PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (THE "AGREEMENT"), dated as of September 19, 2003
(the "EFFECTIVE DATE"), by and between ACTIVECORE TECHNOLOGIES, INC., formerly
known as IVP TECHNOLOGY CORPORATION, with offices at 0000 Xxxxxxxxx Xxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 343 (the "Purchaser"), SCI
HEALTHCARE GROUP, INC., an Ohio corporation, with offices located at P.O. Box
2864, 0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, XX 00000 (the "SELLER"), and,
with respect to Section 10 hereof, the shareholders (the "SHAREHOLDERS")
identified on the signature page hereto. The Purchaser and Seller are sometimes
collectively referred to as the "PARTIES".
WHEREAS, the Seller desires to sell, assign and otherwise transfer and the
Purchaser desires to acquire certain of the properties and assets utilized by
Seller in the operation of its business division known as the Lindsay Division
("LD") business as they exist as of the Effective Date, subject only to certain
liabilities enumerated herein, for the purchase price hereinafter described and
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of such sale and of the foregoing and of
the mutual agreements hereinafter set forth, the parties hereto do hereby agree
as follows:
1. SALE OF THE ASSETS AND BUSINESS:
1.1. Upon the terms and subject to the conditions set forth in this
Agreement and in consideration of the payment to the Seller of the
purchase price described in Section 2, the Seller hereby agrees to
sell, convey, assign and transfer to the Purchaser only the
following assets (collectively, the "PURCHASED ASSETS") which relate
to the LD business of providing integration services and services
ancillary thereto:
(a) All contracts and work orders of the LD issued
pursuant thereto held by Seller with clients for the providing
of services and personnel, as listed in SCHEDULE 1.1(A)
hereto.
(b) All files and records pertinent, relevant or in
any way connected with the performance of services under the
contracts referred to in (a) above.
(c) Personnel files relating to employees assigned
to the LD wherever located, databases maintained by Seller
related to LD clients and personnel assigned to those clients.
A list of current employees is annexed as SCHEDULE 1.1(C)
("CURRENT EMPLOYEES");
(d) A copy of Seller's web based resume system for
Purchaser's non-exclusive use in "AS IS" condition in
accordance with the terms of a license agreement in
substantially the same form as Exhibit 1.1(d) attached hereto
and made a part hereof;
(e) A non-exclusive copy of the LD contact
management database;
(f) The personal property listed on SCHEDULE 1.1(F)
in "AS IS" condition; and
(g) The customer list of LD, a copy of which is
annexed as SCHEDULE 1.1(G).
1.2. Excluded Assets.
(a) Notwithstanding anything to the contrary
contained in this Agreement, it is recognized and agreed that
Seller is not selling its entire business but rather certain
assets utilized by LD. Accordingly, Seller shall retain and
not transfer to Purchaser any assets other than those listed
in Section 1.1 above. All the assets not transferred will be
referred to as the "EXCLUDED ASSETS."
(b) In furtherance of this understanding and by way
of example and not limitation, the Excluded Assets shall
include the following:
(i) all cash and cash equivalents of Seller;
(ii) all Accounts Receivable of Seller
including Accounts Receivable of the LD;
(iii) all work in process for which no invoice
has yet been tendered for services performed or goods
developed by the Seller including its LD ("WIP"); and
(iv) all assets of the Seller not exclusively
utilized by the LD, except the limited use of the resume
system and contact management base referenced in Section
1.1(d) and (e).
1.3. The delivery of the assets referenced in Section 1.1(b) and
(c) will be accomplished by transferring Seller's records maintained
by Xxxxxxxxxxx and Xxxx to Purchaser by means of a letter from
Xxxxxxxxxxx and King acknowledging said transfer free and clear of
any lien, claim or encumbrance. The delivery of the LD contact
management database referenced in 1.1(e) of this Agreement shall be
accomplished by Seller giving Xxxxxx Xxxxxxx or other employees
designated by the Purchaser permission to utilize said information
on behalf of Purchaser.
2. PURCHASE PRICE:
2.1. Upon the terms and subject to the conditions set forth in this
Agreement, and in consideration for the conveyance, transfer and
assignment of the assets and other rights to the Purchaser as
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described in Section 1.1 above, the Purchaser shall pay the Seller a
purchase price in accordance with the following:
(a) A promissory note payable by way of a cash
payment in the sum of Two Hundred Thousand U.S. Dollars
($200,000.00 USD) at the Effective Date.
(b) A number of shares in Purchaser equivalent to
Two Hundred Thousand U.S. Dollars ($200,000.00 USD) equal to
the average closing bid price of Seller's shares thirty (30)
days prior to and two (2) days following the date of this
Agreement (the "PURCHASER SHARES") deliverable on the
Effective Date. The number of Purchaser Shares shall be
subject to reduction if the gross revenue on an accrual basis
of the LD during the one-year period after the Effective Date
is less than $900,000 The number of Purchaser Shares shall be
reduced in accordance with the following table:
REDUCTION IN
REVENUE PURCHASER SHARES
$900,000 or greater 0%
$800,000 to $899,999 10%
$700,000 to $799,999 20%
$699,999 or less 30%
(c) The Purchaser Shares, which shall be the
property of the Seller as of the date of delivery for all
purposes including the date of transfer for the purposes of
Rule 144, shall be held in escrow by the Purchaser's
attorneys, in accordance with the terms of an escrow agreement
in substantially the same form as Exhibit 2.1(b) attached
hereto and made a part hereof, for a period of one year after
the Effective Date, which Purchaser Shares shall be subject to
a reduction in accordance with Section 2.1(b) hereof and an
offset pursuant to Section 7.1 hereof. The Purchaser Shares
shall be subject to the restrictions and obligations set forth
with Section 2.3 below and Exhibit 2.3.
(d) The number of Purchaser Shares shall be subject
to an increase if the gross revenue on an accrual basis of the
LD during the one-year period after the Effective Date is in
excess of $900,000. The number of Purchaser Shares shall be
increased in accordance with the following table:
INCREASE IN
REVENUE PURCHASER SHARES
$900,001 to $1,000,000 10%
$1,000,001 to $1,100,000 20%
$1,100,001 or greater 30%
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Any such price increase ("Price Increase") shall be due and payable
90 days after the first anniversary of the Effective Date. Purchaser
shall provide the Seller with a detailed Profit and Loss Statement
within 90 days after the anniversary of the Effective Date.
For the purposes of the calculation of Price Increase all sales of
software made by or with the direct or indirect participation of
Xxxxxx Xxxxxxx shall be deemed to be part of the gross revenue of
the LD during the one-year period following the Effective Date.
2.2. With respect to the collection of accounts receivables and WIP
due and owing to the Purchaser after the Effective Date.
(a) Purchaser shall xxxx clients for all work
performed by personnel of the LD, performance of services and
delivery of goods and any associated expense and other
reimbursement after the Effective Date and shall have the sole
responsibility to collect same; provided that to the extent
that one or more contracts cannot be assigned (or a novation
received from the contracting party, where required), then
Seller shall xxxx clients for all work performed by the
Purchaser and shall promptly remit all funds received to the
Purchaser.
(b) Seller shall xxxx clients for all work performed
by LD personnel and performance of services and delivery of
goods and any associated expenses and other reimbursement up
to and including the Effective Date and shall have the sole
responsibility to collect same.
(c) Seller shall provide notice to clients in the
form provided in EXHIBIT 2.2(C) to advise client to pay all
accounts receivable directly and exclusively to Seller and all
amounts for services performed after the Effective Date to the
Purchaser.
(d) To the extent any client incorrectly pays either
the Purchaser or Seller funds due to the other, the Party who
received funds belonging to the other shall promptly notify
and pay the other Party all funds due to it without the
necessity of additional demand.
(e) Each Party agrees to assist the other in the
collection of accounts receivable to the extent requested by
the other Party.
(f) The Seller has received certain prepaid fees
from clients and incurred expenses for work not performed all
as set forth in Schedule 2.2(f) to be delivered on or before
October 10, 2003. The Parties agree to adjust for said
prepayments or expenses as of the Effective Date.
(g) The Parties acknowledge that there are certain
sales pending but not yet consummated as referenced on
SCHEDULE 2.2(G) annexed hereto ("PENDING SALES"). Purchaser
agrees to be responsible to pay any and all commissions due to
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SCI employees, representatives and agents after the Effective
Date in accordance with the terms of SCHEDULE 2.2(G).
2.3. Securities Matters:
(a) The Purchaser shall take and perform such
actions, pay such sums and/or prepare, execute and file any
and all documents, instruments, registration statements and
reports, of every kind, nature or description, necessary to
make and/or continue to make available to the Seller during
the Effective Period the benefits of Rule 144 of the
Regulations;
(b) The Seller shall have the right to exercise
"PIGGY BACK" registration rights with respect to the Purchaser
Shares in accordance with the terms and conditions set forth
in paragraphs 1.1 through 1.12 of EXHIBIT 2.3 annexed hereto
and made a part hereof;
(c) If (a) the Purchaser violates and/or become in
violation of the provisions of Sections 5.7 and 5.8 and as a
result thereof the Seller shall not be able to avail itself of
the provisions of Rule 144 then and in that event the Seller
shall have the right to exercise the Compulsory Registration
Rights set forth in paragraph 1.13 of EXHIBIT 2.3 annexed
hereto, in accordance with and subject to the terms and
conditions thereof;
(d) If: (i) the Purchaser violates and/or becomes in
violation of the provisions of Sections 5.7 and 5.8; (ii) as a
result thereof the Seller shall not be able to avail itself of
the provisions of Rule 144 for any 30-day period; and (iii)
fails or refuses to comply with its obligations under Section
2.3 hereof and paragraph 1.13 of EXHIBIT 2.3 annexed hereto,
then and in that event the Purchaser shall at the sole option
of Purchaser, upon ten days prior written notice from the
Seller ("SELLER NOTICE"), repurchase all of the shares of
Purchaser Shares specified in the Seller Notice, for cash, at
a price per share equal to the Repurchase Price (as defined).
For purposes of this agreement, the term "REPURCHASE PRICE"
shall be and mean the market value of the Purchaser Shares on
the date of the transmittal of the Seller Notice in any event
the repurchase price shall not exceed the market value at
which the shares were originally issued to the seller. Any
portion of the Repurchase Price not paid to the Seller within
ten (10) business days of the Seller Notice will bear
interest, until paid, at the rate of 18% per annum.
3. NO ASSUMPTION OF LIABILITIES BY PURCHASER:
3.1. Except for those liabilities (the "ASSUMED LIABILITIES") set
forth on SCHEDULE 3.1, Purchaser shall not assume, or in any way
become liable for, any debts, obligations or liabilities of Seller,
whether accrued, absolute, contingent or otherwise, or whether due
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or to become due, or otherwise, whether known or unknown, arising
out of events, transactions or facts which shall have occurred,
arisen or existed on, prior to or after the Effective Date, which
liabilities and obligations, if ever in existence, shall continue to
be liabilities and obligations of Seller. Seller hereby agrees
promptly to pay all Retained Liabilities when due.
Without limiting the generality of the foregoing, the Assumed Liabilities
shall exclude, and Purchaser shall not be liable for:
(a) any and all liabilities or obligations in
respect of taxes which are imposed, levied, assessed or
payable by, against or attributable to Seller;
(b) any and all liabilities or obligations of Seller
in respect of civil and criminal fines, penalties and punitive
damages (including, without limitation, fines and penalties
imposed in respect of withholding, income, sales, payroll,
franchise and other taxes) arising out of or relating to
events occurring or actions taken by Seller on or prior to the
Effective Date;
(c) any and all liabilities or obligations
associated with or relating to any assets not specifically set
forth in Section 1.1, whether occurring before or after the
Effective Date;
(d) Subject to the provisions of Section 7.1(e) any
and all liabilities or obligations for warranty claims for
services provided by or on behalf of the Seller on or before
the Effective Date; and
(e) any and all liabilities or obligations relating
to claims made by employees or former employees of Seller
occurring on or before the Effective Date, including, without
limitation, any liabilities or obligations relating to claims
made by employees or former employees of Seller for workers'
compensation, employer's liability, or the termination or
resignation of employment, whether or not such termination was
related to Seller's obligations under this Agreement.
All liabilities retained by Seller under this Section 3 are referred to
herein collectively as the "RETAINED LIABILITIES."
4. SELLER'S REPRESENTATIONS AND WARRANTIES:
The Seller represents and warrants to Purchaser as follows:
4.1. The Seller is a corporation duly organized, validly existing
and in good standing under and by virtue of the laws of the State of
Ohio.
4.2. The Seller has and will convey to Purchaser good and
marketable title to all of the assets described in Section 1.1(b),
(f) and (g), subject to no mortgage, pledge, lien, conditional sale
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agreement, encumbrance, or charge except as listed on Schedule 4.2
annexed hereto. The Seller has and will assign to Purchaser all of
the right to the assets described in Section 1.1(a), (c), (d) and
(e), which assignment shall not result in a breach or violation of
any contract or work order set forth in Section 1.1(a) hereto.
Provided that if the assignment to Purchaser of all of the rights to
the assets described in Section 1.1(a), (c), (d) and (e) results in
a breach or violation of the assignment clause of any contract or
work order set forth in Section 1.1(a) hereto, or if the customer
does not approve or attempts to contest any such assignment by
Seller of the then existing contract between Seller and customer,
Seller shall not be deemed to be in breach of or failure to perform
this Agreement and Purchaser's sole and exclusive remedy shall be as
contained in Section 2.2(a), which provides in part that Seller will
xxxx clients for all work performed by the Purchaser and shall
promptly remit all funds to the Purchaser.
4.3. The execution and delivery of this Agreement to the Purchaser
and the sale contemplated hereby has been duly authorized by all
necessary corporate action on the part of the Seller.
4.4. Neither the execution and delivery of this Agreement, nor the
consummation of the sale contemplated hereby will conflict with, or
result in a material breach of, any of the terms, conditions, or
provisions of any law or any regulation, order, writ, injunction, or
decree of any court or governmental instrumentality, or of the
corporate charter or by-laws of the Seller or of any agreement,
whether written or oral, or other instrument to which the Seller is
a party or by which it is bound, or constitute (with the giving of
notice of the passage of time or both) a default thereunder, or
result in any lien or encumbrance on any of the Seller's assets to
be transferred to the Purchaser pursuant hereto.
4.5. The contracts listed in SCHEDULE 1.1(A) are effective and
there exists to the best of Seller's knowledge and belief no
material breach or default by either party with respect to same.
That the copies of those contracts previously delivered to Purchaser
are accurate and complete and there exist no amendments which were
not previously disclosed. That Seller is not presently aware of any
past deficiencies in its performance of services under such
contracts that might adversely affect the continuation of supplying
services under such contracts.
4.6. There are no contracts, agreements or arrangements, written or
oral, relating to the conduct of the business of the LD of Seller
relating to the assets to be sold hereunder to which Seller is a
party or is bound for which Purchaser would have responsibility
except as may be referred to in this Agreement or any Schedule or
Exhibit annexed hereto.
4.7. To the best of Seller's knowledge and belief, there are no
claims or threatened claims, no litigation related to the contracts
listed in SCHEDULE 1.1(A), or the other assets being sold hereunder
except as listed on SCHEDULE 4.7.
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4.8. That "SCI HEALTHCARE GROUP, INC." is the only name Seller has
used in the operation of its business to be sold hereunder.
4.9. That Seller has conducted its LD business in a legal manner at
all times and has and maintains all licenses, permits and approvals
necessary to the conduct of the business except for those which
would not materially affect the business.
4.10. There have been no past proceedings or any proceedings now
pending, nor to Seller's knowledge or belief, threatened against
Seller with regard to the opinion of the LD before the Internal
Revenue Service, National Labor Relations Board, State Dept. of
Labor, State Commission on Human Rights and Opportunities, State
Department of Labor, Equal Employment Opportunity Commission or any
other local, state or Federal agencies having jurisdiction over
employee rights with respect to hiring, tenure, or conditions of
employment within the statute of limitations period prior to the
Effective Date.
4.11. SCHEDULE 4.11 contains complete, correct and current list of
all insurance policies in effect as of the time of this agreement.
Seller shall keep such coverage in effect through the Effective
Date.
4.12.
(a) Attached hereto as Schedule 4.12 is a true and
correct copy of the Seller's financial statements ("FINANCIAL
STATEMENTS");. With respect to the assets transferred
hereunder the Financial Statements fairly present the
financial position of the Seller as of the respective dates
thereof and the results of operations, for each of the periods
covered thereby and are true and accurate in all material
respects. The Financial Statements have been prepared in
conformity with generally accepted accounting principles,
applied on a consistent basis throughout the entire periods
involved. As of the date of any balance sheet forming a part
of the Financial Statements, and except as and to the extent
reflected or reserved against therein, the Seller did not have
any material liabilities, debts, obligations or claims
(absolute or contingent) asserted against it and/or which
should have been reflected in a balance sheet or the notes
thereto; and all assets transferred hereunder reflected
thereon are properly reported and present fairly the value of
the assets therein stated in accordance with generally
accepted accounting principles.
(b) The financial and other books and records of the
Seller, with respect to the assets transferred hereunder, are
in all material respects true, complete and correct and have,
at all times, been maintained in accordance with good business
and accounting practices.
(c) Except as set forth on Schedule 4.12(c) hereto,
since the date of the delivery of Seller financial statements
until Effective Date there have been no material adverse
changes in the property, assets, business, affairs or
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prospects of the Seller or its business with respect to the
assets sold hereunder, except for seasonal variations.
4.13. Seller, to its best knowledge and belief, is in compliance
with all statutes, laws and regulations applicable to its business
as consistently conducted and has properly made, reported and
remitted all appropriate Federal, State and local payroll related
deductions and taxes including: FICA, FUTA, SUI and income tax
withholdings presently due and owing requirements, and further
warrants that it will report and remit all withholdings and taxes
due for activities prior to the Effective Date.
4.14. Seller has not made any payment or given anything of value to
any person with the reason or understanding that any part of such
payment was to be used for any improper or illegal purpose; or any
purpose contrary to the policies or procedures of that person's
employer.
4.15. The Seller has the sufficient right, title and interest in and
to all intellectual property, know-how, trade secrets,
specifications, designs and other proprietary rights (collectively,
the "INTELLECTUAL PROPERTY") necessary for use in the LD. To the
Seller's knowledge, no person is infringing upon, nor has any person
misappropriated any Intellectual Property.
4.16. Seller is acquiring the Purchaser Shares pursuant to this
Agreement with its own funds for its own account and not as a
nominee or agent for the account of any other person. No other
person has any interest, beneficial or otherwise, in any of the
Purchaser Shares. Except as provided in this Agreement, the
Purchaser is not obligated to transfer the Purchaser Shares to any
other person, nor does the Seller have any agreement or
understanding with any other person to do so.
4.17. The Seller is acquiring the Purchaser Shares for investment
purposes and not with a view to the sale or distribution, which
would constitute a violation of the 1933 Act or the rules and
regulations promulgated hereunder, by public or private sale or
other disposition, and the Seller has no present intention of
selling, granting any participation in or otherwise distributing or
disposing of any of the Purchased Shares.
4.18. All representations and warranties by Seller and Stockholder
are true, complete and accurate in all material respects as of the
date of this Agreement and will remain so as of the Effective Date
and do not contain and will not contain any untrue statement of any
material fact, or omit to state a material fact necessary in order
to make all of such representations and warranties not materially
misleading as of this date and as of the Effective Date.
5. PURCHASER'S REPRESENTATIONS AND WARRANTIES:
The Purchaser represents and warrants to the Seller as follows:
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5.1. Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada.
5.2. The execution and delivery of this Agreement to the Seller and
the sale contemplated hereby has been duly authorized by all
necessary corporate action on the part of the Purchaser.
5.3. Neither the execution and delivery of this Agreement, nor the
consummation of the sale contemplated hereby will conflict with, or
result in a material breach of, any of the terms, conditions, or
provisions of any law or any regulation, order, writ, injunction, or
decree of any court or governmental instrumentality, or of the
corporate charter or by-laws of the Purchaser or of any agreement,
whether written or oral, or other instrument to which the Purchaser
is a party or by which it is bound, or constitute (with the giving
of notice of the passage of time or both) a default hereunder.
5.4. Purchaser has funds and available Purchaser's stock necessary
to close the transaction contemplated by this Agreement.
5.5. The audited consolidated financial statements and unaudited
interim consolidated financial statements (including, in each case,
the notes, if any, thereto) included in the SEC Reports complied as
to form in all material respect with the published rules and
regulations of the SEC with respect thereto, were prepared in
accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated thereto or in the notes
thereto and except with respect to unaudited statements as permitted
by Form 10-Q of the SEC) and fairly present (subject in the case of
the unaudited interim financial statements, to normal, recurring
year-end adjustments) the consolidated financial position of
Purchaser (or its predecessor) as to the respective dates thereof
and the consolidated results of its operations and cash flows for
the respective periods then ended.
5.6. There is no litigation pending or threatened that would affect
Purchaser's ability to constitute the transactions contemplated by
this Agreement.
5.7. The shares of the Purchaser's common stock (the "COMMON
STOCK") are registered under the Securities Exchange Act of 1934, as
amended (the "34 ACT"); and during the period commencing on the date
of the signing of this agreement and terminating on the earlier of
(i) the date of the disposition by the Seller of all of the
Purchaser Shares or (ii) the two year anniversary of the Effective
Date (the "EFFECTIVE PERIOD") the Purchaser shall prepare and file
any and all reports, forms, applications and statements, take an
perform such actions and/or pay such sums as shall be necessary to
maintain such registration in full force and effect.
5.8. All documents, instruments, registration statements and
reports of every kind, nature or description, filed and/or to be
filed, by the Purchaser with the Securities and Exchange Commission
("SEC") whether required by the 34 Act and/or the rules and
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regulations promulgated by the SEC pursuant to the 34 Act and/or the
Securities Act of 1933, as amended (collectively, the
"Regulations"), were and/or will be filed and true, correct and
complete in all material respects and will not contain any statement
which, at the time, and in light of the circumstances under which it
is made, is false or misleading with respect to any material fact,
or which omits to state any material fact necessary in order to make
the statements therein made not false or misleading.
6. ACCESS AND INFORMATION:
From and after the Effective Date, and for a period of three years
thereafter,
6.1. The Seller shall have the right, from time to time upon
written request to the Purchaser, to inspect all service orders
related to contracts included in the Purchased Assets and, in the
event of an IRS audit, any books and records included in the
Purchased Assets, records it would be entitled to as all as
shareholders of Purchaser, any and all records necessary to assure
compliance with Sections 5.7 and 5.8 alone including the right to
make copies thereof.
6.2. The Purchaser shall have the right, from time to time upon
written request to the Seller, to inspect all books and records
relating to the Purchased Assets, including the right to make copies
thereof.
7. INDEMNIFICATION:
7.1. Subject to the limitations hereinafter described and the
limitation imposed in Section 8.4 hereof, the Seller agrees to
indemnify, exonerate, defend and save the Purchaser and its
officers, directors, employees, investors and representatives
(collectively, the "PURCHASER" for the purposes of this Section 7)
harmless from, against, for and in respect of the full amounts of
any and all damages, losses, demands, obligations, tax, interest,
penalty, suit, judgment, order, lien, liabilities, debts, claims,
actions, causes of action, encumbrances, costs and expenses
(collectively, the "LOSSES"), whether administrative, judicial or
otherwise, of every kind and nature, including, without limitation,
reasonable attorneys', consultants', accountants' and expert witness
fees, suffered, sustained, incurred or required to be paid at any
time after the Effective Date by the Purchaser based upon, arising
out of, resulting from or because of:
(a) a breach of any obligations of the Seller
incurred in connection with the making and performance of this
Agreement, the failure to sell, convey, assign and transfer
the Purchased Assets pursuant to Section 1.1 hereof, free and
clear of all mortgages, pledges, liens, conditional sales
agreements, encumbrances or charges;
(b) the untruth, inaccuracy, violation or breach of
any representation, warranty, agreement, undertaking or
covenant of Seller contained in or made pursuant to this
Agreement;
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(c) any claims made against or expense incurred by
Purchaser with respect to the conditions or operations of the
Seller made by regulatory or administrative agencies having
jurisdiction over the Seller resulting from violations of
local, state or federal laws or regulations by Seller or any
of their respective agents, servants or employees, or
resulting from a failure to collect or remit state or local
taxes;
(d) all reasonable costs and expenses (including,
without limitation, reasonable attorneys' fees, interest, and
penalties) incurred by the Purchaser in connection with any
action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against; and
(e) any Retained Liabilities; PROVIDED THAT, if any
such Retained Liability relates to a warranty or other claim
for services provided by or on behalf of the Seller on or
before the Effective Date, then such work shall be provided by
the Purchaser and the Seller shall pay the Purchaser the
actual cost of labor, plus fringe benefits, plus 10%.
7.2. Seller's obligations to indemnify pursuant to this Section 7
(and the representations and warranties set forth herein) shall be
for a period of two (2) years following the Effective Date. The
Purchaser shall have the right but not the obligation to offset any
Losses against the Purchaser Shares at the closing bid price on the
date of notice given pursuant to Section 7.6 hereof.
7.3. Subject to the limitations hereinafter described and the
limitation imposed in Section 8.3, the Purchaser agrees to
indemnify, exonerate, defend and save the Seller and its and/or
their officers, directors, employees, investors and representatives
(collectively, the "SELLER" for the purposes of this Section 7)
harmless from, against, for and in respect of the full amounts of
any and all damages, losses, demands, obligations, tax, interest,
penalty, suit, judgment, order, lien, liabilities, debts, claims,
actions, causes of action, encumbrances, costs and expenses, whether
administrative, judicial or otherwise, of every kind and nature,
including, without limitation, reasonable attorneys', consultants',
accountants' and expert witness fees, suffered, sustained, incurred
or required to be paid at any time after the Effective Date by the
Seller based upon, arising out of, resulting from or because of:
(a) a breach of any obligations of the Purchaser
incurred in connection with the making and performance of this
Agreement including the failure to pay the consideration
referenced in Section 2.1 in a timely manner;
(b) the untruth, inaccuracy, violation or breach of
any representation, warranty, agreement, undertaking or
covenant of Purchaser contained in or made pursuant to this
Agreement;
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(c) any claims made against or expense incurred by
Seller with respect to the conditions or operations of the
Purchaser made by regulatory or administrative agencies having
jurisdiction over the Purchaser resulting from violations of
local, state or federal laws or regulations by Purchaser or
any of their respective agents, servants or employees, or
resulting from a failure to collect or remit state or local
taxes, arising after the Effective Date;
(d) all reasonable costs and expenses (including,
without limitation, reasonable attorneys' fees, interest, and
penalties) incurred by the Seller in connection with any
action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against;
(e) any claims made against or expense incurred by
Seller related to the employment of Xxxxxx Xxxxxxx and/or
other Current Employees of the LD accruing after the Effective
Date; and
(f) any claims made by any Client against Seller for
work performed or failure to honor any contract occurring
after the Effective Date.
7.4. Purchaser's obligations to indemnify pursuant to this Section
7 (and the representations and warranties set forth herein) shall be
for a period of two (2) years following the Effective Date.
7.5. Notwithstanding any other provision of this Agreement to the
contrary, each party's liability to the other to indemnify or pay
any monies under this Section 7 shall not exceed the amount of Two
Hundred Thousand U.S. Dollars ($200,000.00 USD), plus the market
value of the Purchaser Shares on the date written notice is given
pursuant to Section 7.6 hereof and PROVIDED THAT no claims shall be
so asserted unless and until the aggregate amount of losses that
would otherwise be paid exceeds on a cumulative basis an amount
equal to Twenty Thousand U.S. Dollars ($20,000.00 USD), and then
only to the extent of any such excess; however, these limitations
shall not apply to Purchaser's obligations with respect to Sections
2 or 7.3(e) and (f) hereto or the Seller's obligations with respect
to Sections 7.1(e) above.
7.6. Each party agrees to give the other prompt written notice of
any claims subject or allegedly subject to their respective
indemnification obligations. The indemnifying party shall have the
right but not the obligation, exercisable upon written notice to the
notifying party within ten (10) days of its receipt of the initial
notice, to defend any such claim with counsel of its own choosing
(reasonably acceptable to the indemnified party) and to settle the
matter in its own discretion provided such settlement does not,
without the indemnified party's written consent, inhibit or prohibit
the ongoing business or professional reputation of the indemnified
party.
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8. OTHER COVENANTS:
8.1. After the Effective Date, the Seller shall utilize its best
efforts to secure the assignments and novations for the client
contracts listed in SCHEDULE 1.1(A) and shall coordinate those
efforts with Purchaser in a manner most likely to assure the
continuation of business with or without written assignment or
novations.
8.2. Purchaser promises to deliver the stock certificates
represented in Section 2.1(b) no later than five (5) business days
of the Effective Date.
8.3. After the Effective Date, the Purchaser covenants to the
Seller that it shall:
(a) run the business as a going concern;
(b) not to terminate the services of Xxxxxx Xxxxxxx
except for cause;
(c) not to postpone or delay sales of goods and
services;
(d) not to sell or transfer the assets of the
Business;
(e) not to declare voluntary bankruptcy or an
assignment for the benefit of creditors.
In the event that the Purchaser is in violation of this Section 8.3,
then the Seller's exclusive remedy for such breach is to receive the
Purchaser Shares in accordance with Section 2.1 hereof (without
reduction or increase as set forth in Section 2.1(b) or (d)).
8.4. The Seller shall be solely responsible for paying any and all
warranty or other claims for services provided by or on behalf of
the Seller on or before the Effective Date in accordance with
Section 7.1(e) hereof. The payment of such work in accordance with
Section 7.1(e) shall be the Purchaser's exclusive remedy for
warranty or other claims for services provided on or before the
Effective Date, PROVIDED THAT this remedy shall not limit the
Purchaser's right to indemnity for Losses to third parties.
8.5. The Purchaser shall have the right to audit the Seller's books
and records as they relate to the LD Division and the Seller shall
cooperate in any such audit by giving access to its books and
records as they relate to the LD Division or as the auditors shall
14
reasonably request. The cost of such audit shall be borne by the
Purchaser.
8.6. After one year from the Effective Date, the Seller shall have
the right to audit the Purchaser's books and records as they related
to the LD Division for the purpose of confirming the revenue of the
LD Division and the Purchaser shall cooperate in any such audit by
giving access to its books and records as they relate to the LD
Division or as the auditors shall reasonably request. The cost of
such audit shall be borne by the Seller. However, if the results of
the audit reveal that Purchaser has underpaid Seller by five (5%)
percent or more of the amount actually due Seller, then Purchaser
shall (i) bear the expenses of the audit and (ii) immediately pay to
Seller the amount of any underpayment determined by said audit.
9. EMPLOYEES:
9.1. From the Effective Date, the Seller shall continue to employ
the Current Employees on the same terms as they were employed prior
to the Effective Date. The Purchaser shall reimburse the Seller for
all employment costs related to the Current Employees arising after
the Effective Date, including wages, withholding taxes and fringes
benefits (except that the Seller shall be responsible for all
accrued wages or benefits existing as of the Effective Date and, to
the extent not released in their offers of employment as set forth
in Section 9.2 hereto, any separation costs related to the
termination of the Current Employees by the Seller occurring after
the Effective Date). The Seller shall not be obligated to employ the
Current Employees after October 10, 2003.
9.2. On or before October 10, 2003, the Purchaser shall offer
employment to each Current Employee on substantially the same terms
as the Seller employed them. The form of offer of employment is
attached as EXHIBIT 9.2 hereto. Upon Purchaser offering employment
to each Current Employee, the Seller shall terminate the employment
of each Current Employee and, to the extent not released in their
offers of employment as set forth in this Section 9.2, shall be
responsible for any separation costs related to the termination of
the Current Employees by the Seller.
9.3. The Current Employees' failure to perform in accordance with
such employment terms shall not be considered a breach or a failure
to perform by Seller.
10. NEGATIVE COVENANTS:
10.1. The Seller and the Shareholders agree that for a period of two
(2) years following the Effective Date, they will not, for their own
account or jointly with another, directly or indirectly, for or on
behalf of any individual (including, without limitation, any person
related by blood, adoption or marriage or other person),
partnership, corporation, or other legal entity, as principal, agent
or otherwise:
(a) own, control, manage, be employed by, consult
with, or otherwise participate in, a business involved within
the Trade Area (as hereinafter defined) involved in: (i) the
sale and delivery of medical data integration services of any
kind or (ii) any activity which competes with the business
conducted by LD (the activities described in this clause (a)
15
are hereinafter referred to collectively as the "BUSINESS");
(b) solicit or induce, or in any manner attempt to
solicit or induce, any person (i) which is or was a customer
of LD (identified on customer list specified in Section 1.1
hereof) or (ii) employed by the Purchaser to leave such
employment, whether or not such employment is pursuant to a
written contract and whether or not such employment is at
will, or hire any person who has been employed by the Company
at any time during the six (6) month period preceding such
hiring; or
(c) solicit or induce any Current Employee employed
by the Purchaser or any of its future subsidiaries to leave
such employment, whether or not such employment is pursuant to
a written contract and whether or not such employment is at
will or hire any such person; or
(d) interfere with the Purchaser's business
relationships, including, without limitation, the business
relationships with the Purchaser's customers, clients, vendors
or referral sources listed on Schedule 1.1(g).
10.2. As used herein, the term "TRADE AREA" shall mean any locations
in which the Seller has conducted the LD business at any time during
the twelve (12) month period.
10.3. Purchaser agrees that for a period of one year from the
Effective Date that neither it nor any of its agents,
representatives, parents, subsidiaries or affiliates will it solicit
or hire any employee or consultant of Seller with the exception of
the Current Employees.
10.4. It is recognized by that an action for damages may not be an
adequate remedy in the event of the breach of any of the negative
covenants contained in this Agreement, and therefore, it is agreed
that in addition to any other rights the non-breaching party may
have in the event of a breach of this Agreement, the non-breaching
party shall have the right to judicial enforcement of said covenants
by way of injunction, restraining order or any other similar
equitable relief if any portion of the foregoing covenants is
invalid or unenforceable due to area or time, such fact shall not
affect the validity or enforceability of the remaining portions or
prevent enforcement of restrictions to the extent a court of
competent jurisdiction may consider reasonable. The parties agree
that in any event said restrictions shall be enforced to the maximum
extent permitted by law.
11. NO BROKERS:
11.1. The parties hereto represent and warrant to each other that
there are no claims for brokerage commissions or finders' fees in
connection with the transactions contemplated hereby.
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12. FEES AND EXPENSES:
12.1. Except as herein otherwise provided, each of the parties
hereto shall pay its own legal and accounting charges and other
expenses incident to the execution of this Agreement and the
consummation of the transactions contemplated hereby.
13. NOTICES:
13.1. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered in
person, by telecopy or mailed by first class, certified mail,
postage prepaid or by an expedited mail carrier and addressed to the
addresses of the parties first above written and to their respective
counsel and advisors at the following addresses:
IF TO SELLER'S COUNSEL AND ADVISORS:
Xxxx X. Xxxxxxxx, Esq.
Xxxxxxxx & Xxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Xxxxxxx Xxxxx, Esq.
Xxxxxxxxxxx & Xxxx, CPA
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
POB 2864
Xxxxxx, XX 00000
Facsimile: ----------
IF TO PURCHASER'S COUNSEL:
Xxxx X. Xxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Facsimile: (000) 000-0000
14. MISCELLANEOUS:
14.1. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. All
covenants and agreements made by or on behalf of any of the parties
hereto shall be binding upon and inure to the benefit of their
respective successors and assigns, unless otherwise specifically set
forth herein. The terms and provisions of this Agreement may not be
modified or amended, except in writing signed by all parties hereto.
17
No representations, warranties, or covenants, express or implied,
have been made by any party to this Agreement in connection with the
subject matter hereof, except as expressly set forth in this
Agreement and the Exhibits hereto. The headings in this Agreement
are for the convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
14.2. No terms and provisions hereof, including, without limitation,
the terms and provisions contained in this sentence, shall be
waived, modified or altered so as to impose any additional
obligations or liability or grant any additional right or remedy,
and no custom, payment, act, knowledge, extension of time, favor or
indulgence, gratuitous or otherwise, or words or silence at any
time, shall impose any additional obligation or liability or grant
any additional right or remedy or be deemed a waiver or release of
any obligation, liability, right or remedy except as set forth in a
written instrument properly executed and delivered by the party
sought to be charged, expressly stating that it is, and the extent
to which it is, intended to be so effective. No assent, express or
implied, by either party, or waiver by either party, to or of any
breach of any term or provision of this Agreement or of the Exhibits
or Schedules shall be deemed to be an assent or waiver to or of such
or any succeeding breach of the same or any other such term or
provision.
14.3. The captions of this Agreement are for convenience and
reference only, and in no way define, describe, extend or limit the
scope or intent of this Agreement or the intent of any provisions
hereof.
14.4. This Agreement, including all Exhibits and the Schedules
hereto, supersedes any and all other agreements, oral or written,
between the parties hereto with respect to the subject matter hereof
(including the Letter of Intent between Purchaser and Seller, and
contains the entire agreement between such parties with respect to
the transaction contemplated hereby.
14.5. No amendment of any provision of this Agreement shall be valid
unless the same is in writing and signed by Purchaser and Seller.
14.6. No waiver by any party of any default, misrepresentation or
breach of warranty or covenant shall be deemed to extend to any
prior or subsequent default, misrepresentation or breach of warranty
or covenant.
14.7. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and may not be assigned by any party hereto
without the prior written consent of the other parties hereto.
Nothing expressed or referred to in this Agreement will be construed
to give any person other than the parties to this Agreement any
legal or equitable right, remedy, or claim under or with respect to
this Agreement or any provision of this Agreement.
14.8. The Parties will each bear their own fees and expenses
incurred in connection with the negotiations, preparation and
execution of this Agreement.
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14.9. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio and any action brought
to enforce the Agreement or for its breach shall be brought within
the exclusive jurisdiction of the state and Federal Courts within
the state of Ohio.
14.10. The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
14.11. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be constitute
as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the
authority of any of the provisions of this Agreement.
14.12. This Agreement may be executed in 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.
15. FACSIMILES:
Facsimile signatures shall be acceptable to bind the respective parties to
the terms of this Agreement
16. EFFECT OF CLOSING:
16.1. The terms of this Agreement shall survive the Effective Date
and shall not become merged therein.
16.2. This Agreement, together with any Exhibits hereto, and any
other documents to be executed pursuant hereto, constitute the
entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements and
understandings, if any, written or oral, between the parties.
17. PUBLIC ANNOUNCEMENT:
17.1. The Seller recognizes and agrees that the Purchaser is a
public company and that the Seller and the Purchaser will not make
any public announcement concerning this Agreement or the
negotiations and to keep same confidential unless given written
permission from the Purchaser to make any announcement or otherwise
disclose the information. The Purchaser shall have the right to
announce the transaction contemplated hereby and/or the negotiations
between the parties upon notice to and current of the Seller to the
extent the announcement is required by law, regulations or the rules
of any public stock exchange on which Purchaser's stock is listed.
The Purchaser will give the Seller prior notice of any announcement
it believes is necessary or proper and Seller will not unreasonably
withhold its consent.
19
18. ARBITRATION:
18.1. Any and all disputes arising under or in connection with this
Agreement shall be resolved by submission to final and binding
arbitration in accordance with the then prevailing rules of JAMS. A
single arbitrator shall be chosen and the proceedings shall be
conducted in Xxxxx County, Ohio. In addition, the arbitrator shall
base his award upon substantial evidence and in accordance with Ohio
law, and shall award to the prevailing party all of its reasonable
costs and attorney's fees, expert witness fees, arbitration fees
(including any fees paid by the prevailing party to the arbitrator),
but shall have no power or jurisdiction to award any punitive or
exemplary damages. Judgment upon an arbitration award may be
confirmed in a state or Federal court sitting in Xxxxx County, Ohio.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
ACTIVECORE TECHNOLOGIES, INC.
By:
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Name:
----------------------------------
Title:
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SCI HEALTHCARE GROUP, INC.
By:
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Name:
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Title:
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SHAREHOLDERS:AS TO ARTICLE 10
----------------------------------------
Name:
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Xxxxxx Xxxxxx
----------------------------------------
Name:
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Xxxx Xxxxxxxx
----------------------------------------
Name:
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Xxxxx Xxxxxxxxxxx
21
