ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT, made this 15th day of September, 2000, by
and among HEALTHCOMP EVALUATION SERVICES CORPORATION, a Nevada
corporation ("Purchaser"), U.S. HEALTHWORKS, INC., a Delaware
corporation ("Shareholder") and U.S. HEALTHWORKS HOLDING COMPANY,
INC., a Delaware corporation and wholly owned subsidiary of
Shareholder ("Seller");
W I T N E S S E T H:
WHEREAS, the parties hereto desire to enter into this Acquisition
Agreement pursuant to which Purchaser will purchase from Seller the
Assets of the Preventive Services Division of Seller ("PSD") and all
of PSD's business operations relating to the Business, upon the terms
and subject to the conditions set forth herein;
NOW, THEREFORE, for and in consideration of the premises and the
mutual promises, agreements, representations, warranties and covenants
hereinafter set forth, and the sum of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which
is hereby specifically agreed to and acknowledged, the parties hereto
agree as follows:
I. DEFINITIONS.
As used herein, the following terms shall have the following meanings
unless the context otherwise requires:
I.1 "Accounts Receivable Billing and Collection Agreement" shall mean
that agreement among Purchaser, Seller and Shareholder, substantially
in the form of Exhibit 2.10.
I.2 "Agreement" shall mean this Acquisition Agreement.
I.3 "Assets" shall mean all of the assets, properties and rights
as used in the Business which are owned by Seller or the Shareholder,
as indicated in Section 2.1, and, except as otherwise noted in Section
2.1.3, wherever located and whether or not carried or reflected on the
books and records of Seller or Shareholder and whether or not carried
in the name of Seller or Shareholder or an affiliate of Seller or
Shareholder, in existence as of the Closing.
I.4 "Benefit Plans" shall have the meaning set forth in Section 3.17.
I.5 "Business" shall mean the provision of occupational health
programs and services including mobile hearing conservation, mobile
respiratory surveillance, and industrial hygiene/safety services
through engineering controls, sales of protective devices,
environmental monitoring and environmental analysis at customer site
and the sale of license of software used in such activity as currently
conducted at or from the following locations: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
I.6 "CERCLA" shall have the meaning set forth in Section 3.19.
I.7 "Closing" shall mean the consummation of the transactions
provided for in this Agreement.
I.8 "Closing Date" shall mean the date on which the Closing occurs
pursuant to Section 8.1 hereof.
I.9 "Code" shall mean the Internal Revenue Code of 1986, as amended.
I.10 "Covenants Not To Compete" shall mean the Covenant Not to
Compete between Purchaser and Seller and between Purchaser and
Shareholder, both substantially in the form attached as Exhibit 2.11,
each of which may be individually referred to as a Covenant Not to
Compete.
I.11 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
I.12 "ERISA Plan" shall have the meaning set forth in Section 3.17.1.
I.13 "Hazardous Substance" shall have the meaning set forth in
Section 3.19.
I.14 "Improvements" shall mean, collectively, any and all
improvements located on the Leased Real Property and used in
connection with the Business.
I.15"Indemnitee" shall have the meaning set forth in Section 9.4.
I.16 "Indemnifying Party" shall have the meaning set forth in Section
9.4.1.1(a).
I.17 "Interim Financial Statement" shall have the meaning set forth
in Section 3.5.1.
I.18 "Leased Real Property" shall have the meaning set forth in
Section 3.7.2.3.
I.19 "Licensed Software" shall have the meaning set forth in Section
3.15.2.
I.20 "Minimum Aggregate Liability Amount" shall have the meaning set
forth in Section 9.3.
I.21 "1933 Act" shall mean the Securities Act of 1933, as amended.
I.22 "1999 and 2000 Financial Statements" shall have the meaning set
forth in Section 3.5.1.
I.23 "Notice to Contest" shall have the meaning set forth in Section
9.4.1.2 (d).
I.24 "Notice to Defend" shall have the meaning set forth in Section
9.4.1.1 (c).
I.25 "Notice of Settlement shall have the meaning set forth in Section
9.4.1.2 (c).
I.26 "Owned Software" shall have the meaning set forth in Section
3.15.2.
I.27 "Permits" shall mean all licenses, registrations, certificates,
approvals, and permits issued by governmental authorities and quasi-
governmental authorities in regard to the Leased Real Property, the
Improvements, or any portion or component of either of them.
I.28 "Promissory Note" shall mean the note of Purchaser to the Seller,
substantially in the form attached hereto as Exhibit 2.2.
I.29 "Property" shall have the meaning set forth in Section 3.19.
I.30 "PSD" shall mean Preventive Services Division, an unincorporated
division of Seller.
I.31 "SEC" shall mean the Securities and Exchange Commission.
I.32 "SEC Documents" shall have the meaning set forth in Section 5.6.
I.33 "Seller" shall mean U.S. HealthWorks Holding Company, Inc., a
Delaware corporation and wholly owned subsidiary of Shareholder.
I.34 "Seller's Software" shall have the meaning set forth in Section
3.15.2.
I.35 "Shareholder" shall mean U.S. HealthWorks, Inc., a Delaware
corporation.
I.36 "Third Party Claim" shall have the meaning set forth in Section
9.4.
II. COVENANTS AND UNDERTAKINGS.
II.1 Purchase and Sale of Assets.
II.1.1 Subject to the terms and conditions hereinafter set forth at
the Closing Seller shall sell, assign, transfer, convey, and deliver,
and the Shareholder shall cause Seller to sell, assign, transfer,
convey, and deliver, to Purchaser, and Purchaser shall purchase and
assume from Seller for the purchase price specified in Section 2.2 of
this Agreement, (i) all items of real and personal property which
constitute a part of the Assets, free and clear of all liens, claims,
charges, and encumbrances of any nature whatsoever and (ii) all
leases, licenses, contracts, and agreements constituting part of the
Assets, all of which shall be as of the Closing in full force and
effect without any existing defaults (or events or conditions, which
with notice or lapse of time, or both, would constitute a default)
thereunder.
II.1.2 The Assets purchased hereunder shall be all business, assets,
properties, and rights relating to the Business and, except as set
forth in Exhibit 2.1.3, shall include, without limitation:
II.1.2.1 all fixed and tangible assets, including office equipment,
other machinery and equipment, computer equipment, furniture and
fixtures, mobile units, tractors, trailers and other motor vehicles
and all other personal property owned by Seller and related to the
Business as of the Closing Date (certain of such personal property
being more particularly described in Exhibit 3.7.1.1);
II.1.2.2 all prepaid assets, security deposits and intangible assets,
including Owned Software, data bases, and copyrights and patents and
applications relating thereto (certain of such intangible assets being
more particularly described in Exhibit 3.15.2);
II.1.2.3 all contracts, purchase orders, leases, maintenance
agreements, service agreements, royalty agreements, instruments,
licenses, franchises, confidentiality agreements, rights to enforce
confidentiality provisions in other agreements (whether or not such
agreements are part of the Assets), and other agreements attributable
to the Business including Licensed Software (all of such contracts,
rights or licenses being more particularly described in Exhibits 3.14
and 3.15.2);
II.1.2.4 all inventories and supplies;
II.1.2.5 the trade and service names "Preventive Services Division",
"Preventive Services" and any abbreviations or variations of such
names, and all trademarks, service marks and copyrights, including
applications for and licenses concerning any of them (such as are
listed on Exhibit 3.15.1);
II.1.2.6 all formulae, trade secrets, customer lists, and all other
rights and documents owned, required for or incident to the
performance of the Business and all books and records incident
thereto, which, however, shall not include any stock books and
corporate minute books of Seller (Purchaser shall have the right,
however, to have reasonable access to all of such books of the Seller
following the Closing only to the extent such access is necessary to
the Purchaser's operation of the Business);
II.1.2.7 such rights as the Seller has to use its present telephone
numbers related to the Business from and after the Closing Date; and
II.1.2.8 rights to insurance proceeds arising from any loss or damage
relating to the Assets.
II.1.3 Notwithstanding anything in this Agreement to the contrary,
Purchaser shall not purchase or receive or be under any obligation
with respect to (i) cash, accounts receivable or any other assets,
equipment or contracts which are set forth in Exhibit 2.1.3; or (ii)
any Benefit Plans as defined in Section 3.17 (but Purchaser shall
purchase the rights to enforce any confidentiality provisions
contained therein).
2.1.4 Right to Use Name. For sixty (60) days after the closing
date, Purchaser shall be permitted to use the name "U.S. HealthWorks"
in the conduct of the Business. For as long as supplies last,
Purchaser shall be permitted to use stationary and other office
products bearing the name "U.S. HealthWorks." At the expiration of
such sixty (60) day period, Purchaser shall cease to use such name
(except on remaining supplies of stationery and other office products
and except for repainting vehicles) and all signs bearing such name
shall be removed. At the expiration of 180 days after the closing
date, Purchaser shall have removed such name from all vehicles.
Purchaser shall use reasonable commercial efforts to ensure that there
is no confusion among the customers and general public regarding the
fact that Shareholder and Seller are not associated with the Business.
II.2 Purchase Price.
In consideration of the sale, transfer, conveyance, assignment and
delivery of the Business and the Assets, and in reliance upon the
representations and warranties made herein by Seller and the
Shareholder, Purchaser in payment for the Business and the Assets,
shall pay to Seller Three Million Fifty Thousand Dollars
($3,000,000.00) as follows:
(i) Two Million Fifty Thousand Dollars ($2,000,000.00) in cash, by
cashier's check or wire transfer of immediately available funds at
Closing; and
(ii) One Million Dollars ($1,000,000.00) in the form of a Promissory
Note, substantially in the form set forth in Exhibit 2.2, delivered
at Closing.
II.3 Compliance with Securities Laws. In connection with the
transactions contemplated by this Agreement, the parties hereto agree
to cooperate with one another in complying with the provisions of the
1933 Act and the General Rules and Regulations thereunder and all
other applicable federal and state securities laws, and each of them
agrees to furnish the other, or its counsel, with such information and
to take such actions as may be reasonably requested in respect of such
compliance.
II.4 Liabilities of Seller.
II.4.1 Except for Purchaser's assumption at the Closing of the
obligations of Seller thereafter to accrue under agreements,
contracts, licenses and leases which constitute part of the Assets,
Purchaser will not assume or become liable on any other agreement,
contract or lease of Seller or Shareholder or for any other
indebtedness, obligations or liabilities of Seller or Shareholder
whatsoever. Purchaser shall not assume any indebtedness, obligation
or liability for any litigation matter arising from the conduct of the
Business prior to the Closing, regardless of whether such matter is
disclosed in Exhibit 3.12. Purchaser shall not assume any liability
for any legal fees or expenses of Seller, Shareholder or any other
party incurred for any reason whatsoever, and the Assets shall not be
utilized for or reduced by the amount of any such fees or expenses.
Purchaser shall not assume any liability for federal, state or local
income, sales, use, excise, payroll, employment or other taxes, or for
wages, salaries or overtime, vacation pay, holiday pay or other
employee benefits, or other employee benefit plans on, arising out of,
or attributable to Seller or Shareholder or to the conduct of the
Business through the close of business on the day prior to the Closing
Date. Seller and Shareholder will pay with funds that are not Assets
all stamp, sales, income, realty transfer or other taxes imposed on
Seller or Shareholder, and Purchaser will pay all such taxes imposed
on it, in respect of any and all transfers pursuant to the terms of
this Agreement.
II.4.2 All property and ad valorem taxes, leasehold rentals and other
customarily proratable items relating to the Assets payable subsequent
to the Closing Date and relating to a period of time both prior to and
subsequent to the Closing Date will be prorated as of the close of
business on the day before the Closing Date between Purchaser and
Seller. If the actual amount of any such item is not known as of the
Closing Date, the aforesaid proration shall be based on the previous
year's assessment of such item and the parties agree to adjust said
proration and pay any underpayment or reimburse for any overpayment
within thirty (30) days after the actual amount becomes known.
II.5 Shareholder Meetings; Covenants and Representations of
Shareholder. Prior to Closing, Seller will submit the sale of the
Assets pursuant to this Agreement, and such other agreements,
documents and instruments evidencing the transactions contemplated
hereby as may be appropriate or necessary, to the Shareholder,
recommend its approval and use its best efforts to obtain such
approval. Shareholder hereby covenants and agrees that at the meeting
of Seller's Shareholder such Shareholder will vote all of the shares
of the Seller owned or controlled by Shareholder in favor of the
approval of such sale and in favor of the approval of all other
agreements, documents and instruments which are contemplated by this
Agreement. To the extent permitted by law, the actions contemplated
above may be taken by unanimous written consent in lieu of a meeting.
II.6 Conduct of the Business of the Seller Prior to Closing.
II.6.1 Except with the prior consent in writing of Purchaser, Seller
and Shareholder covenant and agree that, between the date of this
Agreement and the Closing Date, Seller will conduct the Business and
operate the Business in the ordinary course and consistent with
historical practices, and they will: (a) use their best reasonable
efforts to preserve the organization of Seller and the Business
intact, to keep available the services of the present officers and
employees of Seller employed in connection with the Business, and to
preserve the goodwill of customers, suppliers and others having
business relations with the Seller or the Business; (b) maintain the
Assets in the same working order and condition as such Assets are in
as of the date of this Agreement, reasonable wear and tear excepted
and not liquidate the Assets to cash except in the ordinary course of
business; (c) keep in force at no less than their present limits all
existing bonds and policies of insurance insuring the Assets or the
Business; (d) (i) not enter into any contract, commitment, arrangement
or transaction which is not in the ordinary course of business, or if
in the ordinary course of business, which involves any obligation
which cannot be performed or terminated within thirty (30) days of the
date of this Agreement or which involves future payments or receipts,
performance of services, or delivery of goods to or by Seller of an
amount or value in the aggregate in excess of Ten Thousand Dollars
($10,000.00), or (ii) suffer, permit or incur any of the transactions
or events described in Section 3.11 hereof (except for the payment of
any health, disability and life insurance premiums which may become
due and distributions required to be made pursuant to the terms
currently in effect of any Benefit Plans) to the extent such events or
transactions are within the control of the Seller or the Shareholder
or in any way affect the Assets or the Business; (e) not make or
permit any change in Seller's Articles of Incorporation or Bylaws, or
in its authorized, issued or outstanding securities, if such action
would adversely affect the ability of Seller to consummate the
transactions contemplated hereunder or would cause the necessity of
obtaining the consent of any individual or entity not disclosed in
Exhibit 3.10; (f) not grant any stock option or right to purchase any
security of Seller, issue any security convertible into such
securities, purchase, redeem, retire or otherwise acquire any of such
securities, or agree to do any of the foregoing, if such action would
adversely affect the ability of Seller to consummate the transactions
contemplated hereunder or would cause the necessity of obtaining the
consent of any individual or entity not disclosed in Exhibit 3.10; nor
declare, set aside or pay any dividend or other distribution in
respect of such securities out of Assets; (g) not make any
contribution to or distribution from any employee benefit plan,
pension plan, stock bonus plan, 401(k) plan or profit sharing plan if
such contribution would be out of Assets or such contribution or
distribution would create a liability to or obligation of the Business
(except for the payment of any health, disability and life insurance
premiums which may become due and distributions required to be made
pursuant to the terms of any Benefit Plans); (h) not increase the
compensation payable or to become payable by Seller to any officer,
employee or agent employed in connection with the Business and not
make any bonus payment or arrangement to any of such persons except
for such increases in compensation or bonus payments that are made at
times and in amounts consistent with historical practices of the
Business; and (i) promptly advise Purchaser in writing of any matters
arising or discovered after the date of this Agreement which, if
existing or known at the date hereof, would be required to be set
forth or described in this Agreement or the Exhibits hereto.
II.6.2 Except with the prior consent in writing of Purchaser, Seller
will not, and the Shareholder will not permit Seller, between the date
of this Agreement and the Closing Date, to make any material changes
in the Seller's accounting methods or practices.
II.6.3 Except after prior notification to, and with the prior written
consent of, Purchaser, Seller will not make, and the Shareholder will
not permit the Seller to make, between the date of this Agreement and
the Closing Date as relates to the Assets or the Business, any change
in its banking or safe deposit arrangements or grant any powers of
attorney. A list of all bank accounts, safe deposit boxes (and the
contents thereof) and powers of attorney of Seller related to the
Business and of all persons authorized to act with respect thereto is
attached hereto as Exhibit 2.6.3.
II.7 Examination of Property and Records. Between the date of this
Agreement and the Closing Date, Seller will allow, and Shareholder
will cause Seller to allow, Purchaser, its counsel and other
representatives full access to all the books, records, files,
documents, assets, properties, contracts and agreements of Seller
relating to the Business which may be reasonably requested, and shall
furnish Purchaser and its officers and representatives during such
period with all information concerning the affairs of the Business
which may be reasonably requested. Purchaser will conduct any
investigation in a manner which will not unreasonably interfere with
the business of Seller. In the event the Closing does not occur,
Purchaser will as soon as practicable, return all material of or
concerning the Business then in its possession and hereby covenants to
keep confidential and not use for its own benefit any information
concerning the Business' operations or the Business and ascertained
from its review; provided, however, that the foregoing shall not apply
to any information (a) in the public domain not as a result of the
violation of Purchaser's undertakings herein, (b) available to
Purchaser on a nonconfidential basis without regard to the disclosure
by Seller, Shareholder or their representatives to Purchaser, (c)
available to Purchaser from a source other than Seller, Shareholder or
their representatives (provided that such source in so acting is not
violating any duty or agreement of confidentiality) or (d) required to
be disclosed by any law, rule or regulation. The parties hereto
acknowledge and agree that certain information, including the names of
customers and clients of Seller are already in the possession of
Purchaser and such information shall not be deemed to be confidential
for the purposes hereof.
II.8 Consents, Waivers and Approvals. Seller and Shareholder agree to
use their best reasonable commercial efforts to obtain the waiver,
consent and approval of all persons whose waiver, consent or approval
(i) is required in order to consummate the transactions contemplated
by this Agreement, or (ii) is required by any agreement, lease,
instrument, arrangement, judgment, decree, order or license to which
Seller or Shareholder is a party or subject on the Closing Date, and
(a) which would prohibit, or require the waiver, consent or approval
of any person to such transactions or (b) under which, without such
waiver, consent or approval, such transactions would constitute an
occurrence of default under the provisions thereof, result in the
acceleration of any obligation thereunder, or give rise to a right of
any party thereto to terminate its obligations thereunder. All
written waivers, consents and final approvals shall be produced at
Closing in form and content reasonably satisfactory to Purchaser.
II.9 Employees and Independent Contractors.
II.9.1 The parties acknowledge and agree that certain employees and
independent contractors of Seller have had access to valuable and
necessary confidential trade secrets and proprietary information
related to the Assets and the Business being transferred hereunder.
In order to achieve the full benefits associated with the Assets and
the Business, Seller and Shareholder agree that following the
execution of this Agreement and continuing after the Closing,
Purchaser shall be allowed to discuss with the employees and
independent contractors of Seller who perform services for the
Business the possibility of employment or contracting with Purchaser
in the business operations to be acquired pursuant to the transactions
contemplated herein, and shall be allowed to employ or enter into
contracts with such persons on such terms and conditions as might be
negotiated among Purchaser and such employee or independent
contractor. Purchaser shall offer employment to all the employees of
the Business except those listed on Exhibit 2.9.1. Seller and
Shareholder covenant not to interfere with any such efforts by
Purchaser and to use their best reasonable commercial efforts to
assist Purchaser in employing or contracting with such individuals.
Nothing in this Agreement shall be construed as conferring any right,
as third party beneficiary or otherwise, on any individual or entity
not a party to this Agreement as to the matters described in this
Section 2.9.1.
II.9.2 Seller and Shareholder acknowledge that prior to the date of
this Agreement, Purchaser has approached certain of the employees or
independent contractors of Seller on the same basis as set forth in
Section 2.9.1, and Seller and Shareholder hereby ratify, approve and
retroactively consent to the acts of Purchaser with regard to so
approaching such employees or independent contractors prior to the
date of this Agreement.
II.9.3 As to any such employee or independent contractor who is
employed by Purchaser or with whom Purchaser contracts pursuant to
this Section 2.9, Seller and Shareholder agree to cause the release of
such employee or independent contractor from any contractual provision
with Seller, Shareholder or any affiliate of either of them which
would impair the utility of such employee's or independent
contractor's services to Purchaser or which would impose upon such
employee or independent contractor any monetary or other obligation to
Seller or Shareholder which otherwise would be occasioned by the
termination of such employee's or independent contractor's employment
or relationship including, without limitation, any agreements of
noncompetition or confidentiality.
II.10 Accounts Receivable. Purchaser, Seller and Shareholder
covenant to enter at the Closing into an Accounts Receivable Billing
and Collection Agreement substantially in the form attached hereto as
Exhibit 2.10.
II.11 Covenants Not to Compete. Seller and Shareholder covenant to
enter at the Closing into a Covenant Not to Compete substantially in
the form attached hereto as Exhibit 2.11.
II.12 Transition of Computer and Financial Systems and Personnel.
For a period of one hundred twenty (120) days following the closing
date, Seller and Shareholder hereby agree to make available on a
timely basis to Purchaser any and all of their computer and financial
systems related to or used in the Business and their human resources
personnel and shall use their best efforts to facilitate the orderly
transition of the Business to Purchaser.
II.13 Supplying of Financial Statements. Seller and Shareholder
covenant to deliver to Purchaser all regularly prepared unaudited
financial statements of Seller that relate to the Assets or the
Business prepared after the date of this Agreement through the Closing
Date, in the format historically utilized internally, as soon as such
financial statements are available.
II.14 Payroll Responsibility. Seller and Shareholder hereby covenant
to pay the payroll obligations related to the employees of the
Business for the payroll period next ending after the Closing.
Purchaser covenants to reimburse Seller and Shareholder an amount
equal to the payroll obligations related to the Business incurred
between the date following the Closing and the end of such payroll
period, at such time as the parties conduct the next reconciliation of
accounts receivable collections after the end of such payroll period
in accordance with Section 1 of the Accounts Receivable Billing and
Collection Agreement.
III. REPRESENTATIONS AND WARRANTIES OF SELLER AND
SHAREHOLDER.
Seller and Shareholder, jointly and severally, represent and warrant
to, and for the benefit of, Purchaser as follows:
III.1 Organization and Standing. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of
the State of Delaware, and has the full power and authority (corporate
and otherwise) to carry on the Business in the state of its
incorporation and as it is now being conducted and to own and lease
the properties and assets which it now owns or leases that relate to
the Business. Seller is now, and will be at Closing, duly qualified
and/or licensed to transact business and in good standing as a foreign
corporation in all jurisdictions listed in Exhibit 3.1(a) hereto.
Purchaser shall have no liability and shall incur no loss, damage,
injury, costs or expense from the failure of Seller to be qualified or
licensed to do business or to own or lease property in any
jurisdiction.
III.2 Authority and Status. Each of Shareholder and Seller has the
capacity and authority to execute and deliver this Agreement, to
perform hereunder, and to consummate the transactions contemplated
hereby without the necessity of any act or consent of any other person
whomsoever. The execution, delivery and performance by Seller and
Shareholder of this Agreement and each and every agreement, document
and instrument provided for herein have been duly authorized and
approved by the Board of Directors of Seller and Shareholder. This
Agreement and each and every agreement, document and instrument to be
executed, delivered and performed by Seller or Shareholder in
connection herewith, constitute or will, when executed and delivered,
constitute the valid and legally binding obligations of Seller and
Shareholder, as the case may be, enforceable against each of them in
accordance with their respective terms, except as enforceability may
be limited by applicable equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws from time to
time in effect affecting the enforcement of creditors' rights
generally. Attached hereto as Exhibit 3.2 are true, correct and
complete copies of the Articles of Incorporation and Bylaws of Seller.
III.3 Capitalization. All of the issued and outstanding shares of
Seller are owned by Shareholder, and, except for the requisite
affirmative vote of Shareholder of Seller pursuant to Delaware law,
the authorization or consent of no other person or entity is required
in order to consummate the transactions contemplated herein by virtue
of any such person or entity having an equitable or beneficial
interest in Seller or the capital stock of Seller. There are no
outstanding options, warrants, calls, commitments, or plans by Seller
to issue any additional shares of its capital stock, or to pay any
dividends on such shares, or to purchase, redeem, or retire any
outstanding shares of its capital stock, nor are there outstanding
shares of its capital stock, nor are there outstanding any securities
or obligations which are convertible into or exchangeable for any
shares of capital stock of Seller, which would give any other person
the right to consent or vote on the transaction contemplated herein.
III.4 Absence of Equity Investment. Except as described in Exhibit
3.4 hereto, neither Shareholder nor Seller, directly or indirectly,
owns of record or beneficially any shares or other equity interests in
any corporation (except as a stockholder holding less than one percent
(1%) interest in a corporation whose shares are traded on a national
or regional securities exchange or in the over-the-counter market),
partnership, limited partnership, joint venture, trust, limited
liability company or other business entity, all or any portion of the
business of which is competitive with that of the Business within the
terms of the Covenants Not To Compete.
III.5 Liabilities and Obligations of Seller.
III.5.1 Attached hereto as Exhibit 3.5.1 are true, correct and
complete copies of Seller's unaudited balance sheets for the Business
as of March 31, 1999 and March 31, 2000 and the related statements of
income for the years then ended (the "1999 and 2000 Financial
Statements"). Also attached hereto to Exhibit 3.5.1 is a true,
correct and complete copy of Seller's unaudited balance sheet for the
Business as of June 30, 2000, and the related income statement for the
period then ended (the "Interim Financial Statements"). The 1999 and
2000 Financial Statements and Interim Financial Statements have been
prepared from and are in complete accordance with the books and
records of the Business, are true and complete statements of the
financial position of the Business as of their respective dates, have
been prepared in accordance with generally accepted accounting
principles consistently applied, fairly present the financial position
and results of operations of the Business as of the respective dates
thereof, and disclose all liabilities of the Business, whether
absolute, contingent, accrued or otherwise, existing as of the
respective dates thereof. The books and records of the Business are
sufficient and accurate to the extent (i) to permit Purchaser's
independent certified public accountants to conduct an audit of the
Business sufficient in scope to permit the issuance of an unqualified
opinion on the financial statements of the Business and (ii) to permit
Purchaser to comply with any applicable reporting requirements under
any applicable federal or state securities laws.
III.5.2 Seller has no liability or obligation related to the Assets or
Business (whether accrued, absolute, contingent or otherwise) which is
of a nature required to be reflected in financial statements prepared
in accordance with generally accepted accounting principles,
consistently applied, including, without limitation, any liability
which might result from an audit of its tax returns by any appropriate
authority, except for (i) the liabilities and obligations of Seller
which are disclosed and reserved against in the Interim Financial
Statements or reflected on Exhibit 3.5.2 hereto, to the extent and in
the amounts so disclosed and reserved against, and (ii) liabilities
incurred or accrued in the ordinary course of business since the date
of the Interim Financial Statements, and which do not, either
individually or in the aggregate, have an adverse effect on the Assets
or the Business. Except as otherwise disclosed herein, there is no
basis for any assertion against the Assets or the Business as of the
Interim Financial Statements of any liability of any nature or in any
amount not fully accrued and appearing on the balance sheet as of that
date.
III.5.3 Except as disclosed in the Interim Financial Statements or
Exhibit 3.5.2, Seller is not in default with respect to any
liabilities or obligations which are related to the Assets or
Business, and all such liabilities or obligations shown and reflected
in the Interim Financial Statements or Exhibit 3.5.2, and such
liabilities incurred or accrued subsequent to the Interim Financial
Statements, have been, or are being, paid or discharged as they become
due, and all such liabilities and obligations were incurred in the
ordinary course of business, except as indicated in Exhibit 3.5.2.
III.6 Taxes. There is not, and there will not be, any liability for
federal, state or local income, sales, use, excise, payroll,
employment or other taxes arising out of, or attributable to, or
affecting the Assets or the conduct of the Business through the close
of business on the Closing Date, or attributable to the conduct of the
operations of Seller at any time for which Purchaser will have any
liability for payment or otherwise. After the Closing, there will not
exist by virtue of the transactions contemplated by this Agreement any
liability for taxes (except for sales taxes and realty transfer taxes,
if any, incident to the consummation of the transactions contemplated
herein) which may be asserted by any taxing authority against the
Assets or the operations of the Business, and no lien or other
encumbrance for taxes will attach to the Assets or the operations of
the Business.
III.7 Ownership of Assets and Leases.
III.7.1 Other than with respect to the Leased Real Property and
Improvements:
III.7.1.1 Exhibit 3.7.1.1 attached hereto contains a list of all fixed
assets owned by Seller used in connection with the Business with a
book value in excess of $500.00, including, but not limited to, all
machinery and equipment, office furniture and equipment and all
vehicles owned by Seller, and depreciation schedules of the assets
shown thereon.
III.7.1.2 Seller has good and marketable title to all of the assets
shown on Exhibit 3.7.1.1 subject to no mortgage, pledge, lien,
security interest, conditional sale agreement, encumbrance, charge or
adverse claim whatsoever, except as specifically shown on Exhibit 3.8.
III.7.1.3 Except as shown on Exhibit 3.7.1.3, none of the properties
or assets used by Seller in connection with the Business are held
under any lease, or as conditional vendee under any conditional sale
or other title retention agreement. Exhibit 3.7.1.3 includes a list
of all leases of all machinery and equipment used in connection with
the Business of which Seller is a lessee, including respective
expiration dates and monthly rentals and identifies which of such
leases are treated on Seller's financial books and records as capital
leases and which are treated as operating leases. With respect to the
leases identified as capital leases, Exhibit 3.7.1.3 contains
depreciation schedules for both financial and income tax reporting
purposes.
III.7.1.4 Each of the leases and agreements described in Exhibit
3.7.1.3 is in full force and effect and constitutes a legal, valid and
binding obligation of Seller and the other respective parties thereto
and is enforceable in accordance with its terms, and there is not
under any of such leases or agreements existing any default of Seller
or of any other parties thereto (or event or condition which, with
notice or lapse of time, or both, would constitute a default).
Neither Seller nor any Shareholder has received any payment from a
lessor in connection with or as inducement for entering into any such
lease except as set forth on Exhibit 3.7.1.3.
III.7.1.5 None of the property of Seller shown on Exhibits 3.7.1.1 or
3.7.1.3 is leased by Seller to any other person or entity.
III.7.1.6 There are no items of machinery and equipment or vehicles
employed or used by Seller in connection with the Business with a book
value in excess of $500.00 which are not described in Exhibits 3.7.1.1
or 3.7.1.3. Seller either owns or leases all assets which are
necessary to conduct the Business as conducted prior to Closing. All
machinery and equipment owned or leased by Seller in connection with
the Business are usable and operable in its business and are in good
operating condition and reasonable state of repair, subject only to
ordinary wear and tear.
III.7.1.7 Except as set forth on Exhibit 3.7.1.7, all inventories used
in the Business that are owned by Seller consist only of items of a
quality and quantity readily usable or readily salable, at prices
equal to the values at which such items are reflected in Seller's
books, in the normal course of its business and are valued so as to
reflect the normal valuation policy of Seller, all in accordance with
generally accepted accounting principles, applied on a basis
consistent with prior years, but not in excess of the lower of cost or
net realizable market value.
III.7.1.8 Except pursuant to this Agreement, Seller is not a party to
any contract or obligation whereby there has been granted to anyone an
absolute or contingent right to purchase, obtain or acquire any rights
in any of the assets, properties or operations which are owned by
Seller and used in connection with the Business.
III.7.2 With respect to the Leased Real Property, Improvements and
other real estate:
III.7.2.1 Seller does not and has not ever owned any real estate
related to the Business.
III.7.2.2 Seller owns fee simple title to the Improvements, subject
only to the underlying leases set forth in Exhibit 3.7.2.3.
III.7.2.3 The parcels of property described in Exhibit 3.7.2.3 as the
Leased Real Property are the only real estate leased by Seller used in
connection with the Business. Exhibit 3.7.2.3 includes a list of all
leases of real estate used in connection with the Business of which
Seller is a lessee, including respective expiration dates and monthly
rentals. Each of the leases described in Exhibit 3.7.2.3 is in full
force and effect and constitutes a legal, valid and binding obligation
of Seller and the other respective parties thereto and is enforceable
in accordance with its terms, and there is not under any of such
leases existing any default of Seller or of any other party thereto
(or event or condition which, with notice or lapse of time, or both,
would constitute a default). Neither Seller nor any Shareholder has
received any payment from a lessor in connection with or as inducement
for entry into any such lease except as set forth on Exhibit 3.7.2.3.
III.7.2.4 None of the property shown on Exhibit 3.7.2.3 is leased by
Seller to any other person or entity.
III.7.2.5 There is no real estate used by Seller in connection with
the Business which is not described in Exhibits 3.7.2.3. Seller
leases all real estate which is necessary to conduct the Business as
conducted prior to Closing.
III.7.2.6 No taxes, assessments, water charges or sewer charges
relating to the Leased Real Property or the Improvements are
delinquent and there are no special taxes, assessments or charges
pending or threatened against the Leased Real Property or the
Improvements.
III.7.2.7 All water, sewer, gas, electric, telephone and drainage
facilities and all other utilities required by law or by the normal
use and operation of the Leased Real Property and the Improvements
currently service the Leased Real Property and the Improvements in
such capacities as are required by law or by the normal use and
operation of the Leased Real Property and the Improvements.
III.7.2.8 The Leased Real Property and the Improvements are usable and
operable in the Business and the Improvements are in good operating
condition and reasonable state of repair, subject only to ordinary
wear and tear.
III.7.2.9 Seller has obtained and maintained in full force and effect
to the date hereof all Permits required for the normal use and
operation of the Leased Real Property and the Improvements as
currently operated. A complete and correct list of all such Permits
is set forth on Exhibit 3.7.2.9. Seller has delivered to Purchaser
complete and accurate photocopies of all Permits. Seller has complied
in all respects with all such Permits and has not received any notice
that any such Permits will not be renewed upon expiration or of any
conditions which will be imposed in order to receive any such renewal.
Except as described on Exhibit 3.7.2.9, all of the Permits will remain
in full force and effect, and will inure to the benefit of Purchaser,
after the consummation of the transactions contemplated by this
Agreement.
III.7.2.10 The Leased Real Property is being operated and maintained
in full compliance with all building code, zoning and other applicable
local, state and federal ordinances, regulations and requirements
which affect the use and operation thereof, with all contracts related
thereto and with all Permits. Seller has not received any notice of
violation of law or municipal ordinance, order or requirement having
jurisdiction over or affecting the Leased Real Property.
III.7.2.11 The zoning classification of the various tracts comprising
the Leased Real Property permits the use of all or any part of the
Leased Real Property for the purposes and in the manner in which the
Leased Real Property is currently used. Seller has not received
notice of any pending or contemplated changes in the status of the
zoning for the Leased Real Property. None of Seller, nor any
predecessor in title to the Leased Real Property, has any agreement
currently in effect with any county or township in which a tract is
located, or any other entity, public or private, which would be
binding and would prevent the use of the Leased Real Property for any
of the uses allowed by the current zoning of the Leased Real Property.
III.7.2.12 The Leased Real Property abuts a public right-of-way and
the rights of ingress and egress to and from the Leased Real Property
and adjoining public ways are not restricted or limited in any manner.
III.7.2.13 There are no pending or threatened or contemplated eminent
domain proceedings affecting the Leased Real Property or any part
thereof.
III.8 Indebtedness of Seller. Attached hereto as Exhibit 3.8 is a
list of all instruments, agreements or arrangements related to the
Assets or the Business pursuant to which Seller has borrowed any
money, incurred any indebtedness, established any line of credit,
pledged any Assets, or made any guarantees secured by Assets, any of
which represents a liability of Seller relating to the Business on the
date hereof. Seller has performed all the obligations required to be
performed by it to the date hereof pursuant to the obligations listed
on Exhibit 3.8 and Seller is not in default under any mortgage,
indenture, note or other obligation for, or relating to, borrowed
money to which Seller is a party, or to which any property or assets
belonging to, or used by, Seller in the operation of the Business is
subject, and there has not occurred any event which, but for the
passage of time or giving of notice, or both, would constitute a
default. Seller represents and warrants that there are no amounts in
dispute with regard to any accounts payable related to the Business.
III.9 [Intentionally left blank]
III.10 Agreement Does Not Violate Other Instruments. Except as
listed in Exhibit 3.10, the execution and delivery of this Agreement
by Seller or Shareholder do not, and the consummation of the
transactions contemplated hereby will not, violate any provision of
the Articles of Incorporation, as amended, or Bylaws, as amended, of
Seller or violate or constitute an occurrence of default under any
provision of, or conflict with, or result in acceleration of any
obligation under, or give rise to a right by any party to terminate
its obligations under, any mortgage, deed of trust, conveyance to
secure debt, note, loan, lien, lease, agreement, instrument, or any
order, judgment, decree or other arrangement to which Seller or any of
Shareholder is a party or is bound or by which the Assets or the
Business are affected. Except as listed or described on Exhibit 3.10
attached hereto, no consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental entity is
required to be obtained or made by or with respect to Seller,
Shareholder, any of the Assets or the Business, in connection with the
execution and delivery by Seller or Shareholder of this Agreement or
any of the agreements, certificates or other documents delivered or to
be delivered on or after the date hereof and at or prior to the
Closing in connection with the transactions contemplated hereby.
III.11 Absence of Changes. Since the date of the Interim Financial
Statements, Seller has not, except as disclosed on Exhibit 3.11
attached hereto:
III.11.1 Transferred, assigned, conveyed or liquidated any of the
Assets or Business or entered into any transaction or incurred any
liability or obligation which affect the Assets or Business, other
than in the ordinary course of its business;
III.11.2 Suffered any change in its business, operations, or
financial condition which may have an adverse effect on the Assets or
the Business, and neither Seller nor Shareholder has become aware of
any event which may result in any such adverse change;
III.11.3 Suffered any destruction, damage or loss, relating to the
Assets or the Business whether or not covered by insurance;
III.11.4 Suffered, permitted or incurred the imposition of any lien,
charge, encumbrance (which as used herein includes, without
limitation, any mortgage, deed of trust, conveyance to secure debt or
security interest) or claim upon any of the Assets or the Business,
except for any current year lien with respect to personal or Leased
Real Property taxes not yet due and payable;
III.11.5 Committed, suffered, permitted or incurred any default in
any liability or obligation which, in the aggregate, have had or will
have an adverse effect upon the Assets or the Business;
III.11.6 Made or agreed to any change in the terms of any contract
or instrument to which it is a party which may have an adverse effect
on the Assets or the Business;
III.11.7 Waived, canceled, sold or otherwise disposed of, for less
than the face amount thereof, any claim or right relating to the
Assets or the Business which it has against others;
III.11.8 Declared, promised or made any distribution from the Assets
or other payment from the Assets to Shareholder (other than reasonable
compensation for services actually rendered) or issued any additional
shares or rights, options or calls with respect to the capital stock
of Seller, or redeemed, purchased or otherwise acquired any of the
capital stock of Seller, or made any change whatsoever in Seller's
capital structure (if such action would affect the ability of Seller
to consummate the transactions contemplated in this Agreement or would
cause the necessity of obtaining the consent of any individual or
entity not disclosed in Exhibit 3.10);
III.11.9 Paid, agreed to pay or incurred any obligation for any
payment for, any contribution or other amount to, or with respect to,
any employee benefit plan, or paid any bonus to, or granted any
increase in the compensation of, Seller's officers, agents or
employees (unless made at times and in amounts consistent with the
historical practices of the Business), or made any increase in the
pension, retirement or other benefits of Seller's directors, officers,
agents, field representatives or other employees of the Business;
III.11.10 Committed, suffered, permitted or incurred any transaction
or event which would increase Seller's tax liability for any prior
taxable year;
III.11.11 Incurred any other liability or obligation or entered into
any transaction other than in the ordinary course of the Business;
III.11.12 Paid, agreed to pay or incurred any obligation for any
payment of any indebtedness except current liabilities incurred in the
ordinary course of business and except for payments as they become due
pursuant to governing agreements disclosed on Exhibit 3.8; or
III.11.13 Delayed or postponed the payment of any liabilities,
whether current or long term, or failed to pay in the ordinary course
of business any liability on a timely basis consistent with prior
practice.
III.12 Litigation. Except as otherwise set forth in Exhibit 3.12
hereto, there is no suit, action, proceeding, claim or investigation
pending or threatened against, or affecting, the Assets or the
Business, and there exists no basis or grounds for any such suit,
action, proceedings, claim or investigation. None of the items
described in Exhibit 3.12, singly or in the aggregate, if pursued
and/or resulting in a judgment would have an adverse effect on the
Assets, the business, goodwill or financial condition of the Business,
or the right of Seller or Shareholder to consummate the transactions
contemplated hereby.
III.13 Licenses and Permits; Compliance With Law. Seller holds all
licenses, certificates, permits, franchises and rights from all
appropriate federal, state or other public authorities necessary for
the conduct of the Business and the use of the Assets. All such
licenses, certificates, permits, franchises and rights are listed on
Exhibit 3.13. Except as noted in Exhibit 3.13, Seller is presently
conducting the Business so as to comply in all respects with all
applicable statutes, ordinances, rules, regulations and orders of any
governmental authority. Further, Seller neither is presently charged
with nor is under governmental investigation with respect to any
actual or alleged violation of any statute, ordinance, rule or
regulation, nor is presently the subject of any pending or threatened
adverse proceeding by any regulatory authority having jurisdiction
over the Assets or the Business. Neither the execution nor delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will result in the termination of any such license,
certificate, permit, franchise or right held by Seller which is to be
assigned pursuant to this Agreement, and all such assigned licenses,
certificates, permits, franchises and rights will inure to the benefit
of Purchaser after the transactions contemplated by this Agreement.
The representations and warranties shall not expand or limit the
representations and warranties made in Section 3.1 hereof.
III.14 Contracts, Etc.
III.14.1 Exhibit 3.14 hereto consists of a true and complete list of
all contracts, agreements and other instruments relating to the
Business that involve liabilities or obligations in excess of $10,000
or cannot be terminated without interest or penalty upon 30 days prior
notice, except for those contracts, insurance policies and Benefit
Plans listed in Exhibits 3.7.1.3, 3.8, 3.9, 3.13, 3.15.1, 3.15.2,
3.17, and 3.20, respectively. Contemporaneously with the delivery of
the Exhibits to this Agreement, Seller and Shareholder have delivered
a true and complete copy of each such contract, agreement or
instrument, certified as such by a duly authorized officer of Seller
and Shareholder, including those listed in Exhibits 3.7.1.3, 3.8, 3.9,
3.13, 3.14, 3.15.1, 3.15.2, 3.17, and 3.20.
III.14.2 All of the contracts, agreements, policies of insurance or
instruments described in Exhibits 3.7.1.3, 3.8, 3.9, 3.13, 3.14,
3.15.1, 3.15.2, 3.17, and 3.20 hereto are valid and binding upon
Seller and the other parties thereto and are in full force and effect
and enforceable in accordance with their terms, and none of Seller or
any other party to any such contract, commitment or arrangement has
breached any provision of, or is in default under, the terms thereof,
and there are no existing facts or circumstances which would prevent
the work in process of Seller or their contracts and agreements from
maturing in due course into fully collectible accounts receivable.
Except for items specifically described in Exhibit 3.14, neither
Seller nor Shareholder has received any payment from any contracting
party in connection with or as an inducement for entering into any
contract, agreement, policy or instrument except for payment for
actual services rendered or to be rendered by Seller consistent with
amounts historically charged for such services.
III.15 Intellectual Property; Computer Software.
III.15.1 Intellectual Property.
III.15.1.1 Exhibit 3.15.1 hereto sets forth a complete and correct
list and summary description of all trademarks, tradenames, service
marks, service names, brand names, copyrights and patents,
registrations thereof and applications therefor, applicable to or used
in the Business, together with a complete list of all licenses granted
by or to Seller with respect to any of the above. Except as disclosed
on Exhibit 3.15.1, all such trademarks, tradenames, service marks,
service names, brand names, copyrights and patents are owned by
Seller, free and clear of all liens, claims and encumbrances of any
nature whatsoever. Neither Seller nor Shareholder is currently in
receipt of any notice of any violation of, and Seller is not
violating, the rights of others in any trademark, trade name, service
▇▇▇▇, copyright, patent, trade secret, know-how or other intangible
asset.
III.15.1.2 Attached hereto as Exhibit 3.15.1 are copies of the
Certificates of Registration issued by the United States Patent and
Trademark Office for the trademarks listed on Exhibit 3.15.1. The
trademark registrations specified in Section 3.15.1.3 below for the
trademarks listed on Exhibit 3.15.1 are owned exclusively by Seller,
free and clear of all liens, claims, security interests and
encumbrances of any nature whatsoever and Seller has the right to use
the trade dress currently used in connection therewith. Neither
Seller Shareholder is currently in receipt of any notice of any
violation of, and Seller is not infringing on, the rights of any other
party in any trademark, trade name, or service ▇▇▇▇ used in connection
with the Business.
III.15.1.3 Seller is the owner of Federal Registrations in the U.S.
Patent and Trademark Office as set forth on Exhibit 3.15.1 for use in
connection with the Business, and such registrations are in full force
and effect.
III.15.1.4 Seller has the right to use and transfer the trade dress
currently used in connection with the packaging and promotion of its
products under these marks;
III.15.1.5 Seller has not granted any license, permits on or other
authorization to any other person or entity to use said marks or
tradenames, or has made any conveyance of any such rights.
III.15.1.6 There have been, and are, no past or present disputes,
demands, or litigation challenging or casting doubt on the ownership
by Seller or any predecessor of any of the said marks or challenging
the validity of any of the marks or the registration thereof.
III.15.1.7 There are no prior settlements, agreements, or
administrative or judicial decisions affecting ownership or validity
of the assigned marks or limiting the right of Seller or any
predecessor owner to use or register the marks or to grant this
assignment.
III.15.1.8 There are no other agreements, contracts or licenses
granting, limiting, encumbering or otherwise directly or indirectly
affecting ownership or use or right to use or assign the marks by
Seller.
III.15.1.9 There are no current infringements of the said marks by any
third party.
3.15.1.10 The foregoing shall in no way be construed to provide that
the rights of the Purchaser to acquire any patent, trademark,
tradename, service ▇▇▇▇, service name, brand name, copyright or patent
shall include any rights to use the name "U.S. HealthWorks" or any
derivative thereof or any trademarks associated therewith.
III.15.2 Except as otherwise disclosed on Exhibit 3.15.2, Seller has
sole, full and clear title to that computer software described as
"Owned Software" on Exhibit 3.15.2 hereto (the "Owned Software"), free
of all claims, including claims or rights of employees, agents,
consultants or other parties involved in the development or creation
of such computer software. Except as set forth on Exhibit 3.15.2
hereto, Seller has the right and license to use that software
described as "Licensed Software" on Exhibit 3.15.2 free and clear of
any limitations or encumbrances except as may be set forth in any
license agreements listed in Exhibit 3.15.2. Exhibit 3.15.2 sets
forth a list of all license fees, rents, royalties or other charges
that Seller is required or obligated to pay with respect to Licensed
Software. Seller is in full compliance with all provisions of any
license, lease or other similar agreement pursuant to which it has
rights to use the Licensed Software. Except as disclosed on Exhibit
3.15.2, none of the Licensed Software has been incorporated into or
made a part of any Owned Software or any other Licensed Software and
none of the Owned Software is dependent on any Licensed Software in
order to freely operate in the manner in which it is intended. The
Owned Software and Licensed Software constitute all software used in
the Business (the "Seller's Software"). Seller is not infringing any
intellectual property rights of any other person or entity with
respect to Seller's Software, and no other person or entity is
infringing any intellectual property rights of Seller with respect to
Seller's Software which Seller leases or licenses to it.
III.16 Labor Matters. Exhibit 3.16 sets forth a list of all employees
and independent contractors of Seller who perform services related to
the Business, their date of hire, current salaries or rates, bonuses
due and Seller's salary increase guidelines. Except as set forth on
Exhibit 3.16, within the last three (3) years Seller has not been the
subject of any union activity or labor dispute, nor has there been any
strike of any kind called or threatened to be called against it; and,
except as set forth on Exhibit 3.16, neither Seller nor Shareholder
has violated any federal, state, or other governmental statutes,
regulations, or ordinances relating to employment and labor matters
with regard to the Business, including, without limitation, the
provisions of Title VII of the Civil Rights Act of 1964 (race, color,
religion, sex, and national origin discrimination), 42 U.S.C. section
1981 (discrimination), 42 U.S.C. sections 621-634 (the Age
Discrimination in Employment Act), 29 U.S.C. section 206 (equal pay),
Executive Order 11246 (race, color, religion, sex, and national origin
discrimination), Executive Order 11141 (age discrimination), section
503 of the Rehabilitation Act of 1973 (handicap discrimination), 42
U.S.C. sections 12101-12213 (Americans with Disabilities Act), 29
U.S.C. sections 2001-2654 (Family and Medical Leave Act), 29 U.S.C.
sections 651-678 (occupational safety and health) and requirements
relating to the documentation of the nationality of employees. There
has not been, and there will not be, as the result of any action by
Seller or Shareholder, any adverse change in relations with employees
and independent contractors of Seller as a result of the transactions
contemplated by this Agreement. The staffing and employment levels of
Seller are now, and will be at Closing, sufficient to run the Business
at levels of production, sales, marketing and administration
consistent with the levels of production, sales, marketing and
administration for the prior fiscal year.
III.17 Benefit Plans.
III.17.1 With regard to current or former employees of the Business,
Exhibit 3.17 lists every pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay,
vacation, bonus or other incentive plan, any other written or
unwritten employee program, arrangement, agreement or understanding,
(whether arrived at through collective bargaining or otherwise), any
medical, vision, dental or other health plan, any life insurance plan
or any other employee benefit plan or fringe benefit plan, including,
without limitation, any "employee benefit plan," as that term is
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974 as amended ("ERISA") and any multiemployer plan within the
meaning of Section 3(37) of ERISA, currently or previously adopted,
maintained, sponsored in whole or in part or contributed to by Seller
or any current or former member of a commonly controlled group of
trades or businesses (as defined in Section 4001(b)(1) of ERISA)
including Seller for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors or other beneficiaries of
Seller and under which employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries of Seller
are eligible to participate or under or in connection with which
Seller has any contingent or noncontingent liability of any kind
whether or not probable of assertion (collectively, the "Benefit
Plans"). Any of the Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, or an
"employee welfare benefit plan" as that term is defined in Section
3(1) of ERISA, is referred to herein as an "ERISA Plan." No Benefit
Plan is or has been a multiemployer plan within the meaning of Section
3(37) of ERISA.
III.17.2 Exhibit 3.17 also lists all trust agreements or other
funding arrangements, including insurance contracts, and all
amendments thereto applicable to the Benefit Plans. Contemporaneously
with the delivery of the Exhibits to this Agreement, Seller and
Shareholder have delivered a true and complete copy of each such
Benefit Plan, agreements and/or summary descriptions described in
Sections 3.17.1 or 3.17.2 hereof.
III.17.3 All the Benefit Plans and the related trusts subject to
ERISA comply with and have been administered in compliance with the
provisions of ERISA, all provisions of the Code relating to
qualification and tax exemption under Code Sections 401(a) and 501(a)
or otherwise applicable to secure intended tax consequences, all
applicable state or federal securities laws and all other applicable
laws, rules and regulations and collective bargaining agreements, and
neither of Seller nor any of Shareholder has received any notice from
any governmental agency or instrumentality questioning or challenging
such compliance.
III.17.4 There has been no (a) "reportable event" (as defined in
Section 4043 of ERISA), or event described in Section 4062(f) or
Section 4063(a) of ERISA or (b) termination or partial termination,
withdrawal or partial withdrawal with respect to any of the ERISA
Plans which Seller (or any member of a controlled group of trades or
businesses as defined in Section 4001(b) which has, since January 1,
1975, included Seller) maintains or contributes to or has maintained
or contributed to or was required to maintain or contribute to for the
benefit of employees of Seller or any subsidiaries now or formerly in
existence. With respect to any termination or withdrawal from any such
ERISA Plan, Seller has no direct or indirect liability to said ERISA
Plan or any beneficiary thereof.
III.17.5 For any ERISA Plan which is an employee pension benefit
plan as defined in ERISA Section 3(2), the fair market value of such
Benefit Plan's assets equals or exceeds the present value of all
benefits (whether vested or not) accrued to date by all present or
former participants in such Benefit Plan. For this purpose the
assumptions prescribed by the Pension Benefit Guaranty Corporation for
valuing plan assets or liabilities upon plan termination shall be
applied and the term "benefits" shall include the value of any early
retirement or ancillary benefits (including shutdown benefits)
provided under any Benefit Plan.
III.17.6 As of the date of the Interim Financial Statements, Seller
had no current or future liability under any Benefit Plan that was not
reflected in the Interim Financial Statements.
III.17.7 All Benefit Plans subject to section 4980B of the Code, as
amended from time to time, or Part 6 of Title I of ERISA or both have
been maintained in compliance with the requirements of such laws and
any regulations (proposed or otherwise) issued thereunder.
III.17.8 The Assets and the Business will not be subject to any
liability for contributions under the Benefit Plans after the Closing.
III.18 Customers and Brokers. Exhibit 3.18 attached hereto consists
of a true and correct list of all brokers utilized by, and all of the
customers served by, the Business within the preceding twelve (12)
months setting forth as to each customer and broker its name, address,
telephone number and principal person of contact, and total payments
by dollar amounts by each such customer and broker within the
preceding twelve months. Neither Seller nor Shareholder has received
any notice, or has any knowledge that any such customer or broker of
the Business has taken or contemplates taking any steps which could
disrupt the business relationship of the Business with such customer
or broker or could result in the diminution in the value of the
business of the Business with such customer or broker or could result
in the diminution in the value of the Business.
III.19 Environmental Matters. Except as set forth in Exhibit 3.19,
no real property now or previously owned or used by Seller in the
Business or now or previously leased by Seller for the Business or
relating to the Assets or the Business (the "Property") has been used
by Seller or any affiliate of Seller or, to the knowledge of Seller,
any other party, for the handling, treatment, storage or disposal into
the environment of any Hazardous Substance (as hereinafter defined).
Except as set forth in Exhibit 3.19, no release, discharge, spillage
or disposal of any Hazardous Substance and no soil, water or air
contamination by any Hazardous Substance has occurred or is occurring
in, from or on the Property resulting from any action or inaction of
Seller or any affiliate of Seller or, to the knowledge of Seller, any
other party. Except as set forth in Exhibit 3.19, Seller has complied
with all reporting requirements under any applicable federal, state or
local environmental laws and permits as they relate to the Assets or
the Business, and there are no existing violations by Seller of any
such environmental laws or permits. Except as set forth in Exhibit
3.19, there are no claims, actions, suits, proceedings or
investigations related to the presence, release, production, handling,
discharge, spillage, transportation or disposal of any Hazardous
Substance or contamination of soil, water or air by any Hazardous
Substance pending or threatened with respect to the Property or
otherwise against Seller or any affiliate of Seller in any court or
before any state, federal or other governmental agency or private
arbitration tribunal and there is no basis for any such claim, action,
suit, proceeding or investigation. There are no underground storage
tanks on the Property for which Seller or any affiliate of Seller may
be held to be or have been the owner or operator. No building or
other improvement included in the Property for which Seller or any
affiliate of Seller may be held legally responsible contains any
asbestos or any asbestos-containing materials, and such buildings and
improvements are free from radon contamination. For the purposes of
this Agreement, "Hazardous Substance" shall mean any hazardous or
toxic substance or waste as those terms are defined by any applicable
federal, state or local law, ordinance, regulation, policy, judgment,
decision, order or decree regulation including, without limitations,
the Comprehensive Environmental Recovery Compensation and Liability
Act, 42 U.S.C. 9601 et seq. ("CERCLA"), the Hazardous Materials
Transportation Act, 49 U.S.C. section 1801 et seq. and the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq. ("RCRA"), and
petroleum, petroleum products and oil.
III.20 Insurance. Set forth in Exhibit 3.20 is a complete list of
all insurance policies which Seller currently maintains or that Seller
has maintained and for which a claim can still be made thereunder with
respect to the Business. Except as set forth in Exhibit 3.20, such
policies are in full force and effect and no event has occurred which
would give any insurance carrier a right to terminate any such policy.
Such policies, with respect to their amounts and types of coverage,
are adequate to insure fully against risks to which the Assets and the
Business are exposed, up to usual and customary limits of such
coverage.
III.21 Related Party Relationships. Except as set forth in Exhibit
3.21, neither Shareholder nor any officer or director of Seller
possesses, directly or indirectly, any beneficial interest in, or is a
director, officer or employee of, any corporation, partnership, firm,
association or business organization which is a client, supplier,
customer, lessor, lessee, lender, creditor, borrower, debtor or
contracting party with or of Seller with respect to the Business
(except as a stockholder holding less than a one percent (1%) interest
in a corporation whose shares are traded on a national or regional
securities exchange or in the over-the-counter market), other than
that relationship that has existed between Shareholder, Seller
(including each wholly owned subsidiary of Seller) and any officer or
director thereof with all or any one of the medical practices managed
by it.
III.22 Antitrust Matters. Seller has conducted and is conducting
the Business in compliance with all federal and state antitrust and
trade regulation laws, statutes, rules and regulations, including
without limitation, the ▇▇▇▇▇▇▇ Act, the ▇▇▇▇▇▇▇ Act, the ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Act, the Federal Trade Commission Act, state laws patterned
after any of the above, all laws forbidding price-fixing, collusion,
or bid-rigging, and rules above. With respect to any of the
foregoing, Seller is not presently directly or indirectly involved
with, charged with, or under any governmental investigation with
respect to, and there is no basis or grounds for, any charge, claim,
investigation, suit, action, proceeding or any actual or alleged
violation of any such law, statute, rule or regulation.
III.23 Suppliers. Attached hereto as Exhibit 3.23 is a complete and
correct list of all persons, partnerships, corporations, or entities
from which Seller has purchased any supplies relating to the Business
within the last twelve (12) months with a book value in excess of
$1,000.00, along with their respective addresses and telephone
numbers. Seller has not received any notices indicating, and neither
Seller nor Shareholder has reason to believe, that any supplier of the
Business has taken or contemplates any steps which could disrupt the
business relationship of Seller with said supplier or could result in
the diminution in the value of the Business as a going concern;
III.24 Exhibits. All Exhibits attached hereto are true, correct and
complete as of the date of this Agreement, and will be true, correct
and complete as of the Closing, except to the extent that such
Exhibits may be untrue, incorrect or incomplete due to changes
occurring due to the operation of the Business in the ordinary course.
Matters disclosed on each Exhibit shall be deemed disclosed only for
purposes of the matters to be disclosed in such Exhibit and shall not
be deemed to be disclosed for any other purpose unless expressly
provided therein.
III.25 Disclosure and Absence of Undisclosed Liabilities. This
Agreement and the Exhibits hereto disclose all facts material to the
Assets and the Business. No representation or statement contained
herein or in any certificate, schedule, list, exhibit or other
instrument furnished to Purchaser pursuant to the provisions hereof
contains or will contain any untrue statement of any material fact or
omits or will omit to state a material fact necessary in order to make
the statements contained herein or therein not misleading.
IV0 SECURITIES LAWS.
IV.1 No Registration Statement Required. Seller and Shareholder
represent that they understand that the Promissory Note to be issued
and delivered pursuant to the provisions of this Agreement will not be
registered under the 1933 Act, or under Georgia or any other
applicable "Blue-Sky" laws, in reliance upon the exemptions contained
in the 1933 Act and the General Rules and Regulations under the 1933
Act promulgated by the SEC.
IV.2 Investment Letter of Seller and Shareholder. Seller and
Shareholder each represent, warrant and covenant to and with Purchaser
that the Promissory Note to be issued and delivered pursuant to the
provisions of this Agreement will be, when issued and delivered,
acquired by Seller for investment for its own account and not with a
view to the subsequent resale or other distribution thereof, except
within the limitations prescribed under the Rules and Regulations
under the 1933 Act, or in some other manner which will not violate the
registration requirements of the 1933 Act or any applicable "Blue-Sky"
laws, and Seller agrees to execute and deliver to Purchaser on the
Closing Date, a letter substantially in the form of Exhibit 4.2(a)
attached hereto, dated as of such Closing Date, to such effect;
provided, however, in the event Seller desires to transfer the
Promissory Note to an affiliate, in liquidation or otherwise, it shall
obtain a letter, substantially in the form of Exhibit 4.2(b) attached
hereto, dated as of the proposed effective date of such transfer, from
each such transferee as a condition to such transfer.
Notwithstanding, the Promissory Note may be transferred to any company
directly or indirectly wholly owned by Seller or to any company that
directly or indirectly wholly owns Seller (an "affiliate"), provided
that such affiliate executes and delivers to Purchaser a letter
substantially in the form of Exhibit 4.2(b).
IV.3 Conditions Precedent to Transfer of the Promissory Note.
Seller and Shareholder understand, consent, and agree that transfer of
the Promissory Note received by Seller under this Agreement, including
the proposed transfer in liquidation of Seller described in Section
4.2 but not including a proposed transfer to an affiliate described in
Section 4.2,, will be permitted or allowed only when:
IV.3.1 such request for transfer is accompanied by an opinion of
counsel satisfactory to Purchaser, which satisfaction will not be
unreasonably denied, to the effect that neither the sale nor the
proposed transfer results in a violation of the 1933 Act or the Rules
and Regulations thereunder or applicable "Blue-Sky" laws, or
IV.3.2 such request for transfer is accompanied by a "no-action"
letter from the SEC and the applicable state securities regulatory
agency with respect to the proposed transfer, or
IV.3.3 a Registration Statement under the 1933 Act and applicable
Blue-Sky laws is then in effect with respect to the Promissory Note is
subject to the proposed transfer.
IV.4 Legend on the Promissory Note. The Promissory Note issued and
delivered to Seller under this Agreement shall contain the following
legend:
"THE SECURITIES ACT OF 1933 AND STATE SECURITIES LAWS
This Promissory Note has not been registered under the Securities Act
of 1933, as amended, or under the securities laws of Georgia or any
other state and cannot be sold or transferred unless (i) a
Registration Statement under the Securities Act of 1933, as amended,
and any applicable state securities laws is then in effect with
respect to the securities represented hereby; or (ii) a written
opinion from legal counsel reasonably acceptable to the issuer is
obtained to the effect that an exemption from registration under the
Securities Act of 1933, as amended, and any applicable state
securities laws is available with respect to the proposed sale or
transfer and that no such registration is required; or (iii) a no
action letter or its then equivalent with respect to such sale or
transfer has been issued by the Staff of the Securities and Exchange
Commission and any applicable state securities governmental body; or
(iv) the transfer takes place between the Holder and (a) any company
wholly owned by Holder or (b) any company which wholly owns Holder in
compliance with the Agreement (defined below)."
V0 REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to, and for the benefit of, Seller
and Shareholder as follows:
V.1 Organization and Standing. Purchaser is a duly organized and
validly existing corporation in good standing under the laws of the
State of Nevada, and has the full power and authority (corporate and
otherwise) to carry on its business in the places and as it is now
being conducted and to own and lease the properties and assets which
it now owns or leases.
V.2 Corporate Power and Authority. Purchaser has the capacity and
authority to execute and deliver this Agreement, to perform hereunder,
and to consummate the transactions contemplated hereby without the
necessity of any act or consent of any other person whomsoever. The
execution, delivery and performance by Purchaser of this Agreement and
each and every agreement, document and instrument provided for herein
have been duly authorized and approved by the Board of Directors (or
executive committees thereof) of Purchaser. This Agreement, and each
and every other agreement, document and instrument to be executed,
delivered and performed by Purchaser in connection herewith,
constitute or will, when executed and delivered, constitute the valid
and legally binding obligations of Purchaser, enforceable against it
in accordance with their respective terms, except as enforceability
may be limited by applicable equitable principles, or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws from time to
time in effect affecting the enforcement of creditors' rights
generally.
V.3 Agreement Does Not Violate Other Instruments. The execution and
delivery of this Agreement by Purchaser do not, and the consummation
of the transactions contemplated hereby will not, violate any
provisions of the respective Articles of Incorporation, as amended, or
respective Bylaws, as amended, of Purchaser, or violate or constitute
an occurrence of default under any provision of, or conflict with,
result in acceleration of any obligation under, or give rise to a
right by any party to terminate its obligations under, any mortgage,
deed of trust, conveyance to secure debt, note, loan, lien, lease,
agreement, instrument, or any order, judgment, decree or other
arrangement to which Purchaser is a party or is bound or by which
their assets are affected.
V.4 Consents and Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
third party, including, without limitation, any governmental or
regulatory authority is required to be obtained or made by or with
respect to Purchaser, in connection with the execution and delivery by
Purchaser of this Agreement or any of the agreements, certificates or
other documents delivered or to be delivered on or after the date
hereof and at or prior to the Closing in connection with the
transactions contemplated hereby.
V.5 Litigation. There is no suit, action, proceeding, claim or
investigation pending or threatened against or affecting the right of
Purchaser to consummate the transactions contemplated hereby, and
there exists no basis or grounds, with respect to actions by
Purchaser, for any such suit, action, proceeding, claim or
investigation.
V.6 SEC Reports. Purchaser has made all filings, as amended,
required by it to be made with the SEC (the "SEC Documents"). As of
their respective dates, the SEC Documents, as amended, complied in all
material respects with the requirements of the Securities Act of 1933
and Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC thereunder applicable to such SEC Documents,
and none of the SEC Documents, as amended, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Seller and Shareholder acknowledge that Purchaser has
delivered to them a copy of Amendment 5 to Form 10-SB for the period
ending December 31, 1999 and Form 10-QSB for the period ending March
31, 2000.
V.7 No Adverse Change. Since March 31, 2000, Purchaser has not
suffered any material adverse change in its business, operations or
financial conditions, and Purchaser has not become aware of any event
or state of facts which may result in any such material adverse
change.
VI0 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER TO CLOSE.
All of the obligations of Purchaser to consummate the transactions
contemplated by this Agreement shall be contingent upon and subject to
the satisfaction, on or before the Closing Date, of each and every one
of the following conditions, all or any of which may be waived, in
whole or in part, by Purchaser for purposes of consummating such
transactions, but without prejudice to any other right or remedy which
Purchaser may have hereunder as a result of any misrepresentations by,
or breach of any covenant or warranty of, Seller or Shareholder
contained in this Agreement or any other certificate or instrument
furnished by Seller or Shareholder hereunder.
VI.1 Representations True at Closing. The representations and
warranties made by Seller and Shareholder to Purchaser in this
Agreement, the Exhibits hereto or any document or instrument delivered
to Purchaser or its representatives hereunder shall be true and
correct on the Closing Date with the same force and effect as though
such representations and warranties had been made on and as of such
time (except for changes contemplated by this Agreement).
VI.2 Covenants of Seller and Shareholder. Seller and Shareholder
shall have duly performed all of the covenants, acts and undertakings
to be performed by them on or prior to the Closing Date and duly
authorized officers of Seller and Shareholder shall deliver to
Purchaser a certificate dated as of the Closing Date certifying to the
fulfillment of this condition and the condition set forth in Section
6.1 hereof.
VI.3 No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any court, governmental agency or legislative body to
enjoin, restrain, prohibit, or obtain substantial damages in respect
of, or which is related to, or arises out of, this Agreement or the
consummation of the transactions contemplated hereby, or which is
related to or arises out of the Assets or the Business, if such
action, proceeding, investigation, regulation or legislation, in the
reasonable judgment of Purchaser would make it inadvisable to
consummate such transactions.
VI.4 Consents, Approvals and Waivers. Purchaser shall have received
a true and correct copy of each and every consent, approval and waiver
(a) described in Section 2.8 hereof, or (b) otherwise required for the
execution of this Agreement and the consummation of the transactions
contemplated hereby.
VI.5 Approvals. The execution and the delivery of this Agreement and
the consummation of the transactions contemplated hereby shall have
been approved by all regulatory authorities whose approvals are
required by law.
VI.6 Absence of Changes. Since the date of the Interim Financial
Statements, (a) Seller shall not have suffered any change in its
financial condition, business, property or assets which adversely
affects the Assets or the conduct of the Business, and (b) neither
Seller nor Shareholder shall have permitted or suffered to occur any
transaction or event described in Section 3.11 hereof which is not
described in Exhibit 3.11 hereto.
VI.7 Covenants Not to Compete. Each of Seller and Shareholder shall
have entered into a Covenant Not to Compete substantially in the forms
of Exhibit 2.11.
VI.8 Results of Certain Investigations. Purchaser shall have
completed, and been satisfied in its reasonable discretion with the
results of, (i) legal and business investigations with respect to the
operations of the Business and (ii) interviews of senior management
personnel of the Business.
VI.9 Financing. The Bridge Loan has been funded pursuant to that
certain Loan and Investment Agreement between Purchaser and Diligenti,
Inc.
VII. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER AND
SHAREHOLDER TO CLOSE.
All of the obligations of Seller and Shareholder to consummate the
transactions contemplated by this Agreement shall be contingent upon
and subject to the satisfaction, on or before the Closing Date, of
each and every one of the following conditions, all or any of which
may be waived, in whole or in part, by Seller and Shareholder for
purposes of consummating such transactions but without prejudice to
any other right or remedy which they may have hereunder as a result of
any misrepresentation by, or breach of any covenant or warranty of
Purchaser contained in this Agreement, or any certificate or
instrument furnished by it hereunder.
VII.1 Representations True at Closing. The representations and
warranties made by Purchaser in this Agreement to Seller and
Shareholder or any document or instrument delivered to Seller,
Shareholder or their representatives hereunder shall be true and
correct on the Closing Date with the same force and effect as though
such representations and warranties had been made on and as of such
date, except for changes contemplated by this Agreement.
VII.2 Covenants of Purchaser. Purchaser shall have duly performed all
of the covenants, acts and undertakings to be performed by them on or
prior to the Closing Date, and a duly authorized officer of Purchaser
shall deliver a certificate dated as of the Closing Date certifying to
the fulfillment of this condition and the condition set forth under
Section 7.1 above.
VII.3 No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any court, governmental agency or legislative body to
enjoin, restrain, prohibit, or obtain substantial damages in respect
of, or which is related to, or arises out of, this Agreement or the
consummation of the transactions contemplated hereby, or which is
related to or arises out of the business of Purchaser, if such action,
proceedings, investigation, regulation or legislation, in the
reasonable judgment of Seller or Shareholder would make it inadvisable
to consummate same.
VII.4 Approvals. The execution and the delivery of this Agreement and
the consummation of the transactions contemplated hereby shall have
been approved by all regulatory authorities and all courts whose
approvals are required by law.
VIII. CLOSING.
VIII.1 Time and Place of Closing and Effective Date.
VIII.1.1 The Closing shall be held at the offices of ▇▇▇▇▇, Day, ▇▇▇▇▇▇
& ▇▇▇▇▇, 3500 SunTrust Plaza, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, commencing at 10:00 am, Eastern Time, on September
22, 2000, unless another place or date is agreed to in writing by
Seller, Shareholder and Purchaser. The Closing shall be consummated
by mail or facsimile with the offices of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ as
clearinghouse for signature pages of documents, the delivery of which
are required by this Article VII. Upon receipt of such signature
pages and other documents required by Article VII, ▇▇▇▇▇, Day, ▇▇▇▇▇▇
& ▇▇▇▇▇ will instruct Purchasers to effect delivery of the
consideration as set forth in this Agreement. Within a reasonable
time after the Closing, ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ will forward
executed duplicate originals of the documents described in this
Article VII to each of the parties.
VIII.2 Transactions at Closing. At the Closing, each of the following
transactions shall occur:
VIII.2.1 Seller's and Shareholder's Performance. At the Closing,
Seller and Shareholder shall deliver to Purchaser, the following:
(a0 such good and sufficient bills of sale, assignments, deeds and
other good and sufficient instruments of sale, conveyance, transfer
and assignment as shall be required or as may be appropriate in order
to effectively invest in Purchaser good and marketable title to the
Assets free and clear of all liens, security interests and
encumbrances of whatever nature;
(b) the certificates of the duly authorized officers of Seller and
Shareholder described in Section 6.2;
(c) copies of all consents, approvals, acknowledgments and waivers
described in Sections 2.8 and Section 6.4, which have been obtained
prior to Closing;
(d) satisfactory evidences of the approvals described in Section 6.5;
(e) certificates of compliance or certificates of good standing of
Seller, as of the most recent practicable date, from the appropriate
governmental authority of the jurisdiction of its incorporation and
any other jurisdiction which is set forth in Exhibit 3.1 hereto;
(f) certified copies of resolutions of the Board of Directors of
Seller approving the transactions set forth in this Agreement;
(g) certified copies of resolutions of Shareholder of Seller approving
the transactions set forth in this Agreement;
(h) certificate of incumbency for the officers of Seller who are
executing this Agreement and the other documents contemplated
hereunder;
(i) Accounts Receivable Billing and Collection Agreement executed by
Seller and Shareholder, substantially in the form of Exhibit 2.10.
(j) Covenants Not to Compete executed by Seller and Shareholder,
substantially in the forms of Exhibit 2.11;
(k) investment letter executed by Seller, substantially in the form of
Exhibit 4.2(a);
(l) copies of all books of account (excluding minute books and stock
books of Seller), contracts, files and other data and documents
pertaining to the Assets and Business (which may be delivered at the
offices of the Business);
(m) non-interference by Seller and Shareholder with Purchaser's
physical possession of the Assets where located; and
(n) such other evidence of the performance of all covenants and
satisfaction of all conditions required of Seller and Shareholder by
this Agreement, at or prior to the Closing, as Purchaser, Purchaser or
its counsel may reasonably require.
VIII.2.2 Performance by Purchaser. At the Closing, Purchaser shall
deliver to Seller and Shareholder the following:
(a) cash, by cashier's check or wire transfer, in the amount to be
paid at Closing, as set forth in Section 2.2;
(b) Promissory Note executed by Purchaser, substantially in the form
of Exhibit 2.2;
(c) the certificate of the authorized officers described in Section
7.2;
(d) satisfactory evidence of the approvals described in Section 7.5;
(e) certificate of incumbency of the officers of Purchaser who are
executing this Agreement and the other documents contemplated
hereunder;
(f) executed Accounts Receivable Billing and Collection Agreement,
substantially in the form of Exhibit 2.10;
(g) executed Covenants Not to Compete, substantially in the forms of
Exhibit 2.11;
(h) certified copy of resolutions of the Boards of Directors (or
executive committees thereof) of Purchaser approving the transactions
set forth in this Agreement; and
(i) such other evidence of the performance of all the covenants and
satisfaction of all of the conditions required of Purchaser by this
Agreement at or before the Closing as Seller, Shareholder or their
counsel may reasonably require.
IX. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION.
IX.1 Survival of Representations and Warranties of Seller and
Shareholder. All representations, warranties, agreements, covenants
and obligations made or undertaken by Seller and Shareholder in this
Agreement or in any document or instrument executed and delivered
pursuant hereto are material, have been relied upon by Purchaser and
shall survive the Closing hereunder for the periods set forth in
Section 9.5 and shall not merge in the performance of any obligation
by any party hereto. Seller and Shareholder, jointly and severally,
agree to and shall indemnify and hold harmless Purchaser or any
assignee of Purchaser at all times after the date of this Agreement
from and against and in respect of, any liability, claim, deficiency,
loss, damage, or injury and all reasonable costs and expenses
(including reasonable counsel fees and costs of any suit related
thereto) suffered or incurred by Purchaser arising from (i) any
misrepresentation, or breach of any covenant or warranty of Seller or
Shareholder contained in this Agreement or any exhibit, certificate or
other instrument furnished or to be furnished by Seller or Shareholder
hereunder, or any claim by a third party (regardless of whether the
claimant is ultimately successful) which if true would be such a
misrepresentation or breach, (ii) any nonfulfillment of any agreement
on the part of either of Seller or Shareholder under this Agreement or
from any misrepresentation in or omission from, any certificate or
other instrument furnished or to be furnished to Purchaser hereunder,
(iii) any suit, action, proceeding, claim or investigation pending or
threatened against or affecting the Assets or the Business from any
matter or state of facts existing prior to Closing, regardless of
whether it is disclosed on Exhibit 3.12, (iv) any claim or debt,
obligation or liability which is not specifically assumed by Purchaser
pursuant to this Agreement, (v) any matter regarding Hazardous
Substances on any Leased Real Property or regarding any applicable
federal, state or local environmental laws or permits pertaining to
the Leased Real Property, regardless of whether it has been disclosed
in the Exhibits hereto, (vi) any claim or right, or any alleged claim
or right, of third persons by virtue of application of bulk sales laws
or otherwise which may be asserted against any of the Assets, (vii)
any Third Party Claim, or (viii) any claim against, or liability of,
the Business that is of a nature that, if known at Closing, would have
been required to have been disclosed pursuant to this Agreement. In
addition to any other rights or remedies Purchaser may have, Purchaser
shall be entitled to withhold from the payments due under the
Promissory Note the amount of any and all liabilities, losses,
damages, injuries, costs, expenses and counsel fees which it or
Purchaser has sustained or which it reasonably believes it or
Purchaser may sustain, and to offset from such withheld amount any
amount ultimately determined to be due and owing to Purchaser by way
of indemnification pursuant to this Section, and Purchaser shall not
be liable for principal or interest under the Promissory Note on any
amounts so set off. If the withholding of payments then due under the
Promissory Note has been based on a reasonable belief of a future
claim due to a specific allegation, Purchaser shall pay any such
amount withheld which Purchaser has not offset pursuant to the
preceding sentence, within one year of the giving of the written
notification of such claim to Shareholder, unless a lawsuit,
arbitration or administrative proceeding based on such claim shall
have been commenced within said period and is then pending. If such a
lawsuit, arbitration or administrative proceeding has commenced within
said one year period, Purchaser shall pay within thirty days after a
final determination under such lawsuit, arbitration or administrative
proceeding, the difference, if any, between said withheld amount and
the amount of any liability, loss, damage or injury actually
sustained, if the withheld amount is larger. Any examination,
inspection by audit of the properties, financial condition or other
matters of Seller and the Business which is conducted pursuant to this
Agreement shall in no way limit, affect or impair the ability of
Purchaser to rely upon the representations, warranties, covenants and
obligations of Seller and Shareholder set forth herein.
IX.2 Survival of Representations and Warranties of Purchaser. All
representations, warranties, agreements, covenants and obligations
made or undertaken by Purchaser in this Agreement or in any document
or instrument executed and delivered pursuant hereto are material,
have been relied upon by Seller and Shareholder and shall survive the
Closing hereunder for a period of thirty-six (36) months and shall not
merge in the performance of any obligation by any party hereto.
Purchaser agrees to and shall indemnify and hold harmless Seller and
Shareholder at all times after the date of this Agreement from and
against and in respect of, any liability, claim, deficiency, loss,
damage or injury and all reasonable costs and expenses (including
reasonable counsel fees and costs of any suit related thereto)
suffered or incurred by Seller or Shareholder arising from (i) any
misrepresentation, or breach of any covenant or warranty of Purchaser
contained in this Agreement or any certificate or other instrument
furnished or to be furnished by Purchaser hereunder, or any claim by a
third party (regardless of whether the claimant is ultimately
successful) which if true would be such a misrepresentation or breach,
(ii) Purchaser's use of the name "U.S. HealthWorks" or any derivative
thereof, whether or not in compliance with Section 2.1.4, or (iii) any
nonfulfillment of any agreement on the part of Purchaser under this
Agreement or from any misrepresentation in or omission from, any
certificate or other instrument furnished or to be furnished to Seller
or Shareholder hereunder.
IX.3 Minimum Aggregate Liability Amount. Purchaser agrees not to
seek recourse against, and shall not recover from, Seller or
Shareholder under this Article IX on account of any liability, loss,
damage, injury or claim until the aggregate amount thereof exceeds
Sixty Two Thousand Five Hundred Dollars ($62,500.00) (the "Minimum
Aggregate Liability Amount"), at which time claims may be asserted for
the Minimum Aggregate Liability Amount and amounts in excess of the
Minimum Aggregate Liability Amount. Notwithstanding the foregoing,
there shall be no Minimum Aggregate Liability Amount for, and the
Minimum Aggregate Liability Amount shall not be charged for or reduced
by, any liability, loss, damage, injury or claim resulting from the
covenants, representations and warranties contained in the provisions
of Sections 3.1, 3.2, 3.3, 3.6, 3.19, 12.2 or 12.5 or from a breach of
the covenants contained in Section 2.6.1 to the extent it pertains to
the making of a payment described in Sections 3.11.8 and 3.11.9 or
from a Third Party Claim or by any claim for indemnity under Section
9.1(iv).
IX.4 Notification and Defense of Claims.
IX.4.1 Third Party Claims.
IX.4.1.1 Notification and Defense Rights.
(a) If any party to this Agreement (an "Indemnitee") receives written
notice of the assertion of any claim or of the commencement of any
action or proceeding by any entity who is not a party to this
Agreement (a "Third Party Claim") against or affecting such
Indemnitee, and if such assertion were presumed to be true (regardless
of the actual outcome) then the other party or parties could be
obligated to provide indemnification under this Agreement (an
"Indemnifying Party"), then such Indemnitee will give such
Indemnifying Party reasonably prompt written notice thereof, but in
any event no later than thirty (30) calendar days after receipt of
such written notice of such Third Party Claim. However, if it is
reasonably determined by the Indemnitee that immediate action is
required to address a condition giving rise to a Third Party Claim,
the Indemnitee is authorized to take immediate action without prior
notice, and thereafter give notice to the Indemnifying Party as soon
as practicable. In such event the Indemnitee shall be entitled to
recover from the Indemnifying Party to the extent the Indemnifying
Party is liable for indemnification hereunder.
(b) Failure of the Indemnitee to give the notice described in
subsection (a) above shall not relieve the Indemnifying Party from any
liability which it may have on account of indemnification or
otherwise, except to the extent that the Indemnifying Party is
prejudiced thereby.
(c) If (i) the Indemnifying Party admits in the Notice to Defend
(defined below) its obligation to indemnify the Indemnitee for the
Third Party Claim and (ii) in the case where the Shareholder is the
Indemnifying Party, the amount outstanding on the Promissory Note at
the time of the filing of such a Third Party Claim is at least equal
to the amount alleged owing in such Third Party Claim, then in such
event, the Indemnifying Party will have the sole right to control the
defense of such Third Party Claim at such Indemnifying Party's sole
expense by Indemnifying Party's own counsel (which counsel must be
reasonably satisfactory to the Indemnitee), by giving written notice
to the Indemnitee (the "Notice to Defend") no later than twenty (20)
calendar days after receipt of the above-described notice of such
Third Party Claim.
(d) In all circumstances other than that described in subsection (c)
above, the Indemnifying Party may participate in (but not control) the
defense if it gives the Notice to Defend within such twenty-day
period, and the Indemnitee also will have the right to participate in
the defense of any Third Party Claim assisted by counsel of its own
choosing; provided, however, that the Indemnitee shall have the sole
right to make any significant decisions with respect to the defense of
such Third Party Claim except as to the settlement or compromise of
such Third Party Claim, which shall be subject to the provisions of
Section 9.4.1.2.
(e) During the period prior to receiving the Notice to Defend, the
Indemnitee can proceed to defend the claim, action or proceeding and
the Indemnitee shall be entitled to recover from the Indemnifying
Party to the extent the Indemnifying Party is liable for
indemnification hereunder.
(f) Notwithstanding anything in this Section 9.4.1.1 to the contrary,
the Indemnifying Party shall not be entitled to participate in, and
the Indemnitee shall be entitled to sole and absolute control over the
defense, compromise or settlement of, any claim to the extent that the
claim seeks an injunction or other similar equitable or nonmonetary
relief against the Indemnitee.
(g) If the Indemnitee does not receive a Notice to Defend with respect
to a Third Party Claim within the twenty day period described in
subsection (c) above, the Indemnitee may, at its option, solely defend
the Third Party Claim assisted by counsel of its own choosing, and the
Indemnifying Party will be liable for all costs and expenses, and all
settlement amounts (subject to and in accordance with Section
9.4.1.2), but only to the extent the Indemnifying Party is liable for
indemnification hereunder.
IX.4.1.2 Settlement.
(a) In the circumstances described in Section 9.4.1.1(c) where the
Indemnifying Party has the sole right to control the defense of the
Third Party Claim, the Indemnifying Party shall have the sole right to
settle such claim. Furthermore, in the circumstances described in
Section 9.4.1.1(f), the Indemnitee shall have the sole right to settle
a Third Party Claim to the extent provided in such Section.
(b) In all other circumstances, if there is a dispute between the
Indemnifying Party and Indemnitee concerning whether a Third Party
Claim should be contested, settled or compromised, it shall be
settled, compromised or contested, in accordance with the next
succeeding subsections of this Section 9.4.1.2; provided, however,
that the Indemnitee, or its respective successors or assigns, shall
neither be required to refrain from paying or satisfying any claim
which the Indemnifying Party has not acknowledged in writing its
obligations to indemnify the Indemnitee, or which has matured by court
judgment or decree, unless appeal is taken thereafter and proper
appeal bond posted by the Indemnifying Party, nor shall the Indemnitee
be required to refrain from paying or satisfying any Third Party Claim
after and to the extent that such Third Party Claim has resulted in an
unstayed injunction or other similar equitable relief against the
Indemnitee or in an imposition of a lien upon any of the properties or
assets then held by the Indemnitee or its respective successors and
assigns (unless such claim shall have been discharged or enforcement
thereof stayed by the filing of a legally permitted bond by the
Indemnifying Party or otherwise, at its sole expense), or result in a
breach or default in a license, lease or other contract by which any
of them is bound, or would materially adversely affect their
respective assets, businesses or financial condition.
(c) Subject to subsection (b), in the event that the Indemnifying
Party, on the one hand, or the Indemnitee, on the other hand, has
reached a good faith, bona fide settlement agreement or compromise,
subject only to approval hereunder, with any claimant regarding a
matter which may be the subject of indemnification hereunder and
desires to settle on the basis of such agreement or compromise, such
party who desires to so settle or compromise shall notify the other
party in writing of its desire setting forth the terms of such
settlement or compromise (the "Notice of Settlement").
(d) The Third Party Claim may be settled or compromised on the basis
set forth in the Notice of Settlement unless within twenty (20) days
of the receipt of the Notice of Settlement the party who issued the
Notice of Settlement receives a notice from the other party of its
desire to continue to contest the matter (the "Notice to Contest")
and, in such case:
(i) Should the Indemnitee deliver a Notice to Contest, the claim shall
be so contested and the liability of the Indemnifying Party shall be
limited as provided in subsection (iii) below.
(ii) If the settlement or compromise could result in a claim for
indemnification being made against the Indemnifying Party and if the
Indemnifying Party delivers the Notice to Contest, the claim shall be
so contested and the liability of the Indemnitee shall be limited as
provided in subsection (iii) below.
(iii) If a matter is contested as provided in subsections (i) or (ii)
above and is later adjudicated, settled, compromised or otherwise
disposed of and such adjudication, compromise, settlement or
disposition results in a liability, loss, damage or injury in excess
of the amount for which one party desired previously to settle the
matter as set forth in the Notice of Settlement, then the liability of
such party shall be limited to such lesser proposed settlement amount
and the party contesting the matter shall be solely responsible for
the amount in excess of such lesser proposed settlement amount and
without regard to any minimum restriction on liability described in
the Agreement.
(e) For an Indemnifying Party's Notice to Contest to be effective, it
must also state that the Indemnifying Party acknowledges and agrees
that it shall be obligated to indemnify the Indemnitee for any amount
in excess of the lesser proposed settlement amount as described in
subsection (d)(iii) above.
(f) The Indemnifying Party hereby expressly waives and renounces any
and all rights to make a claim against the Indemnitee or its
respective directors, officers, agents and employees based upon a
right or claim of any Third Party to which it may become subrogated as
a result of making any payment for indemnification hereunder except to
the extent that such waiver adversely affects any rights of
subrogation of an insurer under an applicable insurance policy;
provided however, nothing herein is intended to constitute a waiver by
the Indemnifying Party of any rights of subrogation to which it may be
entitled against persons other than those described herein.
IX.5 Survival Period For Indemnification Claims Against Seller and
Shareholder. A claim for indemnification based on the covenants,
representations and warranties contained in the provisions of Sections
3.1, 3.2, 3.3, 3.6, 3.11.8, 3.11.9, 3.19, 12.2 or 12.5 or from a
breach of the covenants contained in Section 2.6.1 to the extent it
pertains to the making of a payment described in Sections 3.11.8 and
3.11.9 or from a Third Party Claim or a claim for indemnity under
Section 9.1(iv) shall survive for the longest period available under
applicable laws and may be made at any time. Except for such claims,
a claim for indemnification hereunder shall be forever barred unless
made by notifying the Seller and Shareholder (a) in the case of a
claim based upon a tax liability of the Seller (including, without
limitation, any claim based upon an assertion that any of the
previously filed tax returns of the Seller are inaccurate or
incomplete), within the statutory period of limitations under the
applicable tax statute, unless such claim in raised by the taxing
authority by way of an offset against any claim or suit for refund or
is allowed to be assessed after the expiration of the applicable
statute of limitations pursuant to a validly executed waiver or
extension thereof or pursuant to the mitigation provisions contained
in the Code, in which case a claim may be made within one (1) year
after such offset or assessment, or (b) in all other cases, within
thirty-six (36) months after the Closing Date.
X. TAX EFFECT OF THE TRANSACTION.
Neither Purchaser, Seller nor Shareholder have made nor do any of them
make herein any representation or warranty as to the tax consequences
of the transactions contemplated or provided for herein to any party
hereto. It is understood and agreed that each party has looked to its
own advisors for advice and counsel as to such tax effects.
XI.TERMINATION.
XI.1 Method of Termination. This Agreement constitutes the binding
and irrevocable agreement of the parties to consummate the
transactions contemplated hereby, the consideration for which is (a)
the covenants set forth in Article II hereof, and (b) expenditures and
obligations incurred and to be incurred by Purchaser and by Seller and
Shareholder in respect of this Agreement, and this Agreement may be
terminated or abandoned only as follows:
XI.1.1 By the mutual consent of Shareholder and the Boards of
Directors of Seller and Purchaser, notwithstanding prior approval by
Shareholder of any or all of such corporations;
XI.1.2 By Shareholder and Seller after September 22, 2000, if any of
the conditions set forth in Article VII hereof, to which their
obligations are subject, have not been fulfilled or waived, unless
such fulfillment has been frustrated or made impossible by any act or
failure to act of any of them; or
XI.1.3 By Purchaser after September 22, 2000, if any of the
conditions set forth in Article VI hereof, to which the obligations of
Purchaser is subject, have not been fulfilled or waived, unless such
fulfillment has been frustrated or made impossible by any act or
failure to act of Purchaser.
XI.2 Effect of Termination. In the event of a termination of this
Agreement pursuant to Section 11.1.1 hereof, each party shall pay the
direct costs and expenses actually incurred by it in connection with
this Agreement, and no party (or any of its officers, directors,
employees, agents, representatives or shareholders) shall be liable to
any other party for any costs, expenses, damage or loss of anticipated
profits hereunder. In the event of any other termination, the parties
shall retain any and all rights incident to a breach of any covenant,
representation or warranty made hereunder.
XI.3 Risk of Loss. Seller and Shareholder assume all risk of
condemnation, destruction, loss or damage due to fire or other
casualty from the date of this Agreement up to the Closing. If the
condemnation, destruction, loss or damage is such that the Business is
interrupted or curtailed or the Assets are materially adversely
affected, then Purchaser shall have the right to terminate this
Agreement. If the condemnation, destruction, loss, or damage is such
that the Business is neither interrupted nor curtailed nor the Assets
materially adversely affected, or if the Business is interrupted or
curtailed or the Assets are materially adversely affected, and each of
Purchaser nevertheless forgoes the right to terminate this Agreement,
the purchase price shall be adjusted at the Closing to reflect such
condemnation, destruction, loss, or damage to the extent that
insurance proceeds are not sufficient to cover such destruction, loss
or damage, and if Purchaser, on the one hand, and Seller and
Shareholder, on the other hand, are unable to agree upon the amount of
such adjustment, the dispute shall be resolved jointly by the
independent accounting firms then employed by Purchaser and Seller,
and if said accounting firms do not agree, they shall appoint a
nationally recognized accounting firm, whose determination of the
dispute shall be final and binding.
XII. GENERAL PROVISIONS.
XII.1 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be delivered by
hand or mailed by registered or certified mail, return receipt
requested, first class postage prepaid, or sent by Federal Express or
similarly recognized overnight delivery service with receipt
acknowledged, addressed as follows:
XII.1.1 If to Seller or Shareholder:
U.S. HealthWorks, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
and to:
U.S. HealthWorks, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
XII.1.2 If to Purchaser:
Healthcomp Evaluation Services Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
and to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
XII.1.3 If delivered personally, the date on which a notice,
request, instruction or document is delivered shall be the date on
which such delivery is made and, if delivered by mail or by overnight
delivery service, the date on which such notice, request, instruction
or document is received shall be the date of delivery. In the event
any such notice, request, instruction or document is mailed or shipped
by overnight delivery service to a party in accordance with this
Section 12 and is returned to the sender as nondeliverable, then such
notice, request, instruction or document shall be deemed to have been
delivered or received on the fifth day following the deposit of such
notice, request, instruction, or document in the United States mails
or the delivery to the overnight delivery service.
XII.1.4 Any party hereto may change its address specified for
notices herein by designating a new address by notice in accordance
with this Section 12.1.
XII.2 Brokers.
XII.2.1 Seller and Shareholder, jointly and severally, represent and
warrant to Purchaser that no investment banker, broker or finder has
acted for it or them, in connection with this Agreement or any of the
transactions contemplated hereby. Seller and Shareholder, jointly and
severally agree to indemnify and hold harmless Purchaser from and
against any fee, claim, loss, or expense arising out of any claim by
any investment banker, broker or finder employed or alleged to have
been employed by it or them.
XII.2.2 Purchaser represents and warrants to Seller and Shareholder
that it has not retained any investment banker, broker or finder in
connection with this Agreement or any of the transactions contemplated
hereby. Purchaser agrees to indemnify and hold harmless Seller and
Shareholder from and against any fee, claim, loss, or expense arising
out of any claim by any investment banker, broker or finder employed
or alleged to have been employed by it.
XII.3 Further Assurances. Each party covenants that at any time,
and from time to time, after the Closing Date, it will execute such
additional instruments and take such actions as may be reasonably
requested by the other parties to confirm or perfect or otherwise to
carry out the intent and purposes of this Agreement.
XII.4 Waiver. Any failure on the part of any party hereto to comply
with any of its obligations, agreements or conditions hereunder may be
waived by any other party to whom such compliance is owed. No waiver
of any provision of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver.
XII.5 Expenses. All expenses incurred by the parties hereto in
connection with or related to the authorization, preparation and
execution of this Agreement and the Closing of the transactions
contemplated hereby, including, without limitation of the generality
of the foregoing, all fees and expenses of brokers, agents,
representatives, counsel and accountants employed by any such party,
shall be borne solely and entirely by the party which has incurred the
same. All such fees and expenses of Seller shall be borne either by
Shareholder or by Seller from proceeds from the sale of the Assets
hereunder or from funds not included in the Assets. In no event shall
Assets to be purchased by Purchaser be utilized for or be reduced by
the payment of any such fees or expenses. Seller and Shareholder
hereby, jointly and severally, represent and warrant that no such fees
or expenses have been paid by Seller from any Assets prior to the date
of this Agreement, and hereby, jointly and severally, covenant that
Seller will not so pay any such fees or expenses from Assets prior to
the Closing.
XII.6 Nondisclosure of Terms.
XII.6.1 Seller and Shareholder, jointly and severally, represent and
warrant that prior to the execution hereof they have not disclosed any
of the terms, conditions, obligations or matters contained in or
relating to this Agreement and the transactions contemplated herein,
and Seller and Shareholder, jointly and severally, covenant and agree
that following the execution of this Agreement, it and they shall not
disclose to any person, individual or entity any of such terms,
conditions or matters and to keep the same confidential, regardless of
whether the Closing occurs.
XII.6.2 In the event that Purchaser proposes to issue, make or
distribute any press release, public announcement or other written
publicity or disclosure prior to the Closing Date that refers to the
transactions contemplated herein, Purchaser shall provide a copy of
such disclosure to Seller and Shareholder and shall afford Seller and
Shareholder reasonable opportunity (subject to any legal obligation of
prompt disclosure) to comment on such disclosure or the portion
thereof which refers to the transactions contemplated herein prior to
making such disclosure, except that Purchaser shall have the right to
make any public disclosure without such provision to Seller and
Shareholder which its counsel advises is required by law.
XII.7 Materiality. When an item in this Agreement is characterized
as "material," such item shall be deemed "material" even though
individually it may not be material, or even though the individual
adverse effect on the Assets or the Business may not be material, if
the liability, loss, damage or injury (including all reasonable costs
and expenses related thereto) arising from any misrepresentation or
other breach under this Agreement in connection with such item and any
other item or items (regardless of their characterization as material)
are in the aggregate material. Once all such items in the aggregate
are so deemed material, thereafter any liability, loss, damage or
injury (and related expenses) arising from any misrepresentation or
breach in connection with any item shall be deemed material and shall
be deemed to have a material adverse effect on the Assets or the
Business.
XII.8 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
legal representatives, executors, administrators, successors and
assigns.
XII.9 Headings. The section and other headings in this Agreement
are inserted solely as a matter of convenience and for reference, and
are not a part of this Agreement.
XII.10 Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto and supersedes and cancels any
prior agreements, representations, warranties, or communications,
whether oral or written, among the parties hereto relating to the
transactions contemplated hereby or the subject matter herein except
for the letter concerning consents and regarding the Acquisition
Agreement, which letter is dated September 15, 2000. Neither this
Agreement nor any provision hereof may be changed, waived, discharged
or terminated orally, but only by an agreement in writing signed by
the party against whom or which the enforcement of such change,
waiver, discharge or termination is sought.
XII.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia.
XII.12 Counterparts. This Agreement may be executed 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.
XII.13 Pronouns. All pronouns used herein shall be deemed to refer
to the masculine, feminine or neuter gender as the context requires.
XII.14 Exhibits Incorporated. All Exhibits attached hereto are
incorporated herein by reference, and all blanks in such Exhibits, if
any, will be filled in as required in order to consummate the
transactions contemplated herein and in accordance with this
Agreement.
XII.15 Time of Essence. Time is of the essence in this Agreement.
**********
IN WITNESS WHEREOF, each party hereto has executed or caused this
Agreement to be executed on its behalf, all on the day and year first
above written.
HEALTHCOMP EVALUATION SERVICES CORPORATION
("Purchaser")
By:___________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and Secretary and Treasurer
U.S. HEALTHWORKS HOLDING COMPANY, INC.
("Seller")
By:___________________________
Name: ▇▇▇ ▇▇▇▇▇
Title: Chief Financial Officer
U.S. HEALTHWORKS, INC.
("Shareholder")
By:____________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
LIST OF EXHIBITS
EXHIBITS
2.1.3 List of Assets and Contracts Not Included in Assets Being
Sold.
2.2 Form of Promissory Note.
2.6.3 List of Bank Accounts, Safe Deposit Boxes and Powers of
Attorney.
2.9.1 Employees of the Business not Offered Employment by
Purchasers.
2.10 Form of Accounts Receivable Billing and Collection Agreement.
2.11 Form of Covenant Not to Compete.
3.1(a) List of Jurisdictions Where There is Good Standing Status.
3.2 Articles of Incorporation and Bylaws.
3.4 List of Equity Investments.
3.5.1 1998 and 1999 Financial Statements and Interim Financial
Statements.
3.5.2 List of Liabilities not disclosed in the Financial Statements.
3.7.1.1 Fixed Assets and Depreciation Schedules.
3.7.1.3 List of Leased Assets - other than Leased Real Property.
3.7.1.7 Inventory - Not Readily Useable or Salable.
3.7.2.3 List of Leased Real Property.
3.7.2.9 List of Permits.
3.8 List of Indebtedness.
3.10 List of Consent Requirements.
3.11 List of Changes.
3.12 List of Litigation.
3.13 List of Licenses and Permits.
3.14 List of Contracts.
3.15.1 List of Trademarks, Trade Names, Service Marks, Service
Names, Etc.
3.15.2 Lists of Seller's Software.
3.16 List of Employees, Independent Contractors, Salaries, Rates,
Salary Increase Guidelines and Labor Matters.
3.17 List of Benefit Plans.
3.18 List of Customers and Brokers, Addresses, Telephone Numbers and
Principal Person of Contact and List of Problems with Customers.
3.19 List of Environmental Matters.
3.20 List of Insurance Matters.
3.21 List of Related Party Relationships.
3.23 List of Suppliers.
4.2(a) Form of Investment Letter for Seller.
4.2(b) Form of Investment Letter for Transferee.
