STOCK PURCHASE AGREEMENT BY AND AMONG NATIONAL RESEARCH CORPORATION, OUTCOME CONCEPT SYSTEMS, INC., AND THE SHAREHOLDERS AND WARRANTHOLDERS OF OUTCOME CONCEPT SYSTEMS, INC.
BY
AND AMONG
NATIONAL
RESEARCH CORPORATION,
OUTCOME
CONCEPT SYSTEMS, INC.,
AND
THE
SHAREHOLDERS AND WARRANTHOLDERS OF
OUTCOME
CONCEPT SYSTEMS, INC.
TABLE
OF CONTENTS
1.
|
PURCHASE
AND SALE OF SHARES
|
1
|
|
1.1.
|
Purchase
and Sale
|
1
|
|
1.2.
|
Payments
Due at Closing
|
5
|
|
1.3.
|
Withholding
|
5
|
|
2.
|
REPRESENTATIONS
AND WARRANTIES OF THE MAJOR HOLDERS AND COMPANY
|
6
|
|
2.1.
|
Corporate
|
6
|
|
2.2.
|
No
Violation
|
8
|
|
2.3.
|
Accuracy
of Stock Purchase Consideration
|
8
|
|
2.4.
|
Financial
Statements
|
8
|
|
2.5.
|
Tax
Matters
|
9
|
|
2.6.
|
Accounts
Receivable
|
12
|
|
2.7.
|
Absence
of Certain Changes
|
12
|
|
2.8.
|
Absence
of Undisclosed Liabilities
|
14
|
|
2.9.
|
No
Litigation
|
14
|
|
2.10.
|
Compliance
With Laws and Orders
|
14
|
|
2.11.
|
Title
to and Condition of Properties
|
15
|
|
2.12.
|
Insurance
|
16
|
|
2.13.
|
Contracts
and Commitments
|
16
|
|
2.14.
|
Labor
Matters
|
18
|
|
2.15.
|
Employee
Benefit Plans
|
18
|
|
2.16.
|
Employment;
Compensation
|
20
|
|
2.17.
|
Trade
Rights
|
20
|
|
2.18.
|
Information
Technology; Security and Privacy
|
21
|
|
2.19.
|
Bank
Accounts
|
21
|
|
2.20.
|
Major
Customers
|
21
|
|
2.21.
|
Affiliates’
Relationships to Company
|
22
|
|
2.22.
|
No
Brokers or Finders
|
22
|
|
2.23.
|
Treatment
of Rights
|
22
|
|
2.24.
|
Duty
of Company and the Holders to Make Inquiry
|
22
|
|
2.25.
|
Pro
Forma Business Plan
|
22
|
|
2.26.
|
Disclosure
|
22
|
|
3.
|
REPRESENTATIONS
AND WARRANTIES OF THE HOLDERS
|
23
|
|
3.1.
|
Title
to Shares; Authority
|
23
|
|
3.2.
|
No
Violation
|
23
|
|
3.3.
|
Brokers
|
23
|
|
3.4.
|
Litigation
|
23
|
|
4.
|
REPRESENTATIONS
AND WARRANTIES OF NRC
|
23
|
|
4.1.
|
Corporate
|
23
|
|
4.2.
|
Authority
|
24
|
|
4.3.
|
No
Violation
|
24
|
|
4.4.
|
Litigation
|
24
|
|
4.5.
|
Availability
of Funds
|
24
|
|
4.6.
|
No
Brokers or Finders
|
24
|
|
4.7.
|
Disclosure
|
24
|
|
5.
|
COVENANTS
|
25
|
|
5.1.
|
Employment
Agreements
|
25
|
|
5.2.
|
Noncompetition;
Confidentiality
|
25
|
|
5.3.
|
Presentation
of Audited Financial Information
|
26
|
i
5.4.
|
Taxes
|
26
|
|
5.5.
|
Sale
of Business
|
27
|
|
5.6.
|
Release
|
27
|
|
5.7.
|
Waiver
of Notice
|
27
|
|
5.8.
|
Acknowledgement
of Debt Payoff
|
27
|
|
6.
|
CONDITIONS
PRECEDENT TO NRC’S OBLIGATIONS
|
27
|
|
6.1.
|
Representations
and Warranties True as of the Closing Date
|
27
|
|
6.2.
|
Dentra
Joint Venture
|
28
|
|
6.3.
|
Pro
Forma Business Plan
|
28
|
|
6.4.
|
Financial
Statements
|
28
|
|
6.5.
|
Xxxxxx
Lease
|
28
|
|
6.6.
|
Taxes
|
28
|
|
6.7.
|
Compliance
With Agreement
|
28
|
|
6.8.
|
Absence
of Litigation
|
28
|
|
6.9.
|
Governmental
Consents and Approvals
|
28
|
|
6.10.
|
Escrow
Agreement
|
28
|
|
7.
|
CONDITIONS
PRECEDENT TO COMPANY’S AND HOLDERS’ OBLIGATIONS
|
28
|
|
7.1.
|
Representations
and Warranties True on the Closing Date
|
29
|
|
7.2.
|
Compliance
With Agreement
|
29
|
|
7.3.
|
Absence
of Litigation
|
29
|
|
7.4.
|
Consents
and Approvals
|
29
|
|
7.5.
|
Escrow
Agreement
|
29
|
|
8.
|
SHAREHOLDERS’
AGENT
|
29
|
|
8.1.
|
Appointment
|
29
|
|
8.2.
|
Limitation
of Liability
|
30
|
|
8.3.
|
Successor
Shareholders’ Agent
|
30
|
|
9.
|
INDEMNIFICATION
|
30
|
|
9.1.
|
Indemnification
of NRC
|
30
|
|
9.2.
|
Indemnification
by Holders
|
30
|
|
9.3.
|
Indemnification
by NRC
|
31
|
|
9.4.
|
Assertion
of Claims
|
31
|
|
9.5.
|
Indemnification
of Third Party Claims
|
31
|
|
10.
|
CLOSING
|
33
|
|
10.1.
|
Company
Deliverables
|
33
|
|
10.2.
|
NRC
Deliverables
|
35
|
|
11.
|
MISCELLANEOUS
|
36
|
|
11.1.
|
Disclosure
Schedule
|
36
|
|
11.2.
|
Disclosures
and Announcements
|
36
|
|
11.3.
|
Assignment;
Parties in Interest
|
36
|
|
11.4.
|
Law
Governing Agreement
|
36
|
|
11.5.
|
Amendment
and Modification
|
36
|
|
11.6.
|
Waiver
|
36
|
|
11.7.
|
Notice
|
37
|
|
11.8.
|
Expenses
|
38
|
|
11.9.
|
Entire
Agreement
|
38
|
|
11.10.
|
Counterparts
|
39
|
|
11.11.
|
Headings
|
39
|
ii
Defined Terms
|
Section
|
2001
Stock Option Plan
|
2.1(f)
|
Affiliate
|
2.7(l)
|
Agreement
|
Page
1
|
Business
|
Page
1
|
CERCLA
|
2.10(c)
|
Claim
|
9.1
|
Closing
|
10
|
Closing
Date
|
10
|
Closing
Payment
|
1.2(d)
|
Code
|
2.5(q)
|
Company
|
Page
1
|
Company
Working Capital
|
1.1(d)(i)
|
Common
Stock
|
Page
1
|
Common
Warrant
|
2.1(f)
|
Company
Employees
|
2.15(a)
|
Company
IT Systems
|
2.18
|
Company
Transaction Expenses
|
1.2(c)
|
Contract
|
2.2
|
Dentra
|
6.2
|
Disclosure
Schedule
|
|
Employee
Plans
|
2.15(a)
|
Environmental
Laws
|
2.10(c)
|
Epic
|
6.5
|
Equity
Interests
|
2.1(g)
|
ERISA
|
2.15(a)
|
Escrow
Agent
|
6.10
|
Escrow
Agreement
|
1.2(e)
|
FIN
48
|
2.5(b)
|
GAAP
|
1.1(d)(i)
|
Governmental
Entities
|
2.2
|
Holders
|
Page
1
|
Indemnified
Party
|
9.4
|
Indemnifying
Party
|
9.4
|
Indemnity
Escrow Fund
|
1.2(e)
|
Laws
|
2.2
|
Liability
|
2.7(o)
|
Liens
|
2.11(a)
|
Litigation
|
2.9
|
Major
Holders
|
2
|
Material
Adverse Effect
|
2.1(c)
|
Necessary
Consents
|
6.9
|
Neutral
Auditor
|
1.1(d)(i)
|
iii
Defined Terms
|
Section
|
New
Lease Agreement
|
6.5
|
Non-Disclosure
Agreement
|
11.9
|
NRC
|
Page
1
|
NRC’s
Affiliates
|
9.1
|
Option
Payment Amount
|
1.2(b)
|
Orders
|
2.2
|
Organizational
Documents
|
2.2
|
Parties
|
Page
1
|
Preferred
Stock
|
2.1(f)
|
Preferred
Warrant
|
2.1(f)
|
Pro
Forma Business Plan
|
2.25
|
Purchase
Consideration
|
1.1(c)
|
Real
Property
|
2.11(d)
|
Recent
Balance Sheet
|
2.4(a)
|
Rights
|
1.1(b)
|
Shares
|
Page
1
|
Shareholders
|
Page
1
|
Shareholders’
Agent
|
Page
1
|
Shareholders’
Agent Expense Fund
|
1.2(e)
|
Statement
|
1.1(d)(i)
|
Stock
Option Plans
|
2.1(f)
|
Stock
Options
|
2.1(f)
|
Taxes
|
2.5(q)
|
Tax
Return
|
2.5(q)
|
Threshold
Amount
|
9.5(d)(ii)
|
Trade
Rights
|
2.17
|
Treasury
Regulations
|
2.5(q)
|
Warrants
|
Page
1
|
Waste
|
2.10(c)
|
Working
Capital Escrow Fund
|
1.2(e)
|
Exhibit
Index
Exhibit
A
|
Form
of Escrow Agreement
|
iv
STOCK PURCHASE AGREEMENT,
dated as of August 3, 2010 (this “Agreement”), by and among NATIONAL RESEARCH CORPORATION,
a Wisconsin corporation (“NRC”), OUTCOME CONCEPT SYSTEMS, INC.,
a Washington corporation (“Company”), the undersigned holders (collectively, the
“Shareholders”) of the shares of the common stock of Company, no par value per
share (the “Common Stock”), and the undersigned holders (collectively, the
“Warrantholders”) of warrants to purchase shares of Common Stock (the
“Warrants”). The Shareholders and the Warrantholders are referred to
herein collectively as the “Holders.” NRC, Company and the Holders
are referred to herein collectively as the “Parties.”
A.
Company is engaged in the provision of benchmarks and data driven
management solutions and ongoing survey-based performance measurement services
to the hospice and home care industry (the “Business”).
B.
The Boards of Directors of NRC and Company have each approved, and
declared it to be advisable and in the best interests of their respective
shareholders, for NRC to acquire Company upon the terms and subject to the
conditions set forth herein.
C.
The Shareholders own all of the
issued and outstanding shares of Common Stock (the “Shares”).
D.
NRC desires to purchase the Shares
from the Shareholders, and the Shareholders desire to sell the Shares to NRC,
upon the terms and subject to the conditions set forth in this
Agreement.
E.
The Warrantholders are party hereto in their
capacity as Warrantholders to receive the right to payment in exchange for the
cancellation of their Rights under the terms of Section 1.1(b).
F.
The Holders wish to designate Xxxxxx Xxxxx as
their agent and attorney-in-fact (the “Shareholders’ Agent”) with the authority
to act on their behalf in connection with the transactions contemplated by this
Agreement.
NOW THEREFORE, in
consideration of the foregoing and the respective representations, warranties,
covenants, agreements and conditions hereinafter set forth, and intending to be
legally bound hereby, the parties hereto agree as follows:
1.1. Purchase and
Sale.
1.1(a) Upon
the terms and subject to the conditions set forth in this Agreement, on the
Closing Date (as defined in Article 10), each of the Shareholders shall sell,
convey, assign, transfer and deliver to NRC all of the Shares set forth opposite
such Shareholder’s name in Schedule 1.1, and NRC
shall purchase and acquire from the Shareholders, all right, title and interest
in and to the Shares, free and clear of any and all Liens (as defined in Section
2.11(a)), in exchange for the applicable portion of the Purchase Consideration
as set forth in Schedule 1.1 subject
to the terms hereof.
1
1.1(b) Stock Options and
Warrants. NRC shall not assume any Warrants or Stock Options
(as defined in Section 2.1(f)) (collectively, the “Rights”) in connection
with the transactions contemplated hereby.
1.1(b)(i) At
the Closing, all outstanding and unexercised Warrants, whether vested or
unvested, shall be cancelled and converted into and represent the right to
receive an amount of cash (without interest) equal to the product obtained by
multiplying (x) the total number of shares of Common Stock issuable upon
exercise in full of such Warrant, by (y) the amount, if any, by which (A) the
amount of cash equal to the value of the portion of the Purchase Consideration
payable for a share of Common Stock, exceeds (B) the exercise price per share
attributable to such Warrant. Payment for the Warrants shall be made
pursuant to Section 1.2(d) hereof.
1.1(b)(ii) At
the Closing, all outstanding and unexercised Stock Options, whether vested or
unvested, shall be cancelled and converted into and represent the right to
receive an amount of cash (without interest) equal to the product obtained by
multiplying (x) the total number of shares of Common Stock issuable upon
exercise in full of such Stock Option, by (y) the amount, if any, by which (A)
the amount of cash equal to the value of the portion of the Purchase
Consideration payable for a share of Common Stock, exceeds (B) the exercise
price per share attributable to such Stock Option. Payment for the
Stock Options shall be made pursuant to Section 1.2(b) hereof.
1.1(b)(iii) Company
agrees to take all reasonable actions it deems necessary to effect the
transactions anticipated by this Section 1.1(b).
1.1(c) Purchase
Consideration. The “Purchase Consideration” shall mean an
amount equal to $15,000,000 as adjusted pursuant to Section 1.1(d), and
less the sum of the Debt Payoff Amount (as defined in Section 1.2(a)) and
the Company Transaction Expenses (as defined in
Section 1.2(c)).
1.1(d) Working Capital
Adjustment.
1.1(d)(i)
Attached hereto as Schedule 1.1(d) is a
certificate prepared by Company and signed by Company’s chief executive officer
(the “Statement”) setting forth in reasonable detail a calculation of Company’s
good faith estimation of the Company Working Capital (“Estimated Working
Capital”). At the Closing, the Purchase Consideration shall be
increased by the amount by which the Estimated Working Capital exceeds the
Working Capital Target (as defined in Section 1.1(d)(ii)) or decreased by
the amount by which the Working Capital Target exceeds the Estimated Working
Capital. If the Estimated Working Capital equals the Working Capital
Target, there shall be no adjustment of the Purchase Consideration at
Closing. “Company Working Capital” shall mean, as of the Closing
Date, the sum of Company’s cash balances, trade accounts receivable that are
collectable (less a reserve for doubtful accounts), prepaid expenses and other
current assets; less the sum of its current liabilities (including all
non-recurring deferred revenue, the difference between the recurring deferred
revenue and the fair value of the recurring deferred revenue based upon Emerging
Issues Task Force Issue 01-03, which excludes profit associated with the selling
effort because the selling effort was completed prior to the acquisition date,
and all increases in tax reserves under Section 5.4), debt balances, the
Termination Costs (as defined in Section 2.25) and other
liabilities. Notwithstanding the foregoing, Company Working Capital
shall be calculated taking into account the effects of the Pro Forma Business
Plan (as defined in Section 2.25) and shall exclude any assets or liabilities
attributable to Dentra (as defined in Section 6.2) (other than cash or cash
equivalents received upon dissolution of Dentra) and any accounts receivable
older than 90 days. The Statement shall be prepared in accordance
with U.S. generally accepted accounting principles (“GAAP”),
consistently applied. Within 45 days following the Closing, NRC shall
review or cause to be reviewed the Statement to verify the accuracy of the
determination of the Estimated Working Capital as set forth
therein. If NRC determines that the Company Working Capital (the
Company Working Capital as determined by NRC, the “Revised Working Capital”) did
not equal the Estimated Working Capital, NRC shall deliver to Shareholders’
Agent within such 45-day period a notice (an “Adjustment Notice”) setting forth
the Revised Working Capital and the calculation thereof in reasonable
detail. If NRC does not timely deliver an Adjustment Notice to
Shareholders’ Agent, or if NRC notifies Shareholders’ Agent that NRC has no
objection to the Statement, Company’s determination of the Estimated Working
Capital shall be final and binding on all parties. If NRC timely
delivers an Adjustment Notice to Shareholders’ Agent, Shareholders’ Agent shall
have 15 days from receipt of the Adjustment Notice to provide written notice to
NRC that it disputes the Adjustment Notice (a “Dispute Notice”), which Dispute
Notice shall provide a reasonably detailed description of such dispute and
Shareholders’ Agent’s calculation of the Company Working Capital. If
Shareholders’ Agent does not timely deliver a Dispute Notice to NRC, or if
Shareholders’ Agent notifies NRC that it has no objection to the Adjustment
Notice, NRC’s determination of the Revised Working Capital shall be final and
binding on all parties and the Purchase Consideration shall be adjusted in
accordance with the provisions of Section 1.1(d)(iii). If
Shareholders’ Agent timely delivers a Dispute Notice to NRC and Shareholders’
Agent and NRC are unable to mutually agree on the Company Working Capital within
ten days following receipt by NRC of the Dispute Notice, NRC and Shareholders’
Agent shall select a nationally recognized independent accounting firm mutually
satisfactory to NRC and Shareholders’ Agent (the “Neutral Auditor”) to review
the Statement, the Adjustment Notice and the Dispute Notice (and all related
information and documentation provided by the parties to the Neutral
Accountant), which review shall include a determination of the Company Working
Capital in accordance with the definition of Company Working Capital as set
forth herein (the Company Working Capital as determined by the Neutral Auditor,
the “Accountant’s Working Capital”), which determination shall be final and
binding on all parties absent manifest error. All fees and expenses
of the Neutral Auditor shall be divided equally, with half to be paid by NRC and
half deducted from the Working Capital Escrow Fund (as defined in
Section 1.2(e)).
2
1.1(d)(ii) For
purposes hereof, “Final Working Capital” shall equal (i) the Estimated Working
Capital, if NRC does not timely deliver an Adjustment Notice in accordance with
the provisions hereof (or agrees that it does not object to the Statement), (ii)
the Revised Working Capital, if NRC timely delivers an Adjustment Notice in
accordance with the provisions hereof and Shareholders’ Agent does not timely
deliver a Dispute Notice (or agrees that they do not object to the Adjustment
Notice), (iii) the Company Working Capital as mutually agreed upon by NRC and
Shareholders’ Agent upon the resolution of any dispute regarding Company Working
Capital pursuant hereto or (iv) the Accountant’s Working Capital, if the Neutral
Auditor is engaged and delivers a calculation of the Accountant’s Working
Capital. For purposes hereof, “Working Capital Target” means negative
Fifty-Three Thousand Three Hundred Thirty-Three Dollars (-$53,333).
1.1(d)(iii) Immediately
following final determination of the Final Working Capital in accordance with
Section 1.1(d)(i):
(A) if
the Purchase Consideration was not adjusted at Closing pursuant to Section
1.1(d)(i), (1) if the Final Working Capital exceeds the Working Capital Target,
NRC shall pay to each Shareholder and Warrantholder, and shall cause Company to
pay to each Stock Option holder, within five days following the determination of
the Final Working Capital, an amount equal to such Shareholder’s,
Warrantholder’s and Stock Option holder’s respective pro rata share (as set
forth in Schedule 1.1 hereto under the column entitled “Pro Rata Share”) of the
amount by which the Final Working Capital exceeds the Working Capital Target,
(2) if the Working Capital Target exceeds the Final Working Capital, NRC shall
be entitled to reimbursement from the Working Capital Escrow Fund for the amount
by which the Working Capital Target exceeds the Final Working Capital (provided
that, if such excess amount is greater than the Working Capital Escrow Fund, NRC
shall be entitled to further reimbursement from the Indemnity Escrow Fund in the
amount of the difference); and (3) if the Final Working Capital equals the
Working Capital Target, there shall be no adjustment to the Purchase
Consideration pursuant to this Section 1.1(d)(iii), or
3
(B) if
the Purchase Consideration was adjusted at Closing pursuant to Section
1.1(d)(i), (1) if the Final Working Capital exceeds the Estimated Working
Capital, NRC shall pay to each Shareholder and Warrantholder, and shall cause
Company to pay to each Stock Option holder, within five days following the
determination of the Final Working Capital, an amount equal to such
Shareholder’s, Warrantholder’s and Stock Option holder’s respective pro rata
share (as set forth in Schedule 1.1 attached hereto under the column entitled
“Pro Rata Share”) of the amount by which the Final Working Capital exceeds the
Estimated Working Capital; (2) if the Estimated Working Capital exceeds the
Final Working Capital, NRC shall be entitled to reimbursement from the Working
Capital Escrow Fund for the amount by which the Estimated Working Capital
exceeds the Final Working Capital (provided that, if such excess amount is
greater than the Working Capital Escrow Fund, NRC shall be entitled to further
reimbursement from the Indemnity Escrow Fund in the amount of the difference);
and (3) if the Final Working Capital equals the Estimated Working Capital, there
shall be no further adjustment to the Purchase Consideration pursuant to this
Section 1.1(d)(iii).
1.1(d)(iv) Following
the Closing, NRC shall exercise commercially reasonable efforts to collect
accounts receivable that were excluded from Company Working Capital because they
were older than 90 days. Notwithstanding anything contained in this
Section 1.1(d)(iv) to the contrary, NRC shall undertake collection efforts
for such accounts receivable in substantially the same manner following the
Closing Date as is customary in the collection of accounts receivable arising in
NRC’s own business prior to the Closing Date, provided that neither NRC nor
Company shall be required to file suit, employ the services of a collection
agency or commence any other official proceeding to collect any delinquent
accounts included in such accounts receivable. To the extent that NRC
collects such accounts receivable in an amount (such amount, the “Excess
Accounts Receivable”) greater than (1) if the Purchase Consideration was not
adjusted at Closing pursuant to Section 1.1(d)(i), any excess of the Working
Capital Target over the Final Working Capital that is not reimbursed to NRC from
the Working Capital Escrow Fund or the Indemnity Escrow Fund or (2) if the
Purchase Consideration was adjusted at Closing pursuant to Section 1.1(d)(i),
any excess of the Estimated Working Capital over the Final Working Capital that
is not reimbursed to NRC from the Working Capital Escrow Fund or the Indemnity
Escrow Fund, NRC shall pay to each Shareholder and Warrantholder, and shall
cause Company to pay to each Stock Option holder, an amount equal to such
Shareholder’s, Warrantholder’s and Stock Option holder’s respective pro rata
share (as set forth in Schedule 1.1 hereto under the column entitled “Pro Rata
Share”) of the amount by which the Company Working Capital as of the Closing
Date would have increased if the Excess Accounts Receivable had not been
excluded from the Company Working Capital as of the Closing Date as accounts
receivable older than 90 days. NRC may make such payments by check,
wire transfer or such other method that NRC reasonably deems appropriate and
shall make such payments by the earlier of (A) one month following the date
upon which the aggregate Excess Accounts Receivable collected since the previous
payment (or, if no payment has yet been made, since the Closing Date) exceed
$50,000 and (B) six months after NRC collects such Excess Accounts
Receivable.
4
1.2. Payments Due at
Closing.
1.2(a) Subject
to the terms and conditions of this Agreement, at the Closing, NRC shall pay to
each person listed on Schedule 1.2(a) attached hereto such amount set forth
opposite such person’s name on Schedule 1.2(a) (the aggregate of all such
amounts, the “Debt Payoff Amount”) by wire transfer of immediately available
funds in accordance with the wire transfer instructions set forth on Schedule
1.2(a). At or prior to the Closing, Company shall deliver to NRC a
payoff letter, effective as of the Closing, from each person listed on Schedule
1.2.(a).
1.2(b) Subject
to the terms and conditions of this Agreement, at the Closing, NRC shall pay to
Company the Option Payment Amount (defined below) by wire transfer of
immediately available funds in accordance with the wire transfer instructions
set forth on Schedule 1.1. At or promptly following the Closing, NRC
shall cause Company to pay to each of the persons set forth on Schedule 1.1
attached hereto the amount set forth opposite such person’s name under the
column titled “Cash Out Amount” on such schedule (the aggregate of all such
amounts, the “Option Payment Amount”), less any applicable withholding
taxes.
1.2(c) Subject
to the terms and conditions of this Agreement, at the Closing, NRC shall pay to
each person listed on Schedule 1.2(c) attached hereto such amount set forth
opposite such person’s name on Schedule 1.2(c) (the aggregate of all such
amounts, the “Company Transaction Expenses”)
by wire transfer of immediately available funds in accordance with the wire
transfer instructions set forth on Schedule 1.2(c).
1.2(d) Subject
to the terms and conditions of this Agreement, at the Closing, NRC shall pay to
each Shareholder and each Warrantholder the amount set forth opposite such
Shareholder’s and Warrantholder’s name on Schedule 1.1 hereto under the column
titled “Closing Payment” by check or wire transfer of
immediately available funds in accordance with the instructions set forth on
Schedule 1.1.
1.3. Withholding. Notwithstanding
anything to the contrary in this Agreement, NRC and, at NRC’s election, Company
or the Escrow Agent (as defined in Section 6.10) shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
such amounts as it reasonably determines are required to be deducted and
withheld with respect to the making of such payment under the provisions of the
Code and the Treasury Regulations (as defined in Section 2.5(q)) promulgated
thereunder, or any provision of state, local or foreign Tax Law (as defined in
Section 2.5(q)). To the extent that amounts are so withheld or paid
over to or deposited with the relevant Governmental Entity (as defined in
Section 2.2), such amounts shall be treated for all purposes of this Agreement
as having been paid to the person in respect of which such deduction and
withholding was made by NRC, Company or the Escrow Agent.
5
As an
inducement to NRC to execute and deliver this Agreement, Xxxxxx Xxxxx and Xxxxx
Xxxxxxxxxxx (together, the “Major Holders”), jointly and severally, and Company,
jointly and severally with the Major Holders, make the following representations
and warranties to NRC, each of which is true and correct on the date hereof,
shall be unaffected by any investigation heretofore made by NRC, or any
knowledge of NRC other than as specifically disclosed in the Disclosure Schedule
(as defined in Section 11.1) delivered by Company at the time of the execution
of this Agreement, and shall survive the consummation of the transactions
provided for herein.
2.1. Corporate.
2.1(a) Organization. Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Washington. Company was incorporated on
January 12, 1995.
2.1(b) Corporate
Power. Company has all requisite corporate power and authority
to own, operate and lease its assets and to carry on the Business as and where
such is now being conducted, to execute and deliver this Agreement and the other
documents and instruments to be executed and delivered by Company pursuant
hereto and to carry out the transactions contemplated hereby and
thereby.
2.1(c) Qualification. Company
is duly licensed or qualified to do business as a foreign corporation, and is in
good standing, in each jurisdiction wherein the character of the assets owned or
leased by it, or the nature of its business (including due to its employment of
individuals), makes such licensing or qualification necessary, except for such
as will not have a material adverse effect on the Business or the financial
condition, assets, Liabilities (as defined in Section 2.7(o)) or operations of
Company (a “Material Adverse Effect”). The jurisdictions in which
Company is duly licensed or qualified to do business are listed in Schedule 2.1(c).
2.1(d) Subsidiaries. Other
than Dentra, Company does not own or control, directly or indirectly, any equity
interest in any corporation, partnership, limited liability company or other
legal entity.
2.1(e) Corporate Documents,
etc. The copies of the Amended and Restated Articles of
Incorporation and By-Laws of Company, including any subsequent amendments
thereto, that have been delivered by Company to NRC are true, correct and
complete copies of such instruments as presently in effect. The
corporate minute book and stock records of Company that have been furnished to
NRC for inspection are true, correct and complete and accurately reflect all
material corporate action taken by Company. The directors and
officers of Company are set forth in Schedule 2.1(e).
6
2.1(f) Capitalization of
Company. The authorized capital stock of Company consists
entirely of 10,000,000 shares of Common Stock and 1,000,000 shares of preferred
stock, no par value per share (the “Preferred Stock”). No shares of
such capital stock are issued or outstanding except for 4,061,604 shares of
Common Stock, all of which are owned of record and beneficially by the
Shareholders in the respective numbers set forth in Schedule 1.1. There
are no accrued and unpaid dividends in respect of any Shares. All
Shares are validly issued, fully paid and nonassessable. As of the
date of this Agreement, there is an outstanding (i) Warrant representing the
right to purchase 429,822 shares of Common Stock (the “Common Warrant”), (ii)
Warrant representing the right to purchase 107,526 shares of Series A Preferred
Stock (the “Preferred Warrant”) and (iii) outstanding stock options to purchase
947,395 shares of Common Stock (the “Stock Options”). The Common
Warrant was issued pursuant and subject in all respects to the Outcome Concept
Systems, Inc. Stock Purchase Warrant issued as of October 29, 2008 by Company to
Vox Advisors, LLC, a complete and correct copy of which has been provided to
NRC, and the Preferred Warrant was issued pursuant and subject in all respects
to the Outcome Concept Systems, Inc. Stock Purchase Warrant issued as of January
14, 2010 by Company to Columbia Pacific Opportunity Fund , L.P, a complete and
correct copy of which has been provided to NRC. The Stock Options
were granted pursuant and subject in all respects to Company’s 2001 Stock Option
Plan (the “2001 Stock Option Plan”) and Company’s 2000
Stock Option Plan (together with the 2001 Stock Option Plan, the “Stock Option
Plans”), as listed on Schedule
2.1(f). Each Stock Option was granted with an exercise price
per share of Common Stock no less than the fair market value of a share of
Common Stock on the date of the grant, as such fair market value was determined
in good faith by Company’s Board of Directors in accordance with the rules and
regulations pursuant to Section 409A of the Code, and qualifies for the tax
treatment afforded to such stock option under the historical financial
statements of Company. The outstanding Rights are owned by the
holders in the respective numbers set forth in Schedule
1.1.
2.1(g) Other Equity
Interests. Except as set forth in Schedule 1.1
(which sets forth the names of the holders of the securities described therein,
number of such securities held, and exercise prices of such securities) and
Schedule
2.1(g), there are no (a) securities convertible into or exchangeable
for any of Company’s capital stock or other securities, (b) options,
warrants or other rights to purchase or subscribe to capital stock or other
securities of Company or securities that are convertible into or exchangeable
for capital stock or other securities of Company, (c) phantom stock or
other rights the value of which is related to Company’s capital stock or other
securities, or (d) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance, sale or transfer of any
capital stock or other equity securities of Company, any such convertible or
exchangeable securities or any such options, warrants, phantom stock rights or
other rights (collectively, “Equity Interests”).
2.1(h) Authorization;
Enforceability. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by Company pursuant
hereto and the full performance thereunder have been duly authorized by the
Board of Directors of Company. No other or further corporate act or
proceeding on the part of Company is necessary to authorize this Agreement or
the other documents and instruments to be executed and delivered by Company
pursuant hereto or the consummation of the transactions contemplated hereby and
thereby. Company has delivered to NRC correct and complete copies of
all consents, resolutions and other documents necessary to duly authorize the
execution and delivery of this Agreement by Company and the other documents and
instruments to be executed and delivered by Company pursuant hereto and the
consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes, and when executed and delivered,
the other documents and instruments to be executed and delivered by Company
pursuant hereto will constitute, valid and binding agreements of Company
enforceable in accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors’ rights generally, and by general equitable
principles.
7
2.2. No
Violation. Neither
the execution and delivery of this Agreement or the other documents and
instruments to be executed and delivered by Company pursuant hereto nor the
consummation by Company of the transactions contemplated hereby and thereby (a)
will violate any applicable statute, law (including common law), ordinance, rule
or regulation (collectively, “Laws”) or any order, writ, injunction, judgment,
plan or decree (collectively, “Orders”) of any government, court, arbitrator,
department, commission, board, bureau, agency, authority, instrumentality or
other body, whether federal, state, municipal, county, local, foreign,
supranational or other (collectively, “Governmental Entities”), (b) will require
any authorization, consent, approval, exemption or other action by or notice to
any Governmental Entity (including, without limitation, under any “plant
closing” or similar law) or (c) except as set forth in Schedule 2.2(c),
will violate or conflict with, or constitute a default (or an event that, with
notice or lapse of time, or both, would constitute a default) under, or will
result in the termination of, or accelerate the performance required by, or
result in the creation of any Lien upon the Shares, the Rights or any other
Equity Interests of Company, or any of the assets, of Company under, any term or
provision of the charter, bylaws or similar organizational documents of Company
(together, the “Organizational Documents”) or of any oral or written contract,
purchase order, sales order, license, lease or other material agreement,
commitment, arrangement or understanding (each a “Contract”) to which Company is
a party or by which Company or any of its assets or properties may be bound or
affected.
2.3(a) The
methodology for determining the portion of the Purchase Consideration on a per
Share, per Right, pro rata and as converted basis, as the case may be, reflected
on Schedule
1.1, is in accordance with the relative equity interests and all
agreements, instruments and Laws applicable to the Shares and Rights, if any,
and, as of the Closing, all Rights shall have been terminated and cancelled in
accordance with the terms of such agreements, instruments and laws.
2.3(b) NRC’s
payment of the Purchase Consideration in accordance with the terms hereof is the
only obligation NRC or Company shall have with respect to the Shares or Rights
under existing agreements or instruments to which Company is a
party.
2.4. Financial
Statements.
2.4(a) Included
as Schedule 2.4(a)
are true and complete copies of the financial statements of Company consisting
of (a) balance sheets of Company as of December 31, 2009 and 2008, the related
statements of operations, stockholders’ deficit and cash flows for the years
then ended (including the notes contained therein or annexed thereto) and an
accompanying accountants’ review report, and (b) an unaudited consolidated
balance sheet of Company as of June 30, 2010 (the “Recent Balance Sheet”), and
the related unaudited consolidated statements of operations and cash flows for
the five months then ended. Except as otherwise specifically
identified and described in Schedule 2.4(a), all
of such financial statements, including all notes and schedules contained
therein or annexed thereto, are true, complete and accurate in all material
respects, have been prepared in accordance with GAAP applied on a consistent
basis, have been prepared in accordance with the books and records of Company,
and present fairly, in all material respects, in accordance with GAAP, the
assets, liabilities and financial position, the results of operations and cash
flows of Company as of the dates and for the years and periods
indicated.
2.4(b) Except
as otherwise specifically described in Schedule 2.4(b),
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
8
2.4(c) Schedule 2.4(c)
contains a correct and complete copy of the most recent financial plan and
projection that Company prepared in the ordinary course of business, together
with a statement of the assumptions upon which such plan and projection are
based and an order backlog that relates to such plan and
projection.
2.5. Tax
Matters.
2.5(a) Provision For
Taxes. All Taxes (including any interest and penalties) of
Company attributable to periods preceding or ending with the date of the Recent
Balance Sheet have been paid or have been included in a liability accrual for
the specific unpaid Taxes on the Recent Balance Sheet. The provision
made for Taxes (excluding any provision for deferred Taxes established to
reflect timing differences between book and Tax income) on the Recent Balance
Sheet is sufficient for the payment of all Taxes of Company at the date of the
Recent Balance Sheet and for all years and periods prior
thereto. Since the date of the Recent Balance Sheet, Company has not
incurred any Taxes other than Taxes incurred in the ordinary course of business
consistent in type and amount with past practices of Company. All
Taxes of Company attributable to periods ending on, before or including the
Closing Date shall be paid or shall be included in a current liability accrual
on the Closing Balance Sheet. Schedule 2.5(a)
sets forth the amount, due date and type of unpaid Taxes as of the Closing
Date. All such liability accruals for Taxes are and shall be complete
and accurate in all respects.
2.5(b) Tax Returns Filed and FIN 48
Compliance. All Tax Returns (as defined in
Section 2.5(q)) required to be filed by or on behalf of Company have
been timely filed and, when filed, were true, correct and
complete. All Taxes owed and/or due, and the Taxes shown as due, on
such Tax Returns, were paid or adequately accrued. Company is
currently not the beneficiary of any extension of time within which to file any
Tax Return. All expenses reported on any Tax Return filed by Company
represent ordinary and necessary business expenses or otherwise are properly
deductible in accordance with applicable Law. True, correct and
complete copies of all Tax Returns filed by Company for each of its five most
recent fiscal years have been made available to NRC and are listed in Schedule
2.5(b). Company is in full compliance with Financial
Accounting Standards Board Interpretation No. 48 (“FIN 48”) and has made
available to NRC all documents and work papers showing such
compliance. Company has adopted FIN 48 as of January 1, 2008
and, in accordance with FIN 48, has determined, assessed and measured, as of,
and since, January 1, 2008, the benefits of all material tax positions taken in
any income Tax Return, including all significant uncertain positions in all Tax
years that are subject to assessment or challenge by relevant Taxing
authorities. Company maintains adequate documentation (as required by FIN 48) to
support such material positions and the measurement methodology for such
position, and have provided such documentation to the NRC on or prior to the
date hereof.
2.5(c) Withholding. Company
has duly withheld and paid all Taxes that it is required to withhold and pay in
connection with, and properly reported on Form W-2, Form 1099, or such other Tax
Returns all, amounts paid or owing to any employee, independent contractor,
creditor, shareholder or other third party of Company.
9
2.5(d) Tax
Audits. No claim has ever been made by any authority in a
jurisdiction in which Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction or authority. The Tax
Returns of Company that are under audit or have been audited by the Internal
Revenue Service or other applicable Tax authorities, together with a true,
correct and complete list of all powers of attorney granted by Company with
respect to any Tax matter, are set forth in Schedule 2.5(d). Company
has not received from the Internal Revenue Service or any other applicable Tax
authorities any notice of underpayment or assessment of Taxes or other
deficiency that has not been paid or any objection to any Tax Return filed by
Company. Company has made available to NRC true, correct and complete
copies of all Tax Returns, examination and audit reports, Internal Revenue
Service Forms 3115, proposed and final assessments and statements of
deficiencies assessed against or agreed to by Company since January 1,
2005. There are no outstanding agreements, contracts, waivers, or
other arrangements extending the statutory period of limitations applicable to
any Tax Return or applicable to the assessment or reassessment of any
Tax. There is no dispute or claim concerning any Tax of Company
either (i) claimed or raised by any authority in writing or (ii) as to which any
of the Major Holders and the directors and officers (and employees responsible
for Tax matters) of Company has knowledge based upon personal contact with any
agent of such authority.
2.5(e) Consolidated
Group. Company is not, and has never been, a member of an
affiliated group of corporations that filed a consolidated tax
return. Company has no liability for Taxes of any Person under
Treasury Regulation Section 1.1502-6 (or similar provision of state, local or
foreign law), as a transferee or successor by contract or agreement, or
otherwise.
2.5(f) No Tax
Liens. Company is not subject to any Liens for Taxes (other
than Liens for Taxes not yet due and payable).
2.5(g) Tax
Attributes. Schedule 2.5(g) sets forth the
following information with respect to Company as of the most recent practical
date: (i) the original and adjusted basis of Company in each of its
assets; and (ii) the amount of any net operating loss, net capital loss, unused
research and development or other credit, unused foreign tax, excess charitable
contribution or other tax attribute of Company.
2.5(h) Tax
Positions. Company has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of the
Code (or similar provision under state, local or foreign Tax
law). Company has not received a Tax opinion with respect to any
transaction relating to Company other than a transaction in the ordinary course
of business. Company is not the direct or indirect beneficiary of a
guarantee of Tax benefits or any other arrangement that has the same economic
effect with respect to any transaction or Tax opinion relating to
Company. Company is not party to an understanding or arrangement
described in Section 6111(d) or Section 6662(d)(2)(C)(iii) of the
Code. Company has not entered into any transaction identified as (i)
a “listed transaction” as defined in Treasury Regulation (as defined in
Section 2.5(q)) Section 1.6011-4(b)(2), (ii) a “transaction of interest,”
as defined in Treasury Regulation Section 1.6011-3(b)(6) or (iii) any
transaction that is “substantially similar” (within the meaning of Treasury
Regulation Section 1.6011-4(c)(4)) to a “listed transaction” or a “transaction
of interest,” or (iii) entered into any other transaction that required or will
require the filing of an Internal Revenue Service Form 8886. Company
is not party to a lease arrangement involving a defeasance of rent, interest or
principal. Company has timely and completely reported all “Reportable
Transactions” as defined in Treasury Regulation Section 1.6011-4, if any, on its
annual income Tax filings. Company has no uncertain Tax positions
other than those set forth on its FIN 48 workpapers.
10
2.5(i) Consents and Rulings.
Company has not (i) filed any consent or agreement under Section 341(f) of the
Code, (ii) applied for any Tax ruling, (iii) entered into a closing agreement as
described in Section 7121 of the Code or otherwise (or any corresponding or
similar provision of state, municipal, county, local, foreign or other Tax Law)
or any other agreement or contract with any Tax authority, (iv) filed an
election under Section 338(g) or Section 338(h)(10) of the Code (nor has a
deemed election under Section 338(e) of the Code occurred), (v) made any
payments, or been a party to an agreement or contract (including this Agreement)
that under any circumstances could obligate it or NRC to make payments (either
before or after the Closing Date) that will not be deductible because of Section
162(m) or Section 280G of the Code, (vi) been a party to any Tax allocation, Tax
sharing or Tax indemnification contract or other arrangement or (vii) filed or
made any election for federal income Tax purposes under Sections 108, 168, 338,
341, 441, 471, 1017, 1033, 1502 or 4977 of the Code.
2.5(j) Real Property Holding
Company. Company is not a “United States real property holding
company” within the meaning of Section 897 of the Code.
2.5(k) Accounting
Methods. Company has not agreed, nor is it required to make,
any adjustment under Section 263A, Section 481 or Section 482 of the Code (or
any corresponding or similar provision of state, municipal, county, local,
foreign or other Tax Law) by reason of a change in accounting method or
otherwise.
2.5(l) Section 355
Transactions. Company has not been the “distributing
corporation” or a “controlled corporation” (within the meaning of Section 355 of
the Code) with respect to a transaction described in Section 355 of the
Code.
2.5(m) Tax Agreements and
Arrangements. Company is in compliance with the terms and
conditions of any applicable Tax exemptions, Tax agreements or contracts or Tax
orders of any government or governmental entity to which it may be subject or
that it may have claimed, and the transactions contemplated by this Agreement
will not have any adverse effect on such compliance. A true, correct
and complete copy of all such Tax exemptions, Tax agreements or contracts or Tax
orders have been delivered to NRC. No property of Company (i) is
subject to a tax benefit transfer lease subject to the provisions of former
Section 168(f)(8) of the Internal Revenue Code of 1954, (ii) is “tax-exempt use
property” within the meaning of Section 168(h) of the Code or (iii) secures any
debt the interest on which is exempt from Tax under Section 103 of the
Code.
2.5(n) Inclusion of
Items. Company will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date as a result of any (i)
installment sale or open transaction disposition made on or prior to the Closing
Date, (ii) prepaid amount received or accrued on or prior to the Closing Date or
(iii) method of accounting, including the use of the cash, modified cash, or
modified accrual method of accounting, that defers the recognition of income to
any period ending after the Closing Date.
2.5(o) No Ownership
Interests. Except as set forth in Schedule 2.5(o), Company does
not own, directly or indirectly, any capital stock, option, warrant, convertible
debt, restricted equity, or any other ownership or equity interest in any
person.
2.5(p) Code Section 409A
Compliance. Any Employee Plan (as defined in
Section 2.15(a)) that is a deferred compensation arrangement that is
subject to, and not exempt from, Section 409A of the Code has been in good faith
operational compliance with Section 409A of the Code on or after January 1,
2005, or if later, the date the legally binding right to such deferred
compensation first arose.
11
2.5(q) Definitions.
(i) “Code” means
the Internal Revenue Code of 1986, as amended.
(ii) “Taxes” means any
federal, state, county, local, territorial, provincial, or foreign income, net
income, gross receipts, single business, business, commercial activity, margin,
unincorporated business, commuter, transit, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Section 59A of the Code), customs duties, capital stock,
franchise, profits, gains, withholding, social security (or similar), medicare,
payroll, unemployment, disability, workers compensation, real property, personal
property, ad valorem, replacement, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax or fee of any kind
whatsoever, including any interest, penalty, or addition, whether or not
disputed and whether or not disputed and whether imposed by law, order, contract
or otherwise.
(iii) “Tax Return” means any
return, declaration, report, estimate, claim for refund, or information return
or statement relating to, or required to be filed in connection with, any Taxes,
including any schedule, form, attachment or amendment.
(iv) “Treasury Regulations”
means the Treasury Regulations promulgated under the Code, as such Treasury
Regulations may be amended from time to time. Any reference herein to
a particular provision of the Treasury Regulations means, where appropriate, the
corresponding successor provision.
2.6. Accounts
Receivable. All
accounts receivable and deferred revenue (i.e., costs in excess of xxxxxxxx) of
Company reflected on the Recent Balance Sheet, and as incurred in the normal
course of business since the date thereof, represent arm’s length sales actually
made in the ordinary course of business; are the valid and legally binding
obligations of the parties obligated to pay such amounts; are collectible (net
of the reserve shown on the Recent Balance Sheet for doubtful accounts) within
reasonable periods and in the ordinary course of business and without the
necessity of commencing legal proceedings; are subject to no counterclaim or
setoff; and are not in dispute. Schedule 2.6
contains an aged schedule of accounts receivable included in the Recent Balance
Sheet. Schedule 2.6 also
identifies (a) any account receivable which is being retained by the customer
pending completion or other milestone of the applicable contract; (b) any
account receivable which is payable in installments over an extended period of
time of at least 120 days; and (c) any sums owing to Company from employees of
Company.
2.7. Absence of Certain
Changes. Except
as and to the extent set forth in Schedule 2.7, since the date
of the Recent Balance Sheet, Company has conducted its business only in the
ordinary course of business consistent with past practice, and there has not
been:
2.7(a) No Adverse
Change. Any material adverse change in the conduct, financial
condition, assets, Liabilities, business, prospects or operations of the
Business or Company;
2.7(b) No
Damage. Any material loss, damage or destruction, whether
covered by insurance or not, relating to or affecting the Business or the assets
or Liabilities of Company;
2.7(c) No Increase in
Compensation. Any increase in the compensation, salaries,
commissions or wages payable or to become payable to any employee or agent of
Company (including, without limitation, any increase or change pursuant to any
bonus, pension, profit sharing, retirement or other plan or commitment), or any
bonus or other employee benefit granted, made or accrued; or any increase in the
number of employees of Company employed in the Business with the exception of
at-will offer letters with newly-hired employees that have been disclosed to NRC
pursuant to Section 2.16;
12
2.7(d) No Labor
Disputes. Any labor dispute or disturbance;
2.7(e) No Proposals or
Commitments. Any sales proposals, commitments or transactions
by Company other than in the ordinary course of business consistent with past
practice;
2.7(f) No
Distributions. Any declaration, setting aside or payment of
any dividend or any other distribution in respect of Company’s capital stock or
other Equity Interests of Company; any redemption, purchase or other acquisition
by Company of any capital stock or other Equity Interests of Company, or any
security relating thereto; or any other payment to any shareholder of Company or
holder of other Equity Interests of Company by virtue of being a shareholder or
holder;
2.7(g) No Disposition of
Property. Any sale, lease or other transfer or disposition of
any properties or assets of Company, except for the sale or disposition of
properties or assets received pursuant to the dissolution of
Dentra;
2.7(h) No Material
Acquisitions. Any merger or consolidation with, any
acquisition of an interest in or any acquisition of a substantial portion of the
assets or business of any person or entity, or any other acquisition of any
material assets;
2.7(i) No
Indebtedness. Any indebtedness incurred, assumed or guaranteed
by Company;
2.7(j) No
Liens. Any Lien made on any of the properties or assets of
Company;
2.7(k) No Amendment of
Contracts. Any entering into, amendment or early termination
of any Contract relating to employment to which Company is a party other than as
(i) contemplated pursuant to this Agreement or (ii) required by law; any
entering into, amendment or early termination of any Contract between Company
and any shareholder, director or officer of Company (or with any relative,
beneficiary, spouse or Affiliate of any such person); any entering into,
amendment or termination by Company of any material Contract in connection with
or affecting the Business, or any release or waiver of material rights
thereunder, other than in the ordinary course of business;
2.7(l) Loans and
Advances. Any loan or advance (other than advances to
employees in the ordinary course of business for travel and entertainment in
accordance with past practice) to any person including, but not limited to, any
Affiliate (for purposes of this Agreement, the term “Affiliate” shall mean and
include all shareholders, directors and officers of Company; the spouse of any
such person; any person who would be the heir or descendant of any such person
if he or she were not living; and any entity in which any of the foregoing has a
direct or indirect interest, except through ownership of less than 5% of the
outstanding shares of any entity whose securities are listed on a national
securities exchange or traded in the national over-the-counter
market);
2.7(m) Credit and Price
Concessions. Any grant of credit or price concessions to any
customer, distributor, consultant or sales representative of Company on terms or
in amounts more favorable than those which have been extended to such person in
the past, any other material change in the terms of any credit or price
concessions heretofore extended, or any other material change of Company’s
policies or practices with respect to the granting of credit or price
concessions;
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2.7(n) Trade
Rights. Any agreement or settlement regarding the breach or
infringement of any Trade Right (as defined in Section 2.17) or similar rights,
or any modification or agreement to modify any existing rights with respect
thereto;
2.7(o) Deferral of
Liabilities. Any deferral, extension or failure to pay any
direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense (including capital improvements), fine, penalty,
obligation or responsibility, fixed or unfixed, known or unknown, asserted or
unasserted, liquidated or unliquidated, secured or unsecured (any “Liability”)
of Company as and when the same become due or any allowance of the level of the
Liabilities of Company to increase in any material respect or any prepayment of
any of the Liabilities of Company;
2.7(p) Accounting
Principles. Any material change in Company’s financial or Tax
accounting principles or methods, except to the extent required by
GAAP;
2.7(q) Discharge of
Obligations. Any discharge, satisfaction of, or agreement to
satisfy or discharge any Liability, other than current Liabilities shown on the
Recent Balance Sheet and current Liabilities incurred since the date of the
Recent Balance Sheet in the ordinary course of business;
2.7(r) No Unusual
Events. Any other event or condition not in the ordinary
course of business of Company; or
2.7(s) Agreements. Any
agreements entered into to do any of the foregoing.
2.8. Absence of Undisclosed
Liabilities. Except
(i) to the extent specifically set forth or provided for on the Recent Balance
Sheet, (ii) as a direct result of the transactions contemplated by this
Agreement or (iii) as set forth in Schedule 2.8, Company does not
have any Liabilities other than commercial Liabilities and obligations incurred
since the date of the Recent Balance Sheet in the ordinary course of business
and consistent with past practice and none of which has had or is reasonably
expected to have a Material Adverse Effect.
2.9. No
Litigation. Except
as set forth in Schedule 2.9, there is no
action, suit, arbitration, proceeding or investigation, whether civil, criminal
or administrative (“Litigation”) pending or, to Company’s or the Major Holders’
knowledge, threatened against Company, its directors or officers (in such
capacities), the Business or any of Company’s assets or
Liabilities. To Company’s and the Major Holders’ knowledge, no event
has occurred or action taken that is reasonably likely to result in such
Litigation. Schedule 2.9 also identifies
all Litigation to which Company or any of its directors (in such capacity) have
been parties since January 1, 2006. Except as set forth in Schedule 2.9, neither
Company nor its Business, assets or Liabilities is subject to any Order of any
Government Entity.
2.10(a) Compliance. Except
as set forth in Schedule 2.10(a), to Company’s
knowledge, Company (including each and all of its operations, practices,
properties and assets in existence on the Closing Date) is in substantial
compliance with all applicable Laws and Orders, including, without limitation,
those applicable to discrimination in employment, occupational safety and
health, trade practices, competition and pricing, product warranties, zoning,
building and sanitation, employment, retirement and labor relations or product
advertising. Except as set forth in Schedule 2.10(a), Company has
not received notice of any violation or alleged violation of, and is subject to
no Liability for past or continuing violation of, any Laws or
Orders. To Company’s knowledge, all reports and returns required to
be filed by Company with any Government Entity have been filed, and were
accurate and complete in all material respects when filed.
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2.10(b)
Licenses
and Permits. Company has all material licenses, permits,
approvals, authorizations, registrations and consents of all Governmental
Entities and all certification organizations required for the conduct of the
Business (as presently conducted) and operation of the facilities used in the
Business. All such licenses, permits, approvals, authorizations,
registrations and consents are in full force and effect and will not be affected
or made subject to loss, limitation or any obligation to reapply as a result of
the transactions contemplated hereby. Except as set forth in Schedule 2.10(b), Company
(including its operations, practices, properties and assets) is and has been in
compliance in all material respects with all such permits and licenses,
approvals, authorizations, registrations and consents.
2.10(c) Environmental
Matters. The applicable Laws relating to pollution or
protection of the environment, including Laws relating to emissions, discharges,
generation, storage, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic, hazardous or petroleum or
petroleum-based substances (“Hazardous Materials” but excluding janitorial and
office supplies properly maintained) into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Material,
including, without limitation, the Comprehensive Environmental Response
Compensation Liability Act (“CERCLA”), as amended, and its state and local
counterparts are herein collectively referred to as the “Environmental
Laws.” To Company’s knowledge, there is no past or present fact which
is reasonably likely to interfere with or prevent compliance or continued
compliance with the Environmental Laws or with any Order previously issued or
entered against Company which is reasonably likely to result in a Material
Adverse Effect.
2.11(a) Marketable
Title. Company has good and marketable fee title to all assets
and properties owned by Company, including, without limitation, all properties
(tangible and intangible) reflected in the Recent Balance Sheet, except for
inventory disposed of in the ordinary course of business since the date of such
Recent Balance Sheet, free and clear of all mortgages, liens (statutory or
otherwise), security interests, claims, pledges, licenses, equities, options,
conditional sales contracts, assessments, levies, easements, covenants,
reservations, encroachments, hypothecations, restrictions, rights-of-way,
exceptions, limitations, charges, possibilities of reversion, rights of refusal
or encumbrances of any nature whatsoever (collectively, “Liens”), except
(i) restrictions imposed in any Order of a Governmental Entity;
(ii) Liens disclosed on Schedule 2.11(a); (iii) Liens
for Taxes not yet due and payable; (iv) Liens imposed by Laws such as
materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens and other
similar liens arising in the ordinary course of business securing obligations
that are not overdue for a period of more than 30 days; and (v) minor survey
exceptions, reciprocal easement agreements and other customary encumbrances on
title to real property that do not, individually or in the aggregate, materially
and adversely affect the value of or the use of such property for its current
purposes. Company’s title to such assets and properties will not be
affected in any way by the transactions contemplated hereby. Company
is not using, in the present conduct of the Business, any properties, rights or
assets that are not owned, licensed or leased by it and which are material to
the present operation of the Business.
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2.11(b) Condition. All
property and tangible assets (real or personal) owned or used by Company are in
operating condition and repair, free from any defects (except such minor defects
as do not interfere with the use thereof in the conduct of the normal operations
of Company), have been maintained consistent with the standards generally
followed in the industry and are sufficient to carry on the Business as
presently conducted. To the knowledge of Company, all buildings and
other structures owned or otherwise used by Company are in good condition and
repair and have no structural defects or defects affecting the plumbing,
electrical, sewerage, or heating, ventilating or air conditioning systems
(except for such minor defects as do not interfere with the use thereof in the
conduct of the normal operations of Company).
2.11(c)
No
Condemnation or Expropriation. Except as may be set forth in
any lease, license or sublease of Real Property, neither the whole nor any
portion of the property or any other assets of Company is subject to any Order
to be sold or is being condemned, expropriated or otherwise taken by any
Government Entity with or without payment of compensation therefor, nor, to
Company’s knowledge, has any such condemnation, expropriation or taking been
proposed.
2.11(d) Real
Property. Schedule 2.11(d) lists all
real property currently leased, used or occupied by Company (the “Real
Property”). The Company does not own any real property.
2.12. Insurance. Except
for those Employee Plans disclosed in Schedule 2.15(a) of the
Disclosure Schedule, set forth in Schedule 2.12 is a complete
and accurate list and description of all policies of fire, liability, product
liability, workers compensation, health and other forms of insurance presently
in effect with respect to the Business and the assets or Liabilities of Company,
true and correct copies of which have heretofore been delivered to
NRC. Schedule 2.12 sets forth a
brief description of each pending claim in excess of $10,000 under each such
policy other than health or disability. All such policies are valid,
outstanding and enforceable policies; and no such policy (nor any previous
policy) provides for or is subject to any currently enforceable retroactive rate
or premium adjustment, loss sharing arrangement or other actual or contingent
liability arising wholly or partially out of events arising prior to the date
hereof. No notice of cancellation or termination has been received
with respect to any such policy, and neither Company nor any Holder has
knowledge of any act or omission of Company which could result in cancellation
of any such policy prior to its scheduled expiration date. Company
has not been refused any insurance with respect to any aspect of the operations
of the Business nor has its coverage been limited by any insurance carrier to
which it has applied for insurance or with which it has carried insurance during
the last three years. Company has duly and timely made all claims it
has been entitled to make under each policy of insurance. There is no
claim by Company pending under any such policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies, and neither
Company nor any Holder knows of any basis for denial of any claim under any such
policy. Company has not received any written notice from or on behalf
of any insurance carrier issuing any such policy that insurance rates therefor
will hereafter be substantially increased (except to the extent that insurance
rates may be increased for all similarly situated risks) or that there will
hereafter be a cancellation or an increase in a deductible (or an increase in
premiums in order to maintain an existing deductible) or nonrenewal of any such
policy. Such policies are sufficient in all material respects for
compliance by Company with all requirements of law and with the requirements of
all material contracts to which Company is a party.
2.13. Contracts and
Commitments.
2.13(a) Real Property
Leases. Except as set forth in Schedule 2.13(a), Company
(whether as lessor or lessee) has no Contracts for the lease or occupancy of
Real Property.
16
2.13(b) Personal Property
Leases. Except as set forth in Schedule 2.13(b), Company
(whether as lessor or lessee) has no Contracts for the lease or use of personal
property involving any remaining consideration, termination charge or other
expenditure in excess of $5,000 or involving any remaining performance over a
period of more than 12 months.
2.13(c) Sales Contracts and
Commitments. Set forth in Schedule 2.13(c) is a true and
complete list of all Company’s material sales contracts, commitments and orders
to or with customers in effect on the Closing Date. All such
contracts, commitments and orders were made the in ordinary course of business,
and none of them is for a sales price which would reasonably be expected to
result in a loss to Company (after giving effect to full amortization of
overhead and selling, general and administrative expenses).
2.13(d)
Subcontracting. Except
as set forth in Schedule 2.13(d), Company has
no subcontracting agreements, understandings, contracts or commitments (written
or oral) in connection with or affecting the Business. Schedule 2.13(d) also sets
forth all such subcontracting agreements of Company in effect at any time since
January 1, 2007.
2.13(e) Other Material
Contracts. Company has no lease, license, contract or
commitment of any nature (other than the Employee Plans set forth on Schedule 2.15(a)) involving
consideration or other expenditure, or requiring Company to incur any costs, in
excess of $25,000, or which is otherwise individually material to the operations
of Company, except as explicitly described in Schedule 2.13(e).
2.13(f) Powers of
Attorney. Company has not given a power of attorney or proxy
that is currently in effect to any person or entity.
2.13(g) Collective Bargaining
Agreements. Company has no collective bargaining Contract with
any unions, guilds, shop committees or other collective bargaining
groups.
2.13(h) Loan
Agreements. Except as set forth in Schedule 2.13(h), Company has
no loan Contract, promissory note, letter of credit, performance or other type
of bond or other evidence of indebtedness, including any Contract evidencing or
relating to Indebtedness, as a signatory, guarantor or otherwise.
2.13(i) Guarantees. Except
as set forth in Schedule 2.13(i), Company has
not guaranteed the payment or performance of any person or entity, agreed to
indemnify any person or entity (except under Contracts entered into by Company
in the ordinary course of business) or to act as a surety, or otherwise agreed
to be contingently or secondarily liable for the obligations of any person or
entity.
2.13(j) Governmental
Contracts. Except as set forth in Schedule 2.13(j), Company has
no Contract with any Governmental Entity.
2.13(k) Restrictive
Agreements. Except as set forth in Schedule 2.13(k), to Company’s
knowledge, Company has no Contract (i) prohibiting or restricting Company or any
of its employees from competing in any business or geographical area, or
soliciting customers or employees, or otherwise restricting it from carrying on
any business anywhere in the world, (ii) relating to the location of employees
or a minimum number of employees to be employed by Company, (iii) containing any
“most favored nation,” “most favored customer” or similar provisions or (iv)
granting any type of exclusive rights to any person or entity.
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2.13(l) Distribution
Contracts. Set forth in Schedule 2.13(l) is a true and
complete list of all Company’s distribution or similar Contracts in effect on
the Closing Date. All such Contracts were made in the ordinary course
of business.
2.13(m)
No
Default. Company has delivered or made available to NRC
complete and accurate copies of each Contract listed on the schedules named in
this Section 2.13, and Company is not in default under any lease, Contract or
commitment, nor has any event or omission occurred which through the passage of
time or the giving of notice, or both, would constitute a default by Company
thereunder or cause the acceleration of any of Company’s obligations or result
in the creation of any Lien on any of the assets owned, used or occupied by
Company. To Company’s knowledge, no third party is in default under
any lease, Contract or commitment to which Company is a party, nor has any event
or omission occurred which, through the passage of time or the giving of notice,
or both, would constitute a default thereunder or give rise to an automatic
termination, or the right of discretionary termination, thereof.
2.14. Labor
Matters. Except
to the extent set forth in Schedule 2.14, (a) Company is
not engaged in any unfair labor practice; (b) there is no unfair labor practice
charge or complaint against Company pending or, to Company’s knowledge,
threatened; (c) there is no labor strike, dispute, request for representation,
slowdown or stoppage actually pending or, to Company’s or any Major Holder’s
knowledge, threatened against or affecting Company nor any secondary boycott
with respect to products of Company; and (d) there are no administrative charges
or court complaints against Company concerning alleged employment discrimination
or other employment related matters pending or, to Company’s knowledge,
threatened before the U.S. Equal Employment Opportunity Commission or any
Government Entity.
2.15. Employee Benefit
Plans.
2.15(a) Disclosure. Schedule 2.15(a) sets forth
all pension, thrift, savings, profit sharing, retirement, incentive bonus or
other bonus, medical, dental, life, accident insurance, employee benefit,
employee welfare, disability, group insurance, stock purchase, stock option,
stock appreciation, stock bonus, executive or deferred compensation,
hospitalization and other similar fringe or employee benefit plans, programs and
arrangements, and severance agreements or plans, vacation and sick leave plans,
programs, arrangements and policies, including, without limitation, all
“employee benefit plans” (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”)), for the benefit of, or
relate to, any persons employed by Company (“Company Employees”). The
items described in the foregoing sentence are hereinafter sometimes referred to
collectively as “Employee Plans,” and each individually as an “Employee
Plan.” True and correct copies of all the Employee Plans, including
all amendments thereto, have heretofore been made available to
NRC. Company has never maintained, established, sponsored,
participated in, or contributed to or been obligated to contribute to: (i) any
pension plan subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of
ERISA or Section 412 of the Code; (ii) any “multiemployer plan” (as defined in
Section 4001 of ERISA); or (iii) any multiple employer plan described in Section
413 of the Code. Company has no liability, contingent or otherwise,
with respect to any employee benefit plan as a result of having been a member of
a controlled group within the meaning of Code Section 414.
2.15(b) Prohibited Transactions,
etc. There have been no “prohibited transactions” within the
meaning of Section 406 or 407 of ERISA or Section 4975 of the Code for which a
statutory or administrative exemption does not exist with respect to any
Employee Plan, and no event or omission has occurred in connection with which
Company or any of its assets or any Employee Plan, directly or indirectly, could
be subject to any Liability under ERISA, the Code or any other Law or Order
applicable to any Employee Plan, or under any agreement, instrument, Law or
Order pursuant to or under which Company has agreed to indemnify or is required
to indemnify any person against Liability incurred under any such agreement,
instrument, Law or Order.
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2.15(c) Payments and
Compliance. With respect to each Employee Plan, (i) all
payments due from Company to date have been made and all amounts properly
accrued to date as Liabilities of Company which have not been paid have been
properly recorded on the books of Company and are reflected in the Recent
Balance Sheet; (ii) Company has complied, in all material respects, with, and
each such Employee Plan conforms, in all material respects, in form and
operation to, all applicable Laws and regulations, including but not limited to
ERISA and the Code, and all reports and information relating to such Employee
Plan required to be filed with any Governmental Entity have been timely filed;
(iii) all material reports and information relating to each such Employee Plan
required to be disclosed or provided to participants or their beneficiaries have
been timely disclosed or provided; (iv) each such Employee Plan which is
intended to qualify under Section 401 of the Code has received a favorable
determination or opinion letter from the Internal Revenue Service with respect
to such qualification, its related trust has been determined to be exempt from
taxation under Section 501(a) of the Code, and to Company’s knowledge nothing
has occurred since the date of such letter that has or is likely to adversely
affect such qualification or exemption; (v) there are no actions, suits or
claims pending (other than routine claims for benefits) or threatened with
respect to such Employee Plan or against the assets of such Employee Plan; and
(vi) no Employee Plan is a plan which is established and maintained outside the
United States primarily for the benefit of individuals substantially all of whom
are nonresident aliens.
2.15(d) Post-Retirement
Benefits. No Employee Plan provides benefits, including,
without limitation, death or medical benefits (whether or not insured) with
respect to current or former Company employees beyond their retirement or other
termination of service other than (i) coverage mandated by applicable Law, (ii)
death or retirement benefits under any Employee Plan that is an employee pension
benefit plan, (iii) deferred compensation benefits accrued as Liabilities on the
books of Company (including the Recent Balance Sheet), (iv) disability benefits
under any Employee Plan that is an employee welfare benefit plan and which have
been fully provided for by insurance or otherwise or (v) benefits in the nature
of severance pay.
2.15(e) No Triggering of
Obligations. Except as set forth in Schedule 2.15(e), the
consummation of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee of Company to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due to any such employee or former employee, except as
expressly provided in this Agreement, or (iii) result in any prohibited
transaction described in Section 406 of ERISA or Section 4975 of the
Code for which an exemption is not available.
2.15(f) Provision of
Documents. With respect to each Employee Plan, Company has
made available to NRC:
2.15(f)(i) a
copy of the annual report, if required under ERISA, with respect to each such
Employee Plan for the last two years;
2.15(f)(ii) a
copy of the summary plan description, together with each summary of material
modifications, required under ERISA with respect to such Employee Plan, all
material employee communications relating to such Employee Plan, and, unless the
Employee Plan is embodied entirely in an insurance policy to which Company is a
party, a true and complete copy of such Employee Plan;
19
2.15(f)(iii) if
the Employee Plan is funded through a trust or any third party funding vehicle
(other than an insurance policy), a copy of the trust or other funding agreement
and the latest financial statements thereof; and
2.15(f)(iv) the
most recent determination or opinion letter received from the Internal Revenue
Service with respect to each Employee Plan that is intended to be a “qualified
plan” under Section 401 of the Code.
With
respect to each Employee Plan for which an annual report has been filed and made
available to NRC pursuant to clause (i) of this Section 2.15, no material
adverse change has occurred with respect to the matters covered by the latest
such annual report since the date thereof.
2.15(g) Future
Commitments. Company has no announced plan or legally binding
commitment to create any additional Employee Plans or to amend or modify, unless
required by applicable laws, any existing Employee Plan.
2.16. Employment;
Compensation. Schedule 2.16 contains a true
and correct list of all current employees of Company as of the date hereof and
all forms of compensation (including the respective amounts) paid to such
employees in the five months ended May 31, 2010 (other than health, disability
and other benefits subject to plans available to employees
generally). Since May 31, 2010, neither Company nor any Major Holder
is paying or has agreed to pay, directly or indirectly, any compensation, fee or
bonus to any employee of Company in excess of the rates or plans identified in
Schedule 2.15(a) or Schedule 2.16. Except
as set forth in Schedule 2.15(a), neither
Company nor any Major Holder is paying or has agreed to pay, directly or
indirectly, any compensation, fee or bonus to any employee of Company in
connection with the transactions contemplated by this
Agreement. Schedule 2.16 also sets forth
a list by location in the United States of the number of former employees of
Company whose employment was terminated within the 90-day period preceding the
date of this Agreement.
2.17. Trade
Rights. Schedule 2.17 lists (to the
extent reasonably susceptible to listing) all Trade Rights (as defined below)
owned by Company on the Closing Date. Schedule 2.17 specifies
whether such Trade Rights are jointly owned by Company with a third party, and
also indicates in which jurisdictions such registered Trade Rights are
registered. All Trade Rights shown as registered in Schedule 2.17 have been
properly registered, all pending registrations and applications have been
properly made and filed and all annuity, maintenance, renewal and other fees
relating to registrations or applications are current. To conduct the
Business, as such is currently being conducted by Company immediately prior to
the Closing, Company does not, to Company’s knowledge, require any Trade Rights
that it does not already have sufficient rights to. To Company’s
knowledge, Company is not infringing and has not infringed any Trade Rights of
another in the operation of the Business, nor, to the knowledge of Company, is
any other person infringing the Trade Rights owned by
Company. Company has not granted any license or made any assignment
of any Trade Right listed in Schedule 2.17, nor does
Company have any obligation to pay after the Closing Date any royalties or other
consideration for the right to use any Trade Rights of others except as listed
in Schedule 2.17. There
is no Litigation pending or, to Company’s knowledge, threatened to challenge
Company’s right, title and interest with respect to its continued use and right
to preclude others from using any Trade Rights owned by Company. All
Trade Rights of Company set forth in Schedule 2.17 are valid,
enforceable and in good standing, and to Company’s knowledge there are no
equitable defenses to enforcement based on any act or omission of
Company. To Company’s knowledge, the consummation of the transactions
contemplated by this Agreement will not alter or impair any Trade Rights set
forth in Schedule 2.17. To
Company’s knowledge, no methods, processes, procedures, apparatus or equipment
used or held for use by Company use or include any proprietary or confidential
information or any trade secrets misappropriated from another. To
Company’s knowledge, Company has no proprietary or confidential information that
is owned or claimed by third parties and that is not rightfully in the
possession of Company, and Company has complied in all material respects with
all Contracts governing the disclosure and use of proprietary or confidential
information. Schedule 2.17 contains a
correct and complete list of all pending research and development projects for
which there has been a charge or cost allocation of $5,000 or
more. Company has made reasonable efforts to maintain the
confidentiality of all Trade Rights from which Company derives independent
economic value, actual or potential, from such Trade Rights not being generally
known. As used herein, the term “Trade Rights” shall mean and
include: (i) all trademark rights, business identifiers, trade dress, service
marks, trade names and brand names, all registrations thereof and applications
therefor and all goodwill associated with the foregoing; (ii) all copyrights,
copyright registrations and copyright applications, and all other rights
associated with the foregoing and the underlying works of authorship; (iii) all
patents and patent applications, and all international proprietary rights
associated therewith; and (iv) all inventions, software, mask works
and mask work registrations, know how, discoveries, improvements, designs, trade
secrets, shop and royalty rights and other intellectual
property.
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2.18. Information Technology;
Security and Privacy. To
Company’s knowledge, all information technology and computer systems (including
software, information technology and telecommunication hardware and other
equipment) relating to the transmission, storage, maintenance, organization,
presentation, generation, processing or analysis of data and information,
whether or not in electronic format, used in or necessary in the conduct of the
Business (collectively, “Company IT Systems”) have been properly maintained by
technically competent personnel, in accordance with standards set by the
manufacturers or otherwise in accordance with standards prudent in the
industry. As of the Closing Date, to Company’s knowledge, the Company
IT Systems are in good working condition to effectively perform all information
technology operations of the Business as conducted by Company immediately prior
to the Closing.
2.19. Bank
Accounts. Schedule 2.19 sets forth the
names and locations of all banks, trust companies, savings and loan associations
and other financial institutions at which Company maintains a safe deposit box,
lock box or checking, savings, custodial or other account of any nature, the
type and number of each such account and the signatories therefore, a
description of any compensating balance arrangements, and the names of all
persons authorized to draw thereon, make withdrawals therefrom or have access
thereto.
2.20. Major
Customers. Schedule 2.20 contains a
correct and complete list of the 20 largest customers, including distributors,
of Company for each of the two most recent fiscal years (determined on the basis
of the total dollar amount of net sales) showing the total dollar amount of net
sales to each such customer during each such year. Neither Company
nor any Major Holder has any knowledge or information of any facts indicating,
nor any other reason to believe, that any of the customers described in Schedule 2.20 will not
continue to be customers of Company after the Closing at substantially the same
level of purchases as heretofore.
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2.21(a) Contracts With
Affiliates. All leases, contracts, agreements or other
arrangements (except for those Employee Plans disclosed in Schedule 2.15(a) of the
Disclosure Schedule) between Company and any Affiliate are described in Schedule 2.21(a).
2.21(b) No Adverse
Interests. Except as set forth in Schedule 2.21(b), no Affiliate
has any direct or indirect interest in (i) any entity which does business with
Company or is competitive with Company’s business, or (ii) any property, asset
or right which is used by Company in the conduct of the Business.
2.22. No Brokers or
Finders. Except
for Xxxxxxxx Curhan Ford, none of Company, any of the Major Holders or any of
Company’s directors, officers, employees or agents have retained, employed or
used any broker or finder in connection with the transaction provided for herein
or in connection with the negotiation thereof, nor are any of them responsible
for the payment of any broker’s, finder’s or similar fees.
2.23. Treatment of
Rights. The
treatment of outstanding and unexercised options granted under the Stock Option
Plans and of the Warrants as of the Closing as contemplated by
Section 1.1(b) does not violate or conflict with any of the provisions of
the Stock Option Plans, the Warrants or any agreements reflecting the grant of
options or warrants thereunder. As of the Closing, all issued and
outstanding Rights will terminate and there will be no undisclosed or contingent
Liabilities of Company or NRC to the holders thereof as a result of or in any
way related to the Rights.
2.24. Duty of Company and the
Holders to Make Inquiry. To
the extent that any of the representations and warranties made by Company and
the Major Holders in this Agreement or any other document or instrument to be
executed and delivered by Company or any Major Holder pursuant hereto are
qualified by the knowledge of Company or the knowledge of the Major Holders,
Company or the Major Holder, as applicable, has made due and reasonable inquiry
and investigation concerning the matters to which such representations and
warranties relate, including without limitation reasonable inquiry of those
personnel of Company whose titles identify them as officers
thereof.
2.25. Pro Forma Business
Plan. The
costs associated with terminating current activities of Company not included in
the pro forma business plan set forth in Schedule 2.25 hereto (the “Pro Forma
Business Plan”) equal $349,384.16 (the “Termination Costs”) as of the Closing
Date. The Pro Forma Business Plan has been communicated to those
employees, service providers and contractual counterparties with respect to whom
Company expects to incur Termination Costs.
2.26. Disclosure. No
representation or warranty by Company in this Agreement, nor any written
statement, certificate, schedule, document or exhibit hereto furnished by or on
behalf of Company pursuant to this Agreement or in connection with transactions
contemplated hereby, contains any untrue statement of material fact or omits a
material fact necessary to make the statements contained therein, in light of
the circumstances under which made, not misleading. All statements
and information contained in any certificate, instrument, Disclosure Schedule or
document delivered by or on behalf of Company pursuant hereto shall be deemed
representations and warranties by Company. Each copy of an original
document included in any Schedule is a true and correct copy of such document
and includes all material exhibits, schedules, amendments, supplements or other
modifications to such document. Company has furnished to NRC access
to true, accurate and complete copies of all documents that are listed or
otherwise referenced in any Schedule.
22
As an
inducement to NRC to execute and deliver this Agreement, each Holder, severally
and not jointly, makes the following representations and warranties to NRC, each
of which is true and correct on the date hereof, shall be unaffected by any
investigation heretofore made by NRC, or any knowledge of NRC, and shall survive
the consummation of the transactions provided for herein.
3.1. Title to Shares;
Authority. Such
Holder is the lawful, record and beneficial owner of, and has good and valid
title to, all of the Shares set forth opposite such Holder’s name on Schedule
1.1 hereto, with the full power and authority to transfer and otherwise dispose
of such Shares, together with any and all rights and benefits incident to the
ownership thereof, free and clear of all Liens. Such Holder has full
power and authority to enter into this Agreement and this Agreement constitutes
a legal, valid and binding obligation of such Holder, enforceable against such
Holder in accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the rights of creditors generally and by general
equitable principles.
3.2. No
Violation. None
of the execution, delivery or performance by such Holder of this Agreement or
the consummation of the transactions contemplated hereby will, with or without
the giving of notice or the lapse of time or both, conflict with, or result in a
breach or violation of, or a default under, (i) any material contract to which
such Holder is a party or is bound, (ii) the charter, bylaws or similar
organizational documents of such Holder or (iii) any Law or Order to which such
Holder is subject.
3.3. Brokers. Such
Holder has not authorized or retained any person to act as an investment banker,
broker, finder or other intermediary who is entitled to any fee, commission or
payment from Company or NRC in connection with the negotiation, preparation,
execution or delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement.
3.4. Litigation. There
is no Litigation pending or, to the knowledge of such Holder, threatened,
against such Holder, whether at law or in equity, or before or by any
Governmental Entity, challenging, questioning the validity of or seeking to
prevent the transactions contemplated by this Agreement or that would reasonably
be likely to impair such Holder’s ability to fulfill its obligations
hereunder.
As an
inducement to Company and the Holders to execute and deliver this Agreement, NRC
makes the following representations and warranties to Company and the Holders,
each of which is true and correct on the date hereof, shall be unaffected by any
investigation heretofore made by Company or the Holders, or any knowledge of
Company and the Holders, and shall survive the consummation of the transactions
provided for herein.
4.1. Corporate.
4.1(a) Organization. NRC
is a corporation duly incorporated and organized and validly existing under the
laws of the State of Wisconsin.
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4.1(b) Corporate
Power. NRC has all requisite corporate power to enter into
this Agreement and the other documents and instruments to be executed and
delivered by NRC pursuant hereto and to carry out the transactions contemplated
hereby and thereby.
4.2. Authority. The
execution and delivery of this Agreement and the other documents and instruments
to be executed and delivered by NRC pursuant hereto and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of NRC, including the Board of Directors
of NRC. No other corporate act or proceeding on the part of NRC or
NRC’s shareholders is necessary to authorize this Agreement or the other
documents and instruments to be executed and delivered by NRC pursuant hereto or
the consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes, and, when executed and
delivered, the other documents and instruments to be executed and delivered by
NRC pursuant hereto will constitute, valid and binding agreements of NRC,
enforceable in accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors’ rights generally, and by general equitable principles.
4.3. No
Violation. Neither
the execution and delivery of this Agreement or the other documents and
instruments to be executed and delivered by NRC pursuant hereto nor the
consummation by NRC of the transactions contemplated hereby and thereby (a) will
violate any Laws or any Orders of any Governmental Entities, (b) will require
any authorization, consent, approval, exemption or other action by or notice to
any Government Entity or (c) will violate or conflict with, or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or will result in the termination of, or accelerate
the performance required by, or result in the creation of any Lien upon any of
the assets or properties of NRC under, any term or provision of the Articles of
Incorporation or By-Laws of NRC each as amended to date or of any contract,
commitment, understanding, arrangement, agreement or restriction of any kind or
character to which NRC is a party or by which NRC or any of its assets or
properties may be bound or affected.
4.4. Litigation. There
is no Litigation pending or, to the knowledge of NRC, threatened against NRC,
whether at law or in equity, or before or by any Governmental Entity,
challenging, questioning the validity of or seeking to prevent the transactions
contemplated by this Agreement or that would reasonably be likely to impair
NRC’s ability to fulfill its obligations hereunder or under any other document
or instrument to be executed and delivered by NRC pursuant hereto.
4.5. Availability of
Funds. NRC
currently has access to sufficient immediately available funds in cash to pay
the Purchase Consideration and any other amounts to be paid by NRC pursuant to
the transactions contemplated by this Agreement.
4.6. No Brokers or
Finders. Neither
NRC nor any of its directors, officers, employees or agents have retained,
employed or used any broker or finder in connection with the preparation,
execution or delivery of this Agreement or the transactions provided for herein
or in connection with the negotiation thereof.
4.7. Disclosure. No
representation or warranty by NRC in this Agreement, nor any written statement,
certificate, schedule, document or exhibit hereto furnished or to be furnished
by or on behalf of NRC pursuant to this Agreement or in connection with
transactions contemplated hereby, contains or shall contain any untrue statement
of a material fact or omits or shall omit a material fact necessary to make the
statements contained therein, in light of the circumstances under which made,
not misleading. All statements and information contained in any certificate,
instrument, Disclosure Schedule or document delivered by or on behalf of NRC
pursuant hereto shall be deemed representations and warranties by
NRC.
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5.
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5.1. Employment
Agreements. On
or prior to the Closing Date, the employees set forth in Schedule 5.1 hereto
shall have executed and delivered waiver and/or letter agreements in a form
reasonably acceptable to NRC with respect to the compensation arrangements
between such employees and Company.
5.2. Noncompetition;
Confidentiality. As
an inducement to NRC to execute this Agreement and complete the transactions
contemplated hereby, and in order to preserve the goodwill associated with the
Business being acquired pursuant to this Agreement, each of the individuals set
forth in Schedule 5.2 hereto (the “Restricted Holders”) hereby individually
covenants and agrees solely on behalf of themselves and no other Holder as
follows:
5.2(a) Covenant Not to
Compete. For a period commencing on the Closing Date and
continuing until three years from the Closing Date or, for Restricted Holders
who continue as or become an employee or other service provider of Company or
its Affiliates after the Closing, the later of three years from the Closing Date
and two years following the termination of such employment or other service, no
Restricted Holder shall directly or indirectly:
(i)
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engage
in, continue in or carry on any business which competes with the Business
in the Territory (defined below), or any business which competes with any
business engaged in or proposed to be engaged in as disclosed in filings
with the Securities and Exchange Commission by NRC as of the Closing or
the date of such termination, including owning or controlling any
financial interest in any corporation, partnership, firm or other form of
business organization which is so
engaged;
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(ii)
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consult
with, advise or assist in any substantial way, whether or not for
consideration, any business organization that is now or becomes a
competitor of Company or NRC in any aspect with respect to the
Business;
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(iii)
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solicit
for employment any person who is or was employed by NRC or Company as part
of the Business in the Territory during the then immediately preceding 12
months, or actively induce or otherwise assist any other person or entity
in soliciting for employment any person who is or was employed by NRC or
Company in the Territory during the then immediately preceding 12 months,
without the prior written consent of NRC;
or
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(iv)
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unless
agreed to by NRC in writing and in advance, solicit, request or seek any
business that is related to the Business (as the Business is conducted by
Company immediately prior to the Closing, or is then currently, conducted)
from any then current customer or vendor of Company or NRC in the
Territory or from any customer or vendor of Company or NRC in the
Territory during the two year period prior to (A) in the case of
Restricted Holders who continue as or become an employee or other service
provider of Company or its Affiliates, the date on which such employment
or service terminates or (B) in the case other Restricted Holders, the
Closing Date, or request, induce or advise any such customers and vendors
to withdraw, curtail or cancel their business with Company or
NRC;
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25
provided that the foregoing
shall not prohibit the ownership of securities of corporations which are listed
on a national securities exchange or traded in the national over the counter
market in an amount which shall not exceed 5% of the outstanding shares of any
such corporation. The parties agree that the geographic scope of this
covenant not to compete shall extend throughout the United States and Canada
(“Territory”). The parties agree that NRC may sell, assign or
otherwise transfer this covenant not to compete, in whole or in part, to any
person, corporation, firm or entity that purchases all or part of the
Business. In the event a court of competent jurisdiction determines
that the provisions of this covenant not to compete are excessively broad as to
duration, geographical scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any such
over broad provisions shall be deemed, without further action on the part of any
person, to be modified, amended and/or limited, but only to the extent necessary
to render the same valid and enforceable in such jurisdiction.
5.2(b) Covenant of
Confidentiality. No Restricted Holder shall at any time
subsequent to the Closing, except as explicitly requested by NRC, or except as
required by them for income tax purposes or to prove to any Governmental Entity
that they have complied or are complying with their obligations during any
period when they are or were officers or directors or employees of Company, or
except as required to be disclosed by any Laws or Orders, (i) use for any
purpose, (ii) disclose to any person, or (iii) keep or make copies of documents,
tapes, discs or programs containing, any confidential information concerning
Company. For purposes hereof, “confidential information” shall mean
and include, without limitation, all confidential Trade Rights in which Company
has an interest, all customer lists and customer information, and all other
information concerning Company’s processes, products and marketing methods which
is not generally known, and which is not in the public domain (unless such
confidential information was disclosed to the public through the fault of the
Restricted Holder).
5.2(c) Equitable Relief for
Violations. Each Restricted Holder agrees that the provisions
and restrictions contained in this Section 5.2 are necessary to protect the
legitimate continuing interests of NRC in acquiring the Shares and the Business,
that NRC would not have agreed to buy the Shares and the Business or entered
into this Agreement without the inclusion of the provisions and restrictions
contained in this Section 5.2, and that any violation or breach of these
provisions will result in irreparable injury to NRC for which a remedy at law
would be inadequate and that, in addition to any relief at law which may be
available to NRC for such violation or breach and regardless of any other
provision contained in this Agreement, NRC shall be entitled to injunctive and
other equitable relief as a court may grant after considering the intent of this
Section 5.2.
5.3. Presentation of Audited
Financial Information. NRC
will pay to KPMG LLP up to $20,000 of the cost of the audit services reasonably
required to prepare full year audited financial statements of Company for 2009
(the “2009 Audit”). The remainder of the cost of the 2009 Audit shall
constitute a Company Transaction Expense for purposes of this
Agreement. Company will use commercially reasonable efforts to
complete the 2009 Audit no later than 30 days after Closing.
5.4. Taxes. Company
and Shareholders’ Agent shall cooperate fully with NRC to the extent necessary
for NRC to obtain information regarding the Taxes and historical Tax Returns and
positions of Company and to agree on reserves to be set for any adverse Tax
positions that taxing authorities may assert.
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5.5. Sale of
Business. NRC
and Company agree that the transaction contemplated by this Agreement
constitutes a sale of a trade or business within the meaning of Section 41(f)(3)
of the Code. Company and the Major Holders will provide to NRC, upon
request, all information necessary in order to permit NRC to apply the
provisions of Section 41(f)(3)(A) of the Code.
5.6. Release. Effective
as of the Closing, each Holder does for himself, herself or itself and his, her
or its respective heirs, beneficiaries, successors and assigns, if any, release
and absolutely forever discharge NRC and its Affiliates (including, for this
purpose, Company) and their respective shareholders, directors, officers,
employees, agents and other representatives (together, the “Released Parties”)
from all Released Matters. It is the intention of the Holders in
executing the release contained in this Section 5.6, and in giving and receiving
the consideration called for herein, that this release shall be effective as a
full and final accord and satisfaction and general release of and from all
Released Matters. Notwithstanding anything herein or otherwise to the
contrary, the release contained in this Section 5.6 will not be effective so as
to benefit a particular Released Party in connection with any matter or event
that would otherwise constitute a Released Matter, but involved fraud, willful
misconduct or willful misrepresentation, or the breach of any applicable law on
the part of such Released Party. For purposes of this Agreement,
“Released Matters” means any and all claims, demands, damages, debts,
liabilities, obligations, costs, expenses (including attorneys’ and accountants’
fees and expenses), actions and causes of action of any nature whatsoever,
whether now known or unknown, that such Holder now has, or at any time
previously had, or shall or may have in the future, as a shareholder, officer,
director, contractor, consultant or employee of Company, arising by virtue of or
in any matter related to any actions or inactions with respect to Company or its
affairs with respect to Company on or before the Closing; provided that Released
Matters shall not include any rights (i) under this Agreement or any other
documents and agreements entered into in connection herewith or with respect to
the transactions contemplated hereby or (ii) as an officer or director of
Company with respect to any rights to indemnification under the Organizational
Documents, under applicable law or otherwise.
5.7. Waiver of
Notice. Each
Holder hereby waives any advance notice provisions contained in the
Organizational Documents, the Washington Business Corporation Act, the Warrants
or any other Company securities held by such Holder relating to or triggered by
the transactions contemplated by this Agreement.
5.8. Acknowledgement of Debt
Payoff. Each
Holder set forth in Schedule 1.2(a) hereto hereby acknowledges and agrees that
upon receipt of the payoff amount set forth next to such Holder’s name in
Schedule 1.2(a) hereto, the debt instrument and/or agreement between such Holder
and Company will automatically terminate and Company will owe no further
obligations with respect thereto.
Each and
every obligation of NRC to be performed on the Closing Date shall be subject to
the satisfaction prior to or at the Closing of each of the following
conditions:
6.1. Representations and
Warranties True as of the Closing Date. Each
of the representations and warranties made by Company and Holders in this
Agreement that are qualified as to materiality shall be true and correct, and
each of the representations and warranties made by Company and Holders in this
Agreement that is not so qualified and the statements contained in the
Disclosure Schedule or in any instrument, list, certificate or writing delivered
by Company or any Holder pursuant to this Agreement, shall be true and correct
in all material respects as of the Closing Date, except to the extent that such
representations and warranties speak as of an earlier date, as though such
representations and warranties were made or given on and as of the Closing Date,
except for any changes consented to in writing by NRC.
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6.2. Dentra Joint
Venture. Company
shall have delivered to NRC a true and correct copy of the agreement and plan of
dissolution executed by Dentra Corp., a Washington corporation (“Dentra”) and its shareholders, documenting the termination of all management
or shared services or similar agreements between Company and Dentra, and
evidence reasonably satisfactory to NRC that Company’s disposition of its
interest in Dentra and the business conducted by Dentra has been or will be
completed effective as of the Closing Date.
6.3. Pro Forma Business
Plan. The
Pro Forma Business Plan shall have been developed and mutually agreed upon by
NRC, Shareholders’ Agent and Company.
6.4. Financial
Statements. Company
and Shareholders’ Agent shall have provided to NRC (i) statements of Company’s
2009 full year and 2010 partial year revenues in accordance with GAAP along with
any supporting materials reasonably requested by NRC and (ii) full year
financial statements of Company for 2009 in accordance with GAAP.
6.5. Xxxxxx
Lease. The
lease agreement, dated as of January 26, 2009, by and between Company and EPIC
Property Management LLC (“Epic”) relating to the Xxxxxx Professional Building
shall have been terminated by mutual agreement of the parties thereto and
replaced by a lease with a fixed term expiring on January 31, 2011 substantially
in the form set forth in Schedule 6.5 (the
“New Lease Agreement”).
6.6. Taxes. Company
and Shareholders’ Agent shall have agreed with NRC on reserves to be set for any
adverse Tax positions that taxing authorities may assert with respect to Company
as contemplated by Section 5.3.
6.7. Compliance With
Agreement. Company
and the Holders shall have in all material respects performed and complied with
all of their respective agreements and obligations under this Agreement that are
to be performed or complied with by them prior to or on the Closing Date,
including the delivery of the closing documents specified in
Section 10.1.
6.8. Absence of
Litigation. No
Litigation shall have been commenced or overtly threatened, and no investigation
by any Government Entity shall have been commenced, against any Party or any of
their respective affiliates with respect to the transactions contemplated
hereby.
6.9. Governmental Consents and
Approvals. All
consents, approvals, orders or authorizations of, or registrations or filings
with, any Governmental Entity that are required to effect the transactions
contemplated hereby (the “Necessary Consents”) shall have been received and
delivered to NRC not less than two business days prior to the
Closing.
6.10. Escrow
Agreement. The
Escrow Agreement shall have been executed by Company, Shareholders’ Agent and
U.S. Bank National Association (the “Escrow
Agent”).
Each and
every obligation of Company and the Holders to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
conditions:
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7.1. Representations and
Warranties True on the Closing Date. Each
of the representations and warranties made by NRC in this Agreement that are
qualified as to materiality shall be true and correct, and each of the
representations and warranties made by NRC in this Agreement that are not so
qualified and the statements contained in any instrument, list, certificate or
writing delivered by NRC pursuant to this Agreement, shall be true and correct
in all respects as of the date of this Agreement and shall be true and correct
in all material respects, as of the Closing Date, except to the extent that such
representations and warranties speak as of an earlier date, as though such
representations and warranties were made or given on and as of the Closing Date,
except for any changes consented to in writing by Company and Shareholders’
Agent.
7.2. Compliance With
Agreement. NRC
shall have in all material respects performed and complied with all of NRC’s
agreements and obligations under this Agreement which are to be performed or
complied with by NRC prior to or on the Closing Date, including the delivery of
the closing documents specified in Section 10.2.
7.3. Absence of
Litigation. No
injunction or other restrictive order shall be in force against any Party or any
of their respective affiliates restraining or preventing the transactions
contemplated hereby.
7.4. Consents and
Approvals. All
Necessary Consents shall have been received and delivered to Company not less
than two business days prior to the Closing; provided that this
Section 7.4 shall not be available to Company or Holders with respect to
the Necessary Consents that are not (and should have been) disclosed as
necessary pursuant to Section 2.2.
7.5. Escrow
Agreement. The
Escrow Agreement shall have been executed by NRC and the Escrow
Agent.
8.1. Appointment. Shareholders’
Agent and its duly-appointed successor in accordance with Section 8.3 below are
hereby irrevocably constituted and appointed by Company and the Holders as the
representatives of all of the Holders through whom all actions on behalf of the
Holders relating to this Agreement after the Closing Date shall be made or
directed, and it is hereby acknowledged that Shareholders’ Agent shall be the
only person authorized to take any action so required, authorized or
contemplated by this Agreement on behalf of the Holders. Company and
the Holders further acknowledge that the foregoing appointment and designation
shall be deemed to be coupled with an interest and shall survive the Closing or
the disability, death or incompetency of any or all of the
Holders. Shareholders’ Agent is authorized, in its sole discretion
(1) to dispute, refrain from disputing, consent to, assume the defense of,
arbitrate, litigate or settle any claim made by NRC or NRC’s Affiliates under
this Agreement, (2) to negotiate and compromise any dispute which may arise
under, and exercise or refrain from exercising remedies available under, and
make any determinations under this Agreement, and to sign any releases or other
documents with respect to such dispute or remedy, and (3) to give such
instructions and do such other things and refrain from doing such things as
Shareholders’ Agent shall deem appropriate to carry out the provisions of this
Agreement. The Holders shall be bound by all notices received,
agreements and determinations made by and documents executed and delivered by
Shareholders’ Agent under this Agreement and within the scope of this
appointment. By executing and delivering this Agreement under the
heading “Shareholders’ Agent” on the signature page hereof, Xxxxxx Xxxxx hereby
accepts her appointment and authorization to act as Shareholders’ Agent on
behalf of the Holders in accordance with the terms of this
Agreement.
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8.2.
Limitation of
Liability. Shareholders’
Agent shall not be personally liable to the Holders for any action taken,
suffered or omitted by it in good faith under this Agreement or in connection
with any claim. In acting hereunder, Shareholders’ Agent may rely
upon, and shall be protected in acting or refraining from acting upon, an
opinion of counsel, certificate of auditors or other certificate, statement,
instrument, opinion, report, notice, request, consent, order, arbitrator’s
award, appraisal, bond or other paper or document reasonably believed by them to
be genuine and to have been signed or presented by the proper party or
parties. Shareholders’ Agent may consult with counsel and any advice
of such counsel shall be full and complete authorization and protection in
respect to any action taken or suffered or omitted by Shareholders’ Agent in
such capacity in good faith and in accordance with such opinion of
counsel. Shareholders’ Agent may perform its duties either directly
or by or through their agents or attorneys, and Shareholders’ Agent shall not be
responsible to the Holders for any misconduct or negligence on the part of any
agent or attorney appointed with reasonable care by them. The
expenses incurred by Shareholders’ Agent in connection with the administration
and carrying out of its duties pursuant to this Agreement shall be reimbursed
from the Shareholders’ Agent Expense Fund.
8.3. Successor Shareholders’
Agent. In
the event that Shareholders’ Agent becomes unable or unwilling to continue in
its capacity as Shareholders’ Agent under this Agreement, the holders of a
majority of the interests represented by the Holders shall appoint a successor
Shareholders’ Agent. If for any reason no successor Shareholders’
Agent has been appointed pursuant to the foregoing sentence within 60 days after
a Shareholders’ Agent becoming unable or unwilling to continue, NRC shall have
the right to petition a court of competent jurisdiction for appointment of a
successor. The holders of a majority of the interests represented by
the Holders may vote to remove a Shareholders’ Agent with or without cause and
appoint a successor. The appointment of any successor Shareholders’
Agent shall not be binding on NRC unless and until notice thereof is given to
NRC.
9.1. Indemnification of
NRC. Subject
to the terms and conditions of this Article 9, each Major Holder, jointly and
severally, hereby agrees to indemnify, defend and hold harmless NRC and its
directors, officers, employees and controlled and controlling persons
(hereinafter “NRC’s Affiliates”) and Company after the Closing from and against
all Claims asserted against, resulting to, imposed upon, or incurred by NRC,
NRC’s Affiliates or Company, directly or indirectly, by reason of, arising out
of or resulting from (a) the inaccuracy or breach of any representation or
warranty of Company contained in or made pursuant to Section 2 of this
Agreement, or (b) the breach of any covenant of Company contained in this
Agreement. The term “Claims” shall include (i) all debts, Liabilities
and obligations; (ii) all losses, damages, judgments, awards, reasonable
settlements, Taxes, reasonable costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated matter),
penalties, court costs and reasonable attorneys fees and expenses); and (iii)
all demands, claims, suits, actions, costs of investigation, causes of action,
proceedings and assessments, whether or not ultimately determined to be
valid.
9.2. Indemnification by
Holders. Subject
to the terms and conditions of this Article 9, each Holder, severally and not
jointly, hereby agrees to indemnify, defend and hold harmless NRC and NRC’s
Affiliates after the Closing from and against all Claims asserted against,
resulting to, imposed upon, or incurred by NRC or NRC’s Affiliates, directly or
indirectly, by reason of, arising out of or resulting from (a) the inaccuracy or
breach of any representation or warranty of such Holder contained in or made
pursuant to Section 3 of this Agreement, or (b) the breach of any covenant of
such Holder contained in this Agreement.
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9.3. Indemnification by
NRC. Subject
to the terms and conditions of this Article 9, NRC hereby agrees to indemnify,
defend and hold harmless each Holder from and against all Claims asserted
against, resulting to, imposed upon or incurred by such Holder, directly or
indirectly, by reason of, arising out of or resulting from (a) the inaccuracy or
breach of any representation or warranty of NRC contained in or made pursuant to
this Agreement, or (b) the breach of any covenant of NRC contained in this
Agreement.
9.4. Assertion of
Claims. To
bring a claim for indemnification not arising from a third party claim under
this Article 9, the party or parties to be indemnified (whether one or more, the
“Indemnified Party”), shall give the Major Holders, in
the case of a claim pursuant to Section 9.1, Shareholders’ Agent, in the case of
a claim pursuant to Section 9.2, or NRC in the case of a claim pursuant to
Section 9.3 (as applicable, the “Indemnifying Party”), written notice of the
existence of any such claim, specifying the nature and basis of such claim and
the amount thereof, to the extent known, as promptly as practicable after
becoming aware of such claim. Failure to give such notice shall not
affect the Indemnifying Party’s duty or obligations under this Article 9, except
to the extent the Indemnifying Party is prejudiced thereby.
9.5. Indemnification of Third
Party Claims. The
obligations and Liabilities of any party to indemnify any other under this
Article 9 with respect to Claims relating to third parties shall be subject to
the following terms and conditions.
9.5(a) Notice and
Defense. The Indemnified Party shall give the Indemnifying
Party prompt written notice of any such Claim, and the Indemnifying Party shall
undertake the defense, compromise or settlement thereof by representatives
chosen by it. In all matters concerning the Holders, Shareholders’
Agent shall give and receive notice and otherwise act in all respects on the
Holders’ behalf. Failure to give such notice shall not affect the
Indemnifying Party’s duty or obligations under this Article 9, except to the
extent the Indemnifying Party is prejudiced thereby. So long as the
Indemnifying Party is defending any such Claim actively and in good faith, the
Indemnified Party shall not settle such Claim. The Indemnified Party
shall make available to the Indemnifying Party or its representatives all
records and other materials required by them and in the possession or under the
control of the Indemnified Party, for the use of the Indemnifying Party and its
representatives in defending any such Claim, and shall in other respects give
reasonable cooperation in such defense. The final determination of
such third party Claim, including all related costs and expenses, will be
binding and conclusive upon the parties to this Agreement as to the validity or
invalidity, as the case may be, of such third party Claim. Any costs
of the Indemnifying Party ordered to be paid by, or recovered from, any such
third party as a result of such third party Claim will be assigned by the
Indemnified Party to the Indemnifying Party which undertook the
defense.
9.5(b) Failure to
Defend. If the Indemnifying Party, within 20 days after notice
of any such Claim (or sooner if the nature of the Claim so requires), fails to
defend such Claim actively and in good faith, the Indemnified Party shall (upon
further notice) have the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with respect to
such Claim, on behalf of and for the account and risk of the Indemnifying Party,
and the Indemnifying Party shall thereafter have no right to challenge the
Indemnified Party’s defense, compromise, settlement or consent to judgment
therein.
31
9.5(c) Payment/Setoff; Indemnity
Escrow Fund. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 9, which payment may be
accomplished in whole or in part, at the option of the Indemnified Party, by the
Indemnified Party setting off any amount owed to the Indemnifying Party by the
Indemnified Party. Upon judgment, determination, settlement or
compromise of any third party Claim, the Indemnifying Party shall pay promptly
on behalf of the Indemnified Party, and/or to the Indemnified Party in
reimbursement of any amount theretofore required to be paid by it, the amount so
determined by judgment, determination, settlement or compromise and all other
Claims of the Indemnified Party with respect thereto, unless in the case of a
judgment an appeal is made from the judgment. If the Indemnifying
Party desires to appeal from an adverse judgment, then the Indemnifying Party
shall post and pay the cost of the security or bond to stay execution of the
judgment pending appeal. Upon the payment in full by the Indemnifying
Party of such amounts, the Indemnifying Party shall succeed to the rights of
such Indemnified Party, to the extent not waived in settlement, against the
third party who made such third party Claim. In the case of a claim
for indemnification not arising from a third party Claim, the Indemnifying Party
shall promptly pay the Indemnified Party any amount due pursuant to Section 9.4,
or, if the Indemnifying Party disputes such claim, in whole or in part, the
Indemnifying Party and the Indemnified Party shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction in accordance with Section 11.4. From
the Closing Date until the disbursement of the Indemnity Escrow Fund in
accordance with the Escrow Agreement, NRC’s and NRC’s Affiliates’ initial source
of indemnification under this Article 9 for breaches of representations or
warranties shall be the Indemnity Escrow Fund.
9.5(d) Limitations on
Indemnification. Except for any fraud, intentional
misrepresentation or a deliberate and willful breach of any representations or
warranties, as to which claims may be brought without limitation as to time or
amount:
9.5(d)(i) Time
Limitation. No claim or action shall be brought under this
Article 9 for breach of a representation or warranty after the date that is 18
months after the Closing Date. Regardless of the foregoing or any
other provision of this Agreement:
(A) There
shall be no time limitation on claims on actions brought for breach of any
representation or warranty made by Company and the Major Holders in or pursuant
to Sections 2.1, 2.2 and 2.22, and Company and the Major Holders hereby waive
all applicable statutory limitation periods with respect thereto.
(B) There
shall be no time limitation on claims on actions brought for breach of any
representation or warranty made by the Holders pursuant to Sections 3.1,
3.2 and 3.3, and the Holders hereby waive all applicable statutory limitation
periods with respect thereto.
(C) The
representations and warranties made by NRC pursuant to Sections 4.1, 4.2,
4.3 and 4.6 will survive until final payment in full of the Purchase
Consideration.
(D) All
covenants contained in this Agreement shall survive until
performed.
(E) Any
claim or action brought for breach of any representation or warranty made by
Company in or pursuant to Section 2.5 or Section 2.15 may be brought at any time
during the period expiring 60 days following the expiration of the applicable
statute of limitations (as such period may be extended by waiver or consent of
any party, provided that the Company and NRC shall extend such period only upon
notice to and consent from Shareholders’ Agent, which consent shall not be
unreasonably withheld).
32
9.5(d)(ii) Amount
Limitation. NRC and NRC’s Affiliates shall not be entitled to
indemnification under Section 9.1 for breach of a representation or warranty
unless the aggregate of the Major Holders’ indemnification obligations to them
pursuant to Section 9.1 (but for this Section 9.5) exceeds $75,000 (the
“Threshold Amount”); but in such event, NRC and NRC’s Affiliates shall be
entitled to indemnification in full for all breaches of such representations
and/or warranties. Notwithstanding the foregoing, the Threshold
Amount shall not apply and NRC and NRC’s Affiliates shall be entitled to
dollar-for-dollar recovery in respect of Claims in connection with breaches of
representations and/or warranties contained in Sections 2.1, 2.2, 2.5, 2.10(a),
2.15, 2.23, 3.1, 3.2 and 3.3. The maximum aggregate Liability of the
Major Holders under this Agreement with respect to Claims arising out of or
resulting from any breaches of representations or warranties set forth in this
Agreement shall not exceed $3,000,000 (inclusive of the Indemnity Escrow
Fund). All claims for indemnification under Section 9.2 shall be
satisfied on a several and not joint basis and under no circumstance shall any
Holder be liable for indemnification pursuant to Section 9.2 in an aggregate
amount in excess of the amount of the Purchase Consideration actually received
by such Holder or its successor or assign.
9.5(d)(iii) No
losses, Liability, damage or deficiency shall constitute damages for which
indemnification may be sought hereunder to any party to the extent of any
insurance proceeds actually received by such party with respect to such losses,
Liability, damage or deficiency (after deducting reasonable costs and expenses
incurred in connection with recovery of such proceeds).
9.5(d)(iv) Anything
contained in this Agreement to the contrary notwithstanding, no Holder, NRC or
NRC’s Affiliates will be entitled to any recovery under this Agreement for its
own consequential, incidental or indirect damages.
9.5(d)(v) Anything
contained in this Agreement to the contrary notwithstanding, each Major Holder,
jointly and severally, hereby agrees to indemnify, defend and hold harmless NRC,
NRC’s Affiliates and Company after the Closing from and against all Claims (1)
asserted by the former holders of Stock Options against NRC, NRC’s Affiliates or
Company by reason of, arising out of, resulting from or otherwise in connection
with the Stock Options (other than any claim, suit or cause of action based
solely on an allegation that Company or NRC, as applicable, has not paid the
Option Payment Amount in accordance with Section 1.2(b) or that Company or NRC,
as applicable, has not paid the amounts due to the former holders of Stock
Options in accordance with the Escrow Agreement) and/or (2) asserted against,
imposed on or incurred by NRC, NRC’s Affiliates or Company for or relating to
state sales or use taxes, or the failure to file Tax Returns relating to state
sales or use taxes, for all periods up to the Closing Date.
10.
|
The
closing of the transactions contemplated by this Agreement (the “Closing”) will
take place on the date of this Agreement (the “Closing Date”) at the offices of
Xxxxx & Xxxxxxx LLP, 000 X. Xxxxxxxxx Xxx., Xxxxxxxxx, Xxxxxxxxx, at 10:00
a.m., local time.
10.1. Company
Deliverables. At
the Closing, Company shall deliver to NRC the following, in each case duly
executed or otherwise in proper form:
10.1(a) Stock
Certificates. A stock certificate or certificates representing
all of the Shares, duly endorsed for transfer or with duly executed stock powers
attached.
33
10.1(b)
Compliance
Certificate. A certificate signed by the Chief Executive
Officer of Company on behalf of Company and by the Major Holders certifying that
(i) all the conditions set forth in Article 6 have been satisfied (except to the
extent waived in writing by NRC) and (ii) each of the representations and
warranties made by Company and the Major Holders in Section 2 of this Agreement
that are qualified as to materiality shall be true and correct, and each of the
representations and warranties made by Company and the Major Holders in Section
2 of this Agreement that is not so qualified and the statements contained in the
Disclosure Schedule or in any instrument, list, certificate or writing delivered
by Company or any Major Holder pursuant to this Agreement, shall be true and
correct in all material respects as of the Closing Date, except to the extent
that such representations and warranties speak as of an earlier date, as though
such representations and warranties were made or given on and as of the Closing
Date, except for any changes consented to in writing by NRC.
10.1(c) Certified
Resolutions. Certified copies of the resolutions of the Board
of Directors of Company and of any Major Holder that is a corporation, limited
liability company or other entity, authorizing and approving this Agreement and
the consummation of the transactions contemplated by this
Agreement.
10.1(d) Articles;
By-Laws. A copy of the By-Laws of Company certified by the
secretary of Company, and a copy of the Amended and Restated Articles of
Incorporation of Company certified by the Secretary of State of the State of
Washington.
10.1(e) Incumbency
Certificate. Incumbency certificates relating to each person
executing (as a corporate officer or otherwise on behalf of another person) any
document executed and delivered by Company to NRC pursuant to the terms
hereof.
10.1(f) Resignations. The
resignations of Xxxxxx Xxxxx, Xxxxx Xxxxxxxxxxx, Xxxx Xxxxx, Xxxxxx Xxxxxx,
Xxxxx Xxxx, Xxxxxxxxx Xxxx, Xxxx Xxxxx, Xxxx Xxxxxxx and Xxxxxxx Xxxxx as
directors and/or officers, as the case may be, of Company, effective as of the
Closing Date, in form and substance reasonably satisfactory to NRC, duly
executed by such persons.
10.1(g) Consents to
Assignment. Each of the third party consents set forth on
Schedule 10.1(g) in form and substance reasonably satisfactory to
NRC.
10.1(h) Minute Books and Stock
Records. The original minute books, stock records and similar
organizational documents of Company, with the stock records reflecting the
transfer of the Shares to NRC as of the Closing Date.
10.1(i) New Lease
Agreement. The New Lease Agreement referred to in
Section 6.5 duly executed by Epic and Company.
10.1(j) Escrow
Agreement. The Escrow Agreement referred to in
Section 6.10 duly executed by the Escrow Agent, Shareholders’ Agent and
Company.
10.1(k) Form
W-9. A Form W-9 properly completed and executed by each
Holder.
10.1(l) Section 1445
Affidavit. An affidavit from Company, in form and substance
reasonably satisfactory to NRC, to the effect that no interest in Company is a
“U.S. real property interest” within the meaning of Treasury Regulations Section
1.1445-2(c) and Section 1445 of the Code and containing all such other
information as is required to comply with the requirements of such Section, so
that NRC is exempt from withholding any amounts from the Purchase Consideration
payable hereunder.
34
10.1(m) Amendment of Employee
Plans. Evidence reasonably satisfactory to NRC of the
amendment or termination of each Employee Plan that is subject to Section 409A
of the Code to bring such Employee Plan into compliance with Section 409A of the
Code and the regulations thereunder.
10.1(n)
Termination of
Warrants and Option Plans. Evidence reasonably satisfactory to
NRC of the termination of all stock option plans, warrant agreements and any
other equity rights plans, agreements or arrangements (including, but not
limited to, stock option notification letters evidencing the termination of
Stock Options granted under Company’s 2000 Stock Option Plan), effective as of
the Closing Date.
10.1(o)
Disposition of
Dentra. Evidence reasonably satisfactory to NRC that Company’s
disposition of its interest in Dentra and the business conducted by Dentra has
been or will be completed effective as of the Closing Date.
10.1(p) Other
Documents. All other documents, instruments or writings
required to be delivered to NRC at or prior to the Closing pursuant to this
Agreement and such other certificates of authority and documents as NRC may
reasonably request.
10.2. NRC
Deliverables. At
the Closing, NRC shall deliver to Company, Shareholders’ Agent or the Holders,
as applicable, the following, in each case duly executed or otherwise in proper
form:
10.2(a) Closing
Payments. NRC shall have made all payments required to be made
pursuant to Section 1.2 by wire transfer of immediately available funds in
accordance with Section 1.2 hereof.
10.2(b)
Compliance
Certificate. A certificate signed by the Chief Executive
Officer of NRC that, except to the extent that such representations and
warranties speak as of an earlier date, each of the representations and
warranties made by NRC in this Agreement is true and correct, on and as of the
Closing Date as though such representations and warranties were made or given on
and as of the Closing Date (except for any changes consented to in writing by
Company and Shareholders’ Agent), and that NRC has performed and complied in all
material respects with all of NRC’s obligations under this Agreement that are to
be performed or complied with on or prior to the Closing Date.
10.2(c) Certified
Resolutions. A certified copy of the resolutions of the Board
of Directors of NRC authorizing and approving this Agreement and the
consummation of the transactions contemplated by this Agreement.
10.2(d) Incumbency
Certificate. Incumbency certificates relating to each person
executing any document executed and delivered to Company or Shareholders’ Agent
by NRC pursuant to the terms hereof.
10.2(e) Other
Documents. All other documents, instruments or writings
required to be delivered to Company or Shareholders’ Agent at or prior to the
Closing pursuant to this Agreement and such other certificates of authority and
documents as Company or Shareholders’ Agent may reasonably
request.
35
11.
|
11.1. Disclosure
Schedule. The
Schedules to which statements in Articles 2 and 3 refer (the “Disclosure
Schedule”), have been compiled, dated and delivered by Company via email or
overnight courier to NRC on the date of this Agreement. Information
set forth in the Disclosure Schedule specifically refers to the article and
section of this Agreement to which such information is responsive and such
information shall not be deemed to have been disclosed with respect to any
statement not qualified by reference to the Disclosure Schedule or, except with
regard to information set forth on the face of any Schedule that makes
reasonably apparent its applicability to any other Schedule, with respect to any
other article or section of this Agreement or for any other
purpose. The Disclosure Schedule shall not vary, change or alter the
language of the representations and warranties contained in this
Agreement.
11.2. Disclosures and
Announcements. Announcements
concerning the transactions provided for in this Agreement by NRC, Company, or
the Holders shall be subject to the approval of the other parties in all
essential respects, except that approval of the other parties shall not be
required as to a press release, public announcement or filing with a
Governmental Entity to the extent that NRC, Company or Shareholders’ Agent
reasonably determine, after consultation with outside legal counsel, such press
release, public announcement or filing with a Governmental Entity is required by
Law or by the rules of any applicable self-regulatory organization with respect
to its publicly-traded securities (in which case the disclosing party will
notify the other parties prior to making the disclosure).
11.3(a) Assignment. Except
as expressly provided herein, the rights and obligations of a party hereunder
may not be assigned, transferred or encumbered without the prior written consent
of the other parties. Notwithstanding the foregoing, NRC may, without
consent of any other party, cause one or more subsidiaries of NRC to carry out
all or part of the transactions contemplated hereby; provided that NRC shall,
nevertheless, remain primarily liable for all of its obligations, and those of
any such subsidiary, to Company and the Holders hereunder.
11.3(b) Parties in
Interest. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the respective successors and permitted
assigns of the parties hereto. Nothing contained herein shall be
deemed to confer upon any other person any right or remedy under or by reason of
this Agreement. Nothing in this Agreement, express or implied, is
intended to confer upon any person any right relating in any way to employment
or terms of employment with NRC or any of its Affiliates (including, for this
purpose, Company).
11.4. Law Governing
Agreement. This
Agreement shall be construed and interpreted according to the internal laws of
the State of New
York, excluding any choice of law rules that may direct the application of the
laws of another jurisdiction.
11.5. Amendment and
Modification. No
amendment or modification of or supplement to this Agreement shall be valid
unless such amendment, modification or supplement is agreed upon in writing
between NRC and Shareholders’ Agent.
11.6. Waiver. No
waiver by any Party of any of the provisions of this Agreement shall be
effective unless expressly set forth in writing and executed by the Party so
waiving. Except as provided in the preceding sentence, no action
taken pursuant to this Agreement, including any investigation by or on behalf of
any Party, shall be deemed to constitute a waiver by the Party taking such
action of compliance with any representations, warranties or covenants contained
in this Agreement and in any documents delivered or to be delivered pursuant
hereto. The waiver by any Party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
36
11.7. Notice. All
notices, requests, demands and other communications hereunder shall be given in
writing and shall be: (a) personally delivered; (b) sent by
telecopier, facsimile transmission or other electronic means of transmitting
written documents; or (c) sent to the parties at their respective addresses
indicated herein by registered or certified U.S. mail, return receipt requested
and postage prepaid, or by private overnight mail courier
service. The respective addresses to be used for all such notices,
demands or requests are as follows:
|
(a)
|
If
to NRC or to Company after the Closing,
to:
|
National
Research Corporation
0000 X
Xxxxxx
Xxxxxxx,
Xxxxxxxx 00000
Attention: President
and Chief Executive Officer
Facsimile:
(000) 000-0000
(with a
copy to)
Xxxxxxxx
X. Xxxxxx, III
Xxxxxxx
X. Xxxx
Xxxxx
& Xxxxxxx LLP
000 Xxxx
Xxxxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxxx 00000-0000
Facsimile:
(000) 000-0000
or to
such other person or address as NRC shall furnish to Company and Shareholders’
Agent in writing.
|
(b)
|
If
to Company prior to the Closing,
to:
|
Outcome
Concept Systems, Inc.
0000 X.
Xxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxxxx 00000-0000
Attention: President
and Chief Executive Officer
Facsimile:
(000) 000-0000
(with a
copy to)
Xxxxxxx
X. Xxxxxxxxxx
Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxxx
Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
37
|
(c)
|
If
to Shareholders’ Agent, to:
|
Xxxxxx
Xxxxx
0000 X.
Xxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxxxx 00000-0000
Facsimile:
(000) 000-0000
(with a
copy to)
Xxxxxxx
X. Xxxxxxxxxx
Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxxx
Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
or to
such other person or address as Shareholders’ Agent shall furnish to NRC in
writing.
If
personally delivered, such communication shall be deemed delivered upon actual
receipt; if electronically transmitted pursuant to this paragraph, such
communication shall be deemed delivered the next business day after transmission
(and sender shall bear the burden of proof of delivery), unless sender confirms
receipt through personal contact, in which case such communication shall be
deemed delivered upon such confirmation; if sent by overnight courier pursuant
to this paragraph, such communication shall be deemed delivered upon receipt;
and if sent by U.S. mail pursuant to this paragraph, such communication shall be
deemed delivered as of the date of delivery indicated on the receipt issued by
the relevant postal service, or, if the addressee fails or refuses to accept
delivery, as of the date of such failure or refusal. Any party to
this Agreement may change its address for the purposes of this Agreement by
giving notice thereof in accordance with this Section.
11.8. Expenses. Regardless
of whether or not the transactions contemplated hereby are
consummated:
11.8(a) Brokerage. Except
as to Xxxxxxxx Curhan Ford, Company, Shareholders’ Agent and NRC represent and
warrant to each other that there is no broker involved or in any way connected
with the transactions provided for herein on their behalf respectively and each
agrees to hold the other harmless from and against all other claims for
brokerage commissions or finder’s fees in connection with the execution of this
Agreement or the transactions provided for herein.
11.8(b) Expenses to be Paid by the
Holders. The Holders shall pay their own expenses in
connection with the transactions contemplated by this Agreement, including any
transfer tax imposed with respect to the transactions contemplated by this
Agreement.
11.8(c) Other. Except
as otherwise provided herein, each of the Parties shall bear its own expenses
associated with the negotiation and consummation of the transactions
contemplated hereby, including but not limited to legal, accounting, tax and
financial advisors and consultants.
11.9. Entire
Agreement. This
Agreement, along with that certain Non-Disclosure Agreement executed by NRC,
dated as of October 20, 2009 (the “Non-Disclosure Agreement”), embody the entire
agreement between the parties hereto with respect to the transactions
contemplated herein and therein, and there have been and are no agreements,
representations or warranties between the parties other than those set forth or
provided for herein or therein. Upon the Closing, the Non-Disclosure
Agreement shall terminate.
38
11.10. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
11.11. Headings. The
headings in this Agreement are inserted for convenience only and shall not
constitute a part hereof.
[Signature
pages follow.]
39
IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date and year first above
written.
NATIONAL
RESEARCH CORPORATION
|
OUTCOME
CONCEPT SYSTEMS, INC.
|
|||
(“NRC”)
|
(“Company”)
|
|||
By:
|
/s/ Xxxxxxx X. Beans
|
By:
|
/s/ Xxxxxx Xxxxx
|
|
Xxxxxxx
X. Beans
|
Xxxxxx
Xxxxx
|
|||
Vice
President, Secretary and Treasurer
|
President
and CEO
|
|||
SHAREHOLDERS’
AGENT
|
||||
(“Shareholders’
Agent”)
|
||||
/s/ Xxxxxx Xxxxx
|
||||
Xxxxxx
Xxxxx
|
||||
SHAREHOLDERS
|
WARRANTHOLDERS
|
|||
Vox
Advisors, LLC
|
||||
/s/ Xxxxx X. Xxxxxx
|
By:
|
/s/ Xxxxx X. Xxxx
|
||
Xxxxx
X. Xxxxxx
|
Name:
|
Xxxxx
X. Xxxx
|
||
|
Title:
|
Managing
Member
|
||
Columbia
Pacific Opportunity Fund, L.P.
|
||||
/s/ Xxxxxx X. Xxxxx
|
By:
|
/s/ Xxxxxxxxx Xxxxxxxx
|
||
Xxxxxx
X. Xxxxx
|
Name:
|
Xxxxxxxxx
Xxxxxxxx
|
||
Title:
|
Manager
|
|||
/s/ Xxxxxxx X. Xxxxxxxxxx
|
||||
Xxxxxxx
X. Xxxxxxxxxx
|
||||
/s/ Mercy X. Xxxxx
|
||||
Mercy
X. Xxxxx
|
||||
/s/ Xxxxx Xxxxxxxxxxx
|
||||
Xxxxx
Xxxxxxxxxxx
|
40
SHAREHOLDERS
(CONTINUED)
|
|||
/s/ Xxxxxx Xxxxxxxxx
|
|||
Xxxxxx
Xxxxxxxxx
|
|||
/s/ Xxxxxxxxx Xxxxxxx
|
|||
Xxxxxxxxx
Xxxxxxx
|
|||
/s/ Xxxxxxx Day Xxxxxxxxx
|
|||
Xxxxxxx
Day Xxxxxxxxx
|
|||
/s/ Xxxxxx X. Xxxxx
|
|||
Xxxxxx
X. Xxxxx
|
|||
/s/ Xxxxxx Xxxxx
|
|||
Xxxxxx
Xxxxx
|
|||
Atlantis
Investment Group
|
|||
By:
|
/s/ Xxxx X. Xxxxx
|
||
Name:
|
Xxxx
X. Xxxxx
|
||
Title:
|
CEO
|
||
/s/ Xxxxx X. Xxxxxxx
|
|||
Xxxxx
X. Xxxxxxx
|
|||
/s/ Xxxxxx Xxxxxx
|
|||
Xxxxxx
Xxxxxx
|
|||
/s/ Xxxxxxx Xxxxxx
|
|||
Xxxxxxx
Xxxxxx
|
|
41