Asta Funding, Inc.
Form 10-QSB March 31, 2000
Exhibit 10.5
STOCK PURCHASE AGREEMENT
By and Between
SMALL BUSINESS RESOURCES, INC.
and
ASTA XXXXXXX.XXX, LLC
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Dated as of February 14, 2000
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TABLE OF CONTENTS
Page
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ARTICLE IPURCHASE AND SALE......................................................................................-1-
SECTION 1.1 Agreement to Sell and Purchase Capital Stock; Consideration...............................-1-
SECTION 1.2 Closing...................................................................................-2-
SECTION 1.3 Right of First Refusal....................................................................-2-
ARTICLE IIREPRESENTATIONS AND WARRANTIES OF THE SELLER..........................................................-3-
SECTION 2.1 Title to Shares...........................................................................-3-
SECTION 2.2 Due Authorization.........................................................................-3-
SECTION 2.3 No Conflicts; Consents and Approvals......................................................-4-
SECTION 2.4 Corporate Existence and Power; Capitalization.............................................-4-
SECTION 2.5 Charter Documents and Corporate Records...................................................-5-
SECTION 2.6 Financial Information.....................................................................-5-
SECTION 2.7 Properties; Title.........................................................................-5-
SECTION 2.8 Material Contracts........................................................................-5-
SECTION 2.9 Intangible Property and Warranties........................................................-5-
SECTION 2.10 Claims and Proceedings...................................................................-6-
SECTION 2.11 Taxes....................................................................................-6-
SECTION 2.12 Employee Benefit Plans...................................................................-8-
SECTION 2.13 Employee-Related Matters.................................................................-9-
SECTION 2.14 Insurance...............................................................................-10-
SECTION 2.15 Compliance with Laws....................................................................-10-
SECTION 2.16 Permits and Licenses....................................................................-10-
SECTION 2.17 Environmental Matters...................................................................-10-
SECTION 2.18 Finders' Fees...........................................................................-11-
SECTION 2.19 Depositories; Powers of Attorney, Etc...................................................-11-
SECTION 2.20 Xxxxxx Xxxxxx Investment................................................................-11-
SECTION 2.21 Incorporation in Delaware...............................................................-11-
SECTION 2.22 Subsequent Debt of the Seller...........................................................-11-
SECTION 2.23 Seller's Web-Site.......................................................................-12-
SECTION 2.24 Disclosure; Schedules...................................................................-12-
ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF PURCHASER.........................................................-12-
SECTION 3.1 Authority Relative to This Agreement.....................................................-12-
SECTION 3.2 No Conflicts; Consents...................................................................-12-
SECTION 3.3 Corporate Existence and Power............................................................-12-
SECTION 3.4 Finders' Fees............................................................................-12-
SECTION 3.5 Investment...............................................................................-13-
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ARTICLE IVCOVENANTS AND AGREEMENTS PRIOR TOAND SUBSEQUENT TO CLOSING...........................................-13-
SECTION 4.1 Corporate Examinations and Investigations................................................-13-
SECTION 4.2 Consents, Filings and Authorizations; Efforts to Consummate..............................-13-
SECTION 4.3 Negotiations With Others.................................................................-14-
SECTION 4.4 Notices of Certain Events................................................................-14-
SECTION 4.5 Public Announcements.....................................................................-14-
SECTION 4.6 Confidentiality..........................................................................-14-
SECTION 4.7 Expenses.................................................................................-16-
SECTION 4.8 Disclosure Schedules and Exhibits.......................................................-16-
SECTION 4.9 Further Assurances.......................................................................-17-
SECTION 4.10 Tax Matters.............................................................................-17-
SECTION 4.11 Purchasers's Board Representation........................................................-18-
ARTICLE VCONDITIONS TO CLOSING.................................................................................-18-
SECTION 5.1 Conditions to the Obligations of Seller and Purchaser....................................-18-
SECTION 5.2 Conditions to the Obligations of Seller..................................................-18-
SECTION 5.3 Conditions to the Obligations of Purchaser...............................................-18-
ARTICLE VITERMINATION..........................................................................................-20-
SECTION 6.1 Termination..............................................................................-20-
SECTION 6.2 Effect of Termination; Right to Proceed..................................................-21-
ARTICLE VIIINDEMNIFICATION.....................................................................................-21-
SECTION 7.1 Survival of Representations and Warranties...............................................-21-
SECTION 7.2 Obligation of Seller to Indemnify........................................................-21-
SECTION 7.3 Obligation of Purchaser to Indemnify.....................................................-22-
SECTION 7.4 Notice and Opportunity to Defend Third Party Claims......................................-22-
SECTION 7.5 Limitation on Indemnification; Payment of Indemnification Amounts........................-23-
SECTION 7.6 Other Remedies...........................................................................-24-
ARTICLE VIIIMISCELLANEOUS......................................................................................-24-
SECTION 8.1 Notices..................................................................................-24-
SECTION 8.2 Entire Agreement.........................................................................-25-
SECTION 8.3 Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies...............-25-
SECTION 8.4 Governing Law............................................................................-26-
SECTION 8.5 Arbitration..............................................................................-26-
SECTION 8.6 Binding Effect; No Assignment............................................................-26-
SECTION 8.7 Exhibits.................................................................................-26-
SECTION 8.8 Severability.............................................................................-26-
SECTION 8.9 Counterparts.............................................................................-27-
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ARTICLE IXDEFINITIONS..........................................................................................-27-
SECTION 9.1 Definitions..............................................................................-27-
SECTION 9.2 Interpretation...........................................................................-30-
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EXHIBITS
Exhibit A - Form of Promissory Note of the Seller
Exhibit B - Form of Guarantee Agreement
Exhibit C - Opinion of Seller's Counsel
Exhibit D - Form of Employment Agreement
Exhibit E - Form of Non-Competition Agreement
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SCHEDULES
Schedule 1.1 - Principals
Schedule 2.3 - Required Consents
Schedule 2.4 - Capitalization
Schedule 2.6 - Financial Information
Schedule 2.7 - Properties
Schedule 2.8 - Material Contracts
Schedule 2.9 - Intellectual Property
Schedule 2.10 - Litigation
Schedule 2.11 - Taxes
Schedule 2.12 - Employee Benefit Plans
Schedule 2.13 - Employee-Related Matters
Schedule 2.14 - Insurance
Schedule 2.16 - Permits and Licenses
Schedule 2.17 - Environmental Matters
Schedule 2.18 - Broker
Schedule 2.19 - Powers of Attorney
Schedule 3.2 - Consents
Schedule 4.6 - Confidential Information
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made as of February 14, 2000 between
SMALL BUSINESS RESOURCES, INC., a Georgia corporation (the "Seller"), and ASTA
XXXXXXX.XXX, LLC (the "Purchaser").
W I T N E S S E T H :
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WHEREAS, the Seller provides online services for small businesses; and
WHEREAS, the Purchaser has indicated on interest in purchasing
one-third of the capital stock of the Seller and 51% of the Seller's Hispanic
program (the "Transaction"); and
WHEREAS, the board of directors of the Seller has determined that the
disposition of the capital stock of the Seller pursuant to the terms and
conditions of this Agreement are in the best interests of the Seller and its
stockholders; and
WHEREAS, in furtherance of the consummation of the Transaction and the
other transactions contemplated hereby (the "Other Contemplated Transactions"),
the parties hereto desire to enter into this Agreement (certain capitalized
terms used herein have the respective meanings set forth in Article IX).
NOW, THEREFORE, in consideration of the foregoing premises, the
promises contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby expressly acknowledged, the parties
hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.1 Agreement to Sell and Purchase Capital Stock;
Consideration.
(a) Subject to the terms and conditions of this Agreement, the Seller
agrees to sell and the Purchaser agrees to purchase (i) 3,405,183 shares of the
Seller's common stock, (ii) options to purchase 322,500 shares of the Seller's
common stock, exercisable at $.01 per share, on terms substantially similar to
the Seller's presently outstanding options, and (iii) 51% of the Seller's
Hispanic program, when established (the "Purchased Shares"). The options issued
hereunder shall not be exercisable unless any of the presently outstanding
options are exercised and shall terminate to the same extent that any of the
presently outstanding options expire unexercised. The parties hereto agree that
in consideration of the Purchased Shares the Purchaser will invest $750,000 in
the Seller and lend the Seller $1,750,000 (the "Buyer Loans"), to be paid to the
Seller as follows (each a "Closing"): (i) $250,000 as a Buyer Loan to the Seller
on February 14, 2000 (the "Initial Closing"); (ii) $150,000 in cash and $100,000
as a Buyer Loan to the Seller upon the receipt and review by the Purchaser of
the Schedules, Exhibits, and other documents contemplated by this Agreement to
the Purchaser's satisfaction, but in no event later than February 28, 2000 (the
"Second Closing"), or all further obligations of the Seller and the Purchaser
arising under this Agreement shall terminate; (iii) $300,000 in cash and
$700,000 as a Buyer Loan to the Seller within two months of the Initial Closing;
provided, however, the Seller has delivered to the Purchaser the Tax Returns of
the Seller for fiscal year 1999 (the "Third Closing"); and (iv) $300,000 in cash
and $700,000 as a Buyer Loan to the Seller within six months of the Initial
Closing (the "Fourth Closing"). Of the Buyer Loans, an aggregate of $1,750,000
is to be a loan on the books of the Seller as follows: (i) a $1,500,000 loan to
the Seller; (ii) a $150,000 loan to Women, Xxx.Xxx ("Women, Inc."), a majority
owned subsidiary of the Seller; and (iii) a $100,000 as a loan for use in the
Seller's Hispanic program (the "Hispanic Program," and, together with Women,
Inc., the "Subsidiaries"), which will become a subsidiary of the Seller (the
"Purchase Price").
(b) Subject to the terms and conditions of this Agreement, an aggregate
of $1,000,000 (the "Seller Loans") paid to the Seller by Xxxxxx Xxxxxx and other
principals listed on Schedule 1.1 attached hereto (the "Principals") of the
Seller are loans on the books of the Seller in the amounts listed on Schedule
1.1. The Seller shall agree to repay, pro rata, $500,000 of the aggregate of
$1,000,000 loaned to the Seller by the Principals as follows: (i) $250,000 shall
be repaid within sixty (60) days of the Initial Closing; and (ii) $250,000 shall
be repaid within one hundred eighty (180) days of the Initial Closing. The Buyer
Loans and the Seller Loans shall be evidenced by promissory notes (the "Notes"),
substantially in the form attached hereto as Exhibit A. The Buyer Loans to the
Seller will be guaranteed as follows: (i) the Buyer Loan at the Initial Closing
by Xxxxxx Xxxxxx, (ii) the Buyer Loans to the Subsidiaries by the Seller, and
(iii) the Buyer Loans to the Seller by the Subsidiaries. The guarantees will be
pursuant to guaranty agreements (the "Guaranty Agreements"), substantially in
the form attached hereto as Exhibit B.
SECTION 1.2 Closing. Each Closing of the Transaction and the Other
Contemplated Transactions shall take place at the offices of Snow Xxxxxx Xxxxxx
P.C., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as the
parties hereto shall agree. Each date of each Closing is hereinafter called a
"Closing Date." All events which shall occur at a Closing shall be deemed to
occur simultaneously.
SECTION 1.3 Right of First Refusal. (a) Should the Seller desire to
offer to issue securities to another purchaser or Xxxxxx Xxxxxx, Xxxxxxx Xxxx or
their legatee or legatees, as the case may be (each being referred to herein as
a "Selling Stockholder"), desires to sell or transfer Common Stock that either
Selling Stockholder may now or hereafter own (an "Offer"), the Seller or the
Selling Stockholder, as the case may be, shall, prior to accepting an Offer,
deliver to the Purchaser a written Notice of Bona Fide Offer accompanied by a
duplicate original of a written bona fide offer (the "Bona Fide Offer") setting
forth the name of the proposed purchaser, the purchase price or other
consideration for the Offer and all other terms and conditions of the Offer
signed by the proposed purchaser. For a period of ten (10) business days
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following delivery of the Notice of Bona Fide Offer, the Purchaser shall have
the right to accept such Offer by delivery of a written Notice of Acceptance to
the Seller or the Selling Stockholder, as the case may be. If the Purchaser
shall reject or not respond to the Bona Fide Offer within the time period
provided, the Seller or the Selling Stockholder, as the case may be, may accept
such Offer. The acceptance of an Offer by the Purchaser under this Section 1.3
shall be upon the terms and conditions and at the price specified in the Bona
Fide Offer.
(b) Should a Selling Stockholder desire to purchase additional shares
of capital stock of the Seller, such Selling Stockholder shall deliver to the
Purchaser a written notice of such Selling Stockholder's intention to purchase
additional shares of the Seller's capital stock setting forth the terms and
conditions of such Selling Stockholder's purchase (the "Stockholder Notice").
Thereafter, and for a period of ten (10) business days after the delivery of the
Stockholder Notice, the Purchaser shall have the right to purchase that amount
of capital stock of the Seller, on the same terms and conditions as stated in
the Stockholder Notice, that would allow the Purchaser to maintain the
Purchaser's ownership interest in the Seller.
(c) In the event the Seller or a Selling Stockholder, as the case may
be, elects to sell their capital stock pursuant to an Offer not accepted by the
Purchaser pursuant to Section 1.3(a), the Purchaser shall have the right to
participate in the sale of the shares of Common Stock, on a pro rata basis, with
the Company or the Selling Stockholder, as the case may be.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser, as of the
date hereof and as of each Closing Date (as if each such representation and
warranty was remade on such Closing Date), that:
SECTION 2.1 Title to Shares. (a) The Seller owns all of the Purchased
Shares, free and clear of any and all Liens (other than restrictions on transfer
arising under applicable securities law) and, immediately prior to the Initial
Closing, will be owned by the Seller, free and clear of any and all Liens (other
than restrictions on transfer arising under applicable securities law).
(b) Except as disclosed on Schedule 2.4, there are no options,
warrants, rights, convertible securities or other agreements or commitments
obligating the Seller, with respect to the shares of capital stock of the Seller
owned by the Seller, to transfer or sell, or cause the issuance, transfer or
sale of, any shares of capital stock of the Seller.
SECTION 2.2 Due Authorization. The Seller has full corporate power and
authority to execute and deliver this Agreement and each other Transaction
Document to which it is a party and to consummate the Transaction and the Other
Contemplated Transactions. The execution, delivery and performance by the Seller
of this Agreement and the consummation by it of the Transaction and Other
Contemplated Transactions have been duly and validly authorized and approved by
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the Seller's board of directors and no other corporate proceedings on the part
of the Seller are necessary to authorize the execution and delivery by or on
behalf of the Seller of this Agreement or the other Transaction Documents to
which it is a party or the consummation of the Transaction and the Other
Contemplated Transactions. This Agreement and each other Transaction Document to
which the Seller is a party has been duly and validly executed and delivered by
the Seller, and (assuming the valid execution and delivery thereof by the other
parties hereto) constitutes the legal, valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its terms, except as
such obligations and their enforceability may be limited by applicable
bankruptcy and other similar Laws (as defined herein) affecting the enforcement
of creditors' rights generally and except that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefor may be brought (whether at law or in equity).
SECTION 2.3 No Conflicts; Consents and Approvals. Except as set forth
in Schedule 2.3 attached hereto (the "Required Consents"), neither the
execution, delivery and performance by the Seller of this Agreement and each
other Transaction Document to which it is a party, nor the consummation of the
Transaction and the Other Contemplated Transactions, (i) violates any provision
of the Certificate of Incorporation or by-laws (or comparable charter documents)
of the Seller; (ii) requires the Seller to obtain any consent, approval, Permit
or action of or waiver from, or make any filing with, or give any notice to, any
Governmental Body or any other Person; (iii) violates, conflicts with or results
in a breach or default under (after the giving of notice or the passage of time
or both), or permits the termination of, any Contract, right, other obligation
or restriction relating to or which affects the Purchased Shares or the Seller
to which the Seller is a party or its Assets or the Business may be bound or
subject, or results in the creation of any Lien upon the Purchased Shares or
upon any of the Assets of the Seller pursuant to the terms of any such Contract;
(iv) violates or conflicts with any Law or Order of any Governmental Body
against, or binding upon, the Seller or upon Assets or the Business or the
Purchased Shares; or (v) violates or results in the revocation or suspension of
any Permit.
SECTION 2.4 Corporate Existence and Power; Capitalization. (a) The
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has all requisite
power and all material Permits required to own, lease and operate its respective
properties and to conduct the Business as currently conducted. Except in any
such jurisdiction where failure to so qualify would not have a Material Adverse
Effect, the Seller is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary.
(b) The entire authorized capital stock of the Seller consists of
10,000,000 shares of common stock, $.01 par value per share (the "Common
Stock"). Of such authorized shares, 6,810,365 shares of Common Stock are issued
and outstanding. All of the outstanding shares of capital stock of the Seller
are validly issued, fully paid and nonassessable, and no shares were issued in
violation of the preemptive rights of any stockholder. At the Initial Closing
Schedule 2.4 will reflect the stock ownership of the Seller, including the
aggregate number of Purchased Shares which shall represent one-third of all of
the outstanding shares of the capital stock of the Seller.
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(c) Except for the options issued hereunder and as set forth in
Schedule 2.4 attached hereto, there are no options, warrants, rights,
convertible securities or other agreements or commitments obligating the Seller
to issue, transfer or sell, or cause the issuance, transfer or sale of, any
shares of capital stock of the Seller or to make any payments in respect of the
value of any shares the Seller.
SECTION 2.5 Charter Documents and Corporate Records. The Seller shall
deliver to Purchaser at the Initial Closing true and complete copies of the
Certificate of Incorporation and by-laws (or comparable charter documents) of
the Seller, as in effect on the date hereof.
SECTION 2.6 Financial Information. Schedule 2.6 attached hereto
contains (i) Tax Returns of the Seller for fiscal year 1997 and fiscal year
1998; (ii) a budget of the Seller outlining the use of the Purchase Price for
fiscal year 2000; and (iii) the completed "xxxxxx'x report" provided by the
Purchaser to the Seller. After the Initial Closing, any deviation of 5% or more
from the outlined expenditures listed in the budget attached as Schedule 2.6
must be approved by the Purchaser in writing
SECTION 2.7 Properties; Title. (a) the Seller does not own any real
property. Schedule 2.7 attached hereto is a correct and complete list of all
material leases under which the Seller is a lessee (the "Leased Property"), true
and complete copies of which have been delivered to the Purchaser.
(b) To the knowledge of the Seller, all structures and buildings of the
Business are in good operating condition (subject to normal wear and tear).
(c) Except as disclosed in Schedule 2.7 attached hereto, or as
reflected on Schedule 2.6 attached hereto, the Seller has good, valid,
marketable, legal and beneficial title to (or valid leasehold interest in) all
of its Assets and is the lawful owner of its Assets, free and clear of all
Liens. The machinery, equipment and other tangible personal property
constituting part of the Assets of the Seller (whether owned or leased) have
been maintained in a commercially reasonable manner, are in generally good
condition and repair (subject to normal wear and tear). There are no outstanding
options, warrants, commitments, agreements or any other rights of any character,
entitling any Person other than the Purchaser to acquire any interest in all, or
any part of, the Assets. Schedule 2.7 attached hereto contains a list and
description of all (i) equipment, and (ii) other tangible personal property of
the Seller with a book value (before depreciation) of $50,000 or more, in each
case, excluding Inventory.
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SECTION 2.8 Material Contracts. The Seller has heretofore furnished to
the Purchaser copies of material contracts entered into by the Seller.
SECTION 2.9 Intangible Property and Warranties. (a) Schedule 2.9
attached hereto sets forth a true, correct and complete list of all material
patents, registered trademarks, registered copyrights, registered service marks
or registered trade names (and all applications for any of the foregoing),
Permits, license agreements, grants and licenses running to or from, or used by,
the Seller in the conduct of the Business, and there are no other material
patents, trademarks, material copyrights, material service marks, material trade
names or other material intangible assets, properties or rights that are used in
the Business (the "Intellectual Property Rights").
(b) Except as disclosed in Schedule 2.9 attached hereto:
(i) the Seller owns the entire United States right, title and
interest in and to the respective Intellectual Property Rights;
(ii) the Seller has no knowledge that the Intellectual
Property Rights are either invalid or unenforceable;
(iii) the Seller has no knowledge that the Seller business
activities has infringed or conflicts with, or does infringe or conflict with,
patent or any other intellectual property rights of any third party;
(iv) the Seller has never granted any license or permission to
any third party to use the Intellectual Property Rights; and
(v) the Transaction and the Other Contemplated Transactions
will not adversely affect any right of the Purchaser to enjoy as owner all of
the Intellectual Property Rights in the same manner thereof as if the Purchaser
were the Seller.
SECTION 2.10 Claims and Proceedings. Except as set forth in Schedule
2.10 attached hereto, there are no outstanding Orders of any Governmental Body
against or directly involving by name the Seller, the Assets of the Seller, or
the Business. Except as set forth in Schedule 2.10 attached hereto, there are no
actions, suits, asserted claims or counterclaims or legal, administrative or
arbitral proceedings or, to the Seller's knowledge, investigations
(collectively, "Claims") (whether or not the defense thereof or Liabilities in
respect thereof are covered by insurance), pending or, to the knowledge of the
Seller, threatened on the date hereof, against or involving the Seller, the
Purchased Shares, the Assets or the Business. Schedule 2.10 attached hereto also
indicates those Claims the defense thereof or Liabilities in respect thereof are
covered by insurance. Except as set forth on Schedule 2.10 attached hereto, on
the date hereof there are no Claims pending or, to the knowledge of the Seller,
threatened, other than Claims that would not have a Material Adverse Effect.
There are no Claims pending or, to the knowledge of the Seller, threatened that
would give rise to any right of indemnification on the part of any director or
officer of the Seller or the heirs, executors or administrators of such director
or officer, against the Seller.
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SECTION 2.11 Taxes. (a) Except as set forth in Schedule 2.11 attached
hereto:
(i) the Seller has timely filed or, if not yet due, will
timely file, all federal, state or foreign Tax Returns required to be filed by
it for all taxable periods ending on or before a Closing Date and all such Tax
Returns are, or will be when filed, true, correct and complete in all material
respects. Copies of all such Tax Returns have been given to the Purchaser;
(ii) the Seller has paid or, if payment is not yet due, has
established, in accordance with GAAP and consistent with past practice, accruals
that are reflected on Schedule 2.6 attached hereto for the payment of, all Taxes
imposed on the Seller or for which the Seller is liable, whether to taxing
authorities or to other Persons (pursuant to a tax sharing agreement or
otherwise);
(iii) no extension of time has been requested or granted for
the Seller to file any Tax Return that has not yet been filed or to pay any Tax
that has not yet been paid;
(iv) the Seller has not received notice of a determination by
a Tax Authority that Taxes are owed by the Seller (such determination to be
referred to as a "Tax Deficiency") and, to the knowledge of the Seller, no Tax
Deficiency is proposed or threatened;
(v) no issue has been raised in any examination,
investigation, audit, suit, action, claim or proceeding relating to Taxes (a
"Tax Audit") which, by application of similar principles to any past, present or
future period, would result in a Tax Deficiency for such period;
(vi) there are no pending or, to the knowledge of the Seller,
threatened, Tax Audits of the Seller;
(b) The Seller has no (i) income reportable for a period ending after
the Closing Date, but attributable to a transaction (e.g., installment sale) or
a change in accounting method occurring in or made for a period ending on or
prior to the Closing Date which resulted in a deferred reporting on income from
such transaction or from such change in accounting method (other than a deferred
intercompany transaction), or (ii) a deferred gain or loss arising out of any
deferred intercompany transaction, which income, gain or loss has been reflected
on Schedule 2.6 attached hereto in accordance with GAAP, but for which no Tax
liability accrual has been reflected on Schedule 2.6 attached hereto.
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(c) Schedule 2.11 attached hereto contains (i) a schedule of the filing
dates of all Tax Returns required to be filed by the Seller, (ii) a description
of all past Tax Audits involving the Seller, (iii) a list of the states,
territories and jurisdictions (whether foreign or domestic) to which any Tax is
properly payable by the Seller. Except as set forth in Schedule 2.15 attached
hereto, the Seller has retained all supporting and backup papers, receipts,
spreadsheets and other information necessary for (i) the preparation of all Tax
Returns that have not yet been filed, and (ii) the defense of all Tax Audits
involving taxable periods either ending on or during the four (4) years prior to
the Initial Closing or from which there are unutilized net operating loss,
capital loss or investment tax credit carryovers.
(d) Except for sales, use and similar Taxes which do not exceed
$100,000, the Seller has collected and remitted to the appropriate Tax Authority
all sales and use or similar Taxes required to have been collected, including
any interest and any penalty, addition to tax or additional amount unpaid, and
has been furnished properly completed exemption certificates for all exempt
transactions. To the knowledge of the Seller, the Seller has collected and/or
remitted to the appropriate Tax Authority all withholding, payroll, employment,
property, customs duty, fee, assessment or charge of any kind whatsoever
(including Taxes assessed to real property and water and sewer rents relating
thereto), including any interest and any penalty, addition to tax or additional
amount unpaid.
SECTION 2.12 Employee Benefit Plans. (a) Set forth in Schedule 2.12
attached hereto is a list of each employee benefit plan (within the meaning of
Section 3(3) of ERISA), current, accurate and complete copies of each to be
delivered to Purchaser at the Initial Closing, written or oral employment or
consulting agreement, severance pay plan or agreement, employee relations policy
(or practice, agreement or arrangement), agreements with respect to leased or
temporary employees, vacation plan or arrangement, sick pay plan, stock purchase
plan, stock option plan, fringe benefit plan, incentive plan, bonus plan,
cafeteria or flexible spending account plan and any deferred compensation
agreement (or plan, program, or arrangement) covering any present or former
employee of the Seller and which is, or at any time during the last two (2)
years was, sponsored or maintained by (or to which contributions are required to
be, were during the last two (2) years or were required to have been during the
last two (2) years) the Seller. Each and every such plan, program, policy,
practice, arrangement and agreement included on the list set forth in Schedule
2.12 attached hereto is hereinafter referred to as an "Employee Benefit Plan".
(b) With respect to any employee benefit plan (within the meaning of
Section 3(3) of ERISA), stock purchase plan, stock option plan, fringe benefit
plan, bonus plan or any deferred compensation agreement, plan or program
(whether or not any such plan, program or agreement is currently in effect):
there are no actions, suits or claims (other than routine claims for benefits in
the ordinary course) pending or, to the knowledge of the Seller, threatened, and
the Seller has no knowledge of any facts which could reasonably give rise to any
such actions, suits or claims (other than routine claims for benefits in the
ordinary course), which could subject the Seller to any liability.
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(c) (i) except as set forth in Schedule 2.12 attached hereto, the
Seller is not subject to any legal, contractual, equitable or other obligation
to (1) establish as of any date any employee benefit plan of any nature,
including any pension, profit sharing, welfare, post-retirement welfare, stock
option, stock or cash award, non-qualified deferred compensation or executive
compensation plan, policy or practice, or (2) continue any employee benefit plan
of any nature, including any Employee Benefit Plan or any other pension, profit
sharing, welfare or post-retirement welfare plan, or any stock option, stock or
cash award, non-qualified deferred compensation or executive compensation plan,
policy or practice (or to continue their participation in any such benefit plan,
policy or practice) on or after the date hereof;
(ii) the Seller may, in any manner, subject to the limitations
imposed by applicable law, and without the consent of any employee, beneficiary
or other Person, prospectively terminate, modify or amend any such Employee
Benefit Plan or any other plan, program or practice (or its participation in
such Employee Benefit Plan or any other plan, program or practice) effective as
of any date on or after the date hereof; and
(iii) except as set forth in Schedule 2.12 attached hereto, to
the knowledge of the Seller, no representations or communications (directly or
indirectly, orally, in writing or otherwise) with respect to participation,
eligibility for benefits, vesting, benefit accrual coverage or other material
terms of any Employee Benefit Plan have been made to any employee, beneficiary
or other Person other than those which are in accordance with the terms and
provisions of each such Plan as in effect immediately prior to the date hereof
and the Initial Closing.
SECTION 2.13 Employee-Related Matters. (a) Schedule 2.13 attached
hereto contains a true and correct list of each officer and employee of the
Seller whose aggregate compensation exceeds $150,000 per annum, including any
agreement, whether oral or written, relating thereto, and a general description
of the rate and nature of all compensation and benefits payable by the Seller to
each such Person. Schedule 2.13 attached hereto also contains a general
description of all existing severance, accrued vacation obligations or retiree
benefits of any current or former director, officer or employee (to the extent
not included in Schedule 2.13 attached hereto) including, but not limited to,
stay-in-place bonuses to those employees listed on Schedule 2.13 whom Buyer has
agreed to continue to employ. Except as set forth in such Schedule 2.13 attached
hereto, the employment or contractual arrangement of all such Persons is
terminable at will without additional or further economic obligation on the part
of the Seller.
(b) Except as set forth in Schedule 2.13 attached hereto, (i) the
Seller is not a party to any Contract with any labor organization or other
representative of its employees; (ii) there is no unfair labor practice charge
or complaint pending or, to the knowledge of the Seller, threatened against the
Seller, nor has any been pending or threatened within the past three (3) years;
(iii) the Seller has not experienced any labor strike, picketing, hand billing,
slowdown, work stoppage or similar labor controversy within the past three (3)
years; (iv) no representation question is pending or has been raised respecting
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any of the employees of the Seller working within the past three (3) years, nor,
to the knowledge of the Seller, are there any campaigns being conducted to
solicit authorization from the employees of the Seller to be represented by any
labor organization; (v) no Claim before any Governmental Body brought by or on
behalf of or relating to any employee, prospective employee, former employee,
retiree, labor organization or other representative of the employees of the
Seller or relating to their employment practices, is pending or, to the
knowledge of the Seller, threatened against the Seller; (vi) the Seller is not a
party to, or otherwise bound by, any Order relating to its employees or
employment practices; and (vii) the Seller has paid in full to all of its
employees all wages, salaries, commissions, bonuses, benefits and other
compensation due and payable to such employees consistent with past practices
(except for disputed amounts).
SECTION 2.14 Insurance. Schedule 2.14 attached hereto sets forth a list
of all insurance policies, fidelity and surety bonds and fiduciary liability
policies (the "Insurance Policies") covering the Assets, the Business,
operations, employees, officers and directors of the Seller and true and
complete copies of all such Insurance Policies have been delivered to the
Purchaser. Schedule 2.14 attached hereto also sets forth a true and complete
list of Claims made in respect of Insurance Policies during the two (2) years
prior to the date hereof (other than under health or other employee benefit
policies). All Insurance Policies are in full force and effect and will remain
in effect up to the Closing and thereupon terminate. To the knowledge of the
Seller, there is not any threatened termination of, premium increase with
respect to, or uncompleted requirements under, any material Insurance Policy.
SECTION 2.15 Compliance with Laws. To the knowledge of the Seller, the
Seller is not in violation of any order, judgment, injunction, award, citation,
decree, consent decree or writ (collectively, "Orders"), or any law, statute,
code, ordinance, rule, regulation or other requirement (collectively, "Laws"),
of any government or political subdivision thereof, whether federal, state,
local or foreign, or any agency or instrumentality of any such government or
political subdivision, or any court or arbitrator (collectively, "Governmental
Bodies") affecting its Assets or the Business, except where any such violation
would not have a Material Adverse Effect.
SECTION 2.16 Permits and Licenses. The Seller has obtained all
licenses, permits (including environmental permits), certificates, certificates
of occupancy, orders, authorizations and approvals (collectively, "Permits"),
and has made all required registrations and filings with, any Governmental Body
that are required for the conduct of the Business. All Permits that are required
for the conduct of the Business (the "Required Permits") are listed in Schedule
2.16 attached hereto and are in full force and effect; no violations are or have
been recorded in respect of any Permit; and no proceeding is pending or
threatened to revoke or limit any Required Permit. Except as listed in Schedule
2.16 attached hereto, no Permit will terminate by reason of the Transaction and
the Other Contemplated Transactions. To the knowledge of the Seller, this
Agreement and the Transaction and the Other Contemplated Transactions will not
invalidate, revoke or otherwise adversely affect the validity of any such
Permit.
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SECTION 2.17 Environmental Matters. Except as set forth in Schedule
2.17 attached hereto:
(i) to the best knowledge of the Seller, the Seller is in
material compliance with all Environmental Laws;
(ii) to the best knowledge of the Seller, there have been no
Releases of Hazardous Substances by the Seller or violations of Environmental
Laws by the Seller;
(iii) the Seller has not received oral or written notice of a
violation or of a claim of potential or actual liability by any Governmental
Body or third-party against the Seller under Environmental Laws, nor are any
such potential claims known to the Seller;
SECTION 2.18 Finders' Fees. Except Xxxxxxx Xxxxxxxxx, who has been
engaged by the Seller, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of the
Seller who might be entitled to any fee or commission from the Purchaser or the
Seller upon consummation of the Transaction and the Other Contemplated
Transactions. The Seller has agreed to pay Xxxxxxx Xxxxxxxxx a fee of 6% of the
Purchase Price as follows: (i) $37,500 in cash and $37,500 in shares of the
Seller's Common Stock at the Third Closing, and (ii) $37,500 in cash and $37,500
in shares of the Seller's Common Stock at the Fourth Closing.
SECTION 2.19 Depositories; Powers of Attorney, Etc. Schedule 2.19
attached hereto sets forth (i)the name of each bank or similar entity in which
the Seller has an account, lock box or safe deposit box and the names of all
Persons authorized to draw thereon or to have access thereto, and (ii) the name
of each Person holding a general or special power of attorney from the Seller
and a description of the terms thereof.
SECTION 2.20 Principals Investment. The Seller's tax returns for the
1999 fiscal year will reflect that the Principals have made investments in the
Seller in the aggregate of at least $1,200,000 in the Seller since inception.
SECTION 2.21 Incorporation in Delaware. On or prior to the Second
Closing Date, the Seller shall become a Delaware corporation; provided, however,
any failure of the Seller to become a Delaware corporation due to the failure of
the Purchaser to consent to the Seller's reincorporation in Delaware shall not
be a breach of this Section 2.21.
SECTION 2.22 Subsequent Debt of the Seller. From and after the date of
this Agreement and so long as the Buyer Loans are outstanding, the Seller shall
not incur any debt senior to the Buyer Loans, with the exception of trade debt,
without the prior written consent of the Purchaser.
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SECTION 2.23 Seller's Web-Site. As of the date of this Agreement, the
Seller's web-site at xxx.xxxxxxxxxxx.xxx is operational.
SECTION 2.24 Disclosure; Schedules. Neither this Agreement nor the
Schedules, nor any audited or unaudited financial statements, documents or
certificates furnished or to be furnished to the Purchaser or any of its Agents
or Affiliates by or on behalf of the Seller pursuant to this Agreement or in
connection with the Transaction and the Other Contemplated Transactions contain
or will contain any untrue statement of a material fact or omit or will omit a
material fact necessary in order to make the statements contained herein or
therein not misleading. All representations and warranties made by the Seller
will be deemed to have been relied on by the Purchaser (notwithstanding any
investigation by the Purchaser). Except as described in Section 1.1(a), the
Seller will deliver to the Purchaser complete and correct schedules, in form and
substance reasonably acceptable to the Buyer, prior to the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser, represents and warrants to the Seller as of the date of
this Agreement and as of each Closing Date (as if each such representation and
warranty was made on such Closing Date), that:
SECTION 3.1 Authority Relative to This Agreement. The Purchaser has
full corporate power and authority to execute and deliver this Agreement and
each other Transaction Document to which it is a party and to consummate the
Transaction and the Other Contemplated Transactions. The execution, delivery and
performance by the Purchaser of this Agreement and the other Transaction
Documents to which it is a party and the consummation by it of the Transaction
and the Other Contemplated Transactions have been duly and validly authorized
and approved by the Purchaser's board of directors, and no other corporate
proceedings on the part of the Purchaser is necessary to authorize the execution
and delivery by the Purchaser of this Agreement or the other Transaction
Documents to which the Purchaser is a party or the consummation of the
Transaction and the Other Contemplated Transactions to which the Purchaser is a
party. This Agreement has been duly and validly executed and delivered by the
Purchaser and (assuming the valid execution and delivery of this Agreement by
the other parties hereto) constitutes the legal, valid and binding agreement of
the Purchaser, enforceable against the Purchaser in accordance with its terms,
except as such obligations and their enforceability may be limited by applicable
bankruptcy and other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies is subject to
the discretion of the court before which any proceeding therefor may be brought
(whether at law or in equity).
SECTION 3.2 No Conflicts; Consents. Except as set forth in Schedule 3.2
attached hereto, neither the execution, delivery and performance by the
Purchaser of this Agreement and each other Transaction Document to which it is a
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party nor the consummation of the Transaction and the Other Contemplated
Transactions to which the Purchaser is a party (i) violates any provision of the
Certificate of Incorporation or by-laws (or comparable charter documents) of the
Purchaser; (ii) requires the Purchaser to obtain any consent, approval or action
of or waiver from, or make any filing with, or give any notice to, any
Governmental Body or any other Person; (iii) violates, conflicts with or results
in the breach or default under (after the giving of notice or the passage of
time), or permits the termination of, any material Contract to which the
Purchaser is a party or by which any of them or any of their respective assets
may be bound or subject; or (iv) violates any Law or Order of any Governmental
Body against, or binding upon, the Purchaser or upon its assets or businesses.
SECTION 3.3 Corporate Existence and Power. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia and has all requisite powers and all material Permits
required to own, lease and operate its properties and to conduct its business as
currently conducted. The Purchaser is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by the Purchaser or the nature of its activities,
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not have a material adverse effect on the
business, assets, financial condition or the results of operations of the
Purchaser.
SECTION 3.4 Finders' Fees. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of the Purchaser who might be entitled to any fee or commission from
the Seller upon consummation of the Transaction and the Other Contemplated
Transactions.
SECTION 3.5 Investment. The Purchaser is not acquiring the Purchased
Shares with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act of 1933, as amended.
ARTICLE IV
COVENANTS AND AGREEMENTS PRIOR TO
AND SUBSEQUENT TO CLOSING
SECTION 4.1 Corporate Examinations and Investigations. Prior to and
after the Initial Closing, the Seller agrees that the Purchaser shall be
entitled, through its directors, officers, Affiliates, employees, attorneys,
accountants, representatives, lenders, consultants and other agents
(collectively, the "Agents") to make such investigation of the Business and the
Assets and operations of the Seller, and such examination of the books, records
and financial condition of the Seller, as the Purchaser shall deem necessary or
appropriate. Any such investigation and examination shall be conducted at
reasonable times, under reasonable circumstances and upon ten (10) days written
notice to the Seller, and the Seller shall, cooperate fully therein. In that
connection, the Seller shall make available to the Agents during such period,
without however causing any unreasonable interruption in the operations of the
Business, all such information and copies of such documents and records
concerning the affairs of the Seller as the Agents may reasonably request, shall
permit the Agents access to the Assets of the Seller and all parts thereof and
to the Seller's Agents, customers, suppliers and others, and shall cause the
Seller's Agents to cooperate fully in connection with such review and
examination. No investigation by the Purchaser shall diminish or obviate any of
the representations, warranties, covenants or agreements of the Seller contained
in this Agreement.
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SECTION 4.2 Consents, Filings and Authorizations; Efforts to
Consummate. As promptly as practicable after the date hereof, the Purchaser and
the Seller shall make all filings and submissions under such Laws as are
applicable to them or to their respective Affiliates, as may be required for
them to consummate the Transaction and the Other Contemplated Transactions in
accordance with the terms of this Agreement and shall furnish copies thereof to
each other party prior to such filing and shall not make any such filing or
submission to which the Seller or the Purchaser, as the case may be, reasonably
objects in writing. All such filings shall comply in form and content in all
material respects with applicable Law. Subject to the terms and conditions
herein, each party hereto, without payment or further consideration, shall use
its best efforts to take or cause to be taken all action and to do or cause to
be done all things necessary, proper or advisable under applicable Laws, Permits
and Orders, to consummate and make effective, as soon as reasonably practicable,
the Transaction and the Other Contemplated Transactions, including the obtaining
of all Required Consents and Permits or consents of any third party, whether
private or governmental, required in connection with such party's performance of
such transactions and each party hereto shall cooperate with the other in all of
the foregoing.
SECTION 4.3 Negotiations With Others. From and after the date hereof
unless and until this Agreement shall have been terminated in accordance with
its terms, the Seller and hereby agrees that the Seller shall immediately notify
the Purchaser of the receipt of any letter of intent, term sheet or similar
document related to any sale of the Seller, or any substantial portion of the
Business or the Assets of the Seller's capital stock, directly or by merger or
consolidation.
SECTION 4.4 Notices of Certain Events. Prior to a Closing Date, the
Seller and the Purchaser shall promptly notify each other of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the Transaction
and the Other Contemplated Transactions;
(b) any notice or other communication from any Governmental Body in
connection with the Transaction and the Other Contemplated Transactions; and
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(c) any event, condition or circumstance occurring from the date hereof
through a Closing Date that would constitute a violation or breach of any
representation or warranty, whether made as of the date hereof or as of a
Closing Date, or that would constitute a violation or breach of any covenant of
any party contained in this Agreement.
SECTION 4.5 Public Announcements. The Seller and the Purchaser will
consult with each other before issuing any press release or otherwise making any
public statement with respect to the Transaction and the Other Contemplated
Transactions, and will not issue any such press release or make any such public
statement without the prior approval of the Seller or the Purchaser, as the case
may be, except as may be required by applicable Law in which event the other
party shall have the right to review and comment upon (but not approve) any such
press release or public statement prior to its issuance.
SECTION 4.6 Confidentiality. (a) The Purchaser shall hold in strict
confidence, and shall use its best efforts to cause all of its Agents to hold in
strict confidence, unless compelled to disclose by judicial or administrative
process, or by other requirements of Law, all Confidential Information (defined
below) concerning the Seller which any of them has obtained from the Seller or
their Agents prior to, on or after the date hereof, in connection with the
Transaction and the Other Contemplated Transactions, and the Purchaser shall not
use or disclose to others, or permit the use of or disclosure of, any such
Confidential Information so obtained, and will not release or disclose such
information to any other Person, except the Agents who need to know such
information in connection with this Agreement (and who shall be advised of the
provisions of this Section 4.6). The foregoing provisions shall not apply to any
such information to the extent (i) known by Purchaser prior to the date such
information was provided to Purchaser by or on behalf of the Seller in
connection with the Transaction and the Other Contemplated Transactions, (ii)
made known to the Purchaser from a third party, to the knowledge of the
Purchaser, not in breach of any confidentiality requirement, or (iii) made
public through no fault of the Purchaser or any of its Agents.
(b) If this Agreement is terminated as provided herein and the
Transaction and the Other Contemplated Transactions are not consummated and if
requested by the Seller, the Purchaser shall return to the Seller all tangible
evidence of such information regarding the Seller, or provide, at the
Purchaser's option, a certificate to the Seller stating that such information
has been destroyed.
(c) The term "Confidential Information" shall mean all written
information provided to the Purchaser by, for or on behalf of the Seller or
their Agents and will also include, without limitation, any Confidential
Information obtained through due diligence activities, as well as all notes,
compilations and analyses derived therefrom and all copies, summaries, notes and
other written materials so provided.
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(d) In the event that the Purchaser or any of their Agents are
requested in any legal or governmental proceeding to disclosure any of the
Confidential Information, the Purchaser or such Agents, as the case may be,
shall give the Seller prompt written notice of such request so that the Seller
may seek an appropriate order or decree restricting such disclosure. If, in the
absence of such an order or decree, the Purchaser or its Agents are nonetheless
compelled to disclose any Confidential Information, the Purchaser or such Agent,
as the case may be, may disclose such information in such proceeding without
liability hereunder provided that the Purchaser or such Agent gives the Seller
written notice of the Confidential Information to be disclosed as far in advance
of its disclosure as is practicable and, upon the Seller's request and at its
expense, the Purchaser or such Agent shall use its reasonable commercial efforts
to assist the Seller to obtain assurances that confidential treatment will be
accorded to such information.
(e) The Confidential Information will be kept confidential by the
Purchaser and will not be photocopied, distributed or disclosed to any person
other than their Agents for the sole purpose of the Transaction and the Other
Contemplated Transactions. Each Agent of the Purchaser shall be advised of this
Agreement by the Purchaser, and shall agree to be bound by the terms of this
Agreement and shall not disclose such information to any other individual or
entity other than to another Agent or to the Purchaser or as permitted by
Section 4.6(a). The Purchaser agrees to be responsible for the breach of this
Section 4.6 by its Agents.
(f) For a period of two years from the date hereof, without the prior
written consent of the Seller, the Purchaser will not, and will direct its
Agents not to hire or solicit the employment of any employees of the Seller
listed in Schedule 4.6 attached hereto.
SECTION 4.7 Expenses. Except as otherwise specifically provided in this
Agreement, the parties hereto shall bear their respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the Transaction and the Other Contemplated Transactions, including all fees and
expenses of their respective Agents.
SECTION 4.8 Disclosure Schedules and Exhibits.
(a)The parties each acknowledge and agree that as of the date this
Agreement is executed and delivered, none of the Schedules or Exhibits to this
Agreement have been prepared, delivered, reviewed, or approved by the parties or
their respective counsel. In addition to and without in any way limiting, any
other express and implied condition precedent to the obligations of any of the
parties under this Agreement, the obligations of each of the parties under this
Agreement are hereby made subject to and contingent upon the following:
(i) The preparation, delivery, and approval by the parties of
all of the Schedules described in this Agreement;
(ii) The preparation, delivery, and approval by the parties of
all of the Exhibits to this Agreement; and
(iii) All other express and implied conditions precedent to
the obligations of the parties under this Agreement shall have been satisfied or
waived at or prior to a Closing.
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(b) In addition, notwithstanding any other term, condition, covenant,
or provision of this Agreement or of any Other Agreement, the parties have not
made, and shall not be deemed to have made by their execution and delivery of
this Agreement, any representation or warranty with respect to any:
(i) Schedule described in this Agreement;
(ii) Exhibit to this Agreement;
(iii) Document or state of facts pertaining to any Schedule or
Exhibit to this Agreement; or
(iv) The intended contents to any document or state of facts
pertaining to any Schedule or Exhibit to this Agreement.
Any representations or warranties with respect to those matters or
items shall be made (unless waived or amended) only as of a Closing Date, and
only with respect to the Schedules and Exhibits attached to this Agreement as of
the Initial Closing. In the event that this Agreement, the Schedules, any
audited or unaudited financial statements, documents or certificates furnished
or to be furnished to the Purchaser or any of its Agents or Affiliates by or on
behalf of the Seller pursuant to this Agreement or in connection with the
Transaction and the Other Contemplated Transactions contain any untrue
statements of material fact or omit a material fact necessary in order to make
the statements contained herein or therein not misleading, and where such
misstatement or omission has a Material Adverse Effect on the Seller or the
Business or Assets of the Seller, the Purchase Price will be returned to the
Purchaser.
SECTION 4.9 Further Assurances. The Seller hereby agrees, without
further consideration, to execute and deliver, or to cause to be executed and
delivered on its behalf, following a Closing such other instruments of transfer
and take such other action as the Purchaser may reasonably request in order to
put the Purchaser in possession of, and to vest in the Purchaser, good, valid,
and unencumbered title to the Purchased Shares in accordance with this Agreement
and to consummate the Transaction and the Other Contemplated Transactions. The
Purchaser hereby agrees, without further consideration, to take such other
action following a Closing and execute and deliver such other documents as the
Seller may reasonably request in order to consummate the Transaction and the
Other Contemplated Transactions in accordance with this Agreement.
SECTION 4.10 Tax Matters. All sales Taxes (including any penalties and
interest) incurred in connection with the transfer of the Purchased Shares or
the consummation of the Transaction and the Other Contemplated Transactions
shall be borne and paid by the Seller when due, and the Seller will, at its own
expense, file all necessary Tax Returns and other documentation with respect to
all such Taxes and fees.
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SECTION 4.11 Purchasers's Board Representation. Prior to the Third
Closing, the Seller shall cause to be elected to the board of directors of the
Seller, one person appointed by the Purchaser. Prior to the Fourth Closing, the
Seller shall cause to be elected to the board of directors of the Seller persons
whom would cause the to the board of directors of the Seller to be controlled by
independent persons.
ARTICLE V
CONDITIONS TO CLOSING
SECTION 5.1 Conditions to the Obligations of Seller and Purchaser. The
obligations of the Seller and the Purchaser to consummate the Transaction and
the Other Contemplated Transactions are subject to the satisfaction of the
following conditions on or prior to each Closing Date:
(a) No Injunction. No provision of any applicable Law and no Order
shall prohibit the consummation of the Transaction and the Other Contemplated
Transactions.
(b) No Proceeding or Litigation. No Claim instituted by any Person
shall have been commenced or pending against the Seller, or the Purchaser or any
of their respective Affiliates, officers or directors which Claim seeks to
restrain, prevent, change or delay in any material respect the Transaction and
the Other Contemplated Transactions or seeks to challenge any of the material
terms or provisions of this Agreement or seeks material damages in connection
with any of such transactions, except as would not have a Material Adverse
Effect.
SECTION 5.2 Conditions to the Obligations of Seller. All obligations of
the Seller to consummate the Transaction and the Other Contemplated Transactions
are subject to the fulfillment (or waiver by the Seller) on or prior to each
Closing Date of each of the following further conditions:
(a) Performance. The Purchaser shall have performed and complied with
all agreements, obligations and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
(b) Representations and Warranties. The representations and warranties
of the Purchaser contained in this Agreement and in any certificate or other
writing delivered by the Purchaser pursuant hereto shall be true in all material
respects at and as of the Closing Date as if made at and as of such time.
(c) Purchase Price. The Purchase Price shall have been paid by the
Purchaser in accordance with Section 1.1 on the Closing Date.
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SECTION 5.3 Conditions to the Obligations of Purchaser. All obligations
of the Purchaser to consummate the Transaction and the Other Contemplated
Transactions hereunder are subject to the fulfillment (or waiver by the
Purchaser) on or prior to a Closing of each of the following further conditions:
(a) Performance. Except for material changes in general economic or
industry conditions, the Seller shall have performed and complied with all
agreements, obligations and covenants required by this Agreement to be performed
or complied with by them on or prior to a Closing Date; provided, however, that
this condition shall be deemed to have not been fulfilled if the failure to
perform and comply with such agreements, obligations and covenants causes a
Material Adverse Effect.
(b) Representations and Warranties of the Seller. Except for material
changes in general economic or industry conditions, the representations and
warranties of the Seller contained in this Agreement and in any certificate or
other writing delivered by the Seller pursuant hereto shall be true at and as of
a Closing Date as if made at and as of such time, except for such inaccuracies
that do not have a Material Adverse Effect; provided, however, that those
representations and warranties which are qualified by references to "material",
"Material Adverse Effect" or "to the knowledge of the Seller" shall be deemed
not to include such qualifications.
(c) No Adverse Change. Except for material changes in general economic
or industry conditions during the period from the Latest Balance Sheet Date to a
Closing Date, there shall not have been (x) any change in the Condition of the
Business; (y) any damage, destruction, casualty, determination or other event to
or affecting the Assets of the Seller; or (z) any Claims or Liens filed or
threatened against or affecting the Seller or its Assets which in the case of
(x), (y) and (z) above would have a Material Adverse Effect.
(d) Required Consents. The Seller shall deliver written evidence that
all Required Consents shall have been obtained.
(e) Required Permits. All Required Permits shall be in full force and
effect.
(f) Releases. The Seller shall have obtained and delivered to the
Purchaser all general releases and discharges required pursuant to Section 1.2
herein in form and substance reasonably acceptable to the Purchaser and its
legal counsel.
(g )Documentation. There shall have been delivered to the Purchaser the
following:
(i) A certificate, dated a Closing Date, of the Seller
confirming the matters set forth in Sections 5.3(a) and (b);
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(ii) A certificate, dated a Closing Date, of the Seller
certifying that attached to such certificate (A) is a true and correct copy of
the Certificate of Incorporation and by-laws (or comparable instruments) of the
Seller and all amendments, if any, thereto as of the date thereof; (B) are the
names of the directors and officers of the Seller; (C) is a true copy of all
corporate actions taken by the board of directors of the Seller (which actions
shall have been taken prior to the date of entering into this Agreement) to
authorize the Transaction and the Other Contemplated Transactions; and (D) are
the names and signatures of the duly elected or appointed officers of the Seller
who are authorized to execute and deliver this Agreement, the other Transaction
Documents to which the Seller is a party and any certificate, document or other
instrument in connection herewith;
(iii) True, correct and complete copies of all the Required
Consents and Permits;
(iv) Good standing certificates of the Seller from the
Secretary of State (or comparable authority) of each jurisdiction in which the
Seller is organized;
(v) A signed opinion of Seller's counsel, dated a Closing
Date, addressed to the Purchaser, substantially in the form and to the effect of
Exhibit C attached hereto;
(vi) executed Notes of the Seller issued in the name of the
Purchaser evidencing the Buyer Loans on such Closing Date;
(vii) executed Guarantee Agreements of the Seller, the
Subsidiaries or Xxxxxx Xxxxxx, as the case may be, by and between the Purchaser
guaranteeing the Notes issued on such Closing Date;
(viii) no later than February 28, 2000, an executed copy of a
three-year Employment Agreement between the Seller and Xxxxxx X. Xxxxxx, with
terms consistent with Schedule 2.13 attached hereto, and otherwise substantially
in the form and to the effect of Exhibit D attached hereto;
(ix) within sixty (60) days of the Initial Closing, executed
copies of Employment Agreements, between the Seller and each of Xxxxxxx Xxxx and
any other employee reasonably requested by the Purchaser, substantially in the
form and to the effect of Exhibit D attached hereto;
(x) no later than February 28, 2000, an executed copy of a
Non-Compete Agreement between the Seller and Xxxxxx X. Xxxxxx, providing for a
three-year term after the termination of employment, and otherwise substantially
in the form and to the effect of Exhibit E attached hereto;
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(xi) within sixty (60) days of the Initial Closing, executed
copies of Non-Compete Agreements, between the Seller and each of Xxxxxxx Xxxx
and any other employee reasonably requested by the Purchaser substantially in
the form and to the effect of Exhibit E attached hereto;
(xi) within sixty (60) days of the Initial Closing, evidence
of key-man life insurance for Xxxxxx Xxxxxx, President of the Seller, in the
amount of $2,000,000, naming the Seller as beneficiary;
(xii) Consent by the Purchaser as to the retention of the
independent auditors of the Seller, which consent will not be unreasonably
withheld; and
(xiii) Certificates evidencing all of the Purchased Shares.
ARTICLE VI
TERMINATION
SECTION 6.1 Termination. This Agreement may be terminated and the
Transaction and the Other Contemplated Transactions may be abandoned at any time
prior to the Closing:
(a) By mutual written consent of the parties hereto, and after February
14, 2000, by any party hereto, if the Closing has not occurred by that date and
if failure to close is not the result of a breach of this Agreement or a willful
failure to complete closing conditions by the parties hereto.
(b) By the Seller, if (i) there has been a misrepresentation or breach
of warranty on the part of the Purchaser in the representations and warranties
contained herein (ii) the Purchaser has committed a breach of any covenant
imposed upon it hereunder or (iii) any condition to Seller's obligations
hereunder becomes incapable of fulfillment through no fault of the Seller and is
not waived by the Seller.
(c) By the Purchaser if (i) there has been a misrepresentation or
breach of warranty on the part of the Seller in the representations and
warranties contained herein; (ii) the Seller has committed a breach of any
covenant imposed upon it hereunder and fails to cure such breach; or (iii) any
condition to the Purchaser's obligations hereunder becomes incapable of
fulfillment through no fault of the Purchaser and is not waived by the
Purchaser.
(d) By the Purchaser, on the one hand, or by the Seller, on the other
hand, if there shall be any Law that makes consummation of the Transaction and
the Other Contemplated Transactions illegal or otherwise prohibited, or if any
Order enjoining the Purchaser, on the one hand, or the Seller, on the other
hand, from consummating the Transaction and the Other Contemplated Transactions
is entered and such Order shall have become final and nonappealable.
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SECTION 6.2 Effect of Termination; Right to Proceed. (a) In the event
of termination of this Agreement by the Seller, on the one hand, or the
Purchaser, on the other hand, as provided in Section 6.1, this Agreement
forthwith shall become null and void and there shall be no liability on the part
of the Seller or the Purchaser, except that upon termination of this Agreement
pursuant to:
(i) Section 6.1(b), the Purchaser shall have no further
obligation to the Seller under this Agreement or otherwise, except with respect
to the agreements contained in Sections 4.6, 4.7 and 4.8; and
(ii) Section 6.1(c), the Seller shall remain liable to the
Purchaser for any misrepresentation or breach of warranty or nonfulfillment of
or failure to perform any covenant or agreement of the Seller existing at the
time of such termination, and in such event the Purchaser may seek such
remedies, including Losses against the Seller with respect to any such breach as
are provided in this Agreement or as are otherwise available at Law or in equity
and, without limiting the generality of the foregoing, the Seller shall
reimburse the Purchaser for all costs and expenses resulting from any such
breach.
(b) The agreements contained in Sections 4.6, 4.7 and 4.8 shall survive
the termination of this Agreement.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Survival of Representations and Warranties. (a)
Notwithstanding any right of the Purchaser fully to investigate the affairs of
the Seller and any knowledge of facts determined or determinable by the
Purchaser pursuant to such investigation or right of investigation, the
Purchaser has the right to rely fully upon the representations, warranties,
covenants and agreements of the Seller contained in this Agreement, or listed or
disclosed on any Schedule attached hereto or in any instrument delivered in
connection with or pursuant to any of the foregoing.
(b) All representations, warranties, covenants and agreements shall
survive the execution and delivery of this Agreement and the Closing hereunder
for a period of two (2) years following the Closing Date; provided, however,
that the representations and warranties contained in Section 2.1 (Title to
Shares) shall survive in perpetuity and the representations and warranties
contained in Sections 2.15 (Taxes), 2.16 (Employee Benefit Plans) and 2.21
(Environmental Matters) shall survive for any applicable statute of limitations.
SECTION 7.2 Obligation of Seller to Indemnify. Subject to the
limitations set forth in Section 7.5, the Seller hereby agrees to indemnify,
defend and hold harmless the Purchaser (and their directors, officers,
employees, Affiliates, successors, assigns and Agents) from and against all
Claims, losses, liabilities, damages, deficiencies, judgments, settlements,
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costs of investigation or other expenses (including interest, penalties and
reasonable attorneys' fees and disbursements and expenses incurred in enforcing
this indemnification or in any litigation between the parties or with third
parties) (collectively, the "Losses") suffered or incurred by the Purchaser or
any of the foregoing Persons arising out of (a) any breach of the
representations, warranties, covenants and agreements of the Seller or contained
in this Agreement, the Schedules attached hereto or any other Transaction
Document, or (b) any Claim, including any Claim arising out of or relating to
Environmental Laws, whether made before or after the date of this Agreement, or
any litigation, proceeding or governmental investigation, including any Claim
arising out of or relating to Environmental Laws, whether commenced before or
after the date of this Agreement, arising out of the Business, or otherwise
relating to the Seller, prior to a Closing, or otherwise arising out of any act
or occurrence prior to, or any state or facts existing as of, a Closing.
SECTION 7.3 Obligation of Purchaser to Indemnify. Subject to the
limitations set forth in Section 7.5, the Purchaser hereby agrees, to indemnify,
defend and hold harmless the Seller from and against any Losses suffered by the
Seller by reason of any breach of the representations and warranties of the
Purchaser or of the covenants and agreements of the Purchaser contained in this
Agreement, the Schedules attached hereto or any other Transaction Document.
SECTION 7.4 Notice and Opportunity to Defend Third Party Claims. (a)
Promptly after receipt by any party hereto (the "Indemnitee") of notice of any
demand, claim, circumstance or Tax Audit which would or might give rise to a
claim or the commencement (or threatened commencement) of any action, proceeding
or investigation (an "Asserted Liability") that may result in a Loss, the
Indemnitee shall give prompt notice thereof (the "Claims Notice") to the party
or parties obligated to provide indemnification pursuant to Section 7.2 or 7.3
(the "Indemnifying Party"). The Claims Notice shall describe the Asserted
Liability in reasonable detail and shall indicate the amount (estimated, if
necessary, and to the extent feasible) of the Loss that has been or may be
suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend, at its own expense and
with its own counsel satisfactory to Indemnitee, any Asserted Liability, unless
(i) the Asserted Liability seeks an Order, injunction or other equitable or
declaratory relief against the Indemnitee, or (ii) the Indemnitee shall have
reasonably concluded that (x) there is a conflict of interest between the
Indemnitee and the Indemnifying Party in the conduct of such defense, or (y) the
Indemnitee shall have one or more defenses not available to the Indemnifying
Party; provided, however, that the Indemnifying Party shall not be permitted to
make such election if the Indemnifying Party fails to provide Indemnitee with
evidence reasonably acceptable to Indemnitee that the Indemnifying Party will
have the financial resources to defend against the Asserted Liability and
fulfill its indemnification obligations hereunder. If the Indemnifying Party
elects to defend such Asserted Liability, it shall within thirty (30) calendar
days (or sooner, if the nature of the Asserted Liability so requires) notify the
Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at the
expense of the Indemnifying Party, in the defense of such Asserted Liability. If
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the Indemnifying Party assumes the defense against any Asserted Liability it
will be conclusively established for purposes of this Agreement that such
Asserted Liability is within the scope of, and subject to, indemnification. If
the Indemnifying Party elects not to defend the Asserted Liability, is not
permitted to defend the Asserted Liability by reason of the first sentence of
this Section 7.4(b), fails to notify the Indemnitee of its election as herein
provided or contests its obligation to indemnify under this Agreement with
respect to such Asserted Liability, the Indemnitee may pay, compromise or defend
such Asserted Liability at the sole cost and expense of the Indemnifying Party.
Notwithstanding the foregoing, neither the Indemnifying Party nor the Indemnitee
may settle or compromise any claim over the reasonable written objection of the
other, provided, however, that the Indemnitee may settle or compromise any claim
as to which the Indemnifying Party has failed to notify the Indemnitee of its
election as herein provided or is contesting its indemnification obligations
hereunder. In any event, the Indemnitee and the Indemnifying Party may
participate, at their own expense, in the defense of such Asserted Liability. If
the Indemnifying Party chooses to defend any Asserted Liability, the Indemnitee
shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense.
Any expenses of any Indemnitee for which indemnification is available hereunder
shall be paid upon written demand therefor.
SECTION 7.5 Payment of Indemnification Amounts. (a) The parties hereto
will act in good faith so that any amounts payable by an Indemnifying Party to
an Indemnitee pursuant to this Article VII shall be treated, for Tax purposes,
as an adjustment to the Purchase Price, unless a Final Determination with
respect to an Indemnitee or any of its Affiliates causes any such payment not to
be treated as an adjustment to Purchase Price for United States federal income
tax purposes. If such payment cannot be treated as an adjustment to the Purchase
Price for Tax purposes, then such indemnification payment shall be increased to
take account of any net Tax cost incurred by the Indemnitee as a result of the
receipt or accrual of such payments.
(b)Any amounts payable under this Article VII shall be
calculated after giving effect to any net proceeds actually received from
insurance policies covering the damage, loss, liability or expense that is the
subject to the claim for indemnity.
SECTION 7.6 Other Remedies. The provisions of this Article VII shall
not restrict or otherwise limit the legal remedies that a party to this
Agreement may seek under applicable law or otherwise for any breaches of the
representations, warranties, covenants or agreements contained herein.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. (a) Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally by
hand or by recognized overnight courier, telecopied or mailed (by registered or
certified mail, postage prepaid) as follows:
If to the Purchaser, one copy to:
Asta Xxxxxxx.Xxx, LLC
c/o Asta Funding Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xx. Xxxx Xxxxx
with a simultaneous copy to:
Xxxxxx & Xxxxxx
000 Xxxxxxx 00
Xxxx Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxx Xxxxxx, Esq.
If to the Seller one copy to:
Small Business Resources, Inc.
00 Xxxxxxxxx Xxxxxx
Xxxx #0
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxxx
with a simultaneous copy to:
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx Xxxxxx, Esq.
(b) Each such notice or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in SectionE8.1(a) (with confirmation of transmission), or (ii) if
given by any other means, when received at the address specified in Section
8.1(a). Any party by notice given in accordance with this Section 8.1 to the
other party may designate another address (or telecopier number) or Person for
receipt of notices hereunder. Notices by a party may be given by counsel to such
party.
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SECTION 8.2 Entire Agreement. This Agreement (including the Exhibits
and Schedules hereto) and the collateral agreements executed in connection with
the consummation of the Transaction and the Other Contemplated Transactions
contain the entire agreement between the parties with respect to the subject
matter hereof and related transactions and supersede all prior agreements,
written or oral, with respect thereto.
SECTION 8.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended, superseded, canceled,
renewed or extended only by a written instrument signed by the parties hereto.
The provisions hereof may be waived in writing by the parties hereto. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. Except as otherwise
provided herein, the rights and remedies herein provided are cumulative and are
not exclusive of any rights or remedies that any party may otherwise have at law
or in equity.
SECTION 8.4 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflict of laws rules thereof.
SECTION 8.5 Arbitration. The parties hereby covenant and agree that any
legal suit, dispute, claim, demand, controversy or cause of action of every kind
and nature whatsoever, known or unknown, fixed or contingent, that any party may
now have or at any time in the future claim to have based in whole or in part,
or arising from or out of or that in any way is related to the negotiations,
execution, interpretation or enforcement of this Agreement (collectively, the
"Disputes") shall be completely and finally settled by submission of any such
Disputes to arbitration under the rules of the American Arbitration Association
("AAA") then in effect. There shall be one arbitrator, and such arbitrator shall
be chosen by mutual agreement of the parties in accordance with AAA rules.
Unless the parties agree otherwise, the arbitration proceedings shall take place
in New York, New York. The arbitrator shall apply New York law to all issues in
dispute. Notice of demand for arbitration shall be filed in writing with the
other party to this Agreement and with the AAA. In no event shall the demand for
arbitration be made after the date when institution of legal or equitable
proceedings based on such Dispute would be barred by the applicable statute of
limitations. The findings of the arbitrator shall be final and binding on the
parties. Judgment on such award may be entered in any court of competent
jurisdiction, or application may be made to that court for a judicial acceptance
of the award and an order or enforcement, as the party seeking to enforce that
award may elect. The prevailing party in any such action shall be entitled to
receive from the losing party all reasonable costs and expenses, including the
reasonable fees of attorneys, accountants, and other experts, incurred by the
prevailing party in investigating and prosecuting (or defending) such action,
together with any such fees which may be incurred in enforcing any award of
judgment.
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SECTION 8.6 Binding Effect; No Assignment. This Agreement and all of
its provisions, rights and obligations shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors, heirs and
legal representatives. This Agreement may not be assigned (including by
operation of Law) by a party without the express written consent of the
Purchaser (in the case of assignment by the Seller) or the Seller (in the case
of assignment by the Purchaser) and any purported assignment, unless so
consented to, shall be void and without effect. Nothing herein express or
implied is intended or shall be construed to confer upon or to give anyone other
than the parties hereto and their respective heirs, legal representatives and
successors any rights or benefits under or by reason of this Agreement and no
other party shall have any right to enforce any of the provisions of this
Agreement.
SECTION 8.7 Exhibits. All Exhibits and Schedules attached hereto are
hereby incorporated by reference into, and made a part of, this Agreement.
SECTION 8.8 Severability. If any provision of this Agreement for any
reason shall be held to be illegal, invalid or unenforceable, such illegality
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such illegal, invalid or unenforceable provision had never
been included herein.
SECTION 8.9 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
ARTICLE IX
DEFINITIONS
SECTION 9.1 Definitions. (a) The following terms, as used herein, have
the following meanings:
"Affiliate" of any Person means any other Person directly or indirectly
through one or more intermediary Persons, controlling, controlled by or under
common control with such Person.
"Agreement" or "this Agreement" means, and the words "herein", "hereof"
and "hereunder" and words of similar import refer to, this agreement as it from
time to time may be amended.
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"Assets" means properties, rights, interests and assets of every kind,
real, personal or mixed, tangible and intangible, used or usable in the
Business.
The term "audit" or "audited" when used in regard to financial
statements means an examination of the financial statements by a firm of
independent certified public accountants in accordance with generally accepted
auditing standards for the purpose of expressing an opinion thereon.
"Business" means the business of the Seller as presently conducted.
"Certificate of Incorporation" means, in the case of any corporation,
the certificate of incorporation, articles of incorporation or charter of a
corporation, howsoever denominated under the laws of the jurisdiction of its
incorporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any contract, agreement, indenture, note, bond, lease,
conditional sale contract, mortgage, license, franchise, instrument, commitment
or other binding arrangement, whether written or oral.
The term "control", with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Environmental Laws" means any and all Laws (including common law),
Orders, Permits, agreements or any other requirement or restriction promulgated,
imposed, enacted or issued by any federal, state, local and/or foreign
Governmental Bodies relating to human health or the environment, including the
emission, discharge or Release of pollutants, contaminants, Hazardous Substances
or wastes into the environment (which includes ambient air, surface water,
ground water, or land), and the remediation thereof, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof, including the Clean Air
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Emergency Planning and Community Right To Know Act, the Federal Water
Pollution Control Act, the Oil Pollution Act of 1990, the Pollution Prevention
Act of 1990, the Resource Conservation and Recovery Act, the Safe Drinking Water
Act, the Endangered Species Act, the Toxic Substances Control Act, each as
amended, any state or local counterparts thereof and any state or local laws of
a similar nature for the protection of human health and welfare.
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"Environmental Permits" with respect to any Subsidiaries means those
Permits, authorizations, approvals and permission required to be obtained by the
Seller under Environmental Laws in connection with the Business or the use and
operation of the Assets owned or leased by them.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means generally accepted accounting principles in effect on the
date hereof as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States.
"Hazardous Substances" means any dangerous, toxic, reactive, corrosive,
ignitable, radioactive, caustic or otherwise hazardous material, pollutant,
contaminant, chemical, waste or substance defined, listed or described as any of
such in or governed by any Environmental Law, including urea-formaldehyde,
solvents, acids, bases, heavy metals, polychlorinated biphenyls, asbestos or
asbestos-containing materials, radon, explosives, known carcinogens, petroleum
and its derivatives or petroleum products.
"Inventory" means, as of any date, collectively, all inventories of
merchandise and other products owned by the Seller and held for resale or for
distribution, together with packaging and samples thereof owned by the Seller as
of such date.
"IRS" means the Internal Revenue Service.
"knowledge of the Seller" shall mean actual knowledge, after
performance of the duties reasonably within the scope of each such person's
responsibility in the position held, of any officer of the Seller.
"Liability" means any direct or indirect indebtedness, liability,
assessment, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, actual or potential, contingent or otherwise
(including any liability under any guaranties, letters of credit, performance
credits or with respect to insurance loss accruals).
"Lien" means, with respect to any Asset, any mortgage, lien (including
mechanics, warehousemen, laborers and landlords liens), claim, pledge, charge,
security interest, preemptive right, right of first refusal, option, judgment,
title defect or encumbrance of any kind in respect of or affecting such Asset.
"Material Adverse Effect" shall mean an effect on the Condition of the
Business which is or would be materially adverse.
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"Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity, including a government or political subdivision or
an agency or instrumentality thereof.
"Receivables" means as of any date any trade accounts receivable
arising in the ordinary course of business.
"Regulatory Actions" means any claim, demand, action, suit or
proceeding brought or instigated by any Governmental Body in connection with any
Environmental Law, including civil, criminal and/or administrative proceedings,
whether or not seeking costs, damages, penalties, expenses or injunctive relief.
"Release" means the intentional or unintentional, spilling, leaking,
disposing, discharging or disturbance of, or emitting, depositing, injecting,
leaching, escaping or any other release or threatened release, however defined,
of any Hazardous Substance.
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") means (i) any net income, gross income, gross receipts, sales, use,
ad valorem, transfer, transfer gains, franchise, profits, license, withholding,
payroll, employment, social security (or similar), unemployment, disability,
excise, severance, stamp, rent, recording, registration, occupation, premium,
real or personal property, intangibles, environmental (including taxes under
Code ss. 59A) or windfall profits tax, alternative or add-on minimum tax,
capital stock, customs duty or other tax, fee, duty, levy, impost, assessment or
charge of any kind whatsoever (including taxes assessed to real property and
water and sewer rents relating thereto), together with any interest and any
fine, penalty, addition to tax or additional amount or deductions imposed by any
Governmental Body (domestic or foreign) (a "Tax Authority") responsible for the
imposition of any such tax, whether disputed or not, including any liability
arising under any tax sharing agreement, with respect to the Seller, the
Business or the Assets (or the transfer thereof); (ii) any liability for the
payment of any amount of the type described in the immediately preceding clause
(i) as a result of the Seller being a member of an affiliated or combined group
with, or as a successor to or transferee from, any other corporation at any time
on or prior to a Closing Date; and (iii) any liability of the Seller for the
payment of any amounts of the type described in the immediately preceding clause
(i) as a result of a contractual obligation to indemnify any other person.
"Tax Return" means any return or report (including elections,
declarations, disclosures, schedules, attachments, estimates and information
returns) relating to Taxes required to be supplied to any Tax Authority, and
including any amendment thereof.
"Transaction Documents" means, collectively, this Agreement and each of
the other agreements, instruments, certificates and other documents to be
executed and delivered by all or some of the parties hereto in connection with
the consummation of the Transaction and the Other Contemplated Transactions.
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SECTION 9.2 Interpretation. Unless the context otherwise requires, the
terms defined in Section 9.1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. All accounting terms defined in Section 9.1,
and those accounting terms used in this Agreement not defined in Section 9.1,
except as otherwise expressly provided herein, shall have the meanings
customarily given thereto in accordance with GAAP. When a reference is made in
this Agreement to Sections or Exhibits, such references shall be to a Section of
or Exhibit to this Agreement, unless otherwise indicated. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
SMALL BUSINESS RESOURCES, INC.
By:
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
ASTA XXXXXXX.XXX, LLC
By Asta Funding Inc.
By:
---------------------------------------
Name: Xxxx X. Xxxxx
Title: Managing Member
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