Exhibit 4
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("AGREEMENT") dated as of August 2,
2000 between Diagnostic Management Group Holding, Inc., a Delaware corporation
("PURCHASER"), CAT-ECG LLC, a New York limited liability company ("CAT LLC"),
CAT-ECG PC, a New York professional corporation, ("PC") Robert Goodman, MD
("RG") and Shaya Ostrov ("SO").
WHEREAS:
A. Seller is engaged in the business of managing for PC the
operations of medical diagnostic cardiological and neurological testing services
provided to skilled nursing facilities and medical offices, and telemedicine,
all pursuant to a Management Services Agreement ("MSA"), dated
, (such business being referred to herein as the "BUSINESS");
B. Seller owns all of the inventory, equipment, intellectual
property, and customer lists used in the Business;
C. PC's sole stockholder is RG, a medical doctor;
D. Purchaser is a engaged in the diagnostic testing business;
E. Seller desires to sell and transfer, and Purchaser desires
to purchase and acquire certain assets, properties and rights relating to the
Business, all on the terms and conditions set forth in this Agreement; and
F. Purchaser is unwilling to purchase Seller's assets unless
the MSA is extended and SO, the of Seller, enters into a Non-Competition and
Non-Disclosure Agreement and the Seller delivers certain other agreements and
covenants as set forth below.
NOW THEREFORE, in consideration of the respective premises,
mutual covenants and agreements of the parties, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
I. PURCHASE AND SALE OF ASSETS
1.1 ASSETS TO BE SOLD. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as defined in Section 1.5), Seller
shall sell, assign, transfer, convey and deliver to Purchaser, and Purchaser
shall purchase and acquire, from Seller, all of the right, title and interest of
Seller in the assets, properties and rights described in Sections 1.1(a) through
(e), or any replacements thereof (including insurance proceeds relating thereto)
collectively "ASSETS"), in each case free and clear of any and all Liens (as
defined below) except "PERMITTED LIENS" (as defined below). As used in this
Agreement, (x) "LIEN" means any lien,
easement, encumbrance, mortgage, chattel or collateral mortgage, hypothecation,
equity, charge, possibility of reversion or any other conflicting ownership or
security interest in favor of any third party created by, through or under
Sellers or any Affiliate (as defined below) of Sellers, and (y) "AFFILIATE" of
any person means any corporation, limited liability company, partnership or
other entity directly or indirectly controlling, controlled by, or under common
control with such person.
(a) INVENTORY. All inventories consisting of supplies, film
and other tangibles and perishables incidental to the Business that are, as of
the Closing Date, owned by Seller (collectively, "INVENTORIES"), including,
without limitation, those generally described on SCHEDULE 1.1(A) by type and
location.
(b) EQUIPMENT AND MACHINERY. Furniture, fixtures, office
equipment, laboratory equipment, computers, ultrasound equipment, and tangible
personal property that are, as of the Closing Date, owned by Seller and used
(or, in the ordinary and usual course of the Business, at any time prior
thereto, have been used) in the Business, together with the machinery and other
equipment specifically identified on SCHEDULE 1.1(B) (collectively,
"EQUIPMENT").
(c) CONTRACTUAL RIGHTS. All rights and incidents of interest
of Seller, as of the Closing Date, in and to all Contracts (as defined below)
which are specifically identified on Schedule 1.1(c). As used in this Agreement,
"CONTRACTS" means any oral or written contracts, leasehold interests in real
property, agreements, equipment and machinery leases, warranties, guarantees,
commitments, arrangements, mortgages, bonds, notes and other instruments and
obligations, deposits and interest therein or rights thereunder including but
not limited to all contracts and agreements to purchase related companies
including, but not limited to the Seller's contract to purchase the stock of
[MDS] ("MDS AGREEMENT").
(d) INTELLECTUAL PROPERTY; INTANGIBLE RIGHTS.
(i) All of Seller's statutory and common law rights to and in
all trademarks, service marks, trademark registrations, service mark
registrations, trade names, brand names and applications for registration of
trademarks and service marks (collectively, "TRADEMARKS") owned or used by
Seller as of the Closing Date that are a part of or related to the Business,
whether or not currently used therein, including, without limitation, all rights
to and in the trademark or trade name "CAT-ECG LLC and CAT-ECG" and any
variations thereof, and those listed on SCHEDULE 1.1(D)(I).
(ii) All copyrights, copyright registrations and applications
for copyrights (collectively, "COPYRIGHTS") owned or claimed by Seller as of the
Closing Date that are a part of or related to the Business, whether of not
currently used therein, including, without limitation, those listed on SCHEDULE
1.1(D)(II).
(iii) All letters patents, design patents and utility patents,
all applications for grant of any such patents, and all reissues, divisions,
continuations in-part and extensions thereof (collectively, "PATENTS") owned or
claimed by Seller that are part of or related to the Business, whether or not
currently used therein, including, without limitation, those listed on SCHEDULE
1.1(D)(III).
(iv) All renewals, modifications and extensions of any items
referred to in paragraphs (i)
through (iii) above that occur on or prior to the Closing Date.
(v) All technology, processes, ideas, concepts, invention
disclosures, know-how, trade secrets, improvements, design information,
drawings, patterns, blueprints, plans, formulations, software, technical data
and engineering documentation, engineering notebooks, and other engineering
information, vendor lists, customer lists, sales force and distribution networks
and other marketing service information, other than the Trademarks, Copyrights
and Patents described in Sections 1.1(d)(i) through (iv) herein (collectively,
"KNOW-HOW" and, together with the Trademarks, Copyrights and Patents, called
"INTELLECTUAL PROPERTIES") of Seller that are, as of the Closing Date, used or
contemplated for use (or, in the ordinary and usual course of the Business, at
any time prior thereto have been used) in the Business, including, without
limitation, those listed on SCHEDULE 1.1(D)(V) hereto.
(vi) All licenses granted to Seller of rights in or to any
Intellectual Property that are, as of the Closing Date, used or contemplated for
use (or in the ordinary and usual course of the Business, at any time prior
thereto have been used) in the Business, including, without limitation, those
listed on SCHEDULE 1.1(D)(VI) hereto.
(vii) All licenses and powers of attorney granted to others in
effect as of the Closing Date with respect to any of the Intellectual Properties
that are owned by Seller and used in the Business, including, without
limitation, those listed on SCHEDULE 1.1(D)(VII) hereto.
(viii) All rights and incidents of interest of Seller, in and
to all non-competition or confidentiality agreements in effect as of the Closing
Date that were entered into or made in connection with the Business.
(e) ACCOUNTS RECEIVABLE, CASH DEPOSITS, PREPAID EXPENSES. All
(i) Accounts Receivable as set forth and certified by Seller on SCHEDULE
1.1(E)(I) ("ACCOUNTS RECEIVABLE SCHEDULE") to be estimated, calculated and
adjusted as of September 1, 2000, and (ii) cash deposits under any Contract on
Schedule 1.1(e) (ii) ("CASH DEPOSITS"), and prepaid expenses to be estimated,
calculated and adjusted as of September 1, 2000 ("PREPAID EXPENSES") as set
forth on SCHEDULE 1.1(E)(III).
1.2 NONASSIGNABLE LICENSES AND CONTRACTS
(a) NONASSIGNABILITY. To the extent that any contract or other
agreement or instrument or any license, trademark, trade name, copyright,
patent, concession, grant, franchise or approval or any other asset or property
included in the Assets is not capable of being assigned, transferred or
sublicensed without the consent or waiver of the issuer thereof or the other
party thereto or any third party (including any Authority as defined in Section
4.10(d), or if such assignment, transfer or sublicense or attempted assignment,
transfer or sublicense would constitute a breach thereof or a violation of any
Legal Requirement (as defined in Section 4.10(e), this Agreement shall not
constitute an assignment, transfer or sublicense thereof, unless and until such
consent or waiver of such issuer or other party or parties has been duly
obtained or such assignment, transfer or sublicense has otherwise become lawful.
(b) Seller's Efforts. Before the Closing, Sellers shall use
their best efforts to obtain consents and approvals to the assignment of the
agreements identified on SCHEDULE 1.2(B) which shall include, but not be limited
to, the Asset Purchase Agreements, Employment Contract and Management Contract
(collectively "MATERIAL CONSENTS") and otherwise shall obtain the consents and
waivers necessary to sell, assign, convey, set over, deliver and transfer all
rights, title and interests to the Assets to Purchaser. Purchaser agrees to
cooperate and supply relevant information to third parties in order to assist
Seller in obtaining any such consents or waivers.
(c) IF WAIVERS OR CONSENTS CANNOT BE OBTAINED. To the extent
that the Material Consents are not obtained by Seller, (i) Seller shall use its
best efforts to (x) provide or cause to be provided to Purchaser the benefits of
any license or approval and of any contract, license or other agreement referred
to in Section 1.2(a), (y) cooperate in any arrangement, reasonable and lawful as
to Seller and Purchaser, designed to provide such benefits to Purchaser and (z)
enforce for the account and at the expense of Seller any rights of Seller
arising from the licenses, approvals, contracts and other agreements referred to
in Section 1.2(a) against such issuer or the other party or parties referred to
therein, including, without limitation, the right to elect to terminate in
accordance with the terms thereof on the advice of Purchaser, and (ii) Purchaser
shall use reasonable efforts to perform the obligations of Seller arising under
such licenses, approvals, contracts and other agreements, to the extent that, by
reason of the transactions consummated pursuant to this Agreement, Purchaser has
control over the resources necessary to perform such obligations; provided
however, that nothing in this Section 1.2(c) shall constitute a waiver of the
fulfillment of any condition to the obligations of the parties as set forth in
Article VII.
1.3 EXCLUDED ASSETS.
Notwithstanding anything to the contrary contained in this
Agreement, except for the Assets, no other assets or properties of Seller shall
be sold hereunder including, without limitation, the following assets ("EXCLUDED
ASSETS"):
(a) Seller insurance policies provided that such policies are
not assigned Contracts or Assumed Liabilities, as defined in Section 3.1(a).
(b) Rights arising from any tax refunds due from a period
prior to the Closing.
(c) Seller's documents and papers relating to the preparation
of tax returns, and other documents relating to the organization, maintenance
and existence of Seller as a limited liability company, subject to the access
requirements of Section 6.5.
(d) Seller's cash bank accounts and money market mutual fund
accounts.
1.4 INSTRUMENTS OF CONVEYANCE. To effectuate the sale,
assignment, transfer and conveyance contemplated by this Article I, Seller
covenants that it will execute and deliver to Purchaser at the Closing all bills
of sale, deeds, documents or instruments of sale, assignments, transfers or
conveyances, as Purchaser shall reasonably deem necessary and appropriate (and
in proper form for recording when
appropriate) to vest in or confirm to Purchaser good, valid and marketable title
to all of the Assets that are owned by Seller, including but not limited to a
bill of sale, substantially in the form annexed as EXHIBIT A, and valid
assignments of all of Seller's rights, title and interests in all of the Assets
that are contracts or licenses, in each case free and clear of any Liens, other
than Permitted Liens.
1.5 THE CLOSING. The closing of the purchase and sale of the
Assets and the transactions contemplated herein ("CLOSING") shall take place
simultaneously with the execution of this Agreement at the offices of Novack
Burnbaum Crystal LLP, 300 East 42nd Street, 10th Floor, New York, New York, at
10:00 a.m., or at such other time or place as the parties may agree in writing.
The date on which the Closing occurs is called the "CLOSING DATE". The Closing
shall be deemed to be effective as of 12:01 A.M. on the Closing Date at each
place where the Assets are located but the Adjustments, as defined in Section
2.1 below, shall take place as of September 1, 2000.
II. PURCHASE PRICE
2.1 PURCHASE PRICE, ADJUSTMENTS AND CLOSING PROCEDURES
(a) The aggregate consideration payable by Purchaser in
respect of the Assets, and all other rights of Purchaser contemplated by this
Agreement ("PURCHASE PRICE") shall be the sum of (i) $1,100,000 in cash ("CASH
PURCHASE PRICE"), plus (ii) 2,500,000 restricted shares of Series A Convertible
Preferred Stock of American Risk Management Group, Inc. ("ARMC"), Purchaser's
parent corporation ("ARMC PREFERRED STOCK"), plus (iii) the assumption of
certain liabilities as set forth in Section 3.1 ("ASSUMED LIABILITIES") hereof,
plus (iv) Cash Deposits and Prepaid Expenses as set forth on Schedule
1.1(f)(ii), plus (v) the amount of Accounts Receivable as set forth on the
Accounts Receivable Schedule [ARE WE PAYING FOR THE ACCOUNTS RECEIVABLE
SEPARATELY AT THE CLOSING?]. The items set forth in Sections 2.1(a)(iii), (iv)
and (v) shall be adjusted as of September 1, 2000 ("ADJUSTMENTS").
(b)(i) Purchaser shall have the right to set off against the
Cash Purchase Price the difference between the Accounts Receivable actually
collected by the Purchaser up to March 1, 2000 ("COLLECTION PERIOD") and the
Accounts Payable as set forth on the Accounts Payable Schedule, defined in
Section 3.1(a) below assumed by the Purchaser ("DEFICIENCY"). Within 5 days from
the end of the Collections Period, Purchaser shall give written notice to the
Seller of the amount of Deficiency ("DEFICIENCY NOTICE"), and Seller shall pay
Purchaser in cash the amount of the Deficiency within 3 days from the date
Seller receives the Deficiency Notice. In the event that Seller shall disagree
in good faith with the Deficiency Notice, Seller shall give Purchaser a written
notice ("DISAGREEMENT NOTICE") specifying the amount of the Deficiency as
determined by Seller, or that there is no Deficiency, within 20 days after
receipt by Seller of the Deficiency Notice. Seller shall have reasonable access
to the records and personnel of the Purchaser in order to obtain all information
needed for the purposes of review. Seller and Purchaser shall thereupon
negotiate in good faith for up to 20 days to resolve any such disagreements. If
after such negotiation period Seller and Purchaser shall still disagree, any
such disagreement shall be promptly submitted to an accounting firm that is
mutually acceptable to and agreed upon by Seller and Purchaser and has no
financial relationship with either of them ("UNAFFILIATED FIRM"). If an
Unaffiliated Firm is appointed, it shall determine whether there is a Deficiency
or the amount of the Deficiency, as the case may be, as promptly as possible
after its engagement by the parties and the Unaffiliated
Firm shall resolve such issues in accordance with generally accepted accounting
principles. The Unaffiliated Firm shall deliver to Seller and Purchaser, as
promptly as practicable, a written report setting forth its determination of the
Deficiency or that there is no Deficiency, as the case may be ("DEFICIENCY
DETERMINATION"). The Deficiency Determination shall neither be more favorable to
Purchaser than reflected in the Disagreement Notice nor be more favorable to
Seller than reflected in the Disagreement Notice. The determination made by the
Unaffiliated Firm shall be conclusive and binding on and non-appealable by the
parties hereto. The fees, costs and expenses of the Unaffiliated Firm shall be
borne one-half by Purchaser and one-half by Seller.
(ii) At the Closing, 250,000 shares of the 2,500,000 shares of
Preferred Stock to be delivered to Seller in accordance with Section 2.1(a)(i)
shall be deposited in escrow ("ESCROW SHARES") with the law firm Novack Burnbaum
Crystal LLP ("ESCROW AGENT"). In the event Seller fails to pay Purchaser in cash
the amount of any Deficiency as set forth in Section 2.1(b)(i) above, the
Purchaser shall give written notice to the Escrow Agent to release to Purchaser
that number of Escrow Shares equivalent in value to the Deficiency as determined
in accordance with the Valuation, and any excess Escrow Shares shall be
delivered by the Escrow Agent to the Seller ("ESCROW NOTICE"). The Escrow Agent
shall have the right to rely on the Escrow Notice, whether or not the Seller
objects to the Escrow Notice. For the purposes of this Agreement, the Escrow
Shares shall be valued at a price of $.50 per share and shall be deemed to have
an aggregate value of $125,000 unless the market price of ARMC's common stock as
reported on the OTC Bulletin Board, or on any exchange on which the ARMC common
stock trades or is listed is less than $.50 per share on the date of the Escrow
Notice ("MARKET PRICE"), in which case the value of each Escrow Share shall be
the Market Price ("VALUATION"). The sole duty and obligation of the Escrow Agent
under this Agreement shall be to safekeep the Escrow Shares and to deliver the
Escrow Shares in accordance with this Section 2.1(b)(ii). Each of Purchaser and
Seller agree to hold the Escrow Agent harmless, and to indemnify the Escrow
Agent for any and all claims whatsoever made by Purchaser, Seller or any third
party in connection with the Escrow Agent's duties and responsibilities under
this Agreement, which indemnification shall include all of the Escrow Agent's
fees, costs and expenses, and the costs and expenses of any counsel or experts
which the Escrow Agent may retain.
2.2 CLOSING PROCEDURES. At the Closing:
(a) Purchaser shall (i) pay Seller, in cash by wire transfer
of immediately available funds to an account or accounts designated by Seller in
writing, the funds required by Section 2.1(a)(i) less the sum of $150,000
previously paid to Seller by or on behalf of Purchaser in connection with this
transaction; (ii) deliver to Seller a certificate or certificates registered in
the name or names designated by the Seller representing the number of shares of
Preferred Stock less the Escrow Shares; and (ii) deliver the Escrow Shares to
the Escrow Agent.
(b) Purchaser and Seller shall execute and deliver each of the
other agreements, certificates and other documents required by this Agreement,
including, without limitation, those required pursuant to Article VII.
2.3 PURCHASE PRICE ALLOCATION. The Purchase Price shall be
allocated in the manner set forth on SCHEDULE 2.3 at the Closing. The parties
hereto agree to report the transaction for income, franchise and similar tax
purposes in accordance with the allocations set forth on Schedule 2.3. [FRANK
LAFORGIA]
III. ASSUMPTION OF LIABILITIES
3.1 LIABILITIES ASSUMED BY PURCHASER.
(a) Purchaser, in connection with the purchase of the Assets,
at the Closing, shall assume the following liabilities and obligations of Seller
("ASSUMED LIABILITIES"): (i) all liabilities and obligations of Seller that
arise due to any occurrence subsequent to the Closing, or due to an action or
omission of Purchaser or in connection with the operation of the Business,
subsequent to the Closing, and to the extent that such liabilities and
obligations are by their terms to be performed after the Closing under the terms
of a Contract, agreement, license, sales order, purchase order or other
commitment (including Permits as defined in Section 4.10(a)) that is assigned to
Purchaser hereunder and that is listed on Schedule 1.1(c) other than liabilities
and obligations arising out of the breach by Seller, of any such Contract,
agreement, license, sales order, purchase order or other commitment, and (ii)
only those accounts payable of Seller ("ACCOUNTS PAYABLE") as set forth on
SCHEDULE 3.1(A)which shall be estimated, calculated and adjusted as of September
1, 2000 ("ACCOUNTS PAYABLE SCHEDULE") .
(b) Purchaser shall execute and deliver to Seller an
Assignment and Assumption Agreement, substantially in the form attached hereto
as EXHIBIT B ("ASSUMPTION AGREEMENT"), pursuant to which Purchaser shall agree
to pay, perform and discharge when due, to the extent the same are unpaid,
unperformed or undischarged on the Closing Date, the Assumed Liabilities.
3.2 LIABILITIES NOT ASSUMED BY PURCHASER.
(a) Except for the Assumed Liabilities, Purchaser, in
connection with the purchase of the Assets, this Agreement or otherwise, shall
not assume or in any manner be or become responsible for any obligations or
liabilities of any nature, whether known or unknown, accrued, absolute,
contingent or otherwise, and whether due or to become due (including without
limitation any Environmental Liabilities and Costs (as hereinafter
defined))(collectively "LIABILITIES") of Seller or any of its Affiliates,
including Liabilities incurred in connection with, in any way arising out of, or
related to, any of the Assets or the Business prior to the Closing, and Seller
agrees that as between Seller and Purchaser, Seller will be solely responsible
for the satisfaction and discharge of all such Liabilities, and will indemnify
and hold harmless Purchaser against all such Liabilities as provided for in
Section 10.2.
(b) Without limiting the generality of the foregoing paragraph
(a), Purchaser expressly shall not assume any liabilities or obligations of
Seller.,
(i) for any Taxes including, without limitation, (x) federal,
state, local or other income or franchise Taxes arising from, relating to or
attributable to the Business or the Assets or (y) Taxes arising in connection
with the transactions contemplated by this Agreement;
(ii) for product liabilities, workers compensation, and
automobile and similar liabilities for personal injuries, medical malpractice in
each case to the extent such liability arises from an injury, event,
occurrence or omission which occurred or existed on or prior to the Closing
Date;
(iii) for any claims for insurance premiums or retroactive
assessments based upon claims described in the preceding clause (ii);
(iv) for third-party lawsuits and claims resulting from,
caused by or arising our of, any product shipped by, or any service rendered by,
Seller or the use thereof at any time whatsoever, including, without limitation,
any such claims (x) for failure to warn, (y) based on Seller's warranty for the
Inventory and products sold by Seller prior to the Closing and (z) for any
product returns;
(v) to the extent that such claim arises out of or related to
litigation or administrative proceedings existing on or prior to the Closing
Date, including, without limitation, liability for patent, trademark or
copyright infringement or violation of any law, statute, ordinance, regulation
or rule or any Authority;
(vi) to the extent that such claim arises out of or relates to
(x) any claims or controversies pending or threatened or based on facts existing
on or prior to the Closing Date between Seller and any of its employees,
independent contractors, salesmen, former employees, employees' collective
bargaining representatives, job applicants or any association or group of such
persons including, without limitation, claims or controversies asserted pursuant
to any constitutions, statutes, laws, regulations, rules or ordinances of any
Authority or any collective bargaining agreements or regulations relating in
whole or in part to the employment of labor and equal employment opportunity,
(y) except for the Assumed Liabilities, any action which Seller took or failed
to take with regard to such persons prior to, contemporaneous with or subsequent
to the Closing Date or (z) any liability whatsoever including but not limited to
"withdrawal liability", as a result of any agreement between any trade union, or
any collective bargaining agreement, relationship, pension plan, welfare plan
and/or trust documents and any liability to or under any Health and Welfare Fund
or pension plan included or referenced in these agreements, or otherwise binding
upon Seller as a result of its collective bargaining relationships or (xx) any
Environmental Liabilities and Costs as defined in Section 4.15;
(vii) arising out of transactions of any kind between Seller
and any of its Affiliates including but not limited to any inter-company debt;
(viii) for any liabilities or obligations to employees or
former employees of Seller arising out of or in connection with such employment,
including, without limitation, as a result of any act of malpractice,
discrimination as defined by federal or state law, or pursuant to any employee
benefit plans, programs, arrangements, contracts or established working
practices;
(ix) to the stockholder of Seller solely in its capacity as
such stockholder;
(x) for any rebates or volume related discounts that become
due to customers after he Closing related to sales made or services provided by
the Seller, or for those portions of any rebates which may have accrued in part
related to sales made by Seller; and
(xi) for any accounts payable of Seller not set forth on the
Accounts Payable
Schedule.
3.3 NO EXPANSION OF THIRD PARTY RIGHTS. The assumption by
Purchaser of the Assumed Liabilities shall not expand the rights or remedies of
any third party against Purchaser or Seller as compared with the rights and
remedies which such third party would have had against the Seller had Purchaser
not assumed the Assumed Liabilities.
IV. SELLER'S REPRESENTATIONS AND WARRANTIES
Subject to the exceptions, if any, set forth on Schedules
referenced in this Article IV, Seller represents and warrants as follows:
4.1 ORGANIZATION, POWER AND AUTHORITY, ETC. Seller is a
limited liability company and PC is a professional corporation, each of which
are duly organized, validly existing and in good standing under the laws of
their respective jurisdictions with full power and authority to own, operate and
hold under lease its properties and assets and to carry on their business as now
and as heretofore conducted. Seller has full power and authority to execute and
deliver this Agreement and all the schedules, documents, agreements,
certificates and instruments to be delivered by Seller pursuant to this
Agreement at the Closing (such schedules, documents, agreements, certificates
and instruments are referred to herein as ("SELLER'S ANCILLARY DOCUMENTS"), and
to perform the transactions contemplated hereby and thereby. Complete and
correct copies of the certificate of incorporation, bylaws, and all other
corporate governance documents of Seller have been previously delivered to
Purchaser.
4.2 DUE AUTHORITY; NO BREACH. The execution and delivery by
Seller of this Agreement, Seller's Ancillary Documents, and the consummation by
Seller of the transactions contemplated hereby and thereby, have been duly
authorized and consented to by all the members of LLC and its manager, and the
MSA and all agreements to which PC is a party have been duly authorized by all
corporate action of PC ("CONSENTS"). The executed Consents and Resolutions
including a Consent of the Members of LLC and a Resolution of Shareholders and
Resolution of the Board of Directors of PC are annexed as APPENDIX A. This
Agreement and Seller's Ancillary Documents have been, duly executed and
delivered by Seller, and this Agreement and Seller's Ancillary Documents are
legal, valid and binding obligations of Seller, enforceable against Seller, in
accordance with their terms except as such enforceability may be affected by any
applicable bankruptcy, insolvency, equitable subordination, reorganization or
similar laws and general principles of equity pertaining to the enforcement of
creditors' rights. The MSA has been duly executed and delivered by PC, and is
the legal, valid and binding obligation of PC, enforceable against PC in
accordance with its terms except as such enforceability may be affected by any
applicable bankruptcy, insolvency, equitable subordination, reorganization or
similar laws and general principles of equity pertaining to the enforcement of
creditors' rights. Except as set forth on SCHEDULE 4.2, neither the execution
and delivery by Seller and PC of this Agreement or any of Seller's Ancillary
Documents, nor the consummation by Seller, of the transactions contemplated
hereby or thereby, nor the compliance by Seller, with or fulfillment by Seller,
of the terms and provisions hereof or thereof will (i) conflict with or result
in a breach or violation of any of the terms, conditions or provisions of the
certificate of incorporation or bylaws or other corporate governance documents
of Seller, or (ii) with or without the giving of notice or lapse of time or
both, conflict with or result in a breach or violation of, or default under,
or permit the acceleration of any obligation under any provision of any
Contract, Permit, Lien or other instrument or restriction of any kind to which
Seller is a party or by which Seller or any of the Assets is otherwise bound or
affected which in any single case, have a Material Adverse Effect, as defined in
Section 4.5 below, on the Business, or (iii) violate any judgment, order, writ,
injunction, decree, or award which specifically names Seller, or to the
knowledge of Seller upon making reasonable inquiry, violate any judgment, order,
writ, injunction, decree, award, statute, rule or regulation applicable to
Seller or any of the Assets, or result in the creation or imposition of any Lien
on any of the Assets.
4.3 GOVERNMENTAL APPROVAL. No consent, approval, waiver, order
or authorization of, or registration, declaration or filing with, any Authority
is required in connection with the execution and delivery of this Agreement,
including but not limited to approval by the State Department of Education, for
any of Seller's Ancillary Documents or the consummation by Seller of the
transaction contemplated hereby or thereby, whether applicable to Seller, except
where the failure to obtain any consent, approval, waiver, order or
authorization of, or make such registration, declaration or filing would not
have a Material Adverse Effect, as defined below.
4.4 FINANCIAL INFORMATION. The financial statements of Seller
and its affiliates relating to the Business through the fiscal years ending
December 31, 1997, December 31, 1998 and December 31, 1999, and for the three
months ending March 31, 2000, which Seller hereby represents were prepared in
accordance with generally accepted accounting principles, present fairly in all
material respects the financial condition of Seller as of the dates of such
financial statements and the results of operations of Seller for such periods
("FINANCIAL STATEMENTS"). None of the Financial Statements contain an untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not materially misleading.
4.5 LIABILITIES. Except as set forth on SCHEDULE 4.5, Seller
has not incurred any Liabilities relating to the Business except Liabilities (i)
that were incurred in the usual and ordinary course of business consistent with
past practice and (ii) that, individually or in the aggregate, did not have and
are not likely to have a material adverse effect on the Assets, the Business or
the Assumed Liabilities ("MATERIAL ADVERSE EFFECT"). All payments which (x) are
due under any contract, agreement, license, lease, sales order, purchase order
or other commitment of Seller relating to the Business that would in the
aggregate have a Material Adverse Effect after the Closing, or (y) which Seller
has not disclosed, or (z) which Seller will not pay off at time of Closing will
be paid or have been paid and kept current in accordance with past practice.
Except as set forth on Schedule 4 .5, there are no rebates or volume-related
discounts presently due to customers or which may become due after the Closing,
or rebates which have been promised to or negotiated with Seller's customers but
have not yet been paid by Seller because such customers have not yet made the
required level of purchases or received the required level of services from
Seller.
4.6 CONDITION OF ASSETS. All tangible personal property and
equipment included in the Assets, taken as a whole, have been adequately
maintained and are in good operating condition (ordinary wear and tear excepted)
or otherwise suitable for their intended purpose. Seller will deliver good title
to all of the Assets, in each case free and clear of all Liens, except for the
following (referred to herein as "PERMITTED LIENS"): (i) statutory liens of
landlords, liens of carriers, warehousemen, mechanics and materialmen incurred
in the ordinary course of business for sums not yet due; and (ii) liens incurred
or deposits made in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of government mandated employees'
coverage.
4.7 INTELLECTUAL PROPERTY. Except as set forth on Schedules
1.1(d)(i), (ii), (iii), (v), (vi) and (vii), (i) Seller is the sole and
exclusive owner of all rights to the Intellectual Properties, the same are fully
assignable and Seller has the right to use the same without the payment of any
license fee, royalty or similar charge, (ii) there are no other patents,
copyrights, trademarks, service marks (whether registered or unregistered),
trade names, brand names, know-how, trade secrets or other intellectual
properties of a similar nature, or any applications for any of the foregoing,
that are owned or used by Seller in connection with the Business, (iii) there is
no written claim of any other person, firm or corporation or any proceeding
pending against Seller or, to the best knowledge of Seller, threatened that
relates to any of the Intellectual Properties set forth on such Schedules and
Seller knows of no basis for any such claim or proceeding, (iv) none of such
Intellectual Properties is subject to any outstanding order, ruling, decree,
judgment or stipulation naming Seller by or with any court, arbitrator or
Authority, and (v) to the knowledge of Seller, (x) no other person is using any
of the Intellectual Properties and (y) Purchaser's continued use of the
Intellectual Properties in substantially the same manner Seller currently uses
such Intellectual Properties will not infringe or violate the proprietary rights
of any third party.
4.8 LITIGATION AND RELATED MATTERS. There are no actions,
suits, investigations or proceedings pending naming Seller or PC, to the best
knowledge of Seller and PC, threatened against Seller or PC or any of Seller's
Affiliates that involve transactions relating to the Business, the Assets or the
Assumed Liabilities, at law or in equity, or before any arbitrator of any kind,
or before or by any Authority, and there is no such action, suit, investigation
or proceeding pending naming Seller or PC or, to the best knowledge of Seller or
PC threatened against or affecting the transactions contemplated by this
Agreement. Neither Seller nor PC is a party to, or, to the knowledge of Seller
and PC after making reasonable inquiry, subject to the provisions of, any
judgment, decree or order relating to the Business, the Assets or the Assumed
Liabilities, and there has been no material dispute in the last two years
between Seller or PC and any of their respective customers relating to the
Business.
4.9 CONTRACTS. Seller has made available to Purchaser for
review correct and complete copies of all material Contracts in effect as of the
date hereof pertaining to the Business to which Seller is a party or to which
any of the Assets are subject and that are in written form. All of the Contracts
listed on Schedule 1.1(c) are binding and in full force and effect as to Seller,
and no event or condition has occurred or exists or, to the best knowledge of
Seller, is alleged by any of the other parties thereto to have occurred or exist
that constitutes or after notice or lapse of time or both would constitute a
material breach or default by any party thereto, or a basis for termination
thereunder. Except as set forth on Schedule 1.1(c), none of such Contracts have
been amended or modified. Neither Seller nor, to the knowledge of Seller, any
other party to such Contracts, is in material default, and Seller has not
received any notice of alleged material default under any such Contract. Seller
has not waived any material right under any such Contract.
4.10 GOVERNMENTAL LICENSES; PERMITS; COMPLIANCE WITH LAW.
SCHEDULE 4.10 contains a
correct and complete list of all Permits used in connection with the Business as
currently operated. Except as disclosed on Schedule 4.10, Seller has all Permits
material to the conduct of the Business, all such Permits are valid and in full
force and effect, and no proceeding is pending naming Seller, or, to the best
knowledge of Seller, threatened, to modify, suspend, revoke or otherwise limit
any of such Permits and no administrative or governmental actions have been
taken naming Seller or, to the best knowledge of Seller, threatened in
connection with the expiration or renewal of any of such Permits. The Business
is and has been conducted in compliance in all material respects with all
Permits and all Legal Requirements of any Authority applicable to the Business
to the extent necessary to avoid a Material Adverse Effect, including, without
limitation, Legal Requirements and Permits (i) relating to product safety; (ii)
regarding employment and employment practices or terms and conditions of
employment; (iii) relating to trade regulation (including, without limitation,
restraint of trade and relations with suppliers, customers and distributors). No
investigation or review by any Authority with respect to the Business is pending
or threatened. No Authority has indicated in writing an intention to conduct any
such investigation or review. As used in this Agreement, the following terms
have the meanings set forth below:
(a) "PERMITS" mean any and all permits, licenses,
authorizations, approvals, registrations, rights of way, orders, waivers,
variances or other approvals and licenses (i) under any (x) Law, (y) Judgment or
(z) Contract with any Authority relating to compliance with matters described in
(x) or (y) above, or (ii) granted by any Authority;
(b) "LAWS" mean Judgments and Environmental Laws and
Environmental Property Transfer Laws any and all laws (whether statutory or
otherwise), rules and regulations, of all Authorities, all as in effect as of
the Closing Date;
(c) "JUDGMENTS" mean any and all judgments, orders,
directives, rulings, decisions, injunctions (temporary, preliminary or
permanent), decrees, or awards having the effect of law of any federal, state,
local or foreign court, arbitrator or any Authority;
(d) "AUTHORITY" means any governmental, judicial, legislative,
executive, administrative or regulatory authority of the United States including
but not limited to the Securities and Exchange Commission or of any state, local
or foreign government or any subdivisions, agency, commission, office, authority
or bureaucracy thereof as of the Closing Date; and
(e) "LEGAL REQUIREMENTS" mean any and all applicable (i) Laws,
(ii) Judgments, (iii) Contracts with any federal, state, local or foreign court,
arbitrator or Authority all in effect as of the Closing Date (except with
respect to Environmental Property Transfer Laws as to which this definition
extends to such Laws as in effect on or after the Closing Date) relating to
compliance with matters described in (i) or (ii) above and (iv) any Permit.
4.11 CONDUCT OF BUSINESS. Since January 1, 2000 Seller has
conducted the Business only in the ordinary and usual course in all material
respects, and without limiting the generality of the foregoing, Seller has not,
with respect to the Business:
(a) sold, assigned, transferred, mortgaged, pledged, leased or
otherwise disposed of or subjected to any Lien any Asset (other than sales of
inventories in the ordinary and usual course of business);
(b) materially amended, waived, released, disposed of or
permitted to lapse any material right relating to the Business;
(c) transferred or granted any material rights under any
Contracts, leases or Intellectual Properties;
(d) agreed, whether in writing or not, to do any of the
foregoing; or undergone or suffered any change in its financial condition,
business, customer or supplier relationships, properties or prospects which has
been, individually or in the aggregate, materially adverse to the Business, the
Assets or the Assumed Liabilities.
4.12 INTENTIONALLY LEFT BLANK.
4.13 INSURANCE. SCHEDULE 4.13 sets forth a correct and
complete list of all policies of liability insurance ("INSURANCE POLICIES")
currently in force by type, and indicates claims pending thereunder by Seller.
There has been no failure to give or deliver any notice with respect to any
material pending claim there under in a timely fashion, all premiums due and
payable thereunder have been paid and each such policy is in full force and
effect. Correct and complete copies of all such policies have heretofore been
made available by Seller to Purchaser.
4.14 TAXES.
(a) All returns and reports of all Taxes, including. without
limitation, federal income tax returns, withholding tax returns and declarations
of estimated tax and tax reports, required to be filed on or prior to the
Closing Date by Seller with respect to any Tax that, if not paid, might result
in a Lien upon any of the Assets have been duly and timely filed and are, to the
best of Seller's knowledge, true, correct and complete in all material respects,
and all Taxes due or claimed (in writing) to be due pursuant thereto have been
paid.
(b) No Tax is required to be withheld pursuant to Section 1445
of the Internal Revenue Code of 1986, as amended ("CODE"), as a result of the
transfers contemplated by this Agreement because Seller is not a foreign person
within the meaning of that section and the Treasury regulations thereunder.
(c) As used herein, "TAX" and "TAXES" mean all taxes and
similar governmental charges, imposts, levies and assessments, however
denominated (including, without limitation, income taxes, estimated taxes,
withholding taxes, use taxes, gross receipt taxes, sales taxes, transfer taxes
or fees, excise taxes, real and personal property taxes, AD VALOREM taxes,
payroll related taxes, employment taxes, unemployment insurance, social security
taxes, minimum taxes, franchise taxes and import duties and other obligations of
the same or a similar nature), together with any related liabilities, penalties,
fines, additions to tax or interest imposed by the United States or any federal,
state, county, provincial, local or foreign government or subdivision or agency
of
any thereof.
4.15 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE
4.15,
(a) Seller is and has been in compliance in all material
respects with all Environmental Laws (as defined below) applicable to the
Business;
(b) Seller has obtained and is, has been, and will at Closing
be, in compliance in all material respects with the conditions of all
Environmental Permits (as defined below), certificates, approvals, licenses, and
other authorizations necessary under any Environmental Law for the continued
conduct of the Business in the manner now conducted and all such Environmental
Permits are and will at Closing be in full force and effect;
(c) to the knowledge of Seller, there are no pending changes
with respect to any Environmental Permit, that will prevent the Business from
being conducted in the manner now conducted or which would make compliance or
continued compliance with respect to any Environmental Permit materially more
expensive than at present;
(d) neither Seller nor any of its officers, or directors, or
present or past Assets, properties, businesses or operations is subject to, or
within the past five years has been subject to, any outstanding material written
order, decree, judgment, complaint, written agreement, claim, citation, request
for information, or notice or is subject to any ongoing judicial or
administrative proceeding holding or claiming that Seller is or may be (i) in
violation of any Environmental Law, (ii) responsible for the Release of any
Chemical Substance or (iii) liable for any Environmental Liabilities and Costs;
(e) to the knowledge of Seller, none of the Assets or the
Business, is subject to, or as a result of the transactions contemplated by this
Agreement, would be subject to, the requirements of any state or local
Environmental Laws that require notice, disclosure, cleanup or approval prior to
transfer of such Assets or Business, or that would impose Environmental Liens on
such Assets or Business ("ENVIRONMENTAL PROPERTY TRANSFER LAWS");
(f) no property now or previously owned or leased by Seller is
listed or, to Seller's knowledge, is proposed for listing, on the National
Priorities List pursuant to CERCLA, as defined below, on the CERCLIS, or on any
other similar state list of sites requiring investigation or cleanup;
(g) Seller has not transported or arranged for the
transportation of any Chemical Substance to any location that is listed or
proposed for listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS, or any other similar state list, or which is the subject of federal,
state, or local enforcement actions or other investigations that could
reasonably be expected to lead to material claims against Seller for any
remedial work or damage to natural resources, including claims under CERCLA;
(h) there are no polychlorinated biphenyls in excess of 50 ppm
or damaged or friable
asbestos in such condition to cause a present health hazard at any property now
or previously owned or leased by Seller;
(i) none of the manufacturing or distribution facilities of
the Seller is subject to any Environmental Lien;
(j) Seller has not Released and, to the knowledge of Seller,
there have been no Releases of a Chemical Substance, no on-site disposal of a
Chemical Substance, and there are no active, inactive, closed or abandoned
disposal areas, tanks and no investigation or review with respect to any such
matter is pending or to the knowledge of Seller, threatened, nor has any
Authority or other third party indicated an intention to conduct the same.
As used in this Agreement the following terms have the
meanings set forth below:
"CHEMICAL SUBSTANCE" means any chemical substance, including
but not limited to any (i) pollutant, contaminant, chemical, raw material,
intermediate product, by-product, lead-based paints, natural gas, natural gas
liquids, synthetic gas, liquified natural gas, slag, construction debris,
refractory brick or heavy metal, (ii) industrial, solid, toxic or hazardous
substance, material or waste, (iii) petroleum or any fraction thereof, (iv)
asbestos or asbestos-containing material, (v) polychlorinated biphenyl, (vi)
chlorofluorocarbons and (vii) any other substance, material or waste (whether in
the form of raw material, intermediate product, by-product, construction debris,
or otherwise) which is regulated, or for which standards are prescribed, under
any Environmental Law.
"DIRECT CLAIM" means a claim that does not arise from a Third
Party Claim, whereby Purchaser incurs Losses as a result of a Reportable
Environmental Condition.
"ENVIRONMENT" includes real property and the physical
buildings and structure thereon, and also includes, but is not limited to,
ambient air, surface water, drinking water, groundwater, land surface,
subsurface strata and river sediment.
"ENVIRONMENTAL LAW" means any Law or Legal Requirement
relating to human or public health or safety or pollution or protection or
cleanup of the Environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") and any other
Law or Legal Requirement relating to (a) the Release, containment, removal,
remediation, response, cleanup or abatement of any sort of any Chemical
Substance, (b) the manufacture, generation, formulation, processing, labeling,
distribution, introduction into commerce, use, treatment, handling, storage,
recycling, disposal or transportation of any Chemical Substance, (c) exposure of
persons, including employees, to any Chemical Substance, or (d) the management,
use, storage, disposal, cleanup or removal of asbestos, asbestos-containing
materials, polychlorinated biphenyls or any other Chemical Substance.
"ENVIRONMENTAL LIABILITIES AND COSTS" means all Losses, as
defined in Section 9.1 below, to the extent arising from events occurring or
conditions existing on or prior to the Closing Date incurred by Purchaser
Indemnitees:
(i) pursuant to the violation of any Environmental Law or
claimed violation thereof to the extent relating to the Business or any of its
present or past operations or properties (including without limitation, any
liability arising from the off-site disposal of Chemical Substances) which is
incurred pursuant to a Third Party Claim;
(ii) as a result of, relating to, or in connection with any
Release which is incurred pursuant to a Third Party Claim; or
(iii) as a result of any Reportable Environmental Condition
resulting in a Direct Claim.
"ENVIRONMENTAL LIEN" means a lien in favor of any government
entity for any liability under any Environmental Law or costs incurred by such
government entity in response to the Release or threatened Release of any
Chemical Substance into the Environment.
"ENVIRONMENTAL PERMIT" means any Permit required under, issued
pursuant to, or authorized by any Environmental Law.
"RELEASE" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing of any Chemical Substance into the Environment of any kind whatsoever
(including the abandonment or discarding of barrels, containers, tanks or other
receptacles containing or previously containing any Chemical Substance) in
excess of any applicable action levels or other requirement of any Environmental
Law which occurred prior to the Closing Date, including any migration of any
previously Released Chemical Substance after the Closing Date, but "Release"
excludes any migration which is caused or exacerbated by any post-Closing
grossly negligent or willful misconduct of the Purchaser or any agent of the
Purchaser.
"REPORTABLE ENVIRONMENTAL CONDITION" means a condition of or
relating to the Business including but not limited to the on-site or off-site
disposal or other Release of a Chemical Substance or the presence of a Chemical
Substance in excess of applicable action levels which condition Purchaser's
attorneys in their reasonable discretion determine that Purchaser is obligated
to report to a governmental agency or Authority under any Environmental Law.
"THIRD PARTY CLAIM" means a claim, Legal Requirement or the
commencement of any action or proceeding by any third party, including but not
limited to any court, or any governmental agency or entity.
4.16 BROKERS. Seller has dealt with no brokers, finders or
agents in connection with the transactions contemplated by this Agreement except
for Next Century Group and has conducted all negotiations relating to this
Agreement without the intervention of any person acting on its behalf in such
manner as to give rise to any valid claim against Purchaser for any broker's,
finder's fee, or commission in connection with the transactions contemplated by
this Agreement. Seller shall be solely responsible for the payment of any
commission or fee due and owing to Next Century Group in connection with the
transaction contemplated by this Agreement.
4.17 NO PENDING TRANSACTIONS. Except for this Agreement and
the MDS Agreement, Seller is not a party to or bound by any agreement,
commitment or undertaking with respect to the sale, lease or exchange of the
Assets to any other person.
4.18 CERTAIN INTERESTS. Except for (i) the employment
agreement with Dr. Robert Goodman and (ii) the consulting contract with The
August Group LLC, and (iii) any agreement otherwise disclosed in this Agreement
or on SCHEDULE 4.18, no Affiliate of Seller, nor any officer, shareholder,
director or employer of any such Affiliate, is a party to or has an interest,
directly or indirectly, in any contract or commitment which relates to or
affects the Business or by which any of the Assets is or may be bound, or has
any interest, directly or indirectly, in any of the Assets. Each of such
agreements comply in all respect with all Laws, rules and regulations of any
Authority.
4.19 CUSTOMERS AND ACCOUNTS
(a) Set forth on SCHEDULE 4.19 are a list of all customers or
accounts which represent 10% or more of Seller's gross revenue ("MAJOR
ACCOUNTS"). All of the Major Accounts are (i) under contract with Seller and
will be assigned to the Purchaser at Closing, and (ii) are Contracts listed on
Schedule 1.1(c). All Major Account Contracts are in full force and effect, and
Seller is not in breach of any of the terms, conditions or provisions of any of
the Major Account Contracts, and has received no notice of same. Seller has no
knowledge that any of the Major Accounts will not remain accounts of the
Purchaser after the Closing.
(b) Seller has not entered into any agreements to make capital
expenditures in excess of $10,000.
4.20 NON-COMPETITION AGREEMENTS. Seller has provided Purchaser
with complete and accurate copies of all documentation relating to
non-competition and confidentiality agreements in effect as of the date hereof
that were entered into or made in connection with the Business or any of its
officers, shareholders or employees. Specifically, the non-compete agreement
with Dr. Sterling Jonas is in full force and effect. [CHECK]
4.21 ACCURACY AND COMPLETENESS OF ALL STATEMENTS. The
representations and warranties of Seller made pursuant to this Agreement and
Seller's Ancillary Documents, Financial Statements and Business Summary are true
and correct in all material respects. Seller has not omitted therein any
material fact required to make the statements contained therein not misleading.
Seller has heretofore furnished to Purchaser all information as to the Business,
the Assets and the Assumed Liabilities requested by Purchaser, material to a
determination by Purchaser to enter into this Agreement and to acquire the
Assets and Assumed Liabilities.
4.22 ERISA
(a) Seller has not maintained or contributeed to any pension
plan that is subject to the provisions of Title IV of ERISA at any time prior to
the Closing Date, except as shown on SCHEDULE 4.22(A).
(b) Seller has made all contributions required of it to all
employee benefit plans (as defined in Section 3(3) of ERISA) to which Seller is
required to contribute.
(c) The withdrawal liabilities (as defined in Section 4201 of
ERISA or under the terms of any multiemployer plan) that have been incurred by
Seller and which remain unpaid as a result of a complete withdrawal from all of
the multiemployer plans to which Seller contributes has not and will not have a
Material Adverse Effect, individually or in the aggregate.
(d) For purposes of this Section 4.22:
(i) all references to "ERISA" shall be to the Employee
Retirement Income Security Act of 1974, as amended, and all regulations
promulgated thereunder
(ii) all references to the "Seller" shall be to the Seller and
all other entities that are under common control with the Seller within the
meaning of Sections 414(b) and (c) of the Internal Revenue Code of 1986, as
amended; and
(iii) all references to "multiemployer plans" shall be to such
plans as defined in Section 3(37)(A) of ERISA.
4.23 LICENSURE. Seller has all required licenses,
certifications, waivers, permits and other authorizations from the appropriate
federal, state and/or local agencies. Seller attaches hereto as SCHEDULE 4.23 an
accurate list, summary description, and copy of all such licenses,
certifications, waivers, and other authorizations, owned or held by Seller
relating to the Business, all of which are now and as of Closing shall be, in
good standing and not subject to meritorious challenge. Seller has no knowledge
of any facts that would preclude or limit Purchaser from operating the Business
as the Business is currently operated and used.
4.24 COMPLIANCE WITH LAWS.
(a) Seller is in compliance (without waivers) and as of the
Closing Date will be in compliance (without waivers) with all applicable
municipal, county, state and federal laws, regulations, ordinances, standards
and orders and with all municipal, including without limitation, all health,
building, fire and zoning ordinances and life safety codes, including, without
limitation, the Americans with Disabilities Act, as the same may be amended.
(b) There are no outstanding deficiencies or work orders of
any Authority having jurisdiction over the Seller requiring conformity to any
applicable statute, regulation, ordinance or by-law pertaining to nursing home
in general, including but not limited to the Medicare program.
(c) Seller has not received any notice of any claim,
requirement or demand of any licensing or certifying agency supervising or
having authority over the Seller or otherwise to rework or redesign it or to
provide additional furniture, fixtures, equipment or inventory so as to conform
to or comply with any existing law, code or standard which has not been fully
satisfied prior to the date hereof or which will not be satisfied
prior to the Closing Date.
(d) Seller is qualified for, and has never been excluded from,
participation in the Medicare program, has current and valid provider agreements
with the Medicare program ("PROGRAM") with respect to the Business and is in
material compliance with the conditions of participation in, and all billing
requirements of the Program. Seller has no knowledge of any condition with
respect to the Business that constitutes a material deficiency, under the
Program or any other State or Federal law relating to the licensing or operation
of the Business. There is not pending or to the best of Seller's knowledge,
threatened any proceeding or investigation under the Program involving Seller,
(e) All billing practices of Seller, including those with
respect to all third party payors, including the Program and private insurance
companies, have been in compliance with all applicable laws, regulations and
policies of such third party payors and the Program in all material respects.
(f) Neither Seller, nor any member, manager, shareholder,
officer, director or employee of Seller, nor any agent acting on behalf of or
for the benefit of any of the foregoing, has directly or indirectly in
connection with the Business or otherwise: (i) offered or paid any remuneration,
in cash or in kind to, or made any financial arrangements with, any past,
present or potential customers, past or present suppliers, patients, medical
staff members, contractors or third party payors of Seller in violation of
applicable law; (ii) given or agreed to give, or is aware that there has been
made or that there is any agreement to make, any gift or gratuitous payment of
any kind, nature or description (whether in money, property or services) to any
customer or potential customer, supplier or potential supplier, contractor,
third party payor or any other person in violation of applicable law; (iii) made
or agreed to make, or is aware that there has been made or that there is any
agreement to make, any contribution, payment or gift of funds or property to, or
for the private use of, any governmental official, employee or agent where
either the contribution, payment or gift or the purpose of such contribution,
payment or gift is or was illegal under the laws of the United States or under
the laws of any state or any other governmental entity having jurisdiction over
such payment, contribution or gift; (iv) established or maintained any
unrecorded fund or asset for any purpose or made any misleading, false or
artificial entries on any of its books or records for any reason; or (v) made,
or agreed to make, or is aware that there has been made or that there is any
agreement to make, any payment to any person with the intention or understanding
that any part of such payment would be used for any purpose other than that
described in the documents supporting such payment.
(g) Neither Seller, nor any officers or directors of Seller,
is a party to any contract, lease agreement or other arrangement (including any
joint venture or consulting agreement) related to Seller, the Business with any
physician, health care facility, hospital, nursing facility, home health agency
or other person who is in a position to make or influence referrals to or
otherwise generate business or operations for Seller with respect to Business or
otherwise influence the affairs of Seller, to provide services, lease space,
lease equipment or engage in any other venture or activity that is prohibited by
law or that did not provide commercially reasonable terms and fair market value
consideration for the goods, property, services or use of money provided,
exchanged or acquired thereunder at the time entered into.
4.25 BILLING SYSTEM. The billing system for the Business
comply with all Medicare
requirements and is capable of fully functional operation, which means that the
billing system is capable of, but not limited to, the performance of the
following:
(i) transmitting or receiving the necessary data for the
processing of payments regardless of payor class;
(ii) supporting and using software which meets all Medicare
billing requirements; and
V. PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to Seller as follows:
5.1 ORGANIZATION, POWER AND AUTHORITY. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Purchaser has full power and authority to execute and
deliver this Agreement and all other schedules, documents, agreements,
certificates and instruments to be delivered by Purchaser pursuant to this
Agreement at the Closing (such schedules, documents, agreements, certificates
and instruments are referred to herein as "PURCHASER'S ANCILLARY DOCUMENTS"),
and to perform the transactions contemplated hereby and thereby.
5.2 DUE AUTHORITY; NO BREACH. The execution and delivery by
Purchaser of this Agreement, and Purchaser's Ancillary Documents, and the
consummation by Purchaser of the transactions contemplated in this Agreement,
have been duly authorized by all necessary corporate action of Purchaser. This
Agreement and Purchaser's Ancillary Documents have been duly executed and
delivered by Purchaser, and this Agreement and Purchaser's Ancillary Documents
are legal, valid and binding obligations of Purchaser, enforceable against
Purchaser in accordance with their terms except as such enforceability may be
affected by any applicable bankruptcy, insolvency, equitable subordination,
reorganization or similar laws and general principles of equity pertaining to
the enforcement of creditors' rights. Neither the execution and delivery by
Purchaser of this Agreement or any of Purchaser's Documents, nor the
consummation by Purchaser of the transactions contemplated in this Agreement,
nor the compliance by Purchaser with or fulfillment by Purchaser of the terms
and provisions hereof or thereof will (i) conflict with or result in a breach or
violation of any of the terms, conditions or provisions of the certificate of
incorporation or bylaws of Purchaser, or (ii) with or without the giving of
notice of lapse of time or both, conflict with or result in a breach or
violation of, or default under, or permit the acceleration of any obligation
under any provision of any Contract, Permit, Lien or other instrument or
restriction of any kind to which Purchaser is a party or by which Purchaser is
otherwise bound or affected, or (iii) violate any order, writ, injunction,
decree, award, statute, rule or regulation applicable to Purchaser.
5.3 GOVERNMENTAL APPROVAL. No consent, approval, waiver, order
or authorization of, or registration, declaration or filing with, any Authority
is required in connection with the execution and delivery of this Agreement, any
of Purchaser's Ancillary Documents, or the consummation by Purchaser of the
transactions contemplated hereby and thereby, other than any consent, approval,
order, authorization, registration, declaration or filing required in connection
with the transfer of title to the Assets to Purchaser and such other
consents, approvals, waivers, orders, authorizations, registrations,
declarations or filings relating to matters which, individually or in the
aggregate, will not materially adversely affect Purchaser's ability to
consummate the transactions contemplated hereby.
5.4 NO BROKERS. Purchaser has dealt with no brokers, finder's
or agents in connection with this transaction and has conducted all negotiations
relating to this Agreement without the intervention of any person acting on its
behalf in such manner as to give rise to any valid claim against Seller for any
broker's or finder's fee in connection with the transactions contemplated by
this Agreement.
5.5 FINANCIAL ABILITY. Purchaser has sufficient capitalization
and credit in order to perform its obligations under this Agreement and
Purchasers Ancillary Documents
VI. COVENANTS AND AGREEMENTS OF THE PARTIES
6.1 INTENTIONALLY LEFT BLANK.
6.2 INTENTIONALLY LEFT BLANK.
6.3 PUBLICITY AND DISCLOSURE. Unless otherwise required by
applicable law, Seller and PC shall not issue, or cause or permit the
publication by any of its representatives of any press release or other
announcement with respect to, or otherwise disclose any information relating to
this Agreement or the transactions contemplated hereby, except with the prior
written consent of the Purchaser, and except to those employees, agents or
representatives of the party who requires such information in order to assist in
the consummation of the transactions contemplated by this Agreement. Nothing in
this Section 6.3 shall preclude Seller or PC from discussing or disclosing this
transaction to its lenders, leasing companies, suppliers or any person or entity
as necessary to carry out the transactions contemplated by this Agreement or the
Ancillary Documents. Purchaser shall present to Seller for prior review and
comment any press release or announcement with respect to the Closing of the
transactions contemplated in this Agreement.
6.4 INTENTIONALLY LEFT BLANK.
6.5 EXPENSES AND TAXES.
(a) Each party hereto shall pay all fees and expenses incurred
by it in connection with this Agreement and the transactions contemplated
hereby, except that all applicable excise, sales, transfer, documentary, filing,
recordation and other similar taxes, levies, fees and charges, if any (other
than all real estate transfer taxes and conveyance and recording fees, if any,
of which Seller and Purchaser shall each pay one-half), that may be imposed
upon, or payable or collectable or incurred in connection with, this Agreement
and the transactions contemplated hereby shall be borne by Seller. Each party
hereto hereby agrees to file all necessary documentation (including, without
limitation, all tax returns) with respect to all such taxes in a timely manner.
(b) OTHER TAXES. Except as otherwise provided in this
Agreement, as among the parties
hereto, (i) Seller shall be responsible for and pay all taxes levied or imposed
upon, or in connection with, the Assets or the conduct or operation of the
Business before the Closing Date; (ii) Purchaser shall be responsible for and
pay all taxes levied or imposed upon, or in connection with, the Assets or the
conduct or operation of the Business on and after the Closing Date; and (iii)
Seller and Purchaser shall be responsible for their own respective income and
franchise taxes, if any, arising from the transactions contemplated by this
Agreement.
6.6 FILINGS. The parties hereto shall promptly take all such
action as may be necessary under any statute, law, ordinance, rule or regulation
applicable to or necessary for, and will file and, if appropriate, use their
reasonable efforts to have declared effective or approved all documents and
notifications with all Authorities which they deem necessary or appropriate for,
the consummation of the transactions contemplated hereby and the parties hereto
shall give the other information requested by such other party pertaining to it
and its Affiliates which is reasonably necessary to enable such other party to
take such actions and file in a timely manner all reports and documents required
to be so filed by or under applicable laws.
6.7 ASSISTANCE WITH SUPPLIERS. Seller shall, upon reasonable
request of Purchaser, take all reasonable action to assist Purchaser in
retaining the present suppliers of the Business.
6.8 SELLER'S EMPLOYEES AND EMPLOYEE-RELATED OBLIGATIONS.
(a) Seller will use its best efforts to secure the
continuation of employment by the Purchaser, following the sale of the Assets
and the consummation of the transactions contemplated in this Agreement, of key
employees of Seller, as requested by Purchaser. Seller shall cooperate in
seeking from these key employees by the Closing non-compete and non-disclosure
of technology agreements in a form acceptable to Purchaser. With regard to any
of Seller's employees which Purchaser hires, Purchaser shall solely and
exclusively determine the terms and conditions of such employment.
(b) Seller shall maintain a group health plan for the purpose
of providing "continuation coverage", as defined in Section 602 of ERISA, to
those of its employees and their dependents who become entitled to such coverage
on or prior to the Closing Date.
(c) Seller shall take only those actions which are reasonably
necessary and appropriate, in its good faith exercise of discretion, to assure
that (i) Purchaser will not be bound by any collective bargaining obligations or
collective bargaining agreements of Seller, and (ii) no unfair labor practice
claims or breach of contract claims arising from any collective bargaining
agreement of Seller are asserted against Purchaser as a result of Seller's
failure to remove such collective bargaining obligations or collective
bargaining agreement restrictions; PROVIDED HOWEVER, that Seller shall have no
obligations for any unfair labor practice or breach of contract claims asserted
against Purchaser resulting from Purchaser's actions following execution of this
Agreement.
6.9 COMPLIANCE WITH LAWS. From and after the Closing,
Purchaser shall remain in compliance with all applicable municipal, county,
state and federal laws, regulations, and ordinances, including without
limitation, all Medicare and commercial insurance standards and regulations.
6.10 INTENTIONALLY LEFT BLANK
6.11 CHANGE OF NAME. At Closing, Seller shall have delivered a
certificate of amendment or change of name with the indicia of filing or
recording with the appropriate Authority, changing the company name of Seller to
discontinue the use of the trade name "CAT-ECG", and amending or discontinuing
any business certificate to discontinue any use of the name "CAT-ECG" whether in
the jurisdiction of registration or any other jurisdiction where Seller is
qualified to do business.
VII. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
7.1 CONDITIONS TO THE OBLIGATION OF PURCHASER. The obligation
of Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, at or before the Closing Date, of all of the
following conditions (subject to the right of Purchaser to waive any such
condition in writing):
(a) The representations and warranties of Seller and PC
contained in this Agreement and in Seller's Ancillary Documents shall be true
and correct in all material respects as of the date of this Agreement and shall
be true and correct in all material respects at and as of the Closing Date as if
made on and as of the Closing Date (or, if untrue in any material respect,
specifying to Purchaser in writing the respect in which it is untrue); Seller
shall have duly performed all of its obligations under this Agreement to be
performed on or prior to the Closing Date, to the extent not waived in writing
by Purchaser; and Purchaser shall have received at the time of the Closing a
certificate from Seller reasonably satisfactory in form to Purchaser certifying
to the satisfaction of all of the conditions set forth in this Section 7.1(a),
to the extent not waived in writing by Purchaser.
(b) No action, suit or proceeding shall be instituted or
threatened that (i) seeks to restrain, prohibit or declare illegal, or to obtain
a material amount of damages arising from, the transactions contemplated by this
Agreement or (ii) could reasonably be expected to materially impair the value of
the Assets, the Business or the Assumed Liabilities, and no temporary
restraining order or injunction shall be issued by any court or governmental
body restraining or prohibiting, and no other Legal Requirement shall come into
effect making illegal, performance of this Agreement or the consummation of any
of the transactions contemplated hereby.
(c) Seller shall have delivered to Purchaser all of the
Material Consents and all other consents, Contracts, assignments, approvals,
permits, licenses and authorizations required to continue the Business and all
filings required to be made with any person or Authority in connection with the
consummation of the transactions contemplated hereby shall have been obtained or
made.
(d) There shall be no Material Adverse Effect.
(e) Seller shall deliver such instruments of transfer or
conveyance, and of assignment, as are reasonably requested by Purchaser to vest
in Purchaser good title to the Assets.
(f) Mark Gray shall have executed a one year employment
agreement with Purchaser substantially in the form annexed hereto as EXHIBIT C
("EMPLOYMENT AGREEMENT"), and such Employment
Agreement shall be in full force and effect.
(g) All documents incident to the transactions contemplated in
this Agreement shall be reasonably satisfactory in form and substance to
Purchaser and its counsel, and Purchaser and its counsel shall have received all
such counterpart originals or certificates or other copies of such documents as
Purchaser or such counsel may reasonably request.
(h) SO shall have executed and delivered to Purchaser a
Non-Competition and Non- Disclosure Agreement ("NON-COMPETITION AND
NON-DISCLOSURE AGREEMENT") substantially in the form attached hereto as EXHIBIT
D, and such agreement shall be in full force and effect.
(i) Seller shall have assigned and Purchaser agreed to assume
the MSA attached hereto as EXHIBIT E, and such agreement shall be extended in
accordance with Purchaser's requirements and shall be in full force and effect.
(j) Goodman Agreement including indemnification provisions for
loan guarantees and 250,00 preferred shares. [EXPLAIN]
7.2 CONDITIONS TO THE OBLIGATION OF SELLER. The obligation of
Seller to consummate the transactions contemplated by this Agreement is subject
to the fulfillment, at or before the Closing Date, of the following conditions
(subject to the right of Seller to waive any such condition in writing):
(a) The representations and warranties of Purchaser contained
in this Agreement and in Purchaser's Ancillary Documents shall be true and
correct in all material respects as of the date of this Agreement and shall be
true and correct in all material respects at and as of the Closing Date as if
made on and as of the Closing Date; Purchaser shall have performed all of its
obligations under this Agreement to be performed on or prior to the Closing
Date; and Seller shall have received at the time of the Closing a certificate
from Purchaser reasonably satisfactory in form to Seller certifying to the
satisfaction of all of the conditions set forth in this Section 7.2(a).
(b) No temporary restraining order or injunction shall be
issued by any court or governmental body restraining or prohibiting, and no
other Legal Requirement shall have come into effect making illegal, performance
of this Agreement or the consummation of any of the transactions contemplated
hereby.
(c) All consents, approvals, permits and authorizations
required to be obtained from, and all filings required to be made with, any
person or Authority in connection with the consummation of the transactions
contemplated hereby shall have been obtained or made.
(d) Purchaser shall have delivered to Seller (i) the funds set
out in Section 2.1(a)(i) of this Agreement, (ii) the Preferred Stock less the
number of Escrow Shares, and (iii) the Assumption Agreement executed by
Purchaser.
(e) All documents incident to the transactions contemplated in
this agreement shall be reasonably satisfactory in form and substance to Seller
and its counsel, and Seller and its counsel shall have received all such
counterpart originals or certificates or other copies of such documents as
Seller or such counsel may reasonably request.
VIII INTENTIONALLY LEFT BLANK
IX. PIGGYBACK REGISTRATION RIGHTS
The Preferred Stock issued to the Seller pursuant to this
Agreement shall have "piggyback" registration rights as set forth in this
Article IX.
9.1 Piggyback Registration Rights. Purchaser, by its parent
ARMC, shall advise the holders of the Preferred Stock ("SHARES"), by written
notice, at least fifteen days prior to filing, at any time for a period of two
years from the Closing Date, of any registration statement or post-effective
amendment thereto under the Securities Act of 1933 covering common stock or
equivalents thereof of ARMC (except on Form S-4 or Form S-8 or any successor
form) and will, upon the request of such holders, provided that such holders
shall furnish ARMC with appropriate information in connection therewith as ARMC
shall request in writing, and without any charge to such holders, include in any
such post-effective amendment or registration statement such information as may
be required to permit a public offering of the Shares; provided that the
aggregate offering value of the Shares to be registered is reasonably
anticipated to equal at least $100,000. ARMC shall supply reasonable quantities
of prospectuses, qualify the Shares for sale in such jurisdictions as such
holders may reasonably designate and furnish indemnification in the manner set
forth in section 9.2 hereof. Such holder shall furnish information and
indemnification as set forth in section 9.2 hereof. If the underwriter, or the
individuals designated by ARMC to sell securities pursuant to the registration
statement advise ARMC in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such registration, ARMC will include in such registration (i) first, the
securities ARMC proposes to sell, (ii) second, the Shares requested to be
included in such registration, pro rata among the holders of such Shares on the
basis of the Shares to be offered by such holders, and (iii) third, other
securities requested to be included in such registration.
9.2 Obligations Relating to Registration. The following
provisions of this Article IX shall also be applicable:
(a) Seller and all holders requesting registration of Shares
pursuant to section 9.1 shall enter into such customary agreements (including
underwriting agreements in customary form) as are reasonably necessary to
expedite or facilitate the disposition of the Shares.
(b) ARMC shall indemnify and hold harmless each Shareholder
requesting registration and each underwriter within the meaning of the
Securities Act of 1933, who may purchase from or sell for any such holder the
shares from and against any and all losses, claims, damages and liabilities
caused by
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement under the Securities Act or any prospectus included
therein required to be filed or furnished by reason of this Article IX or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or alleged untrue statement or omission or alleged
omission based upon information furnished in writing or required to be furnished
to the Company by such holder or underwriter expressly for use therein, which
indemnification shall include each person, if any, who controls any such holder
or underwriter unless such holder or underwriter shall indemnify ARMC, its
directors, each officer signing the related registration statement and each
person, if any, who controls ARMC within the meaning of the Securities Act, from
and against any and all losses, claims, damages and liabilities caused by any
untrue statement of a material fact contained in any registration statement or
any prospectus required to be filed or furnished by reason of this Article 9 or
caused by any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or alleged untrue statement or omission or alleged omission based upon
information furnished in writing or required to be furnished to ARMC by such
holder or underwriter expressly for use therein; provided that the aggregate
liability of any holder pursuant to this Section 9.2(b) shall not exceed the
total aggregate amount of the net proceeds to be received by such holder from
the sale of Shares to be registered.
(c) Each indemnified party shall give written notice to each
indemnifying party of any action, litigation or proceeding commenced against it
with respect to which indemnity may be sought hereunder, but failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have on account of this indemnity agreement or otherwise unless such
indemnifying party shall sustain the burden of proving that it has been
prejudiced in a material respect of such failure. An indemnifying party may
participate at its own expense in the defense of such action, litigation or
proceeding. In addition, if it so elects within a reasonable time after receipt
of such notice, an indemnifying party (jointly with any other indemnifying
parties receiving such notice) may assume the defense of such action, litigation
or proceeding with counsel chosen by it (jointly with such other indemnifying
parties) and reasonably satisfactory to the indemnified parties defendant in
such action, litigation or proceeding. If an indemnified party assumes the
defense of such action, litigation or proceeding, such indemnifying party shall
not be liable for any fees and expenses of counsel for the indemnified parties
defendant in such action, litigation or proceeding incurred thereafter in
connection therewith. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the employment of counsel by
such indemnified party has been authorized by the indemnifying parties, (ii) the
indemnified party shall have been advised by its counsel that there may be a
conflict of interest between the indemnifying parties and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
party shall not have the right to direct the defense of such action on behalf of
the indemnified party) or (iii) the indemnifying parties shall not in fact have
employed counsel to assume the defense of such action, in each of which cases
the fees and expenses of counsel shall be at the expense of the indemnifying
parties. In no event, however, shall the indemnifying parties be liable for the
fees and expenses of more than one counsel for all indemnifying parties liable
for the fees and expenses of more than one counsel for all indemnified parties
in connection with any one action, litigation or proceeding, or in connection
with separate but similar or related actions, litigations or proceedings in the
same jurisdiction arising out of the same general allegations or circumstances.
The
indemnifying party shall not be liable for any settlement of any such action,
litigation or proceeding effected without its written consent, but if any such
action, litigation or proceeding is settled with the written consent of the
indemnifying party or if there is a final judgment for the plaintiff in any such
action, litigation or proceeding, the indemnifying party shall indemnify and
hold any indemnified party harmless from and against any loss or liability by
reason of such settlement or judgment.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for above is due in
accordance with its terms but is for any reason held by a court to be
unavailable, ARMC, each such holder and each such underwriter shall contribute
to the aggregate loses, claims, damages and liabilities in a manner that is fair
and equitable in accordance with the relative fault of such party. In no case,
however, shall ARMC, any holder or underwriter be responsible for any amount in
excess of the net proceeds to him or it from the public offering as disclosed in
the prospectus for such offering. No party shall be liable for contribution with
respect to any action or claim settled without its consent.
(e) Neither the giving of any notice by the holder nor the
making of any request for prospectuses shall impose upon the holder making such
request any obligation to sell any shares or exercise any warrants.
9.3 Obligation to Continue. The agreements of ARMC in this
Article IX with respect to the warrants and/or the shares shall continue in
effect regardless to the exercise or surrender of the warrants.
X. INDEMNIFICATION
10.1 INDEMNIFICATION BY PURCHASER. From the Closing Date,
Purchaser agrees to indemnify, defend and hold Seller, its Affiliates and their
respective successors and permitted assigns (collectively "SELLER INDEMNITEES")
harmless from and against any and all Losses (as defined below) based upon,
arising out of or otherwise in respect of (i) any inaccuracy or any breach of
any representation or warranty of Purchaser contained in this Agreement, or any
of Purchaser's Ancillary Documents, (ii) any breach of any covenant or agreement
of Purchaser contained in this Agreement (including this Section 10.1), or any
of Purchaser's Ancillary Documents, (iii) any Assumed Liability, (iv) any Taxes
imposed on Seller that are Purchaser's obligations under Section 6.5 and (v)
Purchaser's operation of the Business or the Assets on and following the Closing
Date. As used herein, "LOSS" or "LOSSES" means any loss, claim, demand, damage,
award, liabilities, suits, penalties, increases in insurance premiums as a
result of claims made, forfeitures, cost or expense (including, without
limitation, costs of investigation, monitoring, assessment, containment,
removal, disposal, remedy, clean up, treatment or abatement or Releases or
Chemical Substances, reasonable attorneys', consultant and other professional
fees and disbursements of every kind, nature and description).
10.2 INDEMNIFICATION BY SELLER. From the Closing Date, Seller
agrees to indemnify, defend and hold Purchaser and its Affiliates, ARMC and
their respective successors and permitted assigns (collectively "PURCHASER
INDEMNITEES") harmless from and against any and all Losses based upon, arising
out of or otherwise in respect of (i) any inaccuracy or any breach of any
representation or warranty of Seller contained in this Agreement, or any of
Seller's Ancillary Documents, (ii) any breach of any covenant or agreement of
Seller contained in this Agreement (including this Section 10.2), or any of
Seller's Ancillary Documents, (iii) the failure
of Seller to discharge any liability or obligation of Seller other than the
Assumed Liabilities, (iv) any Liability (including Taxes and Environmental
Liabilities and Costs) arising out of or relating to any of the Assets or the
conduct of the Business during the period prior to and up to the time of the
Closing, other than the Assumed Liabilities, (v) any Taxes imposed on Purchaser
that are Seller's obligations under Section 6.6, and (vi) any Deficiency.
10.3 NOTICE AND OPPORTUNITY TO DEFEND THIRD-PARTY CLAIMS.
(a) Promptly after receipt by either party hereto of notice of
the assertion of any claim by a person not a party to this Agreement with
respect to which such party hereto expects to make a request for indemnification
under this Agreement, such party ("INDEMNIFIED PARTY") shall give the party that
may become obligated to provide indemnification hereunder ("INDEMNIFYING PARTY")
written notice describing such claim in reasonable detail ("INDEMNIFICATION
NOTICE"). If the Indemnified Party fails to give the Indemnification Notice in a
timely manner and the Indemnifying Party is materially prejudiced in its defense
by such failure, the Indemnifying Party's liability in respect of such claim
shall be reduced to the extent of such prejudice. Except as otherwise provided
in this Article X, such Indemnifying Party shall have the right, at its option,
to compromise or defend exclusively, at its own expense and through counsel of
its own choosing, any such matter involving the asserted liability of the
Indemnified Party as to which the Indemnifying Party shall have acknowledged its
obligation to indemnify the party seeking indemnification hereunder. If any
Indemnifying Party shall undertake to compromise or defend any such asserted
liability, it shall give a notice ("DEFENSE ELECTION NOTICE") to the Indemnified
Party of its intention to do so within thirty (30) business days of the
Indemnification Notice to which it relates.
(b) Whether or not the Indemnifying Party chooses to defend or
prosecute a claim, claim, the parties shall cooperate in the defense or
prosecution of any claim and shall furnish such records, information and
testimony and attend such conferences, discovery proceedings, hearings, trials
and appeals as may be reasonably requested in connection with the claim. So long
as the Indemnifying Party is defending a claim in good faith, the Indemnified
Party shall not compromise nor settle such claim. Notwithstanding an election by
an Indemnifying Party to assume the defense of such action or proceeding, such
Indemnified Party shall have the right to employ (at such Indemnified Party's
sole cost and expense) separate counsel and to participate (at such Indemnified
Party's sole cost and expense) in the defense of such action or proceeding.
(c) Notwithstanding anything to the contrary herein, if the
Indemnifying Party does not give a Defense Election Notice within thirty (30)
days of the Indemnification Notice, the Indemnified Party shall be free, in its
sole discretion, to defend, compromise or settle the claim for which
indemnification is sought.
10.4 Indemnification Net of Tax Benefits and Insurance. The
amount of any recovery by the Seller Indemnitees pursuant to Section 10.1 or the
Purchaser Indemnitees pursuant to Section 10.2 (as the case may be) shall be net
of any foreign, Federal, state and/or local income tax benefits and insurance
actually inuring to the Seller Indemnitees or the Purchaser Indemnitees, as the
case may be, as a result of the state of facts which entitled the Seller
Indemnitees or Purchaser Indemnitees, as the case may be, to recover from
Purchaser pursuant to Section 10.1 or Sell pursuant to Section 10.2.
XI. MISCELLANEOUS
11.1 SURVIVAL. All of the provisions of this Agreement,
including without limitation, all representations, warranties, covenants,
agreements, obligations and indemnities herein, shall survive the Closing.
11.2 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally
(including by courier), telegraphed, telexed, sent by facsimile transmission or
sent by certified, registered or express mail, postage prepaid. Any such notice
shall be deemed given when so delivered personally, or if telegraphed, telexed
or sent by facsimile transmission, when transmitted, or, if mailed, forty-eight
(48) hours after the date of deposit in the United States mail, as follows:
(i) if to Purchaser, to:
Diagnostic Management Holding Group, Inc.
c/o James H Clingham, Sr.
32 Nassau Street
Princeton, New Jersey 08542
Fax: 609- 924-4442
with a copy to:
Novack Burnbaum Crystal LLP
300 East 42nd Street
10th Floor
New York, New York 10017
Attention: Edward H. Burnbaum, Esq.
Fax: 212-986-2907
(ii) if to Seller or SO, to:
CAT-ECG LLC
55 Atlantic Avenue
Lynbrook, New York 11563
Attention: Shaya Ostrov
Fax: 516-593-6246
(iii) if to PC or RG, to:
Robert Goodman, M.D.
1523 45th Street,
Brooklyn, New York 112__
Fax : 718-972-2036
Any party may, by notice given in accordance with this Section 11.2 to the other
party, designate another address or person for receipt of notices hereunder.
11.3 ENTIRE AGREEMENT. This Agreement and Purchaser's
Ancillary Documents and the Seller's Ancillary Documents constitute the entire
agreement and understanding between the parties with respect to the transfer of
the Assets to Purchaser and the assumption by Purchaser of the Assumed
Liabilities and supersedes all prior discussions, agreements and undertakings,
written or oral, of any and every nature with respect thereto. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective legal representatives, heirs, successors and permitted assigns. Each
exhibit and the schedules attached to this Agreement, shall be considered
incorporated into this Agreement and the Ancillary Documents. Any matter which
is disclosed in any portion of the schedules attached to this Agreement is
deemed to have been disclosed for the purposes of all relevant provisions of
this Agreement and the Ancillary Documents.
11.4 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES;
PRESERVATION OF REMEDIES. This Agreement may be amended, superseded, cancelled,
renewed, or extended, and the terms hereof may be waived, only by a written
instrument signed by authorized representatives of the parties or, in the case
of a waiver, by an authorized representative of the party waiving compliance. No
such written instrument shall be effective unless it expressly recites that it
is intended to amend, supersede, cancel, renew or extend this Agreement or to
waive compliance with one or more of the terms hereof, as the case may be. No
delay on the part of any party in exercising any right, power or privilege shall
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, or any single or partial
exercise of any such right, power of privilege, preclude any further exercise
thereof or the exercise of any other right, power or privilege. Except as
otherwise provided herein, the rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity. The rights and remedies of any party based
upon, arising out of or otherwise in respect of any inaccuracy in or breach of
any representation, warranty, covenant or agreement contained in this Agreement
shall in no way be limited by the fact that the act, omission, occurrence or
other state of facts upon which any claim of any such inaccuracy or breach is
based may also be the subject matter of any other representation, warranty,
covenant or agreement contained in this Agreement (or in any other agreement
between the parties) as to which there is no inaccuracy or breach.
11.5 GOVERNING LAW. This Agreement shall be governed in all
respects, including validity, construction, interpretation and effect, by the
laws of the State of New York (without regard to principles of conflicts of
law). Each of the parties hereto agrees to submit to the exclusive jurisdiction
of any federal or state court within the City of New York, New York, with
respect to any claim or cause of action arising under or relating to this
Agreement. The parties agree that any service of process to be made hereunder
may be made by certified mail, return receipt requested, addressed to the party
at the address appearing in Section 11.2 together with a copy to be delivered to
such party's attorneys as provided in Section 11.2. Such service shall be deemed
to be completed when received. Seller and Purchaser each waives any objection
based on FORUM NON CONVENIENS. Nothing in this paragraph shall affect the right
of Seller or Purchaser to serve legal process in any other manner permitted by
law.
11.6 BINDING EFFECT; NO ASSIGNMENT, NO THIRD-PARTY RIGHTS.
This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. This Agreement is not assignable without the
prior written consent of each of the parties hereto or by operation of law;
provided, however, that Purchaser may assign its rights under this Agreement to
(i) any entity which is owned by one or more of the members of Purchaser, or
(ii) one of Purchaser's Affiliates, or (iii) to an entity which Purchaser owns
or which owns Purchaser or an Affiliate without such prior written consent. This
Agreement does not create any rights, claims or benefits inuring to any person
that is not a party hereto or create or establish any third party beneficiary
hereto.
11.7 COUNTERPARTS. This Agreement may be executed by the
parties hereto in any number of separate counterparts which together shall
constitute one and the same instrument.
11.8 FURTHER ASSURANCES. Each party shall, at the request of
the other party, at any time and from time to time following the Closing
promptly execute and deliver, or cause to be executed and delivered, to such
requesting party all such further instruments and take all such further action
as may be reasonably necessary or appropriate to transfer, assign, convey, grant
and confirm to Purchaser, or to perfect or record Purchaser's title to or
interest in, or to enable Purchaser to possess and use, the Assets or otherwise
to confirm to carry out the provisions and intents of this Agreement and of the
instruments delivered pursuant to this Agreement.
11.9 SEVERABILITY OF PROVISIONS. If any provision or any
portion of any provision of this Agreement or the application of any such
provision or any portion thereof to any person or circumstance, shall be held
invalid or unenforceable, the remaining portion of such provision and the
remaining provisions of this Agreement, or the application of such provision or
portion of such provision is held invalid or unenforceable to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and such provision or portion of any provision as
shall have been held invalid or unenforceable shall be deemed limited or
modified to the extend necessary to make it valid and enforceable; in no event
shall this Agreement be rendered void or unenforceable.
11.10 EXHIBITS AND SCHEDULES. All exhibits annexed hereto, and
all schedules referred to herein, are hereby incorporated in and made a part of
this Agreement as if set forth herein. Any matter disclosed on any schedule
referred to herein shall be deemed also to have been disclosed on any other
applicable schedule referred to herein.
11.11 CAPTIONS. All section titles or captions contained in
this Agreement or in any schedule or exhibit annexed hereto or referred to
herein, and the table of contents to this Agreement, are for convenience only,
shall not be deemed a part of this Agreement and shall not affect the meaning or
interpretation of this Agreement. All references herein to sections shall be
deemed references to such parts of this Agreement, unless the context shall
otherwise require.
11.12 EXPENSES. Except as otherwise expressly provided in this
Agreement, whether or not the Closing occurs, each party hereto shall pay its
own expenses incidental to the preparation of this Agreement, the carrying out
of the provisions hereof and the consummation of the transactions contemplated.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement, all as of the date first written above.
PURCHASER:
DIAGNOSTIC MANAGEMENT HOLDING GROUP, INC.
By:
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James H. Clingham, Sr., President
SELLER:
CAT-ECG LLC
By:
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Managing Member
PC:
CAT-ECG PC
By:
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Robert Goodman, MD
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ROBERT GOODMAN, MD
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SHAYA OSTROV
AS TO ARTICLE IX ONLY:
AMERICAN RISK MANAGEMENT GROUP, INC.
By:
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LIST OF EXHIBITS
EXHIBITS DESCRIPTION
A Form of Bill of Sale
B Form of Assumption Agreement
C Mark Gray Employment Agreement
D Form of Non-Competition and Non-Disclosure Agreement
E Management Services Agreement
LIST OF SCHEDULES
SCHEDULE DESCRIPTION
1.1(a) Inventories
1.1(b) Equipment
1.1(c) Contracts
1.1(d)(i) Trademarks
1.1(d)(ii) Copyrights
1.1(d)(ii) Patents
1.1(d)(v) Know-How
1.1(d)(vi) Licenses to Seller
1.1(d)(vii) Licenses to Others
1.1(e)(i) Accounts Receivable
1.1(e)(ii) Cash Deposits
1.1(e)(iii) Prepaid Expenses
1.2(b) Material Consents
2.3 Purchase Price Allocation
3.1(a) Accounts Payable Schedule
4.2 Contractual Conflicts
4.5 Liability Disclosure
4.10 Government Licenses, Permits, Approvals
4.13 Insurance
4.15 Environmental Matters
4.18 Certain Interests
4.19 Major Accounts
4.22(a) ERISA Plans
4.23 Licenses, Permits and Authorizations