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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of January 1, 2000 (the
"Agreement"), and is between Xxxxxxxx Xxxxx, Inc., or its assigns, a Florida
corporation (the "Buyer"), and Medical Technology Laboratories, Inc., a Florida
corporation (the "Seller").
Background
The Seller operates a Medicare certified clinical laboratory (the
"Purchased Assets" ) and this Agreement contemplates a transaction (the
"Acquisition") in which (i) the Seller will sell certain specified assets (which
shall include the Purchased Assets) of the Seller to the Buyer, Buyer will lease
back the purchased assets (the "Leaseback") in accordance with the terms and
conditions of this Agreement. The board of directors of the Seller and Medical
Technologies Systems, Inc. (the "Shareholder"), the sole shareholder of the
Seller has approved this Agreement and the transactions contemplated by this
Agreement and the board of directors of the Buyer has determined that the
Acquisition is in the best interests of the Buyer and its shareholders and has
approved and adopted this Agreement and the transactions contemplated by this
Agreement.
In connection with the negotiation and preparation of this Agreement, the
Seller and the Buyer have prepared a set of disclosure schedules, dated the date
hereof and delivered separately as one or more volumes (the "Disclosure
Schedule", with any reference in this Agreement to a Schedule being to the
Disclosure Schedule).
The parties acknowledge that all of the Purchased Assets are subject to a
first priority security interest in favor of SouthTrust Bank, National
Association ("STB") and that the transactions contemplated by this Agreement are
subject to the consent of STB.
Accordingly, in consideration of the above and the mutual covenants and
agreements set forth below, the Buyer and the Seller agree as follows:
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Terms
ARTICLE I
Closing, Purchase and Sale
SECTION 1.01. Closing.
(a) Time and Place. The closing of the transfer and delivery of all
documents and instruments necessary to consummate the transactions contemplated
by this Agreement (the "Closing") shall be held on or before January 1, 2000, or
on such other date and time as shall be mutually agreed to by the Buyer and the
Seller, at the offices of the Seller, it being understood and agreed that time
is of the essence of this Agreement. The date on which the Closing is actually
held is referred to as the "Closing Date". The Closing will be deemed to be
effective for purposes of this Agreement as of the opening of business on the
Closing Date. Unless otherwise agreed by the parties, the Closing shall occur
within the time period contemplated by Section 8.01(b), below.
(b) Transactions at Closing. At the Closing:
(i) The Seller shall duly execute and deliver to the Buyer such deeds,
bills of sale, certificates of title and other instruments of assignment or
transfer with respect to the Purchased Assets, as the Buyer may reasonably
request and as may be necessary to vest in the Buyer or its nominee(s) good
record and marketable title to all of the Purchased Assets, in each case
subject to no encumbrance (except as described in Schedule 1.01(b) and as
otherwise contemplated by this Agreement). The Seller shall also deliver
the proceeds of the sale to STB in exchange for the release of STB of its
liens on the Purchased Assets.
(ii) The Buyer shall pay the Cash Price (as such term is defined in
Section 2.01 below) and shall duly execute and deliver to the Seller such
instruments, as the Seller may reasonably request, including, without
limitation, an assignment and assumption agreement relating to the
liabilities assumed by Buyer pursuant to this Agreement.
(iii) The Seller and Buyer shall execute a lease for the Purchased
Assets in substantially the form of Exhibit A (the "Lease"). Buyer shall
assume the obligations of Seller under the lease agreement dated September
1, 1998 with Xxxxx X. XxXxxxx, Xx. (the "Real Property Lease").
SECTION 1.02. Purchased Assets. Subject to the terms and conditions set
forth in this Agreement, at the Closing, the Seller shall sell, assign, transfer
and deliver to the Buyer, and the Buyer shall purchase, acquire and take
assignment and delivery of, the following assets of the Seller used in or
relating to the business of Seller, with the exception of the Excluded Assets
(as defined in Section 1.03, with all of such assets described in this Section
1.02 hereinafter referred to collectively as the "Purchased Assets"):
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(a) the testing equipment, computers, motor vehicles, furniture and
furnishings and equipment owned by the Seller all of which are listed in
Schedule 1.02(a) (collectively, the "Equipment");
(b) all of the Seller's title to, interest in and rights under any real and
personal property lease relating to the business of Seller to which the Seller
is currently a party, to the extent such leases are assignable (the "Real and
Personal Property Leases") all of which are listed in Schedule 1.02(b);
(c) goodwill;
(d) customer lists;
(e) all of the Seller's rights (and obligations) under the contracts listed
on Schedule 1.02(e) and all of the Seller's rights and obligations under the
Real Property Lease (the "Assumed Obligations");
(f) the Seller's trade non-Medicare/Medicaid accounts receivables (billed
and unbilled) that have been created since September 10, 1999, the date of the
Management Agreement (the "MA") between the Buyer and the Seller, which as of
the date of this Agreement is equal to $826,120.20.
(g) the Seller's collections from Seller's Medicare/Medicaid accounts
receivable (billed and unbilled) that have been created since September 10,
1999, the date of the MA, which as of the date of this Agreement is equal to
$667,937.80. The Parties agree that the collections will be deposited initially
into an Account owned by the Seller and then will be transferred to an account
controlled by Buyer within 24 hours of receipt by Seller.
(h) all of the Seller's rights with respect to a certain Non-Compete
Agreement between the Shareholder, Xxxx Xxxxxx, Xxxxxx Xxxxx, any and all other
employees, and Seller.
(i) all of the sellers rights with respect to security and other deposits.
SECTION 1.03. Excluded Assets. Notwithstanding the foregoing the Seller is
not selling and the Buyer is not purchasing pursuant to this Agreement, and the
term "Purchased Assets" shall not include, any of the following assets
(collectively, the "Excluded Assets"):
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(a) accounts receivable created prior to the date of the MA and all cash
collected from such accounts receivable (the "Existing AR");
(b) any capital stock or equity interest in the Seller;
(c) all foreign, federal, state or local Tax (as defined in Section 9.03)
refunds, Tax refund claims and Tax credits, deductions or other Tax benefits of
the Seller relating to periods prior to the Closing Date;
(d) all indemnity and contribution rights granted to the Seller or owed by
third parties to the Seller with respect to any Liabilities not assumed by the
Buyer (as defined in Section 1.04) and any and all rights or assets arising from
and related to the defense, release, compromise, discharge, administration,
management or satisfaction by the Seller of the Liabilities;
(e) all of Seller's rights, claims, actions, causes of action, vendor,
supplier and similar claims, judgments and demands of whatever nature relating
to Excluded Assets;
(f) all of Seller's deferred charges, advance payments, prepaid items,
claims for refunds, rights of offset, and credits of all kinds, relating
specifically to the Excluded Assets;
(g) the consideration received by the Seller pursuant to this Agreement;
(h) the Seller's rights to its Medicare provider number; and
(i) the rights of the Seller under this Agreement.
SECTION 1.04. Assumption Of Certain Obligations; Excluded Liabilities
(a) At the Closing, the Buyer shall assume and agree to pay, perform,
fulfill and discharge any and all obligations of the Seller: (i) to First Union
in an amount not to exceed $125,000, (ii) to AmSouth Bank in an amount not to
exceed $233,000, (iii) that are set forth on Schedule 1.04, and (iv) that arose
since September 10, 1999, (collectively, the "Assumed Liabilities") and the
Assumed Obligations.
(b) Buyer shall assume any and all obligations secured by the equipment
acquired pursuant to this Agreement (the "Secured Liabilities").
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(c) Buyer shall indemnify, hold harmless and defend Seller as to all
losses, liabilities, costs and expenses, including attorney's fees associated
with the Assumed Liabilities, the Assumed Obligations and the Secured
Liabilities (collectively, "Indemnified Expenses").
ARTICLE II
SECTION 2.01 Consideration. In consideration of the Acquisition
contemplated herein, Buyer shall:
(a) pay to STB (on behalf of the Seller) the sum of One Million Dollars
($1,000,000), less the amounts set forth in Section 2.02 below, at the Closing
(the "Cash Price");
(b) forgive any and all advances or loans made by the Buyer to the Seller
during the term of the MA, including all principal amounts and interest on all
such advances and loans;
(c) execute documents necessary to assume (or refinance) on terms and
conditions acceptable to STB (i) that certain obligation owed to First Union for
an amount not to exceed $125,000, and (ii) that certain obligation in the amount
of $233,000 owed to AmSouth Bank for an amount not to exceed $233,000, which
obligations are currently secured by certain equipment leased by the Seller; and
(d) execute documents necessary to assume and pay, as and when due, all of
the remaining Assumed Liabilities, Assumed Obligations and Second Liabilities,
pursuant to an assignment and assumption agreement contemplated by Section
1.01(b)(ii).
SECTION 2.02. Cash Price Offsets. The Buyer shall be entitled to offset
against the Cash Price the sum of Seventy-Five Thousand and 00/100 Dollars
($75,000.00) representing the deposit provided to the Seller by the Buyer
pursuant to the Letter of Intent between the parties dated September 10, 1999
(the "Deposit").
ARTICLE III
Representations and Warranties of the Seller
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The Seller represents and warrants to the Buyer that:
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SECTION 3.01. Organization and Qualification. The Seller is a corporation
duly organized, validly existing and with active status under the laws of
Florida and has the requisite power and authority to own or lease its interest
in the Purchased Assets and to operate its properties and to carry on its
business as it is now being conducted. The Seller is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction, each such jurisdiction being listed in Schedule 3.01, where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where such
failure to be so duly qualified, licensed and in good standing would not have a
Material Adverse Effect.
SECTION 3.02. Authority Relative to This Agreement. The Seller has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Acquisition and the
other transactions contemplated by this Agreement. The execution and delivery of
this Agreement by the Seller has been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Seller are necessary to authorize this Agreement or to consummate the
Acquisition. This Agreement has been duly and validly executed and delivered by
the Seller and, assuming the due authorization, execution and delivery by the
Buyer, constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws and to general principles of
equity.
SECTION 3.03. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Seller does not,
and the performance of this Agreement by the Seller will not, (i) conflict with
or violate the articles of incorporation or by-laws of the Seller; (ii) conflict
with or violate any domestic (federal, state or local) or foreign law, rule,
regulation, order, judgment or decree (collectively, "Laws") applicable to the
Seller or by which any property or Purchased Assets of the Seller are bound or
affected, except for such conflicts or violations which would not, individually
or in the aggregate, have a Material Adverse Effect; or (iii) except as
specified in Schedule 3.03(a)(iii) of the Disclosure Schedule, result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or Purchased Assets of
the Seller pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Seller is a party or by which the Seller or any property or
Purchased Assets of the Seller are bound or affected, except for any such
breaches, defaults or other occurrences which would not, individually or in the
aggregate, have a Material Adverse Effect.
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(b) The execution and delivery of this Agreement by the Seller and the
consummation of the transactions contemplated hereby does not, and the
performance of this Agreement by the Seller will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic, foreign or supranational, except
(i) as specified in Schedule 3.03(b) of the Disclosure Schedule; and (ii) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay consummation of
the Acquisition, and would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 3.04. Permits; Seller Products; Regulation. Except as set forth on
Schedule 3.04 of the Disclosure Schedule, the Seller is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders necessary for the
Seller to own, lease and operate its properties or to carry on its business as
it is now being conducted (the "Permits"), and no suspension or cancellation of
any of the Permits is pending or, to the knowledge of the Seller, threatened.
Except as provided in Schedule 3.04, the Seller is not in conflict with, nor in
default or violation of, (i) any Laws applicable to the Seller or by which any
property or Purchased Assets of the Seller are bound or affected; (ii) any of
the Permits; or (iii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Seller is a party or by which the Seller or any property or Purchased Assets of
the Seller are bound or affected, except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.05. Consents. Except for the consents of STB and the other
consents that are set forth on Schedule 3.05 of the Disclosure Schedule, neither
the execution, delivery or performance of this Agreement nor the consummation of
any transaction provided for in the Agreement is prohibited by or requires
Seller to obtain or make any consent, authorization, approval, registration, or
filing under any statute, law, ordinance, regulation, rule, judgment, decree or
order of any court or governmental agency, board, bureau, body, department or
authority, or of any other person.
SECTION 3.06. Absence of Litigation. Except as listed in Schedule 3.06,
there is no claim, action, proceeding or investigation pending or, to the
knowledge of the Seller, threatened against the Seller or any property or asset
of the Seller before any court, arbitrator or Governmental Authority (as defined
in Section 9.03), which (a) individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect, or (b) seeks to delay or prevent the
consummation of the Acquisition and the other transactions contemplated hereby.
Except as listed and briefly described in Schedule 3.06, as of the date of this
Agreement, neither the Seller nor any Affiliate nor any property or asset of the
Seller is subject to any order, writ, judgment, injunction, decree,
determination or award having, individually or in the aggregate, a Material
Adverse Effect.
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SECTION 3.08. Labor Matters. The Seller is not a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Seller and has provided its employees with notification of
termination of employment.
SECTION 3.09. Real Property and Leases.
(a) To the best of Seller's knowledge, the Seller has sufficient title or
leasehold interests to all its properties and Acquired Assets to conduct its
business as currently conducted or as contemplated to be conducted, with only
such exceptions as, individually or in the aggregate, would not have a Material
Adverse Effect.
(b) To the best of Seller's knowledge, all leases of real property leased
for the use or benefit of the Seller to which the Seller is a party requiring
rental payments in excess of $10,000 during the period of the lease, and all
amendments and modifications thereto are in full force and effect and have not
been modified or amended, and there exists no default under any such lease by
the Seller, nor any event which with notice or lapse of time or both would
constitute a default thereunder by the Seller, which would, individually or in
the aggregate, have a Material Adverse Effect.
SECTION 3.10. Taxes. Except as described in Schedule 3.10 of the Disclosure
Schedule, (i) the Seller has filed all federal, state, local and foreign Tax
returns and reports required to be filed by it and has paid or accrued all Taxes
shown as due thereon and has paid all applicable ad valorem taxes as are due,
other than (a) such payments as are being contested in good faith by appropriate
proceedings, a description of which is provided in Schedule 3.10 and (b) such
filings, accruals, payments or other occurrences that, individually or in the
aggregate, would not have a Material Adverse Effect; (ii) neither the Internal
Revenue Service (the "IRS") nor any other taxing authority or agency, domestic
or foreign, is now asserting or, to the knowledge of the Seller, threatening to
assert against the Seller any deficiency or claim for additional Taxes or
interest thereon or penalties in connection therewith, which claims or
deficiencies, individually or in the aggregate, would have a Material Adverse
Effect; (iii) the Seller has not granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any federal, state, county, municipal or foreign income tax; (iv) the accruals
and reserves for Taxes reflected in the Closing Balance Sheet and the most
recent quarterly financial statements are adequate to cover all taxes accruable
through the date thereof (including interest and penalties, if any, thereon) in
accordance with generally accepted accounting, principles; (v) Seller has not
withheld or collected and paid over to the appropriate Governmental authorities
or are properly holding for such payment all Taxes required by law to be
withheld or collected, except for such failures to have so withheld or collected
and paid over or to be so holding for payment which would not, individually or
in the aggregate, have a Material Adverse Effect; and (vii) there are no
material liens for Taxes upon the assets of the Seller, other than liens for
Taxes that are being contested in good faith by appropriate proceedings
described in Schedule 3.10.
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SECTION 3.11. Environmental Matters.
(a) For purposes of this Agreement, the following terms shall have the
following meaning: (i) "Hazardous Substances" means (A) those substances defined
in or regulated under the following U.S. federal statutes and their state or
foreign counterparts, as each may be amended from time to time, and all
regulations thereunder: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Toxic Substances Control Act, the Marine Protection, Research and
Sanctuaries Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and
Rodenticide Act and the Clean Air Act; (B) petroleum and petroleum products
including crude oil and any fractions thereof, (C) natural gas, synthetic gas,
and any mixtures thereof, (D) radon; (E) asbestos; (F) any other pollutant or
contaminant; and (G) any substance with respect to which a federal, state or
local agency requires environmental investigation, monitoring, reporting, or
remediation; and (ii) "Environmental Laws" means any U.S. or foreign federal,
state or local law relating to (A) releases or threatened releases of Hazardous
Substances or materials containing Hazardous Substances; (B) the manufacture,
handling, transport, use, treatment, storage or disposal of Hazardous Substances
or materials containing Hazardous Substances; or (C) otherwise relating to
pollution of the environment or the protection of human health.
(b) To the knowledge of the Seller, except as described in Schedule 3.11 of
the Disclosure Schedule (which description shall include an estimate of the
Seller's potential financial liability with respect to each matter so described)
or as would not, individually or in the aggregate, have a Material Adverse
Effect: (i) the Seller has not violated and is not in violation of any
Environmental Law; (ii) there has been no contamination, disposal, spilling,
dumping, incineration, discharge, storage, treatment or handling of any
Hazardous Substance, on or from any of the properties owned or leased by the
Seller (including, without limitation, soils and surface and ground waters);
(iii) to the knowledge of the Seller, the Seller is not liable for any offsite
contamination; (iv) the Seller is not liable under any Environmental Law; (v) to
the knowledge of the Seller, the Seller has all permits, licenses and other
authorizations required under any Environmental Law ("Environmental Permits");
(vi) to the knowledge of the Seller, the Seller has been and is in compliance
with its Environmental Permits; and (vii) there are no pending, or, to the
knowledge of the Seller, threatened claims against the Seller or any Subsidiary
relating to any Environmental Law or Hazardous Substance.
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SECTION 3.12. Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Seller Common Stock is the only vote of
the holders of any class or series of capital stock of the Seller necessary to
approve the Acquisition.
SECTION 3.13. Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
Acquisition based upon arrangements made by or on behalf of the Seller.
SECTION 3.14. Bylaws. Seller has provided Buyer with copies of the by-laws
of Seller.
All of the above representations and warranties shall be true both as of
the date of the execution of this Agreement and as of the Closing Date.
ARTICLE IV
Representations and Warranties of Buyer
Buyer hereby represents and warrants to the Seller that:
SECTION 4.01. Organization and Qualification. Buyer is a corporation duly
organized, validly existing and with active status under the laws of Florida and
has the requisite power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power
and authority would not, individually or in the aggregate, have a Material
Adverse Effect. Buyer is duly qualified or licensed as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing, that would not, individually or
in the aggregate, have a Material Adverse Effect.
SECTION 4.02. Articles of Incorporation and By-Laws. Buyer has heretofore
furnished to the Seller a complete and correct copy of its articles of
incorporation and by-laws, each as amended to date, of Buyer. Such articles of
incorporation and by-laws are in full force and effect. Buyer is not in
violation of any provision of its articles of incorporation or by-laws.
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SECTION 4.03. Authority Relative to this Agreement. Buyer has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Acquisition and the
other transactions contemplated hereby. The execution and delivery of this
Agreement by Buyer and the consummation by Buyer of the Acquisition have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Buyer are necessary to authorize this
Agreement or to consummate the Acquisition. This Agreement has been duly and
validly executed and delivered by Buyer and, assuming the due authorization,
execution and delivery by the Seller, constitutes a legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms,
subject to applicable bankruptcy, insolvency, and similar laws and to general
principles of equity.
SECTION 4.04. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Buyer and the
consummation of the transactions contemplated by this Agreement does not, and
the performance of this Agreement by Buyer will not, (i) conflict with or
violate the articles of incorporation or by-laws of Buyer; (ii) conflict with or
violate any Law applicable to Buyer or by which any property or asset of the
Buyer is bound or affected, except for such conflicts or violations which would
not individually or in the aggregate, have a Material Adverse Effect; or (iii)
except as specified in Schedule 4.04(a)(iii) of the Disclosure Schedule, result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Buyer
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the Buyer
is a party or by which the Buyer or any property or asset of Buyer is bound or
affected, except for any such breaches, defaults or other occurrences which
would not, individually or in the aggregate, have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Buyer and the
consummation of the transactions contemplated by this Agreement does not, and
the performance of this Agreement by Buyer will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental or regulatory authority, domestic, foreign or supranational, except
(i) as specified in Schedule 4.04(b) of the Disclosure Schedule; and (ii) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay consummation of
the Acquisition, and would not, individually or in the aggregate, have a
Material Adverse Effect.
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SECTION 4.05. Consents.
(a) Except as set forth on Schedule 4.05 of the Disclosure Schedule,
neither the execution, delivery or performance of this Agreement nor the
consummation of any transaction provided for in the Agreement is prohibited by
or requires the Buyer to obtain or make any consent, authorization, approval,
registration, or filing under any statute, law, ordinance, regulation, rule,
judgment, decree or order of any court or governmental agency, board, bureau,
body, department or authority, or of any other person. The Buyer is not required
to file any form, report or other document with the SEC.
(b) Except as and to the extent set forth on the consolidated balance sheet
of the Buyer as at September 10, 1999 , including the notes thereto (the "Buyer
Balance Sheet"), the Buyer does not have any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) which would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with generally accepted accounting principles, except for
liabilities and obligations (i) incurred in the ordinary course of Buyer's
business since September 10, 1999 which would not, individually or in the
aggregate, have a Material Adverse Effect; and (ii) incurred pursuant to this
Agreement.
SECTION 4.06. Absence of Certain Changes or Events. Since September 10,
1999 , except as contemplated by this Agreement, or as set forth in Schedule
4.06 of the Disclosure Schedule, Buyer has conducted its businesses in the
ordinary course and in a manner consistent with past practice and, since
September 10, 1999 , there has not been (a) any event or events having,
individually or in the aggregate, a Material Adverse Effect, (b) any change by
the Buyer in its accounting methods, principles or practices, (c) any
revaluation by the Buyer of any asset (including, without limitation, any
writing down of the value of inventory or writing off of notes or accounts
receivable), other than in the ordinary course of business consistent with past
practice, (d) any entry by the Buyer into any commitment or transaction material
to the Buyer, except in the ordinary course of business and consistent with past
practice, or (e) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of Buyer or any redemption,
purchase or other acquisition of any of its securities.
SECTION 4.07. Absence of Litigation. Except as disclosed in Schedule 4.07
of the Disclosure Schedule, there is no claim, action, proceeding or
investigation pending or, to the knowledge of the Buyer, threatened against the
Buyer, or any property or asset of the Buyer, before any court, arbitrator or
Governmental Authority (as defined in Section 9.03), which (a) individually or
in the aggregate, is reasonably likely to have a Material Adverse Effect, or (b)
seeks to delay or prevent the consummation of the Acquisition and the other
transactions contemplated hereby. Neither the Buyer nor any property or asset of
the Buyer is subject to any order, writ, judgment, injunction, decree,
determination or award having, individually or in the aggregate, a Material
Adverse Effect.
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SECTION 4.08. Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
Acquisition based upon arrangements made by or on behalf of the Buyer.
SECTION 4.09 Medicare. The Buyer has applied for a Medicare provider
number. Buyer reasonably expects it will be issued a Medicare provider number
and state license, if applicable, on or before 180 days after the Closing Date.
Buyer believes that it satisfies all statutory and regulatory requirements for
obtaining a Medicare provider number. Borrower knows of no reason why its
application would be denied and neither Buyer nor any affiliate of Buyer has any
history of regulatory problems with Medicare, Medicaid or similar state or
federal agencies. Buyer upon request, will provide to Seller a written status of
its Medicare application.
SECTION 4.10 Certain Matters.
(a) The Buyer has obtained a binding commitment from First Union for a line
of credit (the "Line") in the amount of Nine Hundred Twenty-Five Thousand
Dollars ($925,000), a copy of which is attached to this Agreement as Exhibit C.
Taking the Line into account, the Buyer has adequate funds to pay the Purchase
Price to the Buyer.
(b) The Buyer is not insolvent and the consummation of the transactions
contemplated by this Agreement shall not cause the Buyer to become insolvent.
SECTION 4.11 Licenses
The Buyer has applied for all applicable state and federal licenses.
Borrower believes that it satisfies all statutory and regulatory requirements
for obtaining of all applicable state and federal licenses. Buyer knows of no
reason why its applications would be denied and neither Buyer nor any affiliate
of Buyer has any history of regulatory problems with any state or federal
agencies.
All of the above representations and warranties shall be true both as of
the date of the execution of this Agreement and as of the Closing Date.
14
ARTICLE V
CONDUCT OF BUSINESS PENDING THE ACQUISITION
-------------------------------------------
SECTION 5.01. Conduct of Business by the Seller Pending the Acquisition.
The Seller covenants and agrees that, between the date of this Agreement and the
earlier of the termination of this Agreement or the Closing Date, unless the
Buyer shall otherwise agree in writing, the businesses of the Seller shall be
conducted only in, and the Seller shall not take any action except in, the
ordinary course of business and in a manner consistent with past practice; and
the Seller shall use commercially reasonable efforts to preserve substantially
intact its business organization, to keep available the services of the current
officers, employees and consultants of the Seller and to preserve the current
relationships of the Seller with customers, suppliers and other persons with
which the Seller has significant business relations. It is acknowledged,
however, that any action taken by the Buyer on behalf of the Seller pursuant to
the MA or otherwise, shall not be deemed to be in violation of this Section
5.01. By way of amplification and not limitation, except as contemplated by this
Agreement or as set forth in Schedule 5.01 of the Disclosure Schedule or
otherwise contemplated by the MA, the Seller shall not, between the date of this
Agreement and the earlier of the termination of this Agreement or the Closing
Date, directly or indirectly do, or propose to do, any of the following without
the prior written consent of the Buyer:
(a) amend or otherwise change the Seller's articles of incorporation or
by-laws;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of any assets of the
Seller, except for sales in the ordinary course of business and in a manner
consistent with past practice (if any);
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock;
(d) acquire (including, without limitation, by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership, other business
organization or any division thereof or any material amount of assets; (ii)
incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans or advances,
except in the ordinary course of business and consistent with past practice;
(iii) enter into any contract or agreement material to the business, results of
operations or financial condition of the Seller, other than in the ordinary
course of business, consistent with past practice; (iv) authorize any single
capital expenditure which is in excess of $10,000 or capital expenditures which
are, in the aggregate, in excess of $25,000 ; or (v) enter into or amend in any
material respect any contract, agreement, commitment or arrangement with respect
to any matter set forth in this subsection (d) (except any agreement with STB);
or
15
(e) increase the compensation payable or to become payable to its officers
or employees generally, or grant any bonus, severance or termination pay to, or
enter into any employment or severance agreement with any director, officer or
other employee of the Seller, or establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer or employee.
16
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
SECTION 6.01. Appropriate Action; Consents; Filings.
(a) The Seller and the Buyer shall use commercially reasonable efforts to
(i) take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary, proper or advisable under applicable Law or
otherwise to consummate and make effective the Acquisition as promptly as
practicable; (ii) obtain in a timely manner from any Governmental Authorities
any consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by the Buyer or the Seller or any of their
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the Acquisition and the other
transactions contemplated hereby; and (iii) as promptly as practicable make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement and the Acquisition required under any applicable Law;
provided that the Buyer and the Seller shall cooperate with each other in
connection with the making of all filings, including providing copies of all
such documents to non-filing party and its advisors prior to filing and, if
requested, to accept all reasonable additions, deletions or changes suggested in
connection therewith. The Seller and the Buyer shall furnish to each other all
information required for any application or other filing to be made pursuant to
the rules and regulations of any applicable Law in connection with the
transactions contemplated by this Agreement.
(b) (i) Each of the Buyer and the Seller shall give (or shall cause its
respective subsidiaries to give) any notices to third parties, and use, and
cause its respective subsidiaries to use, their commercially reasonable efforts
to obtain any third party consents, (A) necessary, proper or advisable to
consummate the transactions contemplated in this Agreement, (B) disclosed or
required to be disclosed in the Disclosure Schedule or (C) required to prevent a
Material Adverse Effect from occurring prior to or after the Closing Date.
(ii) In the event that either the Buyer or the Seller shall fail to
obtain any third party consent described in subsection (b)(i) above, it
shall use its commercially reasonable efforts, and shall take any such
actions reasonably requested by the other party, to minimize any adverse
effect upon the Seller and the Buyer, their respective subsidiaries, and
their respective businesses resulting, or which could reasonably be
expected to result after the Closing Date, from the failure to obtain such
consent.
17
(c) Each party shall promptly notify the other party in writing of any
pending or threatened action, proceeding or investigation by any Governmental
Authority or any other person (i) challenging or seeking, material damages in
connection with the Acquisition; or (ii) seeking to restrain or prohibit the
consummation of the Acquisition or otherwise limit the right of Buyer, or
Buyer's Subsidiaries, to own or operate all or any portion of the businesses or
Acquired Assets.
SECTION 6.02. Access to Information; Confidentiality; Investigation.
(a) Upon reasonable notice and subject to restrictions contained in
confidentiality agreements to which such party is subject (from which such party
shall use commercially reasonable efforts to be released), the Buyer and the
Seller will each provide to the other (and their respective representatives)
reasonable access, to all information and documents which the other may
reasonably request regarding the business, assets, liabilities, employees and
other aspects of the other, other than information and documents that in the
opinion of such other party's counsel may not be disclosed under applicable law.
Each party shall keep such information confidential in accordance with Section
6.07 hereof and such obligations shall survive the Closing Date or any
termination of this Agreement.
(b) The Buyer has conducted its own investigation of the Purchased Business
and is not relying on any representation, warranty or assurance (whether oral or
written, express or implied) of the Seller not contained in this Agreement.
SECTION 6.03. Directors' and Officers' Indemnification and Insurance.
(a) After the Closing Date, the Buyer shall, to the fullest extent
permitted under applicable law or under the Buyer's, as the case may be,
articles of incorporation or bylaws, indemnify and hold harmless, each present
and former employee of the Seller or any of its subsidiaries (each a "Potential
Indemnified Party") against any reasonable costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative (collectively, "Losses"), arising out of or pertaining to any
action or omission by such party within the scope of such employee's official
capacity with the Seller occurring during the term of the MA (including without
limitation, the transactions contemplated by this Agreement) for a period of
three years after the date hereof and related to the matters governed by the MA,
provided, however, that the Buyer shall not be required to indemnify or hold
harmless any Potential Indemnified Party (i) for any Losses arising out of or
pertaining to any acts or omissions of such Potential Indemnified Party
determined in any judicial proceeding to be intentional misconduct or a knowing
violation of law, or with respect to which it is determined in any judicial
proceeding that such Potential Indemnified Party personally received a benefit
in money, property or services to which such Potential Indemnified Party is not
legally entitled; (ii) to the extent that the Buyer determines in good faith
that it would not indemnify or hold harmless any similarly situated employee of
the Buyer or any of its wholly-owned subsidiaries under similar circumstances;
or (iii) to the extent that the Buyer reasonably determines that the Potential
Indemnified Party did not reasonably believe that the action or omission in
question was in the Buyer's best interest. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Closing Date), (A) the Buyer shall be permitted to select counsel of its
choosing to conduct the defense of such claim, action, suit, proceeding or
investigation, (B) after the Closing Date, the Buyer shall pay the reasonable
fees and expenses of such counsel, promptly after statements therefor are
received unless the Buyer determines that one or more of the circumstances
described in any of (i) through (iii) of the previous sentence is present, and
(C) the Buyer and the Potential Indemnified Party will cooperate in the defense
of any such matter.
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(b) This Section 6.03 shall survive the consummation of the Acquisition at
the Closing Date, is intended to benefit the Seller, the Buyer and the present
and former directors and officers of the Seller (the "Indemnified Parties"),
shall be binding, jointly and severally, on all successors and assigns of the
Buyer, and shall be enforceable by the Indemnified Parties.
SECTION 6.04. Notification of Certain Matters. Each party hereto shall
promptly notify the other party hereto by written update to its Disclosure
Schedule of (a) the occurrence, or nonoccurrence, of any event the occurrence,
or nonoccurrence of which would be likely to cause (i) any representation or
warranty made in this Agreement by such party, or any information furnished on
any Schedule in the Disclosure Schedule by such disclosing party, to be
inaccurate either at the time such representation or warranty is made, or such
information is furnished, or at the time of the occurrence or non-occurrence of
such event; or (ii) any failure by such party to comply with or satisfy any
condition to the obligations of such party to effect the Acquisition and the
other transactions contemplated by this Agreement, or (b) the failure of the
Seller or the Buyer, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it pursuant to this
Agreement which would be likely to result in any condition to the obligations of
any party to effect the Acquisition and the other transactions contemplated by
this Agreement not to be satisfied; provided, however, that the delivery of any
notice pursuant to this Section 6.04 shall not be deemed to be an amendment of
this Agreement or any Schedule in the Disclosure Schedule and shall not cure any
breach of any representation or warranty requiring disclosure of such matter
prior to the date of this Agreement. No delivery of any notice pursuant to this
Section 6.04 shall limit or affect the remedies available hereunder to the party
receiving such notice, including the rights of the Buyer under Section 7.02(a)
and those of the Seller under Section 7.03(a) in the event that a representation
or warranty made by the Seller or the Buyer herein shall not be true and correct
(giving effect to any standards of materiality set forth in such sections) as of
the Closing Date.
19
SECTION 6.05. Announcements. The Buyer and the Seller shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the Acquisition and related
transactions and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by Law. The
parties will agree on the text of a joint press release by which Buyer and the
Seller will announce the execution of this Agreement.
SECTION 6.06. Confidentiality. At all times from and after the Closing
Date, the Seller shall keep secret and maintain in strictest confidence and
shall not use for its benefit or for the benefit of any third party any
confidential or proprietary information: (i) disclosed by the Buyer during the
period of negotiations for this Agreement and after the Closing Date, or (ii)
relating to the Purchased Business, including, without limitation, all
Intellectual Property and files and records, other than any of such information
that is in the public domain prior to the date of this Agreement or thereafter
comes into the public domain (unless any of such information is in or becomes in
the public domain in whole or in part due to action or inaction of the Seller in
violation of this Agreement). The foregoing shall not prohibit use of such
information as is required by applicable law, or as is necessary to prepare Tax
Returns or other filings with governmental authorities for the period (including
all prior taxable years) ending on and including the Closing Date, or to assert
or protect any rights of the Seller under this Agreement, provided that the
Buyer is given notice and an adequate opportunity to contest such disclosure or
to use any means reasonably available to minimize such disclosure.
SECTION 6.07 Conduct of Business Pending Buyer Obtaining New Medicare
Provider Number.
From the Closing until Buyer obtains its own validated Medicare provider
number or the date on which the MA and the Lease terminate pursuant to the next
paragraph of this Section 6.07, whichever occurs first, Seller shall continue to
operate business under the MA and the Lease. When the Buyer obtains its own
validated Medicare provider number the Lease and the MA shall immediately
terminate.
In the event (a) Buyer does not obtain its own new validated Medicare
provider number within six (6) months from the date of the Closing, or (b) Buyer
receives a final notification that it has been denied its new Medicare provider
number, whichever occurs first, the Buyer shall take an assignment of the
Seller's Medicare provider number and the Lease and MA shall immediately
terminate.
20
On termination of the MA and Lease, the Lease payments shall be prorated
through the date of termination and the payments pursuant to the MA shall be
prorated through the date of termination and Seller shall have no further
liability under the MA.
Buyer agrees to indemnify and hold Seller and Shareholder harmless from any
and all damages, losses, expenses, liability or claims of any manner whatsoever
concerning the operation of the Purchased Assets from the date of the Closing
until the date on which Buyer obtains its own Medicare provider number.
SECTION 6.09 Employee Benefit Plans. Seller will terminate all Plans on the
Closing Date and that Buyer has no obligation to maintain any Plans after the
Closing Date.
ARTICLE VII
CONDITIONS TO THE ACQUISITION
-----------------------------
SECTION 7.01. Conditions to the Obligations of Each Party. The obligations
of the Seller and Buyer to consummate the Acquisition are subject to the
satisfaction of the following conditions:
(a) all actions by or in respect of, or filings with, any Governmental
Authority required to permit the consummation of the Acquisition shall have been
obtained (other than those actions or filings which, if not obtained or made
prior to the consummation of the Acquisition, would not have, individually or in
the aggregate, a Material Adverse Effect prior to or after the Closing Date or
be reasonably likely to subject the Seller or the Buyer or any of their
respective subsidiaries or any of their respective officers or directors to
substantial penalties or criminal liability); and
(b) this Agreement, and all related documents, shall be approved by STB.
SECTION 7.02. Conditions to the Obligations of the Buyer. The obligations
of the Buyer to consummate the Acquisition are subject to the satisfaction of
the following, further conditions:
21
(a) (i) the Seller shall have performed in all material respects all of its
obligations under this Agreement required to be performed by it at or prior to
the Closing Date; (ii) each of the representations and warranties of the Seller
contained in this Agreement which is qualified as to materiality shall be true
and correct and each such representation and warranty that is not so qualified
shall be true and correct in all material respects, in each case as of the
Closing Date as if made at and as of such time, except (A) for changes permitted
by this Agreement, and (B) that the representations and warranties made by the
Seller in Section 3.03 which address matters only as of a particular date shall
remain true and correct as of such date; and (iii) Buyer shall have received a
certificate signed by an executive officer of the Seller to the foregoing,
effect;
(b) the Seller shall have obtained the consent or approval of each person
whose consent or approval shall be required in connection with the Acquisition
under all notes, bonds, mortgages, indentures, contracts, agreements, leases,
licenses, permits, franchises and other instruments or obligations to which it
or any of its subsidiaries is a party.
(c) no order, stay, decree, judgment or injunction shall have been entered,
issued or enforced by any Governmental Authority or court of competent
jurisdiction which prohibits consummation of the Acquisition, and there shall
not be any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Acquisition, which makes the
consummation of the Acquisition illegal or substantially deprives the Buyer of
any of the expected benefits of the Acquisition or the related transactions.
SECTION 7.03. Conditions to the Obligations of the Seller. The obligations
of the Seller to consummate the Acquisition are subject to the satisfaction of
the following further conditions:
(a) (i) The Buyer shall have performed in all material respects all of its
obligations with this Agreement required to be performed by it at or prior to
the Closing Date; (ii) the representations and warranties of the Buyer contained
in this Agreement and any certificate or other writing delivered by the Buyer
pursuant hereto which is qualified as to materiality shall be true and correct
and each such representation and warranty that is not so qualified shall be true
and correct in all material respects, in each case as of the date hereof and at
and as of the Closing Date as if made at and as of such time, except (A) for
changes permitted by this Agreement, and (B) that the representations and
warranties made by the Buyer in Article IV which address matters only as of a
particular date shall remain true and correct as of such date; and (iii) the
Seller shall have received a certificate signed by an executive officer of the
Buyer to the foregoing effect;
(b) The Buyer shall have obtained the consent or approval of each person
whose consent or approval shall be required in connection with the Acquisition
under all notes, bonds, mortgages, indentures, contracts, agreements, leases,
licenses, permits, franchises and other instruments or obligations to which it
or any of its subsidiaries is a party, except those for which failure to obtain
such consents and approvals would not be reasonably expected to have a Material
Adverse Effect after the Closing Date;
22
(c) No order, stay, decree, judgment or injunction shall have been entered,
issued or enforced by any Governmental Authority court of competent jurisdiction
which prohibits consummation of the Acquisition, and there shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Acquisition, which makes the consummation
of the Acquisition illegal.
(d) First Union and AmSouth Bank shall release the Seller and the
Shareholder, in a form acceptable in all respects to STB the Seller and the
Shareholder, from all obligations owed to First Union or any of its affiliates.
(e) The landlord under the Real Property Lease shall consent to the
assignment and assumption of such lease and shall release Seller from all
obligations thereunder.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
SECTION 8.01. Termination. This Agreement may be terminated and the
Acquisition may be abandoned at any time prior to the Closing Date,
notwithstanding, any requisite approval and adoption of this Agreement and the
transactions contemplated hereby:
(a) by mutual written consent duly authorized by the Boards of Directors of
each of Buyer and the Seller; or
(b) by either Buyer or the Seller if either (i) the Closing Date shall not
have occurred on or before January 1, 2000, provided, however, that the right to
terminate this Agreement under this Section 8.01(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Closing Date to occur on or
before such date, or (ii) there shall be any Law that makes consummation of the
Acquisition illegal or otherwise prohibited or if any court of competent
jurisdiction or Governmental Authority shall have issued an order, decree,
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the Acquisition and such order, decree, ruling or other action shall have become
final and nonappealable; provided that the party seeking to terminate this
Agreement pursuant to this subsection (b)(ii) shall have complied with its
obligations under Sections 6.01(a) and (b) of this Agreement, subject to the
terms of Section 6.01(c); or
23
(c) by the Seller pursuant to immediately effective written notice, in the
event of a material breach by the Buyer of any representation, warranty or
agreement contained herein which has not been cured or is not curable within 45
days of notice (or such later date as provided in subparagraph (b) above); or
(d) by the Buyer, in the event of a material breach by the Seller or any
subsidiary of any representation, warranty or agreement contained herein which
has not been cured or is not curable within 45 days of notice (or such later
date as provided in subparagraph (b) above).
SECTION 8.02. Effect of Termination. Except as provided in Section 9.01 and
Sections 6.02 and 6.07, in the event of the termination of this Agreement
pursuant to Section 8.01, this Agreement shall forthwith become void and the MA
shall terminate. However, within ten days of termination there shall be an
accounting of all monies received, expended and loaned pursuant to the terms of
the MA. Upon completion of that accounting, the parties shall within five (5)
days therof deliver to the other all sums of money found to be due the other.
Provided, however, the $75,000 xxxxxxx money deposit from Buyer to Seller shall
be immediately repaid to Buyer if this Agreement is terminated because of a
material breach or default by the Seller.
SECTION 8.03. Expenses. As used herein, "Expenses" means all reasonable and
documented out-of-pocket expenses and fees incurred by the Buyer, on the one
hand, or the Seller, on the other hand, prior to the termination of this
Agreement (including, without limitation, all fees and expenses of counsel,
financial advisors, accountants, environmental and other experts and consultants
to the Buyer or the Seller, and their affiliates, as the case may be) actually
incurred or accrued by them or on their behalf in connection with the
Acquisition, and actually incurred or accrued by any of the foregoing persons
and assumed by the Buyer or the Seller or their affiliates, as the case may be,
in connection with the negotiation, preparation, execution, performance and
termination of this Agreement, the structuring of the Acquisition and any
agreements relating thereto. Except as set forth in this Section 8.03, all costs
and expenses incurred in connection with this Agreement and the Acquisition
shall be paid by the party incurring such expenses, whether or not the
Acquisition is consummated.
SECTION 8.04. Amendment. This Agreement may be amended by an instrument in
writing signed by the parties hereto.
24
SECTION 8.05. Waiver. At any time prior to the Closing Date, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any agreement or condition contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
25
ARTICLE IX
General Provisions
------------------
SECTION 9.01. Non-Survival of Representations Warranties and Agreements.
The representations, warranties and agreements in this Agreement and any
certificate delivered pursuant hereto by any person shall not terminate at the
Closing Date or upon the termination of this Agreement pursuant to Section 8.01,
as the case may be.
SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by hand delivery or overnight
delivery service, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 9.02):
if to Buyer:
Xxxxxxxx Xxxxx, Inc.
000 Xxxxxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxx 00000
Attn:_____________________
with a copy to:
Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx X
Xxxxxxxxxx, Xxxxxxx 00000
if to the Seller:
Medical Technology Laboratories, Inc.
00000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxx
26
with a copy to:
Holland & Knight LLP
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
SECTION 9.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "Affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified person;
(b) "Beneficial Owner" with respect to any shares means a person who shall
be deemed to be the beneficial owner of such shares (i) which such person or any
of its affiliates or associates beneficially owns, directly or indirectly; (ii)
which such person or any of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights,
exchange rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding; or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or any person with whom such
person or any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting, or disposing, of
any such shares;
(c) "Business Day" means any day on which banks are not required or
authorized to close in the City of Clearwater, Florida;
(d) "Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(e) "First Union" shall mean First Union National Bank.
(f) "Governmental Authority" means any United States (federal, state or
local) or foreign government, or governmental, regulatory or administrative
authority, agency or commission;
27
(g) "Material Adverse Effect" means (i) any change or effect that is or is
reasonably likely to be materially adverse to the business, results of
operations, or financial condition of the Buyer or Seller, as the case may be,
(ii) any change or effect that otherwise affects the ability of the Buyer or
Seller, as the case may be, to consummate the Acquisition, adversely affects the
Buyer's ability to perform its obligations under the Promissory Note or related
security documents, or (iii) any change or effect that adversely affects the
ability of Buyer to obtain its Medicare provider number or any other required
state license.
(h) "Person" means an individual, corporation, partnership, limited
partnership, syndicate, person, trust, association or entity or government,
political subdivision, agency or instrumentality of a Government; and
(i) "SEC" means the United States Securities and Exchange Commission.
(j) "Subsidiary" or "Subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of which such person (either
above or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests, the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity.
(k) "Tax" means any federal, state, local, or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
SECTION 9.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Acquisition is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
Acquisition be consummated as originally contemplated to the fullest extent
possible.
28
SECTION 9.05. Entire Agreement; Assignment. This Agreement constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof,
excluding the MA, which will remain in full force and effect. This Agreement
shall not be assigned by operation of law or otherwise.
SECTION 9.06. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement. Notwithstanding the above, STB shall be a third party beneficiary of
this Agreement.
SECTION 9.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 9.08. Governing Law. This Agreement shall be governed by, and
construed pursuant to the laws of Florida.
SECTION 9.09. Consent to Jurisdiction.
(a) Any dispute between Buyer and Seller arising under or in any way
related to this agreement shall be resolved in the Circuit Court for Pinellas
County, Florida. Each Party agrees that Pinellas County, Florida shall be the
exclusive venue for any dispute between the parties.
(b) Each of the Buyer and the Seller irrevocably consents to the service of
the summons and complaint and any other process in any other action or
proceeding relating to the transactions contemplated by this Agreement, on
behalf of itself or its property, by the personal delivery of copies of such
process to such party. Nothing in this section 9.09 shall affect the right of
any party to serve legal process in any other manner permitted by law.
SECTION 9.10. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning, or interpretation of this Agreement.
SECTION 9.11. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
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SECTION 9.12. Waiver of Jury Trial. Each of Buyer and the Seller hereby
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of Buyer or the Seller in the
negotiation, administration, performance and enforcement of this Agreement.
SECTION 9.13. Covenant Not to Compete. The Seller, its officers and
directors shall not, for a period of two years from the date of the Closing,
within the States of Florida, Alabama, Georgia, Texas, South Carolina,
Mississippi, North Carolina, Louisiana, Virginia, Arkansas, West Virginia,
Kentucky and Tennessee, directly or indirectly, as an agent, consultant,
independent contractor or in any other capacity: (a) engage in any business or
activity which is competitive with the Business operated by Buyer using the
Purchased Assets (the "Business"); (b) render services to a competitor of the
Business; (c) contact, solicit or attempt to solicit or accept business that is
competitive with the operation of the Business; or (d) own or operate a medical
laboratory. Nothing in this Section 9.13 shall prohibit Seller or its officers
and directors from collecting the accounts receivable of Seller that are part of
the Excluded Assets.
SECTION 9.14. Construction. If a court of competent jurisdiction determines
the above restrictive covenants are unenforceable, the parties desire that such
court enforce the above restrictive covenants to the fullest extent permitted by
the laws of Florida.
SECTION 9.15. Preparation of Agreement. Because each party has participated
fully in the drafting and preparation of this Agreement, the Agreement shall not
be construed more strongly against any party.
SECTION 9.16. Representation by Independent Legal Counsel. Each party to
this Agreement hereby acknowledges and confirms that it has had an opportunity
to retain independent legal counsel to independently advise that party of the
legal consequences of the Agreement to that party. Each party to the Agreement
further acknowledges and confirms that each party to the Agreement received the
strong recommendation by all other parties to the Agreement that each party
should retain separate and independent legal counsel to advise each party of the
legal consequences of the Agreement to that party.
SECTION 9.17 Access. After the Closing, upon reasonable notice, the Seller
shall have access to and the right to use, the Buyer's computer systems, other
information systems and personnel of the Buyer to assist its efforts to collect
accounts receivable. Seller agrees to reimburse the Buyer for the reasonable
cost of the time expended by the Buyer's personnel in taking any of the actions
that are described in this Section 9.17.
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SECTION 9.18 Collections after the Closing. Before Buyer obtains its own
Medicare provider number , the Buyer shall deposit all accounts receivable into
an account designated by (and owned by) the Seller on a daily basis and shall
notify the Seller daily concerning such deposits. The amount of such deposits
will be paid by the Seller to the Buyer within three business days of such
notification.
IN WITNESS WHEREOF, the Buyer and the Seller have caused this Agreement to
be executed as of the date first written above.
Medical Technology Laboratories, Inc.
By:_______________________________________
Name: Xxxx Xxxxxx
Title: Chairman of the Board of Directors
Xxxxxxxx Xxxxx, Inc.
By:_______________________________________
Name:__________________________________
Title:__________________________________
