ASSET PURCHASE AGREEMENT

 

<PAGE>

                                                                     Exhibit 2.1

 

 

                            ASSET PURCHASE AGREEMENT

 

         This Asset Purchase Agreement ("AGREEMENT") is made as of December 22,

2003, among Better Solutions, Inc., a Pennsylvania corporation ("BUYER"),

Superior Staffing Solutions, Inc., a Pennsylvania corporation ("Seller"), Craig

Fusting ("FUSTING"), Charles Smith ("SMITH"), and Reginald Belden ("BELDEN")

(Fusting, Smith and Belden shall be referred to collectively as "PRINCIPALS" and

together with the Seller, the "SELLER PARTIES"). Capitalized terms used herein

are defined in the text; an index of such terms is attached to the end of this

Agreement.

 

                                    PREAMBLE

 

         Seller is engaged in the business of making temporary and permanent

placements of nursing personnel in Pennsylvania (the "BUSINESS"). Seller desires

to sell to Buyer, and Buyer desires to purchase from Seller, substantially all

of Seller's assets used or useful in connection with, or otherwise relating to,

the Business, all upon the terms and subject to the conditions set forth herein.

Seller is also engaged in making temporary and permanent placements of nursing

personnel in North Carolina (the "NORTH CAROLINA OPERATIONS"), but none of the

assets, liabilities, or any other aspect of the North Carolina Operations will

be sold, assumed or otherwise transferred pursuant to this Agreement. Therefore,

the parties agree as follows with the intent to be legally bound.

 

                                    AGREEMENT

 

                                    ARTICLE I

                           PURCHASE AND SALE OF ASSETS

 

         1.01. Purchase and Sale of Assets. On the Closing Date, Seller will

sell to Buyer, and Buyer will purchase from Seller, all of Seller's rights,

title and interest in and to all of the assets and properties of Seller related

to or used or useful in connection with the Business other than the Excluded

Assets (collectively, the "ASSETS"), free and clear of any Liens, including

without limitation:

 

               (a) all equipment, computer hardware, software, machinery,

fixtures, tools, and furniture used or useful in connection with, or otherwise

related to, the Business (collectively, the "EQUIPMENT"), and all supplies,

spare parts and warranties relating to any of the Equipment;

 

               (b) all patents, registered and unregistered trademarks, service

marks, logos, designs, corporate and trade names, and registered and common law

copyrights, and all applications therefor, used or useful in connection with, or

otherwise related to, the Business;

 

<PAGE>

 

               (c) all inventions, discoveries, techniques, processes, methods,

formulae, designs, trade secrets, confidential information, know-how and ideas

used or useful in connection with or otherwise related to the Business (together

with the items listed in subsection (b) above, the "INTELLECTUAL PROPERTY");

 

               (d) all accounts receivable of the Business, including accounts

related to services provided to customers that have not yet been billed and thus

may not be reflected yet on Seller's books as a receivable (the "RECEIVABLES"),

deposits, investments, securities, advance payments, and all other claims,

causes of action, choses in action and rights of recovery and setoff relating to

the Business or any of the Assets that the Seller has against any Person;

 

               (e) to the extent transferable, all rights under (i) all

contracts, agreements, licenses, commitments and purchase orders with Seller's

customers for sales of Seller's services and (ii) all of Seller's contractual

provisions, agreements, licenses, or commitments constituting restrictive

covenants made by its employees, agents, representatives and Principals (the

"BUSINESS AGREEMENTS");

 

               (f) to the extent transferable, all rights under all permits,

licenses, franchises, certificates, authorizations, consents and approvals

obtained from or issued by any governmental entity that are necessary or

desirable for the ownership or operation of the Business or the ownership,

operation or use of any of the Assets (collectively, the "BUSINESS PERMITS");

 

               (g) all books, records, customer lists, files, ledgers, drawings,

specifications and manuals relating to the Business or any of the Assets, all

advertising materials relating to the Business and all other information

relating to the Business or any of the Assets, regardless of the form in which

such information appears; and

 

               (h) all goodwill of the Business or associated with any of the

Assets.

 

         1.02. Excluded Assets. Notwithstanding any other provision hereof, the

Assets do not include the following (the "EXCLUDED ASSETS"): (a) assets or

properties of Seller relating to the North Carolina Operations; (b) real

property; (c) automobiles; (d) any employee benefit plan, policy or arrangement,

whether formal or informal, sponsored, maintained, or contributed to by Seller,

including without limitation any retirement plan, 401(k) plan, or health plan,

and any trust fund, account, or other amount related to or held in connection

therewith; (e) leases (including without limitation leases for office space,

property (real or personal), equipment or any other asset); (f) rights under all

loans, lines of credit or similar obligations; (g) insurance policies; (h)

claims (and benefits to the extent they arise therefrom) and litigation against

third parties to the extent that such claims and litigation relate to any

Excluded Assets; (i) any books and records that such party is required by law to

retain, and any books and records relating solely to Excluded Assets or Excluded

Liabilities, provided, however, that Seller will

 

 

                                       2

<PAGE>

 

promptly provide Buyer with copies thereof upon Buyer's request; (j) cash on

hand as of December 19, 2003; and (k) any rights that accrue or will accrue to

Seller under this Agreement.

 

         1.03. Assumption of Liabilities. At the Closing, Buyer will assume and

become liable only for liabilities that (a) arise out of the Assets or the

Business as conducted after thirty (30) days after the Closing Date, (b) arise

out of events first occurring or conditions first existing thirty (30) days from

and after the date of the Closing, and (c) those expenses incurred in the

ordinary course of business during the thirty (30) day period from and after the

Closing Date and that are listed in Schedule 1.03, but excluding any contractual

liability or obligation to the provider billing for such expenses (collectively,

the "ASSUMED LIABILITIES"). All liabilities not meeting the forgoing conditions

or which arise out of or relate to the Excluded Assets (collectively, the

"EXCLUDED LIABILITIES"), will continue to be liabilities of Seller. Without

limiting the generality of the foregoing, Excluded Liabilities shall include (1)

Seller's accrued payroll liability for its administrative employees and outside

employees (as defined in Section 2.17) and (2) all loans, lines of credit ,

notes payable, trade payables and/or similar obligations (collectively

"PAYABLES").

 

         1.04. Purchase Price. The purchase price for the Assets (the "PURCHASE

PRICE") will be four million, two hundred thousand U.S. Dollars ($4,200,000.00),

which amount is subject to adjustment in accordance with Section 1.05, exclusdes

certain interest amounts and is payable as follows:

 

               (a) On the Closing Date, Buyer will pay one million, five hundred

thousand dollars ($1,500,000.00) to Seller.

 

               (b) Within thirty (30) days after the Closing Date, Buyer will

pay Seller an amount equal to one half of Seller's Surplus Receivables, if any,

as determined pursuant to Section 1.05(b).

 

               (c) On the Closing Date, Buyer will issue to Seller such number

of shares of Common Stock of World Health Alternatives, Inc. ("PARENT") as shall

be equal to (x) $400,000 divided by (y) the Average Trading Price. For purposes

of this Section 1.04, the "AVERAGE TRADING Price" means the average of the last

closing price of Parent's common stock on the OTC Bulletin Board for the ten

(10) trading days preceding and including the Closing Date, and rounded up to

the nearest whole number of shares (the "SHARES"). For example, if, over the ten

day period before the Closing Date, the Stock price closed at $1.10 for five

days and $1.00 for five days, the mean average Share price would be $1.05,

resulting in Seller receiving 380,952 Shares ($400,000/$1.05 = 380,952.38). No

fractional shares or cash in lieu of fractional shares will be issued. Buyer

will provide to Seller a certificate evidencing the Shares as soon as reasonably

practicable after the Closing Date, which certificate will contain a restrictive

legend in accordance with Section 4.06.

 

 

                                        3

<PAGE>

 

               (d) As soon as reasonably practicable following the Closing but

not later than thirty days thereafter, Buyer will pay one million, five hundred

thousand dollars ($1,500,000.00) to Seller.

 

               (e) On the first business day of each calendar quarter commencing

with the first calendar quarter of 2004 and ending with the third calendar

quarter of 2006, Buyer will make quarterly payments to Seller in the amount of

ninety-five thousand and thirty dollars ($95,030.00).

 

                (f) All payments to be made by Buyer hereunder shall be made via

wire transfer from PNC Bank (or other comparable commercial bank) to: Belden Law

Firm Escrow Account (held by Commercial National Bank).

 

         1.05. Post-Closing Adjustments.

 

               (a) Not more than ten (10) business days prior to the Closing

Date, Seller and Buyer shall, in good faith, using Seller's then available

financial information, jointly estimate in accordance with generally accepted

accounting principles ("GAAP") applied in a manner consistent with that used by

Seller in preparing its historical financial statements, (i) the amount of

Seller's Receivables as of such date (the "ESTIMATED RECEIVABLES (ii) the amount

of Seller's Payables as of such date (the "ESTIMATED PAYABLES", and (iii) the

positive difference, if any, between Estimated Receivables minus Estimated

Payables (the "ESTIMATED SURPLUS RECEIVABLES"). If Seller and Buyer cannot agree

on such estimates, then such estimates will be the average of their respective

good faith determinations.

 

               (b) Within twenty-five days after the Closing Date, Buyer will

prepare and deliver to Seller a final statement (the "FINAL STATEMENT) of (i)

the amount of Receivables as of the Closing Date (the "FINAL RECEIVABLES), (ii)

the amount of Payables as of the Closing Date (the "FINAL PAYABLES"), (iii) the

positive difference, if any, between Final Receivables minus Final Payables (the

"FINAL SURPLUS RECEIVABLES"), and (iv) Seller's portion of Final Surplus

Receivables, if any, which portion shall equal one-half (1/2) of Final Surplus

Receivables ("SELLER'S SURPLUS RECEIVABLES"), which statement shall be prepared

in accordance with GAAP, applied in a manner consistent with that used by Seller

in preparing its historical financial statements. Seller will have a period of

five days after its receipt of the Final Statement to review the same and to

notify Buyer of any disputes regarding the same. As part of such review, Seller

and its advisors will have full access to Buyer's work papers, to the preparers

of the Final Statement and to the books and records on which the Final Statement

is based. If Seller notifies Buyer of any dispute within such five day period,

then (A) the parties will negotiate in good faith in an effort to resolve such

dispute and (B) Buyer's payment obligation under Section 1.04(b) shall be

suspended until the dispute is resolved. If the parties are unable to resolve

such dispute within five days after Buyer receives notice of

 

 

                                        4

<PAGE>

 

the same, then either party may submit such dispute to an independent accounting

firm of recognized national or regional standing mutually acceptable to Buyer

and Seller for resolution or, if they cannot agree, a Big Four accounting firm

chosen by lot (after elimination of those Big Four accounting firms having

relationships with the parties) for determination within thirty days after

submission of such dispute to such firm. Each of Buyer and Seller will be

afforded the opportunity to present to such accounting firm any material related

to the determination and to discuss the determination with such accountants. The

determination by such accounting firm will be conclusive and binding upon the

parties. The fees and expenses of such accounting firm will be shared equally by

Seller and Buyer.

 

               (c) Buyer shall have the right to assume all or any portion of

the Final Payables pursuant to written notice from Buyer to Seller. If Buyer

chooses to exercise this right, Seller shall take all reasonable actions

requested by Buyer in connection with effectuating this right.

 

               (d) To the extent that Final Receivables are determined by Buyer

to be uncollectible, such uncollectible amounts may be offset by Buyer against

payments otherwise owing to Seller hereunder. An amount will be considered

"uncollectible" if, after Buyer's reasonable commercial efforts to collect the

same, it is 150 days past due and, if a reasonable payment arrangements exist,

the debtor is not fully complying with those arrangements.

 

               (e) Seller shall use all funds provided pursuant to Section 1.04

on the Closing Date and all funds provided subsequent to the Closing Date to

satisfy its Payables within thirty (30) days after the Closing Date and shall

provide to Buyer proof of such satisfaction. Buyer shall have the right to make

any post-Closing payment(s) otherwise due to Seller under this Agreement

directly to Seller's creditor(s) for application against Seller's Payables in

lieu of paying Seller.

 

         1.06. Assignment of Value. Buyer and Seller will use their best efforts

to comply with the applicable requirements of the Internal Revenue Code of 1986,

as amended (the "CODE"), by preparing a schedule to be executed at the Closing

reflecting the allocation of the Purchase Price to the respective Assets, which

allocation will be used by them in preparing their respective income tax

returns; provided, that any failure to agree on such allocation will not relieve

either party of its obligations hereunder.

 

 

                                       5

<PAGE>

 

                                   ARTICLE II

                    REPRESENTATIONS AND WARRANTIES OF SELLER

 

         Seller Parties, jointly and severally, hereby represent and warrant to

Buyer as of the date hereof and as of the Closing Date as follows:

 

         2.01. Organization and Qualification. Seller is a corporation duly

organized, validly existing and in good standing in the State of Pennsylvania.

Seller is duly qualified to do business as a foreign corporation and is in good

standing in all jurisdictions in which the ownership of its properties or the

nature of its business makes such qualification necessary, except to the extent

that the failure to be so qualified has not resulted in, and is not reasonably

likely to result in, a material adverse change in the business, operations,

financial condition or prospects of the Assets or Business (a "MATERIAL ADVERSE

CHANGE"), and all of such jurisdictions are listed on Schedule 2.01.

 

         2.02. Power and Authority. Seller has the corporate power and authority

to own its assets, to conduct its business as presently conducted and to

execute, deliver and perform this Agreement and the other Transaction Documents.

 

         2.03. Execution and Binding Effect. This Agreement has been, and on the

Closing Date the other Transaction Documents will be, duly and validly executed

and delivered by the Seller Parties and constitute (or upon such execution and

delivery will constitute) legal, valid and binding obligations of the Seller

Parties enforceable against the Seller Parties in accordance with their

respective terms.

 

         2.04. No Breach, Default, Violation or Consent. Except as otherwise

disclosed on Schedule 2.04, the execution, delivery and performance by Seller of

this Agreement and the other Transaction Documents do not and will not:

 

               (a) violate Seller's charter or bylaws;

 

               (b) breach or result in a default (or an event which, with the

giving of notice or the passage of time, or both, would constitute a default)

under any Business Agreement or Business Permit, or require any consent under or

give to others any rights of termination, acceleration, suspension, revocation,

cancellation or amendment of, any Business Agreement or Business Permit;

 

               (c) breach or otherwise violate any order, writ, judgment,

injunction or decree issued by any governmental entity (each a "GOVERNMENTAL

ORDER") which names a Seller Party or is directed to a Seller Party, the

Business or any of the Assets;

 

               (d) violate any law, rule, regulation, ordinance or code of any

governmental entity (each a "GOVERNMENTAL RULE"); or

 

 

                                       6

<PAGE>

 

               (e) require any consent, authorization, approval, exemption or

other action by, or any filing, registration or qualification with, any person

or entity (each a "PERSON").

 

         2.05. Financial Statements. Seller has previously delivered to Buyer

correct and complete copies of (a) its reviewed balance sheets and statements of

income, retained earnings and cash flows as of and for its fiscal years ended

December 31, 2001 and 2002, including the footnotes thereto, and (b) unaudited

interim balance sheets and statements of income, retained earnings and cash

flows as of and for its three fiscal quarters ended September 30, 2003 (the

"CURRENT FINANCIAL STATEMENTS" and, together with the items described in clause

(a) above, the "FINANCIAL STATEMENTS"). The Financial Statements present fairly

the financial condition of Seller as at the end of the periods covered thereby

and the results of its operations and the changes in its financial position for

the periods covered thereby, and were prepared in accordance with GAAP applied

on a consistent basis throughout the periods covered thereby subject, in the

case of the Current Financial Statements, to year-end audit adjustments (which

will not be material except as otherwise disclosed on Schedule 2.05) and the

lack of footnotes and other presentation items. Except as and to the extent

otherwise disclosed in the Current Financial Statements and on Schedule 2.05,

Seller has no liabilities of any kind, whether direct or indirect, fixed or

contingent or otherwise, other than (i) executory obligations under Business

Agreements which are not required to be set forth in the Current Financial

Statements in accordance with GAAP and (ii) liabilities incurred in the ordinary

course of business since September 30, 2003 (the "FINANCIAL STATEMENT DATE").

 

         2.06. Tax Matters. Except as otherwise disclosed on Schedule 2.06:

 

               (a) all tax returns and reports required to be filed by Seller

have been properly prepared and filed;

 

               (b) Seller has paid, or has made adequate reserves on its books

for the payment of, all taxes, interest, penalties, assessments and deficiencies

shown to be due on such tax returns and reports or claimed to be due by any

governmental entity or which Seller is required to withhold on behalf of any

other Person;

 

               (c) the reserves and provisions for taxes on the books of Seller

are adequate for all open years and for its current fiscal period and properly

classify such tax obligations as either current or deferred;

 

                (d) Seller has no knowledge of any proposed assessment of any

additional taxes by any governmental entity or of any basis for any such

assessment (whether or not reserved against);

 

 

                                       7

<PAGE>

 

               (e) the federal income tax liabilities of Seller have been

finally determined by the Internal Revenue Service (the "IRS"), or the time for

audit has expired, for all fiscal periods ending on or prior to September 30,

2003;

 

               (f) Seller is not currently being audited by any governmental

entity, and no such audit is pending or, to Seller's knowledge, threatened;

 

               (g) Except for its election to an S Corporation on _____________

, 2000, Seller has not made any tax elections which (i) were in effect in any

past year for which the time for audit has not expired, (ii) are currently in

effect or (iii) will be in effect at any future time; and

 

               (h) Seller has not given any waiver or extension of any period of

limitation governing the time of assessment or collection of any tax.

 

         2.07. Litigation. Except as otherwise disclosed on Schedule 2.07, there

is no pending or, to Seller's knowledge, threatened investigation, action,

claim, demand or proceeding against, involving or relating to Seller, Seller's

employees or agents or the Principals, involving or relating to the Business or

any of the Assets by or before any governmental entity, arbitrator, mediator or

other forum. Schedule 2.07 sets forth a correct and complete list of each

investigation, action, claim, demand and proceeding (a) described in the

preceding sentence; and (b) in which Seller has been involved since January 1,

1998, including without limitation as the plaintiff or initiating party,

together with the parties thereto, the alleged basis therefor, the relief sought

therein and the current status thereof.

 

         2.08. Absence of Certain Changes and Events. Except as otherwise

disclosed on Schedule 2.08, since the Financial Statement Date:

 

                (a) Seller has not incurred any material obligation or liability

with respect to the Business except for normal trade obligations incurred in the

ordinary course of business;

 

               (b) no casualty, loss or damage has occurred with respect to any

of the Assets, whether or not the same is covered by insurance;

 

               (c) Seller has not sold, transferred or otherwise disposed of any

of its properties or assets related to the Business or any interest therein, or

agreed to do any of the foregoing, except pursuant to sales of services in the

ordinary course of business;

 

               (d) Seller has not written off as uncollectible any of the

Receivables, or written down the value of any of the Assets, except in each case

in the ordinary course of business and at a rate no greater than during the

12-month period ending on the Financial Statement Date;

 

 

                                       8

<PAGE>

 

               (e) Seller has not waived or released any of its rights with

respect to the Business or the Assets or permitted any of such rights to lapse;

 

               (f) no executive officer or other key employee of Seller has left

his or her employment with Seller;

 

               (g) since November 14, 2002, Seller has not granted, and is not

committed to grant, any salary or wage increases to any of its employees

employed in connection with the Business;

 

               (h) Seller has not made, or committed to make, any capital

expenditures in excess of $750.00 in the aggregate;

 

                (i) there has been no payment, discharge or other satisfaction of

any liabilities of Seller, whether direct or indirect, fixed or contingent or

otherwise, other than the satisfaction, in the ordinary course of business, of

liabilities reflected on the Current Financial Statements or incurred in the

ordinary course of business since the Financial Statement Date;

 

               (j) Seller has not introduced any material change with respect to

the Business, including without limitation with respect to the products or

services it sells, the areas in which such products or services are sold, its

methods of providing its services, products, marketing techniques or its

accounting methods; and

 

               (k) no Material Adverse Change, and no event which is reasonably

likely to result in a Material Adverse Change, has occurred.

 

         2.09. Customers. Schedule 2.09 sets forth a correct and complete list

of each of Seller's top twenty (20) customers in terms of dollar volume of

services purchased during Seller's fiscal year ended December 31, 2002, and

during the nine months ending on the Financial Statement Date, and indicates

with respect to each the name and address, dollar volume and nature of the

relationship. Seller is not required to provide any material bonding or other

financial security arrangements in connection with any of its transactions with

any such customer. Since the Financial Statement Date, no such customer has

terminated its relationship with, or materially reduced its business activity

with, Seller, and Seller has no knowledge that any such customer intends to

terminate its relationship with, or materially reduce its business activity

with, Seller.

 

         2.10. Constituent Documents and Governmental Rules. Seller is in

compliance with (a) its charter and bylaws and (b) all Governmental Rules

applicable to Seller, the Business or the Assets, except, in each case, for such

non-compliance as, individually or in the aggregate, has not resulted in, and is

not likely to result in, a Material Adverse Change.

 

 

                                       9

<PAGE>

 

         2.11. Governmental Orders. Schedule 2.11 sets forth a correct and

complete list of all Governmental Orders which name Seller or are directed to

Seller, the Business or any of the Assets, together with the governmental entity

who issued the same and the subject matter thereof. Seller is in compliance with

all such Governmental Orders, except for such non-compliance as, individually or

in the aggregate, has not resulted in, and is not likely to result in, any

Material Adverse Change.

 

         2.12. Business Permits. Schedule 2.12 sets forth a correct and complete

list of all Business Permits and indicates for each whether the same are

transferable to Buyer and, if so, whether consent to such transfer is required.

Such Business Permits have been validly acquired, are in full force and effect

and represent all governmental permits, licenses, franchises, certificates,

authorizations, consents and approvals necessary under applicable Governmental

Rules for Buyer to carry on the Business as now being conducted and to own,

occupy or use the Assets. No violations have been recorded against any such

Business Permit, no citation, notice or warning has been issued by any

governmental entity with respect to any such Business Permit, no investigation

or hearing has been held by or before any governmental entity with respect to

any such Business Permit, Seller has not received any notice from any

governmental entity that it intends to cancel, revoke, terminate, suspend or not

renew any such Business Permit and Seller has no knowledge of any basis for any

of the foregoing. Seller is in compliance with all such Business Permits, except

for such non-compliance as, individually or in the aggregate, has not resulted

in, and is not likely to result in, a Material Adverse Change.

 

         2.13. Personal Property.

 

               (a) Schedule 2.13 sets forth a correct and complete list of all

agreements applicable to any of the Equipment.

 

               (b) Except as otherwise disclosed on Schedule 2.13, the Equipment

is in good repair and operating condition and is suitable for the purposes for

which it is generally used. The Equipment constitutes all equipment, machinery,

fixtures, patterns, computer hardware and software and furniture necessary to

conduct the Business as currently conducted.

 

               (c) Except as otherwise disclosed on Schedule 2.13, all

Receivables (i) represent amounts receivable for goods actually delivered or

services actually provided (or, in the case of non-trade receivables, represent

amounts receivable in respect of other bona fide business transactions), (ii)

are not subject to any material defenses, counterclaims or rights of setoff,

(iii) have been or will be billed and are or will be generally due and payable

within 30 days after billing and (iv) are fully collectible in the ordinary

course of business except, in the case of receivables arising prior to the

Financial Statement Date, to the extent of the reserves set forth in the

 

 

                                       10

<PAGE>

 

Current Financial Statements and, in the case of receivables arising after such

date, to the extent of a reasonable allowance for bad debts. Schedule 2.13 sets

forth the total amount of Receivables outstanding as of the Closing Date,

together with the aging of such Receivables, from the due date thereof, based on

the following schedule: 0-30 days; 61-90 days; over 90 days; and over 150 days.

 

         2.14. Intellectual Property. Schedule 2.14 sets forth a correct and

complete list of (a) all patents, registered and unregistered trademarks,

service marks, logos, corporate and trade names and registered and unregistered

copyrights, and all applications therefor, included in the Intellectual

Property, (b) all licenses or other agreements pursuant to which any Person has

the right to use any Intellectual Property owned by Seller and (c) all licenses

or other agreements pursuant to which Seller has the right to use any

Intellectual Property owned by others. Seller has the lawful right to use all of

the Intellectual Property, and no such use infringes upon the lawful rights of

any other Person. To Seller's knowledge, no Person is using any Intellectual

Property in a manner which infringes upon the lawful rights of Seller. The

Intellectual Property constitutes all intellectual property necessary to conduct

the Business as currently conducted.

 

         2.15. Title Matters. Except as otherwise disclosed on Schedule 2.15,

Seller has good and marketable title to all Assets purported to be owned by it,

with such Assets being free and clear of all liens, claims and encumbrances of

any nature whatsoever (collectively, "LIENS"). On the Closing Date, Seller will

transfer to Buyer title to the Assets, free and clear of all Liens. The Assets

constitute all of the assets and properties, tangible and intangible, necessary

to operate the Business in the manner presently operated by the Seller.

 

         2.16. Pension and Welfare Plans. Schedule 2.16 sets forth a true,

correct and complete list of all Pension Plans and Welfare Plans (collectively,

"PLANS"). Except as otherwise disclosed on Schedule 2.16:

 

               (a) each Plan and each related trust has been established,

maintained, administered and funded in all material respects in compliance with

ERISA, the Code and all other applicable Governmental Rules;

 

               (b) no transaction or omission has occurred with respect to any

Plan or related trust that could subject Seller or any other Person who owns or

operates the Business to any tax or penalty under ERISA, the Code or other

applicable Governmental Rules;

 

               (c) none of the Plans or related trusts have any unfunded

liabilities;

 

               (d) none of the Plans (i) is a "multiemployer plan" (as defined

in Section 3(37) of ERISA), (ii) is a "defined benefit plan" (as defined in

Section 3(35) of

 

 

                                       11

<PAGE>

 

ERISA), (iii) is subject to the minimum funding requirements of Section 302 of

ERISA or Section 412 of the Code or (iv) provides medical, health, life

insurance or other welfare-type benefits to former employees of Seller or any

ERISA Affiliate;

 

               (e) there are no actions, suits, claims, demands, investigations

or other proceedings pending or, to Seller's knowledge, threatened against any

Plan or related trust or any fiduciary thereof;

 

               (f) there are no outstanding Governmental Orders that name any

Plan or related trust or any fiduciary thereof or are directed to any Plan or

related trust, any fiduciary thereof or any assets thereof; and

 

               (g) each Plan and related trust that is intended to be

tax-qualified meets the requirements of a tax-qualified plan or tax exempt trust

under Section 401(a) and Section 501(a), respectively, of the Code, has received

a favorable determination letter from the IRS as to the qualification of such

Plan and the tax-exempt status of the related trust (or has filed with the IRS

for such a determination letter within the applicable remedial amendment period

or is a standardized plan for which the prototype plan sponsor has received a

favorable determination letter from the IRS as to the qualification of the

standardized plan), and nothing has occurred since the date of such

determination letter that could reasonably be expected to adversely affect the

qualification of such Plan or the tax-exempt status of the related trusts.

 

         As used in this Agreement the following terms have the following

meanings:

 

                  "ERISA" means the Employee Retirement Income Security Act of

1974 and the regulations promulgated thereunder, as amended.

 

                  "ERISA AFFILIATE" means any trade or business which, together

with Seller, is treated as a single employer under Section 4001(b)(1) of ERISA

or Sections 414(b), (c), (m) or (o) of the Code.

 

                  "PENSION PLAN" means any "employee pension benefit plan" as

defined in Section 3(2) of ERISA which is maintained for past or present

employees of Seller or any ERISA Affiliate or with respect to which Seller or

any ERISA Affiliate has any current or potential liability, including without

limitation any withdrawal liability.

 

                  "WELFARE PLAN" means (i) any "employee welfare benefit plan"

as defined in Section 3(1) of ERISA which is maintained for past or present

employees of Seller or any ERISA Affiliate or with respect to which Seller or

any ERISA Affiliate has any current or potential liability and (ii) any other

plan or program maintained for past or present employees of Seller, including

without any limitation health insurance plan, life insurance plan, option plan,

bonus plan, savings plan or severance plan.

 

 

                                       12

<PAGE>

 

         2.17. Personnel Matters.

 

                (a) Schedule 2.17 sets forth a correct and complete list of (i)

all directors, executive officers and Principals of Seller, (ii) all other

employees of or consultants to the Business, including "outside employees"

(i.e., those employees who provide services directly at the customers' site),

(iii) the current job title or relationship to Seller of each such Person

described in clauses (i) and (ii) above, (iv) the amount of compensation

(including bonuses and commissions) paid to each such Person during Seller's

fiscal year ended December 31, 2002, through the Financial Statement Date, and

what each of them is expected to receive in Seller's current fiscal year, (v)

any employee benefits or perquisites available to any such Person that are not

generally available to employees of Seller or which are utilized by any such

Person, and (vi) the number of hours billed by each outside employee during

Seller's fiscal year ended December 31, 2002, and through the Financial

Statement Date. To Seller's knowledge, no Persons identified pursuant to the

previous sentence have threatened to terminate his or her employment with the

Seller. Seller reasonably believes that at least 90% of the outside employees

will accept employment with Buyer after the Closing.

 

                (b) Except as otherwise disclosed on Schedule 2.17, Seller is not

a party to any employment, consulting or similar agreement or obligation,

written or oral, with any Person related to the Business.

 

               (c) Except as otherwise disclosed on Schedule 2.17, (i) no

employees of Seller related to the Business are represented by any labor union

or similar organization, (ii) Seller is not party to any collective bargaining

or similar agreement covering any of its employees related to the Business and

(iii) no labor union or similar organization or group of employees has made a

demand for recognition, filed a petition seeking a representation proceeding,

given Seller notice of any intention to hold an election of a collective

bargaining representative or engaged in any organizing activities at any time

during the past three years.

 

               (d) Except as otherwise disclosed on Schedule 2.17, (i) no

strike, work stoppage, contract dispute or other labor disturbance involving any

employees of Seller related to the Business currently exists or, to Seller's

knowledge, is threatened and (ii) no investigation, action, claim, demand or

proceeding by or before any governmental entity which relates to allegedly

unfair or discriminatory employment or labor practices or the violation of any

Governmental Rule relating to employment or labor practices with respect to the

Business is pending or, to Seller's knowledge, threatened.

 

         2.18. Insurance. Schedule 2.18 sets forth a correct and complete list

of all insurance policies of which Seller is the owner, insured, loss payee or

beneficiary and which relate to the Business or any of the Assets and indicates

for each such policy any pending claims thereunder. Except as otherwise

disclosed on Schedule 2.18: (a) there

 

 

                                       13

<PAGE>

 

has been no failure to give any notice or present any material claim under any

such policy in a timely fashion or as otherwise required by such policy; (b) all

premiums under such policies which were due and payable on or prior to the date

hereof have been paid in full; (c) no such policy provides for retrospective or

retroactive premium adjustments; (d) Seller has not received notice of

disallowance of any claim under any such policy; (e) Seller has not been refused

any insurance, nor has its coverage been limited by any carrier; and (f) since

January 1, 2000, Seller has maintained, or been the beneficiary of, general

liability and professional liability policies reasonable in both scope and

amount in light of the risks attendant to the Business and which provide

coverage comparable to coverage customarily maintained by others in similar

lines of business, and such policies have been "occurrence" policies and not

"claims made" policies. Seller has provided to Buyer a correct and complete loss

run for each such policy during the past five (5) years.

 

         2.19. Other Material Business Agreements. Schedule 2.19 sets forth a

correct and complete list of all Business Agreements other than (a) Business

Agreements listed on any of Schedule 2.13 through Schedule 2.18, (b) Business

Agreements involving the payment by or to Seller, or creating any liability of

Seller (whether direct or indirect, fixed or contingent), of less than $2,500.00

over the term thereof (exclusive of Business Agreements which require

performance by the Company other than the payment of money or the delivery of

goods or services) and (c) Business Agreements which constitute, create,

evidence or secure any Excluded Assets or Excluded Liabilities.

 

         2.20. Status of Business Agreements. Each Business Agreement is in full

force and effect and is enforceable against Seller and, to Seller's knowledge,

the other parties thereto, in accordance with its terms. Seller is in compliance

with ea