EXHIBIT 10.10
STOCK PURCHASE AGREEMENT
     THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into
this 12th day of September, 2008 by and among American Claims Evaluation, Inc.,
a New York corporation (“Purchaser”), John Torrens, an individual with an
address at 6368 East Seneca Turnpike, Jamesville, NY 13078 (the “Majority
Shareholder”), Kyle Palin Torrens, an individual with an address at 6368 East
Seneca Turnpike, Jamesville, NY 13078 (“K. Torrens”), and Carlena Palin Torrens,
an individual with an address at 6368 East Seneca Turnpike, Jamesville, NY 13078
(“C. Torrens”). Each of the Majority Shareholder, K. Torrens and C. Torrens are
sometimes hereinafter individually referred to as a “Seller” and collectively as
the “Sellers”.
RECITALS
          WHEREAS, Interactive Therapy Group Consultants, Inc., a New York
corporation (the “Company”) is engaged in the business of providing a
comprehensive range of services to children with developmental delays and
disabilities (the “Business”) and owns or leases the assets and properties
related thereto;
          WHEREAS, the Sellers own fifty one (51) shares of common stock, no par
value, of the Company (“Capital Stock”), which represents all of the outstanding
shares of capital stock of the Company (collectively, the “Company Shares”); and
          WHEREAS, Purchaser desires to purchase, and Sellers desire to sell,
all of the Company Shares, all on the terms and conditions set forth in this
Agreement.
          NOW, THEREFORE, in consideration of the mutual promises and other
consideration provided for in this Agreement, and intending to be legally bound,
the parties hereby agree as follows:
ARTICLE I
PURCHASE OF COMPANY SHARES AND PURCHASE PRICE
     1.1 Purchase and Sale of Company Shares. Upon the terms and subject to the
conditions hereof, at the Closing (as defined in Section 2.1), Sellers shall
sell to Purchaser, and Purchaser shall purchase from Sellers, all of the Company
Shares, free and clear of all mortgages, liens, pledges, security interests,
charges, claims, restrictions and encumbrances of any nature whatsoever
(“Liens”).
     1.2 Purchase Price. The consideration for the Company Shares to be acquired
(the “Purchase Price”) will be: $570,000.00 (the “Base Purchase Price”) by wire
transfer at the Closing, subject to adjustment as provided in Section 1.4 below.
The Purchase Price, prior to the adjustment pursuant to Section 1.4, shall be
delivered by Purchaser to Sellers at the Closing as follows: (i) $428,529.42 by
wire transfer to the Majority Shareholder; (ii) $18,235.29 by wire transfer to
K. Torrens; (iii) $$18,235.29 by wire transfer to C. Torrens; and (iv)
$105,000.00 paid to the escrow agent pursuant to the Escrow Agreement as
provided in Section 1.3 hereof.
     1.3 Escrow. At the Closing, the parties hereto agree to place an aggregate
of $105,000 of the Base Purchase Price in an interest bearing escrow account to
be held by JPMorgan Chase Bank (the “Escrow Account”) pursuant to the terms of
an Escrow Agreement in the form of Exhibit 1.3 attached hereto (the “Escrow
Agreement”). The Escrow Account shall secure the Majority Shareholder’s
obligation to (i) indemnify Purchaser for amounts paid by the Company in
connection with the claim of the New York State Insurance Fund for unpaid
worker’s compensation premiums in the amount of $81,354.00 which amounts shall
also include any penalties, fines and legal fees incurred by the Company or
Purchaser in connection with the payment or settlement of such claim for
workers’ compensation premiums (collectively, the “Workers’ Compensation Claim”)
and (ii) secure the collectability of the A/R with respect to services rendered
in the conduct of the Business prior to the Closing Date (as defined in Section

 

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2.1). For purposes of this Agreement, “A/R” shall mean all accounts receivable,
notes, and other amounts receivable, and the proceeds thereof, together with
unpaid financing and other charges accrued thereon.
     1.4 Minimum Adjusted Tangible Net Deficiency. The Minimum Adjusted Tangible
Net Deficiency of the Company (“Minimum Net Deficiency”), as hereinafter
defined, as of the close of business on the Closing Date, shall be
$(180,000.00). In the event that the Minimum Net Deficiency is more or less than
$(180,000.00), then the Base Purchase Price payable pursuant to Section 1.2
hereof shall be increased or reduced, as the case may be, dollar for dollar, by
the amount of any excess or shortfall.
     The Minimum Net Deficiency shall be determined by the firm of Holtz
Rubenstein Reminick LLP (“HRR”), the independent public accountants (“Auditing
Accountants”), whose determination shall be final and binding, except in the
event of manifest error, gross negligence or fraud. The calculation of Minimum
Net Deficiency shall be tentatively made (the “Tentative Calculation”) based
upon the Company’s unaudited balance sheet for the period ended on the last day
of the month immediately proceeding the month in which the Closing Date occurs.
Such Tentative Calculation shall be finalized ( the “Final Calculation”) based
upon the Company’s audited financial statements for the period ending with the
Closing Date as prepared by the Auditing Accountants (the “Closing Balance
Sheet”). The Final Calculation shall be prepared and submitted to the parties
hereto by such Auditing Accountants within forty-five (45) days after the
Closing Date.
     For purposes of this Agreement, the Minimum Net Deficiency shall mean and
be computed by the aggregate of the Company’s tangible assets, less all
liabilities, fixed or contingent. Such calculation shall be made by the Auditing
Accountants in accordance with U.S. generally accepted accounting principles
consistently applied (“GAAP”) and, to the extent consistent therewith in
accordance with the Company’s regular practices and procedures, and further in
accordance with, but not limited to, the following:

  (i)   Fixed assets, including but not limited to furniture, fixtures,
automobiles and machinery and equipment, shall be taken at the value at which
these items appear on the Company’s books, less reserves for depreciation and
obsolescence;     (ii)   Goodwill and other intangible assets of the Company
shall be deemed to be of no value;     (iii)   The value of inventory on hand
shall be established by an inventory and shall be valued at the lower cost or
fair market value on a first-in, first-out basis;     (iv)   Cash in the bank or
on hand shall be taken at face value;     (v)   A/R shall be taken at their net
value after setting up reserves for bad debts, if required; and     (vi)  
Provision and/or reserves for all liabilities, present or contingent, including
taxes shall be made.

     In the event the Minimum Net Deficiency is less than $(180,000.00), then,
within fifteen days of delivery of the Closing Balance Sheet, Purchaser shall
pay Sellers an amount equal to such deficiency. In the event that the Minimum
Net Deficiency exceeds $(180,000.00), then, within fifteen days of delivery of
the Closing Balance Sheet, Sellers shall pay Purchaser an amount equal to such
excess.
     1.5 Transfer Taxes. Any transfer, recording or similar taxes due as a
result of the transactions provided for herein shall be paid by Purchaser.
     1.6 Employment of Majority Shareholder. Effective as of the Closing, the
Company shall employ Majority Shareholder in an executive capacity on terms and
conditions satisfactory to each pursuant to a Majority Shareholder Employment
Agreement, in the form of Exhibit A hereto, executed simultaneously herewith.
     1.7 Election of Majority Shareholder to Board of Directors. For so long as
Majority Shareholder is employed by the Company under the Majority Shareholder
Employment Agreement or any successor agreement, Purchaser shall ensure that
Majority Shareholder holds a seat on the Company’s board of directors.

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ARTICLE II
CLOSING
     2.1 Closing; Closing Date. The closing (the “Closing”) of the purchase and
sale of the Assets under this Agreement shall occur simultaneously with the
execution of this Agreement on September 10, 2008. The date on which the Closing
occurs is referred to herein as the “Closing Date”.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
     3.1 Representations and Warranties of the Majority Shareholder. The
Majority Shareholder represents and warrants to Purchaser (and hereby
acknowledges that Purchaser is relying on such representations and warranties in
connection with the purchase of the Company Shares) that, as of the date of the
Closing:
          (a) Organization, Qualification and Corporate Power of the Company.
The Company is a corporation validly existing and in good standing under the
laws of the State of New York. The Company does not have any subsidiaries and
does not own any shares of capital stock or other securities of any other Person
(as hereinafter defined). The Company is duly authorized to conduct business and
is in good standing under the laws of each other jurisdiction where such
qualification is required. The Company has full corporate power and authority to
carry on the business in which it is engaged and to own and use the properties
owned and used by it.
          (b) Authorization. Each Seller has full power to enter into, execute
and deliver this Agreement and each and every agreement and instrument
contemplated hereby to which he or she is or will be a party and to perform his
or her obligations hereunder and thereunder.
          (c) No Breach or Conflict.
                    (i) Except as provided in Schedule 3.1(c) hereto, the
execution, delivery and performance of this Agreement and the other agreements,
documents and instruments executed and delivered by Sellers in connection
herewith, the performance of Sellers’ obligations hereunder and thereunder and
the consummation by Sellers of the transactions contemplated hereby and thereby
do not and will not (a) conflict with, violate or result in any breach of the
terms, conditions or provisions of the Company’s Certificate of Incorporation or
Bylaws, (b) conflict with, violate or result in any breach of, or constitute a
default (or constitute an event or circumstance that with notice or lapse of
time, or both, would result in a default) or give rise to any right of
termination, cancellation or acceleration, or loss of any right or benefit
under, or create any mortgage, lien, pledge, security interest, charge, claim,
restriction or encumbrance of any nature whatsoever (“Liens”) (other than the
Liens disclosed in Schedule 3.1(g) hereto (the “Permitted Liens”)) pursuant to,
any of the terms, conditions or provisions of (x) any agreement to which the
Company is a party or by which the Company or any of its assets may be bound, or
(y) any statute, ordinance, law, common law, rule, regulation, permit, order,
code, writ, judgment, award, injunction or decree of the United States, or any
state, territory, county, city, municipality, province or any subdivision
thereof, or any foreign jurisdiction, or any court, arbitral body or arbitrator
(whether formal or informal), administrative or regulatory agency or unit or
commission thereof, in each case applicable to the Company or by which any of
its assets may be bound (a “Requirement of Law;” any such court, arbitral body
or arbitrator, administrative or regulatory agency or unit or commission being a
“Governmental Entity”), or (z) require any filing, declaration or registration
with, or permit, consent, approval, waiver, clearance, order or authorization
of, or the giving of any notice to, any Governmental Entity or other Person
(including, without limitation, under the WARN Act, or any state statute of
similar import). For purposes of this Agreement, “Person” means a natural
person, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, any other business entity or Governmental Entity (or any
department, agency or political subdivision thereof).
                    (ii) Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, by Sellers will
(i) violate any Requirement of Law or other restriction of any Governmental
Entity to which Sellers are subject, (ii) conflict with, result in a breach of,
constitute

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a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under, any
commitment to which Sellers are a party or by which they are bound or to which
any of their assets is subject, (iii) result in the imposition or creation of a
Lien upon or with respect to any Company Shares or (iv) result in the
suspension, revocation, impairment, withdrawal, forfeiture (for dormancy or
otherwise) or non-renewal of any material permit, license or authorization
related to the Business. Sellers need not give any notice to, make any filing
with, or obtain any authorization, consent or approval of any Governmental
Entity or other third party in order to consummate the transactions contemplated
by this Agreement.
          (d) Third-Party Consents. Each Person whose consent to the execution,
delivery or performance of this Agreement by Sellers is legally or contractually
required is identified on Schedule 3.1(d) hereto (the “Third-Party Consents”).
          (e) Enforceability. This Agreement has been and each and every
agreement and instrument contemplated hereby to which Sellers are or will be a
party will be, duly executed and delivered by Sellers and constitutes, and will
constitute, a valid and binding obligation of Sellers enforceable in accordance
with its terms except as may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws affecting
creditor’s rights generally or by the principles of equity.
          (f) Fees and Utilities. Except for the Workers’ Compensation Claim,
the Company has paid in full any and all license fees, copyright fees, business
permit costs, unemployment and worker’s compensation insurance contributions and
utility bills related to the Business that were required to be paid on or prior
to the date hereof.
          (g) Property. Except with respect to liens arising in connection with
the Permitted Liens, the Company has good, valid and marketable title to and
owns all its assets, free and clear of all Liens. Except for the Permitted
Liens, all of the assets that are not owned by the Company are leased or
licensed pursuant to valid and existing leases or license agreements and such
interests are not subject to any Liens. The Company’s tangible assets are in
good operating condition and repair, subject to ordinary wear and tear. The
Company’s assets are sufficient to conduct the Business as it is currently
conducted by the Company, and include all of the assets used in or relating to
the Business.
          (h) Capital Stock Ownership. The authorized capital stock of the
Company consists of 51 Company Shares, all of which are outstanding. All of the
outstanding Company Shares are held of record by the Seller as set forth in
Schedule 3.1(h) hereto. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other commitments that could require the Company to issue, sell or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the Company. There are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of the capital stock of the Company.
          (i) Company Shares. Sellers hold of record and own beneficially the
number of Company Shares set forth in Schedule 3.1(h), free and clear of any
restrictions on transfer (other than restrictions under the Securities Act of
1933, as amended, and state securities laws), Taxes, Liens, options, warrants,
purchase rights, Commitments, equities, claims, and demands. Sellers are not a
party to any option, warrant, purchase right, or other commitment (other than
this Agreement) that could require them to sell, transfer or otherwise dispose
of any capital stock of the Company. Sellers are not a party to any voting
trust, proxy or other agreement or understanding with respect to the voting of
any capital stock of the Company.
          (j) Financial Statements. Attached as Exhibit 3.1(j) hereto is an
unaudited balance sheet of the Company as at July 31, 2008 (the “Interim Balance
Sheet”) and the related unaudited statements of income and cash flows for the
eight (8) months then ended, including the notes thereto (collectively, the
“Financial Statements”).
               (1) The Financial Statements have been prepared from the books
and records of the Company and fairly present in all material respects the
financial position, results of operations and cash flows of the Company as of
the dates and for the periods set forth therein, all in accordance with GAAP
throughout the periods covered thereby, except as otherwise noted therein,
subject in the case of interim financial statements, to normal recurring
year-end adjustments (the effect of which will not, individually or in the
aggregate, be significant) and the absence of notes (that, if presented, would
not differ materially from those included in the balance sheet of the Company as
at December 31, 2007).

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               (2) Except as set forth in Schedule 3.1(j), there are no
differences between the Financial Statements and the financial records
maintained and accounting methods applied by the Company for Tax purposes.
               (3) The Company’s books and records are complete and correct in
all material respects and have been maintained in accordance with good business
practice.
               (4) Sellers do not know of any basis for the assertion against
the Company of any liability or loss contingency, except as set forth in
Schedule 3.1(j) or in the Financial Statements.
          (k) No Material Adverse Change. Since January 1, 2008, the Company has
operated the Business in the ordinary course of business. Since January 1, 2008,
there has not been: (i) any material adverse change in the assets, liabilities,
operations, business, prospects, financial condition or results of operations of
the Business, or (ii) any material damage, destruction, loss or casualty to any
property or assets of the Company used in connection with the Business, whether
or not covered by insurance. Since January 1, 2008, the Company has not incurred
any fees or expenses or removed any assets or incurred any liabilities related
to the Business except in the ordinary course of business. For the purposes of
this Section 3.1(j), a “material adverse change” is any change that is
materially adverse to the assets, business, financial condition, results of
operations or prospects of the Company, taken as a whole, or has had a material
adverse effect on the ability of the Sellers to perform their obligations
hereunder, except for changes arising from or relating to: (i) general business,
industry or economic conditions; (ii) local, regional, national or international
political or social conditions, including the engagement by the United States in
hostilities, whether or not pursuant to the declaration of a national emergency
or war, or the occurrence of any military or terrorist attack; (c) changes in
financial, banking, or securities markets (including any disruption thereof and
any decline in the price of any security or any market index); (d) changes in
GAAP; (e) changes in Requirements of Law; (f) the taking of any action
contemplated by this Agreement; (g) the announcement of the transactions
contemplated by this Agreement; or (h) any actions or omissions by the Purchaser
or any of its Affiliates.
          (l) Tax Matters. Except as set forth on Schedule 3.1(l) hereto, the
Company has (a) timely filed in accordance with all applicable Requirements of
Law (taking into account valid extensions) all Returns required to be filed by
it, (b) paid all Taxes shown to have become due pursuant to such Returns, and
(c) paid all Taxes for which a notice of, or assessment or demand for, payment
has been received or which are or may become otherwise due or payable. All
Returns filed by the Company with respect to Taxes were true and complete in all
material respects as of the date on which they were filed or as subsequently
amended as of the date of amendment. Prior to the date hereof, the Company has
provided to Buyer copies of all revenue agent’s reports and other written
assertions of deficiencies or other liabilities for Taxes of the Company with
respect to past periods. All amounts required to be collected or withheld by the
Company with respect to Taxes have been duly collected or withheld and any such
amounts that are required to be remitted to any taxing authority have been duly
remitted. There are no waivers or extensions of any applicable statute of
limitations for the assessment or collection of Taxes with respect to any Return
that relates to the Company which remain in effect. There are no Tax rulings,
requests for rulings, transfer pricing agreements, closing agreements or similar
agreements relating to the Company. There are no pending examinations of the
Company’s Tax Returns, and other than any examination set forth on
Schedule 3.1(l) there have been no such examinations. The Company is not a party
to, nor is it bound by, any Tax allocation or Tax sharing agreement or
arrangement and has no current contractual or legal obligation (actual or
potential) to indemnify any other Person with respect to Taxes (including as a
result of being part of the same consolidated, combined or affiliated group). No
taxing authority in a jurisdiction where the Company or any shareholder of the
Company does not file Returns has made a claim, assertion or threat that the
Company is or may be subject to taxation by such jurisdiction. Any adjustment of
Taxes of the Company made by the Internal Revenue Service (“IRS”) in any
examination which is required to be reported to the appropriate state
authorities has been reported, and any additional Taxes due with respect thereto
have been paid. For purposes of this Agreement, (i) “Tax” or “Taxes” shall mean
any liability for any federal, state, county, local, foreign or other income,
excise, sales, withholding, value-added, capital stock, transfer, use, gross
receipts, franchise, employment, payroll related, property or any other tax of
any sort, including interest, penalties and additions to tax thereon and
obligations under any tax sharing, tax allocation or similar agreement to which
the Company or any Seller is a party attributable to any period ending on or
before the Closing Date relating to the Company or any Seller’s income, assets
and operations, including the Business and its assets, or arising out of the
transactions contemplated by this Agreement and (ii)

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“Returns” means any report, return, statement, claim, estimate, declaration,
notice, form or other information supplied or required to be supplied to a
taxing authority in connection with Taxes.
          (m) Compliance with Laws. Except as disclosed on Schedule 3.1(m)
hereto, the Company is in compliance with, and since January 1, 2002, has
conducted and is conducting the Business and using its assets in compliance
with, all Requirements of Law, and the Company has not received, at any time
since January 1, 2002, any notice that it is in breach of any thereof. No event
has occurred which, with or without the passage of time or the giving of notice,
or both, would constitute a non-compliance with or violation of any Requirement
of Law. The Company is not subject to any Requirement of Law or, to the best
knowledge of Sellers, any proposed Requirement of Law, which individually or in
the aggregate has had or could have an adverse effect on the Business or the
Company’s assets or on Purchaser’s ability to acquire any property or conduct
the Business in substantially the same manner as it is currently conducted by
the Company. Except as disclosed on Schedule 3.1(m), the Company has not had any
disputes with, and to the best knowledge of Sellers, has not been subject to any
investigation by, any Governmental Entity.
          (n) Litigation. Except as set forth in Schedule 3.1(n) hereto, there
is no claim, action, suit, proceeding, inquiry or investigation (a “Claim”)
pending or, to the knowledge of Sellers, threatened, by or against the Company
or any Seller, or any affiliate, director, officer, key employee or sales
representative of the Company, or with respect to the Business or the
transactions contemplated hereby, whether at law or in equity or before or by
any Governmental Entity, which could have an adverse affect on the Company, the
Business, or the Company’s assets, and, to the knowledge of Sellers, there is no
valid basis for any such Claim.
          (o) Clients. Schedule 3.1(o) hereto sets forth by dollar volume for
each of the two calendar years ending on December 31, 2007, and December 31,
2006, the ten (10) largest clients or customers of the Company (“Clients”) of
the Company in connection with the Business. Except as specifically identified
on Schedule 3.1(o), no single Client is of material importance to the Business.
To the knowledge of Sellers, the relationship between the Company and each of
its Clients is a good commercial working relationship. Except as disclosed on
Schedule 3.1(o), since July 31, 2007, no Client of the Company has:
(i) terminated, or threatened in writing to terminate, its relationship with the
Company; or (ii) materially decreased, or threatened to materially decrease, its
usage of the Company’s services. To the knowledge of Sellers, the consummation
of the transactions contemplated hereby will not adversely affect the
relationship of the Company with any such Client. True and correct copies of all
Client lists of the Company have been delivered to Purchaser.
          (p) Operations of the Business. Except as set forth on Schedule 3.1(p)
hereto, from the date of the Interim Balance Sheet through the date hereof the
Company, in connection with the Business, has not:
               (1) canceled or compromised any claims, or waived any other
rights, or sold, transferred, abandoned or otherwise disposed of any assets or
properties of the Business, other than in the ordinary course of business;
               (2) made, or agreed to make any change in: (i) its accounting
methods or practices; or (ii) its depreciation or amortization policies or
rates;
               (3) materially changed, or agreed to materially change, any of
its business policies or practices that relate to the Business, including,
without limitation, advertising, marketing, pricing, purchasing, personnel,
sales, budget policies or practices;
               (4) entered into, or agreed to enter into, any lease (whether as
lessor or lessee) on behalf of the Business, except in the ordinary course of
business;
               (5) granted or suffered, or agreed to grant or suffer, any Lien
on any of the assets or properties of the Business being sold hereunder or
incurred any indebtedness for borrowed money (except for the Permitted Liens);
               (6) entered into or amended, or agreed to enter into or amend,
any contract or other agreement pursuant to which the Company has agreed either:
(i) to indemnify any party on behalf of the Business; (ii) to refrain from
competing with any party with respect to the Business;

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               (7) sold, transferred or otherwise disposed of, permitted to
lapse, or disclosed to any Person, any material Intellectual Property, except
for disclosures in the ordinary course of business consistent with past
practices and in furtherance of the interests of the Business;
               (8) incurred or assumed, or agreed to incur or assume, any
liability (whether or not currently due and payable) relating to the Business or
any of its assets except in the ordinary course of business;
               (9) entered into or amended, or agreed to enter into or amend,
any material contract related to the Business (for purposes of this clause (9),
a “material” contract is a contract providing for payments to or from the
Company of at least $10,000 in the aggregate in any 12-month period) other than
in the ordinary course of business; or
               (10) agreed in writing or otherwise to take any actions described
in this Section 3.1(p).
          (q) Insurance.
               (1) No Seller has received, or been informed by a third party of
the receipt by it of, any notice from any insurance carrier or organization:
(i) threatening a suspension, revocation, modification or cancellation of any
insurance policy or a material increase in any premium in connection therewith
or (ii) informing Seller that any coverage will or may not be available in the
future on substantially the same terms as now in effect. To the knowledge of
Sellers, there is no basis for the issuance of any such notice or the taking of
any such action.
               (2) Schedule 3.1(q) hereto contains a complete list of all of the
Company’s policies of insurance currently in effect, including the effective
date and expiration date thereof.
               (3) Schedule 3.1(q) sets forth in respect of the Company, by
year, for the current policy year and each of the three (3) preceding policy
years: (A) a summary of the loss experience under each policy of insurance;
(B) a statement describing each claim under a policy of insurance for an amount
in excess of five thousand dollars ($5,000), which sets forth: (i) the name of
the claimant; (ii) a description of the policy by insurer, type of insurance and
period of coverage; and (iii) the amount and a brief description of the claim;
and (C) a statement describing the loss experience for all claims in excess of
$5,000 that were self-insured, including the number and aggregate cost of such
claims.
          (r) Client Contracts. Schedule 3.1(r) hereto sets forth a complete
list of all of the Company’s contracts, engagement letters and other
arrangements with Clients (“Client Contracts”). Sellers have provided Purchaser
with a complete copy of each Client Contract and each Client Contract is (and
immediately after the Closing will be) in full force and effect and valid,
binding and enforceable in accordance with its terms against the Company and, to
the Sellers’ knowledge, any other parties thereto. The Company has and, to the
knowledge of the Sellers, all other parties to each of the Client Contracts
have, performed all obligations required to be performed to date under the
Client Contracts in all material respects, and neither the Company nor any such
other party is in material default or arrears under the terms thereof, and no
condition exists or event has occurred which, with the giving of notice or lapse
of time or both, would constitute a material breach or default thereunder. The
Client Contracts do not include any obligations to Clients that have not been
incurred in the ordinary course of the Company’s business.
          (s) Intellectual Property.
               (1) Except as set forth Schedule 3.1(s) hereto, there are no:
(i) patents, registered trademarks, registered copyrights, websites or domain
names owned or ordinarily used in connection with the Business; or, with the
exception of “click-wrap,” “shrink-wrap” or similar licenses with respect to
factory pre-installed or “off-the-shelf” computer software, (ii) patents,
trademarks, copyrights, technology or processes used in connection with the
Business pursuant to a license or other right granted by a third party. The
Intellectual Property constitutes all of the intellectual property which is
necessary, or used, to operate the Business.

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               (2) No Claims are pending or, to the knowledge of Sellers,
threatened, questioning the validity of any of the Intellectual Property or
asserting that the Company is infringing or otherwise adversely affecting the
rights of any Person with regard to any intellectual property of such Person. To
the knowledge of Sellers, no Person is infringing the rights of the Company with
respect to any Intellectual Property.
               (3) All of the Intellectual Property owned by the Company is
owned solely by the Company, free and clear of all Liens (except for the
Permitted Lien), and all Intellectual Property that is licensed or otherwise
used by the Company is licensed pursuant to license agreements that, to the
knowledge of Sellers, are valid and in full force and effect.
               (4) To the knowledge of Sellers, and subject to the consent of
any third party required under any license agreement or similar Contract, the
consummation of the transactions contemplated by this Agreement will not result
in the Purchaser’s inability to use the Intellectual Property following the
Closing.
               (5) For purposes of this Agreement, “Intellectual Property” shall
mean registered or unregistered names, domain names, websites, telephone
numbers, trademarks, patents, patents pending, trade or brand names, service
marks, copyrights (including, applications for, rights to acquire and other
rights with respect to patents, patents pending, trademarks, trade names,
service marks and copyrights), designs, licenses, franchises, data, know-how,
trade secrets, formulae, technology, processes, inventions, technology,
statutory names, marketing and management know-how, together with any goodwill
associated therewith and all rights of action on account of past, present and
future unauthorized use or infringement thereof, including, without limitation,
the tradename “Interactive Therapy Group,” the items described in
Schedule 3.1(s), and/or all other intellectual property, whether registered or
unregistered, owned or licensed or ordinarily used by the Company in respect of
the Business (together with all drawings, plans, specifications and other
documents relating thereto).
          (t) Environmental Matters. The Company is, and at all times has been,
in compliance with all Requirements of Law relating to the environment or public
health or safety (an “Environmental Law”). The Company does not have any
liability under any Environmental Law with respect to the real property leased
by it, or with respect to any other properties and assets (whether real,
personal, or mixed) in which the Company (or any predecessor) has or had an
interest. There are no Hazardous Materials (as defined below) present on or in
the environment at the real property owned or leased by the Company. No notices
of any violation or alleged violation of any Environmental Law relating to the
operations or properties of the Company have been received by Sellers. For the
purposes of this Section 3.1(t), “Hazardous Materials” means any substance,
material or waste which is regulated by any governmental authority, including
any waste which is defined as a “hazardous waste,” “hazardous material,”
“hazardous substance,” “extremely hazardous waste,” “restricted hazardous
waste,” “biohazardous waste,” “biomedical waste,” “medical waste,” “sharps,”
“contaminant,” “pollutant,” “toxic waste” or “toxic substance” under any
provision of Environmental Law, and including petroleum, petroleum products,
asbestos, presumed asbestos-containing material or asbestos-containing material,
radon and urea formaldehyde, radioactive materials, polychlorinated biphenyls,
mold, mildew and fungus.
          (u) Equipment. Schedule 3.1(u) hereto includes a complete list of all
Equipment owned or leased by the Company with an initial, undepreciated value of
at least $500. Copies of all leases under which the Equipment are being leased
by the Company (the “Equipment Leases”) have been provided by Sellers to
Purchaser. All payments required to be paid by the Company pursuant to each
Equipment Lease have been paid when due and the Company is not otherwise in
default in meeting its obligations thereunder. To the knowledge of Sellers, the
lessor under each Equipment Lease is not in default in meeting its obligations
thereunder.
          (v) Premises. Sellers have made available to Purchaser a copy of each
real property lease to which the Company is a party (“Leases”). All payments
required to be paid by the Company pursuant to each Lease have been paid when
due and the Company is not otherwise in default in meeting its obligations
thereunder. To the knowledge of Sellers, the landlord under each Lease is not in
default in meeting any of its obligations under each such Lease. The premises
covered by the Leases are the only premises used by the Company in connection
with the Business.
          (w) Employees. Schedule 3.1(w) hereto sets out a complete list of all
employees (including any employees on pregnancy or parental leave or short-term
disability leave) of the Company (collectively, the “Employees”), along with the
following information related to each, as applicable: (i) salary (including any
written or oral understanding or arrangement regarding compensation);
(ii) current bonus compensation arrangement; (iii)

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deferred compensation arrangement; (iv) profit sharing; (v) pension;
(vi) retirement; (vii) stock option; (viii) stock purchase; (ix) hospitalization
insurance; and (x) other plans or arrangements providing benefits to such
Employee. The Company is not a party to, or otherwise bound by, any labor or
collective bargaining agreement and, to the best knowledge of Sellers, there are
no current or threatened attempts to organize or establish any labor union or
association or employee association. There are no Claims pending or, to the best
knowledge of Sellers, threatened, against the Company under any Requirement of
Law relating to employment, including Claims involving wages, hours, human
rights, withholding, or the payment of unemployment insurance or taxes. Sellers
have furnished to Purchaser a true and correct copy of each written employment
agreement (as amended to date) with an Employee.
          (x) Benefit Plans. Schedule 3.1(x) hereto sets forth a true and
complete list of each “employee benefit plan” (as such term is defined in the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)
Section 3(3)), whether or not subject to ERISA, and each employment, consulting,
independent contractor, bonus, incentive, equity purchase, option or other
equity-based, deferred compensation, loan, severance, termination, retention,
change of control, collective bargaining or other agreement with any works
council or association, profit sharing, pension, retirement, 401(k), vacation,
medical or other welfare, disability, fringe benefit and any other employee or
retiree benefit or compensation plan, funding mechanism, agreement, program,
policy or other arrangement, whether or not subject to ERISA or written or
unwritten or legally binding or not, and (i) that is maintained, sponsored or
contributed to by the Company or any ERISA Affiliate for the benefit of any
current or former employee, officer or independent contractor of the Company, or
the beneficiaries or dependents of any such individual, or (ii) under which the
Company may have or could have any outstanding liability (“Employee Benefit
Plan”). “ERISA Affiliate” means any trade or business, whether or not
incorporated, that, together with the Company, is or would have been at any date
of determination occurring within the preceding six years, treated as a single
employer within the meaning of Section 414 of the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder (“Code”).
               (1) Each Employee Benefit Plan has been established, operated and
administered in all respects in accordance with its terms, and each such
Employee Benefit Plan is in compliance with all applicable laws. All
contributions (including all employer contributions and employee salary
reduction contributions) and premiums required to have been paid by the Company
and its ERISA Affiliates to any Employee Benefit Plan under the terms of any
such Employee Benefit Plan or its related trust, insurance contract or other
funding arrangement, or pursuant to any applicable law have been paid within the
time prescribed by any such Employee Benefit Plan, trust, contract or
arrangement, or applicable Requirement of Law. All contributions and premiums
for any period ending on or before the Closing Date that are not yet due have
been made to each such Employee Benefit Plan or its related trust, insurance
contract or other funding arrangement, or have been accrued in accordance with
past practice and custom.
          (y) A/R and Work-in-Progress. All A/R and unbilled work-in-progress
related to the Business have been bona fide created in the ordinary course of
business and the provision for doubtful accounts established in connection
therewith is reasonable. Except as set forth in Schedule 3.1(y) hereto, none of
such A/R have been extended, re-billed or rolled over in order to make them
current nor are any of the A/R subject to valid setoffs or counterclaims.
          (z) Improper Payments. Neither the Company nor any Seller nor any of
its directors, officers, agents, employees or other Persons acting on its
behalf, has directly or indirectly made or received any illegal or improper
payments to or from, or directly or indirectly provided any illegal or improper
benefit or inducement for, any governmental official (whether domestic or
foreign), supplier, client or other Person, in an attempt to influence any such
Person to take or to refrain from taking any action relating to the Business.
          (aa) Certain Claims. There is no pending Claim that has been commenced
against the Company or any Seller that challenges, or that may have the effect
of preventing, delaying, making illegal or otherwise interfering with, any of
the transactions contemplated by this Agreement. To the knowledge of Sellers, no
such Claim has been threatened.
          (bb) Directors and Officers. Schedule 3.1(bb) hereto lists the
directors and officers of the Company as of the date hereof. Except as set forth
on Schedule 3.1(bb), there are no outstanding powers of attorney executed on
behalf of the Company.
          (cc) Material Commitments. Schedule 3.1(cc) hereto sets forth a
complete list of all of the material commitments to which the Company is a party
and/or to which the Company or the Business may be bound

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or subject (“Material Commitments”) other than commitments which arise in the
ordinary course of business. Sellers have provided Purchaser with a complete
copy of each Material Commitment, and (i) each Material Commitment is (and
immediately after the Closing will be) in full force and effect and valid,
binding and enforceable in accordance with its terms against the Company, and to
the Sellers’ knowledge, any other parties thereto, (ii) neither the Company nor
the other parties to any Material Commitment is, to Sellers’ knowledge, in
material default under any Material Commitment (beyond any applicable notice and
cure period), and (iii) to the Sellers’ knowledge, no condition exists which,
with the passage of time or the giving of notice, or both, will become a
material default under any Material Commitment.
          (dd) Outstanding Indebtedness. Except as set forth in Schedule 3.1(dd)
hereto immediately prior to the Closing, the Company has no indebtedness for
borrowed money.
          (ee) Disclosure. This Agreement does not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements contained herein not misleading in light of the circumstances
under which they were made.
     3.2 Representations and Warranties of Purchaser. Purchaser represents and
warrants to Sellers (and hereby acknowledges that Sellers are relying on such
representations and warranties in connection with the sale of the Company
Shares) that, as of the Closing:
          (a) Organization. Purchaser is a corporation organized, validly
existing, and in good standing under the laws of the state of New York.
Purchaser is qualified to do business in all jurisdictions where the conduct of
its business requires it to be so qualified.
          (b) Authorization. Purchaser has full corporate power to enter into,
execute and deliver this Agreement and each and every agreement and instrument
contemplated hereby to which Purchaser is or will be a party and to perform its
obligations hereunder and thereunder, and the execution, delivery and
performance hereof and thereof and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
corporate action.
          (c) No Breach or Conflict. Except as set forth on Schedule 3.2(c)
hereto, neither the execution and delivery of this Agreement or any other
agreement or instrument contemplated hereby, the consummation of the
transactions contemplated hereby or thereby nor the performance of this
Agreement or any other agreement or instrument contemplated hereby in accordance
with their respective terms and conditions by Purchaser (a) violates any
provision of Purchaser’s Certificate of Incorporation, Bylaws or other governing
instruments; (b) requires the approval or consent of any Governmental Entity or
of any other Person, or (c) conflicts with or results in any breach or violation
of, results in a material modification of the effect of, otherwise causes the
termination of or gives any other contracting party the right to terminate, or
constitutes (or with notice or lapse of time or both would constitute) a default
under, any agreement, indenture, note, bond, loan, instrument, lease,
conditional sale contract, mortgage, license, franchise, commitment or other
binding arrangement, certificate of incorporation, bylaw, judgment, decree, or
Requirement of Law applicable to Purchaser.
          (d) Third-Party Consents. Each Person whose consent to the execution,
delivery or performance of this Agreement by Purchaser is legally or
contractually required is identified on Schedule 3.2(d) hereto (the “Purchaser
Third-Party Consents”).
          (e) Certain Claims. There is no pending Claim that has been commenced
against Purchaser that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the transactions
contemplated by this Agreement. To the knowledge of Purchaser, no such Claim has
been threatened.
          (f) Enforceability. This Agreement has been and each and every
agreement and instrument contemplated hereby to which Purchaser is or will be a
party will be, duly executed and delivered by Purchaser and constitutes, and
will constitute, a valid and binding obligation of Purchaser enforceable in
accordance with its terms except as may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws affecting
creditor’s rights generally or by the principles of equity.
     3.3 “Knowledge” Defined. For purposes of this Agreement, whenever any
statement in this Agreement is made by a Person “to the knowledge” of such
Person, or words of similar intent or effect: (i) an individual shall be deemed
to have “knowledge” of a particular fact or other matter if: (1) such individual
is actually

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aware of such fact or other matter, (2) such individual received written notice
of such fact or other matter, or (3) a prudent individual could be expected to
have discovered or otherwise become aware of such fact or other matter in the
normal course of performing his or her duties; and (ii) a Person (other than an
individual) shall be deemed to have “knowledge” of a particular fact or other
matter if: (1) any individual who is serving as a director, executive officer,
general partner, trustee or similar capacity of such Person has knowledge of
such fact or other matter, (2) such Person received written notice of such fact
or other matter, or (3) a prudent individual in any such position could be
expected to have discovered or otherwise become aware of such fact or other
matter in the normal course of performing his or her duties.
ARTICLE IV
COVENANTS OF THE PARTIES
     Except and to the extent agreed otherwise in writing, Sellers, jointly and
severally, and Purchaser covenant and agree as follows:
     4.1 Access. Sellers shall, for a period of six (6) years from the Closing
Date, (i) have access to, and the right to copy, at their expense, for bona fide
business purposes and during usual business hours upon reasonable prior written
notice to Purchaser, all books and records relating to the operation of the
Business prior to the Closing; and (ii) have access to employees of the Company
for bona fide purposes in connection with any pending claim, litigation or
proceeding, the facts of which the employee may have knowledge during usual
business hours upon reasonable prior notice to Purchaser. Purchaser shall retain
and preserve all such books and records for such six (6) year period.
     4.2 Expenses. Except to the extent otherwise expressly provided in this
Agreement, the parties to this Agreement shall bear their respective direct and
indirect expenses incurred in connection with the negotiation, preparation,
execution and performance of this Agreement and the transactions contemplated
hereby, including, without limitation, all fees, charges, disbursements and
expenses of agents, representatives, counsel and accountants.
     4.3 Post-Closing Third Party Consents and Governmental Permits and
Approvals. Seller shall use commercially reasonable best efforts to obtain
necessary third-party consents and governmental permits and approvals to the
transactions contemplated by this Agreement prior to the Closing; however, the
parties agree that it will be impossible for Seller to obtain all such consents,
permits and approvals by such time and that Seller’s obtaining such consents,
permits and approvals shall not be a condition precedent to Purchaser’s
performance of its obligations hereunder. As such, following the Closing, the
parties shall cooperate in good faith to obtain all necessary consents, permits
and approvals not obtained prior to the Closing.
     4.4 Privacy of Education Records. Seller and Purchaser shall, at all times,
comply with the applicable provisions of the Family Educational Rights and
Privacy Act, 20 U.S.C. § 1232g, as amended, the Individuals with Disabilities
Education Act, 20 U.S.C. § 1400 et seq., as amended, and all applicable
regulations promulgated thereunder, in connection with the transfer,
maintenance, use and disclosure of any “education records” or other confidential
student or patient information included in the Company’s assets.
     4.5 Further Assurances. Sellers and Purchaser will at any time after
closing execute any and all such further assurances as the other party may
reasonably request in order to carry out the transactions contemplated
hereunder.
     4.6 Tax Provisions.
          (a) Sellers shall be responsible for the preparation of the Company’s
federal and state Tax Returns for the taxable years which end on or prior to the
Closing Date and such Tax Returns shall be prepared in a manner consistent with
the prior practice of the Company. Sellers shall provide Purchaser with an
opportunity to review and comment on such Tax Returns at least ten (10) Business
Days prior to the date that such Returns are due to be filed (taking into
account extensions of the due date thereof). Any Company Tax due with respect to
such Tax Returns or, in the case of any Tax Returns for taxable years which
include the Closing Date, the portions of such Tax relating to pre-Closing Tax
periods (including in each case payments of estimated Tax) shall, to the extent
not

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accrued by the Company (the amount accrued by the Company shall be paid by the
Company) be paid by Sellers to the Company on the later of two (2) days before
the first date on which such Tax becomes due and payable without interest or
penalties or two (2) days after Purchaser’s request for such payment, and upon
receipt by the Company shall be promptly paid over by the Company to the
relevant taxing authority. If the amount due pursuant to the immediately
preceding sentence is not paid by Sellers by the due date specified therein, the
same shall carry interest, without duplication of interest included in the
definition of Taxes, from (and including) such due date to (but not including)
the date of payment at an annual rate of interest equal to the reference or
“prime” rate from time to time of JPMorgan Chase Bank.
          (b) The Majority Shareholder shall indemnify and hold harmless,
without duplication, Purchaser and the Company (collectively, the “Tax
Indemnified Parties”) from and against any and all Liabilities and Losses of the
Company or Purchaser based upon, resulting from or arising out of Company Taxes
arising (or deemed to arise) with respect to pre-Closing Tax periods. In the
case of any Tax relating to a taxable period of the Company that includes but
does not end on the Closing Date, the portion of such Tax relating to the
portion of such taxable period which ends on the Closing Date shall be computed
for purposes of clause (a) of this Section 4.6 in a manner which is consistent
with the same computation undertaken for purposes of the preparation of the
Financial Statements.
          (c) After the Closing Date, Sellers shall make reasonably available to
Purchaser, and Purchaser shall make reasonably available to Sellers, all
information, records or documents within their possession or control relating to
Tax Liabilities or potential Tax Liabilities of the Company with respect to
pre-Closing Tax periods, and shall preserve all such information, records and
documents until the expiration of any applicable statute of limitations or
extensions thereof. Sellers shall afford Purchaser, and Purchaser shall afford
Sellers, the right to take extracts therefrom and to make copies thereof to the
extent reasonably necessary to permit Purchaser or Sellers to prepare Returns,
to conduct negotiations with tax authorities, and to implement the provisions
of, and to investigate any claims between the Parties arising under this
Agreement. Sellers and Purchaser shall also cooperate, in all other respects,
with each other as is reasonably necessary for Purchaser or Seller to prepare
such Returns, conduct any such negotiations, and investigate any such claims
referred to herein.
          (d) As between Purchaser and Sellers, Purchaser shall to the maximum
extent possible pay, and shall file all necessary Returns and other
documentation with respect to, all transfer (excluding transfer gains),
documentary, sales, use, stamp, registration and other such Taxes (including any
penalties, interest, additions to tax, and costs and expenses relating to such
Taxes) incurred in connection with the consummation of the transactions
contemplated by this Agreement. If Sellers are required by applicable Law to pay
such Taxes and/or file such Returns, Purchaser shall prepare such Returns and/or
pay Seller at Closing or promptly thereafter any amounts Sellers are obligated
to pay (as applicable). Sellers shall cooperate with Purchaser in the
preparation of all such Returns, and, if required by applicable Law, Sellers
will join in the execution of any such Returns and other documentation.
          (e) A. Subject to the provisions of this subsection (e) of this
Section 4.6, Sellers shall have the right, at their own expense, to control,
manage and be responsible for any audit, contest, claim, proceeding or inquiry
with respect to Taxes of the Company for any Tax period ending on or before the
Closing Date and shall have the right to settle or contest in their discretion
any such audit, contest, claim, proceeding or inquiry; provided, however, that
(i) Sellers shall not have the right to control, settle or contest any such
proceeding unless it first acknowledges in writing its obligation to fully
indemnify the Tax Indemnified Parties for the Taxes payable by the Company at
issue in the proceeding; (ii) no settlement or disposition of any such
proceeding shall be made without Purchaser’s prior written consent, which shall
not be unreasonably withheld, if such settlement or disposition reasonably could
be expected to affect the Company’s liability for Tax in any taxable period or
portion of a taxable period ending after the Closing Date and (iii) Purchaser
shall have the right to attend and participate in, at its own expense, any such
proceeding controlled by Seller pursuant to this Section 4.6(e) only if such
proceedings reasonably could be expected to affect the Company’s liability for
Taxes (it being understood that Purchaser shall not unreasonably withhold its
consent if Sellers request that certain limited meetings with agents of a taxing
authority be held without Purchaser’s representative in attendance, provided
that Purchaser is kept fully informed with respect to any such meeting).
          B. The Company shall, at its own expense, control, manage and solely
be responsible for any audit, contest, claim, proceeding or inquiry with respect
to Taxes for any taxable period ending after the Closing Date (including a
taxable period that straddles the Closing Date), and shall have the exclusive
right to settle or

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contest any such audit, contest, claim, proceeding or inquiry without the
consent of any other Party. Sellers shall have no liability for Purchaser’s or
the Company’s Taxes with respect to any period after the Closing Date.
          (f) The Company shall promptly pay over to Sellers any refunds of
Income Tax actually received in cash with respect to Pre-Closing Tax Periods,
net of any Income Tax imposed on and actually paid by the Company as the result
of the receipt of such Tax refunds.
          (g) Notwithstanding anything that may be to the contrary in this
Agreement, neither Purchaser nor any of its Affiliates shall have the right to
receive or obtain any information relating to the Taxes of Sellers, other than
information relating solely to the Company.
     4.7 Section 338(h)(10) Election. Sellers and Purchaser shall join in making
an election under Section 338(h)10) of the Internal Revenue Code of 1986, as
amended, (and any corresponding elections under state or local tax law
(collectively, a “Section 338(h)(10) Election”) with respect to the purchase and
sale of the Company Shares. Sellers agree to sign and deliver a Form 8023
(“Form 8023”) to Purchaser at Closing so that Purchaser may file such Form with
the IRS to make the Section 338(h)(10) Election.
ARTICLE V
DELIVERIES AT CLOSING
     5.1 Sellers’ Deliveries at Closing. At Closing, Sellers shall deliver or
cause to be delivered the following to Purchaser:
          (a) Stock Certificates. Stock certificates representing all of the
Company Shares, endorsed in blank or accompanied by duly executed stock powers.
          (b) Secretary’s Certificate. A certificate executed on behalf of
Seller by the Secretary of Seller authenticating Seller’s Certificate of
Incorporation, as amended, and By-Laws.
          (c) Escrow Agreement. The Escrow Agreement, duly executed by Sellers.
          (d) Consents, Permits, etc. All third-party consents and governmental
permits and approvals obtained by Sellers prior to the Closing.
          (e) Majority Shareholder Employment Agreement. The Majority
Shareholder Employment Agreement, executed by Majority Shareholder.
          (f) Resignations. Resignations of all officers and directors of the
Company.
          (g) Form 8023. The Form 8023 duly signed by Sellers.
          (h) Good Standing Certificate. A certificate of Good Standing as to
the Company issued by the Secretary of State of the State of New York.
     5.2 Purchaser’s Deliveries at Closing. At Closing, Purchaser shall deliver
the following to Seller:
          (a) Purchase Price. In connection with the payment of the Purchase
Price in accordance with Section 1.2 hereof:
               (1) $428,529.42 to the Majority Shareholder by wire transfer to
an account specified in writing by the Majority Shareholder;
               (2) $18,235.29 to K. Torrens by wire transfer to an account
specified in writing by K. Torrens; and
               (3) $18,235.29 to C. Torrens by wire transfer to an account
specified in writing by C. Torrens.
          (b) Escrow Agreement. The Escrow Agreement, duly executed by
Purchaser.

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          (c) Secretary’s Certificate. A certificate executed on behalf of
Purchaser by the Secretary of Purchaser (i) authenticating Purchaser’s Restated
Certificate of Incorporation and By-Laws; (ii) certifying as to resolutions of
the Board of Directors of Purchaser authorizing the transactions contemplated by
this Agreement; and (iii) concerning the incumbency of officers signing this
Agreement and other documents related hereto.
     5.3 Company’s Delivery at Closing. At Closing, Sellers shall cause the
Company to deliver the following to the Majority Shareholder and Purchaser:
          (a) Majority Shareholder Employment Agreement. The Majority
Shareholder Employment Agreement, duly executed by the Company.
ARTICLE VI
RESTRICTIVE COVENANTS
     6.1 Non-competition. Sellers acknowledge that reasonable limits on their
respective ability to engage in activities competitive with Purchaser and the
Business are warranted to protect Purchaser’s investment in acquiring the Assets
and the Business. Accordingly, each Seller covenants and agrees that, commencing
on the Closing Date and ending on the fifth anniversary thereof, such Seller
shall not engage in the Business or in any business that is in competition with
the Business within the states of Connecticut or New York whether directly or
indirectly, through any subsidiary, affiliate, partnership, licensee, joint
venture or agent, or as a partner, owner, manager, operator, advisor, agent or
consultant of or to any Person; provided, however, that nothing herein shall
prevent such Seller from investing as a less than one (1%) percent shareholder
in the securities of any company listed on a national securities exchange or
quoted on an automated quotation system in which Seller does not, directly or
indirectly, exercise any operational or strategic control.
     6.2 Non-Solicitation. For a period of five (5) years after the Closing
Date, each Seller covenants and agrees that such Seller will not, directly or
indirectly, either for itself or for any Person (i) solicit any employee of the
Business to terminate his or her employment with the Company or employ such
individual during his or her employment with the Company and for a period of six
(6) months after such individual terminates employment with the Company, or
(ii) make any disparaging statements concerning the Company, the Business or its
officers, directors, or employees, that could injure, impair or damage the
relationships between the Company or the Business on the one hand and any of the
employees, clients or suppliers of the Business, or any lessor, lessee, vendor,
supplier, client, distributor, employee or other business associate of the
Business.
     6.3 Non-Disclosure. Each Seller acknowledges that in connection with
Seller’s ownership and operation of the Company, Seller has Confidential
Information, and Seller agrees that, after Closing, Seller will not disclose to
any Person any Confidential Information, except with the prior written consent
of Purchaser. The term “Confidential Information” means any information which is
proprietary or unique to the Business, including but not limited to trade secret
information, matters of technical nature such as processes, devises, techniques,
data and formulas, research subject and results, marketing methods, plans and
strategies, operations, products, revenues, expenses, profits, sales, key
personnel, clients, suppliers, pricing policies, and any information concerning
the marketing and other business affairs and methods of the Business which is
not readily available to the public.
     6.4 Injunctive Relief. If the provisions of Sections 6.1 through 6.3 are
violated in whole or in part, Purchaser shall be entitled upon application to
any court of proper jurisdiction, to a temporary restraining order or
preliminary injunction to restrain and enjoin Seller from such violation without
prejudice as to any other remedies Purchaser may have at law or in equity.
ARTICLE VII
SURVIVAL
     7.1 Survival of Representations and Warranties. The representations and
warranties of each party contained in this Agreement or in any document
delivered pursuant hereto shall be deemed to be continuing and shall survive
until 12:01 a.m. EDT on the second anniversary of the Closing Date except that
the Majority

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Shareholder’s representations in Sections 3.1(l) and 3.1(t) shall survive the
Closing until the expiration of the applicable statutes of limitations.
ARTICLE VIII
INDEMNIFICATION
     8.1 Obligation of the Majority Shareholder to Indemnify. The Majority
Shareholder shall indemnify, defend and hold harmless Purchaser, its directors,
officers, employees and successors and assigns and Purchaser’s past, present and
future shareholders from and against any losses, liabilities, damages,
deficiencies, costs or expenses (including interest, penalties, fines, amounts
paid in settlements and reasonable attorneys’ and environmental and other
licensed consultants’ fees and disbursements) (collectively, “Losses”) based
upon, arising out of or otherwise in respect of:
          (a) During the period of survival of such representation or warranty,
any inaccuracy in or any breach of any representation or warranty of the
Majority Shareholder contained in this Agreement or any certificates or
schedules delivered by the Majority Shareholder pursuant hereto;
          (b) The failure by Sellers to comply with any covenant of Sellers set
forth herein or in any instrument or certificate delivered hereunder;
          (c) Any undisclosed liability or obligation, or claim against, the
Company or any affiliate thereof;
          (d) Any Claim: (i) relating to the Business or any of its assets
during any period prior to the Closing Date; or (ii) arising out of or relating
to any facts or circumstances, or any acts or omissions regarding the operation
of the Business or any of its assets, existing prior to the Closing Date whether
or not such liability or obligation was known at the time of Closing, including,
without limitation, the Workers’ Compensation Claim; or
          (e) Any A/R that is not collected in full within 240 days of the
Closing.
     8.2 Obligations of Purchaser to Indemnify. Purchaser shall indemnify,
defend and hold harmless Sellers and all of their respective heirs, successors
and assigns from and against any Losses based upon, arising out of or otherwise
in respect of:
          (a) During the period of survival of such representation or warranty,
any inaccuracy in or any breach of any representation, warranty of Purchaser
contained in this Agreement or any certificate delivered by Purchaser pursuant
hereto;
          (b) The failure to comply with any covenant of Purchaser set forth
herein or in any instrument or certificate delivered hereunder; or
          (c) Any Claim: (i) relating to the Business or any of its assets
during any period on or after the Closing Date; or (ii) arising out of (1) any
facts or circumstances of, or (2) any acts or omission regarding the operation
of the Business or any of its assets, existing at or after the Closing Date.
     8.3 Limitation of Liability.
          (a) Limitation of Liability of the Majority Shareholder.
               (1) The Majority Shareholder shall not have any liability (for
indemnification or otherwise) with respect to claims under Section 8.1 until the
total amount of Losses with respect to such matters exceeds $25,000, but then
for the entire amount of such Losses; provided, however, that this
Section 8.3(a)(1) will not apply to claims under Sections 8.1(b) through 8.1(e)
or to matters arising in respect of Section 9.3 or to any inaccuracy in or
breach of any of the Majority Shareholder’s representations and warranties of
which the Majority Shareholder had knowledge at any time prior to the date on
which such representation and warranty is made.
               (2) Further, the Majority Shareholder shall not have any
liability (for indemnification or otherwise) with respect to matters described
in Section 8.1(a) to the extent that all Losses with respect to such matters
exceed $750,000; provided, however, that this Section 8.3(a)(2) will not apply
to matters

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arising under Sections 3.1(l) or 3.1(t) or any inaccuracy in or breach of any of
the Majority Shareholder’s representations and warranties of which the Majority
Shareholder had knowledge at any time prior to the date on which such
representation and warranty is made.
          (b) Limitation of Liability of Purchaser.
               (1) Purchaser will have no liability (for indemnification or
otherwise) with respect to claims under Section 8.2 until the total amount of
Losses with respect to such matters exceeds $25,000, but then for the entire
amount of such Losses; provided, however, that this Section 8.3(b)(1) will not
apply to claims under Sections 8.2(b) through 8.2(c) or to matters arising in
respect of Section 9.3 or to any inaccuracy in or breach of any of Purchaser’s
representations and warranties of which the Purchaser had knowledge at any time
prior to the date on which such representation and warranty is made.
               (2) Further, Purchaser will have no liability (for
indemnification or otherwise) with respect to matters described in
Section 8.2(a) to the extent that all Losses with respect to such matters exceed
$750,000; provided, however, that this Section 8.3(b)(2) will not apply to any
inaccuracy in or breach of any of Purchaser’s representations and warranties of
which Purchaser had knowledge at any time prior to the date on which such
representation and warranty is made.
     8.4 General Indemnification Provisions.
          (a) For the purposes of this Section 8.4, the term “Indemnitee” shall
refer to the Person or Persons indemnified, or entitled, or claiming to be
entitled to be indemnified, pursuant to the provisions of Section 8.1 or 8.2, as
the case may be; the term “Indemnitor” shall refer to the Person or Persons
having the obligation to indemnify pursuant to such provisions.
          (b) An Indemnitee shall promptly give the Indemnitor written notice
(provided that the failure to promptly give notice shall relieve the Indemnitor
of its indemnification obligations hereunder only to the extent, if any, that it
is materially prejudiced thereby) of any matter which an Indemnitee has
determined has given or could give rise to a right of indemnification under this
Agreement. If an Indemnitee shall receive notice of any Claim of any third party
that is subject to the indemnification provided for in this Article IX (“Third
Party Claims”) the Indemnitee shall give the Indemnitor prompt written notice
(“Notice”) of such Third Party Claim (provided that the failure to promptly give
such Notice shall relieve the Indemnitor of its indemnification obligations
hereunder only to the extent, if any, that it is materially prejudiced thereby).
The Indemnitee shall permit the Indemnitor, at its option, to assume and control
the defense of such Third Party Claim at its expense and through counsel of its
choice (which counsel shall be reasonably acceptable to the Indemnitee) if it
gives written notice of its intention to do so to the Indemnitee within 20 days
after its receipt of the Notice. After notice from the Indemnitor to the
Indemnitee of the Indemnitor’s election to assume the defense of such
Third-Party Claim, the Indemnitor will not, so long as it diligently conducts
such defense, be liable to the Indemnitee for any fees of other counsel or any
other expenses with respect to the defense of such Third-Party Claim, in each
case subsequently incurred by the Indemnitee in connection with the defense of
such Third-Party Claim, other than reasonable costs of investigation; provided,
however, if the Indemnitee reasonably believes that counsel chosen by the
Indemnitor would have a conflict of interest or if one or more defenses exist
for the Indemnitee and not for the Indemnitor, the Indemnitee shall have the
right, at the Indemnitor’s expense, to be represented by counsel of its own
choosing in addition to counsel chosen by the Indemnitor. In the event the
Indemnitor exercises its right to undertake the defense against any such Third
Party Claim as provided above, the Indemnitee shall cooperate with the
Indemnitor in such defense and make available to the Indemnitor all witnesses,
pertinent records, materials and information in its possession or under its
control relating thereto as is reasonably required by the Indemnitor. In the
event that the Indemnitor shall elect not to undertake such defense, or within a
reasonable time after Notice of any such claim from the Indemnitee shall fail to
defend, the Indemnitee (upon further written notice to the Indemnitor) shall
have the right to undertake the defense, compromise or settlement of such claim,
by counsel or other representatives of its own choosing, on behalf of and for
the account and risk of the Indemnitor (subject to the right of the Indemnitor
to assume the defense of such claim at any reasonable time prior to settlement,
compromise or final determination thereof). In the event the Indemnitee is,
directly or indirectly, conducting the defense against any such Third Party
Claim, the Indemnitor shall cooperate with the Indemnitee in such defense and
make available to it all such witnesses, records, materials and information in
its possession or under its control relating thereto as is reasonably required
by the Indemnitee. Except for the settlement of a Third Party Claim which
involves the payment of money only and for which the Indemnitee is totally

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indemnified by the Indemnitor, no Third Party Claim may be settled by the
Indemnitor without the prior written consent of the Indemnitee. An Indemnitee
may not settle or compromise a Third Party Claim without the prior written
consent of the Indemnitor, provided that the Indemnitor has given the Indemnitee
written notice that Indemnitor will fully indemnify the Indemnitee for such
Third Party Claim.
ARTICLE IX
GENERAL PROVISIONS
     9.1 Further Assurances. Purchaser on the one hand, and Sellers, on the
other, shall from time to time at the request of the other and without further
consideration execute and deliver to the other such additional instruments of
conveyance, consents or other documents which shall be reasonably requested by
the other to evidence more fully the transfer by Sellers of the Company Shares
to Purchaser.
     9.2 Publicity. All public announcements relating to this Agreement or the
transactions contemplated hereby, including, without limitation, announcements
to clients, vendors and employees, shall be made only with the prior written
consent of Purchaser and Sellers, not to be unreasonably withheld; provided that
Purchaser may make such public disclosures as may be necessary or appropriate
under applicable securities laws or listing agreements without seeking Sellers’
consent.
     9.3 Finder’s Fees. Each party represents to the others that there is no
finder, broker, or similar Person entitled to a fee for the negotiation or
execution of this Agreement or the consummation of the transactions contemplated
by this Agreement retained on its behalf, except that Majority Shareholder has
engaged The March Group Delaware, LLC (“March Group”) to provide to Majority
Shareholder certain services in connection with the transactions contemplated by
this Agreement and Sellers shall be solely responsible for the payment of any
fees and expenses of March Group.
     9.4 Governing Law; Arbitration.
          (a) This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York without regard to its
provisions concerning conflicts or choice of laws.
          (b) Any dispute or controversy arising under or in connection with
this Agreement and the transactions contemplated thereby shall be resolved by
confidential binding arbitration which shall be conducted before a panel of
three (3) arbitrators in New York, New York, or at such other location as the
parties involved may mutually agree upon, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (“AAA”) then in
effect. Unless the parties involved agree otherwise, the panel of arbitrators
will be selected by the AAA. The panel of arbitrators shall not have the
authority to add to, detract from or modify any provision of this Agreement nor
to award special, consequential or punitive damages to any injured party. A
decision by a majority of the panel of arbitrators shall be final and binding
and judgment may be entered on the award of the arbitrators by any court of
competent jurisdiction. All fees and expenses of the arbitration proceeding,
including the fees and expenses of the AAA and the panel of arbitrators, and the
reasonable legal fees and expenses of the prevailing party, shall be borne by,
and be the responsibility of, the non-prevailing party.
     9.5 Notices. All notices, communications and deliveries hereunder shall be
made in writing signed by or on behalf of the party making the same and shall be
delivered personally or by facsimile or other electronic transmission or sent by
registered or certified mail (return receipt requested) or by any national
overnight courier service (with postage and other fees prepaid) as follows:
     If to Majority Shareholder to:
Mr. John Torrens
6368 East Seneca Turnpike
Jamesville, NY 13078

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     If to K. Torrens to:
Kyle Palin Torrens
c/o John Torrens
6368 East Seneca Turnpike
Jamesville, NY 13078
     If to C. Torrens to:
Carlena Palin Torrens
c/o John Torrens
6368 East Seneca Turnpike
Jamesville, NY 13078
     in each case with a copy (which shall not constitute notice) to:
Sherrard & Roe, PLC
424 Church Street, Suite 2000
Nashville, TN 37219
Attn: Elizabeth E. Moore, Esq.
Facsimile: (615) 742-4539
     If to Purchaser to:
American Claims Evaluation, Inc.
One Jericho Plaza
Jericho, NY 11753
Attn: Gary Gelman
Fax: (516) 938-0405
     with a copy (which shall not constitute notice) to:
Siller Wilk LLP
675 Third Avenue
New York, NY 10017
Attn: Joel I. Frank, Esq.
Facsimile: (212) 752-6380
or to such other representative or at such other address of a party as such
party may furnish to the other party in writing. Any such notice, communication
or delivery shall be deemed given or made (a) on the date of delivery if
delivered in person (by courier service or otherwise), (b) upon transmission by
facsimile or other electronic transmission if receipt is confirmed by telephone,
provided transmission is made during regular business hours, or if not, the next
business day, or (c) on the fifth (5th) business day after it is mailed by
registered or certified mail.
     9.6 Entire Agreement; Amendments. This Agreement (including the schedules
and exhibits hereto) sets forth the entire agreement of the parties with respect
to the subject matter of this Agreement and supersedes any and all prior
discussions, agreements, terms sheets or understandings between them with
respect to such matters. This Agreement may be modified only in writing signed
by all the parties hereto.
     9.7 Counterparts. This Agreement may be executed and delivered by facsimile
or other electronically-scanned signature pages and in one or more counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
     9.8 Binding Effect; Assignment. This Agreement shall be binding upon and
shall inure to the benefit of, and be enforceable by, the parties and their
permitted successors and assigns. This Agreement may not be assigned by any
party without the prior written consent of the other parties; provided, however,
that Purchaser may: (i) assign any or all of its rights and interests hereunder
to one or more of its affiliates or subsidiaries; or (ii) designate one or more
of its affiliates or subsidiaries to perform its obligations hereunder. Except
as set forth in this

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Agreement, nothing herein is intended to, nor shall it, create any rights in any
Person other than the parties and their respective successors and assigns.
     9.9 Amendments; Waiver; Consents. No amendment or waiver of any provision
of this Agreement nor consent to any departure therefrom shall in any event be
effective unless the same shall be in writing and signed by Purchaser and
Sellers, and then such amendment or waiver shall be effective only in the
specific instance and for the specific purpose for which given, and shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
breach of such provision or be deemed to be or constitute a waiver of any other
provision hereof. The failure by a party to insist upon strict adherence to any
provision of this Agreement on one or more occasions shall not be considered a
waiver or deprive it of the right thereafter to insist upon strict adherence to
that provision of any other provision of this Agreement. Whenever this Agreement
requires a permit or consent by or on behalf of either party hereto, such
consent shall be effective only if given in writing in a manner consistent with
the requirements for a waiver of compliance as set forth above.
     9.10 Headings. The Article and Section headings contained in this Agreement
are for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
     9.11 Specific Performance. Sellers and Purchaser each acknowledge that
Purchaser would not have an adequate remedy at law for money damages in the
event that this Agreement were not performed in accordance with its terms and
therefore agree that Purchaser shall be entitled to specific enforcement of the
terms hereof in addition to any other remedy to which it may be entitled at law
or in equity.
     9.12 Severability of Provisions. If any provision or any portion of any
provision of this Agreement or the application of any such provision or any
portion thereof to any Person or circumstance, shall be held invalid,
unenforceable or unreasonable, the remaining portion of such provision and the
remaining provisions of this Agreement, or the application of such provision or
portion of such provision as is held invalid, unenforceable or unreasonable to
persons or circumstances other than those as to which it is held invalid,
unenforceable or unreasonable, shall not be affected thereby and such provision
or portion of any provision as shall have been held invalid, unenforceable or
unreasonable shall be deemed limited or modified to the extent necessary to make
it valid, enforceable and reasonable (including, without limitation, reformation
as to the maximum time, geographic or business limitation) and in no event shall
this Agreement be rendered void or unenforceable.
     9.13 Construction and References.
          (a) Words used in this Agreement, regardless of the number or gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context shall require. Unless otherwise specified, all references in this
Agreement to Sections, paragraphs or clauses are deemed references to the
corresponding Sections, paragraphs or clauses in this Agreement, and all
references in this Agreement to Schedules are references to the corresponding
Schedules attached to this Agreement.
          (b) This Agreement shall not be construed for or against any party to
this Agreement because that party or its legal representative drafted all or any
part of this Agreement.
[signature page to follow]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

            PURCHASER:

AMERICAN CLAIMS EVALUATION, INC.
      By:   /s/ Gary Gelman       Name:   Gary Gelman      Title:   President
and Chief Executive Officer        MAJORITY SHAREHOLDER:
      /s/ John Torrens       John Torrens              K. TORRENS
      By:   /s/ John Torrens       John Torrens, as parent for a minor child   
            C. TORRENS
      By:   /s/ John Torrens       John Torrens, as parent for a minor child   
         

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