Exhibit 10.51
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (THE "AGREEMENT"), dated as of September ___, 2003
(the "Effective Date"), by and between ACTIVECORE TECHNOLOGIES, INC., formerly
known as IVP TECHNOLOGY CORPORATION, with offices at 0000 Xxxxxxxxx Xxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 343 (the "Purchaser"), SCI
HEALTHCARE GROUP, INC., an Ohio corporation, with offices located at P.O. Box
2864, 0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, XX 00000 (the "Seller"), and,
with respect to Section 10 hereof, the shareholders (the "Shareholders")
identified on the signature page hereto. The Purchaser and Seller are sometimes
collectively referred to as the "Parties".
WHEREAS, the Seller desires to sell, assign and otherwise transfer and the
Purchaser desires to acquire certain of the properties and assets utilized by
Seller in the operation of its business division known as the Lindsay Division
("LD") business as they exist as of the Effective Date, subject only to certain
liabilities enumerated herein, for the purchase price hereinafter described and
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of such sale and of the foregoing and of
the mutual agreements hereinafter set forth, the parties hereto do hereby agree
as follows:
1. SALE OF THE ASSETS AND BUSINESS:
1.1. Upon the terms and subject to the conditions set forth in this
Agreement and in consideration of the payment to the Seller of the
purchase price described in Section 2, the Seller hereby agrees to
sell, convey, assign and transfer to the Purchaser only the following
assets (collectively, the "PURCHASED ASSETS") which relate to the LD
business of providing integration services and services ancillary
thereto:
(a) All contracts and work orders of the LD issued pursuant
thereto held by Seller with clients for the providing of services
and personnel, as listed in SCHEDULE 1.1(a) hereto.
(b) All files and records pertinent, relevant or in any way
connected with the performance of services under the contracts
referred to in (a) above.
(c) Personnel files relating to employees assigned to the LD
wherever located, databases maintained by Seller related to LD
clients and personnel assigned to those clients. A list of
current employees is annexed as SCHEDULE 1.1(c) ("CURRENT
EMPLOYEES");
(d) A copy of Seller's web based resume system for Purchaser's
non-exclusive use in "AS IS" condition in accordance with the
terms of a license agreement in substantially the same form as
Exhibit 1.1(d) attached hereto and made a part hereof;
(e) A non-exclusive copy of the LD contact management database;
(f) The personal property listed on Schedule 1.1(f) in "AS IS"
condition; and
(g) The customer list of LD, a copy of which is annexed as
Schedule 1.1(g).
1.2. Excluded Assets.
(a) Notwithstanding anything to the contrary contained in this
Agreement, it is recognized and agreed that Seller is not selling
its entire business but rather certain assets utilized by LD.
Accordingly, Seller shall retain and not transfer to Purchaser
any assets other than those listed in Section 1.1 above. All the
assets not transferred will be referred to as the "Excluded
Assets."
(b) In furtherance of this understanding and by way of example
and not limitation, the Excluded Assets shall include the
following:
(i) all cash and cash equivalents of Seller;
(ii) all Accounts Receivable of Seller including Accounts
Receivable of the LD;
(iii) all work in process for which no invoice has yet been
tendered for services performed or goods developed by the
Seller including its LD ("WIP"); and
(iv) all assets of the Seller not exclusively utilized by
the LD, except the limited use of the resume system and
contact management base referenced in Section 1.1(d) and
(e).
1.3. The delivery of the assets referenced in Section 1.1(b) and (c)
will be accomplished by transferring Seller's records maintained by
Xxxxxxxxxxx and King to Purchaser by means of a letter from
Xxxxxxxxxxx and Xxxx acknowledging said transfer free and clear of any
lien, claim or encumbrance. The delivery of the LD contact management
database referenced in 1.1(e) of this Agreement shall be accomplished
by Seller giving Xxxxxx Xxxxxxx or other employees designated by the
Purchaser permission to utilize said information on behalf of
Purchaser.
2. PURCHASE PRICE:
2.1. Upon the terms and subject to the conditions set forth in this
Agreement, and in consideration for the conveyance, transfer and
assignment of the assets and other rights to the Purchaser as
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described in Section 1.1 above, the Purchaser shall pay the Seller a
purchase price in accordance with the following:
(a) A promissory note payable by way of a cash payment in the
sum of Two Hundred Thousand U.S. Dollars ($200,000.00 USD) at the
Effective Date.
(b) A number of shares in Purchaser equivalent to Two Hundred
U.S. Dollars ($200,000.00 USD) equal to the average closing bid
price of Seller's shares thirty (30) days prior to and two (2)
days following the date of this Agreement (the "Purchaser
Shares") deliverable on the Effective Date. The number of
Purchaser Shares shall be subject to reduction if the gross
revenue on an accrual basis of the LD during the one-year period
after the Effective Date is less than $900,000 The number of
Purchaser Shares shall be reduced in accordance with the
following table:
Reduction in
Revenue Purchaser Shares
------- ----------------
$900,000 or greater 0%
$800,000 to $899,999 10%
$700,000 to $799,999 20%
$699,999 or less 30%
(c) The Purchaser Shares, which shall be the property of the
Seller as of the date of delivery for all purposes including the
date of transfer for the purposes of Rule 144, shall be held in
escrow by the Purchaser's attorneys, in accordance with the terms
of an escrow agreement in substantially the same form as Exhibit
2.1(b) attached hereto and made a part hereof, for a period of
one year after the Effective Date, which Purchaser Shares shall
be subject to a reduction in accordance with Section 2.1(b)
hereof and an offset pursuant to Section 7.1 hereof. The
Purchaser Shares shall be subject to the restrictions and
obligations set forth with Section 2.3 below and Exhibit 2.3.
(d) The number of Purchaser Shares shall be subject to an
increase if the gross revenue on an accrual basis of the LD
during the one-year period after the Effective Date is in excess
of $900,000. The number of Purchaser Shares shall be increased in
accordance with the following table:
Increase in Purchaser
Revenue Shares
------- --------------------
$900,001 to $1,000,000 10%
$1,000,001 to $1,100,000 20%
$1,100,001 or greater 30%
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Any such price increase ("Price Increase") shall be due and
payable 90 days after the first anniversary of the Effective
Date. Purchaser shall provide the Seller with a detailed Profit
and Loss Statement within 90 days after the anniversary of the
Effective Date.
For the purposes of the calculation of Price Increase all sales
of software made by or with the direct or indirect participation
of Xxxxxx Xxxxxxx shall be deemed to be part of the gross revenue
of the LD during the one-year period following the Effective
Date.
2.2. With respect to the collection of accounts receivables and WIP
due and owing to the Purchaser after the Effective Date.
(a) Purchaser shall xxxx clients for all work performed by
personnel of the LD, performance of services and delivery of
goods and any associated expense and other reimbursement after
the Effective Date and shall have the sole responsibility to
collect same; provided that to the extent that one or more
contracts cannot be assigned (or a novation received from the
contracting party, where required), then Seller shall xxxx
clients for all work performed by the Purchaser and shall
promptly remit all funds received to the Purchaser.
(b) Seller shall xxxx clients for all work performed by LD
personnel and performance of services and delivery of goods and
any associated expenses and other reimbursement up to and
including the Effective Date and shall have the sole
responsibility to collect same.
(c) Seller shall provide notice to clients in the form provided
in EXHIBIT 2.2(c) to advise client to pay all accounts receivable
directly and exclusively to Seller and all amounts for services
performed after the Effective Date to the Purchaser.
(d) To the extent any client incorrectly pays either the
Purchaser or Seller funds due to the other, the Party who
received funds belonging to the other shall promptly notify and
pay the other Party all funds due to it without the necessity of
additional demand.
(e) Each Party agrees to assist the other in the collection of
accounts receivable to the extent requested by the other Party.
(f) The Seller has received certain prepaid fees from clients
and incurred expenses for work not performed all as set forth in
Schedule 2.2(f) to be delivered on or before October 10, 2003.
The Parties agree to adjust for said prepayments or expenses as
of the Effective Date.
(g) The Parties acknowledge that there are certain sales pending
but not yet consummated as referenced on SCHEDULE 2.2(g) annexed
hereto ("PENDING SALES"). Purchaser agrees to be responsible to
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pay any and all commissions due to SCI employees, representatives
and agents after the Effective Date in accordance with the terms
of SCHEDULE 2.2(g).
2.3. Securities Matters:
(a) The Purchaser shall take and perform such actions, pay such
sums and/or prepare, execute and file any and all documents,
instruments, registration statements and reports, of every kind,
nature or description, necessary to make and/or continue to make
available to the Seller during the Effective Period the benefits
of Rule 144 of the Regulations;
(b) The Seller shall have the right to exercise "PIGGY BACK"
registration rights with respect to the Purchaser Shares in
accordance with the terms and conditions set forth in paragraphs
1.1 through 1.12 of EXHIBIT 2.3 annexed hereto and made a part
hereof;
(c) If (a) the Purchaser violates and/or become in violation of
the provisions of Sections 5.7 and 5.8 and as a result thereof
the Seller shall not be able to avail itself of the provisions of
Rule 144 then and in that event the Seller shall have the right
to exercise the Compulsory Registration Rights set forth in
paragraph 1.13 of Exhibit 2.3 annexed hereto, in accordance with
and subject to the terms and conditions thereof;
(d) If: (i) the Purchaser violates and/or becomes in violation
of the provisions of Sections 5.7 and 5.8; (ii) as a result
thereof the Seller shall not be able to avail itself of the
provisions of Rule 144 for any 30-day period; and (iii) fails or
refuses to comply with its obligations under Section 2.3 hereof
and paragraph 1.13 of EXHIBIT 2.3 annexed hereto, then and in
that event the Purchaser shall at the sole option of Purchaser,
upon ten days prior written notice from the Seller ("SELLER
NOTICE"), repurchase all of the shares of Purchaser Shares
specified in the Seller Notice, for cash, at a price per share
equal to the Repurchase Price (as defined). For purposes of this
agreement, the term "REPURCHASE PRICE" shall be and mean the
market value of the Purchaser Shares on the date of the
transmittal of the Seller Notice in any event the repurchase
price shall not exceed the market value at which the shares were
originally issued to the seller. Any portion of the Repurchase
Price not paid to the Seller within ten (10) business days of the
Seller Notice will bear interest, until paid, at the rate of 18%
per annum.
3. NO ASSUMPTION OF LIABILITIES BY PURCHASER:
3.1. Except for those liabilities (the "ASSUMED LIABILITIES") set
forth on SCHEDULE 3.1, Purchaser shall not assume, or in any way
become liable for, any debts, obligations or liabilities of Seller,
whether accrued, absolute, contingent or otherwise, or whether due or
to become due, or otherwise, whether known or unknown, arising
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out of events, transactions or facts which shall have occurred, arisen
or existed on, prior to or after the Effective Date, which liabilities
and obligations, if ever in existence, shall continue to be
liabilities and obligations of Seller. Seller hereby agrees promptly
to pay all Retained Liabilities when due.
Without limiting the generality of the foregoing, the Assumed Liabilities
shall exclude, and Purchaser shall not be liable for:
(a) any and all liabilities or obligations in respect of taxes
which are imposed, levied, assessed or payable by, against or
attributable to Seller;
(b) any and all liabilities or obligations of Seller in respect
of civil and criminal fines, penalties and punitive damages
(including, without limitation, fines and penalties imposed in
respect of withholding, income, sales, payroll, franchise and
other taxes) arising out of or relating to events occurring or
actions taken by Seller on or prior to the Effective Date;
(c) any and all liabilities or obligations associated with or
relating to any assets not specifically set forth in Section 1.1,
whether occurring before or after the Effective Date;
(d) Subject to the provisions of Section 7.1(e) any and all
liabilities or obligations for warranty claims for services
provided by or on behalf of the Seller on or before the Effective
Date; and
(e) any and all liabilities or obligations relating to claims
made by employees or former employees of Seller occurring on or
before the Effective Date, including, without limitation, any
liabilities or obligations relating to claims made by employees
or former employees of Seller for workers' compensation,
employer's liability, or the termination or resignation of
employment, whether or not such termination was related to
Seller's obligations under this Agreement.
All liabilities retained by Seller under this Section 3 are referred to
herein collectively as the "Retained Liabilities."
4. SELLER'S REPRESENTATIONS AND WARRANTIES:
The Seller represents and warrants to Purchaser as follows:
4.1. The Seller is a corporation duly organized, validly existing and
in good standing under and by virtue of the laws of the State of Ohio.
4.2. The Seller has and will convey to Purchaser good and marketable
title to all of the assets described in Section 1.1(b), (f) and (g),
subject to no mortgage, pledge, lien, conditional sale agreement,
encumbrance, or charge. The Seller has and will assign to Purchaser
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all of the right to the assets described in Section 1.1(a), (c), (d)
and (e), which assignment shall not result in a breach or violation of
any contract or work order set forth in Section 1.1(a) hereto.
Provided that if the assignment to Purchaser of all of the rights to
the assets described in Section 1.1(a), (c), (d) and (e) results in a
breach or violation of the assignment clause of any contract or work
order set forth in Section 1.1(a) hereto, or if the customer does not
approve or attempts to contest any such assignment by Seller of the
then existing contract between Seller and customer, Seller shall not
be deemed to be in breach of or failure to perform this Agreement and
Purchaser's sole and exclusive remedy shall be as contained in Section
2.2(a), which provides in part that Seller will xxxx clients for all
work performed by the Purchaser and shall promptly remit all funds to
the Purchaser.
4.3. The execution and delivery of this Agreement to the Purchaser and
the sale contemplated hereby has been duly authorized by all necessary
corporate action on the part of the Seller.
4.4. Neither the execution and delivery of this Agreement, nor the
consummation of the sale contemplated hereby will conflict with, or
result in a material breach of, any of the terms, conditions, or
provisions of any law or any regulation, order, writ, injunction, or
decree of any court or governmental instrumentality, or of the
corporate charter or by-laws of the Seller or of any agreement,
whether written or oral, or other instrument to which the Seller is a
party or by which it is bound, or constitute (with the giving of
notice of the passage of time or both) a default thereunder, or result
in any lien or encumbrance on any of the Seller's assets to be
transferred to the Purchaser pursuant hereto.
4.5. The contracts listed in SCHEDULE 1.1(a) are effective and there
exists to the best of Seller's knowledge and belief no material breach
or default by either party with respect to same. That the copies of
those contracts previously delivered to Purchaser are accurate and
complete and there exist no amendments which were not previously
disclosed. That Seller is not presently aware of any past deficiencies
in its performance of services under such contracts that might
adversely affect the continuation of supplying services under such
contracts.
4.6. There are no contracts, agreements or arrangements, written or
oral, relating to the conduct of the business of the LD of Seller
relating to the assets to be sold hereunder to which Seller is a party
or is bound for which Purchaser would have responsibility except as
may be referred to in this Agreement or any Schedule or Exhibit
annexed hereto.
4.7. To the best of Seller's knowledge and belief, there are no claims
or threatened claims, no litigation related to the contracts listed in
SCHEDULE 1.1(a), or the other assets being sold hereunder except as
listed on SCHEDULE 4.7.
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4.8. That "SCI Healthcare Group, Inc." is the only name Seller has
used in the operation of its business to be sold hereunder.
4.9. That Seller has conducted its LD business in a legal manner at
all times and has and maintains all licenses, permits and approvals
necessary to the conduct of the business except for those which would
not materially affect the business.
4.10. There have been no past proceedings or any proceedings now
pending, nor to Seller's knowledge or belief, threatened against
Seller with regard to the opinion of the LD before the Internal
Revenue Service, National Labor Relations Board, State Dept. of Labor,
State Commission on Human Rights and Opportunities, State Department
of Labor, Equal Employment Opportunity Commission or any other local,
state or Federal agencies having jurisdiction over employee rights
with respect to hiring, tenure, or conditions of employment within the
statute of limitations period prior to the Effective Date.
4.11. SCHEDULE 4.11 contains complete, correct and current list of all
insurance policies in effect as of the time of this agreement. Seller
shall keep such coverage in effect through the Effective Date.
4.12.
(a) Attached hereto as Schedule 4.12 is a true and correct copy
of the Seller's financial statements ("FINANCIAL STATEMENTS");.
With respect to the assets transferred hereunder the Financial
Statements fairly present the financial position of the Seller as
of the respective dates thereof and the results of operations,
for each of the periods covered thereby and are true and accurate
in all material respects. The Financial Statements have been
prepared in conformity with generally accepted accounting
principles, applied on a consistent basis throughout the entire
periods involved. As of the date of any balance sheet forming a
part of the Financial Statements, and except as and to the extent
reflected or reserved against therein, the Seller did not have
any material liabilities, debts, obligations or claims (absolute
or contingent) asserted against it and/or which should have been
reflected in a balance sheet or the notes thereto; and all assets
transferred hereunder reflected thereon are properly reported and
present fairly the value of the assets therein stated in
accordance with generally accepted accounting principles.
(b) The financial and other books and records of the Seller,
with respect to the assets transferred hereunder, are in all
material respects true, complete and correct and have, at all
times, been maintained in accordance with good business and
accounting practices.
(c) Since the date of the delivery of Seller financial
statements until Effective Date there have been no material
adverse changes in the property, assets, business, affairs or
prospects of the Seller or its business with respect to the
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assets sold hereunder, except for seasonal variations.
4.13. Seller, to its best knowledge and belief, is in compliance with
all statutes, laws and regulations applicable to its business as
consistently conducted and has properly made, reported and remitted
all appropriate Federal, State and local payroll related deductions
and taxes including: FICA, FUTA, SUI and income tax withholdings
presently due and owing requirements, and further warrants that it
will report and remit all withholdings and taxes due for activities
prior to the Effective Date.
4.14. Seller has not made any payment or given anything of value to any
person with the reason or understanding that any part of such payment
was to be used for any improper or illegal purpose; or any purpose
contrary to the policies or procedures of that person's employer.
4.15. The Seller has the sufficient right, title and interest in and to
all intellectual property, know-how, trade secrets, specifications,
designs and other proprietary rights (collectively, the "INTELLECTUAL
PROPERTY") necessary for use in the LD. To the Seller's knowledge, no
person is infringing upon, nor has any person misappropriated any
Intellectual Property.
4.16. Seller is acquiring the Purchaser Shares pursuant to this
Agreement with its own funds for its own account and not as a nominee
or agent for the account of any other person. No other person has any
interest, beneficial or otherwise, in any of the Purchaser Shares.
Except as provided in this Agreement, the Purchaser is not obligated
to transfer the Purchaser Shares to any other person, nor does the
Seller have any agreement or understanding with any other person to do
so.
4.17. The Seller is acquiring the Purchaser Shares for investment
purposes and not with a view to the sale or distribution, which would
constitute a violation of the 1933 Act or the rules and regulations
promulgated hereunder, by public or private sale or other disposition,
and the Seller has no present intention of selling, granting any
participation in or otherwise distributing or disposing of any of the
Purchased Shares.
4.18. All representations and warranties by Seller and Stockholder are
true, complete and accurate in all material respects as of the date of
this Agreement and will remain so as of the Effective Date and do not
contain and will not contain any untrue statement of any material
fact, or omit to state a material fact necessary in order to make all
of such representations and warranties not materially misleading as of
this date and as of the Effective Date.
5. PURCHASER'S REPRESENTATIONS AND WARRANTIES:
The Purchaser represents and warrants to the Seller as follows:
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5.1. Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada.
5.2. The execution and delivery of this Agreement to the Seller and
the sale contemplated hereby has been duly authorized by all necessary
corporate action on the part of the Purchaser.
5.3. Neither the execution and delivery of this Agreement, nor the
consummation of the sale contemplated hereby will conflict with, or
result in a material breach of, any of the terms, conditions, or
provisions of any law or any regulation, order, writ, injunction, or
decree of any court or governmental instrumentality, or of the
corporate charter or by-laws of the Purchaser or of any agreement,
whether written or oral, or other instrument to which the Purchaser is
a party or by which it is bound, or constitute (with the giving of
notice of the passage of time or both) a default hereunder.
5.4. Purchaser has funds and available Purchaser's stock necessary to
close the transaction contemplated by this Agreement.
5.5. The audited consolidated financial statements and unaudited
interim consolidated financial statements (including, in each case,
the notes, if any, thereto) included in the SEC Reports complied as to
form in all material respect with the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as
may be indicated thereto or in the notes thereto and except with
respect to unaudited statements as permitted by Form 10-Q of the SEC)
and fairly present (subject in the case of the unaudited interim
financial statements, to normal, recurring year-end adjustments) the
consolidated financial position of Purchaser (or its predecessor) as
to the respective dates thereof and the consolidated results of its
operations and cash flows for the respective periods then ended.
5.6. There is no litigation pending or threatened that would affect
Purchaser's ability to constitute the transactions contemplated by
this Agreement.
5.7. The shares of the Purchaser's common stock (the "COMMON STOCK")
are registered under the Securities Exchange Act of 1934, as amended
(the "34 ACT"); and during the period commencing on the date of the
signing of this agreement and terminating on the earlier of (i) the
date of the disposition by the Seller of all of the Purchaser Shares
or (ii) the two year anniversary of the Effective Date (the "EFFECTIVE
PERIOD") the Purchaser shall prepare and file any and all reports,
forms, applications and statements, take an perform such actions
and/or pay such sums as shall be necessary to maintain such
registration in full force and effect.
5.8. All documents, instruments, registration statements and reports
of every kind, nature or description, filed and/or to be filed, by the
Purchaser with the Securities and Exchange Commission ("SEC") whether
required by the 34 Act and/or the rules and regulations promulgated by
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the SEC pursuant to the 34 Act and/or the Securities Act of 1933, as
amended (collectively, the "Regulations"), were and/or will be filed
and true, correct and complete in all material respects and will not
contain any statement which, at the time, and in light of the
circumstances under which it is made, is false or misleading with
respect to any material fact, or which omits to state any material
fact necessary in order to make the statements therein made not false
or misleading.
6. ACCESS AND INFORMATION:
From and after the Effective Date, and for a period of three years
thereafter,
6.1. The Seller shall have the right, from time to time upon written
request to the Purchaser, to inspect all service orders related to
contracts included in the Purchased Assets and, in the event of an IRS
audit, any books and records included in the Purchased Assets, records
it would be entitled to as all as shareholders of Purchaser, any and
all records necessary to assure compliance with Sections 5.7 and 5.8
alone including the right to make copies thereof.
6.2. The Purchaser shall have the right, from time to time upon
written request to the Seller, to inspect all books and records
relating to the Purchased Assets, including the right to make copies
thereof.
7. INDEMNIFICATION:
7.1. Subject to the limitations hereinafter described and the
limitation imposed in Section 8.4 hereof, the Seller agrees to
indemnify, exonerate, defend and save the Purchaser and its officers,
directors, employees, investors and representatives (collectively, the
"Purchaser" for the purposes of this Section 7) harmless from,
against, for and in respect of the full amounts of any and all
damages, losses, demands, obligations, tax, interest, penalty, suit,
judgment, order, lien, liabilities, debts, claims, actions, causes of
action, encumbrances, costs and expenses (collectively, the "Losses"),
whether administrative, judicial or otherwise, of every kind and
nature, including, without limitation, reasonable attorneys',
consultants', accountants' and expert witness fees, suffered,
sustained, incurred or required to be paid at any time after the
Effective Date by the Purchaser based upon, arising out of, resulting
from or because of:
(a) a breach of any obligations of the Seller incurred in
connection with the making and performance of this Agreement, the
failure to sell, convey, assign and transfer the Purchased Assets
pursuant to Section 1.1 hereof, free and clear of all mortgages,
pledges, liens, conditional sales agreements, encumbrances or
charges;
(b) the untruth, inaccuracy, violation or breach of any
representation, warranty, agreement, undertaking or covenant of
Seller contained in or made pursuant to this Agreement;
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(c) any claims made against or expense incurred by Purchaser
with respect to the conditions or operations of the Seller made
by regulatory or administrative agencies having jurisdiction over
the Seller resulting from violations of local, state or federal
laws or regulations by Seller or any of their respective agents,
servants or employees, or resulting from a failure to collect or
remit state or local taxes;
(d) all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees, interest, and penalties)
incurred by the Purchaser in connection with any action, suit,
proceeding, demand, assessment or judgment incident to any of the
matters indemnified against; and
(e) any Retained Liabilities; PROVIDED THAT, if any such
Retained Liability relates to a warranty or other claim for
services provided by or on behalf of the Seller on or before the
Effective Date, then such work shall be provided by the Purchaser
and the Seller shall pay the Purchaser the actual cost of labor,
plus fringe benefits, plus 10%.
7.2. Seller's obligations to indemnify pursuant to this Section 7 (and
the representations and warranties set forth herein) shall be for a
period of two (2) years following the Effective Date. The Purchaser
shall have the right but not the obligation to offset any Losses
against the Purchaser Shares at the closing bid price on the date of
notice given pursuant to Section 7.6 hereof.
7.3. Subject to the limitations hereinafter described and the
limitation imposed in Section 8.3, the Purchaser agrees to indemnify,
exonerate, defend and save the Seller and its and/or their officers,
directors, employees, investors and representatives (collectively, the
"Seller" for the purposes of this Section 7) harmless from, against,
for and in respect of the full amounts of any and all damages, losses,
demands, obligations, tax, interest, penalty, suit, judgment, order,
lien, liabilities, debts, claims, actions, causes of action,
encumbrances, costs and expenses, whether administrative, judicial or
otherwise, of every kind and nature, including, without limitation,
reasonable attorneys', consultants', accountants' and expert witness
fees, suffered, sustained, incurred or required to be paid at any time
after the Effective Date by the Seller based upon, arising out of,
resulting from or because of:
(a) a breach of any obligations of the Purchaser incurred in
connection with the making and performance of this Agreement
including the failure to pay the consideration referenced in
Section 2.1 in a timely manner;
(b) the untruth, inaccuracy, violation or breach of any
representation, warranty, agreement, undertaking or covenant of
Purchaser contained in or made pursuant to this Agreement;
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(c) any claims made against or expense incurred by Seller with
respect to the conditions or operations of the Purchaser made by
regulatory or administrative agencies having jurisdiction over
the Purchaser resulting from violations of local, state or
federal laws or regulations by Purchaser or any of their
respective agents, servants or employees, or resulting from a
failure to collect or remit state or local taxes, arising after
the Effective Date;
(d) all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees, interest, and penalties)
incurred by the Seller in connection with any action, suit,
proceeding, demand, assessment or judgment incident to any of the
matters indemnified against;
(e) any claims made against or expense incurred by Seller
related to the employment of Xxxxxx Xxxxxxx and/or other Current
Employees of the LD accruing after the Effective Date; and
(f) any claims made by any Client against Seller for work
performed or failure to honor any contract occurring after the
Effective Date.
7.4. Purchaser's obligations to indemnify pursuant to this Section 7
(and the representations and warranties set forth herein) shall be for
a period of two (2) years following the Effective Date.
7.5. Notwithstanding any other provision of this Agreement to the
contrary, each party's liability to the other to indemnify or pay any
monies under this Section 7 shall not exceed the amount of Two Hundred
Thousand U.S. Dollars ($200,000.00 USD), plus the market value of the
Purchaser Shares on the date written notice is given pursuant to
Section 7.6 hereof and provided that no claims shall be so asserted
unless and until the aggregate amount of losses that would otherwise
be paid exceeds on a cumulative basis an amount equal to Twenty
Thousand U.S. Dollars ($20,000.00 USD), and then only to the extent of
any such excess; however, these limitations shall not apply to
Purchaser's obligations with respect to Sections 2 or 7.3(e) and (f)
hereto or the Seller's obligations with respect to Sections 7.1(e)
above.
7.6. Each party agrees to give the other prompt written notice of any
claims subject or allegedly subject to their respective
indemnification obligations. The indemnifying party shall have the
right but not the obligation, exercisable upon written notice to the
notifying party within ten (10) days of its receipt of the initial
notice, to defend any such claim with counsel of its own choosing
(reasonably acceptable to the indemnified party) and to settle the
matter in its own discretion provided such settlement does not,
without the indemnified party's written consent, inhibit or prohibit
the ongoing business or professional reputation of the indemnified
party.
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8. OTHER COVENANTS:
8.1. After the Effective Date, the Seller shall utilize its best
efforts to secure the assignments and novations for the client
contracts listed in Schedule 1.1(a) and shall coordinate those efforts
with Purchaser in a manner most likely to assure the continuation of
business with or without written assignment or novations.
8.2. Purchaser promises to deliver the stock certificates represented
in Section 2.1(b) no later than five (5) business days of the
Effective Date.
8.3. After the Effective Date, the Purchaser covenants to the Seller
that it shall:
(a) run the business as a going concern;
(b) not to terminate the services of Xxxxxx Xxxxxxx except for cause;
(c) not to postpone or delay sales of goods and services;
(d) not to sell or transfer the assets of the Business;
(e) not to declare voluntary bankruptcy or an assignment for the
benefit of creditors.
In the event that the Purchaser is in violation of this Section 8.3,
then the Seller's exclusive remedy for such breach is to receive the
Purchaser Shares in accordance with Section 2.1 hereof (without
reduction or increase as set forth in Section 2.1(b) or (d)).
8.4. The Seller shall be solely responsible for paying any and all
warranty or other claims for services provided by or on behalf of the
Seller on or before the Effective Date in accordance with Section
7.1(e) hereof. The payment of such work in accordance with Section
7.1(e) shall be the Purchaser's exclusive remedy for warranty or other
claims for services provided on or before the Effective Date, PROVIDED
THAT this remedy shall not limit the Purchaser's right to indemnity
for Losses to third parties.
8.5. The Purchaser shall have the right to audit the Seller's books
and records as they relate to the LD Division and the Seller shall
cooperate in any such audit by giving access to its books and records
as they relate to the LD Division or as the auditors shall reasonably
request. The cost of such audit shall be borne by the Purchaser.
8.6. After one year from the Effective Date, the Seller shall have the
right to audit the Purchaser's books and records as they related to
the LD Division for the purpose of confirming the revenue of the LD
Division and the Purchaser shall cooperate in any such audit by giving
access to its books and records as they relate to the LD Division or
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as the auditors shall reasonably request. The cost of such audit shall
be borne by the Seller. However, if the results of the audit reveal
that Purchaser has underpaid Seller by five (5%) percent or more of
the amount actually due Seller, then Purchaser shall (i) bear the
expenses of the audit and (ii) immediately pay to Seller the amount of
any underpayment determined by said audit.
9. EMPLOYEES:
9.1. From the Effective Date, the Seller shall continue to employ the
Current Employees on the same terms as they were employed prior to the
Effective Date. The Purchaser shall reimburse the Seller for all
employment costs related to the Current Employees arising after the
Effective Date, including wages, withholding taxes and fringes
benefits (except that the Seller shall be responsible for all accrued
wages or benefits existing as of the Effective Date and, to the extent
not released in their offers of employment as set forth in Section 9.2
hereto, any separation costs related to the termination of the Current
Employees by the Seller occurring after the Effective Date). The
Seller shall not be obligated to employ the Current Employees after
October 10, 2003.
9.2. On or before October 10, 2003, the Purchaser shall offer
employment to each Current Employee on substantially the same terms as
the Seller employed them. The form of offer of employment is attached
as Exhibit 9.2 hereto. Upon Purchaser offering employment to each
Current Employee, the Seller shall terminate the employment of each
Current Employee and, to the extent not released in their offers of
employment as set forth in this Section 9.2, shall be responsible for
any separation costs related to the termination of the Current
Employees by the Seller.
9.3. The Current Employees' failure to perform in accordance with such
employment terms shall not be considered a breach or a failure to
perform by Seller.
10. NEGATIVE COVENANTS:
10.1. The Seller and the Shareholders agree that for a period of two
(2) years following the Effective Date, they will not, for their own
account or jointly with another, directly or indirectly, for or on
behalf of any individual (including, without limitation, any person
related by blood, adoption or marriage or other person), partnership,
corporation, or other legal entity, as principal, agent or otherwise:
(a) own, control, manage, be employed by, consult with, or
otherwise participate in, a business involved within the Trade
Area (as hereinafter defined) involved in: (i) the sale and
delivery of medical data integration services of any kind or (ii)
any activity which competes with the business conducted by LD
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(the activities described in this clause (a) are hereinafter
referred to collectively as the "BUSINESS");
(b) solicit or induce, or in any manner attempt to solicit or
induce, any person (i) which is or was a customer of LD
(identified on customer list specified in Section 1.1 hereof) or
(ii) employed by the Purchaser to leave such employment, whether
or not such employment is pursuant to a written contract and
whether or not such employment is at will, or hire any person who
has been employed by the Company at any time during the six (6)
month period preceding such hiring; or
(c) solicit or induce any Current Employee employed by the
Purchaser or any of its future subsidiaries to leave such
employment, whether or not such employment is pursuant to a
written contract and whether or not such employment is at will or
hire any such person; or
(d) interfere with the Purchaser's business relationships,
including, without limitation, the business relationships with
the Purchaser's customers, clients, vendors or referral sources
listed on Schedule 1.1(g).
10.2. As used herein, the term "TRADE AREA" shall mean any locations in
which the Seller has conducted the LD business at any time during the
twelve (12) month period.
10.3. Purchaser agrees that for a period of one year from the Effective
Date that neither it nor any of its agents, representatives, parents,
subsidiaries or affiliates will it solicit or hire any employee or
consultant of Seller with the exception of the Current Employees.
10.4. It is recognized by that an action for damages may not be an
adequate remedy in the event of the breach of any of the negative
covenants contained in this Agreement, and therefore, it is agreed
that in addition to any other rights the non-breaching party may have
in the event of a breach of this Agreement, the non-breaching party
shall have the right to judicial enforcement of said covenants by way
of injunction, restraining order or any other similar equitable relief
if any portion of the foregoing covenants is invalid or unenforceable
due to area or time, such fact shall not affect the validity or
enforceability of the remaining portions or prevent enforcement of
restrictions to the extent a court of competent jurisdiction may
consider reasonable. The parties agree that in any event said
restrictions shall be enforced to the maximum extent permitted by law.
11. NO BROKERS:
11.1. The parties hereto represent and warrant to each other that there
are no claims for brokerage commissions or finders' fees in connection
with the transactions contemplated hereby.
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12. FEES AND EXPENSES:
12.1. Except as herein otherwise provided, each of the parties hereto
shall pay its own legal and accounting charges and other expenses
incident to the execution of this Agreement and the consummation of
the transactions contemplated hereby.
13. NOTICES:
13.1. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered in
person, by telecopy or mailed by first class, certified mail, postage
prepaid or by an expedited mail carrier and addressed to the addresses
of the parties first above written and to their respective counsel and
advisors at the following addresses:
IF TO SELLER'S COUNSEL AND ADVISORS:
Xxxx X. Xxxxxxxx, Esq.
Xxxxxxxx & Xxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Xxxxxxx Xxxxx, Esq.
Xxxxxxxxxxx & Xxxx, CPA
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
POB 2864
Xxxxxx, XX 00000
Facsimile: __________
IF TO PURCHASER'S COUNSEL:
Xxxx X. Xxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Facsimile: (000) 000-0000
14. MISCELLANEOUS:
14.1. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. All
covenants and agreements made by or on behalf of any of the parties
hereto shall be binding upon and inure to the benefit of their
respective successors and assigns, unless otherwise specifically set
forth herein. The terms and provisions of this Agreement may not be
modified or amended, except in writing signed by all parties hereto.
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No representations, warranties, or covenants, express or implied, have
been made by any party to this Agreement in connection with the
subject matter hereof, except as expressly set forth in this Agreement
and the Exhibits hereto. The headings in this Agreement are for the
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
14.2. No terms and provisions hereof, including, without limitation,
the terms and provisions contained in this sentence, shall be waived,
modified or altered so as to impose any additional obligations or
liability or grant any additional right or remedy, and no custom,
payment, act, knowledge, extension of time, favor or indulgence,
gratuitous or otherwise, or words or silence at any time, shall impose
any additional obligation or liability or grant any additional right
or remedy or be deemed a waiver or release of any obligation,
liability, right or remedy except as set forth in a written instrument
properly executed and delivered by the party sought to be charged,
expressly stating that it is, and the extent to which it is, intended
to be so effective. No assent, express or implied, by either party, or
waiver by either party, to or of any breach of any term or provision
of this Agreement or of the Exhibits or Schedules shall be deemed to
be an assent or waiver to or of such or any succeeding breach of the
same or any other such term or provision.
14.3. The captions of this Agreement are for convenience and reference
only, and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provisions hereof.
14.4. This Agreement, including all Exhibits and the Schedules hereto,
supersedes any and all other agreements, oral or written, between the
parties hereto with respect to the subject matter hereof (including
the Letter of Intent between Purchaser and Seller, and contains the
entire agreement between such parties with respect to the transaction
contemplated hereby.
14.5. No amendment of any provision of this Agreement shall be valid
unless the same is in writing and signed by Purchaser and Seller.
14.6. No waiver by any party of any default, misrepresentation or
breach of warranty or covenant shall be deemed to extend to any prior
or subsequent default, misrepresentation or breach of warranty or
covenant.
14.7. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and may not be assigned by any party hereto without
the prior written consent of the other parties hereto. Nothing
expressed or referred to in this Agreement will be construed to give
any person other than the parties to this Agreement any legal or
equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement.
14.8. The Parties will each bear their own fees and expenses incurred
in connection with the negotiations, preparation and execution of this
Agreement.
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14.9. This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio and any action brought to enforce
the Agreement or for its breach shall be brought within the exclusive
jurisdiction of the state and Federal Courts within the state of Ohio.
14.10. The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
14.11. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be constitute as
if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the
authority of any of the provisions of this Agreement.
14.12. This Agreement may be executed in or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all
of which, when taken together, will be deemed to constitute one and
the same agreement.
15. FACSIMILES:
Facsimile signatures shall be acceptable to bind the respective
parties to the terms of this Agreement
16. EFFECT OF CLOSING:
16.1. The terms of this Agreement shall survive the Effective Date and
shall not become merged therein.
16.2. This Agreement, together with any Exhibits hereto, and any other
documents to be executed pursuant hereto, constitute the entire
agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements and understandings, if any,
written or oral, between the parties.
17. PUBLIC ANNOUNCEMENT:
17.1. The Seller recognizes and agrees that the Purchaser is a public
company and that the Seller and the Purchaser will not make any public
announcement concerning this Agreement or the negotiations and to keep
same confidential unless given written permission from the Purchaser
to make any announcement or otherwise disclose the information. The
Purchaser shall have the right to announce the transaction
contemplated hereby and/or the negotiations between the parties upon
notice to and current of the Seller to the extent the announcement is
required by law, regulations or the rules of any public stock exchange
on which Purchaser's stock is listed. The Purchaser will give the
Seller prior notice of any announcement it believes is necessary or
proper and Seller will not unreasonably withhold its consent.
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18. ARBITRATION:
18.1. Any and all disputes arising under or in connection with this
Agreement shall be resolved by submission to final and binding
arbitration in accordance with the then prevailing rules of JAMS. A
single arbitrator shall be chosen and the proceedings shall be
conducted in Xxxxx County, Ohio. In addition, the arbitrator shall
base his award upon substantial evidence and in accordance with Ohio
law, and shall award to the prevailing party all of its reasonable
costs and attorney's fees, expert witness fees, arbitration fees
(including any fees paid by the prevailing party to the arbitrator),
but shall have no power or jurisdiction to award any punitive or
exemplary damages. Judgment upon an arbitration award may be confirmed
in a state or Federal court sitting in Xxxxx County, Ohio.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
ACTIVECORE TECHNOLOGIES, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
SCI HEALTHCARE GROUP, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
SHAREHOLDERS:AS TO ARTICLE 10
______________________________________
Name:_________________________________
Xxxxxx Xxxxxx
______________________________________
Name:_________________________________
Xxxx Xxxxxxxx
______________________________________
Name:_________________________________
Xxxxx Xxxxxxxxxxx
