Exhibit 2.1
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ASSET PURCHASE AGREEMENT
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BY AND BETWEEN
MEDSOLUTIONS, INC.,
A TEXAS CORPORATION,
AND
ON CALL MEDICAL WASTE SERVICE, LTD.,
A TEXAS LIMITED PARTNERSHIP
DATED EFFECTIVE AS OF AUGUST 29, 2005
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), executed to be
effective as of August 29, 2005 (the "Effective Date"), is made and entered into
by and between MedSolutions, Inc., a Texas corporation (the "Buyer"), and On
Call Medical Waste Service, Ltd., a Texas limited partnership (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), in exchange for, due
or payable at the Closing (as defined below), the following consideration (the
"Purchase Price"):
(a) $375,000 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 "90-Day Note") in the principal amount of $375,000 (the "90-Day
Principal Amount"), with no interest, payable on the fifth Business Day
(as defined in Article VIII of this Agreement) after the earlier to
occur of (i) the date on which the Seller has delivered executed
customer contracts (the "Customer Contracts") representing at least 90%
of both its aggregate revenues and customers during the 12-month period
immediately preceding the Closing Date, and shall have duly assigned
such Customer Contracts to the Buyer or its designee, or (ii) the date
on which an Adjustment (as defined below) occurs; provided, however,
that in the event that the Seller shall not have delivered and assigned
Customer Contracts representing at least 90% of both its aggregate
revenues and customers during the 12-month period immediately preceding
the Closing Date to the Buyer within 90 days of the Closing Date, then
the 90-Day Principal Amount shall be promptly adjusted (the
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"Adjustment") by the Buyer by determining the Seller's average monthly
revenue for the 12-month period immediately preceding the Closing Date
for each customer of the Seller for which a Customer Contract has not
been so delivered (the "Non-Assigned Customer Monthly Average
Revenue"), multiplying such Non-Assigned Customer Monthly Average
Revenue by 24 (the product of such calculation, the "Non-Assigned
Customer Adjustment"), and subtracting the Non-Assigned Customer
Adjustment from the 90-Day Principal Amount; provided further, however,
that in the event that the Seller shall have delivered and assigned
Customer Contracts representing at least 75% but less than 90% of both
its aggregate revenues and customers during the 12-month period
immediately preceding the Closing Date within 90 days of the Closing
Date, then the Seller shall have an additional 90 days to deliver and
assign Customer Contracts to the Buyer before the Adjustment shall be
calculated by the Buyer; 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 first
deducted from the 90-Day Principal Amount payable to the Seller after
adjustment, if any, pursuant to this Section 1.01(b), and second from
the Shares (as defined below) by redemption and cancellation of Shares
at the Share Value (as defined below) for no consideration.
(c) A promissory note in the form attached hereto as Exhibit A
(the "Note") in the principal amount of $250,000. (the "Principal
Amount"), with simple interest at the annual rate of 8% payable in 24
equal monthly installments of principal and interest in the amount of
$11,306.82 each (or such other adjusted amount calculated as set forth
below), and with the first such installment due on the 120th day after
the Closing Date; provided, however, that beginning with the first day
of the first full calendar month for which the Seller's customers as of
the date hereof (the "Existing Customers") are billed by the Buyer and
for three months thereafter (the "Three-Month Post-Closing Period"), in
the event that the amount of the Buyer's average monthly accrual basis
sales from such Existing Customers (exclusive of any fees, price
increases or surcharges implemented by the Buyer) during the
Three-Month Post-Closing Period (the "Three-Month Post-Closing Average
Monthly Sales Amount") is less than $47,000.00, the difference between
the Three-Month Post-Closing Average Monthly Sales Amount and
$47,000.00 shall be multiplied by 24 to obtain an adjustment amount
(the "Revenues Adjustment Amount"), and such Revenues Adjustment Amount
shall first be deducted from the Principal Amount of the Note, and
second from the Shares (as defined below) by redemption and
cancellation of Shares at the Share Value (as defined below) for no
consideration. No later than 30 days after the end of the Three-Month
Post-Closing Period, the Buyer shall provide the Seller with a true,
correct and complete copy of its invoice register for such Three-Month
Post-Closing 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 interest previously paid by the Buyer that is in excess of an 8%
annual rate on such newly-reduced Principal Amount will be credited
against the Principal Amount such that the amount of interest paid on
such newly-reduced Principal Amount, if any, will not exceed 8%
annually.
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(d) 166,667 restricted shares (the "Shares") of the Buyer's
common stock, $.001 par value per share (the "Common Stock"), valued at
$1.50 per share for the purposes of this Agreement (the "Share Value").
(e) If the Buyer shall have to pay, directly or indirectly,
during the first 90 days 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.
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 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.
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:
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(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;
(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
Xxxxxx Xxxxxxx and his spouse, in the form
attached hereto as Exhibit H; and
(vii) an employment agreement between the Buyer
and Xxxxxx Xxxxxxx in the form attached
hereto as Exhibit I.
(b) The Buyer shall deliver to the Seller:
(i) The Cash, the Note, the 90-Day Note and a
stock certificate for the Shares.
(ii) the Officer's Certificate in substantially
the form of Exhibit F attached hereto;
(iii) the Secretary's Certificate in substantially
the form of Exhibit G hereto.
(iv) non-competition and non-solicitation
agreements between the Buyer and each of
Xxxxxx Xxxxxxx and his spouse, in the form
attached hereto as Exhibit H;
(v) an employment agreement between the Buyer
and Xxxxxx Xxxxxxx in the form attached
hereto as Exhibit I; and
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(vi) an executed copy of the Xxxx of Sale and
Assignment and Assumption Agreement attached
hereto as Exhibit B.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF THE SELLER
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 Limited
Partnership 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 agreement of limited partnership and (ii) 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 limited partnership 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 DCTK, Inc., a Texas corporation and the Seller's general partner
(the "General Partner"), and by the Seller's limited partners and has been duly
authorized, executed, and delivered by the Seller. No other limited partnership
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 General Partner and the Seller's limited
partners, certified as true and correct by the General Partner's Secretary,
approving this Agreement and authorizing the execution hereof by the General
Partner'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 Revised Limited
Partnership Act or the agreement of limited partnership 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 Seller's 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
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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).
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
and express liabilities arising under the contracts set forth on Schedule 3.19,
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
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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;
(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 true, correct, and complete 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, 2004, and an unaudited balance sheet, statement of
income, and statement of cash flows as of and for the seven months ended July
31, 2005 (collectively, the "Seller Financial Statements"). 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. 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 tax (including interest and penalties thereon and
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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 consents of
the general partner and the limited partner 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 Securities Act Compliance. 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. 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 limited partnership action
taken by the partners of the Seller, and no meeting of any such partners 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
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and judicial discretion, to the Seller's Knowledge, each Assigned Contract is in
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.
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(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. 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.
(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 RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
11
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, 2005 (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,
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
12
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.
13
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.
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. 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 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, (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
14
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 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.
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 "On Call Medical Waste ", including without limitation the right
to open a bank account in the name of and cash checks made to "On Call Medical
Waste ". The term of the License shall commence on the Closing Date and end 360
days thereafter (the "License Term"). The Seller agrees not to use the name "On
Call Medical Waste" 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
Seller's liabilities, and such creditor requests payment from the Buyer for
liabilities of the Seller accruing prior to the Closing, 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.
6.03 Accounts Receivables. After the Closing Date, the Seller shall
remit within two (2) Business Days of receipt, and in accordance with the
instructions of the Buyer, any and all payments received by the Seller from
Existing Customers with respect to accounts receivables conveyed to the Buyer
pursuant to the transactions contemplated by this Agreement, and the Seller
shall hold any and all such payments in trust for the benefit of the Buyer until
such payments are so remitted.
15
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 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,
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
16
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
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.
"Business Day" shall mean any day other than a Saturday, Sunday, or any
day on which banks located in Dallas, Texas are authorized to be closed by
applicable law.
"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
17
("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. A limited
partnership shall be deemed to have "knowledge" of a particular fact or other
matter if the executive officers of such limited partnership's general partner
have Knowledge (as set forth above) of such fact or other matter.
"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,
18
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.
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
19
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: On Call Medical Waste Service, Ltd.
c/o DCTK, Inc.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxxxx, President & CEO
Fax: 000-000-0000
Email:
With a copy to (delivery of which shall not be deemed as notice to
Seller):
000 Xxxx Xxxx Xxxx., Xxxxx 000
Xxxxx, Xxxxx 00000
Attn: Xxxx Xxxxx
Fax: 000-000-0000
Email: xxxxxxxxxxxx@xxxxx.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.
20
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 PARTIES TO THIS AGREEMENT
HEREBY MUTUALLY AGREE THAT VENUE FOR ANY ACTION BROUGHT WITH RESPECT TO THIS
AGREEMENT SHALL BE PROPER EXCLUSIVELY IN DALLAS COUNTY, TEXAS.
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.
21
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.
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.]
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
THE SELLER:
ON CALL MEDICAL WASTE SERVICE, LTD.
By: DCTK, Inc., its general partner
By: /s/ Xxxxxx Xxxxxxx
-------------------
Name: Xxxxxx Xxxxxxx
Title: President and CEO
THE BUYER:
MEDSOLUTIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
23
EXHIBIT A
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
---------------
$250,000 Dallas, Texas August 29, 2005
FOR VALUE RECEIVED, the undersigned, MedSolutions, Inc., a Texas
corporation (the "Maker"), hereby unconditionally promises to pay to the order
of On Call Medical Waste Service, Ltd., a Texas limited partnership (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 in accordance with
Sections 1.01(c) and 1.01(e) of that certain Asset Purchase Agreement (the
"Asset Purchase Agreement") executed between the Maker and the Payee as of the
date hereof, with simple interest at an annual rate of 8.0%
1. This Promissory Note (the "Note") shall be due and payable in 24
equal monthly installments of principal and interest in the amount of $11,306.82
(or such other adjusted amount calculated in accordance with Sections 1.01(c)
and 1.01(e) of the Asset Purchase Agreement), with the final such installment
due on _________ (the "Maturity Date"). Each payment shall be made on the
_______ day of each month, commencing on December 27, 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 this Note and the Principal
Amount is subsequently reduced in accordance with the terms of the Asset
Purchase Agreement, any interest previously paid by the Buyer that is in excess
of an 8% annual rate on such newly-reduced Principal Amount will be credited
against the Principal Amount such that the amount of interest paid on such
newly-reduced Principal Amount, if any, will not exceed 8.0% annually.
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.
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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 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
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EXHIBIT B
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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 August 29, 2005 (the "Closing Date"), by and
between On Call Medical Waste Service, Ltd., a Texas limited partnership
("Assignor"), and MedSolutions, Inc., a Texas corporation ("Assignee").
Assignee is a party to that certain Asset Purchase Agreement dated as
of August 29, 2005 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
B-1
Exhibit B attached hereto. 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.
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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.]
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IN WITNESS WHEREOF, Assignor and Assignee have caused this Agreement to
be executed and delivered as of the date first written above.
ASSIGNOR:
ON CALL MEDICAL WASTE SERVICE, LTD.
By: DCTK, Inc., its general partner
By:_________________________________
Xxxxxx Xxxxxxx, President/CEO
ASSIGNEE:
MEDSOLUTIONS, INC.
By:_________________________________
Xxxxxxx X. Xxxxxxx, President/CEO
B-4
ACKNOWLEDGMENT
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this 29th day of
August 2005, Xxxxxx Xxxxxxx, President and CEO of DCTK, 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 29th day of
August 2005, 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
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Assigned Assets
(a) Tangible Assets:
1998 GMC Model C65, VIN 0XXX0X0X0XX000000
2005 Ford 1.5 ton pickup, VIN 0XXXX00XX0X000000
(b) Other Assets:
List of customer contracts attached hereto.
All outstanding accounts receivable of the Seller as of August 29, 2005.
B-7
EXHIBIT B
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Assumed Liabilities
None.
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XXXXXXX X
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XX CALL MEDICAL WASTE SERVICE, LTD.
OFFICER'S CERTIFICATE
---------------------
I, Xxxxxx Xxxxxxx, President of DCTK, Inc., a Texas corporation and the
general partner of On Call Medical Waste Service, Ltd., a Texas limited
partnership (the "Seller"), hereby certify the following pursuant to Section
2.01(a)(ii) of the Asset Purchase Agreement (the "Agreement"), dated as of
August 29, 2005, 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 August 29,
2005.
ON CALL MEDICAL WASTE SERVICE, LTD.,
a Texas limited partnership
By: DCTK, Inc., its general partner
By:_________________________________
Name: Xxxxxx Xxxxxxx
Title: President and CEO
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EXHIBIT D
---------
ON CALL MEDICAL WASTE SERVICE, LTD.
CERTIFICATE OF SECRETARY
------------------------
This Certificate of Secretary is made and attested to this 29th day of
August, 2005, pursuant to the Asset Purchase Agreement dated August 29, 2005
(the "Agreement"), by and between MedSolutions, Inc., a Texas corporation (the
"Buyer"), and DCTK, Inc., a Texas corporation and the general partner of On Call
Medical Waste Service, Ltd., a Texas limited partnership (the "Seller").
1. The Seller has provided the Buyer with the agreement of limited
partnership 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
Written Consent of the General Partner of the Seller, which approves the
Agreement and the execution thereof by the President of the General Partner, and
I hereby certify and attest that such Action by 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 the limited partners of the Seller, executed by each and
every limited partner 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.
____________________________________
___________, Secretary
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EXHIBIT E
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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,
ON CALL MEDICAL WASTE SERVICE, LTD.
By: DCTK, Inc., its general partner
By:_________________________________
Xxxxxx Xxxxxxx, 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
August 29, 2005, between the Buyer and On Call Medical Waste Service, Ltd., a
Texas limited partnership. 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 August 29, 2005.
MEDSOLUTIONS, INC.,
a Texas corporation
By:________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President and CEO
F-1
EXHIBIT G
MEDSOLUTIONS, INC.
CERTIFICATE OF SECRETARY
This Certificate of Secretary is made and attested to this 29th day of
August, 2005, pursuant to the Asset Purchase Agreement dated August 29, 2005
(the "Agreement"), by and between MedSolutions, Inc., a Texas corporation (the
"Buyer"), and On Call Medical Waste Service, Ltd., a Texas limited partnership
(the "Seller").
The Buyer has provided the Seller with a copy of the Action by
Unanimous Written Consent of the Board of Directors of the Buyer, which approves
the Agreement and the execution thereof by the President of the Buyer, and I
hereby certify and attest that such Action by Unanimous 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.
____________________________________
Xxxxxxx Xxxxxxx, Secretary
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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 August 29, 2005, 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 On Call
Medical Waste Service, Ltd. (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 August 29, 2005, (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, (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 duration of the provisions of this Article II are reasonable and are no
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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
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severable; this Agreement shall be construed and enforced as if such illegal,
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
Attached hereto.
EXHIBIT J
---------
FORM OF 90-DAY NOTE
PROMISSORY NOTE
$375,000 Dallas, Texas August 29, 2005
FOR VALUE RECEIVED, the undersigned, MedSolutions, Inc., a Texas
corporation (the "Maker"), hereby unconditionally promises to pay to the order
of On Call Medical Waste Service, Ltd., a Texas limited partnership (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 $375,000, 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"), with no interest. All capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Asset Purchase
Agreement.
1. This Promissory Note (the "Note") shall be due and payable on the
third Business Day after the earlier to occur of (i) the date on which the Payee
has delivered Customer Contracts representing at least 90% of both its aggregate
revenues and customers during the 12-month period immediately preceding the
Closing Date, and shall have duly assigned such Customer Contracts to the Maker
or its designee, or (ii) the date on which an Adjustment (as defined below)
occurs; provided, however, that in the event that the Payee shall not have
delivered and assigned Customer Contracts representing at least 90% of both its
aggregate revenues and customers during the 12-month period immediately
preceding the Closing Date to the Maker within 90 days of the Closing Date, then
the 90-Day Principal Amount shall be promptly adjusted (the "Adjustment") by the
Maker by determining the Payee's average monthly revenue for the 12-month period
immediately preceding the Closing Date for each customer of the Payee for which
a Customer Contract has not been so delivered (the "Non-Assigned Customer
Monthly Average Revenue"), multiplying such Non-Assigned Customer Monthly
Average Revenue by 24 (the product of such calculation, the "Non-Assigned
Customer Adjustment"), and subtracting the Non-Assigned Customer Adjustment from
the Principal Amount hereof; provided further, however, that in the event that
the Payee shall have delivered and assigned Customer Contracts representing at
least 75% but less than 90% of both its aggregate revenues and customers during
the 12-month period immediately preceding the Closing Date within 90 days of the
Closing Date, then the Payee shall have an additional 90 days to deliver and
assign Customer Contracts to the Maker before the Adjustment shall be calculated
by the Maker; provided further, however, that the amount invoiced by the Maker
for the regulated medical waste ("RMW") processed by the Maker for the Payee
during the period up to and including the Closing Date, and any RMW backlog of
the Payee as of the Closing Date to be processed by the Maker subsequent to
Closing, shall be deducted from the Principal Amount payable to the Payee after
adjustment, if any, pursuant to this Paragraph 1; 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. 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.
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.
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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 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
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