchaser.
1.6. Post-Closing Assurances. The Seller shall, at any time and from time
to time after the Closing Date, upon the reasonable request of the Purchaser,
do, execute, acknowledge, deliver and file, or cause to be done, executed,
acknowledged, delivered or filed, all such further acts, deeds, transfers,
conveyances, assignments or assurances as may be reasonably required for the
better transferring, conveying, assigning and assuring to the Purchaser, or for
the aiding and assisting in the reducing to possession by the Purchaser of, any
of the Acquired Assets.
1.7. Assignment of Contracts. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement shall not constitute an agreement or
attempt to transfer, sublease or assign any contract, license, lease, sales
order, purchase order or other agreement or any claim or right of any benefit
arising thereunder or resulting therefrom or any governmental permit, license,
franchise, approval, registration or certificate of occupancy (collectively, the
"Rights") to the extent that an attempted sale, transfer, sublease or assignment
thereof, without the consent of any other party thereto, would constitute a
breach thereof or in any way adversely affect the Purchaser's rights to receive
the benefits thereunder.
[**] - Confidential or proprietary information redacted.
5
In order, however, that the full value of any Rights may be realized for
the benefit of the Purchaser, the Seller shall, at the expense of the Purchaser
and at the reasonable request and under the direction of the Purchaser, in the
name of such party or as otherwise reasonably specified by the Purchaser, acting
reasonably, take all such action and do or cause to be done all such things that
are necessary and advisable in order that the rights and obligations of the
Seller in connection with such Rights may be performed in such manner that the
value of such Rights shall be preserved and shall inure to the exclusive benefit
of the Purchaser (or to the benefit of the Purchaser to the same extent as the
Seller enjoyed prior to the date hereof if the Seller was not entitled to the
exclusive benefit thereof).
The Purchaser may at any time thereafter request a sale, assignment,
conveyance or transfer of any Rights notwithstanding that the third party
consent necessary for such sale, assignment and transfer has not been obtained,
provided that such sale, assignment, conveyance or transfer of such Rights does
not materially diminish the benefit of such Rights to any Affiliate of the
Seller, if the Seller was not entitled to the exclusive benefit thereof.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties by the Seller. The Seller and the
Principals represent and warrant to the Purchaser Parties as follows:
(a) Organization, Standing and Power. The Seller is a limited liability
company duly formed, validly existing and in good standing under the laws of the
State of California and has all requisite limited liability company power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. The Seller is duly qualified to do business and is in
good standing in each jurisdiction in which such qualification is necessary
because of the property owned, leased or operated by it or because of the nature
of its business as now being conducted. True and complete copies of the
certificate of formation and limited liability company operating agreement of
the Seller, including all amendments thereto through and including the date
hereof, have been delivered to the Purchaser, and such documents have not been
amended, modified or rescinded in any respect and are in full force and effect.
(b) Authority; Binding Agreements. The execution, delivery and
performance of this Agreement, the Non-Compete Agreement, the ▇▇▇▇ of Sale (as
defined in Section 4.1), and the Assignment (as defined in Section 4.1), and all
other agreements, documents and instruments contemplated in connection with this
Agreement to which the Seller is a party and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary limited liability company action of the Seller and
its members. The Seller has all requisite limited liability company power and
[**] - Confidential or proprietary information redacted.
6
authority to execute, deliver and perform its obligations under this Agreement,
the Non-Compete Agreement, the ▇▇▇▇ of Sale, and the Assignment, and to
consummate the transactions contemplated hereby and thereby and the Seller has
duly executed and delivered this Agreement. This Agreement is, and upon
execution and delivery, the Non-Compete Agreement, the ▇▇▇▇ of Sale, and the
Assignment, and such other agreements, documents and instruments as are executed
and delivered by the Seller will be, the legal, valid and binding obligations of
the Seller, enforceable in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) Ownership. The Principals own of record and beneficially all of the
issued and outstanding membership interests in the Seller. There are no
outstanding rights, options or warrants to acquire interests in the Seller.
There are no agreements to which the Seller or the Principals are a party that
relate to the issuance or transfer of any of the membership interests in the
Seller.
(d) Conflicts; Consents. None of the execution and delivery of this
Agreement, the Non-Compete Agreement, the ▇▇▇▇ of Sale, and the Assignment, the
consummation of the transactions contemplated hereby or thereby, or compliance
by the Seller with any of the provisions hereof or thereof, will (i) conflict
with or result in a breach of the certificate of formation or limited liability
company operating agreement of the Seller, (ii) conflict with or result in a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the provisions of any note, bond, lease, hypothecation, mortgage,
indenture, license, franchise, permit, agreement or other instrument or
obligation to which the Seller is a party, or by which the Seller's properties
or assets may be bound or affected, except for such conflict, breach or default
as to which requisite waivers or consents shall be obtained before the Closing
(which waivers or consents are set forth in Schedule 2.1), (iii) violate any
law, statute, rule or regulation or order, writ, injunction or decree applicable
to the Seller or the Seller's properties or assets or (iv) result in the
creation or imposition of any Liens upon any of the Acquired Assets. Except as
set forth in Schedule 2.1, no consent or approval by, or any notification of or
filing with, any person, firm, corporation, partnership, limited liability
company, trust, joint venture, association or entity (governmental or private)
(each, a "person" and collectively, "persons") is required in connection with
the execution, delivery and performance by the Seller of this Agreement, the
Non-Compete Agreement, the ▇▇▇▇ of Sale, the Assignment or any of the other
agreements, documents and instruments contemplated in connection with this
Agreement or the consummation of the transactions contemplated hereby or
thereby.
(e) Acquired Assets and Related Matters. The Seller is the sole owner of
the Acquired Assets and has, and the Purchaser will at the Closing acquire, good
and valid title to, and in the case of the immovable property, good, valid and
marketable title to, as applicable, all of the Acquired Assets, free and clear
of all Liens. At the time of Closing, the Seller will have delivered to the
[**] - Confidential or proprietary information redacted.
7
Purchaser true and complete lien searches for all relevant jurisdictions
evidencing the absence of Liens on any of the Acquired Assets, other than Liens
on such assets for which full releases satisfactory in form and substance to the
Purchaser will have been delivered to the Purchaser by Closing. The tangible
property included in the Acquired Assets is in good operating condition and
repair, subject to ordinary wear and tear.
(f) Inventory. The Inventory listed on Schedule C is the only inventory
used or held for use or intended to be used or held for use in the Business.
Such inventory is useable and salable in the ordinary course of business as
currently conducted at customary gross margins.
(g) Customer Lists. The Customer Lists contain, in all material respects, a
true, correct and complete list of the names, addresses, email addresses,
telephone numbers, fax numbers and contact names of all of the customers who
have actually purchased merchandise from the Business since January 1, 2004.
Prior hereto, the Seller has provided the Purchaser with true, correct and
complete credit reports and data regarding the purchases of customers on the
Customer Lists, including sales dollars by customer and prices paid for each
procedure. Neither the Seller nor any of its Affiliates has any contract,
agreement, understanding or policy, including without limitation any privacy
policy, that could limit the use of the Customer Lists by the Purchaser after
the Closing.
(h) Goodwill and Similar Rights.
(i) Schedule E sets forth a true and complete list of any and all trade
names, service marks, trademarks (registered or unregistered), logos, patterns,
designs, drawings, software, URLs, copyrights and patents and applications
therefor owned, used, filed by or licensed to the Seller with respect to the
Business. With respect to registered trademarks, Schedule 2.1 sets forth a list
of all jurisdictions in which such trademarks (if any) are registered or applied
for and all registration and application numbers. With respect to patents,
Schedule 2.1 sets forth a list of all jurisdictions in which such patents have
been granted or applied for and all registration and application numbers. The
Seller owns or validly license all patents, trademarks, service marks, trade
names, domain names and copyrights, in each case registered or unregistered,
inventions, technology, industrial design, software, know-how, trade secrets,
Customer Lists and other intellectual property rights (collectively, the
"Intellectual Property") used in the Business as presently conducted, with no
infringement of or conflict with any rights of others. The Seller is, and on the
Closing Date the Purchaser will be, the sole and exclusive owner of or valid
licensee of all rights to the Intellectual Property, free and clear of all
Liens. Each of the aforesaid elements of the Intellectual Property is valid,
subsisting and enforceable. Except as set forth on Schedule 2.1, the Seller has,
and on the Closing Date the Purchaser will have, the right to use the same
[**] - Confidential or proprietary information redacted.
8
without the payment of any license, fee, royalty or similar charge. Except as
set forth on Schedule 2.1, the Seller has not granted to any third party any
license or other right to any of the Intellectual Property. Except as set forth
on Schedule 2.1, there is no claim pending or, to the knowledge of the Seller or
the Principals, threatened, which relates to any of the Intellectual Property.
Except as set forth on Schedule 2.1, the Seller has not received any notice that
the operations of the Business or the practice of any of the Intellectual
Property infringes upon or conflicts with any patent, trademark, trade name,
copyright or other proprietary right of a third party.
(ii) To the knowledge of the Seller and the Principals, all trade secrets
and other confidential information of the Seller relating to the Business or the
Acquired Assets are presently valid and protectable and are not part of the
public domain or knowledge, nor, to the knowledge of the Seller, have they been
used, divulged or appropriated for the benefit of any person other than the
Seller to the detriment of the Business.
(i) Agreements, Etc. Schedule F contains a true and complete list (and,
with respect to oral contracts or agreements, a description) of all written or
oral contracts and agreements to which the Seller is a party in connection with
the Business relating to (1) the lease or similar arrangement of any machinery,
equipment, furniture, fixtures or similar property, and (2) the maintenance of
any machinery, equipment, furniture, fixtures or similar property. Schedule G
contains a true and complete list (and, with respect to oral contracts or
agreements, a description) of all written or oral contracts and agreements to
which the Seller is a party in connection with the Business relating to open
purchase orders with customers of the Seller and agreements with customers to
which the Seller is a party. The Seller is not in default under any such
agreement or instrument, and, to the knowledge of the Seller and the Principals,
no other party to any such agreement or instrument is in breach thereof or
default thereunder. All such agreements or instruments are in full force and
effect and are enforceable against the other parties thereto. The Seller has
made available to or furnished to the Purchaser true and complete copies of all
documents described in Schedule F and Schedule G.
(j) Compliance with Law; Investigations. The Seller has complied with all
applicable laws, statutes, regulations, orders and restrictions of each federal,
state, municipal or other governmental body, department, commission, board,
bureau, agency or instrumentality to which it is subject, the failure to comply
with which could have a material adverse effect on the Seller's business,
operations, assets, properties, condition or prospects. There is no governmental
inquiry pending or, to the knowledge of the Seller, threatened relating to or
involving the Seller, its assets, properties or business which might, if
determined adversely, result in a material adverse change in the Seller's
business, operations, assets, properties, condition or prospects, and no basis
for any of the foregoing is known to the Seller.
(k) Brokers. No agent, broker, investment banker, person or firm acting on
behalf of the Seller or any of its Affiliates is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly from any of the parties hereto in connection with any of the
transactions contemplated hereby.
2.2. Representations and Warranties by the Principals. Each of the
Principals severally represents and warrants to the Purchaser Parties as
follows:
(a) Authority; Binding Agreements. Such Principal has all requisite power
and authority to execute, deliver and perform his obligations under this
Agreement, the Non-Compete Agreement and the Proxy, and to consummate the
transactions contemplated hereby and thereby and the Principal has duly executed
[**] - Confidential or proprietary information redacted.
9
and delivered this Agreement. This Agreement is, and upon execution and
delivery, the Non-Compete Agreement and the Proxy and such other agreements,
documents and instruments as are executed and delivered by the Principal will
be, the legal, valid and binding obligations of such Principal, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) Purchase for Own Account. Such Principal is acquiring the Emergent
Stock as principal for the Principal's own account, not as a nominee or agent,
and not with a view to the public resale or distribution thereof within the
meaning of the Securities Act of 1933, as amended (the "Securities Act"), and
the Principal has no present intention of selling, granting any participation
in, or otherwise distributing the same.
(c) Investment Experience. Such Principal understands that the Emergent
Stock may involve substantial risk. The Principal has experience as an investor
in securities of companies and acknowledges that it is able to fend for itself,
can bear the economic risk of its investment in the Emergent Stock and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of an investment in the Emergent Stock and
protecting its own interests in connection with this investment.
(d) Accredited Purchaser Status. The Principal is an "accredited investor"
within the meaning of Regulation D promulgated under the Securities Act.
(e) Reliance Upon Principal's Representations. The Principal understands
that the issuance of the Emergent Stock to it will not be registered under the
Securities Act on the ground that such issuance and sale will be exempt from
registration under the Securities Act pursuant to Section 4(2) thereof, and that
the Purchaser Parties' reliance on such exemption is based in part on each
Principal's representations set forth herein.
(f) General Solicitation. The Principal is not purchasing the Emergent
Stock as a result of any advertisement, article, notice or other communication
regarding the Emergent Stock published in any newspaper, magazine or similar
media or broadcast over television or radio or presented at any seminar or any
other general solicitation or general advertisement.
(g) Receipt of Information. The Principal has had an opportunity to ask
questions of the Purchaser's Parent regarding the terms and conditions of the
issuance of the Emergent Stock and the business, properties, prospects and
financial condition of the Purchaser's Parent and to obtain any additional
information.
(h) Restricted Securities. The Principal will not sell, offer to sell,
assign, pledge, hypothecate or otherwise transfer the Emergent Stock unless (i)
pursuant to an effective registration statement under the Securities Act, (ii)
such holder provides the Purchaser's Parent with an opinion of counsel, in a
generally acceptable form, to the effect that a sale, assignment or transfer of
such securities may be made without registration under the Securities Act, (iii)
such securities can be sold pursuant to Rule 144(k) under the Securities Act
with such restrictions as provided therein, or (iv) such securities may be
[**] - Confidential or proprietary information redacted.
10
publicly sold pursuant to Rule 144 ("Rule 144") and such Principal has delivered
to the Purchaser's Parent with a copy to its securities counsel, ▇▇▇▇▇ & ▇▇▇▇▇,
PLLC, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (fax: ▇▇▇-▇▇▇-▇▇▇▇)
prior to sale customary Rule 144 broker's and seller's representation letters, a
Form 144 and an appropriate legal opinion. It is understood that the Principal
shall not sell the Emergent Stock issued as the Stock Consideration hereunder
until the Stock Consideration is no longer subject to the stock giveback
pursuant to Section 1.3(c) and until the Purchaser's Parent's counsel authorizes
the Purchaser's Parent's transfer agent, American Stock Transfer and Trust
Company, to rely on the legal opinion submitted to the Purchaser's Parent
hereunder. Notwithstanding anything to the contrary contained in this Agreement
or the Non-Compete Agreement, the Principal may transfer (without restriction
and without the need for an opinion of counsel) the Emergent Stock to its
affiliates provided that such affiliate is an "accredited investor" under
Regulation D and such affiliate agrees to be bound by the terms and conditions
of this Agreement, the Non-Compete Agreement and the Proxy, as applicable.
(i) Legends. The Principal agrees that the Emergent Stock and the
certificates for the Emergent Stock shall bear legends to the following effect:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or with any state
securities commission, and may not be transferred or disposed
of by the holder in the absence of a registration statement
which is effective under the Securities Act of 1933 and
applicable state laws and rules, or, unless, immediately prior
to the time set for transfer, such transfer may be effected
without violation of the Securities Act of 1933 and other
applicable state laws and rules."
"The securities represented by this certificate are subject to
an agreement with Emergent Group, Inc. which prohibits the
sale or other transfer of such shares. A copy of such
agreement dated as of November 11, 2005 is available at the
principal executive offices of the corporation."
In addition, the Principal agrees that the Purchaser's Parent may place stop
transfer orders with its transfer agent with respect to such certificates.
Notwithstanding the foregoing, it is agreed that, as long as (A) the resale or
transfer (including without limitation a pledge) of the Emergent Stock is
registered pursuant to an effective registration statement and the Principal
represents in writing to the Purchaser's Parent that such Emergent Stock has
been or is being sold pursuant to such registration statement and that the
Principal has or will comply with all applicable prospectus delivery
requirements in connection with such sale, (B) such Emergent Stock has been
publicly sold pursuant to Rule 144 and such Principal has delivered to the
Company customary Rule 144 broker's and seller's representation letters, a Form
144 and an appropriate legal opinion, or (C) such Emergent Stock can be publicly
sold pursuant to Rule 144(k) under the Securities Act, such Emergent Stock shall
be issued without any legend or other restrictive language and, with respect to
Emergent Stock upon which such legend is stamped, the Purchaser's Parent shall
[**] - Confidential or proprietary information redacted.
11
issue new certificates without such legend to the Principal promptly upon
request. Nothing contained in this Agreement obligates the Purchaser's Parent or
the Purchaser to file a registration statement with the Securities and Exchange
Commission to register the resale of the Emergent Stock being issued as the
Stock Consideration to the Principals hereunder.
2.3. Representations and Warranties by the Purchaser. The Purchaser
represents and warrants to the Seller and the Principals as follows:
(a) Organization and Standing. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has all requisite limited liability company power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted.
(b) Authority; Binding Agreements. The execution, delivery and performance
of this Agreement and the Non-Compete Agreement and all other agreements,
documents and instruments contemplated in connection with this Agreement to
which the Purchaser is a party and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary action of the Purchaser. The Purchaser has all requisite power and
authority to execute, deliver and perform this Agreement and the Non-Compete
Agreement and to consummate the transactions contemplated hereby and thereby and
the Purchaser has duly executed and delivered this Agreement. This Agreement is,
and upon execution and delivery, the Non-Compete Agreement and such other
agreements, documents and instruments will be, the legal, valid and binding
obligation of the Purchaser, enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) Conflicts; Consents. None of the execution of this Agreement or the
Non-Compete Agreement, the consummation of the transactions contemplated hereby
or thereby or compliance by the Purchaser with any of the provisions hereof or
thereof will (i) conflict with or result in a breach of the constituent
documents of the Purchaser, (ii) conflict with or result in a default (or give
rise to any right of termination, cancellation or acceleration) under any of the
provisions of any note, bond, lease, mortgage, indenture, license, franchise,
permit, agreement or other instrument or obligation to which the Purchaser is a
party, or by which the Purchaser or the Purchaser's properties or assets, may be
bound or affected, except for such conflicts, breaches or defaults as to which
requisite waivers or consents shall be obtained before the Closing, or (iii)
violate any law, statute, rule or regulation or order, writ, injunction or
decree applicable to the Purchaser or the Purchaser's properties or assets, in
each case, which conflict, breach, default or violation could reasonably be
expected to materially impair such party's ability to consummate the
transactions contemplated hereby. No material consent or approval by or
notification of or filing with any person (as defined herein) is required in
connection with the execution, delivery and performance by the Purchaser of this
[**] - Confidential or proprietary information redacted.
12
Agreement or the Non-Compete Agreement or the consummation of the transactions
contemplated hereby or thereby, other than those that have been obtained or will
prior to the Closing Date be obtained and are, or will be, in full force and
effect.
(d) Brokers. No agent, broker, investment banker, person or firm acting on
behalf of the Purchaser or any of its affiliates or under the authority of the
Purchaser of any of its affiliates is or will be entitled to any broker's or
finder's fee or any other commission or similar fee directly or indirectly from
any of the parties hereto in connection with any of the transactions
contemplated hereby.
2.4. Representations and Warranties by the Purchaser's Parent. The
Purchaser's Parent represents and warrants to the Seller and the Principals as
follows:
(a) Organization and Standing. The Purchaser's Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has all requisite limited liability company power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted.
(b) Authority; Binding Agreements. The execution, delivery and performance
of this Agreement and all other agreements, documents and instruments
contemplated in connection with this Agreement to which the Purchaser's Parent
is a party and the consummation of the transactions contemplated hereby and
thereby, including the authorization, issuance and delivery of the Emergent
Stock, have been duly and validly authorized by all necessary action of the
Purchaser's Parent. The Purchaser's Parent has all requisite power and authority
to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby and thereby, including the authorization,
issuance and delivery of the Emergent Stock, and the Purchaser's Parent has duly
executed and delivered this Agreement. This Agreement is, and upon execution and
delivery, such other agreements, documents and instruments contemplated by this
Agreement to be entered into by Purchaser's Parent will be, the legal, valid and
binding obligation of the Purchaser's Parent, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) Conflicts; Consents. None of the execution of this Agreement, the
consummation of the transactions contemplated hereby, including the
authorization, issuance and delivery of the Emergent Stock, or compliance by the
Purchaser's Parent with any of the provisions hereof will (i) conflict with or
result in a breach of the constituent documents of the Purchaser's Parent, (ii)
conflict with or result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the provisions of any note, bond,
[**] - Confidential or proprietary information redacted.
13
lease, mortgage, indenture, license, franchise, permit, agreement or other
instrument or obligation to which the Purchaser's Parent is a party, or by which
such party or such party's properties or assets, may be bound or affected,
except for such conflicts, breaches or defaults as to which requisite waivers or
consents shall be obtained before the Closing, or (iii) violate any law,
statute, rule or regulation or order, writ, injunction or decree applicable to
the Purchaser's Parent or such party's properties or assets, in each case, which
conflict, breach, default or violation could reasonably be expected to
materially impair such party's ability to consummate the transactions
contemplated hereby. No material consent or approval by or notification of or
filing with any person (governmental or private) is required in connection with
the execution, delivery and performance by the Purchaser's Parent of this
Agreement or the consummation of the transactions contemplated hereby, including
the authorization, issuance and delivery of the Emergent Stock, other than those
that have been obtained or will prior to the Closing Date be obtained and are,
or will be, in full force and effect. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, or notice to, any federal, state or local governmental authority on
the part of the Purchaser's Parent is required in connection with the issuance
of the Emergent Stock to the Principals, or the consummation of the other
transactions contemplated by this Agreement, other than any federal and state
filings that may be required pursuant to Regulation D promulgated under the
Securities Act and any applicable state securities laws.
(d) Valid Issuance of Stock.
(i) Valid Issuance. The Emergent Stock to be issued pursuant to this
Agreement will be, upon consummation of this Agreement by the Principals, duly
authorized and validly issued, free and clear of all liens, claims and
encumbrances, except encumbrances or restrictions arising under federal or state
securities laws. The Emergent Stock has been duly and validly authorized and
reserved for issuance and, upon issuance, sale and delivery in accordance with
the terms of this Agreement and the Non-Compete Agreement, for the consideration
provided for therein, will be duly and validly issued, fully paid and
non-assessable free and clear of all liens, claims and encumbrances, except
encumbrances or restrictions arising under federal or state securities laws.
(ii) Compliance with Securities Laws. Subject to the accuracy of the
representations made by the Principals in Section 2.2 hereof (and assuming no
change in applicable law and no unlawful distribution of the Emergent Stock by
the Principals or other parties), the Emergent Stock will be issued to the
Principals in compliance with applicable exemptions from (i) the registration
and prospectus delivery requirements of the Securities Act, and (ii) the
registration and qualification requirements of all applicable securities laws of
the states of the United States.
(e) General Solicitation; No Integration. Neither the Purchaser's Parent
nor any other person or entity authorized by the Purchaser's Parent to act on
its behalf has engaged in a general solicitation or general advertising (within
the meaning of Regulation D of the Securities Act) of investors with respect to
offers or sales of the Emergent Stock. The Purchaser's Parent has not, directly
[**] - Confidential or proprietary information redacted.
14
or through any agent, sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the Securities
Act) which, to its knowledge, is or will be integrated with the Emergent Stock
issued pursuant to this Agreement.
ARTICLE 3
ADDITIONAL AGREEMENTS
3.1. Expenses; Taxes. Each party hereto shall pay its respective legal and
accounting fees and expenses incurred in connection with the preparation,
execution and delivery of this Agreement and all other agreements, documents and
instruments executed pursuant hereto and any other costs and expenses incurred
by such party, except as otherwise expressly set forth herein, whether or not
Closing occurs. The Seller shall pay the cost of all income, excise, single
business, use, gross receipts and similar taxes related to the Business before
the Closing, and the Purchaser shall pay such taxes related to the Business as
of and after the Closing. The Purchaser shall not be responsible for any income
taxes of the Seller or the Principals arising out of or in connection with the
transactions contemplated by this Agreement and the other agreements, documents
and instruments executed pursuant hereto. The Seller and the Purchaser shall
each pay 50% of any sales and transfer taxes arising out of or in connection
with the transfer by the Seller to the Purchaser of the Acquired Assets and
Assumed Liabilities pursuant hereto.
3.2. Further Assurances. Each party hereto agrees to use its reasonable
best efforts to take, or cause to be taken, all action, and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations, to consummate and make effective the transactions contemplated by
this Agreement as expeditiously as practicable and to ensure that the conditions
set forth in Article IV hereof are satisfied, insofar as such matters are within
the control of such party. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement or to ensure the proper assignment and delivery of the Acquired Assets
to the Purchaser, each of the parties to this Agreement shall take or cause to
be taken all such necessary action, including, the execution and delivery of
such further instruments and documents, as may be reasonably requested by any
party for such purposes or otherwise to complete or perfect the transactions
contemplated hereby.
3.3. Access and Information. Following the Closing Date, the Seller and the
Principals shall make available to the Purchaser any data and other information
in the possession of the Seller or the Principals relating to the Acquired
Assets, the Assumed Liabilities or the Business and the Seller and the
Principals shall reasonably assist the Purchaser in arranging discussions with
(and the calling as witnesses in any proceedings related to the Acquired Assets,
the Assumed Liabilities or the Business, of) officers, employees and agents of
the Seller: (i) to permit the preparation of any tax returns; (ii) in connection
with any governmental examination of tax returns relating to the Acquired
Assets; (iii) to defend or prosecute any claims relating to the Acquired Assets
or the Assumed Liabilities; or (iv) for any other purpose reasonably requested
by the Purchaser Parties.
[**] - Confidential or proprietary information redacted.
15
3.4. Bulk Sales. Subject to the indemnification provision in Section
5.1(a)(v), the Seller and the Purchaser hereby agree to waive compliance with
any and all bulk sales laws applicable to the transactions contemplated by this
Agreement.
3.5. Public Announcements. Except as otherwise required by law or
applicable stock exchange rules, no party hereto may issue any press release or
other public disclosure concerning this transaction without the prior written
consent of the other parties hereto.
3.6. Non-Compete Agreement. The Seller and the Principals agree to enter
into the Non-Compete Agreement.
3.7. [**] of [**]. [**] and [**] agree to [**] with [**] within one year of
the Closing Date to [**] a [**] and offer a [**] known as [**] on terms to be
mutually agreed between such parties [**].
3.8. Grant of Proxy. The Principals agree to grant to ▇▇▇▇▇ ▇. ▇▇▇▇▇, the
Chairman of the Board of the Purchaser's Parent, on the Closing Date, an
irrevocable proxy in the form of Exhibit 3 attached hereto to vote all the
shares of Emergent Stock which they acquire hereunder and under the Non-Compete
Agreement, in his discretion, on all matters brought before the stockholders of
the Purchaser's Parent (at a meeting of stockholders or by written consent of
stockholders)(each a "Proxy" and, collectively, the "Proxies"), until the
Emergent Stock is sold by the respective Principals to a non-affiliated third
party in compliance with the provisions of Section 2.2(h) hereof.
ARTICLE 4
CONDITIONS PRECEDENT
4.1. Conditions of Obligations of the Purchaser Parties. The obligations of
the Purchaser Parties to purchase and accept the Acquired Assets, assume the
Assumed Liabilities and otherwise to consummate the transactions contemplated by
this Agreement are subject to the satisfaction on or prior to the Closing of the
following conditions unless waived in writing by the Purchaser Parties:
(a) Consents, Amendments and Terminations. The Purchaser shall have
received duly executed and delivered copies of all waivers, consents,
terminations and approvals contemplated by this Agreement, all in form and
substance reasonably satisfactory to the Purchaser.
(b) Instruments of Transfer. The Seller shall have delivered to the
Purchaser a ▇▇▇▇ of Sale conveying the movable (personal) property included in
the Acquired Assets (the "▇▇▇▇ of Sale"), an Assignment and Assumption (the
"Assignment"), and any additional instruments of assignment, transfer or
[**] - Confidential or proprietary information redacted.
16
conveyance requested by the Purchaser from the Seller, including certificates of
registration duly executed with respect to each of the Vehicles ("Vehicle
Transfers"), each in form and substance reasonably satisfactory to the
Purchaser.
(c) Governmental Consents; No Legal Bar; Permits. The Seller shall have
obtained all necessary authorizations, approvals, and qualifications, or secured
exemptions therefrom, required by, and made all necessary filings and
registrations with, any governmental authority in connection with the
consummation of the transactions contemplated by this Agreement. No action or
proceeding by or before any court or governmental authority shall be pending or
threatened challenging or seeking to restrain or prohibit the transactions
contemplated by this Agreement. No law, rule, regulation, order, injunction or
decree of any court or governmental authority preventing the transactions
contemplated by this Agreement shall be in effect.
(d) Constitutive Documents; Approvals. The Purchaser shall have received
copies of all of the constituent and governing documents of the Seller and
resolutions documenting all limited liability company or member proceedings and
approvals of the Seller with respect to this Agreement, the other agreements,
documents and instruments contemplated in connection herewith and the
transactions contemplated hereby and thereby, certified as true and complete by
the Secretary of the Seller.
(e) FIRPTA Certificate. The Seller shall have delivered an executed
certificate, as described in Treasury Regulations ss. 1.1445-2, certifying that
the Seller is not a foreign person as defined in Section 1445(f)(3) of the Code.
(f) Customer Lists. The Seller shall have provided to the Purchaser a true
and correct copy of the Customer Lists current as of the Closing Date.
(g) Proxies. The Principals shall have delivered to the Purchaser Parties
the Proxies.
(h) Non-Compete Agreement. The Seller and the Principals shall have
delivered to the Purchaser the Non-Compete Agreement.
(i) Other Documents. The Purchaser Parties shall have received such other
documents, certificates or instruments as they may reasonably request.
4.2. Conditions of Obligations of the Seller. The obligations of the Seller
to sell the Acquired Assets and otherwise to consummate the transactions
contemplated by this Agreement are subject to the satisfaction on or prior to
the Closing of the following conditions unless waived in writing by the Seller:
(a) Assignment. The Purchaser shall have delivered to the Seller the
Assignment, duly executed by the Purchaser, in form and substance reasonably
satisfactory to the Seller.
[**] - Confidential or proprietary information redacted.
17
(b) Payment of Purchase Price. The Purchaser shall have paid the Purchase
Price, as determined in accordance with Section 1.3, to the Seller.
(c) Governmental Consents; No Legal Bar. The Purchaser Parties shall have
obtained all necessary authorizations, approvals, and qualifications, or secured
exemptions therefrom, required by, and made all necessary filings and
registrations with, any governmental authority in connection with the
consummation of the transactions contemplated by this Agreement. No action or
proceeding by or before any court or governmental authority shall be pending or
threatened challenging or seeking to restrain or prohibit the transactions
contemplated by this Agreement. No law, rule, regulation, order, injunction or
decree of any court or governmental authority preventing the transactions
contemplated by this Agreement shall be in effect.
(d) Other Documents. The Seller shall have received such other documents,
certificates or instruments as it may reasonably request.
ARTICLE 5
INDEMNIFICATION
5.1. Indemnification. (a) The Seller and the Principals jointly and
severally shall indemnify and hold harmless each of the Purchaser Parties and
its Affiliates, shareholders, partners, directors, officers, employees and other
agents and representatives from and against any and all liabilities, judgments,
claims (including claims of creditors of the Seller), settlements, losses,
damages, fees, Liens, taxes, penalties, obligations and expenses (including
reasonable fees and disbursements of counsel) (collectively, "Losses") incurred
or suffered by any such person arising from, by reason of or in connection with:
(i) any misrepresentation or breach of any representation,
warranty, covenant or agreement of the Seller or the Principals contained
in this Agreement, or any other agreement, document, instrument or
certificate delivered or entered into by the Seller or the Principals on
the Closing Date in connection herewith including the Non-Compete
Agreement;
(ii) any and all federal, state, local and foreign income,
profits, franchise, sales, use, occupation, property, excise, employment
and other taxes (including interest, penalties and withholdings of tax)
of any kind related to the Business or the Acquired Assets for any and
all periods ending on or prior to the Closing Date;
(iii) the conduct of the Business or other operations of the
Business or the Acquired Assets on or prior to the Closing Date or any
condition relating to product or service liability of the Business in
existence prior to the Closing Date;
[**] - Confidential or proprietary information redacted.
18
(iv) except for the Assumed Liabilities, any and all liabilities
or obligations of the Seller, including any and all Excluded Liabilities,
or the failure of the Seller to pay or discharge the same;
(v) the failure (A) of the Purchaser Parties to comply with any
bulk sales laws applicable to the transactions contemplated by this
Agreement, and (B) of the Seller to pay to the creditors of the Seller
all amounts which are related to the Business outstanding at the Closing
Date;
(vi) any claim by any [**] with respect to the transactions
contemplated by this Agreement or otherwise; and
(vii) any and all actions, suits, proceedings, demands, orders,
rulings, decrees, judgments, costs and legal and other expenses incident
to any of the matters referred to in clauses (i) through (vi) of this
Section 5.1(a);
provided, however, that the Purchaser shall be entitled to offset the amounts
due to the Principals under the Non-Compete Agreement (including the amount of
Emergent Stock) against the Principals' obligation and liability for any and all
such Losses under Section 5.1(a) as such Losses are known and such amounts
become due; and provided, further, however, that with respect to obligations and
liabilities for breaches of the Non-Compete Agreement, the breaching Principal
shall be fully liable without limitation as to the time of the breach while the
non-breaching Principals shall be liable up to a maximum of 50% each for
breaches occurring within three years from the Closing Date.
(b) The Purchaser shall indemnify and hold harmless the Seller and its
members (including the Principals), shareholders, partners, directors, officers,
employees and other agents and representatives from and against any and all
liabilities, judgments, claims, settlements, losses, damages, fees, Liens,
taxes, penalties, obligations and expenses (including fees and disbursements of
counsel) incurred or suffered by any such person arising from, by reason of or
in connection with:
(i) any misrepresentation or breach of any representation,
warranty, covenant or agreement of any Purchaser Party contained in this
Agreement, or any other agreement, document, instrument or certificate
delivered or entered into by the Purchaser Parties on the Closing Date in
connection herewith;
(ii) any and all federal, state, local and foreign income,
profits, franchise, sales, use, occupation, property, excise, employment
and other taxes (including interest, penalties and withholdings of tax)
of any kind related to the Business or the Acquired Assets for any and
all periods beginning after the Closing Date;
(iii) the conduct of the Business or other operations of the
Business or the Acquired Assets after the Closing Date;
[**] - Confidential or proprietary information redacted.
19
(iv) any and all Assumed Liabilities or the failure of the
Purchaser to pay or discharge the same; and
(v) any and all actions, suits, proceedings, demands, orders,
rulings, decrees, judgments, costs and legal and other expenses incident
to any of the matters referred to in clauses (i) through (iv) of this
Section 5.1(b).
5.2. Certain Limitations. The remedies provided in this Article V shall be
the exclusive remedies of the Purchaser Parties for any Losses that are subject
to indemnification pursuant to Section 5.1(a).
5.3. Procedures Relating to Third Party Claims.
(a) In order for an indemnified party to be entitled to any indemnification
provided for under this Article V arising from, by reason of, or otherwise in
connection with an asserted or unasserted claim or demand made or which might be
made by any Person against the indemnified party (a "Third Party Claim"), the
indemnified party must send reasonably prompt notice to the indemnifying parties
in writing of the Third Party Claim, including the nature and basis of such
claim to the extent known by the indemnified party (the "Indemnification
Notice"); provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
indemnifying parties have been materially and actually prejudiced as a result of
such failure. If a Third Party Claim is made against the indemnified party, the
indemnifying parties shall be entitled to participate in the defense thereof
and, if they so choose and acknowledge in writing their respective obligation to
indemnify the indemnified party therefor, to assume the defense thereof with
counsel selected by the indemnifying parties acting together, provided that such
counsel is reasonably acceptable to the indemnified party. Should the
indemnifying parties so elect to assume the defense of a Third Party Claim, the
indemnifying parties shall not be liable to the indemnified party for legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof. If the indemnifying parties assume such defense, the
indemnified party shall have the right to participate in the defense thereof and
to employ counsel, at its own expense, separate from the counsel employed by the
indemnifying parties, it being understood that the indemnifying parties shall
control such defense. The indemnifying parties shall be liable for the fees and
expenses of counsel employed by the indemnified party for any period during
which the indemnifying parties have failed to assume the defense thereof (as
well as during the period prior to the time the indemnified party shall have
given notice of the Third Party Claim as provided above). Regardless of which
party shall assume the defense of such claim, each party shall provide to the
other parties, upon such other parties' written request, reasonable access
during normal business hours to the books, records and personnel in their
possession or under their control which are reasonable necessary to verify such
claim.
(b) Prior to the indemnifying parties notifying the indemnified party of
their intention to defend the claim, the indemnified party will defend against
such claim as the indemnified party deems appropriate. If the indemnifying
[**] - Confidential or proprietary information redacted.
20
parties so elect to assume the defense of any Third Party Claim, the indemnified
party shall cooperate with the indemnifying parties in the defense or
prosecution thereof. Whether or not the indemnifying parties shall have assumed
the defense of a Third Party Claim, the indemnified party shall not admit any
liability with respect to, or settle, compromise or discharge, such Third Party
Claim without the prior written consent of the indemnifying parties (which
consent shall not be unreasonably withheld). If the indemnifying parties shall
have assumed the defense of a Third Party Claim, the indemnified party shall
agree to any settlement, compromise or discharge of a Third Party Claim which
the indemnifying parties may recommend and which by its terms obligates the
indemnifying parties to pay the full amount of the liability in connection with
such Third Party Claim, which releases the indemnified party completely in
connection with such Third Party Claim and which would not otherwise adversely
affect the indemnified party.
(c) Notwithstanding the foregoing, the indemnifying parties shall not be
entitled to assume the defense of any Third Party Claim (and shall be liable for
the reasonable fees and expenses of counsel incurred by the indemnifying parties
in defending such Third Party Claim) if the Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than money damages
against the indemnified party which the indemnified party determines, after
conferring with its outside counsel, cannot be separated from any related claim
for money damages without any potential adverse effect to the indemnified party.
If such equitable relief or other relief portion of the Third Party Claim can be
so separated from that for money damages, the indemnifying parties shall be
entitled to assume the defense of the portion relating to money damages.
5.4. Procedures Related to Claims other than Third Party Claims. In the
event any indemnified party should have a claim for indemnification against the
indemnifying parties under this Article V that does not involve a Third Party
Claim being asserted against or sought to be collected from such indemnified
party, the indemnified party shall deliver notice of such claim with reasonable
promptness to the indemnifying parties. The failure by any indemnified party so
to notify the indemnifying parties shall not affect the indemnification provided
hereunder except to the extent the indemnifying parties have been materially and
actually prejudiced as a result of such failure.
ARTICLE 6
MISCELLANEOUS
6.1. Entire Agreement. This Agreement, the Non-Compete Agreement, the
Proxies and the other agreements, documents and instruments contemplated in
connection with this Agreement and the schedules and exhibits hereto and thereto
contain the entire agreement among the parties with respect to the transactions
contemplated hereby and thereby and supersede all prior agreements or
understandings among the parties.
6.2. Descriptive Headings; Certain Interpretations. (a) Descriptive
headings are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
[**] - Confidential or proprietary information redacted.
21
(b) Whenever the Seller makes any representation, warranty or other
statement to the Seller's knowledge, the Designated Representatives of the
Seller will be deemed to have made due inquiry into the subject matter of such
representation, warranty or other statement. The Designated Representatives of
the Seller are ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and Rel
▇▇▇▇▇▇▇▇▇.
(c) Except as otherwise expressly provided in this Agreement, the following
rules of interpretation apply to this Agreement: (i) the singular includes the
plural and the plural includes the singular; (ii) "or" and "any" are not
exclusive and "include" and "including" are not limiting; (iii) a reference to
any agreement or other contract includes permitted supplements and amendments;
(iv) a reference to a law includes any amendment or modification to such law and
any rules or regulations issued thereunder; (v) a reference to a person includes
its permitted successors and assigns; (vi) "$" and "dollars" refer to lawful
money of the United States of America; and (vii) a reference in this Agreement
to an Article, Section, Annex, Exhibit or Schedule is to the Article, Section,
Annex, Exhibit or Schedule of this Agreement.
6.3. Notices. All notices, requests and other communications to any party
hereunder shall be in writing and sufficient if delivered personally or sent by
facsimile (with confirmation of receipt) or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
If to the Purchaser's Parent, to:
Emergent Group Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Purchaser, to:
PRI Medical Technologies, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Seller, to:
Advantage Medical Services, LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
[**] - Confidential or proprietary information redacted.
22
If to the Principals:
c/o ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or facsimile number as the party to whom notice is to
be given may have furnished to the other party in writing in accordance
herewith. Each such notice, request or communication shall be effective when
received or, if given by mail, when delivered at the address specified in this
Section or on the fifth business day following the date on which such
communication is posted, whichever occurs first.
6.4. No Third Party Beneficiaries. Other than as set forth in Article V,
this Agreement does not confer upon any person other than the parties hereto any
rights or remedies.
6.5. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement. The signatures to this Agreement may be delivered by facsimile and
any such facsimile signature shall be as admissible in any judicial or other
proceeding as the originals thereof.
6.6. Survival. Except as set forth in Article V, all representations and
warranties contained in this Agreement or in any document, certificate or
instruments delivered pursuant hereto or in connection herewith (unless
otherwise expressly provided herein or therein) shall survive the execution and
delivery of this Agreement and the Closing and shall remain in full force and
effect until the second anniversary of the date of this Agreement; provided,
however, that no party's indemnification obligations under Section 5.1 shall
terminate with respect to any item as to which the person to be indemnified or
the related party thereto shall have, before the expiration of the applicable
period, previously made a claim by delivering a notice of such claim to the
indemnifying party.
6.7. Benefits of Agreement. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. This Agreement is for the sole
benefit of the parties hereto and their respective successors and assigns and
not for the benefit of any third party.
6.8. Amendments and Waivers. No modification, amendment or waiver, of any
provision of, or consent required by, this Agreement, nor any consent to any
departure herefrom, shall be effective unless it is in writing and signed by the
parties hereto. Such modification, amendment, waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
[**] - Confidential or proprietary information redacted.
23
6.9. Assignment. This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by any party hereto without the prior
written consent of the other parties hereto. Any purported assignment not
permitted by this Section shall be void.
6.10. Enforceability. It is the desire and intent of the parties hereto
that the provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated to be invalid or unenforceable, such provision
shall be deemed amended to delete therefrom the portion thus adjudicated to be
invalid or unenforceable, such deletion to apply only with respect to the
operation of such provision in the particular jurisdiction in which such
adjudication is made.
6.11. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to the choice of law provisions thereof. Each party hereto agrees to the
exclusive jurisdiction of any state or Federal court within the Central District
of California, City of Los Angeles, with respect to any claim or cause of action
arising under or relating to this Agreement, and waives personal service of any
and all process upon it, and consents that all services of process be made by
registered or certified mail, return receipt requested, directed to it at its
address in accordance with Section 6.3, and service so made shall be deemed to
be completed when received. Each party hereto waives any objection based on
forum non conveniens and waives any objection to venue of any action instituted
hereunder. Nothing in the paragraph shall affect the right of a party hereto to
serve legal process in any other manner permitted by law.
[**] - Confidential or proprietary information redacted.
24
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed and delivered as of the day and year first above written.
ADVANTAGE MEDICAL SERVICES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ M.D.
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
Title: Chief Executive Officer
PRI MEDICAL TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
EMERGENT GROUP INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
PRINCIPALS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
/s/ ▇▇▇▇▇ ▇. ▇▇▇, M.D.
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇, M.D.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇
/s/ Rel ▇▇▇▇▇▇▇▇▇
-------------------------------
Rel ▇▇▇▇▇▇▇▇▇
25
Exhibit 1
---------
[Portions of this agreement have been omitted and separately filed with the SEC
with a request for confidential treatment. The location of those omissions have
been noted by [**].
NONCOMPETITION, NONDISCLOSURE AND NONSOLICITATION AGREEMENT (this
"Agreement"), dated as of November 11, 2005, by and between PRI MEDICAL
TECHNOLOGIES, INC., a Nevada corporation (the "Purchaser"), and ADVANTAGE
MEDICAL SERVICES, LLC, a California limited liability company (the "Seller"),
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇ ▇. ▇▇▇, M.D., ▇▇▇▇▇
▇▇▇▇▇ and Rel ▇▇▇▇▇▇▇▇▇ (collectively, the "Principals").
Introduction
The Principals own 100% of the membership interests of the Seller.
Concurrently with the execution and delivery of this Agreement, the
Purchaser is purchasing from the Seller certain of the assets of the Seller,
including without limitation its good will, pursuant to the terms and conditions
of an asset purchase agreement, dated as of the date hereof (the "Asset Purchase
Agreement"). Sections 3.6 and 4.1(h) of the Asset Purchase Agreement require
that a noncompetition agreement be executed and delivered by the Seller and each
Principal at the Closing.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
Capitalized terms not expressly defined in this Agreement shall have the
meanings ascribed to them in the Asset Purchase Agreement.
2. ACKNOWLEDGMENTS BY SELLER AND PRINCIPALS
Each Principal acknowledges that such Principal has occupied a position of
trust and confidence with the Seller prior to the date hereof and has had access
to and has become familiar with the following, any and all of which constitute
confidential information of the Seller, (collectively the "Confidential
Information"): (i) any and all trade secrets concerning the business and affairs
of the Seller, product specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings, samples, inventions
and ideas, past, current and planned research and development, current and
planned manufacturing and distribution methods and processes, customer lists,
current and anticipated customer requirements, price lists, market studies,
business plans, computer software and programs (including object code and source
code), database technologies, systems, structures architectures processes,
improvements, devices, know-how, discoveries, concepts, methods and information
of the Seller and any other information, however documented, of the Seller that
[**] - Confidential or proprietary information redacted.
1
is a trade secret within the meaning of California law or other applicable law;
(ii) any and all information concerning the business and affairs of the Seller
(which includes historical financial statements, financial projections and
budgets, historical and projected sales, capital spending budgets and plans, the
names and backgrounds of key personnel, contractors, agents, suppliers and
potential suppliers, personnel training and techniques and materials, purchasing
methods and techniques, however documented; and (iii) any and all notes,
analysis, compilations, studies, summaries, and other material prepared by or
for the Seller containing or based, in whole or in part, on any information
included in the foregoing.
The Seller and each Principal each acknowledges that (a) the business of
the Seller relating to the use and operation of the Assets by the Seller prior
to Closing is regional in scope, (b) that its products and services related to
such business are marketed in the States of California and Arizona; (c) the
Seller' s business prior to the Closing competes with other businesses that are
or could be located in the States of California and Arizona; (d) the Purchaser
has required that the Seller and each Principal make the covenants set forth in
Sections 3 and 4 of this Agreement as a condition to the Purchaser's purchase of
the Assets; (e) the provisions of Sections 3 and 4 of this Agreement are
reasonable and necessary to protect and preserve the Purchaser's interests in
and right to the use and operation of the Assets from and after Closing; and (f)
the Purchaser would be irreparably damaged if the Seller or any Principal were
to breach the covenants set forth in Sections 3 and 4 of this Agreement.
3. CONFIDENTIAL INFORMATION
The Seller and each Principal each acknowledges and agrees that the
protection of the Confidential Information is necessary to protect and preserve
the value of the Assets. Therefore, the Seller and each Principal hereby agree
not to disclose to any unauthorized persons (as such term is defined in the
Asset Purchase Agreement) or use for his or its own account or for the benefit
of any third party any Confidential Information, whether or not such information
is embodied in writing or other physical form, or is retained in the memory of
any Principal, without the Purchaser's written consent, unless and to the extent
that the Confidential Information is or becomes generally known to and available
for use by the public other than as a result of the Seller's or any Principal's
fault or the fault of any other person (as defined) bound by a duty of
confidentiality to the Purchaser or the Seller. The Seller and each Principal
agrees to deliver to the Purchaser at the time of execution of this Agreement,
and at any other time the Purchaser may request, all documents, memoranda,
notes, plans, records, reports and other documentation, models, components,
devices, or computer software, whether embodied in a disk or in other form (and
all copies of all of the foregoing), that contain Confidential Information and
any other Confidential Information that the Seller or the Principals may then
possess or have under their control.
4. NONCOMPETITION AND NONSOLICITATION
As an inducement for Purchaser to enter into the Asset Purchase Agreement
and as additional consideration for the consideration to be paid to Seller under
the Asset Purchase Agreement and the consideration to be paid under this
Agreement, the Seller and each Principal each agrees that:
[**] - Confidential or proprietary information redacted.
2
(a) For a period of five years after the Closing:
(i) Neither the Seller nor any Principal will, directly or indirectly,
engage or invest in, own, manage, operate, finance, control, or participate
in the ownership, management, operation, financing, or control of, be
employed by, associated with, or in any manner connected with, or render
services or advice or other aid to, or guarantee any obligation of, any
person (as defined) engaged in or planning to become engaged in, the
business of renting lasers and other medical equipment to hospitals and
other medical providers, or any other business whose products or activities
compete in whole or in part with the Business in which the Acquired Assets
were used prior to the Closing or may be used thereafter or the business of
the Purchaser prior to or after the Closing, anywhere within the States of
California and Arizona; provided, however, that any Principal may purchase
or otherwise acquire up to (but not more than) one percent of any class of
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on any
national or regional securities exchange or have been registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended. The
Seller and each Principal agree that this covenant is reasonable with
respect to its duration, geographical area, and scope;
(ii) The Seller and each Principal agree not to, directly or
indirectly, (A) induce or attempt to induce any employee of Seller who is
an employee of the Purchaser or becomes an employee of the Purchaser in
connection with the purchase of the Acquired Assets to leave the employ of
the Purchaser, (B) in any way interfere with the relationship between the
Purchaser and any such employee of the Purchaser, (C) employ, or otherwise
engage as an employee, independent contractor, or otherwise, any such
employee of the Purchaser, or (D) induce or attempt to induce any customer,
supplier, licensee, or other person (as defined) to cease doing business
with the Purchaser, or in any way interfere with the relationship between
any such customer, supplier, licensee, or other business entity and the
Purchaser; and
(iii) The Seller and each Principal agree that he (or it) will not,
directly or indirectly, solicit the business of any person (as defined)
that is a customer of the Purchaser, whether or not such Principal had
personal contact with such person, with respect to products or activities
which compete in whole or in part with the business operated by the
Purchaser using the Acquired Assets or otherwise;
(b) In the event of a breach by the Seller or a Principal of any covenant
set forth in Subsection 4(a) of this Agreement, the term of such covenant will
be extended by the period of the duration of such breach;
(c) Neither the Seller nor any Principal will, at any time during or after
the five year period, disparage the Purchaser, the Acquired Assets, the business
formerly conducted by the Seller, the business conducted by the Purchaser using
the Acquired Assets or otherwise, or any stockholder, director, officer,
employee or agent of the Purchaser, except as reasonably necessary, solely
related to the business formerly conducted by the Seller and not with respect to
the Purchaser or the Acquired Assets or the business conducted by the Purchaser
using the Acquired Assets, in connection with the Seller's and the principals'
[**] and [**] with [**]; and
[**] - Confidential or proprietary information redacted.
3
(d) Each Principal will, for a period of five years after the Closing,
within ten days after accepting any employment, consulting engagement,
engagement as an independent contractor, partnership or other association,
advise the Purchaser of the identity of the new employer, client, partner or
other person (as defined) with whom such Principal has become associated. The
Purchaser may serve notice upon each such person that such Principal is bound by
this Agreement and furnish each such person with a copy of this Agreement or
relevant portions thereof.
5. COMPENSATION
As additional consideration for the covenants in Section 4 of this
Agreement, the Purchaser will pay (1) the Seller the non-compete consideration
set forth in Exhibit 2 to the Asset Purchase Agreement in accordance with
Section 1.3 of the Asset Purchase Agreement and (2) the Principals the aggregate
sum of Three Hundred Seventy Five Thousand Dollars ($375,000) plus an aggregate
of 324,000 shares of common stock, par value $0.01 per share, of Emergent Group
Inc., a Nevada corporation and the parent of the Purchaser (the "Emergent
Stock"), each subject to adjustment as provided in Section 1.3(c) of the Asset
Purchase Agreement, as follows:
(a) The aggregate principal amount of Three Hundred Seventy Five Thousand
Dollars ($375,000) shall be payable to the Principals in the amounts set forth
on Schedule A hereto, in 12 equal quarterly payments payable on November 1,
February 1, May 1 and August 1 of each year, with the first such payment being
due on February 1, 2006, subject to adjustment as provided in Section 1.3(c) of
the Asset Purchase Agreement; and
(b) The Emergent Stock shall be payable to each Principal by delivery of
certificates for the Emergent Stock in the amounts set forth on Schedule A
hereto, subject to adjustment as provided in Section 1.3(c) of the Asset
Purchase Agreement, after the Final Net Service Revenue is determined after the
conclusion of the Revenue Period in accordance with the provisions of Section
1.3(c) of the Asset Purchase Agreement.
6. REMEDIES
If the Seller or any Principal breaches the covenants set forth in Sections
3 or 4 of this Agreement, the Purchaser will be entitled to the following
remedies:
(a) Damages from the Seller or such Principal, as the case may be;
(b) To offset against any and all amounts owing by the Purchaser to the
Principals under Section 5 of this Agreement any and all amounts which the
Purchaser claims under Subsection 6(a) of this Agreement;
(c) To make a claim for indemnity under Section 5.1(a) of the Asset
Purchase Agreement; and
(d) In addition to its right to damages and any other rights it may have,
to obtain injunctive or other equitable relief to restrain any breach or
threatened breach or otherwise to specifically enforce the provisions of
Sections 3 and 4 of this Agreement, it being agreed that money damages alone
would be inadequate to compensate the Purchaser and would be an inadequate
remedy for such breach.
[**] - Confidential or proprietary information redacted.
4
The rights and remedies of the parties to this Agreement are cumulative and
not alternative.
7. SUCCESSORS AND ASSIGNS
This Agreement will be binding upon the Purchaser, the Seller and each
Principal and will inure to the benefit of the Purchaser and its affiliates,
successors and assigns.
8. WAIVER
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by any party in exercising
any right, power, or privilege under this Agreement will operate as a waiver of
such right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement can be discharged, in whole or in part, by a
waiver or renunciation of the claim or right except in writing; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party, or of the right of the
party giving such notice or demand to require the other party, to take further
action without notice or demand as provided in this Agreement.
9. GOVERNING LAW
This Agreement will be governed by the laws applied by courts of the State
of California to contracts entered into within that State by parties residing
within that State and having no connection to any other state.
10. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of California, City of Los Angeles or, if it
has or can acquire jurisdiction, in the United States District Court for the
Central District of California, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
[**] - Confidential or proprietary information redacted.
5
11. SEVERABILITY
Whenever possible each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any provision or term
of this Agreement is held to be prohibited by or invalid, then such provision or
term will be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement. If any
of the covenants set forth in Section 4 of this Agreement are held to be
unreasonable, arbitrary, or against public policy, such covenants will be
considered divisible with respect to scope, time, and geographic area, and in
such lesser scope, time and geographic area, will be effective, binding and
enforceable against the Seller and the Principals to the greatest extent
permissible.
12. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
13. SECTION HEADINGS; CONSTRUCTION
The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
14. NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is also promptly
mailed by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth in Section 6.3 of the Asset Purchase Agreement (or to such
other addresses and facsimile numbers as a party may designate by notice to the
other parties).
15. ENTIRE AGREEMENT
This Agreement, the Proxies and the Asset Purchase Agreement (including the
other documents and agreements contemplated thereby) constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior written and oral agreements and understandings
between the parties with respect to the subject matter of this Agreement. This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.
[**] - Confidential or proprietary information redacted.
6
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
PRI MEDICAL TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
ADVANTAGE MEDICAL SERVICES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
Title: Chief Executive Officer
PRINCIPALS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
/s/ ▇▇▇▇▇ ▇. ▇▇▇, M.D.
------------------
▇▇▇▇▇ ▇. ▇▇▇, M.D.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------
▇▇▇▇▇ ▇▇▇▇▇
/s/ Rel ▇▇▇▇▇▇▇▇▇
-------------
Rel ▇▇▇▇▇▇▇▇▇
[**] - Confidential or proprietary information redacted.
7