SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
August 18, 1997
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(Date of Report)
GLOBAL MED TECHNOLOGIES, INC.
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(Exact Name of Registrant as specified in its charter)
COLORADO
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(State or other jurisdiction of incorporation)
0 - 22083 84-1116894
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(Commission File Number) (IRS Employer Identification Number)
12600 WEST COLFAX, SUITE A-500, LAKEWOOD, CO 80215
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(Address of principal executive offices including zip code)
(303) 238-2000
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(Registrant's telephone number including area code)
NOT APPLICABLE
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(Former name or former address, if changed since last report)
This report consists of 4 sequentially numbered pages.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On August 18, 1997, Global Med Technologies, Inc. ("the Company") and
National Medical Review Offices, Inc. ("NMRO") executed an Asset Purchase
Agreement (the "Agreement") which provides, subject to the approval of the
shareholders of the Company and the satisfaction of certain other
conditions, that the Company will sell its DataMed International division
("DataMed") to NMRO.
NMRO will purchase from the Company all of the assets associated with
DataMed at June 30, 1997. The assets include accounts receivable, accrued
accounts receivable (unbilled revenue), pre-paid expenses, the customer
list of DataMed, customer contracts, furniture, fixtures and equipment,
names, telephone numbers, trade names and copyrighted materials. In
consideration for the DataMed assets, NMRO shall pay $1,200,000 at closing,
$600,000 of which has been placed in an escrow account, and assume certain
obligations of DataMed at June 30, 1997. Included in the obligations
assumed by NMRO are accounts payable (excluding intercompany payables),
certain accrued expenses not to exceed approximately $127,000, capitalized
leases of approximately $500,000, a new lease on approximately 10,500
square feet of office space in which DataMed's operations are located,
accrued payroll and vacation pay for DataMed employees and certain sales
commissions.
Consummation of the transaction is dependent upon approval of the
Company's shareholders and various other conditions. The final agreement
will also include an agreement of the Company and of Michael I Ruxin,
M.D., the Company's Chief Executive Officer, not to compete with NMRO in
the substance abuse testing business, not to solicit customers of NMRO and
to maintain the confidentiality of trade secrets of that business.
Effective at Closing, the existing Interim Management Agreement (the
"Management Agreement"), which was entered into between the Company and
NMRO on July 7, 1997, effective July 1, 1997, will terminate. Under the
Management Agreement, NMRO assumed the direction and control of the
business and operations of DataMed. Under the Management Agreement, NMRO
has the right (i) to sell, assign, dispose of or transfer any or all of the
assets or contractual obligations of DataMed, (ii) reduce DataMed's work
force, (iii) assign or transfer DataMed's administrative responsibilities,
(iv) administer DataMed's contracts with its customers, service providers,
vendors or purchasers of services or supplies, including negotiating,
amending, maintaining and entering into such contracts, but not the
termination of any such contract, or any service provided by DataMed to any
customer, without the prior consent of the Company, (v) to bill for
services rendered by DataMed and collect accounts receivable of the Company
relating to DataMed and (vi) to fix, change or relocate the offices used by
DataMed. NMRO also agreed to pay and discharge all Expenses (as defined
below) incurred by NMRO in the operation of DataMed.
As compensation for its management services, NMRO receives a monthly
management fee in an amount equal to the Net Income (which is defined as
Revenues less Expenses, as determined on an accrual basis in accordance
with generally accepted accounting principles
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<PAGE>
consistently applied). Revenues are defined as all fees and payments to
which the Company is entitled during the term of the Management Agreement
in connection with the provision of services or supplies by DataMed,
investment income and any other income collected by or on behalf of DataMed
during the term of the Management Agreement. Expenses are defined as all
expenses which were fully disclosed and recorded on DataMed's June 30, 1997
balance sheet and profit and loss statement, expenses incurred in the
ordinary course of operation of DataMed during the term of the Management
Agreement and other non-reimbursed or insured expenses. Excluded from the
definition of Expenses in the Agreement are (i) interest on borrowed funds,
(ii) legal accounting and other consulting expenses incurred by the
Company, (iii) property taxes and taxes based on the Company's income, (iv)
insurance expenses (other than health insurance for employees providing
services exclusively to DataMed), (v) judgments and expenses of litigation
(except legal actions initiated by NMRO to collect accounts receivable of
DataMed), (vi) bank charges on Company accounts, (vii) employee bonuses or
compensation increases for employees of DataMed not disclosed on the June
30, 1997 profit and loss statement; (viii) compensation and benefits paid
to Company employees whose services are not rendered exclusively to
DataMed, (ix) intercompany charges or allocations for overhead and loans,
as mutually agreed by the parties, and (x) expenses paid by the Company
relating to DataMed's operations that are not disclosed and recorded in the
June 30, 1997 profit and loss statement of DataMed.
During the term of the Managment Agreement, and based upon the
historical financial results of DataMed, the Company and NMRO anticipate
that the operations of DataMed will result in a Net Loss. Any Net Loss is
to be the sole responsibility of NMRO if the Company's shareholders approve
the proposal to sell DataMed to NMRO. If the Management Agreement is
terminated by NMRO pursuant to NMRO's right to terminate (as set forth in
the Managment Agreement), then the Company shall be solely responsible for
the Net Loss incurred in the operation of DataMed. If the Company is
obligated to reimburse NMRO for any Net Losses, the Company has the right
to have the Net Loss reviewed and verified by the Company's independent
certified public accountants.
The Management Agreement also provides that the Company would assign
Bart K. Valdez, Acting Chief Financial Officer of the Company and Director
of DataMed Operations, to provide services on behalf of DataMed. The
Management Agreement provides that Mr. Valdez may not allocate in excess of
eight hours per week of his time to the Company and shall not be required
to travel more than twice for the Company during the term of the Management
Agreement, each of which may be for a maximum of three days.
On July 15, 1997, the Company was notified that NMRO had assigned the
Management Agreement to Substance Abuse Technologies, Inc., a publicly held
company.
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<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Exhibits:
Exhibit 10.17 Interim Management Agreement, dated July 7, 1997,
between Global Med Technologies, Inc. and National
Medical Review Offices, Inc.(1)
Exhibit 10.18 Asset Purchase Agreement, dated August 18, 1997,
between Global Med Technologies, Inc. and National
Medical Review Offices, Inc.
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(1) Incorporated by reference to the same numbered exhibit filed pursuant
to the Company's Registration Statement on Form SB-2 ( No. 333-11723).
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: August 21, 1997 GLOBAL MED TECHNOLOGIES, INC.
By /s/ MICHAEL I. RUXIN
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Michael I. Ruxin
Chief Executive Officer
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ASSET PURCHASE AGREEMENT
DATED AS OF AUGUST 18, 1997
BY AND BETWEEN
GLOBAL MED TECHNOLOGIES, INC.
A COLORADO CORPORATION
("SELLER")
AND
NATIONAL MEDICAL REVIEW OFFICES, INC.
A MICHIGAN CORPORATION
("BUYER")
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TABLE OF CONTENTS
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PAGE
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION . . . . . . . . 2
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . 2
(a) "ACCOUNTS PAYABLE . . . . . . . . . . . . . . . . . . 2
(b) "ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . 2
(c) "AFFILIATE. . . . . . . . . . . . . . . . . . . . . . 2
(d) "AGENTS . . . . . . . . . . . . . . . . . . . . . . . 2
(e) "AGREEMENT. . . . . . . . . . . . . . . . . . . . . . 2
(f) "BUSINESS . . . . . . . . . . . . . . . . . . . . . . 2
(g) "CLOSING. . . . . . . . . . . . . . . . . . . . . . . 2
(h) "CLOSING DATE . . . . . . . . . . . . . . . . . . . . 2
(i) "CODE . . . . . . . . . . . . . . . . . . . . . . . . 3
(j) "CONTRACT . . . . . . . . . . . . . . . . . . . . . . 3
(k) "COPYRIGHTS AND TRADENAMES. . . . . . . . . . . . . . 3
(l) "DAMAGES. . . . . . . . . . . . . . . . . . . . . . . 3
(m) "EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . 3
(n) "EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . 3
(o) "ESCROW AGENT . . . . . . . . . . . . . . . . . . . . 3
(p) "ESCROW AGREEMENT . . . . . . . . . . . . . . . . . . 3
(q) "FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . 3
(r) "LETTER OF INTENT . . . . . . . . . . . . . . . . . . 3
(s) "LIEN . . . . . . . . . . . . . . . . . . . . . . . . 3
(t) "LEASES . . . . . . . . . . . . . . . . . . . . . . . 4
(u) "MANAGEMENT AGREEMENT . . . . . . . . . . . . . . . . 4
(v) "OFFICE LEASE . . . . . . . . . . . . . . . . . . . . 4
(w) "PERSON . . . . . . . . . . . . . . . . . . . . . . . 4
(x) "PREMISES . . . . . . . . . . . . . . . . . . . . . . 4
(y) "SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . 4
(z) "TAXES. . . . . . . . . . . . . . . . . . . . . . . . 4
(aa) "TRADE SECRETS. . . . . . . . . . . . . . . . . . . . 4
<PAGE>
ARTICLE II
ASSETS AND LIABILITIES. . . . . . . . . . . . 4
2.1 Included Assets. . . . . . . . . . . . . . . . . . . . . . 4
(a) Fixtures, Furniture and Equipment . . . . . . . . . . 5
(b) Supplies and Consumables. . . . . . . . . . . . . . . 5
(c) Prepaid Expenses. . . . . . . . . . . . . . . . . . . 5
(d) Accounts Receivable . . . . . . . . . . . . . . . . . 5
(e) Accrued Accounts Receivable (Un-billed Revenue) . . . 5
(f) Copyrights and Tradenames . . . . . . . . . . . . . . 5
(g) Business Contracts. . . . . . . . . . . . . . . . . . 5
(h) Leasehold Improvements. . . . . . . . . . . . . . . . 5
(i) Customer List . . . . . . . . . . . . . . . . . . . . 5
(j) Books and Records . . . . . . . . . . . . . . . . . . 6
(k) Telephone Numbers and Internet Addresses. . . . . . . 6
(l) Net Working Capital . . . . . . . . . . . . . . . . . 6
(m) Goodwill. . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . 6
(a) Contracts . . . . . . . . . . . . . . . . . . . . . . 6
(b) Telephone Numbers and Internet Addresses. . . . . . . 6
(c) Copyrights and Tradenames . . . . . . . . . . . . . . 6
2.3 Certain Covenants of Seller Purchased by Buyer . . . . . . 6
(a) Operation of the Business . . . . . . . . . . . . . . 6
(b) Tenant Improvements . . . . . . . . . . . . . . . . . 6
(c) Other Restrictions. . . . . . . . . . . . . . . . . . 7
2.4 Assumed Obligations. . . . . . . . . . . . . . . . . . . . 7
(a) Business Contracts. . . . . . . . . . . . . . . . . . 7
(b) Accounts Payable. . . . . . . . . . . . . . . . . . . 7
(c) Accrued Accounts Payable. . . . . . . . . . . . . . . 7
(d) Accrued Expenses. . . . . . . . . . . . . . . . . . . 7
(e) Leases. . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Specific Excluded Liabilities. . . . . . . . . . . . . . . 7
2.6 Seller's Accrued Accounts Payable. . . . . . . . . . . . . 8
ARTICLE III
PURCHASE PRICE; PAYMENT TERMS. . . . . . . . . . 8
3.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Escrow Deposit . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Payment and Delivery on Closing Date . . . . . . . . . . . 8
3.4 Allocation of Purchase Price . . . . . . . . . . . . . . . 9
ii
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . 9
4.1 Representations and Warranties of Seller . . . . . . . . . 9
(a) Organization and Standing . . . . . . . . . . . . . . 9
(b) Corporate Authority . . . . . . . . . . . . . . . . . 9
(c) Binding Effect. . . . . . . . . . . . . . . . . . . . 9
(d) Approvals; Consents . . . . . . . . . . . . . . . . . 9
(e) No Violation. . . . . . . . . . . . . . . . . . . . . 9
(f) Compliance With Laws. . . . . . . . . . . . . . . . . 10
(g) Financial Statements. . . . . . . . . . . . . . . . . 10
(h) Title to Assets . . . . . . . . . . . . . . . . . . . 10
(i) Condition of Premises . . . . . . . . . . . . . . . . 10
(j) Contracts . . . . . . . . . . . . . . . . . . . . . . 11
(k) Taxes . . . . . . . . . . . . . . . . . . . . . . . . 11
(l) Litigation. . . . . . . . . . . . . . . . . . . . . . 11
(m) No Misleading Statements. . . . . . . . . . . . . . . 11
(n) Operations of the Business. . . . . . . . . . . . . . 12
(o) Hazardous Materials . . . . . . . . . . . . . . . . . 12
(p) Accounts Receivable . . . . . . . . . . . . . . . . . 12
(q) Collection of Accounts Receivable . . . . . . . . . . 12
(r) Accrued Accounts Receivable (Un-billed Revenue) . . . 13
(s) Accounts Payable. . . . . . . . . . . . . . . . . . . 13
(t) Accrued Accounts Payable. . . . . . . . . . . . . . . 13
(u) Accrued Expenses. . . . . . . . . . . . . . . . . . . 13
(v) Leases. . . . . . . . . . . . . . . . . . . . . . . . 13
(w) Accrued Payroll . . . . . . . . . . . . . . . . . . . 13
(x) Accrued Paid Time Off . . . . . . . . . . . . . . . . 13
(y) Sales Commissions . . . . . . . . . . . . . . . . . . 13
(z) Accrued Interest. . . . . . . . . . . . . . . . . . . 14
(aa) Deposit Accounts. . . . . . . . . . . . . . . . . . . 14
(ab) Leases. . . . . . . . . . . . . . . . . . . . . . . . 14
(ac) Employees . . . . . . . . . . . . . . . . . . . . . . 14
(ad) Employee Benefit Plans. . . . . . . . . . . . . . . . 14
(ae) No Agent or Brokers . . . . . . . . . . . . . . . . . 15
(af) Intercompany Obligations. . . . . . . . . . . . . . . 15
(ag) Foreign Person. . . . . . . . . . . . . . . . . . . . 15
4.2 Representations and Warranties of Buyer. . . . . . . . . . 15
(a) Organization and Standing . . . . . . . . . . . . . . 15
(b) Corporate Authority . . . . . . . . . . . . . . . . . 15
(c) Binding Effect. . . . . . . . . . . . . . . . . . . . 15
(d) Approvals; Consents . . . . . . . . . . . . . . . . . 16
iii
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(e) No Agent or Brokers . . . . . . . . . . . . . . . . . 16
4.3 Survival of Representations and Warranties . . . . . . . . 16
ARTICLE V
COVENANTS OF THE PARTIES . . . . . . . . . . . 16
5.1 Covenants of Seller. . . . . . . . . . . . . . . . . . . . 16
(a) Operation of the Business . . . . . . . . . . . . . . 16
(b) Maintenance of Contracts, Copyrights, Permits, etc. . 16
(c) Proscribed Activities . . . . . . . . . . . . . . . . 16
(d) Insurance . . . . . . . . . . . . . . . . . . . . . . 17
(e) Books and Records; Compliance with Laws . . . . . . . 17
(f) No Organic Change . . . . . . . . . . . . . . . . . . 18
(g) Consent and Approvals . . . . . . . . . . . . . . . . 18
(h) Corporate Name. . . . . . . . . . . . . . . . . . . . 18
(i) Depreciation of Capital Assets. . . . . . . . . . . . 18
(j) Cooperation . . . . . . . . . . . . . . . . . . . . . 18
5.2 Seller's Employees, Employee Benefits. . . . . . . . . . . 18
5.3 Access and Information . . . . . . . . . . . . . . . . . . 19
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS . . . . . . . . 19
6.1 Conditions Precedent to Obligations of Buyer . . . . . . . 19
(a) Accuracy of Representations and Warranties. . . . . . 19
(b) Performance of Agreements . . . . . . . . . . . . . . 19
(c) Corporate Action and Approvals. . . . . . . . . . . . 19
(d) Consents of Other Persons . . . . . . . . . . . . . . 20
(e) Office Lease. . . . . . . . . . . . . . . . . . . . . 20
(g) No Material Adverse Change. . . . . . . . . . . . . . 20
(h) Organization of Buyer . . . . . . . . . . . . . . . . 20
(i) Litigation. . . . . . . . . . . . . . . . . . . . . . 20
(j) Changes in Law. . . . . . . . . . . . . . . . . . . . 20
(k) Opinion of Counsel. . . . . . . . . . . . . . . . . . 21
6.2 Conditions Precedent to Obligations of Seller. . . . . . . 21
(a) Accuracy of Representations and Warranties. . . . . . 21
(b) Performance of Agreements . . . . . . . . . . . . . . 21
(c) Shareholder Approval. . . . . . . . . . . . . . . . . 21
(d) Office Lease. . . . . . . . . . . . . . . . . . . . . 22
(e) Litigation. . . . . . . . . . . . . . . . . . . . . . 22
(f) Opinion of Counsel. . . . . . . . . . . . . . . . . . 22
iv
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ARTICLE VII
CLOSING . . . . . . . . . . . . . . . 22
7.1 Time and Place; Deliveries . . . . . . . . . . . . . . . . 22
7.2 Deliveries by Seller upon Closing. . . . . . . . . . . . . 22
7.3 Deliveries by Buyer upon Closing . . . . . . . . . . . . . 23
7.4 Deliveries by Both Buyer and Seller. . . . . . . . . . . . 23
ARTICLE VIII
TERMINATION . . . . . . . . . . . . . . 23
8.1 Termination By the Parties . . . . . . . . . . . . . . . . 23
8.2 Termination By Seller. . . . . . . . . . . . . . . . . . . 24
8.3 Termination By Buyer . . . . . . . . . . . . . . . . . . . 24
8.4 Effect of Termination. . . . . . . . . . . . . . . . . . . 25
8.5 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IX
POST CLOSING COMMITMENTS AND COVENANTS. . . . . . . . 26
9.1 Noncompetition . . . . . . . . . . . . . . . . . . . . . . 26
9.2 Non-Disclosure of Trade Secrets. . . . . . . . . . . . . . 26
9.3 Covenant Not to Solicit. . . . . . . . . . . . . . . . . . 26
9.4 Modification . . . . . . . . . . . . . . . . . . . . . . . 27
9.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE X
INDEMNIFICATION . . . . . . . . . . . . . 27
10.1 Seller's Indemnification . . . . . . . . . . . . . . . . . 27
10.2 Buyer's Indemnification. . . . . . . . . . . . . . . . . . 28
10.3 Indemnification for Taxes. . . . . . . . . . . . . . . . . 28
ARTICLE XI
MISCELLANEOUS PROVISIONS . . . . . . . . . . . 29
11.1 Expenses and Taxes . . . . . . . . . . . . . . . . . . . . 29
11.2 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.3 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.4 Further Assurances . . . . . . . . . . . . . . . . . . . . 29
11.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . 30
11.6 Severability of Provisions . . . . . . . . . . . . . . . . 30
11.7 Captions . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.8 Exhibits and Schedules . . . . . . . . . . . . . . . . . . 30
11.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 30
11.10 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 30
11.11 Amendment; Waiver. . . . . . . . . . . . . . . . . . . . . 30
v
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11.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 30
11.13 Dispute Resolution . . . . . . . . . . . . . . . . . . . . 31
11.14 Attorneys' Fees and Costs. . . . . . . . . . . . . . . . . 31
11.15 Representation By Counsel; Interpretation. . . . . . . . . 31
11.16 Assignment Prohibited. . . . . . . . . . . . . . . . . . . 31
EXHIBIT A Letter of Intent
EXHIBIT B Escrow Agreement
EXHIBIT C Management Agreement
EXHIBIT D Floor Plan
EXHIBIT E Office Lease (Buyer)
EXHIBIT F Noncompetition Agreement
EXHIBIT G Office Lease (Seller)
EXHIBIT H Bill of Sale
EXHIBIT I Assignment and Assumption Agreement
vi
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ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT, is entered into as of August 18, 1997,
by and between GLOBAL MED TECHNOLOGIES, INC., a Colorado corporation
("SELLER"), and NATIONAL MEDICAL REVIEW OFFICES, INC., a Michigan
corporation ("BUYER"). Buyer and Seller are sometimes referred to herein
individually as the "PARTY" and collectively as the "PARTIES."
RECITALS
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A. Seller owns or leases all of the assets of, and operates a
nationwide business under the names National MRO, DataMed, and DataMed
International (collectively, "DataMed International"), which provides third
party administration and medical review officer services in support of
employer substance abuse testing programs, which Business is presently
conducted at the offices of Seller located at 12600 West Colfax ,
Suite A-500, Lakewood, Colorado 80215-3734;
B. Buyer is in the business of providing medical review services for
employee substance abuse testing programs;
C. Seller and Buyer are parties to that certain Letter of Intent for
Proposed Acquisition dated June 20, 1997, which incorporates by reference
the Term Sheet and other terms of a previous Letter of Intent for Proposed
Acquisition dated June 18, 1997;
D. Seller and Buyer are parties to that certain Fund Escrow
Agreement dated July 3, 1997, pursuant to which Tri-State Bank, a state
chartered commercial bank, holds as escrow agent the amount of Six Hundred
Thousand Dollars ($600,000.00), as a deposit to be applied against the
final purchase price to be paid by Buyer at Closing;
E. Seller and Buyer are parties to that certain Interim Management
Agreement dated July 3, 1997, pursuant to which direction and control of
the operations of the Business have been transferred from Seller to Buyer
as of July 1, 1997, on an interim basis, subject to the Closing of the
transactions when and as required by this Agreement; and
F. Seller desires to sell and Buyer desires to purchase all of the
assets of Seller relating to the Business, except for those assets
specifically excluded pursuant to Section 2.2 herein, and the Parties
further desire to enter into certain additional agreements, in accordance
with the covenants, conditions, and restrictions as set forth herein.
<PAGE>
AGREEMENT
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NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
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1.1 DEFINITIONS. As used in this Agreement, in addition to the terms
defined elsewhere, the following terms shall have the meanings set forth
below, unless the context clearly indicates another meaning:
(a) "ACCOUNTS PAYABLE." Seller's obligations to pay for goods
sold or services rendered to Seller in connection with Seller's operation
of the Business, existing as of June 30, 1997, and recorded on the June 30,
1997, balance sheet of the Business, as set forth on SCHEDULE 2.4(b).
(b) "ACCOUNTS RECEIVABLE." Seller's present and future rights to
payment for services rendered or goods sold in connection with Seller's
operation of the Business, existing as of June 30, 1997, and recorded on
the June 30, 1997, balance sheet of the Business, as set forth on SCHEDULE
2.1(d).
(c) "AFFILIATE." An "AFFILIATE" of, or Person "AFFILIATED"
with, a specified Person, is a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified.
(d) "AGENTS." When used with reference to any Person, its
members, shareholders, partners, directors, trustees, officers, employees,
agents, accountants, legal counsel, auditors, and other representatives.
(e) "AGREEMENT." This Asset Purchase Agreement.
(f) "BUSINESS." Seller's nationwide and international business
under the names National MRO, Datamed, and DataMed International, which
provides third party administration and medical review officer services in
support of employer substance abuse testing programs.
(g) "CLOSING." The consummation of and satisfaction by the
Parties (or pursuant to their direction) of the acts, conditions and
transactions contemplated by this Agreement required of each of them on or
before the Closing Date.
(h) "CLOSING DATE." The date established in Section 7.1 for
discharging various conditions by each of the parties hereto and
consummating the transactions described herein.
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(i) "CODE." The Internal Revenue Code of 1986, as amended.
(j) "CONTRACT." Any instrument, mortgage, agreement, contract
or restriction to which either Seller or Buyer is a party, or by which
either Seller or Buyer is bound or which is applicable to a Party or any of
its properties.
(k) "COPYRIGHTS AND TRADENAMES." Trade names, related
trademarks, service marks, copyrights or other intellectual property rights
or items of a similar character or nature, and all registrations or
applications therefor, and any other unregistered names or marks used by
Seller relating to the Business.
(l) "DAMAGES." Any loss, liability, damage (other than special,
remote or speculative damages, including, without limitation, damages for
loss of anticipated future profits or damages based on multiples of
earnings) or expense (including, without limitation, reasonable attorneys'
fees and disbursements).
(m) "EFFECTIVE TIME." The effective time of the Closing which
shall be 12:01 a.m. on the day immediately after the Closing Date.
(n) "EMPLOYEES." The employees of Seller who provide services
for the Business.
(o) "ESCROW AGENT." Tri-State Bank, a state chartered
commercial bank.
(p) "ESCROW AGREEMENT." That certain Fund Escrow Agreement
entered into by and between Seller and Buyer, and dated as of July 3, 1997,
a copy of which is attached as EXHIBIT B.
(q) "FINANCIAL STATEMENTS." The unaudited internal financial
statements maintained by Seller relating to the Business, including,
without limitation, balance sheets and statements of operations for the
Business, and any related schedules and source documents thereto.
(r) "LETTER OF INTENT." That certain Letter of Intent entered
into by and between Seller and Buyer, and dated as of June 20, 1997, which
incorporates by reference the Term Sheet and other terms of a previous
Letter of Intent for Proposed Acquisition dated June 18, 1997, a copy of
which is attached as EXHIBIT A.
(s) "LIEN." Any mortgage, pledge, security interest,
encumbrance, lien, or charge of any kind (including any agreement to grant
any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or any
agreement to give any financing statement under the Uniform Commercial Code
of any jurisdiction).
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(t) "LEASES." All leases for personal property (including both
capital and operating leases) set forth on SCHEDULE 2.4(d), including all
amendments and addenda thereto;
(u) "MANAGEMENT AGREEMENT." That certain Interim Management
Agreement entered into by and between Seller and Buyer, and dated as of
July 3, 1997, a copy of which is attached as EXHIBIT C.
(v) "OFFICE LEASE." A lease for a portion of the Premises, by
and between Golden Hill Office Complex, on the one hand ("LANDLORD"), and
each of Seller and Buyer, on the other hand, as a Tenant;
(w) "PERSON." An individual, a partnership, a joint venture, a
corporation, limited liability company, a trust, an unincorporated
organization or any other entity, including, without limitation, any
Affiliate.
(x) "PREMISES." The principal place of business for the
Business located at 12600 West Colfax , Suite A-500, Lakewood, Colorado
80215-3734.
(y) "SHAREHOLDERS." The shareholders of record of Seller as of
the most recent record date of Seller occurring prior to the Closing Date.
(z) "TAXES." All federal, state, county, local, foreign and
other taxes (including, without limitation, income, excise, sales, use,
gross receipts, franchise, employment and payroll related taxes), whether
or not measured in whole or in part by net income, and including related
interest, penalties and additions to tax.
(aa) "TRADE SECRETS." All confidential, proprietary or
privileged information relating to the Business, including, without
limitation, the Customer List as set forth in SCHEDULE 2.1(i), operating
manuals, symbols, trademarks, trade names, service marks, designs,
procedures, processes, and other copyrighted, patented, trademarked, or
legally protectable information, but excluding the Copyrights and
Tradenames identified in Section 2.2(c).
ARTICLE II
ASSETS AND LIABILITIES
----------------------
2.1 INCLUDED ASSETS. Subject to the terms and conditions of this
Agreement, Seller agrees to sell, convey, transfer, assign and deliver to
Buyer, and Buyer agrees to purchase from Seller as of the Closing, all
rights, title and interests of Seller in all assets of Seller, whether
real, personal, mixed, tangible or intangible, except for the Excluded
Assets as defined in Section 2.2 below, owned, leased or used by Seller in
the operation of its Business as of June 30, 1997, which assets shall
entirely consist of the following (collectively, the "ASSETS"):
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(a) FIXTURES, FURNITURE AND EQUIPMENT. All equipment, vehicles,
tools, accessories, maintenance equipment, spare parts, furnishings and
fixtures used in or related to the operation of the Business and existing
as of the Closing Date, whether or not located at the Premises, together
with all rights in all warranties of any manufacturer or vendor with
respect thereto, as set forth in SCHEDULE 2.1(a), and related accumulated
depreciation for both purchased and leased assets as reflected on the June
30, 1997, Financial Statements of the Business;
(b) SUPPLIES AND CONSUMABLES. All pamphlets, brochures, videos,
office supplies and other consumable supplies held for use in connection
with the Business as described in SCHEDULE 2.1(b);
(c) PREPAID EXPENSES. All deposits, prepaid rent, paid premiums
and other prepaid expenses as of the Closing Date, together with any
additions thereto and subject to any reductions therefrom made or accrued
in the operation of the Business after June 30, 1997, through the Closing
Date ("PREPAID EXPENSES"), including, without limitation, those Prepaid
Expenses itemized in SCHEDULE 2.1(c);
(d) ACCOUNTS RECEIVABLE. All of Seller's Accounts Receivable,
as set forth on SCHEDULE 2.1(d), and related allowance for doubtful
accounts as reflected on the June 30, 1997, Financial Statements of the
Business;
(e) ACCRUED ACCOUNTS RECEIVABLE (UN-BILLED REVENUE). All of
Seller's rights to payment for services rendered or goods sold in
connection with Seller's operation of the Business prior to June 30, 1997,
which had not been billed as of June 30, 1997, as set forth on SCHEDULE
2.1(e), and related allowance for doubtful accounts as reflected on the
June 30, 1997, Financial Statements of the Business;
(f) COPYRIGHTS AND TRADENAMES. All Copyrights and Tradenames of
Seller and all variations and derivatives thereof set forth on SCHEDULE
2.1(f), including, without limitation, the right to use the names "National
MRO," "DataMed" and "DataMed International" following the Closing;
(g) BUSINESS CONTRACTS. All of Seller's rights and interests
under those Contracts specifically listed in SCHEDULE 2.1(g) (all such
Contracts collectively, the "BUSINESS CONTRACTS"), including in particular
and without limitation, the Leases;
(h) LEASEHOLD IMPROVEMENTS. All of Seller's rights and
interests in any and all additions for improvements made to the Premises
and included in the Office Lease to which Buyer is a party (the "LEASEHOLD
IMPROVEMENTS");
(i) CUSTOMER LIST. All of Seller's rights and interests in the
list of customers or clients of the Business, as set forth on SCHEDULE
2.1(I);
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(j) BOOKS AND RECORDS. Subject to applicable laws, all of
Seller's interests in all business and financial books of account and
records, personnel records of Employees, and all other records, information
and data in whatever form recorded or preserved, whether on computer tapes
or disk, which are necessary for or related to the prior or to the
continuing operation of the Business from and after the Closing Date (all
such items, the "RECORDS");
(k) TELEPHONE NUMBERS AND INTERNET ADDRESSES. All rights to the
telephone numbers and internet addresses used by the Business as set forth
on SCHEDULE 2.1(k);
(l) NET WORKING CAPITAL. The net working capital of the
Business reconciled as of June 30, 1997, in accordance with SCHEDULE 3.3;
and
(m) GOODWILL. All of Seller's goodwill in the Business
(notwithstanding the absence of any entry on the June 30, 1997 Financial
Statements for goodwill).
2.2 EXCLUDED ASSETS. The following assets of Seller shall not be
included in the Assets and shall not be purchased and sold under this
Agreement:
(a) CONTRACTS. All of Seller's rights and interests in
contracts other than the Business Contracts;
(b) TELEPHONE NUMBERS AND INTERNET ADDRESSES. All of Seller's
rights and interests in the telephone numbers and internet addresses set
forth on SCHEDULE 2.2(b); and
(c) COPYRIGHTS AND TRADENAMES. All Copyrights and Tradenames of
Seller and all variations and derivatives thereof not set forth on SCHEDULE
2.1(f), including, without limitation, the right to use the name "Global
Med" and the globe trademark.
2.3 CERTAIN COVENANTS OF SELLER PURCHASED BY BUYER. In consideration
of the sale of the Assets by Seller and the purchase of the Assets by
Buyer, and as a condition to the consummation of the transaction
contemplated by this Agreement, Seller agrees to the following additional
covenants:
(a) OPERATION OF THE BUSINESS. From the date hereof to the
Closing, and subject to Seller's obligations under the Management
Agreement, Seller agrees to operate Seller's Business only in accordance
with Section 5.1 of this Agreement;
(b) TENANT IMPROVEMENTS. Seller agrees to assume responsibility
for and to pay and discharge all expenses relating to the construction of
tenant improvements necessary to divide the Premises between Seller and
Buyer in accordance with the floor plan attached hereto as EXHIBIT D, with
the sole exception of those expenses incurred in the construction of those
tenant improvements specifically identified on SCHEDULE 2.3(b), which shall
be the responsibility of Buyer; and
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(c) OTHER RESTRICTIONS. Seller agrees to the post-closing
covenants set forth in Article IX hereof.
2.4 ASSUMED OBLIGATIONS. On the Closing Date and as of June 30,
1997, Buyer shall assume and agree to pay, perform and discharge only the
following obligations (the "ASSUMED OBLIGATIONS"), but only to the extent
that the Assumed Obligations have not previously been paid, performed or
discharged:
(a) BUSINESS CONTRACTS. Buyer agrees to pay, perform and
discharge the executory obligations of Seller arising after June 30, 1997,
under the Business Contracts;
(b) ACCOUNTS PAYABLE. Buyer agrees to pay, perform and
discharge Seller's Accounts Payable as recorded on the June 30, 1997,
Financial Statements of the Business, and in the categorical amounts up to
but not exceeding the categorical limits set forth on SCHEDULE 2.4(b) (not
to include any intercompany payables);
(c) ACCRUED ACCOUNTS PAYABLE. Subject to Sections 2.5 and 2.6
below, Buyer agrees to pay in cash, perform and discharge in an amount not
to exceed One Hundred Twenty-Seven Thousand Forty-Three and 58/100 Dollars
($127,043.58) in the aggregate, Seller's accrued accounts payable as
recorded on the June 30, 1997, Financial Statements of the Business and as
set forth on SCHEDULE 2.4(c) (not to include any intercompany payables),
and Seller agrees that Buyer shall be entitled to carry on Buyer's books of
account and records the entire amount ($568,488.00) of such accrued
accounts payable, and Buyer agrees, upon reasonable request by Seller, to
provide Seller with written documentation of Buyer's compliance with its
obligations under this Section 2.4(c);
(d) ACCRUED EXPENSES. Buyer agrees to pay, perform and
discharge Seller's accrued expenses as recorded on the June 30, 1997,
Financial Statements of the Business, and in the categorical amounts up to
but not exceeding the categorical limits set forth on SCHEDULE 2.4(d) (not
to include any intercompany payables); and
(e) LEASES. Buyer agrees to pay, perform and discharge the
executory obligations of Seller arising after June 30, 1997 under the
Leases as set forth on SCHEDULE 2.4(d).
2.5 SPECIFIC EXCLUDED LIABILITIES. Buyer shall not be obligated to
pay, perform, or discharge any obligations of Seller other than the Assumed
Obligations. Without limiting the generality of the foregoing, and except
as expressly included in the Assumed Obligations, Seller shall remain
liable for all of its outstanding liabilities, whether known or unknown,
accrued or unaccrued, including but not limited to: (i) any continuing
obligations it may have for compensation, benefits or taxes or other
employment-related expenses for personnel employed by or under contract
with Seller prior to the Closing, or any such obligations that may arise by
reason of or with respect to the termination of any such personnel, except
as otherwise provided in the Management Agreement; (ii) any liabilities
arising out of or
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relating to Taxes, to the Shareholders, product liability, or the errors or
omissions of Seller, or its Agents; (iii) any intercompany transfers,
costs, payables or any other intercompany obligation(s); (iv) any severance
payment due from Seller to Bart Valdez; (v) Seller's accounts payable in
excess of the categorical limits set forth on SCHEDULE 2.4(b); (vi)
Seller's accrued accounts payable of the Business in excess of One Hundred
Twenty-Seven Thousand Forty-Three and 58/100 Dollars ($127,043.58); and
any other liabilities set forth on SCHEDULE 2.5.
2.6 SELLER'S ACCRUED ACCOUNTS PAYABLE. Within five (5) business days
of receipt by Seller of an invoice from Buyer, Seller agrees to pay to
Buyer an amount or amount(s) equal to all of Seller's accrued accounts
payable of the Business (as set forth on Schedule 2.4(c)) that: (i) have
been paid in cash by Buyer during the period beginning on July 1, 1997 and
ending on March 31, 1998, and are in excess of One Hundred Twenty-Seven
Thousand Forty-three and 58/100 Dollars ($127,043.58) in the aggregate; and
(ii) have received the prior written approval of Bart Valdez. Seller and
Buyer agree that Bart Valdez shall have the exclusive, complete and final
right to determine which accrued accounts payable of the Business are
included within the foregoing category of accrued accounts payable to be
reimbursed by Seller. Buyer agrees, upon reasonable request by Seller, to
provide Seller with written documentation of Buyer's compliance with its
obligations under Section 2.4(c). Seller agrees, upon reasonable request
by Buyer, to provide Buyer with written documentation of Seller's
compliance with its obligations under this Section 2.6.
ARTICLE III
PURCHASE PRICE; PAYMENT TERMS
-----------------------------
3.1 PURCHASE PRICE. The aggregate purchase price for the Assets (the
"PURCHASE PRICE") shall be the sum of One Million Two Hundred Thousand
Dollars ($1,200,000.00).
3.2 ESCROW DEPOSIT. Pursuant to the Escrow Agreement, Buyer has
deposited with the Escrow Agent Six Hundred Thousand Dollars ($600,000.00)
(the "DEPOSIT"). Notwithstanding any other provision of this Agreement or
breach hereof by either Party, in the event the Closing has not been
accomplished before October 31, 1997, or such other date as the Parties may
establish by amendment of this Agreement, the Parties agree that Buyer then
shall have the option, exercisable in Buyer's sole and complete discretion,
to terminate this Agreement in accordance with Section 8.3(d), with the
effect as set forth in Section 8.4(a).
3.3 PAYMENT AND DELIVERY ON CLOSING DATE. Buyer and Seller agree
that on the Closing Date:
(a) Buyer shall instruct the Escrow Agent to transfer the
Deposit to Seller; and
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(b) Buyer shall pay to Seller the amount of Six Hundred Thousand
Dollars ($600,000.00), by wire transfer of immediately available funds to
the Seller's account at a bank specified by Seller prior to the Closing
Date; and
(c) Net working capital of the Business shall be reconciled as
of June 30, 1997, and paid to Buyer in accordance with SCHEDULE 3.3.
3.4 ALLOCATION OF PURCHASE PRICE. The Purchase Price payable by
Buyer for the Assets shall be allocated as set forth in SCHEDULE 3.4. The
allocation set forth in SCHEDULE 3.4 is in accordance with Paragraph 1060
of the Code, and Buyer and Seller agree to file an IRS Form 8594 with
respect to the transactions contemplated hereby on the basis of such
allocation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
4.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to Buyer as follows:
(a) ORGANIZATION AND STANDING. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Colorado, and has no Affiliate organization except as otherwise
set forth on SCHEDULE 4.1(a).
(b) CORPORATE AUTHORITY. Seller has corporate power and
corporate authority to own and lease the Assets and its other properties as
the Assets and such properties are now owned and leased by Seller, to
conduct the Business and its businesses as and where such businesses have
been and are now being conducted, and to enter into and deliver this
Agreement and perform the transactions contemplated herein.
(c) BINDING EFFECT. This Agreement when executed and delivered
will constitute Seller's legal, valid and binding obligation enforceable in
accordance with its terms, except to the extent that the enforceability
against Seller of this Agreement in accordance with its terms may be
limited in accordance with principles of equity or applicable insolvency,
bankruptcy or other similar laws affecting creditors' rights generally.
(d) APPROVALS; CONSENTS. All approvals, resolutions,
authorizations, consents, actions or orders required of Seller for the
authorization, execution and delivery of, and for the consummation of the
transactions contemplated by, this Agreement, have been obtained or will be
obtained prior to the Closing, except solely for the approval of the
Shareholders as required by Section 6.1(c) and Section 6.2(c) of this
Agreement.
(e) NO VIOLATION. Except as disclosed on SCHEDULE 4.1(e) to
this Agreement, the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement, and the
fulfillment of and compliance with the
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terms and provisions hereof do not conflict with or violate any judicial
or administrative order, award, judgment or decree applicable to Seller,
conflict with any of the terms, conditions or provisions of Seller's
Articles of Incorporation or Bylaws or other organizational documents or
any Contract, or require any approval, consent or authorization which has
not been obtained from any federal, state or local court, or any creditor
of Seller or any other person or entity, or give any party with rights
under any Contract, judgment, award, or order, the right to terminate,
modify or otherwise change the rights or obligations of Seller thereunder.
(f) COMPLIANCE WITH LAWS. Seller has complied, and is in
material compliance with, all material laws, regulations, rules and orders
affecting its operations, except as noted on SCHEDULE 4.1(f).
(g) FINANCIAL STATEMENTS. Seller has furnished Buyer with its
Financial Statements for the Business for the last three (3) fiscal years,
and for the six months ended June 30, 1997. Such Financial Statements are
kept on an accrual basis, have not been audited, reviewed, or otherwise
verified by an independent third party, and are derived from the original
books of accounts and records of Seller, and except for the June 30, 1997
Financial Statements, form part of the audited consolidated financial
statements of Seller. Except for certain items related to intercompany
transfers and intercompany costs, all such Financial Statements, audited or
unaudited, are complete and correct in all material respects, and present
fairly the results of operations of the Business for the respective periods
covered, and the balance sheets present fairly the financial condition of
the Business as of their respective dates. There has been no material,
adverse change in the properties or condition (financial or otherwise) of
the Business other than as reflected in the June 30, 1997 Financial
Statements furnished hereunder or in SCHEDULE 4.1(g). There are no
contingent liabilities which, if determined adversely, would have a
material adverse effect on the Business other than those accrued for in the
Financial Statements furnished hereunder or in SCHEDULE 4.1(g).
(h) TITLE TO ASSETS. Seller has good, valid and marketable
title, as owner or lessee, to all of the Assets. All of the Assets are
free and clear of Liens and are not subject to any options to purchase or
limitations of any nature whatsoever, except as listed in SCHEDULE 4.1(h).
Subject to Seller's usual capitalization policy applied consistently with
Seller's past practices in the conduct of the Business in the ordinary
course, all assets of Seller, whether real, personal, mixed, tangible or
intangible, except for the Excluded Assets as defined in Section 2.2 below,
owned, leased or used by Seller in the operation of its Business as of June
30, 1997, are reflected in the June 30, 1997 Financial Statements of the
Business delivered to Buyer pursuant to Section 4.1(g).
(i) CONDITION OF PREMISES. No condemnation action has been
taken or threatened with respect to the Premises or any part thereof, nor
has any of the Premises been the subject of any assessments for work or
improvements either completed or to be completed, and Seller has no
knowledge or belief that there is any pending or contemplated
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condemnation or assessment or other specified tax or assessment relating to
any of the Premises.
(j) CONTRACTS. SCHEDULE 2.1(g) is a complete and accurate list
of all Contracts, whether written or oral, that relate to or may affect the
Business, the Assets or the operation of any thereof, other than any
Contract that in the aggregate involves an annual expenditure of less than
Five Thousand Dollars ($5,000.00), or annual revenues of less than Ten
Thousand Dollars ($10,000.00), and can be terminated on thirty (30) days'
notice. Seller has made available to Buyer complete and accurate copies of
such Contracts. To Seller's knowledge, Seller is not in default under any
Contract nor has any event occurred which, with the giving of notice or the
passage of time, or both, would constitute a default by Seller under any
Contract.
(k) TAXES.
(i) Seller has filed or caused to be filed all annual
reports and returns which are required to be filed relating to the
Business, and has paid all Taxes shown to be due and payable on said annual
reports and returns or on any assessments made against it, except for
returns which have been appropriately extended, and, to the best knowledge
of Seller, Seller has paid all other Taxes, fees or other charges imposed
on it relating to the Business by any government authority, agency or
instrumentality which have become due and payable (other than those
contested by Seller in good faith through appropriate proceedings and with
respect to which reserves in conformity with generally accepted accounting
principles have been provided on the books of Seller) and no tax liens have
been filed.
(ii) Seller through its payroll services vendor, ADP, has
withheld proper and accurate amounts from its Employees in full and
complete compliance with the tax withholding provisions of the Code and
other applicable federal, foreign, state or local laws, and has filed
proper and accurate federal, foreign, state and local returns and reports
for all years and periods (and portions thereof) for which any such returns
and reports were due with respect to Employee income tax, withholding
taxes, social security taxes and unemployment taxes.
(l) LITIGATION. To Seller's knowledge, there are no
investigations, actions, lawsuits, claims, arbitrations or proceedings,
either judicial, administrative or otherwise, pending or to the knowledge
of Seller, threatened against or affecting the Assets or the operation of
the Business, by or before any court, governmental department, commission,
board, bureau, agency, mediator, arbitrator or other person or
instrumentality.
(m) NO MISLEADING STATEMENTS. Nothing herein contains or will
contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If any
change of the information contained in any Exhibit or Schedule shall change
between the date of this Agreement and the Closing, Seller shall promptly
notify
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Buyer of such changes, in accordance with Section 11.3 hereof and the
Exhibit or Schedule shall be amended accordingly.
(n) OPERATIONS OF THE BUSINESS. From the date of execution of
the Letter of Intent through the date of execution of the Management
Agreement, Seller has operated the Business only in the usual, regular and
ordinary course and manner consistent with past practices, and has not
entered into agreements or transactions with any Person, including any
Affiliate (except for Buyer), or incurred obligations which would or could
reasonably be expected to have a material, adverse impact on the
operations, financial status or condition, or prospects of the Business.
From the date of execution of the Management Agreement, Seller has
operated, and will continue through the Closing Date to operate, the
Business in accordance with and subject to the Management Agreement and in
accordance with and subject to Section 5.1 hereof.
(o) HAZARDOUS MATERIALS. Hazardous Materials for purposes of
this Agreement shall mean all substances which are hazardous or toxic or
which are otherwise regulated under any federal, state or local laws,
rules, regulations or ordinances governing the existence, clean-up or
remedial contaminated property, the protection of the environment from
soil, air or water pollution or the generation, handling or disposal of
hazardous substances. The Premises upon which the Business is conducted
are free from any and all Hazardous Materials, other than those used,
handled, generated, manufactured, stored, treated, transported or disposed
of in compliance with all applicable safety laws and environmental laws as
in force and effect on the date hereof. Neither Seller nor any third party
have used, handled, generated, manufactured, treated, stored, emitted,
released, threatened release, discharged, transported or disposed of any
Hazardous Materials on, under, above, about or from the Premises except in
compliance with all applicable safety and environmental laws as in force
and effect on the date thereof.
(p) ACCOUNTS RECEIVABLE. SCHEDULE 2.1(d) is a complete and
accurate list of all Accounts Receivable of the Business as of June 30,
1997, which Accounts Receivable are reflected on the June 30, 1997,
Financial Statements delivered to Buyer pursuant to Section 4.1(g), and
which represent sales actually made in the ordinary course of Seller's
Business. Seller has delivered to Buyer a complete and accurate aging list
of all Accounts Receivable of the Business.
(q) COLLECTION OF ACCOUNTS RECEIVABLE. From the date of
execution of the Letter of Intent through the date of execution of the
Management Agreement, Seller has diligently collected its Accounts
Receivable in the usual, regular and ordinary course and manner consistent
with past practices, and deposited such Accounts Receivable into existing
Deposit Accounts, as identified in paragraph 4.1(s) below, and has not
entered into agreements or transactions or incurred obligations which would
or could reasonably be expected to have a material, adverse impact on the
collection of the Accounts Receivable of the Business, from and after the
date of execution of the Management Agreement.
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(r) ACCRUED ACCOUNTS RECEIVABLE (UN-BILLED REVENUE). SCHEDULE
2.1(e) is a complete and accurate list of all of Seller's rights to payment
for services rendered or goods sold in connection with Seller's operation
of the Business prior to June 30, 1997, which have not been billed as of
June 30, 1997.
(s) ACCOUNTS PAYABLE. SCHEDULE 2.4(b) is a complete and
accurate list of all Accounts Payable of the Business as of June 30, 1997,
which Accounts Payable are reflected on the June 30, 1997, Financial
Statements delivered to Buyer pursuant to Section 4.1(g), and which
represent payment obligations actually incurred in the ordinary course of
Seller's Business.
(t) ACCRUED ACCOUNTS PAYABLE. SCHEDULE 2.4(c) is a complete and
accurate list of all of Seller's accrued accounts payable that are recorded
on the June 30, 1997, Financial Statements of the Business, and which
represent payment obligations actually incurred in the ordinary course of
Seller's Business.
(u) ACCRUED EXPENSES. SCHEDULE 2.4(d) is a complete and
accurate list of all of Seller's accrued expenses that are recorded on the
June 30, 1997, Financial Statements of the Business, and which represent
payment obligations actually incurred in the ordinary course of Seller's
Business.
(v) LEASES. SCHEDULE 2.4(e) is a complete and accurate list of
all Seller's Leases (including both capital and operating leases), and
which represent obligations actually incurred in the ordinary course of
Seller's Business.
(w) ACCRUED PAYROLL. SCHEDULE 2.4(d) is a complete and accurate
list of Seller's accrued payroll for its Employees of the Business as of
June 30, 1997, which payroll is reflected on the June 30, 1997, Financial
Statements delivered to Buyer pursuant to Section 4.1(g), and which
represent payment obligations actually incurred in the ordinary course of
Seller's Business.
(x) ACCRUED PAID TIME OFF. SCHEDULE 2.4(d) is a complete and
accurate list of Seller's accrued paid time off for its Employees of the
Business as of June 30, 1997, which paid time off is reflected on the June
30, 1997, Financial Statements delivered to Buyer pursuant to Section
4.1(g), and which represent payment obligations actually incurred in the
ordinary course of Seller's Business.
(y) SALES COMMISSIONS. SCHEDULE 2.4(d) is a complete and
accurate list of all sales commissions of the Business as of June 30, 1997,
which sales commissions are reflected on the June 30, 1997, Financial
Statements delivered to Buyer pursuant to Section 4.1(g), and which
represent payment obligations actually incurred in the ordinary course of
Seller's Business;
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(z) ACCRUED INTEREST. SCHEDULE 2.4(d) is a complete and
accurate list of all accrued interest obligations of the Business as of
June 30, 1997, which obligations are reflected on the June 30, 1997,
Financial Statements delivered to Buyer pursuant to Section 4.1(g), and
which represent payment obligations actually incurred in the ordinary
course of Seller's Business;
(aa) DEPOSIT ACCOUNTS. Attached hereto as SCHEDULE 4.1(aa) (the
"DEPOSIT ACCOUNTS") is a complete and accurate list of each bank, trust
company, savings institution, brokerage firm, mutual fund or other
financial institution with which Seller has an account or safe deposit box
for the Business, and the account numbers and the June 30, 1997, account
balances, the names and identification of all Persons authorized to draw
thereon or to have access thereto, and the names of each Person holding
powers of attorney or agency authority from Seller and a summary of the
terms thereof.
(bb) LEASES. Seller has good and marketable title to all of the
rights and interests in, to, and under the Leases free and clear of all
encumbrances, but subject to the terms of such Leases. Each Lease held by
Seller is a legal, valid and binding agreement of Seller and all other
parties thereto in force and effect on the date hereof in accordance with
its terms. Seller has fulfilled all material obligations required pursuant
to each Lease to have been performed prior to the date hereof. Seller
warrants and guarantees that there has not occurred any default under any
such Lease on the part of Seller or any other party thereto, nor has any
event occurred which with the giving of notice or the lapse of time (or
both) would constitute a default thereunder or would cause the acceleration
of any obligation of Seller thereunder, or the creation of any encumbrance
upon any of the Assets transferred hereunder.
(cc) EMPLOYEES. Attached hereto as SCHEDULE 4.1(ac) is a
complete and accurate list of names, positions, including whether full-time
or part-time, and current annual salary or wage rates and bonus and other
compensation or severance arrangements of all full-time and part-time
Employees. To the best of Seller's knowledge there is no pending or
threatened Employee strike, work stoppage or labor dispute, and no union
representation question exists or is being negotiated, no union organizing
activities by or with respect to any Employees are taking place, and none
of the Employees is represented by any labor union or organization. Seller
is in compliance in all material respects with all federal and state laws
respecting employment and employment practices, terms and conditions of
employment, and the payment of wages and working hours. Except as set
forth in Schedule 4.1(ac), there are no pending, and to the best of
Seller's knowledge, threatened wage and hour claims, EEOC claims,
unemployment compensation claims, workers compensation claims or any
similar claim against Seller by Employees.
(dd) EMPLOYEE BENEFIT PLANS. Attached hereto as SCHEDULE 4.1(ad)
is a complete and accurate list of all employee benefit policies and plans
that are or have been sponsored, maintained for the benefit of or
contributed to by Employees at any time within the past two (2) years prior
to the Closing Date ("Employee Benefit Plans"), including,
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without limitation, (i) each employee benefit plan as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), (ii) each policy, plan or arrangement relating to stock
options, profit sharing, bonus or incentive awards or compensation,
vacation, sick time or disability leave, deferred or supplemental
compensation, and (iii) each other plan, agreement, arrangement, program,
practice or policy providing for the recognition or payment by Seller of
any employee benefits. Seller has made available to Buyer complete and
accurate copies of all such Employee Benefit Plans. Seller has
established, maintained, and administered all Employee Benefit Plans in
compliance with applicable laws and Employee Benefit Plan terms and
conditions, and all obligations, whether arising by operation of law or by
contract, required to be performed in connection with the Employee Benefit
Plans have been performed in all material respects, nor has any event
occurred which, with notice or the passage of time, or both, would
constitute a breach of fiduciary duty or a default by Seller under any
Employee Benefit Plan.
(ee) NO AGENT OR BROKERS. No agent, broker, or other firm or
person is or will be entitled to any broker or finder's fee, or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement made by or on behalf of Seller.
(ff) INTERCOMPANY OBLIGATIONS. Attached hereto as SCHEDULE
4.1(af) is a complete and accurate list of all intercompany obligations or
outstanding liabilities of the Business to Seller, and the consummation of
the transactions contemplated by this Agreement will not (either alone, or
upon the occurrence of any act or event, or with the lapse of time, or
both) result in any payment arising or becoming due from the Business to
Seller, or any successor or assign of Seller.
(gg) FOREIGN PERSON. Seller is not a "foreign person" as that
term is defined in Paragraph 6038A(c)(3) of the Code.
4.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents
and warrants to Seller as follows:
(a) ORGANIZATION AND STANDING. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Michigan.
(b) CORPORATE AUTHORITY. Buyer has corporate power and
corporate authority to own and lease the Assets and its other properties as
the Assets and such properties are now owned and leased by Buyer, to
conduct its businesses as and where such businesses have been and are now
being conducted, and to enter into and deliver this Agreement and perform
the transactions contemplated herein.
(c) BINDING EFFECT. This Agreement when executed and delivered
will constitute Buyer's legal, valid and binding obligation enforceable in
accordance with its terms, except to the extent that the enforceability
against Buyer of this Agreement in
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accordance with its terms may be limited in accordance with principles of
equity or applicable insolvency, bankruptcy or other similar laws affecting
creditors' rights generally.
(d) APPROVALS; CONSENTS. All approvals, resolutions,
authorizations, consents, actions or orders required of Buyer for the
authorization, execution and delivery of, and for the consummation of the
transactions contemplated by, this Agreement, have been obtained or will be
obtained prior to the Closing.
(e) NO AGENT OR BROKERS. No agent, broker, or other firm or
person is or will be entitled to any broker or finder's fee, or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement made by or on behalf of Buyer.
4.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of each Party contained in this Article IV shall be true,
accurate and complete as of the date of the execution of this Agreement,
and shall continue to be true, accurate and complete as of the Closing.
The respective obligations of the Parties for the truth, accuracy and
completeness of the representations and warranties made by each Party
pursuant to this Article IV, shall survive the Closing.
ARTICLE V
COVENANTS OF THE PARTIES
------------------------
5.1 COVENANTS OF SELLER. Seller agrees that from the date of
execution of this Agreement until the Closing:
(a) OPERATION OF THE BUSINESS. Seller shall operate the
Business subject to and in accordance with the Management Agreement, and
shall preserve intact the present business organization and relationships
(except as otherwise contemplated herein and in the Management Agreement),
and avoid any action which could have a material adverse effect on the
present goodwill, intangible assets and advantageous relationships of the
Business.
(b) MAINTENANCE OF CONTRACTS, COPYRIGHTS, PERMITS, ETC. Seller
shall preserve and maintain in force in the ordinary course of business
without change (except as otherwise contemplated herein and in the
Management Agreement) all Contracts, Copyrights and Tradenames, licenses,
registrations, franchises and other similar rights which it owns or of
which it is the beneficiary.
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(c) PROSCRIBED ACTIVITIES. Except with Buyer's express prior
written approval which Buyer may withhold in the exercise of its sole and
absolute discretion, Seller shall not, directly or indirectly, whether
through the act itself or through any agreement entered into or to be
entered into to perform an act, do any of the following:
(i) solicit or enter into any discussions or negotiations
with any Person regarding the sale or other disposition of all or any of
the Assets, or furnish any information to any prospective buyer or
acquiring party of all or any material part of the Assets;
(ii) subject any of the Assets to any Lien other than those
listed in SCHEDULE 4.1(h);
(iii) incur any obligation (contingent or fixed) to
transfer or convey, including by means of an option to purchase or acquire,
or transfer or convey, any material Asset of the Business, or enter into
any other transaction or make or enter into any other contract or
commitment affecting the Business, except with the prior written consent of
Buyer in accordance with the Management Agreement;
(iv) grant any general or uniform increase in the rates of
pay or benefits to officers, directors or Employees (or a class thereof) or
pay any special bonus to any person (with the sole exception of bonuses in
the form of stock, or stock options, of Seller), or enter into any new
employment, collective bargaining or severance agreement;
(v) make, guarantee, assume or otherwise cause the Business
to become liable for any borrowing or increase any existing indebtedness
except with the prior written consent of Buyer;
(vi) discharge or satisfy any Lien or pay any debt,
obligation or liability of the Business, except with the prior written
consent of Buyer; or
(vii) engage in or enter into any material transaction
of any nature relating to the Business and not expressly provided for
herein, except with the prior written consent of Buyer.
(d) INSURANCE. Subject to Seller's reimbursement rights under
the Management Agreement, Seller shall maintain in force all property,
casualty, liability, directors and officers and other forms of insurance
which it is presently carrying with respect to the Business, and no
cancellation or reduction of such insurance coverage shall be effected by
Seller.
(e) BOOKS AND RECORDS; COMPLIANCE WITH LAWS. Seller shall
maintain its books of account and records relating to the Business in the
usual, regular and ordinary manner, and on a basis consistent with prior
years, and shall comply in all material respects with all laws applicable
to it or to the conduct of its Business.
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(f) NO ORGANIC CHANGE. Subject to Seller's obligations under
the Management Agreement, and except as contemplated by this Agreement or
disclosed in SCHEDULE 5.1(f), Seller shall not change the character of the
Business or take any other action if any such action would or could
reasonably be expected to have a material, adverse impact on the
properties, financial status or condition, operations, or prospects of the
Business.
(g) CONSENT AND APPROVALS. Seller shall use reasonable efforts
to obtain all necessary consents and approvals of other Persons to the
transactions contemplated by this Agreement.
(h) CORPORATE NAME. On or prior to the Closing Date, Seller
shall take all action necessary and file all documents or instruments
necessary with any governmental entity or other Person to abandon its use
of the names "National MRO," "DataMed," "DataMed International," and all
other names used by Seller to identify the Business (except as provided in
Section 2.2(c)). Seller agrees not to adopt any new name that conflicts
with or otherwise interferes with Buyer's ability to use the current names
of the Business after the Closing.
(i) DEPRECIATION OF CAPITAL ASSETS. Prior to the Closing Date,
Seller shall fully depreciate all purchased capital assets of the Business
on its books of account and records for purposes of federal income tax,
unless Seller receives a written position prepared in good faith in the
ordinary course of business by Ernst & Young as its auditor, that Seller is
not lawfully permitted to take such depreciation.
(j) COOPERATION. During the period prior to Closing, and for a
reasonable period of time after Closing, Seller will cooperate with Buyer
in every reasonable way in carrying out the transition of the ownership of
the Business and the other transactions contemplated herein, in obtaining
any and all required approvals and authorizations, any and all required
consents of third parties, and in preparation of the various schedules
required to be produced on the Closing Date pursuant to Article VII hereof,
and in executing and delivering all documents, instruments or copies
thereof deemed necessary or useful by Buyer.
5.2 SELLER'S EMPLOYEES, EMPLOYEE BENEFITS. Buyer and Seller agree
that Buyer has not assumed and shall not assume any obligation to employ
any particular person or persons previously or currently employed by
Seller. On or before the Closing Date and effective as of the Effective
Time, Seller shall terminate the employment of any and all Employees.
Except as otherwise provided by the Management Agreement, Seller shall be
fully responsible for all claims of such Employees including, but not
limited to, claims related to salary or compensation, severance pay, sick
or vacation leave, disability benefits, pension benefits, retirement
benefits, or benefits in connection with any other pension or other
profit-sharing plan. Buyer shall not assume or be obligated for any such
claims owed by Seller to such Employees, notwithstanding any employment of
Seller's Employees by Buyer following Closing. Except as otherwise
provided by the Management Agreement, Seller shall indemnify, defend and
hold Buyer harmless against and in respect of any and all Damages that
Buyer may incur or suffer, arising or resulting from Seller's employment of
its Employees, pursuant to the terms and conditions set
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forth in Article X, below, and in particular Section 10.1 thereof. Seller
shall not make any representation to any of Seller's Employees concerning
any future employment with Buyer, except with the prior written
authorization of Buyer.
5.3 ACCESS AND INFORMATION. Buyer may, prior to the Closing and
through its Agents, make, or cause to be made, at Buyer's own expense, such
investigation of the business, properties and personnel of the Business as
Buyer may deem necessary or advisable, and such investigation shall not
affect the representations and warranties to be made by the Seller under
this Agreement. Buyer and its Agents shall have full access to the
Business's books of account and records, and Seller's books of account and
records relating to the operations of the Business and maintained by Seller
during the period from and including June 20, 1997 through and including
the Closing, and Seller will furnish to Buyer and its Agents, at Buyer's
expense, such financial and operating data and other information (or copies
thereof) with respect to the properties, and personnel of the Business as
Buyer shall from time to time reasonably request. Furthermore, Seller will
use reasonable efforts to ensure that the auditors and accountants of
Seller will cooperate with Buyer and its Agents in making available to them
all financial and Tax information requested, including the right to examine
working papers pertaining to audits made and to make copies and extracts
thereof.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
-----------------------------------
6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligations of
Buyer to consummate the transactions contemplated hereby are subject to the
satisfaction of all of the conditions set out in the remainder of this
Section 6.1. Buyer may waive any or all of these conditions in whole or in
part in writing on or before the Closing; provided, however, that no such
waiver of a condition shall constitute a waiver by Buyer of any of its
other rights or remedies, at law or in equity, if Seller shall be in
default of any of its representations, warranties, or covenants under this
Agreement.
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller herein contained shall be true and
correct in all material respects on and as of the Closing, except as
affected by transactions contemplated hereby.
(b) PERFORMANCE OF AGREEMENTS. Seller shall have in all
material respects performed all obligations and complied with all covenants
and conditions contained in this Agreement, in the Escrow Agreement, and in
the Management Agreement, to be performed and complied with by Seller on or
prior to the Closing.
(c) CORPORATE ACTION AND APPROVALS. All necessary corporate
action and approvals on the part of Seller in adopting and approving this
Agreement, and approving the transactions contemplated hereby, shall have
been taken. Without limiting the generality of the foregoing, Seller's
Shareholders shall have met, voted and duly approved in accordance with
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Seller's Articles of Incorporation, Bylaws, and other organizational
instruments, this Agreement and all of the transactions contemplated
hereby.
(d) CONSENTS OF OTHER PERSONS. Except as described in SCHEDULE
6.1(d), to the extent that Seller's assignment of any Contract requires the
consent of a party to such agreement, such consent shall have been obtained
by the Closing, provided, however, that (i) Seller shall not make, as a
condition for the obtaining of any such consent, any agreements or
undertakings not approved by Buyer, and (ii) if such consent cannot be
obtained Buyer shall have the option, exercisable in Buyer's sole and
complete discretion, to require Seller to terminate the applicable
Contract. Without limiting the generality of the foregoing, Seller and
Buyer each shall have obtained the unconditional consent of the Landlord to
an Office Lease for a portion of the Premises, without as a result thereof,
Landlord having a right to demand of Buyer, accelerated payment of rent or
other expenses due under the existing lease for the Premises, any transfer
or other fee, premium or penalty, any increase in the rent, or any other
material change in the terms of the existing lease for the Premises.
(e) OFFICE LEASE. Landlord shall have executed and delivered to
Buyer, an Office Lease, in form and content reasonably acceptable to Buyer
and to the Landlord and substantially in the form attached hereto as
EXHIBIT E and incorporated herein by this reference, pursuant to which
Buyer will lease approximately 9069 square feet of Suite A501, and
approximately 1478 square feet of Suite A130 of the Premises.
(f) COLLATERAL AGREEMENT. Michael I. Ruxin shall have executed
and delivered the Noncompetition Agreement in the form set forth in EXHIBIT
F.
(g) NO MATERIAL ADVERSE CHANGE. There shall be no material
adverse change in the Business, the Assets or other properties or financial
condition of the Business between the date of this Agreement and the
Closing, except to the extent that such material adverse change was caused
by Buyer, or caused by Buyer's assignee under the Management Agreement.
(h) ORGANIZATION OF BUYER. Buyer shall have received a
Certificate of Authority to Transact Business from the Secretary of State
of Colorado, and any other jurisdiction in which Seller maintains
qualification in order to conduct the Business within such jurisdiction.
(i) LITIGATION. No action or proceeding shall have been
instituted or threatened which would enjoin, restrain or prohibit the
consummation of the transactions contemplated by this Agreement.
(j) CHANGES IN LAW. No law or order shall have been enacted,
entered, issued, promulgated or enforced by any governmental entity, at
what otherwise would be the Closing Date, which would not permit the
Business as presently conducted to be continued by Buyer unimpaired
following the Closing Date.
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(k) OPINION OF COUNSEL. Buyer shall receive at the Closing from
Brenman Bromberg & Tenenbaum, P.C., counsel to Seller, an opinion dated as
of the Closing Date, in form and substance reasonably satisfactory to
Buyer, that:
(i) Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Colorado;
(ii) Seller has corporate power and corporate authority to
own and lease the Assets as the Assets are now owned and leased by Seller,
to conduct the Business as and where such Business has been and is now
being conducted, and to enter into and deliver this Agreement and perform
the transactions contemplated herein;
(iii) This Agreement when executed and delivered will
constitute Seller's legal, valid and binding obligation enforceable in
accordance with its terms, except to the extent that the enforceability
against Seller of this Agreement in accordance with its terms may be
limited in accordance with principles of equity or applicable insolvency,
bankruptcy or other similar laws affecting creditors' rights generally; and
(iv) All approvals, resolutions, authorizations, consents,
actions or orders required of Seller for the authorization, execution and
delivery of, and for the consummation of the transactions contemplated by,
this Agreement, including, without limitation, the approval of Seller's
Shareholders, have been obtained.
6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations
of Seller to consummate the transaction contemplated hereby are subject to
the satisfaction of all of the conditions set out in the remainder of this
Section 6.2. Seller may waive any or all of these conditions in whole or
in part in writing on or before the Closing; provided, however, that no
such waiver of a condition shall constitute a waiver by Seller of any of
its other rights or remedies, at law or in equity, if Buyer shall be in
default of any of its representations, warranties, or covenants under this
Agreement.
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer herein contained shall be true and
correct in all material respects on and as of the Closing, except as
affected by transactions contemplated hereby.
(b) PERFORMANCE OF AGREEMENTS. Buyer shall have in all material
respects performed all obligations and complied with all covenants and
conditions contained in this Agreement, in the Escrow Agreement, and in the
Management Agreement, to be performed and complied with by Buyer on or
prior to the Closing.
(c) SHAREHOLDER APPROVAL. Seller's Shareholders shall have met,
voted and duly approved in accordance with Seller's Articles of
Incorporation, Bylaws, and other organizational instruments, this Agreement
and all of the transactions contemplated hereby.
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(d) OFFICE LEASE. Landlord shall have executed and delivered to
Seller, an Office Lease, in form and content reasonably acceptable to
Seller and to the Landlord and substantially in the form attached hereto as
EXHIBIT G and incorporated herein by this reference, pursuant to which
Seller will lease approximately 3439 square feet of Suite A500 of the
Premises.
(e) LITIGATION. No action or proceeding shall have been
instituted or threatened which would enjoin, restrain or prohibit the
consummation of the transactions contemplated by this Agreement.
(f) OPINION OF COUNSEL. Seller shall receive at the Closing
from Buyer's counsel, an opinion dated as of the Closing Date, in form and
substance reasonably satisfactory to Seller, that:
(i) Buyer is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its
incorporation;
(ii) Buyer has corporate power and corporate authority to
purchase the Assets and to enter into and deliver this Agreement and
perform the transactions contemplated herein; and
(iii) This Agreement has been duly authorized by all
necessary corporate action on the part of Buyer, and when executed and
delivered will constitute Buyer's legal, valid and binding obligation
enforceable in accordance with its terms, except to the extent that the
enforceability against Buyer of this Agreement in accordance with its terms
may be limited in accordance with principles of equity or applicable
insolvency, bankruptcy or other similar laws affecting creditors' rights
generally.
ARTICLE VII
CLOSING
-------
7.1 TIME AND PLACE; DELIVERIES. The Closing shall be held on or
before November 17, 1997, or such later date which the Parties may
establish by amendment of this Agreement ("CLOSING DATE"), at a place to be
agreed upon and designated by the Parties. All proceedings to take place
at the Closing shall take place simultaneously, and no delivery shall be
considered to have been made until all such proceedings have been
completed.
7.2 DELIVERIES BY SELLER UPON CLOSING. At the Closing on the Closing
Date, Seller shall deliver to Buyer the following (duly executed where
appropriate):
(a) Possession of the Assets, including, without limitation, all
the items listed in Section 2.1;
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(b) Updated Schedules to be attached hereto, reflecting any
changes as necessary to render the information contained therein true and
accurate and not misleading, as required pursuant to Paragraph 4.1(n),
above;
(c) All consents required for assignment and transfer by Seller
to Buyer of the Contracts;
(d) The documents or instruments necessary to assign Seller's
current Copyrights and Tradenames;
(e) The documents and other instruments referenced in Section
6.1 which Seller is required to execute or obtain and deliver to Buyer;
(f) The opinion of Seller's counsel referenced in Section
6.1(i); and
(g) Such other documents as (A) may be reasonably requested by
Buyer at least three (3) business days prior to the Closing Date to effect
the Closing as herein contemplated or (B) required to effect the Closing as
herein contemplated whether or not requested by Buyer.
7.3 DELIVERIES BY BUYER UPON CLOSING. At the Closing on the Closing
Date, Buyer shall deliver to Seller the following (duly executed where
appropriate):
(a) Immediately available funds in the amount set forth in
Paragraph 3.3;
(b) The opinion of Buyer's counsel referenced in Section 6.2(e);
and
(c) Such other documents as (A) may be reasonably necessary
requested by Seller at least three (3) business days prior to the Closing
Date to effect the Closing as herein contemplated or (B) required to effect
the Closing of as herein contemplated whether or not requested by Seller.
7.4 DELIVERIES BY BOTH BUYER AND SELLER. At the Closing on the
Closing Date, Buyer and Seller each shall execute and deliver an Office
Lease for a portion of the Premises, a Bill of Sale substantially in the
form of agreement attached hereto as EXHIBIT H and incorporated herein by
this reference, and an Assignment and Assumption Agreement substantially in
the form of agreement attached hereto as EXHIBIT I and incorporated herein
by this reference.
ARTICLE VIII
TERMINATION
-----------
8.1 TERMINATION BY THE PARTIES. This Agreement may be terminated at
any time prior to the Closing by mutual written consent of the Parties.
This Agreement also may be terminated by either of the Parties on the
Closing Date upon written notice to the other Party (in accordance
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with Section 11.2 hereof) in the event that all of the conditions precedent
to a Party's obligation to consummate the Closing shall not have been
satisfied on or prior to the Closing Date, in which case Section 8.4 shall
apply.
8.2 TERMINATION BY SELLER. Seller may terminate this Agreement under
the following circumstances:
(a) The commencement of any voluntary proceeding by Buyer under
any reorganization arrangement, readjustment, moratorium law or statute,
including without limitation, the United States Bankruptcy Code or any
successor federal statute, or if any involuntary proceeding under any
reorganization arrangement, readjustment, moratorium law or statute,
including without limitation the United States Bankruptcy Code or any
successor federal statute, is commenced against Buyer, or if Buyer makes,
negotiates or commences negotiations for partial or complete assignment of
its assets for the benefit of creditors, pursuant to statutory or common
law;
(b) Buyer suffers an appointment of a receiver, custodian,
examiner or a trustee for any of its property or assets;
(c) The termination, liquidation or dissolution of Buyer;
(d) In the event that Buyer shall default in the performance of
any material duty or obligation imposed upon it by this Agreement and such
default shall continue for a period of ten (10) days after written notice
thereof has been given to Buyer by Seller; or
(e) In the event that Seller's Shareholders do not approve this
Agreement and the transactions contemplated hereby within the time required
herein, but only if Seller is not then in breach of any material duty or
obligation imposed upon Seller hereunder, and no event has occurred which
with the giving of notice or the passage of time would constitute a breach
by Seller of any material duty or obligation imposed upon Seller hereunder.
8.3 TERMINATION BY BUYER. Buyer may terminate this Agreement under
the following circumstances:
(a) the commencement of any voluntary proceeding by Seller under
any reorganization arrangement, readjustment, moratorium law or statute,
including without limitation, the United States Bankruptcy Code or any
successor federal statute, or if any involuntary proceeding under any
reorganization arrangement, readjustment, moratorium law or statute,
including without limitation the United States Bankruptcy Code or any
successor federal statute, is commenced against Seller; or if Seller makes,
negotiates or commences negotiations for partial or complete assignment of
its assets for the benefit of creditors, pursuant to statutory or common
law;
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(b) Seller suffers an appointment of a receiver, custodian,
examiner or a trustee for any of its property or assets;
(c) the termination, liquidation or dissolution of Seller,
except any such action that causes a third party to expressly assume the
obligations and succeed to the interests of Seller hereunder;
(d) in the event that Seller's Shareholders do not approve this
Agreement and the transactions contemplated hereby within the time required
herein, but only if Buyer is not then in breach of any material duty or
obligation imposed upon Buyer hereunder, and no event has occurred which
with the giving of notice or the passage of time would constitute a breach
by Buyer of any material duty or obligation imposed upon Buyer hereunder;
or
(e) in the event Seller shall default in the performance of any
material duty or obligation imposed upon it by this Agreement and such
default shall continue for a period of ten (10) days after written notice
thereof has been given to Seller.
8.4 EFFECT OF TERMINATION. Except as otherwise provided in Section
3.2 with regard to the Deposit, upon termination of this Agreement, the
following shall apply:
(a) If Buyer terminates this Agreement pursuant to Section 8.3,
or if Seller terminates this Agreement pursuant to Section 8.2(e), then in
addition to any other right or remedies to which Buyer may be entitled
hereunder, or by law, Seller will retain all rights (including rights to
accounts receivable of the Business), and all obligations and liabilities
(including accounts payable) relating to the operation of the Business
prior to the Closing, and Seller will reimburse Buyer for its Expenses, as
defined in Section 6.2 of the Management Agreement;
(b) If Seller terminates this Agreement pursuant to Section 8.2
(except for Section 8.2(e)), then (i) this Agreement and the Management
Agreement will terminate; (ii) Seller will not be obligated to reimburse
Buyer for its Expenses, as defined in Section 6.2 of the Management
Agreement; and (iii) Seller will assume all rights (including rights to
accounts receivable of the Business), and all obligations and liabilities
(including accounts payable) relating to the operation of the Business
after the effective date of the termination;
(c) if Buyer terminates this Agreement following any failure to
satisfy the conditions precedent set forth in Section 6.1 (except for
Section 6.1(d)), then the effect shall be governed by Section 8.4(a) above;
and
(d) if Seller terminates this Agreement following any failure to
satisfy the conditions precedent set forth in Section 6.2, then the effect
also shall be governed by Section 8.4(a) above.
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8.5 EXTENSION; WAIVER. At any time prior to the Closing Date, either
Party may (a) extend the time for the performance of any of the obligations
or other acts of the other Party, (b) waive any inaccuracy in or breach of
the representations and warranties of the other Party contained herein or
in any schedule hereto or in any document delivered pursuant hereto, or (c)
waive the other Party's compliance with any of the covenants, conditions,
or agreements contained herein. Any Agreement on the part of any Party to
any such extension or waiver shall be valid only if set forth in an
instrument in writing signed and delivered on behalf of such Party to the
other Party in accordance with Section 11.3 hereof.
ARTICLE IX
POST CLOSING COMMITMENTS AND COVENANTS
--------------------------------------
9.1 NONCOMPETITION. Seller and Buyer acknowledge and agree that (i)
Buyer's entering into this Agreement is induced primarily because of the
covenants and assurances made by Seller hereunder; (ii) the covenant not to
compete and the other restrictive covenants of Seller are necessary to
insure the continuation of the Business as operated nationwide by Buyer
subsequent to the Closing; and (iii) irreparable harm and damage to Buyer
will result if Seller violates the covenant not to compete or any other
restrictive covenant set forth in this Article IX. Therefore, in
consideration of these premises and in order to induce Buyer to consummate
the purchase contemplated by this Agreement, Seller agrees that for a
period of three (3) years following the Closing Date (the "NONCOMPETITION
PERIOD"), Seller will not directly or indirectly, whether as a principal,
on his or its own account, or solely or jointly with others as an agent,
contractor, general partner, limited partner, manager or member of any
corporation, partnership, limited liability company or other entity: (i)
own, manage, operate, control, or participate in the management or control
of, directly or indirectly, any enterprise located within the territorial
United States (the "RESTRICTED TERRITORY"), which is, or as of Seller's
engagement or participation would become, engaged in any business that is
competitive with any aspect of the Business as operated by Buyer; or (ii)
be employed by, provide, or contract to provide, management, consulting, or
administrative services to any enterprise located within the Restricted
Territory which is, or as of Seller's engagement or participation would
become, engaged in any activity or business that is competitive with any
substance abuse testing or third party administration services of the
Business.
9.2 NON-DISCLOSURE OF TRADE SECRETS. During the Noncompetition
Period, Seller will not, without the prior written consent of Buyer, which
consent Buyer may give or withhold in its sole and absolute discretion:
(i) disclose Trade Secrets to any Person not a party to this Agreement;
(ii) permit the use or appropriation of Trade Secrets by any Person not a
party to this Agreement; (c) use or appropriate Trade Secrets for any
purpose other than the performance of its obligations under this Agreement;
or (d) otherwise misuse or misappropriate Trade Secrets.
9.3 COVENANT NOT TO SOLICIT. During the Noncompetition Period,
Seller will not, without the prior written consent of Buyer, which consent
Buyer may give or withhold in its sole and absolute discretion, either
directly or indirectly, either for itself or for any other Person, call
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upon, solicit, invite, entice, divert or take away, or attempt to solicit,
invite, entice, divert or take away, or in any way interfere with, the
relationships existing between Buyer and any of Buyer's employees or
contractors, or any other Person with whom or with which Buyer has a then
existing business relationship.
9.4 MODIFICATION. Although Seller and Buyer consider the
restrictions contained in this Article IX to be reasonable, if a final
judicial determination is made by a court of competent jurisdiction that
the time or geographical territory or any other restriction contained in
this Section is an unreasonable or otherwise unenforceable restriction, the
above provisions shall not be rendered void but shall be deemed amended to
apply as to such maximum time and territory and to such other extent as
such court may determine or indicate to be reasonable.
9.5 REMEDIES. The parties to this Agreement further acknowledge and
agree that Buyer's remedy at law for a breach or threatened breach of any
of the provisions of this Article IX would be inadequate and, in
recognition of that fact, in the event of a breach or threatened breach by
Seller of the provisions of this Section, Buyer shall be entitled to,
without posting any bond, and Seller agree not to oppose any request for,
equitable relief in the form of specific performance, a temporary
restraining order, a temporary or permanent injunction or any other
equitable remedy which may be available. Nothing contained herein shall be
construed as prohibiting Buyer from pursuing any other remedies available
to Buyer.
ARTICLE X
INDEMNIFICATION
---------------
10.1 SELLER'S INDEMNIFICATION. Buyer and its Agents shall neither
assume nor be responsible for, and Seller shall indemnify and defend Buyer
and its Agents against and hold Buyer and its Agents harmless from, any
claims of whatsoever kind and nature and any obligations, liabilities,
actions, suits, claims, demands, losses, damages or expenses of whatsoever
kind and nature, including attorneys' fees, which occur at any time in
consequence of or arising out of or in connection with: (i) any conduct by
Seller or its Agents relating to the operation of the Business, or other
action by Seller or its Agents concerning the Assets, prior to and
including the Closing Date; (ii) any unassumed or excluded contracts or
liabilities; (iii) any breach by Seller or its Agents of any representation
or warranty of Seller contained in this Agreement or any of the documents
related hereto; (iv) any misrepresentation or concealment or omission of a
material fact in any other document furnished or required to be furnished
by Seller in connection with this Agreement; and (v) any other material
breach by Seller or its Agents of this Agreement, or of any other document
furnished or required to be furnished by Seller in connection with this
Agreement, including the Management Agreement. Upon request, Seller shall
provide Buyer with written assurances that Seller will defend the same at
its own expense and with counsel of its own selection. If Seller shall
fail to provide such written assurances, or otherwise fails to defend,
Buyer, upon written notice to Seller, shall have the right, but not the
obligation, to undertake the defense of, and to compromise or settle
(exercising reasonable business judgment) the claim or other matter on
behalf, for the account and at the risk of Seller.
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10.2 BUYER'S INDEMNIFICATION. Seller and its Agents shall neither
assume nor be responsible for, and Buyer shall indemnify and defend against
and hold Seller and its Agents harmless from, any claims of whatsoever kind
and nature and any obligations, liabilities, actions, suits, claims,
demands, losses, damages or expenses of whatsoever kind and nature,
including attorneys' fees, in consequence of or arising out of or in
connection with: (i) the conduct of the Business after the Closing Date;
(ii) any Business Contracts or Assumed Obligations after the Closing Date;
(iii) any breach by Buyer or its Agents of any representation or warranty
of Buyer contained in this Agreement; (iv) any misrepresentation or
concealment or omission of a material fact in any other document furnished
or required to be furnished by Buyer in connection with this Agreement, and
(v) any other material breach by Buyer or its Agents of this Agreement, or
of any other document furnished or required to be furnished by Buyer in
connection with this Agreement, including the Management Agreement. Upon
request, Buyer shall provide Seller with written assurances that Buyer will
defend the same at its own expense and with counsel of its own selection.
If Buyer fails to provide such written assurances, or otherwise fails to
defend, Seller shall have the right, but not the obligation, to undertake
the defense of, and to compromise or settle (exercising reasonable business
judgment) the claim or other matter on behalf, for the account and at the
risk of Buyer.
10.3 INDEMNIFICATION FOR TAXES.
(a) From and after the Closing, Seller shall indemnify and save
the Buyer harmless from any and all liabilities for Taxes imposed upon
Seller for any taxable year prior to and including the taxable year in
which the Closing occurs, and for any other Taxes in respect of which
Seller is obligated to prepare returns, provided, however, that Buyer shall
be responsible for payment of all Taxes imposed upon Buyer and relating to
the period of Buyer's ownership and operation of the Business after the
Closing Date.
(b) If any claim for Taxes is asserted by any taxing authority
against Buyer that, if successful, would result in an indemnification
payment pursuant to this Section 10.3, Buyer shall promptly notify Seller
in writing of such claim (a "TAX CLAIM"), and such notice shall include in
reasonable detail the circumstances surrounding such claim. Upon the
posting of a surety bond as described below, Seller shall have the right to
control the handling and disposition of all Tax Claims including, without
limitation, (i) whether or not to contest or settle such Tax Claim at the
outset or at any stage, (ii) whether to pursue or forego any administrative
appeals and proceedings, (iii) if Seller chooses to undertake judicial
action with respect to a Tax Claim, the court or other judicial body before
which the action shall be commenced and (iv) the manner in which any such
contest is to be conducted. The rights of Seller pursuant to the preceding
sentence shall be contingent upon the posting of a surety bond issued by a
company reasonably acceptable to Buyer in an amount equal to the amount of
the Tax Claim, which bond may be exonerated at the request of Buyer in
order to satisfy the Tax Claim. If Seller fails to post the surety bond
described in the preceding sentence within ten (10) days following notice
to Buyer of the Tax Claim, Buyer shall have the right to handle and dispose
of the Tax Claim in such manner as it sees fit.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
11.1 EXPENSES AND TAXES.
(a) Except as otherwise provided in Section 8.4(a), the Parties
hereto shall each bear their own costs and expenses incurred in connection
with the transactions described herein, including, without limitation, the
fees and expenses of their counsel and accountants, and travel, meals and
lodging.
(b) Seller shall be liable and responsible for, and will duly
and timely pay, any transfer tax liability which may arise out of or result
from the transactions contemplated herein (including, without limitation
any tax imposed on the sale of the Assets pursuant to this Agreement).
(c) NOTICE. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have
been given when delivered personally, by nationally recognized overnight
courier, or when deposited in the United States mail, certified, and with
proper postage prepaid, addressed as follows:
SELLER: Global Med Technologies, Inc.
12600 West Colfax, Suite A-500
Lakewood, Colorado 80215
Attention: Michael I. Ruxin, Chief Executive Officer
BUYER: National Medical Review Offices, Inc.
5750 Wilshire Boulevard, Suite 275
Los Angeles, California 90036
Attention: President
If such notice, demand or other communication is served personally, service
shall be conclusively deemed made at the time of such personal service. If
such notice, demand, or other communication is given by mail, service shall
be conclusively deemed given five (5) business days after the deposit
thereof in the United States Mail addressed to the Party to whom such
notice, demand, or other communication is to be given, as hereinabove set
forth. Either Party may change its address for the purpose of receiving
notices, demands, or other communications provided herein by giving a
written notice in the manner stated above to the other Party stating such
change of address.
11.3 TIME. Time is of the essence of this Agreement.
11.4 FURTHER ASSURANCES. Each Party agrees to execute and deliver
such documents and instruments and take any actions desirable or necessary
to otherwise carry out the full intent and purpose of this Agreement.
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11.5 BINDING EFFECT. All the terms, provisions and conditions of this
Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the Parties hereto, and their successors and assigns.
11.6 SEVERABILITY OF PROVISIONS. If any provision of this Agreement
or the application thereof to any person or circumstance shall to any
extent be held in any judicial proceeding with appropriate jurisdiction to
be invalid or unenforceable, the remainder of this Agreement, or the
application of such provision to persons or circumstances other than those
to which it was held to be invalid or unenforceable, shall not be affected
thereby, and shall be valid and be enforceable to the fullest extent
permitted by law, but only if and to the extent such enforcement would not
materially and adversely frustrate any Party's essential objectives as
reflected in this Agreement.
11.7 CAPTIONS. The captions in this Agreement are included for
purposes of convenience only and shall not be considered a part of the
Agreement in construing or interpreting any provision hereof.
11.8 EXHIBITS AND SCHEDULES. All Exhibits, Schedules and Appendices
to this Agreement shall be deemed to be incorporated herein by reference
and made a part hereof as if set out in full herein.
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts by the Parties. All counterparts shall be construed together
and shall constitute one agreement. Each counterpart shall be deemed an
original hereof notwithstanding that less than all of the Parties may have
executed it.
11.10 GOVERNING LAW. This Agreement shall be governed by, and shall
be construed and enforced in accordance with, the internal laws of the
State of Colorado without reference to principles of conflicts of laws.
11.11 AMENDMENT; WAIVER. This Agreement may be amended, modified,
superseded, or cancelled only by a written instrument signed by each of the
Parties, and any of the terms, provisions, and conditions hereof may be
waived, only by a written instrument signed by the waiving Party. Failure
of a Party at any time or times to require performance of any provision
hereof shall not be considered to be a waiver of any succeeding breach of
such provision by the other Party.
11.12 ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding of the parties hereto regarding its subject matter and
supersedes all prior agreements, correspondence, arrangements and
understandings relating to the subject matter hereof. No representation,
promise, inducement or statement of intention has been made by any Party
which has not been embodied in this Agreement or the documents expressly
referred to herein.
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11.13 DISPUTE RESOLUTION. In the event of any controversy, claim or
dispute between any Parties arising out of or relating to this Agreement,
or the making, performance or interpretation of it (the "Dispute"), the
Parties agree to comply diligently and in good faith with the following
procedure in order to resolve the Dispute:
(a) A meeting (the "Initial Meeting") shall promptly be held at
which all Parties are present or represented by individuals with full
decision making authority regarding the Dispute. If within thirty (30)
days following the Initial Meeting the Parties have not succeeded in
negotiating a resolution of the Dispute, the Dispute shall be submitted to
mediation facilitated by a mediator ("Mediator"). Such Mediator shall be
a retired judge or mature practicing attorney. Each Party shall bear its
proportionate share of the costs of the mediation, including the Mediator's
fee. The Parties agree to participate in good faith in the mediation and
negotiations related thereto and in all mediation conferences.
(b) If within a period of thirty (30) days following the final
adjournment of the mediation conference(s), the Parties are unable to
resolve the Dispute, the Dispute shall be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association then existing, including, but not limited to, the
Commercial Arbitration Rules relating to selection of arbitrators and the
place of arbitration. Arbitrators will be persons experienced in
negotiating, making, and consummating acquisition agreements. Judgment
upon the arbitration award may be entered in any court having jurisdiction
over the subject matter of the controversy.
11.14 ATTORNEYS' FEES AND COSTS. In the event either party commences
legal action or arbitration to interpret or enforce this Agreement, or for
damages for any alleged breach hereof, the prevailing party in such action
shall be entitled to recover from the nonprevailing party reasonable
attorney's fees and costs as awarded by the court.
11.15 REPRESENTATION BY COUNSEL; INTERPRETATION. Each party to
this Agreement acknowledges that it has been represented by counsel in
connection with this Agreement and the transactions contemplated by this
Agreement. Accordingly, any rule of law, or any legal decision that would
require interpretation of this Agreement against the party that drafted it
has no application and is expressly waived.
11.16 ASSIGNMENT PROHIBITED. This Agreement may not be assigned,
delegated, or transferred by either Party, by operation of law or
otherwise, except with the prior written consent of the other Party, which
consent shall not be unreasonably withheld, delayed or conditioned.
[signatures continued on next page]
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IN WITNESS WHEREOF, the Parties have caused the execution and
delivery of this Agreement as of the date first above written.
"Buyer" "Seller"
NATIONAL MEDICAL GLOBAL MED TECHNOLOGIES, INC.
REVIEW OFFICES, INC. a Colorado corporation
a Michigan corporation
/s/ MURRAY I. LAPPE /s/ MICHAEL I. RUXIN
- ------------------------------- -----------------------------------
Murray I. Lappe Michael I. Ruxin
President President and Chief Executive Officer
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LIST OF EXHIBITS
EXHIBITS
- --------
EXHIBIT A Letter of Intent
EXHIBIT B Escrow Agreement
EXHIBIT C Management Agreement
EXHIBIT D Floor Plan
EXHIBIT E Office Lease (Buyer)
EXHIBIT F Noncompetition Agreement
EXHIBIT G Office Lease (Seller)
EXHIBIT H Bill of Sale
EXHIBIT I Assignment and Assumption Agreement
<PAGE>
LIST OF SCHEDULES
SCHEDULES
- ---------
2.1(a) Fixtures, Furniture and Equipment
2.1(b) Supplies and Consumables
2.1(c) Prepaid Expenses
2.1(d) Accounts Receivable
2.1(e) Accrued Accounts Receivable (Un-billed Revenue)
2.1(f) Copyrights and Tradenames
2.1(g) Business Contracts
2.1(i) Customer List
2.1(k) Included Telephone Numbers and Internet Addresses
2.2(b) Excluded Telephone Numbers and Internet Addresses
2.3(c) Buyer's Tenant Improvements
2.4(b) Accounts Payable
2.4(c) Accrued Accounts Payable
2.4(d) Accrued Expenses
2.4(e) Leases
2.5 Specific Excluded Liabilities
3.3 Working Capital Reconciliation
3.4 Purchase Price Allocation
4.1(a) Exceptions to Seller's Representations Re: Affiliates
4.1(e) Exceptions to Seller's Representations Re: No Violation
4.1(f) Exceptions to Seller's Representations Re: Compliance with
Laws
4.1(g) Financial Statements
4.1(h) Exceptions to Title
4.1(aa) Deposit Accounts
4.1(ac) Employees
4.1(ad) Employee Benefit Plans
4.1(af) Intercompany Obligations
5.1(f) Organic Changes Re: Seller
6.1(d) Consents Not Obtained
