Exhibit 2.1
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ASSET PURCHASE AGREEMENT
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BY AND BETWEEN
MEDSOLUTIONS, INC.,
A TEXAS CORPORATION,
AND
MED-CON WASTE SOLUTIONS, INC.,
A TEXAS CORPORATION
DATED EFFECTIVE AS OF SEPTEMBER 30, 2004
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), executed to be effective
as of September 30, 2004 (the "Effective Date"), is made and entered into by and
between MedSolutions, Inc., a Texas corporation (the "Buyer"), and Med-Con Waste
Solutions, Inc., a Texas corporation (the "Seller").
WITNESSETH:
WHEREAS, the Seller is currently engaged in the business of regulated
medical waste transportation and disposal; and
WHEREAS, the Seller desires to sell and convey, and the Buyer desires to
purchase and assume, certain assets and liabilities of the Seller, as more
particularly described herein, in exchange for the consideration as more
particularly described herein;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
undertakings and covenants set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties to this Agreement hereby agree as follows:
ARTICLE I
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PURCHASE OF ASSETS; PURCHASE PRICE
1.01 Assets to be Purchased; Purchase Price. On the Closing Date (as
defined below), and subject to the terms and conditions of this Agreement, the
Seller shall sell, assign, convey, and transfer, and the Buyer shall purchase,
acquire, accept, and assume, the Assets (as defined below) and the Assumed
Liabilities (as defined below), in exchange for, due or payable at the Closing
(as defined below), the following consideration (the "Purchase Price"):
(a) $250,000 in the form of a certified or cashiers' check, money
order, or wire-transfer of immediately available funds (the "Cash").
(b) A promissory note in the form attached hereto as Exhibit J (the
"30-Day Note") in the principal amount of $250,000, subject to adjustment
as set forth in this Section 1.01(b) (the "30-Day Principal Amount"), with
no interest, secured by the Assets as set forth in more particular detail
in a security agreement in the form attached hereto as Exhibit K (the
"Security Agreement") and personally guaranteed by Xxxxxxx X. Xxxxxxx as
set forth in more particular detail in a guaranty agreement in the form
attached hereto as Exhibit L (the "Guaranty Agreement"), and payable as
follows: (i) on the 30th day after the Closing Date (the "First Consent
Deadline"), the Buyer shall pay to the Seller that portion of the 30-Day
Principal Amount equal to the amount that is the product of (W) a fraction
the numerator of which is the aggregate average monthly sales for the
months of May 2004, June 2004, July 2004 and August 2004 (collectively, the
"Four-Month Period") under the Seller's contracts with Existing Customers
(as defined below) relating to the Schedule 3.12 Consents (as defined
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below) that have been delivered to the Buyer on or prior to the First
Consent Deadline, and the denominator of which is the aggregate average
monthly sales for the Four-Month Period under all of the Seller's contracts
with Existing Customers relating to the Schedule 3.12 Consents; multiplied
by (X) the 30-Day Principal Amount; and (ii) on the 75th day after the
Closing Date (the "Second Consent Deadline"), the Buyer shall pay to the
Seller that portion of the 30-Day Principal Amount equal to the amount that
is the product of (Y) a fraction the numerator of which is the aggregate
average monthly sales for the Four-Month Period under the Seller's
contracts with Existing Customers relating to the Schedule 3.12 Consents
that have been delivered to the Buyer after the First Consent Deadline but
on or prior to the Second Consent Deadline, and the denominator of which is
the aggregate average monthly sales for the Four-Month Period under all of
the Seller's contracts with Existing Customers relating to the Schedule
3.12 Consents; multiplied by (Z) the 30-Day Principal Amount; provided,
however, that in the event the last of the Schedule 3.12 Consents is
delivered by the Seller to the Buyer after the Closing Date but prior to
the seventh day before the Second Consent Deadline, the Buyer shall pay the
full remaining balance of the 30-Day Principal Amount to the Seller on the
seventh day after the date on which such last Schedule 3.12 Consent is
delivered; provided further, however, that the amount invoiced by the Buyer
for the regulated medical waste ("RMW") processed by the Buyer for the
Seller during the period up to and including the Closing Date, and any RMW
backlog of the Seller as of the Closing Date to be processed by the Buyer
subsequent to Closing, shall be deducted from the 30-Day Principal Amount
payable to the Seller after adjustment, if any, pursuant to this Section
1.01(b). In no event shall any portion of the 30-Day Principal Amount be
payable to the Seller for Section 3.12 Consents delivered to the Buyer
after the Second Consent Deadline. For purposes of this Agreement,
"Schedule 3.12 Consents" shall mean consents to assignment which represent
at least 87% of the aggregate average monthly sales for the Four-Month
Period under the Seller's contracts with Existing Customers relating to the
contracts set forth on Schedule 3.12 (excluding any contracts for which
consents are delivered to Buyer at the Closing pursuant to Section
2.01(a)(iv) hereof).
(c) A promissory note in the form attached hereto as Exhibit A (the
"Note") in the principal amount of $500,000 (the "Principal Amount"), with
simple interest at the annual rate of 7%, secured by the Assets as set
forth in more particular detail in the Security Agreement and payable in 30
equal monthly installments of principal and interest in the amount of
$18,215.95 each, and with the first such installment due on January 1,
2005; provided further, however, that beginning with the first day of the
first full calendar month for which the Seller's existing customers
relating to the contracts listed on Schedule 3.19 (the "Existing
Customers") are billed by Buyer and for 90 days thereafter (the "90-Day
Period"), in the event that the amount of the Buyer's average monthly sales
from Existing Customers for such 90-Day Period (the "90-Day Average
Amount") is less than $81,612 (except in the case of a loss of sales due to
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one or more contract cancellations resulting solely from service issues
attributable to Buyer), the difference between the 90-Day Average Amount
and $81,612 shall be multiplied by 15 to obtain an adjustment amount (the
"90-Day Adjustment Amount"), and such 90-Day Adjustment Amount shall be
deducted from the Principal Amount of the Note. No later than 30 days after
the end of the 90-Day Period, the Buyer shall provide the Seller with a
true, correct and complete copy of its invoice register for such 90-Day
Period with respect to the Existing Customers. To the extent that any
interest is paid on the Note and the Principal Amount is subsequently
reduced in accordance with the terms of this Agreement, any excess interest
previously paid will be credited against the future interest payment(s)
and/or the Principal Amount such that the amount of interest paid on the
Principal Amount will not exceed 7%.
(d) 149,000 restricted shares (the "Shares") of the Buyer's common
stock, $.001 par value per share (the "Common Stock"), valued at $1.00 per
share for the purposes of this Agreement (the "Share Value").
(e) The assumption of certain of the Seller's liabilities not to
exceed $75,000, as more particularly described in Section 1.05 of this
Agreement.
(f) If the Buyer shall have to pay, directly or indirectly, during the
first year after the Closing Date, any amount, including without limitation
by way of reimbursement, rebate, credit or invoice adjustment, to any
Existing Customer relating to any customer complaints or grievances based
on any action or failure to act by the Seller prior to the Closing Date,
such payment shall be deducted by the Buyer first from the Principal Amount
and any accrued and unpaid interest accrued thereon, and second from the
Shares by redemption and cancellation of Shares at the Share Value for no
consideration.
(g) Notwithstanding anything in this Agreement to the contrary, in the
event that the results of the Buyer's audit of the Seller as contemplated
by Section 5.03 reflect that the Seller's total sales on an accrual
accounting basis from Existing Customers for the nine-month period ended
September 30, 2004 (the "Audited Gross Revenues") are less than $659,000,
the difference between the Audited Gross Revenues and $659,000 shall be
divided by nine and then multiplied by 15 to obtain an adjustment amount
(the "Audit Adjustment Amount"), and such Audit Adjustment Amount shall be
(i) first, deducted from the Principal Amount of the Note, and (ii) second,
to the extent that the Audit Adjustment Amount exceeds the Principal Amount
of the Note, the total number of Shares issued to the Seller effective as
of the Closing Date shall be reduced by a number of shares of Common Stock
equal to the quotient of any such excess Audit Adjustment Amount divided by
the Share Value.
1.02 Allocation of the Purchase Price. The Purchase Price shall be
allocated among the Assets in accordance with Schedule 1.02 (the "Allocation").
The Seller and the Buyer shall make consistent use of the Allocation following
the Closing Date, and the Seller and the Buyer hereby agree not to file any tax
return or otherwise take a position with any federal, state or local tax
authority which is inconsistent with the Allocation.
1.03 Definition of Assets. The term "Assets" shall mean all right, title,
and interest that the Seller now has, or may have in the future, in and to the
properties (both real and personal) and assets (both tangible and intangible) as
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set forth and described on Schedule 1.03. All properties and assets not set
forth and fully described on Schedule 1.03 are expressly excluded from the term
"Assets" for the purposes of this Agreement.
1.04 Assets Unencumbered. Schedule 1.04 sets forth and fully describes each
and every liability, lien, mortgage, encumbrance, and imperfection of title to
which the Assets are subject or may be subject in the future due to actions or
omissions of the Seller (the "Disclosed Encumbrances"). Except for the Disclosed
Encumbrances, the Seller shall convey to the Buyer marketable title to the
Assets free and clear of any liabilities, liens, mortgages, encumbrances, and
imperfections of title.
1.05 Assumption of Certain Liabilities. Schedule 1.05 sets forth and fully
describes only those debts, liabilities, and obligations of the Seller that the
Buyer has agreed to assume pursuant to this Agreement (the "Assumed
Liabilities"). No Disclosed Encumbrance shall constitute an Assumed Liability
unless it is specifically enumerated on Schedule 1.05. Except for the Assumed
Liabilities, the Buyer shall not assume, and expressly disclaims any obligation
or responsibility for, and nothing in this Agreement shall be construed as
causing the assumption of or obligation or responsibility for, any debts,
liabilities, or obligations of the Seller or any Affiliate (as defined in
Article VIII of this Agreement) thereof.
ARTICLE II
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CLOSING AND CLOSING DATE
2.01 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held on (i) the Effective Date or (ii) such
other date as the parties hereto may agree, at such time and place as the
parties hereto may agree. The date on which the Closing occurs is referred to
herein as the "Closing Date". At the Closing, the parties hereto shall deliver
or cause to be delivered the following:
(a) the Seller shall deliver or cause to be delivered to the Buyer:
(i) title to and possession of the Assets by means of an executed
copy of the Xxxx of Sale and Assignment and Assumption Agreement
attached hereto as Exhibit B and any other instruments of
conveyance or other documents or instruments necessary to
transfer and assign title and beneficial ownership of the Assets
to the Buyer as determined by the Buyer in its sole discretion;
(ii) the Officer's Certificate in substantially the form of Exhibit C
attached hereto;
(iii)the Secretary's Certificate in substantially the form of Exhibit
D hereto;
(iv) the consents as set forth on Schedule 2.01(a)(iv), dated prior to
the Closing Date, required to be obtained by the Seller from
third parties in order to transfer certain of the Assets to the
Buyer in accordance with this Agreement;
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(v) a shareholder lock-up agreement with respect to the Shares
between the Buyer and the Seller in the form attached hereto as
Exhibit E;
(vi) non-competition and non-solicitation agreements between the Buyer
and each of Xxx Xxxxxx, Xxxxxx Xxxx, Xxxxx Xxxx, and Xxxxx
Xxxxxxx, in the form attached hereto as Exhibit H;
(vii)an employment agreement between the Buyer and Xxxxxx Xxxx in the
form attached hereto as Exhibit I;
(viii) an executed copy of the Security Agreement; and
(ix) an executed copy of the Guaranty Agreement.
(b) The Buyer shall deliver to the Seller:
(i) The Cash, the Note, the 30-Day Note and a stock certificate for
the Shares.
(ii) the Officer's Certificate in substantially the form of Exhibit F
attached hereto;
(iii)non-competition and non-solicitation agreements between the
Buyer and each of Xxx Xxxxxx, Xxxxxx Xxxx, Xxxxx Xxxx, and Xxxxx
Xxxxxxx, in the form attached hereto as Exhibit H;
(iv) an employment agreement between the Buyer and Xxxxxx Xxxx in the
form attached hereto as Exhibit I;
(v) an executed copy of the Xxxx of Sale and Assignment and
Assumption Agreement attached hereto as Exhibit B;
(vi) an executed copy of the Security Agreement; and
(vii) an executed copy of the Guaranty Agreement.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF THE SELLER
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To induce the Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, the Seller hereby represents and warrants to
the Buyer, as of the Closing Date, the following:
3.01 Organization and Good Standing. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Texas. Schedule 3.01 includes (i) a true and complete copy of the Seller's
Articles of Incorporation and all amendments thereto, certified by the Secretary
of State of Texas; (ii) a true and complete copy of the Bylaws of the Seller
presently in effect, certified as true and correct by the Seller's Secretary;
and (iii) true and complete copies of certificates of existence and account
status, certified by the Secretary of State of Texas and the Texas Comptroller
of Public Accounts, respectively, as of the Closing Date.
3.02 Authority. The Seller has all requisite corporate power and authority
to own its property (including, without limitation, the Assets), to conduct its
business, and to execute and deliver this Agreement and any instruments and
agreements contemplated herein that are required to be executed and delivered by
the Seller pursuant to its obligations under this Agreement, and to perform its
obligations hereunder and thereunder. This Agreement has been approved by the
Seller's Board of Directors and shareholders and has been duly authorized,
executed, and delivered by the Seller. No other corporate act or proceeding on
the part of the Seller is necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement represents a valid and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and similar laws affecting the enforcement of creditors' rights
generally and the application of general principles of equity and judicial
discretion. The Seller has delivered to the Buyer a copy of the resolutions of
the Seller's Board of Directors and shareholders, certified as true and correct
by the Seller's Secretary, approving this Agreement and authorizing the
execution hereof by the Seller's President.
3.03 No Violation. Neither the execution and delivery by the Seller of this
Agreement nor the consummation by the Seller of the transactions contemplated
hereby will (i) violate any provision of the Texas Business Corporation Act, the
Articles of Incorporation of the Seller, or the Bylaws of the Seller; (ii)
except as set forth on Schedule 3.12, violate, or be in conflict with, or
constitute a default (or an event or condition that, with notice or lapse of
time, or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or cause the acceleration of the
maturity of any of the Assumed Liabilities, or result in the creation or
imposition of any security interest, lien, charge, or other encumbrance upon any
of the Assets under, any note, bond, mortgage, indenture, deed of trust,
license, lease, contract, commitment, understanding, arrangement, agreement, or
restriction of any kind or character to which the Seller is a party or by which
the Seller may be bound or affected or to which any of the Assets is subject; or
(iii) violate any statute or law or any judgment, decree, order, writ,
injunction, regulation, or rule of any court or Governmental Authority (as
defined in Article VIII of this Agreement).
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3.04 Brokers. The Seller has not employed any broker, agent, or finder in
connection with any transaction contemplated by this Agreement for which the
Buyer may be liable or responsible to pay.
3.05 No Undisclosed Liabilities. Except for the Disclosed Encumbrances,
express liabilities arising under the contracts set forth on Schedule 3.19 and
the Assumed Liabilities, there are no liabilities or obligations of the Seller,
whether accrued, absolute, contingent, or otherwise, that have affected or could
affect in any way the Assets, or any of them. There is no basis for the
assertion against the Seller of any liability or obligation of any nature
whatsoever that could result in the creation or imposition of any security
interest, lien, charge, or encumbrance upon the Assets.
3.06 Title to the Assets; Encumbrances. Except for the Disclosed
Encumbrances, the Seller has good and marketable title to the Assets free and
clear of all liens, mortgages, claims, easements, pledges, security interests,
or other imperfections of title.
3.07 Environmental Compliance.
(a) With respect to the Assets and any other Property (as defined in
Article VIII of this Agreement) owned or operated by the Seller, the Seller
is in compliance with all applicable Environmental Laws (as defined in
Article VIII of this Agreement) and has obtained and is in compliance with
all permits, licenses, and other authorizations required under any
Environmental Law. There is no past or present event, condition or
circumstance that is likely to interfere with the utilization of the Assets
constituting a violation of Environmental Laws or resulting from any
failure to comply therewith;
(b) The Seller does not now and has not leased, operated, owned, or
exercised managerial functions at any facilities or real property with
respect to which such facility or real property is subject to any
Proceeding (as defined in Article VIII of this Agreement) under any
Environmental Law, and the Seller is not aware of any facts or
circumstances that could give rise to such a Proceeding;
(c) There are no actions or Proceedings pending or, to the Seller's
Knowledge (as defined in Article VIII of this Agreement), threatened
against the Seller under any Environmental Law, and the Seller has not
received any notice (whether from any regulatory body or private person) of
any violation, or potential or threatened violation, of any Environmental
Law;
(d) There are no actions or Proceedings pending or, to the Seller's
Knowledge, threatened under any Environmental Law involving the release or
threat of release of any Polluting Substances (as defined in Article VIII
of this Agreement) at or on (i) any Property currently or in the past
owned, operated or leased by the Seller or over which the Seller exercised
managerial functions, or (ii) at any Property where Polluting Substances
generated by the Seller have been disposed;
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(e) There is no Property for which the Seller is or was required to
obtain any permit under an Environmental Law to construct, demolish,
renovate, occupy, operate, or use such Property or any portion of it;
(f) The Seller has not generated any Polluting Substances;
(g) There has been no release of Polluting Substances by the Seller in
violation of any Environmental Law that would require any report or
notification to any governmental or regulatory authority in or on any
Property;
(h) The Seller is not under investigation or subject to pending or, to
the Seller's Knowledge, threatened litigation by federal, state, or local
officials or a private litigant as a result of any previous on-site
management, treatment, storage, release, or disposal of Polluting
Substances or exposure to any Polluting Substances;
(i) There are no underground or above ground storage tanks on or under
any Property that are not in conformity with any Environmental Law, and any
Property previously containing such tanks has been remediated in compliance
with all Environmental Laws; and
(j) There is no asbestos-containing material on any Property of the
Seller.
3.08 Financial Statements; No Financial Change. Attached as Schedule 3.08
are copies of the following financial statements: unaudited balance sheets,
statements of income, statements of changes in shareholders' equity, and
statements of cash flows as of and for the year ended December 31, 2003, and an
unaudited balance sheet, statement of income, statement of changes in
shareholders' equity, and statement of cash flows as of and for the eight months
ended August 31, 2004 (collectively, the "Seller Financial Statements"). To the
best of the Seller's Knowledge, the Seller Financial Statements have been
prepared consistently during the periods indicated, are correct and complete in
all respects, accurately present the financial condition and results of
operations of the Seller as of the dates set forth, and have been prepared in
accordance with generally accepted accounting principles, consistently applied,
except that the Seller has not capitalized nor depreciated the cost of reusable
containers and related items, nor has the Seller categorized its expenses among
cost of sales, general and administrative and other expenses in the unaudited
statements of income for the periods presented. Since the date of the Seller
Financial Statements, there has not been any change in the business, operations,
prospects, assets, results of operations or condition (financial or other) of
the Seller, and no event has occurred or circumstance exists that may result in
such a change.
3.09 Taxes.
(a) The Seller has (i) timely filed all returns required to be filed
by it with respect to all federal, state, local, and foreign income,
payroll, withholding, unemployment, excise, added value, social security,
sales and use, real and personal property, use and occupancy, business and
occupation, mercantile, real estate, capital stock, and franchise or other
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tax (including interest and penalties thereon and including estimated taxes
thereof) (hereinafter referred to collectively as "Taxes"); (ii) paid all
Taxes shown to have become due pursuant to such returns; and (iii) paid all
other Taxes for which a notice of assessment or demand for payment has been
received;
(b) All returns for Taxes filed by or on behalf of the Seller have
been prepared in accordance with all applicable laws and requirements and
accurately reflect the taxable income (or other measure of Tax) of the
entity filing the return; and
(c) There are no Tax liens upon any of the Assets, and the Seller is
not aware of any audit or other proceeding or investigation, or of any
position taken on a Tax return of the Seller, that could give rise to a Tax
lien upon any of the Assets. The Seller has previously provided the Buyer
with complete, true, and correct copies of all of the Seller's federal
income tax returns.
3.10 Intangible Assets. The Seller owns and possesses all necessary
certificates, permits, authorizations, licenses, patents, trademarks, trademark
licenses, trade names, mastheads, brand names, slogans, copyrights, reprint
rights, franchises, inventions, processes, know-how, formulas, trade secrets,
and other intangible assets, including all pending applications,
continuations-in-part, and extensions for any of the above, that may be
associated with any of the Assets and all of the foregoing are being
transferred, conveyed, and assigned to the Buyer pursuant to this Agreement.
3.11 Litigation. Except as set forth on Schedule 3.11, there are no
Proceedings (as defined in Article VIII of this Agreement) in progress, pending,
or, to the Seller's Knowledge, threatened against or affecting the Seller, the
Assets, or the transactions contemplated hereby in any court or before any
arbitration panel of any kind or before or by any Governmental Authority (as
defined in Article VIII of this Agreement), nor is there any valid basis for any
such arbitration, claim, action, proceeding, inquiry or investigation.
3.12 Consents. Except as set forth on Schedule 3.12 and the consent of the
shareholders of the Seller, no consent, approval, license, permit,
authorization, or order of any Person is required in connection with the
execution and delivery of this Agreement by the Seller or the consummation of
the transactions contemplated hereby by the Seller.
3.13 Permits, Licenses, Etc. The Seller has received no written
notification of any threatened suspension or cancellation of any permit,
license, franchise, order, certificate, consent, authorization, or approval of
any Governmental Authority or administrative authority required to permit the
Seller to conduct its business as conducted on the Closing Date.
3.14 Absence of Unethical Business Practices. Neither the Seller nor any
officer, employee or agent thereof has directly or indirectly given or agreed to
give any gift or similar benefit to any customer, contractor, Governmental
Authority, or any employee, agent, broker or affiliate of such Person or
Governmental Authority who was or is in a possible position to help or hinder
the Seller, which gift or benefit (a) would subject the Seller to any damages or
penalties in any civil or criminal proceeding, or (b) would have a Material
Adverse Effect on the Assets if discontinued.
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3.15 Capitalization. The authorized equity securities of the Seller consist
of [____] shares of common stock, par value [$____] per share, of which 1,960
shares are issued and outstanding. None of the outstanding equity securities of
the Seller was issued in violation of the Securities Act of 1933, as amended
(the "Securities Act") or any other legal requirement.
3.16 Books and Records. To the best of the Seller's Knowledge, the books of
account and other financial records of the Seller, all of which have been made
available to the Buyer, are complete and correct and represent actual, bona fide
transactions, and have been maintained in accordance with sound business
practices and the requirements of Sections 13(b)(2)(A) and (B) of the Securities
Exchange Act of 1934, as amended (regardless of whether the Seller is subject to
such Sections or not), including the maintenance of an adequate system of
internal controls. The minute books of the Seller, all of which have been made
available to the Buyer, contain accurate and complete records of all meetings
held of, and corporate action taken by, the shareholders, the board of directors
and committees of the board of directors of the Seller, and no meeting of any
such shareholders, board of directors, or committee has been held for which
minutes have not been prepared or are not contained in such minute books.
3.17 Condition of Assets; Inventory.
(a) Each of the Assets is in good repair and good operating condition,
is suitable for immediate use, and is free from latent and patent defects.
No Asset is in need of repair or replacement. All Assets used in the
Seller's business are in the possession of the Seller.
(b) All of the Seller's inventory is merchantable and fit for the
purposes for which it was procured or manufactured, and none of such
inventory is slow moving, obsolete, damaged, or defective.
3.18 Employee Benefits. The Seller has no Employee Benefit Plans that are
required to comply with ERISA. For purposes of this Agreement, "Employee Benefit
Plan" means any "employee pension benefit plan" (as defined in Section 3(2) of
ERISA), any "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), and any other written or oral plan, agreement or arrangement involving
direct or indirect compensation, including insurance coverage, severance
benefits, disability benefits, deferred compensation, bonuses, stock options,
stock purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement compensation. For purposes of this Agreement,
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
3.19 Contracts; No Defaults. Schedule 3.19 contains an accurate and
complete list, and the Seller has delivered to the Buyer accurate and complete
copies, of each contract to which the Seller is a party and which is being
assigned to or assumed by the Buyer under this Agreement and each amendment,
supplement and modification (whether oral or written) in respect thereof
(collectively, the "Assigned Contracts"). Except as otherwise set forth on
Schedule 3.19, and except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting the enforcement of
creditors' rights generally and the application of general principles of equity
and judicial discretion, to the Seller's Knowledge, each Assigned Contract is in
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full force and effect and is valid and enforceable in accordance with its terms,
is not in default nor has any event occurred which with the passage of time
would result in a default, and is assignable by the Seller to the Buyer without
the consent of any other Person.
3.20 Solvency. The Seller is not now insolvent and will not be rendered
insolvent by any of the transactions contemplated by this Agreement. As used in
this section, "insolvent" means: (i) that the sum of the debts and other
probable liabilities of the Seller exceed the present fair saleable value of the
Seller's assets; (ii) any event in which the Seller is required to make an
assignment for the benefit of creditors; (iii) any event in which the Seller its
unable to pay its debts as they become due; (iv) any event in which the Seller
shall be required to file a voluntary petition in bankruptcy, or shall be
adjudicated a bankrupt or insolvent, or shall be required to file any petition
or answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, or shall be required to file any answer
admitting or not contesting the material allegations of a petition filed against
it in any such proceeding; or (v) any event in which the Seller shall be
required to seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of it or of all or any substantial part of its
properties.
3.21 Full Disclosure. No representation or warranty regarding the Seller or
the Assets made in this Agreement, the Exhibits and Disclosure Schedules hereto,
or the documents to be delivered by the Seller at the Closing pursuant to
Section 2.01(a), contains any untrue statement of a material fact that affects
the Assets or the Seller's title to the Assets, or omits to state a material
fact necessary to make the statements or facts contained herein or therein not
misleading. Each of the Exhibits and Disclosure Schedules attached hereto is a
true and complete list or description, as appropriate, of the items purported to
be listed or described thereon.
3.22. Representations Regarding the Acquisition of the Shares.
(a) Purchase Entirely for Own Account. This Agreement is made with the
Seller in reliance upon the Seller's representation to the Buyer, which by
the Seller's execution of this Agreement the Seller hereby confirms, that
the Shares to be received by the Seller will be acquired for investment for
the Seller's own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and that the Seller has no
present intention of selling or granting any participation in or otherwise
distributing the same. The Seller further represents that the Seller does
not have any contract, undertaking, agreement or arrangement with any
Person to sell, transfer or grant participations to such Person or to any
third Person with respect to the Shares.
(b) Sophistication; Accredited Investor Status. The Seller is a Person
who either alone or with its purchaser representative(s) has sufficient
knowledge and experience in financial and business matters to be capable of
evaluating the merits and risks of an investment in the Buyer.
11
(c) Speculative Investment. The Seller understands the speculative
nature and risks of investments associated with the Buyer and confirms that
it is able to bear the risk of the investment, and that there may not be
any public market for the Shares received herein.
(d) No Coercion or Solicitation. The Seller has freely entered this
Agreement and has been subject to neither pressure to make a xxxxx or
uninformed decision to enter into this Agreement nor solicitation to
receive the Shares.
(e) Transfer Restrictions. The Seller hereby acknowledges that the
Buyer is not under any obligation to register or seek an exemption under
any federal and/or state securities laws for any sale or transfer of the
Shares by the Seller, and the Seller hereby further acknowledges that the
Shares constitute restricted securities as that term is defined in Rule 144
under the Securities Act and that the Shares may not be sold, transferred,
assigned or hypothecated unless there is an effective registration
statement under the Securities Act covering the Shares, the sale is made in
accordance with Rule 144 under the Securities Act, or the Buyer receives an
opinion of counsel of the Seller reasonably satisfactory to the Buyer,
stating that such sale, transfer, assignment or hypothecation is exempt
from the registration and prospectus delivery requirements of the
Securities Act.
(f) Disclosure of Information. To the Knowledge of the Seller, the
Seller has received all the information it considers necessary or
appropriate for deciding whether to purchase the Shares. The Seller further
represents that it has had the opportunity to ask questions of the Buyer
and receive answers from the Buyer, to the extent that the Buyer possessed
such information or could acquire it without unreasonable effort or
expense, necessary to evaluate the merits and risks of any investment in
the Buyer. Further, the Seller has been given an opportunity to question
the appropriate executive officers of the Buyer. The Seller hereby
acknowledges that the Buyer has suffered a loss for the fiscal quarter
ended June 30, 2004.
(g) Lock-up Agreement. The Seller hereby acknowledges that the
shareholder lock-up agreement with respect to the Shares between the Buyer
and the Seller in the form attached hereto as Exhibit E shall follow the
Shares upon the sale, transfer, assignment or hypothecation of any or all
of the Shares to any transferee of the Seller.
(h) Legends. It is understood that the certificates evidencing the
Shares will bear the legend set forth below:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY OTHER JURISDICTIONS. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
12
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF
THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS."
The legend set forth above shall be removed by the Buyer from any
certificate evidencing Shares upon delivery to the Buyer of an opinion by
counsel, reasonably satisfactory to the Buyer, that a registration
statement under the Securities Act is at that time in effect with respect
to the legended security or that such security can be freely transferred in
a public sale without such a registration statement being in effect and
that such transfer will not jeopardize the exemption or exemptions from
registration pursuant to which the Buyer issued the Shares.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF THE BUYER
To induce the Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, the Buyer hereby represents and warrants to
the Seller, as of the Closing Date, the following:
4.01 Organization and Good Standing. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Texas. Exhibits 3.1 through 3.6, inclusive, to the Buyer's Form 10-QSB for the
quarterly period ended June 30, 2004 (the "Buyer's Form 10-QSB") are true and
complete copies of the Buyer's Articles of Incorporation and all amendments
thereto. Exhibit 3.7 to the Buyer's Form 10-QSB is a true and complete copy of
the bylaws of the Buyer as presently in effect. Schedule 4.01 includes true and
complete copies of certificates of existence and account status of Buyer,
certified by the Secretary of State of Texas and the Texas Comptroller of Public
Accounts, respectively, as of the Closing Date.
4.02 Authority. The Buyer has all requisite corporate power and authority
to execute and deliver this Agreement and the Note (collectively, the
"Transaction Documents") and to consummate the transactions contemplated hereby
and thereby. The Transaction Documents have been approved by the Buyer's Board
of Directors and have been duly authorized, executed, and delivered by the
Buyer. No other corporate act or proceeding on the part of the Buyer is
necessary to authorize the Transaction Documents or the transactions
contemplated thereby. The Transaction Documents have been duly authorized,
executed, and delivered by the Buyer and constitute a valid and binding
obligation of the Buyer enforceable against the Buyer in accordance with their
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
13
moratorium, and similar laws affecting the enforcement of creditors' rights
generally and the application of general principles of equity and judicial
discretion. The Buyer has delivered to the Seller a copy of the resolutions of
the Buyer's Board of Directors, certified as true and correct by the Buyer's
secretary, approving this Agreement, the issuance of the Shares and the Note,
and authorizing the execution hereof and thereof by the Buyer's President.
4.03 No Violation. Neither the execution and delivery by the Buyer of the
Transaction Documents nor the consummation by the Buyer of the transactions
contemplated thereby will (i) violate any provision of the Texas Business
Corporation Act, the Articles of Incorporation of the Buyer, or the Bylaws of
the Buyer; (ii) violate, or be in conflict with, or constitute a default (or an
event or condition that, with notice or lapse of time, or both, would constitute
a default) under, or result in the termination of, or accelerate the performance
required by, or cause the acceleration of the maturity of any agreement to which
the Buyer is subject, or result in the creation or imposition of any security
interest, lien, charge, or other encumbrance upon any of the Buyer's assets
under, any note, bond, mortgage, indenture, deed of trust, license, lease,
contract, commitment, understanding, arrangement, agreement, or restriction of
any kind or character to which the Buyer is a party or by which the Buyer may be
bound or affected or to which any the Buyer's assets is subject; or (iii)
violate any statute or law or any judgment, decree, order, writ, injunction,
regulation, or rule of any court or Governmental Authority (as defined in
Article VIII of this Agreement).
4.04 Brokers. The Buyer has not employed any broker, agent, or finder in
connection with any transaction contemplated by this Agreement for which the
Seller may be liable or responsible to pay.
4.05 Litigation. Except as disclosed in Buyer's Form 10-QSB, there are no
suits, arbitrations, claims, actions, Proceedings, investigations, or inquiries
in progress, pending, or, to Buyer's Knowledge, threatened against or affecting
the Buyer, the Buyer's assets, or the transactions contemplated hereby in any
court or before any arbitration panel of any kind or before or by any
Governmental Authority, except such Proceedings which would not have a Material
Adverse Effect.
4.06 Full Disclosure. To the Buyer's Knowledge, no representation or
warranty of the Buyer made in this Agreement contains any untrue statement of a
material fact that affects the ability of the Buyer to consummate the
transactions contemplated by this Agreement or omits to state a material fact
necessary to make the statements or facts contained herein not misleading.
4.07 Consents. No consent, approval, license, permit, authorization, or
order of any person is required in connection with the execution and delivery of
Transaction Documents or the consummation of the transactions contemplated
hereby.
4.08 Capitalization. The capitalization of the Buyer immediately prior to
the Closing is as set forth on Schedule 4.08.
4.09 Exemption. The issuance of the Shares hereunder to the Seller is
exempt from the registration requirements under the Securities Act of 1933, as
amended, and all applicable state securities laws.
14
4.10 Issuance of Common Stock. The Shares being sold hereunder, when issued
in accordance with this Agreement, will have been validly issued, fully paid and
non-assessable and will be free and clear of any lien, charge or other
encumbrance (other than as set forth in this Agreement) and will not be subject
to any preemptive or similar rights. As of the Closing Date, no previously
existing shareholders of the Buyer have any rights superior to the Seller,
including rights upon liquidation, to dividends, or for registration of shares
with the Securities and Exchange Commission. The shareholder lock-up agreement
with respect to the Shares between the Buyer and the Seller in the form attached
hereto as Exhibit E is the Buyer's standard form lock-up agreement to which no
less than 65% of the Buyer's outstanding Common Stock is subject as of the
Closing Date and does not contain any more severe restrictions than those
applied to other shareholders of the Buyer that have signed lock-up agreements.
4.11 Disclosure of Information. To the Knowledge of the Buyer, the Buyer
has received all the information it considers necessary or appropriate for
deciding whether to purchase the Assets. The Buyer further represents that it
has had the opportunity to ask questions of the Seller and receive answers from
the Seller, to the extent that the Seller possessed such information or could
acquire it without unreasonable effort or expense, necessary to evaluate the
merits and risks of any purchase of the Assets. Further, the Buyer has been
given an opportunity to question the appropriate executive officers of the
Seller. The Buyer hereby acknowledges that it has not received, and is not
relying on, any oral or written representations of Seller relating to the
transaction described herein, other than those representations contained within
this Agreement. Buyer represents and warrants that it is entering into this
transaction on the basis of its own due diligence with regard to Seller,
Seller's business, and the Assets.
ARTICLE V
---------
COVENANTS OF THE SELLER
5.01 Payment of Liabilities and Taxes; Bulk Transfer Laws. The Seller shall
pay in full or otherwise satisfy all liabilities of the Seller other than the
Assumed Liabilities. The Buyer and the Seller hereby waive compliance with the
bulk transfer provisions of the UCC or any similar bulk sales laws in connection
with the transactions contemplated by this Agreement.
5.02 Non-competition.
(a) The Seller and the Buyer acknowledge that (i) the Buyer is engaged
in or intends to be engaged in business throughout the United States and
that the marketplace for the Buyer's products and services is nationwide,
(ii) the agreements and covenants in this Section 5.02 are essential to
protect the legitimate business interests of the Buyer, and (iii) the Buyer
would not enter into this Agreement but for the covenants and agreements
contained in this Section 5.02. Accordingly, the Seller covenants and
agrees that commencing on the Closing Date and continuing for a period of
two years thereafter, the Seller will not, and will cause its Affiliates
not to, own, manage, operate, join, control or participate in, directly or
indirectly, or be a partner or shareholder of (except for the ownership of
the Shares), any business engaged in the (A) regulated medical waste
15
transportation business, (B) document destruction or shredding business,
including without limitation the transportation of destroyed or shredded
documents business in the states of Texas, Louisiana, Arkansas, or Oklahoma
(other than for Mitubishi Caterpiller Forklift America), (C) sharps
management business, and (D) compliance with the Occupational Safety and
Health Act ("OSHA") or the Health Insurance Portability and Accountability
Act of 1996 ("HIPAA") business (collectively, the "Buyer Businesses"), and
neither the Seller nor any Affiliate of the Seller shall render assistance
or advice to any Person which is so engaged; provided however, that the
passive ownership of less than 2% of the equity securities of a
publicly-traded company that is involved in any of the foregoing businesses
shall be permissible under this Section 5.02.
(b) If any covenant in this Section 5.02 is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered to be
divisible with respect to scope, time, and geographic area, and such lesser
scope, time, or geographic area, or all of them, as an arbitrator or a
court of competent jurisdiction may determine to be reasonable, not
arbitrary, and not against public policy, will be effective, binding, and
enforceable against the Seller and the Buyer.
5.03 Audit. The Seller shall take all actions necessary and proper such
that the Buyer's audit of the Seller's accounts and records (the "Audit") is
completed at the Buyer's expense within 45 days after the Closing Date.
5.04 Consents. The Seller shall use its reasonable best efforts to obtain
all consents from third parties necessary in order to transfer the Assets (other
than the consents already delivered pursuant to Section 2.01(a)(iv)) as soon as
practicable, but in no event later than within 30 days after the Closing Date.
5.05 Payment of Taxes. The Seller shall promptly pay all Taxes due from the
Seller as of the Closing Date, and all other Taxes for which a notice of
assessment or demand for payment has been received as of the Closing Date.
5.06 Audit Representations. Within 7 days of the delivery of the final
Audit report and the audited financial statements related thereto (collectively,
the "Audited Financials") to the Seller by the independent auditors selected to
conduct the Audit, the Seller shall provide the Buyer with an executed agreement
wherein the Seller makes the following representations and warranties (the
"Audit Representations") to the Buyer, and provides indemnification to the Buyer
with regards to the breach of such Audit Representations in a form consistent
with Sections 7.01, 7.03 and 7.04 hereof:
(a) The Audited Financials have been prepared consistently during the
periods indicated, are correct and complete in all respects, accurately present
the financial condition and results of operations of the Seller as of the dates
set forth, and have been prepared in accordance with generally accepted
accounting principles, consistently applied; and
(b) The books of account and other financial records of the Seller, all of
which have been made available to the Buyer, are complete and correct and
represent actual, bona fide transactions, and have been maintained in accordance
16
with sound business practices and the requirements of Sections 13(b)(2)(A) and
(B) of the Securities Exchange Act of 1934, as amended (regardless of whether
the Seller is subject to such Sections or not), including the maintenance of an
adequate system of internal controls.
ARTICLE VI
----------
ADDITIONAL AGREEMENTS
6.01 License of the Seller's Name. The Seller hereby grants to the Buyer a
nonexclusive license (the "License") consisting of a nonexclusive right to use
the name "Med-Con Waste Solutions", including without limitation the right to
open a bank account in the name of and cash checks made to "Med-Con Waste
Solutions". The term of the License shall commence on the Closing Date and end
one year thereafter (the "License Term"). The Seller agrees not to use the name
"Med-Con Waste Solutions" or conduct business under such name during the License
Term except to wind up its operations.
6.02 Negotiation with Creditors. In the event that the Buyer is contacted
by any creditor of the Seller, excluding creditors relating to the Assumed
Liabilities, and such creditor requests payment from the Buyer for liabilities
of the Seller accruing prior to the Closing and which are not part of the
Assumed Liabilities, the Buyer shall promptly notify the Seller in writing of
such contact. The Seller shall be entitled to negotiate with such creditor for a
period of 30 days after the Seller receives such written notice from the Buyer
(the "Negotiation Period"), and the Buyer shall take no action, unless such
creditor claims or alleges a fraudulent conveyance or similar charge, with
respect to such creditor during the Negotiation Period without the prior written
consent of the Seller, which consent shall not be unreasonably withheld.
ARTICLE VII
-----------
INDEMNIFICATION
7.01. Indemnification of the Buyer. The Seller hereby agrees to indemnify,
defend, and hold harmless the Buyer, its successors in interest, and their
respective officers, directors, employees, agents, attorneys, and stockholders
(each a "Buyer Indemnitee") from and against all demands, claims, actions, or
causes of action, assessments, losses, taxes, damages, liabilities, costs, and
expenses, including, without limitation, interest, penalties, and reasonable
attorneys' fees and expenses (collectively "Damages"), asserted against,
assessed upon, resulting to, imposed upon, or incurred by a Buyer Indemnitee by
reason of or resulting from (a) a breach of any representation, warranty, or a
breach or threatened breach of any covenant, obligation, or agreement of the
Seller contained in or made pursuant to this Agreement, including the Disclosure
Schedules and Exhibits hereto, or any facts or circumstances constituting such a
breach; or (b) the operation of the businesses of the Seller, including, but not
limited to, any products sold or services rendered, on or prior to the Closing
Date. In addition, the Seller agrees to indemnify any Buyer Indemnitee for
17
Damages as they are incurred by the Buyer Indemnitee irrespective of any ongoing
or continuing legal proceedings and the relative timeframes and issues
associated with such proceedings, or the relative success or nonsuccess the
Buyer Indemnitee may experience in such proceedings.
7.02. Indemnification of the Seller. The Buyer hereby agrees to indemnify,
defend, and hold harmless the Seller, its successors in interest, and their
respective officers, directors, employees, agents, attorneys and shareholders
(each a "Seller Indemnitee") from and against all Damages asserted against,
assessed upon, resulting to, imposed upon, or incurred by the Seller by reason
of or resulting from (a) any default on any Assumed Liability occurring after
the Closing Date, (b) a breach of any representation or warranty of the Buyer
contained in or made pursuant to this Agreement and the other Transaction
Documents, including the Exhibits and Disclosure Schedules thereto, or (c) the
operation of the businesses of the Buyer directly related to the Assets and the
Assumed Liabilities, including, but not limited to, any products sold or
services rendered, after the Closing Date. In addition, the Buyer agrees to
indemnify any Seller Indemnitee for Damages as they are incurred by the Seller
Indemnitee irrespective of any ongoing or continuing legal proceedings and the
relative timeframes and issues associated with such proceedings, or the relative
success or nonsuccess the Seller Indemnitee may experience in such proceedings.
7.03. Indemnification Claims Procedure. All claims subject to
indemnification under Section 7.01 or 7.02 above shall be asserted and resolved
in accordance with the following provisions. Promptly after receipt by a Buyer
Indemnitee or a Seller Indemnitee (either is referred to as an "Indemnitee" in
this Section 7.03) of notice of the commencement of any action (including any
governmental action), such Indemnitee will, if a claim in respect thereof is to
be made against any indemnifying party (the "Indemnifying Party") under this
Article VII, deliver to the Indemnifying Party a written notice of the
commencement thereof and the Indemnifying Party shall have the right to
participate in, and, to the extent the Indemnifying Party so desires, jointly
with any other Indemnifying Party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an Indemnitee (together with all other Indemnitees that may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential conflicts
of interest between such Indemnified Party and any other party represented by
such counsel in such proceeding. The failure to deliver written notice to the
Indemnifying Party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such Indemnifying Party of any liability to the Indemnitee under this
Article VII to the extent of the prejudice caused by such failure.
7.04. Expiration of Indemnification Obligations. All obligations to provide
indemnification pursuant to this Article VII shall terminate on the fourth
anniversary of the Closing Date, other than claims arising from environmental,
employee benefit or tax issues, which shall not terminate until the applicable
statutes of limitations for such claims have expired.
ARTICLE VIII
------------
DEFINITIONS
18
The following terms as used in this Agreement shall have the meanings set
forth below:
"Affiliate" shall mean, as to any Person, any Person controlled by,
controlling, or under common control with such Person, and, in the case of a
Person who is an individual, a member of the family of such individual
consisting of a spouse, sibling, in-law, lineal descendant, or ancestor
(including by adoption), and the spouses of any such individuals. For purposes
of this definition, "control" (including the terms "controlling", "controlled
by" and "under common control with") of a Person means the possession, directly
or indirectly, alone or in concert with others, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of securities, by contract, or otherwise, and no Person shall be
deemed in control of another solely by virtue of being a director, officer, or
holder of voting securities of any entity. A Person shall be presumed to control
any partnership of which such Person is a general partner.
"Code" shall mean the Internal Revenue Code of 1986, as amended. All
references herein to sections of the Code shall include any corresponding
provision or provisions of succeeding law.
"Environmental Laws" shall mean laws, including, without limitation,
federal, state, or local laws, ordinances, rules, regulations, interpretations,
and orders of courts or administrative agencies or authorities relating to
pollution, environmental protection, health and safety, or similar laws
(including, without limitation, ambient air, surface water, ground water, land
surface, and subsurface strata), including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Federal Clean Water Act ("CWA"), the Safe Drinking Water
Act ("SDWA"), the Resource Conservation and Recovery Act of 1976, as amended
("RCRA"), the Clean Air Act ("CAA"), the Emergency Planning and Community Right
to Know Act ("EPCRA"), OSHA, the Medical Waste Tracking Act of 1988 ("MWTA"),
the Hazardous Materials Transportation Authorization Act of 1994 ("HMTAA"), any
regulations issued by the Texas Department of Health (the "TDH"), the Texas
Natural Resource Conservation Commission (the "TNRCC"), or the Texas Commission
on Environmental Quality (the "TCEQ"), and other laws relating to pollution or
protection of the environment, or to the manufacturing, processing,
distribution, use, treatment, handling, storage, disposal, or transportation of
Polluting Substances.
"Governmental Authority" means any nation or government, any state,
regional, local, or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government.
"Knowledge" - An individual shall be deemed to have "knowledge" of a
particular fact or other matter if (i) such individual is actually aware of such
fact or other matter, or (ii) a person serving in the same capacity as such
individual would be expected to discover or otherwise become aware, after due
inquiry, of such fact or other matter in the course of performing the official
duties of such individual. A corporation shall be deemed to have "knowledge" of
a particular fact or other matter if the executive officers of the corporation
have Knowledge (as set forth above) of such fact or other matter.
19
"Material Adverse Effect" means any effect(s), individually or in the
aggregate, that would be materially adverse to: (i) a party's assets (which in
the case of the Seller shall be the Assets) in an amount of $10,000 or more; or
(ii) the ability of a party to timely consummate the transactions contemplated
hereby.
"Person" shall have the meaning given in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended, as modified and used in Sections 13(d)(3) and
14(d)(2) of such act.
"Polluting Substances" shall be construed broadly to include (a) asbestos,
(b) petroleum products or wastes, (c) biomedical or biological wastes, and (d)
all pollutants, contaminants, chemicals, or industrial, toxic, or hazardous
substances or wastes and shall include, without limitation, any flammable
explosives, radioactive materials, oil, hazardous materials, hazardous or solid
wastes, hazardous or toxic substances or regulated materials defined in CERCLA,
CWA, SDWA, RCRA, EPCRA, CAA, OSHA, MWTA, and HMTAA, and/or any other
Environmental Laws, as amended, and in the regulations adopted and publications
promulgated thereto, including without limitation those issued by the TDH, the
TNRCC and the TCEQ; provided, to the extent that the laws of the State of Texas
establish a meaning for "hazardous substance," "hazardous waste," "hazardous
materials," "solid waste," or "toxic substance," which is broader than that
specified in any of CERCLA, CWA, SDWA, RCRA, EPCRA, CAA, OSHA, MWTA, HMTAA or
other Environmental Laws such broader meaning shall apply.
"Proceeding" shall mean any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
judicial, or investigative, whether formal or informal, whether public or
private) commenced, brought, conducted, or heard by or before, or otherwise
involving any Governmental Authority or arbitrator.
"Property" includes any property (whether real or personal) that the Seller
currently or in the past has leased, operated, owned, or managed in any manner,
including, without limitation, any property acquired by foreclosure or deed in
lieu thereof and property held as security for a loan or other indebtedness on
the Closing Date.
ARTICLE IX
----------
MISCELLANEOUS
9.01 Reformation and Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof:
(a) in lieu of such illegal, invalid, or unenforceable provision,
there shall be added automatically as a part of this Agreement a provision
as similar in terms to such illegal, invalid, or unenforceable provision as
may be possible and be legal, valid, and enforceable; and
(b) the legality, validity, and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired thereby.
20
9.02 Further Assurances. Each party hereto shall, from time to time after
the Closing Date, at the request of any other party hereto and without further
consideration, execute and deliver such other instruments of conveyance,
assignments, transfer, and assumption, and take such other actions, as such
other party may reasonably request to more effectively consummate the
transactions contemplated by this Agreement.
9.03 Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be sent by first class U.S. mail
(certified mail - return receipt requested), or by facsimile transmission (if
facsimile transmission is also sent by regular U.S. mail the same day), or
delivered by hand or by overnight or similar delivery service, fees prepaid, to
the party to whom it is to be given at the address of such party set forth below
or to such other address for notice as such party shall provide in accordance
with the terms of this section. Except as otherwise specifically provided in
this Agreement, notice so given shall, in the case of notice given by certified
mail (or by such comparable method) be deemed to be given and received three
business days after the time of certification thereof (or comparable act), in
the case of notice so given by overnight delivery service, on the date of actual
delivery, and, in the case of notice so given by facsimile transmission or
personal delivery, on the date of actual transmission or, as the case may be,
personal delivery.
If to the Buyer: MedSolutions, Inc.
00000 Xxxxx Xxxxx
Xxxx Xxxxxxx VIII
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, President & CEO
Fax: (000) 000-0000
Email: xxxxxxxx@xxxxxxxxxxxx.xxx
With a copy to (delivery of which shall not be deemed as notice to Buyer):
Fish & Xxxxxxxxxx P.C.
5000 Bank One Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Block
Fax (000) 000-0000
Email: xxxxx@xx.xxx
If to the Seller: Med-Con Waste Solutions, Inc.
0000 Xxxxxxxx Xx.
Xxxxxxxx, Xxxxx 00000
Attn: Xxx Xxxxxx, President & CEO
Fax: (000) 000-0000
Email: xxxx@xxxxxxxxxxxx.xxx
21
With a copy to (delivery of which shall not be deemed as notice to Seller):
Xxxxxxx & Xxxxxx LLP
2200 ChevronTexaco Heritage Plaza
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: C. Xxxxxx Xxxxxxx
Fax: (000) 000-0000
Email: xxxxxxxx@xxxxxxx-xxxxxx.xxx
9.04 Headings. The headings of sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
9.05 Waiver. The failure of any party to insist, in any one or more
instances, upon performance of any of the terms, covenants, or conditions of
this Agreement shall not be construed as a waiver or a relinquishment of any
right or claim granted or arising hereunder or of the future performance of any
such term, covenant, or condition, and such failure shall in no way affect the
validity of this Agreement or the rights and obligations of the parties hereto.
No waiver of any provision or condition of this Agreement shall be valid unless
executed in writing and signed by the party to be bound thereby, and then only
to the extent specified in such waiver. No waiver of any provision or condition
of this Agreement shall be construed as a waiver of any other provision or
condition of this Agreement, and no present waiver of any provision or condition
of this Agreement shall be construed as a future waiver of such provision or
condition.
9.06 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties hereto shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.07 GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF OR OF ANY
STATE TO THE EXTENT THAT SUCH CHOICE OF LAW RULES PROVIDE FOR THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN TEXAS. THE SELLER HEREBY AGREES THAT
VENUE FOR ANY ACTION BROUGHT BY THE BUYER WITH RESPECT TO THIS AGREEMENT SHALL
BE PROPER IN DALLAS COUNTY, TEXAS. THE BUYER HEREBY AGREES THAT VENUE FOR ANY
ACTION BROUGHT BY THE SELLER WITH RESPECT TO THIS AGREEMENT SHALL BE PROPER IN
XXXXXX COUNTY, TEXAS.
22
9.08 Court Costs and Attorneys' Fees. If any action at law or in equity,
including an action for declaratory relief, is brought to enforce or interpret
the provisions of this Agreement, the prevailing party shall be entitled to
recover costs of court and reasonable attorneys' fees from the other party or
parties to such action, which fees may be set by the court in the trial of such
action or may be enforced in a separate action brought for that purpose, and
which fees shall be in addition to any other relief that may be awarded.
9.09 Assignability and Binding Effect. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors, heirs, and permitted assigns. This Agreement and the rights and
obligations hereunder shall not be assignable without the express written
consent of all parties hereto.
9.10 Amendments. This Agreement may not be modified, amended, or
supplemented except by an agreement in writing signed by all of the parties
hereto.
9.11 Expenses, Taxes, Etc. Except as otherwise provided herein, the Seller
shall pay all fees, taxes, and expenses incurred by it in connection with this
Agreement, and the Buyer shall pay all fees and expenses incurred by it in
connection with the transactions contemplated by this Agreement.
9.12 Third Parties. Except with respect to indemnification under Section
7.01 or Section 7.02 herein, nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person other than the parties
hereto and their successors, heirs or permitted assigns, any rights or remedies
under or by reason of this Agreement.
9.13 Number and Gender of Words. When the context so requires in this
Agreement, words of gender shall include either or both genders and the singular
number shall include the plural.
9.14 Entire Agreement. This Agreement and the executed documents, the forms
of which are attached hereto as Exhibits, together with the Disclosure Schedules
and Exhibits attached hereto and thereto, shall constitute the entire agreement
between the parties hereto with respect to the transactions contemplated hereby
and shall supersede all prior or contemporaneous negotiations, understandings
and agreements. There are no representations, agreements, arrangements, or
understandings, oral or written, between or among the parties hereto relating to
the subject matter of this Agreement that are not fully expressed herein.
9.15 Survival of Representations and Warranties. All representations,
warranties, covenants, and obligations of the parties hereto shall survive the
Closing for a period of three years thereafter.
9.16 Multiple Counterparts. This Agreement may be executed in multiple
counterparts, including by facsimile signature, each of which shall be deemed to
be an original but all of which together shall constitute one and the same
instrument.
23
9.17 Disclosure on Disclosure Schedules. Disclosure of a specific item in
any one Schedule hereto shall be deemed a disclosure as to all other applicable
Disclosure Schedules if there is an explicit cross-reference to another
Schedule.
[Remainder of page intentionally left blank.]
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
THE SELLER:
MED-CON WASTE SOLUTIONS, INC.
By: /s/ Xxx Xxxxxx
Name: Xxx Xxxxxx
Title: President and CEO
THE BUYER:
MEDSOLUTIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
25
EXHIBIT A
---------
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
---------------
$500,000 Dallas, Texas September 30, 2004
FOR VALUE RECEIVED, the undersigned, MedSolutions, Inc., a Texas
corporation (the "Maker"), hereby unconditionally promises to pay to the order
of Med-Con Waste Solutions, Inc., a Texas corporation (the "Payee"), at such
place as designated by the Payee, or at such other place or to such other party
or parties as may be designated by the Payee from time to time, in lawful money
of the United States of America, the principal amount of $500,000 (the
"Principal Amount"), secured by certain of the assets of the Maker as described
in the Security Agreement entered into by Maker and Payee and dated as of
September 30, 2004, with simple interest at an annual rate of 7.0%
1. This Promissory Note (the "Note") shall be due and payable in 30 equal
monthly installments of principal and interest in the amount of $18,215.95, with
the final such installment due on June 1, 2007 (the "Maturity Date"). Each
payment shall be made on the first day of each month, commencing on January 1,
2005. Each date on which a payment is due, including the Maturity Date, shall be
referred to herein as a "Payment Date"; provided, however, that if a Payment
Date should fall on a Saturday, Sunday, or bank holiday, then the Payment Date
shall be the next business day. The Maker may prepay any portion or this entire
Note without penalty at any time. Any prepayment will be applied first against
accrued but unpaid interest and then against the outstanding principal balance.
At the request of the Payee, the Maker may make any payments due under the Note
directly to the creditors of the Payee. The Payee hereby acknowledges that this
Note and the Principal Amount are subject to certain offset rights by the Maker
pursuant to that certain Asset Purchase Agreement (the "Asset Purchase
Agreement") entered into by and between the Maker and the Payee as of the date
hereof. To the extent that any interest is paid on the Note and the Principal
Amount is subsequently reduced in accordance with the terms of the Asset
Purchase Agreement, any excess interest previously paid will be credited against
the future interest payment(s) and/or the Principal Amount such that the amount
of interest paid on the Principal Amount does not exceed 7.0%.
2. If the Maker fails to pay the full amount then due on any Payment Date
and such failure remains uncured for a period of 10 calendar days following
written notice of such default by the Payee, then, at the election of the Payee,
this Note shall immediately become due and payable in full, interest on such
principal amount and unpaid interest shall thereafter accrue at the lesser of
12% or the highest lawful rate permissible under applicable law (the "Default
Rate"), and the Payee shall be entitled to pursue any remedy to which it is
entitled under applicable law.
3. The makers, signers, sureties, guarantors, and endorsers of this Note
severally waive valuation and appraisal, demand, presentment, notice of
dishonor, notice of intent to demand or accelerate payment hereof, notice of
demand, notice of acceleration, diligence in collecting, grace, notice, and
protest. If this Note is not paid when due, the Maker agrees to pay all costs of
collection, including, but not limited to, reasonable attorneys' fees and all
expenses incurred by the holder hereof on account of any such collection,
whether or not suit is filed hereon.
4. Except as expressly set forth in Section 1 hereof, the Maker shall have
no right of setoff, counterclaim, recoupment or other deduction with respect to
the payment required hereunder, and such payment constitutes the absolute and
unconditional obligation of the Maker.
5. Each right and remedy available to the holder hereof shall be cumulative
of and in addition to each other such right and remedy. No delay on the part of
A-1
the holder hereof in the exercise of any right or remedy available to the holder
hereof shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude other or further exercise thereof or exercise of any
other such right or remedy.
6. Regardless of any provision contained in this Note, Payee shall never be
entitled to receive, collect or apply, as interest on this Note, any amount in
excess of the maximum lawful rate permitted by applicable law and, in the event
Payee ever receives, collects or applies as interest any such excess, such
amount that would be excessive interest shall be deemed a partial prepayment of
principal and treated under this Note as such by Maker. In determining whether
or not the interest paid or payable on this Note exceeds such maximum lawful
rate, Maker and Payee shall, to the maximum extent permitted under applicable
law, (a) characterize any nonprincipal payment as an expense, fee or premium
rather than as interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate and spread, in equal parts, the
total amount of interest throughout the entire contemplated term of this Note so
that the interest rate does not exceed the maximum lawful rate at any time
during the entire term of this Note. However, if this Note is paid in full or
all or a portion of the principal is set off under the Asset Purchase Agreement
prior to the scheduled maturity hereof, and if the interest received for the
actual period of existence thereof exceeds such maximum lawful rate, Payee shall
refund the amount of such excess and shall not be subject to any applicable
penalties provided by any laws for contracting for, charging, taking, reserving
or receiving interest in excess of such maximum lawful rate.
7. Payee shall be entitled to assign all or a portion of this Note to an
Affiliate (as such term is defined in the Asset Purchase Agreement dated of even
date herewith by and between Maker and Payee) without the consent of Maker.
Maker shall reissue the Note to the transferee(s) upon receipt of written notice
of the transfer and evidence of transferee(s)' status as an Affiliate.
8. This Note is one of two promissory notes referred to and is entitled to
the benefits of and security afforded by that certain Security Agreement dated
as of September 30, 2004, executed by Maker in favor of Payee and covering the
collateral described therein (the "Security Agreement"). This Note is subject to
the Security Agreement which, among other things, provides for acceleration of
the maturity hereof upon the occurrence of certain events.
9. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS RULES OR CHOICE OF LAWS RULES THEREOF.
EXECUTED effective as of the date first set forth above.
MAKER:
MedSolutions, Inc.
By:_________________________________
Xxxxxxx X. Xxxxxxx, President/CEO
A-2
EXHIBIT B
---------
FORM OF XXXX OF SALE AND
ASSIGNMENT AND ASSUMPTION AGREEMENT
XXXX OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT
THE STATE OF TEXAS )
) KNOWN BY ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS )
THIS XXXX OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT (this
"Agreement") is effective as of September 30, 2004 (the "Closing Date"), by and
between Med-Con Waste Solutions, Inc., a Texas corporation ("Assignor"), and
MedSolutions, Inc., a Texas corporation ("Assignee").
Assignee is a party to that certain Asset Purchase Agreement dated as of
September 30, 2004 by and between Assignee and Assignor (the "Purchase
Agreement"). The Purchase Agreement contemplates the making and delivery of this
Agreement. Capitalized terms used in this Agreement but not otherwise defined
herein shall have the meanings given to such terms in the Purchase Agreement.
NOW, THEREFORE, as contemplated by the Purchase Agreement, and for good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Effective as of the Closing Date, Assignor hereby sells, conveys,
assigns, transfers, and delivers to Assignee, its successors and assigns,
forever, and Assignee hereby accepts, all of Assignor's right, title, and
interest in and to all of the properties and assets listed on Exhibit A attached
hereto (the "Assigned Assets"), free and clear of all liens, charges, security
interests, encumbrances, and restrictions of whatever nature, except as
otherwise set forth pursuant to the Purchase Agreement, and the Assignor does
hereby bind itself and its successors and assigns to WARRANT and FOREVER DEFEND,
all and singular, title to the Assigned Assets unto the Assignee, its successors
and assigns, against every person whomsoever lawfully claiming or to claim the
same, or any part thereof. Except as otherwise set forth pursuant to the
Purchase Agreement, it is agreed that the Assignee shall not be responsible for
the discharge and performance of any duties or obligations required to be
performed and/or discharged in connection with the Assigned Assets on or prior
to the Closing Date, and Assignor agrees to indemnify, as set forth in Article
VII of the Purchase Agreement, save, and hold harmless the Assignee from and
against any and all losses, costs, damages, liabilities, expenses (including
reasonable attorneys' fees) actions, claims, or causes of action existing in
favor of or asserted by any party arising from or related to any failure by the
Assignor to perform or discharge its obligation as the owner of the Assigned
Assets on and prior to the Closing Date.
2. Effective as of the Closing Date, Assignee hereby assumes and agrees to
pay, discharge, and perform when due certain of Assignor's debts, liabilities,
and obligations (whether accrued, absolute, contingent or otherwise, whether
known or unknown, whether due or to become due, and regardless of when or by
whom asserted) (the "Assumed Liabilities") listed on Exhibit B attached hereto.
B-1
Assignee hereby indemnifies, as set forth in Article VII of the Purchase
Agreement, and holds harmless Assignor from and against any and all liabilities,
costs, losses, and expenses arising from or relating to the Assumed Liabilities.
3. The Assignor hereby constitutes and appoints the Assignee as the
Assignor's true and lawful attorney, with full power of substitution, for it and
in its name, place, and stead, or otherwise, but on behalf of and for the
benefit of the Assignee, to demand and receive from time to time any and all
Assigned Assets and Assumed Liabilities, hereby sold, assigned, and conveyed, or
intended so to be, and to get receipts and release for and in respect of the
same or any part thereof, and from time to time to institute and prosecute in
the name of the Assignor or otherwise, but at the expense and for the benefit of
the Assignee, any and all proceedings at law, inequity or otherwise, that the
Assignee may deem proper in order to collect, assert, or enforce any claim,
right, or title, of any kind, in and to the Assigned Assets and Assumed
Liabilities hereby assigned and conveyed, or intended so to be, and to defend
and compromise any and all actions, suits, or proceedings relating to any of the
said Assigned Assets and Assumed Liabilities, and generally to do all and any
such acts and things in relation thereto as the Assignee shall deem advisable.
4. Notwithstanding any other provision in this Agreement to the contrary,
in the event that any Assigned Asset is not legally or equitably assignable
(whether pursuant to its express terms or otherwise) at the Closing Date, or if
the purported assignment of such Assigned Asset pursuant to this Agreement would
adversely affect, or diminish the value to Assignee of, such Assigned Asset,
then in any such case (a) such Assigned Asset shall not be deemed assigned to
Assignee hereunder, (b) Assignor shall, until such time as such Assigned Asset
is so assignable without any such adverse effect or diminution in value, hold
such Assigned Asset in trust for the benefit of Assignee, and act as agent of
Assignee in order to obtain for Assignee the economic and other benefits of such
Assigned Asset as though such Assigned Asset had been assigned to Assignee
hereunder, (c) Assignor shall transfer or deliver to Assignee any and all sums,
proceeds and other consideration received or collected by Assignor in respect of
such Assigned Asset or as a result of any liquidation or other capitalization
thereof, and (d) if and when such Assigned Asset thereafter becomes so
assignable without any such adverse effect or diminution in value, then Assignor
shall promptly, at Assignee's reasonable request and without further
consideration, execute and deliver such instruments of conveyance and transfer
and take such action to effect, consummate, confirm and evidence the transfer to
Assignee of such Assigned Asset.
5. Each party hereby covenants that, from and after the Closing Date, upon
the other party's reasonable request and without further consideration, such
party shall execute and deliver such further instruments of conveyance and
transfer and take such additional action to effect, consummate, confirm and
evidence the transfer to Assignee of the Assigned Assets and the assumption by
Assignee of the Assumed Liabilities.
6. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same Agreement.
B-2
7. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF.
8. This instrument shall insure to the benefit of, and be binding upon, the
parties hereto and their respective successors and assigns.
[The remainder of page is intentionally left blank.]
B-3
IN WITNESS WHEREOF, Assignor and Assignee have caused this Agreement to be
executed and delivered as of the date first written above.
ASSIGNOR:
MED-CON WASTE SOLUTIONS, INC.
By: _________________________________
Xxx Xxxxxx, President/CEO
ASSIGNEE:
MEDSOLUTIONS, INC.
By: _________________________________
Xxxxxxx X. Xxxxxxx, President/CEO
X-0
XXXXXXXXXXXXXX
XXX XXXXX XX XXXXX )
)
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this _____ day of
__________ 2004, by Xxx Xxxxxx, President and CEO of Med-Con Waste Solutions,
Inc., on behalf of said corporation.
___________________________________________
Notary Public for and in the State of Texas
[SEAL]
____________________________
My commission expires
X-0
XXXXXXXXXXXXXX
XXX XXXXX XX XXXXX )
)
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this _____ day of
__________ 2004, by Xxxxxxx Xxxxxxx, President and CEO of MedSolutions, Inc., on
behalf of said corporation.
___________________________________________
Notary Public for and in the State of Texas
[SEAL]
____________________________
My commission expires
B-6
EXHIBIT A
---------
-----------------------------------------------------------------
Assigned Assets
B-7
EXHIBIT B
---------
-----------------------------------------------------------------
Assumed Liabilities
B-8
EXHIBIT C
---------
MED-CON WASTE SOLUTIONS, INC.
OFFICER'S CERTIFICATE
---------------------
I, Xxx Xxxxxx, President of Med-Con Waste Solutions, Inc., a Texas
corporation (the "Seller"), hereby certify the following pursuant to Section
2.01(a)(ii) of the Asset Purchase Agreement (the "Agreement"), dated as of
September 30, 2004, between MedSolutions, Inc., a Texas corporation, and the
Seller. Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings ascribed to them in the Agreement.
1. All representations and warranties of the Seller set forth in the
Agreement are true and correct as of the date hereof, except to the extent such
representations and warranties are specifically made as of an earlier date (in
which case such representations and warranties are true and correct as of such
earlier date).
2. The Seller has performed or complied with in all respects its agreements
and covenants required to be performed or complied with under the Agreement as
of or prior to the date hereof.
IN WITNESS WHEREOF, I have executed this Certificate as of September 30,
2004.
MED-CON WASTE SOLUTIONS, INC.,
a Texas corporation
By: ____________________________
Name: Xxx Xxxxxx
Title:President and CEO
C-1
EXHIBIT D
---------
MED-CON WASTE SOLUTIONS, INC.
CERTIFICATE OF SECRETARY
------------------------
This Certificate of Secretary is made and attested to this 30th day of
September, 2004, pursuant to the Asset Purchase Agreement dated September 30,
2004 (the "Agreement"), by and between MedSolutions, Inc., a Texas corporation
(the "Buyer"), and Med-Con Waste Solutions, Inc., a Texas corporation (the
"Seller").
1. The Seller has provided the Buyer with the Articles of Incorporation of
the Seller, including all amendments thereto as of this date, and the Bylaws of
the Seller, including all amendments thereto as of this date, and I hereby
certify and attest that such documents are true, complete, and presently in
effect.
2. The Seller has provided the Buyer with a copy of the Action by Unanimous
Written Consent of the Board of Directors of the Seller, which approves the
Agreement and the execution thereof by the President of the Seller, and I hereby
certify and attest that such Action by Unanimous Written Consent is true and
complete and has not been rescinded.
3. The Seller has provided the Buyer with a copy of the Action by Written
Consent of shareholders of the Seller, executed by each and every shareholder of
the Seller as of the date hereof, approving the adoption of the Agreement and
the transaction contemplated thereby, and I hereby certify and attest that such
Action by Written Consent is true and complete and has not been rescinded.
IN WITNESS WHEREOF, I have set my hand hereto as of the date first written
above.
____________________________________
Xxxxx Xxxx, Secretary
D-1
EXHIBIT E
---------
FORM OF SHAREHOLDER LOCK-UP AGREEMENT
LOCK-UP AGREEMENT
MedSolutions, Inc.
00000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Dear Sirs:
The undersigned, a shareholder of MedSolutions, Inc., (the "Company"),
understands that the Company has filed with the Securities and Exchange
Commission ("SEC") a Form 10-SB (the "Form 10-SB") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and as a result thereof
the Company has become a fully reporting Company under the Exchange Act, thus
creating the statutory foundation for the development of a public market for the
Company's common stock, par value $.001 per share (the "Common Stock"). The
Company's management believes that the Company soon will be in a position to
have the trading of the Common Stock quoted on the OTC Bulletin Board(R), after
certain steps are completed, including the execution of this Lock-Up Agreement
by a sufficient number of the Company's shareholders. In recognition of the
benefit that the quotation of the trading of the Common Stock would confer upon
the undersigned as a shareholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with the Company that, except for the "Allowable
Transactions" defined herein, during the period of twelve (12) months following
the date on which the Common Stock is initially quoted on the OTC Bulletin
Board(R) or other national exchange (the "Effective Date"), the undersigned will
not, without the prior written consent of the Company, directly or indirectly,
with regard to shares of Common Stock held by the undersigned on the Effective
Date but not shares of Common Stock acquired thereafter, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of hypothecate, or transfer any shares of Common Stock or
any securities convertible into or exchangeable or exercisable for Common Stock,
or request that the Company file any registration statement under the Securities
Act of 1933, as amended, with respect to any of the foregoing or (ii) enter into
any swap or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise (collectively the
"Lock-Up Provisions").
The Company's consent, however, is not required for the following transfers
(the "Allowable Transactions"): (a) after the expiration of one year from the
Effective Date, 20% of the shares of Common Stock owned by the undersigned will
no longer be subject to the Lock-Up Provisions; (b) after the expiration of 90
days following the completion of one year from the Effective Date, 40% of the
shares of Common Stock owned by the undersigned will no longer be subject to the
Lock-Up Provisions; (c) after the expiration of 180 days following the
completion of one year from the Effective Date, 60% of the shares of Common
Stock owned by the undersigned will no longer be subject to the Lock-Up
Provisions; (d) after expiration of 270 days following the completion of one
year from the Effective Date, 80% of the shares of Common Stock owned by the
undersigned will no longer be subject to the Lock-Up Provisions; (e) after
expiration of two years from the Effective Date, 100% of the shares of Common
Stock owned by the undersigned will no longer be subject to the Lock-Up
Provisions; (f) a bona fide gift or gifts made by the undersigned, provided that
the donee of such shares of Common Stock or securities convertible into or
exchangeable or exercisable for any shares of Common Stock agree in writing to
be bound by the terms of this letter agreement prior to such gift; (g) a
distribution to partners or stockholders of the undersigned (and to any direct
or indirect partner or stockholder thereof), provided that the ultimate
distributees of such shares of Common Stock or securities convertible into or
E-1
exchangeable or exercisable for any shares of Common Stock agree in writing to
be bound by the terms of this letter agreement prior to such distribution; or
(h) transfers, without consideration, of shares of Common Stock or securities
convertible into or exchangeable or exercisable for any shares of Common Stock
to family members or to one or more trusts established for the benefit of one or
more family members, provided that the transferee of such shares of Common Stock
or securities convertible into or exchangeable or exercisable for any shares of
Common Stock agree in writing to be bound by the terms of this letter agreement
prior to such transfer. The undersigned further agrees for the Company to place
a restrictive legend on any share certificates representing shares of Common
Stock that are subject to the Lock-Up Provisions, and to place stop-transfer
orders with the Company's transfer agent in order to prevent the transfer of
shares of Common Stock in contravention of the Lock-Up Provisions. This letter
agreement, once executed by the undersigned shareholder of the Company, shall
supersede and replace in its entirety any prior lock-up arrangement the
shareholder may have entered into with the Company.
Very truly yours,
MED-CON WASTE SOLUTIONS, INC.
By:_________________________________
Xxx Xxxxxx, President/CEO
MEDSOLUTIONS, INC.
By:_________________________________
Xxxxxxx X. Xxxxxxx, President/CEO
E-2
EXHIBIT F
---------
MEDSOLUTIONS, INC.
OFFICER'S CERTIFICATE
---------------------
I, Xxxxxxx X. Xxxxxxx, President of MedSolutions, Inc., a Texas corporation
(the "Buyer"), hereby certify the following pursuant to Section 2.01(b)(ii) of
the Asset Purchase Agreement (the "Agreement"), dated as of September 30, 2004,
between the Buyer and Med-Con Waste Solutions, Inc., a Texas corporation.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed to them in the Agreement.
1. All representations and warranties of the Buyer set forth in the Agreement
are true and correct as of the date hereof, except to the extent such
representations and warranties are specifically made as of an earlier date (in
which case such representations and warranties are true and correct as of such
earlier date).
2. The Buyer has performed or complied with in all respects its agreements and
covenants required to be performed or complied with under the Agreement as of or
prior to the date hereof.
IN WITNESS WHEREOF, I have executed this Certificate as of September 30, 2004.
MEDSOLUTIONS, INC.,
a Texas corporation
By:________________________
Name: Xxxxxxx X. Xxxxxxx
Title:President and CEO
F-1
EXHIBIT G
---------
RESERVED.
G-1
EXHIBIT H
---------
FORM OF NON-COMPETITION AND NON-SOLICITATION AGREEMENT
CONFIDENTIALITY AND
NON-COMPETITION AGREEMENT
This Confidentiality and Non-competition Agreement (the "Agreement") is
made and entered into as of September 30, 2004, by and between
[______________________________], an individual (the "Seller Representative"),
and MedSolutions, Inc., a Texas corporation (the "Company").
RECITALS:
A. The Company is purchasing certain assets (the "Assets") of Med-Con Waste
Solutions, Inc. (the "Seller"), of which the Seller Representative is an
officer, director, shareholder and/or employee, as set forth in that certain
Asset Purchase Agreement, dated September 30, 2004, (the "Purchase Agreement")
between the Company and the Seller. This Agreement is ancillary to and part of
such Purchase Agreement.
B. The Company's business and success are based on the use of proprietary
and confidential information and trade secrets that are valuable and unique
assets of the Company. In connection with the Purchase Agreement between the
Company and the Seller, the Seller Representative will receive and have access
to and knowledge of proprietary and confidential information and trade secrets
of the Company, its suppliers and its customers.
C. The Seller Representative is intimately familiar with confidential
information and trade secrets of the Seller. The Seller Representative is also
in a position to affect the goodwill associated with the Seller's business and
the Assets. Further, the Seller Representative acknowledges that the Company is
purchasing such confidential information, trade secrets, and goodwill of the
Seller in the Purchase Agreement.
D. The Seller Representative's access to and knowledge of proprietary and
confidential information, trade secrets, and goodwill of the Seller and the
Company will present the Seller Representative with the opportunity to benefit
himself and others wrongly at the expense of the Company, its customers, and the
Seller, if the Seller Representative does not abide by the terms of this
Agreement. If the Seller Representative were to compete with the Company, it
would be highly unlikely that the Seller Representative could do so without
misappropriating for himself or for any competing employer information obtained
through his employment with the Company or the Seller, thereby causing
irreparable harm to the business of the Company and also frustrating and
defeating the entire purpose of the Company's Purchase Agreement with the
Seller.
E. The Seller Representative will receive financial consideration from the
Seller as a result of the Purchase Agreement, given the Seller Representative's
position as an officer, director, shareholder and/or employee of the Seller.
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F. In addition to this Agreement, the Seller Representative may be entering
into an employment or consulting agreement with the Company as part of the
Purchase Agreement. If so, this Agreement is ancillary to such employment or
consulting agreement.
G. For purposes of this Agreement, the term "Company" shall mean and
include the Company and its affiliates, and all of their direct and indirect
subsidiaries.
AGREEMENTS:
THEREFORE, in exchange for the consideration contained herein, as well as
the consideration contained in the Purchase Agreement, employment agreement
and/or consulting agreement, or inuring to the Seller Representative's benefit
as a result of such agreements, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Seller Representative
agrees with the Company as follows:
ARTICLE I
CONFIDENTIALITY OF COMPANY INFORMATION
Confidentiality Agreement. The Seller Representative acknowledges that,
during the negotiation of the Purchase Agreement, during the course of his
employment with, management of or ownership of the Seller, and during the course
of his employment or consulting relationship with the Company, if any, the
Seller Representative has or will become privy to certain Confidential
Information (hereinafter defined) of the Company and/or the Assets and the
Seller Representative agrees that he shall not, without the prior written
consent of the Company, at any time, whether before, during, or after the term
of his employment with the Company, if applicable, except as required to perform
his duties of employment with the Company, use, disseminate, disclose, or
communicate any Confidential Information to any person or entity inside or
outside the United States. As used herein, the term "Confidential Information"
means: (i) all information about the Company disclosed or made known to the
Seller Representative as a direct or indirect consequence of or through the
Purchase Agreement, (ii) all information about the Assets disclosed or made
known to the Seller Representative during the course of his employment with,
management of or ownership of the Seller, and (iii) all information about the
Company disclosed or made known to the Seller Representative during the course
of his employment or consulting with the Company, that is not generally known in
the industries in which the Company or any of its affiliates or subsidiaries is
or may become engaged, including, but not limited to, information about: (A)
financial position, product line, customers, suppliers, and market; (B) profit
margins, pricing techniques, or pricing information as to both purchase prices
from suppliers and sale prices to customers; (C) past, present, or future plans
with respect to the business of the Company; (D) bids, negotiations, or
techniques in bidding or negotiating, pursuant to supplier, wholesaler, customer
or other contracts; (E) current or future Company advertising or promotion plans
or programs; (F) any Company system, procedure, or administrative operations;
(G) Company's structure, employees, or processes; and (H) present or future
plans for the extension of the present business or commencement of a new
business by the Company or any subsidiary or division of the Company.
Confidential information shall exclude information that: (w) is already known by
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the receiving party prior to disclosure by the other party from a source other
than the disclosing party and not under a duty of confidentiality to the
Company, (x) is in the public domain, (y) ceases to be confidential through no
fault of the receiving party, or (z) is independently developed by the receiving
party.
ARTICLE II
NON-COMPETITION COVENANTS
2.01 Term of Non-Competition. The "Term of Non-Competition" means the
period beginning on the date hereof and continuing for a period of two years
following the closing date of the Purchase Agreement (as defined therein).
2.02 No Business Competition. During the Term of Non-Competition, the
Seller Representative will not own, manage, operate, join, control or
participate in, directly or indirectly, or be a partner or shareholder of
(except for shares in the Company), any business engaged in the (A) regulated
medical waste transportation business, (B) document destruction or shredding
business, including without limitation the transportation of destroyed or
shredded documents business in the states of Texas, Louisiana, Arkansas, or
Oklahoma (other than for Mitubishi Caterpiller Forklift America), (C) sharps
management business, and (D) compliance with the Occupational Safety and Health
Act or the Health Insurance Portability and Accountability Act of 1996 business
(collectively, the "Competing Businesses"), and the Seller Representative shall
not render assistance or advice to any person which is so engaged; provided
however, that the passive ownership of less than 2% of the equity securities of
a publicly-traded company that is involved in any of the foregoing businesses
shall be permissible under this Section 2.02.
2.03 No Solicitation of Company's Customers. During the Term of
Non-Competition, the Seller Representative shall not induce, request, advise,
attempt to influence, or solicit, directly or indirectly, any person or entity
that is an actual or prospective customer of the Company at any time during the
Term of Non-Competition to buy products or services from a competing business.
It is understood that this Section 2.03 shall be in addition to and not
construed as a limitation upon any other covenant in Article II hereof.
2.04 No Solicitation of Employees. During the Term of Non-Competition, the
Seller Representative hereby agrees not to induce, directly or indirectly, any
person who is an employee of the Company to leave the employment of the Company.
2.05 Tolling of Term. If, during any calendar month within the Term of
Non-Competition, the Seller Representative is not in compliance with the terms
of this Article II, the Company shall be entitled to, among other remedies,
compliance by the Seller Representative with the terms of this Article II for an
additional number of calendar months that equals the number of calendar months
during which such noncompliance occurred. The term "Term of Non-Competition"
shall also include this additional period.
2.06 Reasonableness of Restrictions. The Seller Representative acknowledges
that the geographic boundaries, scope of prohibited activities, and time
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duration of the provisions of this Article II are reasonable and are no broader
than are necessary to maintain the confidentiality of the Confidential
Information and the goodwill associated with the Company's goods and services,
and to protect the other legitimate business interests of the Company, including
its goodwill and the intent of the Purchase Agreement.
ARTICLE III
MISCELLANEOUS
3.01 Continuing Obligation. If the Seller Representative also has an
employment or consulting agreement with the Company, the Seller Representative's
obligations under this Agreement shall continue whether or not the Seller
Representative's employment or consulting with the Company shall be terminated
voluntarily or involuntarily, with or without cause, and whether or not the
Seller Representative or the Company breaches the employment or consulting
agreement between the Seller Representative and the Company, if any.
3.02 Parties Bound. This Agreement shall be binding upon the Seller
Representative, the Seller Representative's heirs, executors, administrators,
and assigns and shall inure to the benefit of the Company, its successors, and
assigns.
3.03 Counterparts. This Agreement may be executed in multiple counterparts,
including by facsimile signature, each of which shall be deemed to be an
original but all of which together shall constitute one and the same instrument.
3.04 Waiver. The Company may waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of the Company to any
such waiver shall be valid only if set forth in an instrument in writing signed
by the Company.
3.05 Entirety and Amendments. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof,
supersedes all prior agreements or understandings relating to the subject matter
hereof, and may be modified or amended only by an instrument in writing executed
by the parties hereto.
3.06 Headings. The heading contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
3.07 Governing Law. The law of the State of Texas will govern the
interpretation, validity and effect of this Agreement without regard to the
place of execution or the place of performance thereof.
3.08 Invalid Provisions and Request for Reformation. If any provision of
this Agreement (including, without limitation, any provision relating to the
activities covered by, or time period of, the non-competition covenants of
Article II) is held to be illegal, invalid, or unenforceable under present or
future laws effective during the term hereof, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
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invalid, or unenforceable provision had never comprised a part hereof; and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision, there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible that is legal, valid, and enforceable, and the
Company hereby requests the court or any arbitrator to whom disputes relating to
this Agreement are submitted to reform the otherwise unenforceable covenant in
accordance with the preceding provision.
[The remainder of this page is left intentionally blank.]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
MEDSOLUTIONS, INC.
By:_________________________________
Xxxxxxx X. Xxxxxxx, President/CEO
SELLER REPRESENTATIVE
By:_________________________________
[Printed name]
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EXHIBIT I
---------
FORM OF EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (this "Agreement") is made and entered into as of
_________, 2004 (the "Effective Date"), by and between MedSolutions, Inc., a
Texas corporation (the "Employer"), and Xxxxxx Xxxx, an individual and resident
of the State of Texas (the "Employee").
RECITALS
A. The Employer is purchasing certain assets (the "Assets") of Med-Con
Waste Solutions, Inc. (the "Seller"), as set forth in the Asset Purchase
Agreement (the "Purchase Agreement") entered into by and between the Employer
and the Seller, dated as of [______], 2004.
B. Employee has served as an employee of the Seller.
C. The Employee has certain skills, experience, and abilities that are
valuable to the successful transition of the Assets from Seller to Employer and
to the success of the Employer's operations and future profitability;
D. The Employer desires to employ and retain the services of the Employee
as a full time employee, and the Employee desires to work for and be employed by
the Employer, to perform those duties as may be assigned by the Employer;
E. The Employer and the Employee desire to set forth the terms and
conditions pursuant to which the Employee will be employed by the Employer; and
F. In consideration of the foregoing premises and of the mutual covenants
and undertakings contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties to this Agreement hereby agree as follows:
Article 1: EMPLOYMENT PERIOD AND DUTIES
1.01 Employment. The Employer hereby employs the Employee, and the Employee
hereby accepts employment by the Employer, upon the terms and conditions set
forth in this Agreement.
1.02 Employment Period. Unless earlier terminated as herein provided, the
Employee's employment with the Employer pursuant to this Agreement shall
commence on the Effective Date and shall continue for a term of thirty-six
months after such date (the "Employment Period"). The date on which the
Employment Period ends shall be the "Expiration Date."
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1.03 Duties and Services. The Employee will be employed at [________,
Houston, Texas] or at such other office location as determined by the Employer's
President, and will have such duties and perform such services as are assigned
or delegated to the Employee by the President, including without limitation
assisting in the orderly transition of the Assets from the Seller to the
Employer as contemplated by the Purchase Agreement. During the Employment
Period, the Employee will devote his business time, attention, skill, and energy
to the business of the Employer and will use his best efforts to promote the
success of the Employer's business.
Article 2: COMPENSATION
2.01 Salary. Subject to the provisions of Article 4 of this Agreement that
relate to compensation of the Employee following the termination of the
Employment Period, the Employee will be compensated at the rate of $8,333.33 per
month (such amount is hereinafter referred to as the "Salary"), for the duration
of the Employment Period. The Salary will be payable in accordance with the
normal payroll practices and procedures of the Employer. The Employer shall
withhold from each installment of the Salary all applicable federal, state, and
local income and other payroll taxes.
2.02 Incentive Bonus. During the Employment Period, the Employee shall be
entitled to receive incentive bonus payments (the "Bonus") in the amount of
$10,000 per quarter in accordance with the terms set forth in this Section 2.02.
The Bonus shall be calculated on the basis of consecutive 12-month periods
during the Employment Period, commencing on the first day of the first full
month for which Employer's and Seller's xxxxxxxx are consolidated after the
closing of the transactions contemplated by the Purchase Agreement (each, a
"Bonus Year"). The Employee shall be entitled to receive the Bonus for each
fiscal quarter of a Bonus Year (each, a "Bonus Quarter") for which the
percentage by which the Employer's gross revenues for such Bonus Quarter exceed
those of the immediately preceding Bonus Quarter (the "Growth Rate") by at least
3.75%; provided, however, that the Employee shall be entitled to the Bonus
payments for the first two Bonus Quarters during the Employment Period
irrespective of the amount of the Company's gross revenues; provided further,
however, that if for any Bonus Quarter (a "Non-Qualifying Bonus Quarter") the
Employer's Growth Rate is less than 3.75%, the Employee shall nonetheless be
entitled to receive the Bonus for such Non-Qualifying Bonus Quarter if the sum
of (i) the Employer's Growth Rate for such Non-Qualifying Bonus Quarter and (ii)
any Growth Rate in excess of 3.75% for each of the immediately preceding or the
immediately succeeding Bonus Quarters (but excluding any such excess Growth Rate
that has been allocated towards any other Non-Qualifying Bonus Quarter), exceeds
3.75%; provided further, however, that any gross revenues of the Employer
attributable to acquisitions (whether by way of merger, purchase of assets, or
otherwise) by Employer after the Effective Date shall not be included in any
calculations used to determine the Employee's eligibility to receive the Bonus.
The Employer shall make payment of the Bonus to the Employee within 30 days of
the end of the Bonus Quarter to which such Bonus payment corresponds; provided,
however, that if the payment of the Bonus relates to a Non-Qualifying Bonus
Quarter, the Employer shall make such payment to the Employee within 30 days of
the Employer's determination that the Employee is entitled to the Bonus for such
Non-Qualifying Bonus Quarter.
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2.03 Additional Performance-Based Compensation. The compensation committee
of the Employer's Board of Directors shall establish additional criteria within
six months of the Effective Date for compensating the Employee in the event that
the Employer exceeds the revenue targets contemplated by Section 2.02 hereof. In
addition, the compensation committee of the Employer's Board of Directors shall
establish criteria within six months of the Effective Date for grants to the
Employee of options to purchase shares of the Employer's equity securities.
2.04 Benefits. For the duration of the Employment Period and as otherwise
set forth herein, the Employee and his dependents (if applicable), will be
permitted to participate in such pension, health insurance, disability
insurance, and other employee benefit plans of the Employer that may be in
effect from time to time and made available to the employees of the Employer
generally to the extent the Employee and his dependents are eligible for
participation under the terms of such plans, as determined in the sole
discretion of the Employer's Board of Directors. The Employer shall provide the
Employee with access to a company car, obtain automobile insurance coverage for
the Employee's use of such company car in connection with his employment, and
reimburse the Employee for fuel purchases relating to his employment in
accordance with the Employer's reimbursement policies as in effect from time to
time. The Employer shall provide the Employee with a company credit card for use
for expenses related to his employment in accordance with the Employer's
reimbursement policies as in effect from time to time. The Employer shall
provide the Employee with a company cellular phone in connection with his
employment in accordance with the Employer's cellular phone policies as in
effect from time to time.
Article 3: FACILITIES AND EXPENSES
The Employee will use the office space, equipment, supplies, and such other
facilities, property, and personnel as provided by the Employer for such
purposes to perform his duties under this Agreement. The Employer will reimburse
the Employee for reasonable expenses incurred by the Employee in the performance
of his duties in accordance with the Employer's employment policies in effect
from time to time; provided, however, that the Employee must file written
expense reports with respect to such expenses, in accordance with the Employer's
employment policies, before the Employee may receive such reimbursement.
Article 4: TERMINATION
4.01 Termination of Employment Period.
(a) Death of the Employee. The Employment Period shall terminate
immediately and automatically upon the death of the Employee.
(b) Termination by the Employer. The Employer may terminate the
Employment Period (i) immediately upon the delivery of a Notice of
Termination (as defined in Section 4.01(c) of this Agreement) by the
Employer to the Employee setting forth the facts that indicate that a
determination has been made that the Employee has a Disability in
accordance with Section 4.02 of this Agreement; (ii) immediately upon
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delivery of a Notice of Termination by the Employer to the Employee setting
forth the facts that indicate that an event constituting Cause (as defined
in Section 4.03 of this Agreement) has occurred, or on such later date as
may be set forth in such Notice of Termination; or (iii) at any time
without Cause effective as of the 30th day following the delivery of a
Notice of Termination by the Employer to the Employee, or on such later
date as may be set forth in such Notice of Termination.
(c) Notice of Termination. For purposes of this Agreement, a "Notice
of Termination" shall mean a written notice (delivered in accordance with
Section 7.06 herein) that indicates the specific termination provision in
this Agreement upon which the person intending to terminate the Employment
Period is relying and sets forth in reasonable detail the facts and
circumstances that provide a basis for termination of the Employment Period
under such termination provision.
4.02 Definition of "Disability." For purposes of this Agreement, the
Employee will be deemed to have a "Disability" under any of the following
conditions: (a) for physical or mental reasons, the Employee is unable to render
and perform substantially and continuously the Employee's duties and services as
required by this Agreement for 12 consecutive weeks, or for 16 nonconsecutive
weeks during any 12-month period, or (b) the prognosis or recommendations of the
Examining Doctor (as defined in this Section 4.02) are such that the Employee
would be unable to render and perform substantially and continuously the
Employee's duties and services under this Agreement for 12 consecutive weeks, or
for 16 nonconsecutive weeks during any 12-month period. Upon the request of
either party hereto following written notice to the other, the Disability of the
Employee will be determined by a medical doctor (the "Examining Doctor") who
shall be selected as follows: the Employer and the Employee shall each select a
medical doctor, and those two medical doctors will select a third medical doctor
who will be the Examining Doctor. The determination of the Examining Doctor as
to whether or not the Employee has a Disability will be binding on both parties
hereto. The Employee must submit to a reasonable number of examinations by the
Examining Doctor, and the Employee hereby authorizes the disclosure and release
to the Employer of such determination and the results of such examinations. If
the Employee is not legally competent, the Employee's legal guardian or duly
authorized attorney-in-fact will act in the Employee's stead under this Section
4.02 for the purposes of submitting the Employee to examinations and providing
any such authorizations of disclosure.
4.03 Definition of "Cause." For purposes of this Agreement, "Cause" shall
mean: (a) the Employee's material and persistent failure to perform his duties
and services in accordance with this Agreement, including without limitation by
manner of Employee's gross insubordination or gross absenteeism, unless such
failure is due to the Employee's Disability, or the Employee's material
violation of this Agreement or any material inaccuracy of any representation or
warranty of the Employee contained herein, unless, for any such failure,
violation, or inaccuracy which is capable of being cured, the Employee cures
such failure, violation, or inaccuracy within 30 days of the Employer providing
written notice to the Employee of such failure, violation, or inaccuracy; (b)
the appropriation (or attempted appropriation) of a material business
opportunity of the Employer, including attempting to secure or securing any
personal profit in connection with any transaction entered into on behalf of the
Employer; (c) the theft, fraud, or embezzlement of any of the real or personal
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property, tangible or intangible, of the Employer or any of its Affiliates; (d)
the commission of an act of fraud upon, or bad faith or willful misconduct
toward, the Employer or any of its Affiliates; (e) conduct constituting gross
negligence or recklessness, as determined by the Employer in its sole
discretion, that is materially injurious to the Employer, a customer of the
Employer, or any of the Employer's Affiliates; or (f) the conviction of or the
entering of a guilty plea or plea of no contest with respect to, a felony, the
equivalent thereof, or any other crime with respect to which imprisonment is a
possible punishment.
4.04 Effect of Termination of Employment Period; Post-Termination Benefits.
Upon the termination of the Employment Period in accordance with Section 4.01 of
this Agreement, the Employee's obligation to render to the Employer the services
described in Section 1.03 of this Agreement shall cease, and the Employer shall
pay the Employee or, in the event of his death while amounts remain payable
hereunder, his Designated Beneficiary (as defined in this Section 4.04), if at
all, as follows:
(a) Termination by the Employer with Cause or by the Employee. If the
Employment Period is terminated in accordance with Section 4.01(b)(ii) of
this Agreement or by the Employee, the Employee will be entitled to receive
solely that portion of his Salary, payable in accordance with the
Employer's normal payroll practices, accrued by the Employee as of the date
of the termination of the Employment Period; provided, however, that the
Employee shall not receive, and shall not be entitled to receive, any
Salary or Benefits (except for Salary and Benefits accrued prior to the
date of the termination of the Employment Period) during the remainder of
the Term following such termination, or thereafter, except as otherwise
required in accordance with federal or state law or the terms of the plans
governing the benefits provided hereunder.
(b) Termination by the Employer without Cause. If the Employment
Period is terminated in accordance with Section 4.01(b)(iii) of this
Agreement, the Employee will be entitled to receive his Salary, payable in
accordance with the Employer's normal payroll practices, for a period of
one year following the date of the termination of the Employment Period.
(c) Termination upon Death or Disability. If the Employment Period is
terminated in accordance with Section 4.01(a) or Section 4.01(b)(i), the
Employer will pay to the disabled Employee or to the Employee's Designated
Beneficiary, as the case may be, in accordance with its normal payroll
practices, the customary installments of the Salary and the Benefits that
were provided to the Employee during the Employment Period, if applicable,
until the earlier of the Expiration Date or the 30th day following the date
of the Employee's death or the date of the determination by the Examining
Doctor that the Employee has a Disability, as the case may be. Following
such date, the Employee or the Employee's Designated Beneficiary shall have
no right to receive, and the Employer shall have no further obligation to
pay to the Employee, further monthly installments of Salary or Benefits;
provided, however, that, in the event the Employee is determined to have a
Disability, the Employee is entitled to benefits under the disability
insurance referred to in Section 2.04 of this Agreement, if applicable. For
the purposes of this Agreement, the Employee's "Designated Beneficiary"
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means such individual beneficiary or trust, located at such address as the
Employee may designate by written notice to the Employer from time to time
or, if the Employee fails to give written notice to the Employer of such a
beneficiary, the Employee's estate; provided, however, that,
notwithstanding the preceding sentence, the Employer shall have no duty
under any circumstances to attempt to open an estate on behalf of the
Employee, to determine whether any beneficiary designated by the Employee
is alive, to determine the existence of any trust, to determine whether any
person or entity purporting to act as the Employee's personal
representative (or the trustee of a trust established by the Employee) is
duly authorized to act in that capacity, or to locate or attempt to locate
any beneficiary, personal representative, or trustee.
(d) Accrued Benefits. Unless otherwise required by this Agreement,
federal or state law, or the terms of the relevant plans providing Benefits
hereunder, the Employee's accrual of the Benefits pursuant to Section 2.04
hereof will cease on the date of the termination of the Employment Period,
and the Employee will thereafter be entitled to accrued Benefits pursuant
to such plans only as provided in such plans.
Article 5: NON-DISCLOSURE COVENANT
5.01 Confidential Information Defined. For the purposes of this Article 5,
the phrase "Confidential Information" means any and all of the following: trade
secrets concerning the business and affairs of the Employer or its Affiliates,
product specifications, data, know-how, formulae, compositions, processes,
designs, sketches, photographs, graphs, drawings, samples, inventions and ideas,
past, current, and planned research and development, current and planned
distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including object code, machine code, and source code),
computer software and database technologies, systems, structures, and
architecture (and related formulae, compositions, processes, improvements,
devices, know-how, inventions, discoveries, concepts, ideas, designs, and
methods); information concerning the business and affairs of the Employer or its
Affiliates (which includes historical financial statements, financial
projections and budgets, historical and projected sales, capital spending
budgets and plans, the names and backgrounds of key personnel, personnel
training techniques and materials, however documented); and notes, analysis,
compilations, studies, summaries, and other material prepared by or for the
Employer or its Affiliates containing or based, in whole or in part, on any
information included in the foregoing. Notwithstanding the foregoing,
Confidential Information shall not include any information that the Employee
demonstrates was or became generally available to the public other than as a
result of a disclosure of such information by the Employee or any other person
under a duty to keep such information confidential.
5.02 Acknowledgment by the Employee. The Employee acknowledges that (a)
during the Employment Period and as part of his employment, the Employee will be
afforded access to Confidential Information that the Employer has devoted
substantial time, effort, and resources to develop and compile; (b) public
disclosure of such Confidential Information would have an adverse effect on the
Employer and its business; (c) the Employer would not disclose such information
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to the Employee, nor employ or continue to employ the Employee without the
agreements and covenants set forth in this Article 5; and (d) the provisions of
this Article 5 are reasonable and necessary to prevent the improper use or
disclosure of Confidential Information.
5.03 Maintaining Confidential Information. In consideration of the
compensation and benefits to be paid or provided to the Employee by the Employer
under this Agreement and the acknowledgments set forth above, the Employee,
during the Employment Period and at all times thereafter, agrees and covenants
as follows:
(a) Employer Information. The Employee will hold in strictest confidence
the Confidential Information and will not disclose it to any Person (defined
below) except with the specific prior written consent of the Employer or as may
be required by court order (provided that the Employee shall first give notice
to the Employer in order that the Employer may obtain a protective order
requiring that the Confidential Information so disclosed be used only for the
purposes for which the order was issued and the Employee uses reasonable efforts
to have such information be treated as confidential and under seal), or except
as otherwise expressly permitted by the terms of this Agreement. Any trade
secrets of the Employer will be entitled to all of the protections and benefits
afforded under applicable laws. If any information that the Employer deems to be
a trade secret is ruled by a court of competent jurisdiction not to be a trade
secret, such information will, nevertheless, be considered Confidential
Information for purposes of this Agreement. The Employee hereby waives any
requirement that the Employer submit proof of the economic value of any trade
secret or post a bond or other security. The Employee will not remove from the
Employer's premises or record (regardless of the media) any Confidential
Information of the Employer or its Affiliates, except to the extent such removal
or recording is necessary for the performance of the Employee's duties. The
Employee acknowledges and agrees that all Confidential Information, and physical
embodiments thereof, whether or not developed by the Employee, are the exclusive
property of the Employer or its Affiliates, as the case may be.
(b) Third Party Information. The Employee recognizes that the Employer and
its Affiliates have received and in the future will receive from third parties
their confidential or proprietary information subject to a duty on their parts
to maintain the confidentiality of such information and to use it only for
certain limited purposes. The Employee agrees that he owes the Employer, its
Affiliates, and such third parties, during the Employment Period and thereafter,
a duty to hold all such confidential or proprietary information in the strictest
confidence and not to disclose it to any Person (except as necessary in carrying
out his duties for the Employer consistent with the Employer's agreement with
such third party) or to use it for the benefit of anyone other than for the
Employer or such third party (consistent with the Employer's agreement with such
third party) without the express written authorization of the Employer or its
Affiliate, as the case may be.
(c) Returning Employer Documents. The Employee agrees that, at the time of
the termination of the Employment Period, he will deliver to the Employer (and
will not keep in his possession or deliver to any other Person) any and all
devices, records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, materials, equipment, other
documents or property, or reproductions of any of the aforementioned items
belonging to the Employer or any of its Affiliates, and their respective
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successors or assigns, regardless of whether such items are represented in
tangible, electronic, digital, magnetic or any other media. In the event of the
termination of the Employment Period, the Employee agrees to sign and deliver
the "Termination Certification" attached hereto as Exhibit A.
Article 6: NON-COMPETITION AND NON-INTERFERENCE
6.01 Covenants Regarding Competitive Protection. The Employer and the
Employee hereby mutually agree that the nature of the Employer's business and
the Employee's employment hereunder are based on the Employer's goodwill, public
perception, and customer relations. Therefore, in consideration of the
acknowledgments set forth in Section 5.02 herein and the compensation and
benefits to be paid to the Employee pursuant to this Agreement, the Employee
hereby agrees and covenants to each and all of the following; provided, however,
that this Article 6 shall be null and void if the Employment Period is
terminated in accordance with Section 4.01(b)(iii):
(a) Noncompete. For the duration of the Employment Period and for 12 months
thereafter, the Employee will not, directly or indirectly, in any capacity
whatsoever, individually or on behalf of any other person or entity, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be employed by,
associated with, or in any manner connected with, lend the Employee's name or
any similar name to, lend the Employee's credit to or render services or advice
to, any business engaged or about to become engaged in the Business of the
Employer, or any of its Affiliates, in the Market Area. For purposes of this
Agreement, the "Business" of the Employer, or its Affiliates, includes all those
businesses, products, and services that are presently or hereafter marketed by
the Employer, or its Affiliates, or that are in the development stage at any
time during the Employment Period; and any other business in which the Employer,
or any of its Affiliates, are engaged in at any time during the Employment
Period.
(b) Solicitation of Customers. For the duration of the Employment Period
and for 12 months thereafter, the Employee hereby covenants and agrees that he
will not, either directly or through an Affiliate, solicit any Person that is a
Current Customer (defined below) of the Employer or its Affiliates for purposes
of selling products or services to such Person that are in competition with the
products and services offered or sold by the Employer or its Affiliates.
(c) Solicitation of Employees. For the duration of the Employment Period
and for 12 months thereafter, the Employee hereby agrees not to employ, either
directly or through an Affiliate, any current employee of the Employer or its
Affiliates or any individual who was an employee of the Employer or its
Affiliates at any time during Employment Period, and agrees not to solicit, or
contact in any manner that could reasonably be construed as a solicitation,
either directly or through an Affiliate, any employee of the Employer or its
Affiliates for the purpose of encouraging such employee to leave or terminate
his or her employment with the Employer or its Affiliates.
(d) Solicitation of Vendors. For the duration of the Employment Period and
for 12 months thereafter, the Employee hereby agrees not to solicit, either
directly or through an Affiliate, a current vendor or supplier of the Employer
I-8
or its Affiliates for purposes of encouraging such vendor or supplier to cease
or diminish providing products or services to the Employer or its Affiliates, or
to change adversely the terms under which such vendor or supplier provides such
products or services to the Employer or its Affiliates.
(e) Interference. For the duration of the Employment Period and for 12
months thereafter, the Employee hereby agrees not to interfere with the
Employer's relationship with any person who at the relevant time is an employee,
contractor, supplier, or customer of the Employer or its Affiliates.
(f) Market Area. For purposes of this Section 6.01, the term "Market Area"
means any county or parish in which the Employer or its Affiliates have or had
provided goods or services to customers during the Employment Period or are
actively soliciting customers during the Employment Period.
6.02 Scope. The Employee acknowledges and agrees that the Employer is
engaged in or intends to be engaged in business throughout the United States and
that the marketplace for the Employer's businesses, products and services is
nationwide, and includes the areas described in Section 6.01(f) of this
Agreement, and thus the geographic area, length and scope of the restrictions
contained in Section 6.01 are reasonable and necessary to protect the legitimate
business interests of the Employer. The duration of the agreements contained in
Section 6.01 shall be extended for the amount of any time of any violation
thereof and the time, if greater, necessary to enforce such provisions or obtain
any relief or damages for such violation through the court system. The Employer
may, at any time on written notice approved by its Board, reduce the geographic
area, length or scope of any restrictions contained in Section 6.01 and,
thereafter, the Employee shall comply with the restriction as so reduced,
subject to subsequent reductions. If any covenant in Section 6.01 of this
Agreement is held to be unreasonable, arbitrary, or against public policy, such
covenant will be considered to be divisible with respect to scope, time, and
geographic area, and such lesser scope, time, or geographic area, or all of
them, as an arbitrator or a court of competent jurisdiction may determine to be
reasonable, not arbitrary, and not against public policy, will be effective,
binding, and enforceable against the Employee. In the event of termination of
the Employee's employment with the Employer for any reason, the Employee
consents to the Employer communicating with the Employee's new employer, any
entity in the Business or through or in connection with which the Employee is
restricted hereunder, or any other party about the restrictions and obligations
imposed on the Employee under this Agreement.
Article 7: GENERAL PROVISIONS
7.01 Injunctive Relief and Additional Remedy. The Employee acknowledges
that the injury that would be suffered by the Employer as a result of a breach
of the provisions of Articles 5 and 6 hereof might be irreparable and that an
award of monetary damages to the Employer for such a breach would be an
inadequate remedy. Consequently, the Employer will have the right, in addition
to any other rights it may have, to obtain injunctive relief to restrain any
breach or threatened breach or otherwise to specifically enforce the provisions
of Articles 5 and 6 hereof.
I-9
7.02 Covenants of Articles 5 and 6 are Essential and Independent Covenants.
The covenants by the Employee in Articles 5 and 6 are essential elements of this
Agreement, and without the Employee's agreement to comply with such covenants,
the Employer would not have entered into this Agreement or employed or continued
the employment of the Employee. The Employer and the Employee have independently
consulted their respective counsel and have been advised in all respects
concerning the reasonableness and propriety of such covenants, with specific
regard to the nature of the business conducted by the Employer. If the
Employee's employment hereunder expires or is terminated, this Agreement will
continue in full force and effect as is necessary or appropriate to enforce the
covenants and agreements of the Employee in Articles 5 and 6.
7.03 Representations and Warranties by the Employee. The Employee
represents and warrants to the Employer that (a) the Employee has never taken
any action of the types set forth in Section 4.03(b) though (f) and (b) the
execution and delivery by the Employee of this Agreement does not, and the
performance by the Employee of the Employee's obligations hereunder will not,
with or without the giving of notice or the passage of time, or both: (i)
violate any judgment, writ, injunction, or order of any court, arbitrator, or
governmental agency applicable to the Employee; or (ii) conflict with, result in
the breach of any provisions of or the termination of, or constitute a default
under, any agreement to which the Employee is a party or by which the Employee
is or may be bound.
7.04 Obligations Contingent on Performance. The obligations of the Employer
hereunder, including its obligation to pay the compensation provided for herein,
are contingent upon the Employee's performance of the Employee's obligations
hereunder.
7.05 Binding Effect; Delegation of Duties Prohibited. This Agreement shall
inure to the benefit of, and shall be binding upon, the parties hereto and their
respective successors, assigns, heirs, and legal representatives, including any
entity with which the Employer may merge or consolidate or to which all or
substantially all of its assets may be transferred. The covenants of the
Employee under this Agreement, being personal, may not be delegated.
7.06 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by facsimile (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested) or, (d) mailed by registered or certified mail, postage
prepaid and return receipt requested, in each case to the appropriate addresses
and facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):
If to Employer: MedSolutions, Inc.
00000 Xxxxx Xxxxx
Xxxx Xxxxxxx XXX, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: President
Facsimile: (000) 000-0000
I-10
With a copy to: Fish & Xxxxxxxxxx P.C.
5000 Bank One Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Block
Facsimile: (000) 000-0000
If to the Employee: Xxxxxx Xxxx
Facsimile: (___)___- ___________
7.07 Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be amended orally; but only by an agreement in writing signed by the parties
hereto.
7.08 Governing Law; Venue. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS RULES OR CHOICE OF LAW RULES THEREOF. VENUE FOR
ANY ACTION BROUGHT HEREUNDER SHALL BE PROPER EXCLUSIVELY IN DALLAS COUNTY,
TEXAS.
7.09 Headings; Construction. The headings in this Agreement are provided
for convenience only and will not affect its construction or interpretation. All
references to "Article," "Articles," "Section," or "Sections" refer to the
corresponding Article, Articles, Section, or Sections of this Agreement unless
otherwise specified. All words used in this Agreement will be construed to be of
such gender or number as the circumstances require.
7.10 Severability. If any provision of this Agreement is held invalid or
unenforceable by an arbitrator or any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
7.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.12 TELECOPY EXECUTION AND DELIVERY. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto,
and an executed copy of this Agreement may be delivered by one or more parties
hereto by facsimile or similar electronic transmission device pursuant to which
the signature of or on behalf of such party can be seen, and such execution and
I-11
delivery shall be considered valid, binding and effective for all purposes. At
the request of any party hereto, all parties hereto agree to execute an original
of this Agreement as well as any facsimile, telecopy or other reproduction
hereof.
7.13 Survival of Obligations. The obligations of the Employer and the
Employee under this Agreement which by their nature may require either partial
or total performance after the expiration of the Employment Period shall survive
such expiration.
7.14 Withholding and Set Off. All payments and benefits made or provided
under this Agreement shall be subject to withholding as required under
applicable law. The Employer is further authorized to withhold and setoff
against any such payments and benefits any amounts that the Employee may come to
owe the Employer, whether as a result of any breach of this Agreement or
otherwise.
Article 8: CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings
indicated below:
"Affiliate" shall mean, as to any Person, any Person controlled by,
controlling, or under common control with such Person, and, in the case of a
Person who is an individual, a member of the family of such individual
consisting of a spouse, sibling, in-law, lineal descendant, or ancestor
(including by adoption), and the spouses of any such individuals. For purposes
of this definition, "control" (including the terms "controlling", "controlled
by" and "under common control with") of a Person means the possession, directly
or indirectly, alone or in concert with others, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of securities, by contract or otherwise, and no Person shall be deemed
in control of another solely by virtue of being a director, officer or holder of
voting securities of any entity. A Person shall be presumed to control any
partnership of which such Person is a general partner.
"Current Customer" shall mean any Person who is currently utilizing any
product or service sold or provided by the Employer or any of its Affiliates;
any Person who utilized any such product or service within the previous 12
months; and any Person with whom the Employer or any of its Affiliates is
currently conducting negotiations concerning the utilization of such products or
services.
"Person" shall have the meaning given in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended, as modified and used in Sections
13(d)(3) and 14(d)(2) of such act.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
I-12
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
EMPLOYER:
MEDSOLUTIONS, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
EMPLOYEE:
__________________________________________
Xxxxxx Xxxx
I-13
EXHIBIT A
TERMINATION CERTIFICATION
This is to certify that the undersigned has complied with all the terms of
the Employment Agreement (the "Employment Agreement") signed by the undersigned
with MedSolutions, Inc., a Texas corporation (the "Employer"). It is further
certified that the undersigned does not possess, nor has the undersigned failed
to return to the Employer any Confidential Information (as defined in the
Employment Agreement). It is further certified that the undersigned has
destroyed all tangible copies and has erased any electronic, digital, or
magnetic representations or manifestations of the foregoing. The undersigned
further agrees that, in compliance with the Employment Agreement, the
undersigned will preserve as confidential all Confidential Information and
information of third parties as provided in the Employment Agreement.
___________________________________________
[Name]
Signature:_________________________________
Date: _____________________________________
I-14
EXHIBIT J
---------
FORM OF 30-DAY NOTE
Attached hereto.
PROMISSORY NOTE
$250,000 Dallas, Texas September 30, 2004
FOR VALUE RECEIVED, the undersigned, MedSolutions, Inc., a Texas
corporation (the "Maker"), hereby unconditionally promises to pay to the order
of Med-Con Waste Solutions, Inc., a Texas corporation (the "Payee"), at such
place as designated by the Payee, or at such other place or to such other party
or parties as may be designated by the Payee from time to time, in lawful money
of the United States of America, the principal amount (the "Principal Amount")
of $250,000, subject to adjustment as set forth herein in accordance with
Section 1.01(b) of that certain Asset Purchase Agreement executed between the
Maker and the Payee as of the date hereof (the "Asset Purchase Agreement"),
secured by certain of the assets of the Maker as described in the Security
Agreement entered into by Maker and Payee and dated as of September 30, 2004,
with no interest.
1. This Promissory Note (the "Note") shall be due and payable as follows:
as follows: (i) on the First Consent Deadline (as defined in the Asset Purchase
Agreement), the Maker shall pay to the Payee that portion of the Principal
Amount equal to the amount that is the product of (W) a fraction the numerator
of which is the aggregate average monthly sales for the Four-Month Period (as
defined in the Asset Purchase Agreement) under the Payee's contracts with
Existing Customers (as defined in the Asset Purchase Agreement) relating to the
Schedule 3.12 Consents (as defined in the Asset Purchase Agreement) that have
been delivered to the Maker on or prior to the First Consent Deadline, and the
denominator of which is the aggregate average monthly sales for the Four-Month
Period under all of the Payee's contracts with Existing Customers relating to
the Schedule 3.12 Consents; multiplied by (X) the Principal Amount; and (ii) on
the Second Consent Deadline (as defined in the Asset Purchase Agreement), the
Maker shall pay to the Payee that portion of the Principal Amount equal to the
amount that is the product of (Y) a fraction the numerator of which is the
aggregate average monthly sales for the Four-Month Period under the Payee's
contracts with Existing Customers relating to the Schedule 3.12 Consents that
have been delivered to the Maker after the First Consent Deadline but on or
prior to the Second Consent Deadline, and the denominator of which is the
aggregate average monthly sales for the Four-Month Period under all of the
Payee's contracts with Existing Customers relating to the Schedule 3.12
Consents; multiplied by (Z) the Principal Amount; provided, however, that in the
event the last of the Schedule 3.12 Consents is delivered by the Payee to the
Maker after the Closing Date but prior to the seventh day before the Second
Consent Deadline, the Maker shall pay the full remaining balance of the
Principal Amount to the Payee on the seventh day after the date on which such
last Schedule 3.12 Consent is delivered; provided further, however, that if a
payment date hereunder should fall on a Saturday, Sunday, or bank holiday, then
such payment date shall be the next business day. In no event shall any portion
of the 30-Day Principal Amount be payable to the Seller for Section 3.12
Consents delivered to the Buyer after the Second Consent Deadline. The Maker may
prepay any portion or this entire Note without penalty at any time. Any
prepayment will be applied first against accrued but unpaid interest and then
against the outstanding principal balance. At the request of the Payee, the
Maker may make any payments due under the Note directly to the creditors of the
Payee. The Payee hereby acknowledges that this Note and the Principal Amount are
subject to certain offset rights by the Maker pursuant to the Asset Purchase
Agreement. To the extent that any interest is paid on the Note and the Principal
Amount is subsequently reduced in accordance with the terms of the Asset
Purchase Agreement, any excess interest previously paid will be credited against
the future interest payment(s) and/or the Principal Amount such that the amount
of interest paid on the Principal Amount does not exceed 7.0%.
2. If the Maker fails to pay the full amount then due on any Payment Date
and such failure remains uncured for a period of 10 calendar days following
written notice of such default by the Payee, then, at the election of the Payee,
this Note shall immediately become due and payable in full, interest on such
principal amount and unpaid interest shall thereafter accrue at the lesser of
12% or the highest lawful rate permissible under applicable law (the "Default
Rate"), and the Payee shall be entitled to pursue any remedy to which it is
entitled under applicable law.
3. The makers, signers, sureties, guarantors, and endorsers of this Note
severally waive valuation and appraisal, demand, presentment, notice of
dishonor, notice of intent to demand or accelerate payment hereof, notice of
demand, notice of acceleration, diligence in collecting, grace, notice, and
protest. If this Note is not paid when due, the Maker agrees to pay all costs of
collection, including, but not limited to, reasonable attorneys' fees and all
expenses incurred by the holder hereof on account of any such collection,
whether or not suit is filed hereon.
4. Except as expressly set forth in Section 1 hereof, the Maker shall have
no right of setoff, counterclaim, recoupment or other deduction with respect to
the payment required hereunder, and such payment constitutes the absolute and
unconditional obligation of the Maker.
5. Each right and remedy available to the holder hereof shall be cumulative
of and in addition to each other such right and remedy. No delay on the part of
the holder hereof in the exercise of any right or remedy available to the holder
hereof shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude other or further exercise thereof or exercise of any
other such right or remedy.
6. Regardless of any provision contained in this Note, Payee shall never be
entitled to receive, collect or apply, as interest on this Note, any amount in
excess of the maximum lawful rate permitted by applicable law and, in the event
Payee ever receives, collects or applies as interest any such excess, such
amount that would be excessive interest shall be deemed a partial prepayment of
principal and treated under this Note as such by Maker. In determining whether
or not the interest paid or payable on this Note exceeds such maximum lawful
rate, Maker and Payee shall, to the maximum extent permitted under applicable
law, (a) characterize any nonprincipal payment as an expense, fee or premium
rather than as interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate and spread, in equal parts, the
total amount of interest throughout the entire contemplated term of this Note so
that the interest rate does not exceed the maximum lawful rate at any time
during the entire term of this Note. However, if this Note is paid in full or
all or a portion of the principal is set off under the Asset Purchase Agreement
prior to the scheduled maturity hereof, and if the interest received for the
actual period of existence thereof exceeds such maximum lawful rate, Payee shall
refund the amount of such excess and shall not be subject to any applicable
penalties provided by any laws for contracting for, charging, taking, reserving
or receiving interest in excess of such maximum lawful rate.
7. Payee shall be entitled to assign all or a portion of this Note to an
Affiliate (as such term is defined in the Asset Purchase Agreement dated of even
date herewith by and between Maker and Payee) without the consent of Maker.
Maker shall reissue the Note to the transferee(s) upon receipt of written notice
of the transfer and evidence of transferee(s)' status as an Affiliate.
8. This Note is one of two promissory notes referred to and is entitled to
the benefits of and security afforded by that certain Security Agreement dated
as of September 30, 2004, executed by Maker in favor of Payee and covering the
collateral described therein (the "Security Agreement"). This Note is subject to
the Security Agreement which, among other things, provides for acceleration of
the maturity hereof upon the occurrence of certain events.
9. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS RULES OR CHOICE OF LAWS RULES THEREOF.
EXECUTED effective as of the date first set forth above.
MAKER:
MedSolutions, Inc.
By:______________________________
Xxxxxxx X. Xxxxxxx, President/CEO
DISCLOSURE SCHEDULES
Schedule 1.02 Allocation of Purchase Price
-------------
Schedule 1.03 Assets
-------------
Schedule 1.04 Disclosed Encumbrances
-------------
Schedule 1.05 Assumed Liabilities
-------------
Schedule 2.01(a)(iv) Material Contracts
--------------------
Schedule 3.01 Seller Organizational and Good Standing Documents
-------------
Schedule 3.08 Seller Financial Statements
-------------
Schedule 3.11 Litigation
-------------
Schedule 3.12 Consents
-------------
Schedule 3.19 Contracts
-------------
Schedule 4.01 Buyer Good Standing Documents
-------------
Schedule 4.08 Capitalization
-------------
DS-1
Schedule 4.01
Buyer Good Standing Documents
[Attached hereto.]
Schedule 4.08
Capitalization
The Buyer had 17,972,242 shares of Common Stock issued and outstanding as of
August 1, 2004.