ASSET PURCHASE AGREEMENT
AMONG
INTERACTIVE8, INC.,
LUMINANT WORLDWIDE CORPORATION,
NEW YORK CONSULTING PARTNERS, LLC
AND
THE MEMBERS OF NEW YORK CONSULTING PARTNERS, LLC
DATED AS OF MAY 31, 2000
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.......................................................................2
SECTION 1.01 DEFINITIONS......................................................2
SECTION 1.02 OTHER TERMS......................................................7
ARTICLE II ASSET PURCHASE AND RELATED MATTERS...............................................9
SECTION 2.01 AGREEMENT TO SELL AND PURCHASE; INSTRUMENTS OF TRANSFER..........9
SECTION 2.02 PURCHASED ASSETS AND EXCLUDED ASSETS............................10
SECTION 2.03 ASSUMED LIABILITIES AND EXCLUDED LIABILITIES....................10
SECTION 2.04 TAXES...........................................................10
SECTION 2.05 PURCHASE PRICE; CERTAIN TERMS REGARDING SHARES..................10
SECTION 2.06 PURCHASE PRICE ADJUSTMENTS......................................11
SECTION 2.07 INSTALLMENT SHARES..............................................15
SECTION 2.08 ESCROW SHARES...................................................20
SECTION 2.09 CONTINGENT PAYMENTS.............................................21
SECTION 2.10 DISPUTES........................................................22
ARTICLE III CLOSING........................................................................24
SECTION 3.01 LOCATION AND DATE...............................................24
SECTION 3.02 DELIVERIES AT THE CLOSING. AT THE CLOSING:......................24
SECTION 3.03 ALLOCATION......................................................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................................25
SECTION 4.01 REPRESENTATIONS AND WARRANTIES OF THE SELLER....................25
SECTION 4.02 REPRESENTATIONS AND WARRANTIES OF THE MEMBERS...................38
SECTION 4.03 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE MEMBERS
TO LUMINANT....................................................................39
SECTION 4.04 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.................40
SECTION 4.05 REPRESENTATIONS AND WARRANTIES OF LUMINANT......................41
ARTICLE V COVENANTS........................................................................44
SECTION 5.01 ACCESS TO INFORMATION...........................................44
SECTION 5.02 NON-DISCLOSURE; CONFIDENTIALITY; PUBLICITY......................45
SECTION 5.03 CONDUCT OF BUSINESS PENDING CLOSING.............................46
SECTION 5.04 PROHIBITED ACTIVITIES...........................................47
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SECTION 5.05 EXCLUSIVITY.....................................................48
SECTION 5.06 NOTIFICATION OF CERTAIN MATTERS.................................48
SECTION 5.07 RESTRICTIONS....................................................49
SECTION 5.08 FURTHER ASSURANCES..............................................50
SECTION 5.09 [RESERVED]......................................................50
SECTION 5.10 Non-Competition or Non-Disclosure Agreements or Covenants
Binding on Employees or Independent Contractors of the Seller..................50
SECTION 5.11 CONTRACTS IN PROGRESS...........................................50
SECTION 5.12 TRADEMARK; USE OF NAME..........................................51
SECTION 5.13 FIRPTA COMPLIANCE...............................................51
SECTION 5.14 RESERVE FOR CERTAIN LIABILITIES.................................51
SECTION 5.15 [RESERVED]......................................................51
SECTION 5.16 STOCK EXCHANGE LISTING..........................................52
SECTION 5.17 BOOKS AND RECORDS...............................................52
SECTION 5.18 EMPLOYMENT MATTERS..............................................52
SECTION 5.19 HEDGE TRANSACTION...............................................53
SECTION 5.20 REPORTS UNDER EXCHANGE ACT......................................53
SECTION 5.21 TAX COOPERATION.................................................53
SECTION 5.22 LEASES..........................................................54
SECTION 5.23 VISA APPLICATIONS...............................................54
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE....................................54
SECTION 6.01 CONDITIONS TO CLOSING OBLIGATIONS OF THE PURCHASER AND
LUMINANT.......................................................................54
SECTION 6.02 CONDITIONS TO CLOSING OBLIGATIONS OF THE SELLER AND MEMBERS.....55
ARTICLE VII INDEMNIFICATION................................................................57
SECTION 7.01 GENERAL INDEMNIFICATION BY THE SELLER AND THE MEMBERS...........57
SECTION 7.02 INDEMNIFICATION BY LUMINANT.....................................58
SECTION 7.03 DEFENSE.........................................................59
SECTION 7.04 INDEMNIFICATION PROCEDURES--THIRD PARTY CLAIMS..................59
SECTION 7.05 INDEMNIFICATION PROCEDURE--OTHER CLAIMS.........................60
SECTION 7.06 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS...........61
SECTION 7.07 LIMITATION AND EXPIRATION.......................................61
SECTION 7.08 REMEDIES........................................................62
SECTION 7.09 REDUCTION OF DAMAGES............................................62
SECTION 7.10 SUBROGATION.....................................................63
SECTION 7.11 RIGHT TO SET OFF................................................63
SECTION 7.12 [RESERVED]......................................................63
SECTION 7.13 INDEMNIFICATION PAYMENT AS PURCHASE PRICE ADJUSTMENT............63
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ARTICLE VIIIREGISTRATION RIGHTS.............................................................63
SECTION 8.01 SHELF REGISTRATION..............................................63
SECTION 8.02 PIGGYBACK REGISTRATION RIGHTS...................................63
SECTION 8.03 REGISTRATION EXPENSES...........................................64
SECTION 8.04 UNDERWRITING AGREEMENT..........................................64
SECTION 8.05 AVAILABILITY OF RULE 144........................................65
SECTION 8.06 MARKET STANDOFF.................................................65
ARTICLE IX[RESERVED]........................................................................65
ARTICLE X NON-COMPETITION..................................................................65
SECTION 10.01 PROHIBITED ACTIVITIES..........................................65
SECTION 10.02 DAMAGES........................................................66
SECTION 10.03 REASONABLE RESTRAINT...........................................66
SECTION 10.04 SEVERABILITY; REFORMATION......................................66
SECTION 10.05 INDEPENDENT COVENANT...........................................66
SECTION 10.06 MATERIALITY....................................................67
ARTICLE XIMISCELLANEOUS.....................................................................67
SECTION 11.01 SEVERABILITY...................................................67
SECTION 11.02 SPECIFIC ENFORCEMENT...........................................67
SECTION 11.03 ENTIRE AGREEMENT...............................................67
SECTION 11.04 COUNTERPARTS...................................................67
SECTION 11.05 NOTICES........................................................67
SECTION 11.06 AMENDMENTS.....................................................69
SECTION 11.07 SUCCESSORS AND ASSIGNS.........................................69
SECTION 11.08 EXPENSES AND REMEDIES..........................................69
SECTION 11.09 GOVERNING LAW; CONSENT TO JURISDICTION.........................70
SECTION 11.10 THIRD PARTY BENEFICIARIES......................................70
SECTION 11.11 MUTUAL DRAFTING................................................70
SECTION 11.12 FURTHER REPRESENTATIONS........................................70
SECTION 11.13 Members' REPRESENTATIVE........................................70
SECTION 11.14 BULK TRANSFER LAW..............................................71
SECTION 11.15 GENDER AND NUMBER..............................................71
SECTION 11.16 ARBITRATION....................................................71
EXHIBITS
Exhibit A--Blanket Conveyance, General Assignment and Xxxx of Sale
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Exhibit B--Assumption of Liabilities Agreement
Exhibit C--[Reserved]
Exhibit D--Investor Questionnaires
Exhibit E--FIRPTA Certificates
Exhibit F--Escrow Agreement
Schedules
2.01 Permitted Liens
2.02 Purchased Assets and Excluded Assets
2.03 Assumed Liabilities and Excluded Liabilities
2.03(3) Bonus and Vacation Time Liabilities Assumed by the Purchaser
2.06 Percentage Interests of Each Member in Share Consideration
2.09 Contingent Arrangements
4.01(a) Jurisdictions in Which Seller is Qualified to do Business
4.01(c)(ii) Seller and Member Required Third Party Consents
4.01(e) Seller Financial Statements
4.01(f)(1) Seller Contingent Liabilities
4.01(f)(2) Seller Plans and Projects
4.01(h) Seller Powers of Attorney
4.01(i)(1) Seller Accounts and Notes Receivable as of May 31, 2000
4.01(i)(2) Seller Accounts and Notes Receivable as of a Date Two Days
Prior to Closing
4.01(k) Seller Real Property and Leases
4.01(l) Seller Personal Property
4.01(m) Seller Intellectual Property
4.01(n) Seller Customers
4.01(o) Seller Contracts and Commitments
4.01(q) Insurance
4.01(u)(i)/(iii) Benefit Plans, Benefit Arrangements and Qualified Plans
4.01(w) Claims and Litigation
4.01(z) Absence of Changes
4.01(cc) Certain Business Relationships With Affiliates
4.01(ee) Seller Legal Names, Trade Names and Fictitious Names
4.01(ff) Locations of Chief Executive Office of Seller and Purchased
Assets
4.02(c) Member Power of Attorneys
5.18(a) Option Grants to Employees of the Seller
5.18(b) Employees to Receive Offers; Salary
5.18(c) Educational Assistance Provided to Employees of the Seller and
Assumed by the Purchaser
5.23 Visa Applications
6.01(e) Employment Agreements With Members
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 31st
day of May 2000 (this "Agreement"), by and among InterActive8, Inc., a New
York corporation (the "Purchaser"), Luminant Worldwide Corporation, a
Delaware corporation ("Luminant"), New York Consulting Partners, LLC, a
limited liability company organized under the New York Limited Liability
Company Law (the "Seller"), and Xxxxxxxxx Xxxx-Xxxxxxxxx (as a Member and in
her capacity as the Members' Representative (as defined in Section 11.13
hereof)), the Xxxxxxxxx X. X. Xxxxxxxxx Year 2000 Family Trust, Xxxxxx Xxxxx,
Xxxx Xxxxxxx, Xxxx Xxxxxx and Xxxxx Xxxxxx (each a "Member" and collectively,
the "Members"), except that for the purposes of Article II of this Agreement
or as specified herein Xxxxxxxxx Xxxx-Xxxxxxxxx and the Xxxxxxxxx X. X.
Xxxxxxxxx Year 2000 Family Trust shall be deemed to be one and the same
Member.
R E C I T A L S
WHEREAS, the Purchaser is a wholly-owned subsidiary of
Luminant engaged primarily in the business of providing consulting and
development services to Internet businesses; and
WHEREAS, the Seller is engaged primarily in the business of
providing consulting and development services to businesses (the "Business");
and
WHEREAS, the Members are all the members of the Seller and own
all the outstanding membership interests in the Seller;
WHEREAS, Luminant is a public company whose common stock, par
value $.01 per share ("Common Stock"), is traded on the NASDAQ National
Market and is primarily in the business of providing consulting and
development services to businesses operating in the Internet through its
operating subsidiaries; and
WHEREAS, the Purchaser proposes to acquire the Purchased
Assets from the Seller on the terms and conditions set forth in this
Agreement; and
WHEREAS, the Seller desires to transfer, sell and assign to
the Purchaser the Purchased Assets; and
WHEREAS, the Purchaser proposes to enter into the Transaction
Documents with the Seller and the Members, as applicable, as contemplated in
this Agreement; and
WHEREAS, the Seller and the Members desire to enter into the
applicable Transaction Documents with the Purchaser.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein set forth, the parties agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. The terms defined in this Article I, whenever used
in this Agreement, shall have the following meanings for all purposes of this
Agreement:
(a) "ACCOUNTS RECEIVABLE" means all uncollected accounts and xxxxxxxx for
services performed, or products sold, in connection with the Business or
with the conduct of the Seller or its employees, consultants, agents and
the Members in connection with the Business, excluding Contingent Fees
which shall be treated in accordance with Section 2.09.
(b) "AFFILIATE" has the meaning set forth in Rule 12b-2 under the Exchange
Act.
(c) "BENEFIT ARRANGEMENT" means any benefit arrangement, obligation, or
practice, whether or not legally enforceable, to provide benefits (other
than merely as salary or under a Benefit Plan), as compensation for
services rendered, to present or former directors, employees, agents,
members or independent contractors, including, but not limited to,
employment or consulting agreements, severance agreements or pay
policies, executive or incentive compensation programs or arrangements,
sick leave, vacation pay, plant closing benefits, salary continuation
for disability, workers' compensation, retirement, deferred
compensation, bonus, stock option or purchase, tuition reimbursement or
scholarship programs, employee discount programs, any plans subject to
Section 125 of the Code, and any plans providing benefits or payments in
the event of a change of control, change in ownership or effective
control, or sale of a substantial portion (including all or
substantially all) of the assets of any business or portion thereof now
or previously sponsored, maintained or contributed to or required to be
contributed to by the Seller or any ERISA Affiliate, for the benefit of
any present or former employees, members, directors or consultants of
the Seller.
(d) "BENEFIT PLAN" means an employee benefit plan as defined in Section 3(3)
of ERISA sponsored, maintained or contributed to or required to be
contributed to by the Seller or any ERISA Affiliate, for the benefit of
any present or former officers, employees, members or consultants of the
Seller.
(e) "BILLABLE VALUE" means, with respect to any customer or client
engagement of Luminant or any of its Subsidiaries: (A) the aggregate
amount, excluding expenses incurred to perform services which are
reimbursable by any customer or client, provided that Luminant or its
Subsidiary shall be entitled to xxxx such client or customer and
recognize and report such amounts as revenues in accordance with GAAP,
of: (1) in the case of an Hourly Fee Arrangement, the Hourly Fees; or
(2) in the case of a Fixed Fee Arrangement, the Fixed Fees; or (3) in
the case of a Contingent Fee Arrangement, the Contingent Fee Amount;
excluding in each case (B) any Contingent Fees which shall be treated in
accordance with Section 2.09.
(f) "BOARD" means the Boards of Directors of the Purchaser or Luminant, as
the case may be, as identified in this Agreement.
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(g) "BUSINESS" is defined in the Recitals to this Agreement.
(h) "BUSINESS DAY" has the meaning specified in Rule 14d-1(g)(3) of the
Exchange Act.
(i) "CHANGE OF CONTROL" means the occurrence of any one or more of the
following events: (i) sale of all or substantially all of the assets of
Luminant to one or more Persons in a single transaction or series of
related transactions; (ii) a Person (other than an Excluded Owner)
acquires or attains ownership of, or the right to vote, more than 50% of
the undiluted total voting power of Luminant's then-outstanding
securities eligible to vote to elect members of its Board; or (iii)
completion of a merger or consolidation of Luminant with or into any
other Person (other than an Excluded Owner) UNLESS the holders of
Luminant voting securities outstanding immediately before such
completion, together with any trustee or other fiduciary holding
securities under any Benefit Plan of Luminant or any of its
Subsidiaries, hold securities that represent immediately after such
merger or consolidation at least 50% of the combined voting power of the
then outstanding voting securities of either Luminant or the other
surviving entity or its ultimate parent.
(j) "CODE" is the federal Internal Revenue Code of 1986, as amended.
(k) "COLLAR" shall mean a hedging arrangement entered into between the
Seller and/or any of the Members with a Person whereby:
(i) the Seller and/or such Member/s, as the case may be, shall have
the option to put or sell a number of the Initial Shares (not to
exceed 200,000 of the Initial Shares) to such Person on a date no
earlier than the date which is six (6) months after the Closing
Date at a price agreed to by the Seller and/or such Member/s, as
the case may be, and such Person, and
(ii) such Person shall have the option to call or buy a number of the
Initial Shares (not to exceed 200,000 of the Initial Shares) from
the Seller and/or such Member/s, as the case may be, on a date no
earlier than the date which is six (6) months after the Closing
Date at a price to be agreed to by the Seller and/or such
Member/s, as the case may be, and such Person.
(l) "COMMON STOCK" is defined in the Recitals to this Agreement.
(m) "COMPETING BUSINESS" means any service or product of any Person other
than Luminant and its successors, assigns, or Subsidiaries that competes
with any service or product provided by Luminant and its successors,
assigns, or Subsidiaries during the Restricted Period, including, but
not limited to, any Person engaged in the formation or operation of
internet professional services firms that provide strategic, interactive
design and technical business services, information technology and
interactive business consulting, and other related services to assist
clients in integrating and maintaining their electronic commerce
capabilities.
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(n) "CONTINGENT FEE AMOUNT" means with respect to any customer or client
engagement, the amount by which (A) the aggregate revenues for a
specified time period, exceeds (B) the aggregate Fixed Fees or Hourly
Fees, as the case may be, for that same time period; provided that
Luminant or its Subsidiary shall be entitled to xxxx such client or
customer and recognize and report such amounts as revenues in accordance
with GAAP.
(o) "CONTINGENT FEE ARRANGEMENT" means any customer or client engagement
whereby Luminant or any of its Subsidiaries receives Contingent Fee
Amount.
(p) "DISPUTE RESOLUTION PERIOD" means the period beginning on the date that
any required notice or notification pursuant to any applicable Section
of this Agreement shall have been provided by the party required to give
such notice or notification to the Person entitled to receive such
notice or notification and ending on the date on which the matter to
which such notice or notification relates becomes final and binding in
accordance with the terms of Section 2.10 or Section 11.16, as
applicable.
(q) "ENTERPRISE STRATEGY GROUP" means the enterprise strategy group of the
Purchaser, Luminant or any Subsidiary thereof or any successor Person
performing comparable services to those performed by the enterprise
strategy group as it is currently operating.
(r) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all regulations and rules issued thereunder, or any
successor law.
(s) "ERISA AFFILIATE" means any person or entity that, together with the
entity referenced and at the relevant time, would be treated as a single
employer under Code Section 414 or ERISA Section 4001 (including any
entities excluded from the definition because they are not subject to
U.S. jurisdiction) and any general partnership of which such entity is
or has been a general partner.
(t) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to
a particular section of the Securities Exchange Act of 1934 shall
include a reference to the comparable section, if any, of any such
successor Federal statute.
(u) "EXCLUDED ASSETS" is defined in Schedule 2.02.
(v) "EXCLUDED LIABILITIES" is defined in Schedule 2.03.
(w) "EXCLUDED OWNER" consists of Luminant, any Luminant Subsidiary, any
Benefit Plan of Luminant or any of its Subsidiaries, or any underwriter
temporarily holding securities for an offering of such securities.
(x) "FAIR MARKET VALUE" means with respect to a share of Common Stock listed
on a national securities exchange or quoted on The NASDAQ Stock Market,
Inc. ("NASDAQ") National Market, the average of the daily closing prices
on the NASDAQ National Market (or the principal exchange or automated
trading system on which such security may be listed or may trade) for
the twenty (20) consecutive trading days ending June 20,
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2000, except that, if the average daily closing prices for the five (5)
consecutive trading days ending June 20, 2000 shall fluctuate (in any
direction) by more than 50% from the twenty (20) day average daily
closing price, the Fair Market Value shall be the average daily closing
price for the ten (10) consecutive trading days ending June 20, 2000.
The closing price for each trading day shall be the closing price, if
reported, or, if the closing price is not reported, the average of the
closing bid and asked prices as reported by the NASDAQ National Market
(or such principal exchange or market) or a similar source selected from
time to time by Luminant for quotation of its Common Stock.
(y) "FIXED FEES" mean with respect to any customer or client engagement of
Luminant or any of its Subsidiaries, the fixed amount that Luminant or
any of its Subsidiaries earns during a specified time period or for
delivery or completion of a specified work product or service pursuant
to the terms of that engagement; provided that Luminant or any of its
Subsidiaries shall be entitled to xxxx such client or customer and
recognize and report such amounts as revenues in accordance with GAAP.
(z) "FIXED FEE ARRANGEMENT" means any customer or client engagement whereby
Luminant or any of its Subsidiaries is compensated based on Fixed Fees.
(aa) "FOUNDING STOCKHOLDERS" means the former stockholders, partners or
members of Brand Dialogue-New York, Free Range Media, Inc., Integrated
Consulting, Inc. d/b/a i.con interactive, InterActive8, Inc., Multimedia
Resources LLC, Potomac Partners Management Consulting, LLC, RSI Group,
Inc.
(bb) "GAAP" means United States generally accepted accounting principles in
effect from time to time.
(cc) "GOVERNMENTAL ENTITY" means any foreign, federal, state, or local court
or tribunal or administrative, governmental or regulatory body, agency,
commission, division, department, public body or other authority.
(dd) "HOURLY FEES" mean with respect to any customer or client engagement of
Luminant or any of its Subsidiaries, the aggregate gross monetary value
(based on the prevailing billable rates set by Luminant or any of its
Subsidiaries, from time to time, during a specified period) for the
hours (or fractions thereof) actually reported by applicable Persons
during any specified time period as time spent on actual work performed
on such engagement; provided that Luminant or any of its Subsidiaries
shall be entitled to xxxx such client or customer and recognize and
report such amounts as revenues in accordance with GAAP.
(ee) "HOURLY FEE ARRANGEMENT" means any customer or client engagement whereby
Luminant or any of its Subsidiaries is compensated based on Hourly Fees.
(ff) "INTELLECTUAL PROPERTY" means trademarks, trade names, trade dress,
service marks, copyrights, Internet domain names, and general
intangibles of like nature, together with all goodwill (including
registrations and applications to register any of the foregoing),
patents and patent applications, trade secrets, inventions,
improvements, practices, processes, formulas, designs, know-how,
confidential business or technical information,
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computer software, firmware, data and documentation, licenses of or
agreements relating to any of the foregoing (in any medium including
electronic media).
(gg) "LUMINANT" is defined in the introductory paragraph of this Agreement.
(hh) "MARKET AREA" consists of the United States and Canada.
(ii) "MATERIAL ADVERSE EFFECT" on or with respect to a Person (or group of
Persons taken as a whole) means any state of facts, event or effect that
individually (or in the aggregate with all other states of facts, events
and effects) has resulted in, or would reasonably be expected to result
in, a material adverse change in the business, properties, customer or
client relationships, results of operations or financial condition of
such Person (or, if applicable, of such group of Persons taken as a
whole), or on the ability of such Person (or group of Persons taken as a
whole) to consummate the transactions contemplated hereby or to perform
its obligations under the Transaction Documents to which it is or will
be a party or by which it or its properties or assets is or will be
bound.
(jj) "MEMBER" is defined in the introductory paragraph of this Agreement.
(kk) "MULTIEMPLOYER PLAN" means any plan described in ERISA Section 3(37).
(ll) "PENSION PLAN" means any plan subject to Code Section 412 or ERISA
Section 302 or Title IV (excluding any Multiemployer Plan) or any
comparable benefit plan not covered by ERISA.
(mm) "PERSON" means and includes an individual, a partnership, a joint
venture, a corporation, a trust, a limited liability company, an
unincorporated organization, a Government Entity or any other
organization or entity.
(nn) "PURCHASER" is defined in the introductory paragraph of this Agreement.
(oo) "QUALIFIED PLAN" means any Benefit Plan intended to meet the
requirements of Section 401(a) of the Code, including any previously
terminated plan.
(pp) "RELATED EMPLOYER" means the Seller and every ERISA Affiliate.
(qq) "RESTRICTED PERIOD" means the period commencing on the Closing Date and
continuing for a period ending five (5) years thereafter.
(rr) "SEC" means the Securities and Exchange Commission or any successor
Governmental Entity.
(ss) "SECOND QUARTER" means the second calendar quarter ending June 30, 2000.
(tt) "SECOND QUARTER REVENUE" means (A) revenues ((1) excluding expenses
incurred to perform services which are reimbursable by any customer or
client, and (2) including those expenses billed to any customer or
client associated with the provision of communications resource services
by Xxxx Xxxxxx and/or other employees of the Seller
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who provided such services prior to the Closing and who provide such
services as employees of the Purchaser, Luminant or any of its
Subsidiaries after the Closing) of the Seller earned during the period
commencing on April 1, 2000 and through the day prior to Closing, as
recorded for financial statement purposes in accordance with GAAP by the
Seller, plus (B) revenues ((1) excluding all expenses incurred to
perform services which are reimbursable by any customer or client, and
(2) including only those expenses billed to Customers associated with
the provision of communications resource services by Xxxx Xxxxxx and
other employees of the Seller who provided such services prior to the
Closing and who provide such services as employees of the Purchaser,
Luminant or any of its Subsidiaries after the Closing) for services
provided to Customers of the Seller as set forth on Schedule 4.01(n)
commencing on the Closing Date through June 30, 2000, as recorded for
financial statement purposes in accordance with GAAP by Luminant,
MINUS (C) receivables for such revenues earned during the Second Quarter
written-off during or after such quarter as well as other expense
adjustments all in accordance with GAAP, in each case as recorded in
accordance with GAAP, MINUS (D) all Contingent Fees, if any, which shall
be treated in accordance with Section 2.09.
(uu) "SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to
a particular section of the Securities Act of 1933 shall include a
reference to the comparable section, if any, of any such successor
Federal statute.
(vv) "SELLER" is defined in the introductory paragraph to this Agreement.
(ww) "SHARES" means the Share Consideration, Installment Shares and Earn-Out
Shares.
(xx) "SUBSIDIARY" means, with respect to any Person; any corporation, limited
or general partnership, joint venture, association, limited liability
company, joint stock company, trust, unincorporated organization, or
other entity analogous to any of the foregoing of which a majority of
the equity ownership (whether voting stock or comparable interest) is,
at the time, owned directly or indirectly by such Person.
(yy) "TRANSACTION DOCUMENTS" means the Employment Agreements attached as
Schedule 6.01(e), the Blanket Conveyance, General Assignment and Xxxx of
Sale attached as Exhibit A, the Assumption of Liabilities Agreement
attached as Exhibit B, the Investor Questionnaires attached as Exhibit
D, the FIRPTA Certificates for the Seller and each Member in the forms
of the Certification of Non-Foreign Status Entity Transferor and
Certification of Non-Foreign Status Individual Transferor in the forms
hereto as Exhibit E and the Escrow Agreement attached hereto as Exhibit
F and any other agreements entered into pursuant hereto.
(zz) "TRANSFER AGENT" means American Stock Transfer & Trust Company or any
successor thereto or replacement thereof from time to time.
SECTION 1.02 OTHER TERMS. Each of the following terms is defined in the
Section set forth opposite such term:
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TERM SECTION
"ACCOUNTING FIRM" 2.10(a)(ii)
"ADDITIONAL PURCHASE PRICE REDUCTION" 2.06(a)(v)
"ALLOCATION SCHEDULE" 3.03
"ASSUMED LIABILITIES" 2.03
"BALANCE SHEET DATE" 4.01(e)
"CASH CONSIDERATION" 2.05(b)(i)
"CHANGE OF CONTROL CONSIDERATION" 2.07(a)(i)
"Claim" 7.04
"CLOSING" 3.01
"CLOSING DATE" 3.01
"COBRA" 4.01(u)(ii)5)
"CONFIDENTIAL INFORMATION" 5.02(a)
"CONTINGENT CONTRACT" 2.09(a)
"CONTINGENT CUSTOMER" 2.09(a)
"CONTINGENT FEES" 2.09(a)
"CONTRACT" 4.01(o)
"CONTRACTS IN PROGRESS" 4.01(o)(vii)
"CONTROL INSTALLMENT AMOUNT" 2.07(a)(i)
"CUSTOMERS" 4.01(n)
"DAMAGES" 7.01
"DEFENSE COUNSEL" 7.04(b)
"DEFENSE NOTICE" 7.04(b)
"DISCLOSING PARTY" 5.02(a)
"EARN-OUT SHARE AGENT" 2.06(f)(iv)
"EARN-OUT SHARES" 2.05(d)
"ESCROWED SHARES" 2.08(a)
"ESCROW AGENT" 2.08(a)(ii)
"ESCROW AGREEMENT" 2.08(a)
"FILED LUMINANT SEC DOCUMENTS" 4.05(f)
"FIRST INSTALLMENT PERIOD" 2.07(a)(iii)
"FINANCIALS" 4.01(e)
"FIRPTA CERTIFICATES" 5.13
"GOVERNMENTAL ENTITY" 4.01(c)(ii)
"INDEMNIFICATION THRESHOLD" 7.07(a)
"INDEMNIFIED PARTY OR PARTIES" 7.04(a)
"INDEMNIFYING PARTY OR PARTIES" 7.04(a)
"INSTALLMENT SHARE AGENT" 2.07(d)(iv)
"INSTALLMENT SHARES" 2.07
"INTERIM BALANCE SHEET" 4.01(e)
"INTERIM FINANCIALS" 4.01(e)
"INSTALLMENT PERIOD" 2.07(a)(iii)
"IRS" 4.01(u)(ii)1)
"LIEN" 4.01(c)(i)
"LOGO" 5.12(a)
8
"LUMINANT INDEMNIFIED PARTY OR PARTIES" 7.01
"LUMINANT INDEMNIFYING PARTY OR PARTIES" 7.02
"LUMINANT PERSONNEL" 2.09(a)(i)
"MAY BALANCE SHEET" 4.01(e)
"MAY FINANCIAL STATEMENTS" 4.01(e)
"MBE" 4.01(o)(v)
"MEMBERS' REPRESENTATIVE" 11.13
"OPERATING AGREEMENT" 4.01(a)
"PARTNER" 2.07(b)(i)
"PERCENTAGE INTERESTS" 2.06(g)
"PERMIT" 4.01(c)(i)
"PERMITTED LIENS" 2.01
"PREPAID EXPENSES" 2.06(k)
"PURCHASED ASSETS" 2.02
"PURCHASE PRICE" 2.05(a)
"PURCHASE PRICE INCREASE" 2.06(a)(iv)
"PURCHASE PRICE REDUCTION" 2.06(a)(iii)
"RECEIVING PARTY" 5.02(a)
"REVENUE TARGET" 2.06(a)
"RESTRICTED SECURITIES" 5.20
"SECOND INSTALLMENT PERIOD" 2.07(a)(iii)
"SECOND QUARTER INCOME STATEMENT" 2.06(a)(ii)
"SELLER FINANCIAL STATEMENTS" 4.01(e)
"SELLER INDEMNIFIED PARTY OR PARTIES" 7.02
"SELLER INDEMNIFYING PARTY OR PARTIES" 7.01
"SELLER PERSONNEL" 2.09(a)(i)
"SHARE CONSIDERATION" 2.05(b)(ii)
"TAXES" 4.01(v)(i)
"TAX EXEMPT USE PROPERTY" 4.01(v)(vi)
"TAX RETURNS" 4.01(v)(i)
"UTILIZATION" 2.07(a)(iv)
"WBE" 4.01(o)(v)
ARTICLE II
ASSET PURCHASE AND RELATED MATTERS
Section 2.01 AGREEMENT TO SELL AND PURCHASE; INSTRUMENTS OF TRANSFER. On the
Closing Date, and in accordance with the terms and conditions of this
Agreement, the Seller shall sell, convey, assign and deliver to the
Purchaser, and the Purchaser shall purchase and assume from the Seller for
the consideration specified in Section 2.05, all right, title and interest to
the Purchased Assets, free and clear of all Liens other than the Liens set
forth on Schedule 2.01 attached hereto (the "Permitted Liens"), and the
Assumed Liabilities. The transfer of the Purchased Assets shall occur by
delivery of the instruments of transfer described in Article III and physical
delivery of all tangible assets into the possession of the Purchaser, except
that tangible assets located at the principal business office of the Seller
shall be deemed delivered if
9
such assets remain at those premises as of the Closing Date until removal is
authorized by the Purchaser or Luminant.
Section 2.02 PURCHASED ASSETS AND EXCLUDED ASSETS. For purposes of this
Agreement, the "Purchased Assets" shall consist of all right, title and
interest in and to all of the assets utilized in the Business which are
specified on Schedule 2.02 as being Purchased Assets, which Schedule 2.02 is
incorporated by reference herein and made a part hereof, and the Seller or
any Member, as the case may be, shall retain all right, title and interest in
and to the Excluded Assets which are specified on Schedule 2.02 as being
Excluded Assets.
Section 2.03 ASSUMED LIABILITIES AND EXCLUDED LIABILITIES. For purposes of
this Agreement, the "Assumed Liabilities" shall consist of all obligations of
the Seller which are specified on Schedule 2.03 as being Assumed Liabilities
and such other assumed obligations of the Purchaser as listed thereon as
Assumed Liabilities, which Schedule 2.03 is incorporated by reference herein
and made a part hereof. Neither the Purchaser nor Luminant will assume or
have any responsibility with respect to any obligation or liability of the
Seller or any Member not included within the definition of Assumed
Liabilities. The Seller shall retain all Excluded Liabilities as set forth on
Schedule 2.03.
Section 2.04 TAXES. The Seller shall be responsible for, and shall pay, any
documentary and transfer Taxes and any sales, use or other Taxes imposed by
reason of the transfer of Purchased Assets provided hereunder and any
deficiency, interest or penalty asserted with respect thereto.
SECTION 2.05 PURCHASE PRICE; CERTAIN TERMS REGARDING SHARES.
(a) The purchase price for the Purchased Assets (the "Purchase Price") shall
be an aggregate amount equal to SIX MILLION FIVE HUNDRED SIXTY THOUSAND
DOLLARS ($6,560,000) and the Purchaser's assumption of the Assumed
Liabilities, subject to adjustment in accordance with Sections 2.06 of
this Agreement.
(b) SIX MILLION FIVE HUNDRED SIXTY THOUSAND DOLLARS ($6,560,000) of the
Purchase Price shall be paid to the Seller at the Closing as follows:
(i) by delivery to the Seller by Luminant on behalf of the Purchaser of
cash in the amount of EIGHT HUNDRED THOUSAND DOLLARS ($800,000) (the
"Cash Consideration") by wire transfer of immediately available
federal funds to such bank account or accounts as the Seller may
designate in writing to the Purchaser at least two (2) business days
prior to the Closing Date; and
(ii) by delivery to the Seller by Luminant on behalf of the Purchaser of
shares of Common Stock ("Initial Shares") with a Fair Market Value
equal to FIVE MILLION SEVEN HUNDRED SIXTY THOUSAND DOLLARS
($5,760,000) (the "Share Consideration").
(c) The Purchaser shall assume the Assumed Liabilities upon Closing.
(d) After the Closing, Luminant on behalf of the Purchaser shall deliver to
the Seller additional shares of Common Stock (the "Earn-Out Shares")
with a Fair Market Value
10
equal to any Purchase Price Increase subject to satisfaction of the
conditions set forth in Section 2.06.
(e) After the Closing, the Seller (or, if the Seller has distributed such
Shares to the Members, the Members) shall deliver to Luminant (on behalf
of the Purchaser) Share Consideration with a Fair Market Value, and Cash
Consideration, if necessary, equal to the Purchase Price Reduction or
Additional Purchase Price Reduction, as the case may be, subject to
satisfaction of the conditions set forth in Section 2.06.
(f) No fractional Shares shall be issued by Luminant on behalf of the
Purchaser as part of the Purchase Price. In lieu of fractional Shares,
Luminant on behalf of the Purchaser shall deliver to the Seller an
amount in cash determined by multiplying (i) the fraction of a Share to
which the Seller would otherwise have been entitled by (ii) the Fair
Market Value.
(g) Except as provided in Article VIII, all Shares shall be "Restricted
Securities" within the meaning of Rule 144 and Rule 145 promulgated
under the Securities Act.
(h) All Shares shall be adjusted as appropriate for stock splits, reverse
stock splits and stock dividends declared and paid with respect to the
Common Stock.
SECTION 2.06 PURCHASE PRICE ADJUSTMENTS.
(a) The aggregate Purchase Price payable pursuant to this Agreement has been
calculated based upon the assumption that the Second Quarter Revenue
will be equal to, or greater than, ONE MILLION NINE HUNDRED THOUSAND
DOLLARS ($1,900,000) (the "Revenue Target"). The aggregate Purchase
Price shall be adjusted in the event Second Quarter Revenue is less than
ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($1,800,000) or more than TWO
MILLION DOLLARS ($2,000,000), as follows:
(i) Prior to Closing, the Seller shall deliver to the Purchaser and
Luminant the Interim Financials and the May Financial Statements
pursuant to Section 4.01(e) hereof.
(ii) Within forty-five (45) days after the end of the Second Quarter,
the Purchaser or Luminant shall deliver to the Seller an income
statement showing Second Quarter Revenue (the "Second Quarter
Income Statement") and shall notify the Seller of Luminant's
calculation of the amount of any Purchase Price Reduction pursuant
to Section 2.06(a)(iii) or Purchaser Price Increase pursuant to
Section 2.06(a)(iv), as the case may be. Within forty-five (45)
days after the end of each fiscal quarter following the Second
Quarter, Luminant shall deliver to the Seller an income statement
and shall notify the Seller of Luminant's calculation of the
amount of any Additional Purchase Price Reduction pursuant to
Section 2.06(a)(v).
(iii) If the Second Quarter Revenue (determined pursuant to the Second
Quarter Income Statement, subject to the dispute resolution
procedures in Section 2.10) is less than ONE MILLION EIGHT HUNDRED
THOUSAND DOLLARS ($1,800,000), the Purchase Price shall be reduced
by the amount equal to the product of (A) the amount
11
by which the Revenue Target exceeds Second Quarter Revenue,
multiplied by (B) 4.24 (the "Purchase Price Reduction").
(iv) If the Second Quarter Revenue (determined pursuant to the Second
Quarter Income Statement, subject to the dispute resolution
procedures in Section 2.10) is more than TWO MILLION DOLLARS
($2,000,000), the Purchase Price shall be increased by an amount
equal to the product of (A) the amount by which the Second Quarter
Revenue exceeds TWO MILLION DOLLARS ($2,000,000), multiplied by
(B) 4.24 (the "Purchase Price Increase").
(v) Notwithstanding anything herein to the contrary, the Purchase
Price, including any Purchase Price Increase, shall also be
subject to reduction by an amount equal to the product of (A) the
amount of any Accounts Receivable that were included in the
calculation of Second Quarter Revenue which are written off in
accordance with GAAP after the fiscal quarter ending June 30, 2000
by the Purchaser, Luminant or any of its Subsidiaries from time to
time as uncollectable in accordance with GAAP (subject to the
dispute resolution mechanism in Section 2.10), multiplied by (B)
4.24 (each an "Additional Purchase Price Reduction").
(b) In the event the Seller, the Purchaser or Luminant objects to or
disputes any matter applicable to this Section 2.06, the parties agree
that the dispute resolution mechanism under Section 2.10 is the sole
remedy of all parties with respect to the subject matter hereof and any
decisions pursuant thereto shall be final and binding on all parties.
(c) In the event that at the end of the applicable Dispute Resolution Period
set forth in Section 2.10 it is determined that a Purchase Price
Reduction pursuant to Section 2.06(a)(iii) is required, no later than
fifteen (15) days thereafter the Seller shall return to Luminant on
behalf of the Purchaser an aggregate number of the Initial Shares with a
Fair Market Value equal to the Purchase Price Reduction, and if the
Purchase Price Reduction exceeds the Fair Market Value of the Initial
Shares, cash up to the balance of the unpaid Purchase Price Reduction.
(d) In the event that at the end of the applicable Dispute Resolution Period
set forth in Section 2.10 it is determined that an Additional Purchase
Price Reduction pursuant to Section 2.06(a)(v) is required, no later
than fifteen (15) days thereafter the Seller shall return to Luminant on
behalf of the Purchaser an aggregate number of the Initial Shares or
Earn-Out Shares with a Fair Market Value equal to the Additional
Purchase Price Reduction, from time to time, and if the Additional
Purchase Price Reduction, singularly or in the aggregate, exceeds the
Fair Market Value of the Initial Shares and Earn-Out Shares, cash up to
the balance of the unpaid Additional Purchase Price Reduction.
(e) In the event that at the end of the applicable Dispute Resolution Period
set forth in Section 2.10 it is determined that a Purchase Price
Increase pursuant to Section 2.06(a)(iv)is required, no later than
fifteen (15) days thereafter Luminant shall instruct its Transfer Agent
to prepare and deliver to the Seller an aggregate number of Earn-Out
Shares with a Fair Market Value equal to the Purchase Price Increase.
Luminant shall use its best efforts to notify its Transfer Agent as soon
as practicable after a determination
12
that a Purchase Price Increase is required and to expedite the
preparation and delivery of stock certificates by its Transfer Agent to
the Seller.
(f) Luminant shall be deemed to be in full compliance with this Agreement
and not in default in any respect if:
(i) Luminant shall forward the aggregate Earn-Out Shares payable
hereunder to the Seller or the Members' Representative, as the case
may be.
(ii) Notwithstanding anything in this Section 2.06(f) to the contrary,
if a Purchaser Price Increase is required and the Seller has been
dissolved and liquidated or the Seller shall request a distribution
to the Members, Luminant will use reasonable efforts to accommodate
the distribution of any Earn-Out Shares to each Member pro rata in
accordance with each Member's Percentage Interest or on a different
basis, provided that the Member's Representative on behalf of all
the Members shall notify Luminant in writing within fifteen (15)
days after the final determination that a Purchase Price Increase is
required specifying such percentage allocations among the Members
and authorizing Luminant to make distributions on that basis.
(iii) If Luminant does not receive from the Seller or any Member all of
the information necessary for Luminant to notify its Transfer Agent
to prepare and deliver stock certificates in accordance with Section
2.06(f)(ii) above, the date by which Luminant must give notice to
its Transfer Agent pursuant to Section 2.06(e) shall be extended to
a date fifteen (15) following the date that it receives all
necessary information from the Seller or such Member.
(iv) At its option Luminant may deposit Earn-Out Shares, or instructions
relating to the preparation and/or delivery of stock certificates
representing Earn-Out Shares for which it has not received all
information necessary to prepare and deliver such certificates, into
an escrow account with its Transfer Agent or a bank with an office
in New York City (the "Earn-Out Share Agent"). Within ten (10) days
after Luminant has deposited any Earn-Out Shares or instructions
relating thereto into escrow with the Earn-Out Share Agent, Luminant
shall notify the Seller and the Members' Representative that it has
made such deposit and the name, address, telephone number, fax
number and name of the contact person at the applicable Earn-Out
Share Agent. Following such notice by Luminant, the Seller, the
Members' Representative or any Member shall provide the outstanding
information necessary to prepare and deliver a certificate or
certificates for such Earn-Out Shares to Luminant and to the
Earn-Out Share Agent in accordance with the applicable notice
provisions of Section 11.05 of this Agreement. Luminant shall
provide such Earn-Out Share Agent with a general description of the
outstanding information as well as instructions to promptly deliver,
or, if the Earn-Out Share Agent is not the Transfer Agent, to
instruct the Transfer Agent to promptly prepare and/or deliver, the
applicable certificates for the Earn-Out Shares upon receipt by the
Earn-Out Share Agent of such necessary information. If and when
Luminant receives all information necessary to instruct the Earn-Out
Share Agent to deliver, or, if the Earn-Out Share Agent is not the
Transfer Agent, to instruct its Transfer Agent to prepare and
deliver, stock certificates representing such Earn-Out Shares,
within fifteen (15) days
13
thereafter Luminant will provide such information and issue appropriate
instructions to the Earn-Out Share Agent and/or the Transfer Agent, as
the case may be. Luminant shall use its best efforts to notify the
Earn-Out Share Agent and/or the Transfer Agent as soon as practicable
after receipt of all necessary information and to expedite the delivery
of stock certificates by the Earn-Out Share Agent and/or the
preparation and/or delivery of stock certificates representing such
Earn-Out Shares by the Transfer Agent.
(g) To the extent that the Seller has distributed Shares to all or some of
the Members, the obligation to pay the Purchase Price Reduction and
Additional Purchase Price Reduction, as the case may be, shall be the
individual pro rata obligation of each Member, and each Member shall
return the Initial Shares or pay the cash, as the case may be, to
Luminant (on behalf of the Purchaser) pro rata based on the percentage
interest of such Members set forth in Schedule 2.06 (the "Percentage
Interests").
(h) Notwithstanding anything herein to the contrary, if the Seller or any
Member shall fail to deliver to Luminant the Purchase Price Reduction or
Additional Purchase Price Reduction, as the case may be, in accordance
with Sections 2.06(c) and/or 2.06(d), as applicable, in addition to any
other remedies available to Luminant at law or in equity, Luminant shall
have the right (but shall not be required) to set-off or offset the full
Purchase Price Reduction and Additional Purchase Price Reduction, as the
case may be, against any Installment Shares payable, from time to time,
pursuant to Section 2.07 hereof or the Escrowed Shares. Luminant's right
of set-off or offset may be exercised in Luminant's sole discretion
without the requirement to take any further action and this right of
set-off or offset may be enforced against the Seller or any one Member
or the Seller and all Members, as applicable. (i) The costs of preparing
the Second Quarter Income Statement shall be borne by the Purchaser.
(j) Notwithstanding anything herein to the contrary, in no event shall the
Seller be entitled to receive, nor shall Luminant or the Purchaser have
any obligation to pay the Seller (or the Members, as applicable),
Earn-Out Shares with a Fair Market Value exceeding ONE MILLION TWO
HUNDRED SEVENTY-TWO THOUSAND DOLLARS ($1,272,000).
(k) In addition, within fifteen (15) days after the finalization of (A) the
Second Quarter Income Statement and (B) the income statement relating to
a fiscal quarter ending after the end of the Second Quarter, Luminant or
the Purchaser shall notify the Seller of Luminant's or the Purchaser's,
as the case may be, calculation of any prepaid expenses recorded by the
Seller on the May Balance Sheet (the "Prepaid Expenses") in accordance
with GAAP (1) for which Luminant or any of its Subsidiaries received a
benefit for the period June 1, 2000 through June 30, 2000 in the case of
the Second Quarter Income Statement, or (2) for which Luminant or any of
its Subsidiaries received a benefit during the fiscal quarter to which
the expense relates in the case of income statements relating to a
fiscal quarter ending after the end of the Second Quarter, as finally
determined in the event of a dispute in accordance with Section 2.10. In
the event that at the end of the applicable Dispute Resolution Period
set forth in Section 2.10 it is determined that Luminant or any of its
Subsidiaries are required to reimburse the Seller for any Prepaid
14
Expenses, within fifteen (15) days thereafter Luminant or the Purchaser
shall remit to the Seller cash in the amount of such Prepaid Expenses.
Notwithstanding anything herein to the contrary, Luminant's and the
Purchaser's obligations with respect to educational financial assistance
to former employees of the Seller shall be governed by Section 5.18(c)
and Schedule 5.18(c) of this Agreement.
(l) All of the Purchase Price adjustments listed in this Section 2.06 shall
be treated as adjustments to the Purchase Price for tax purposes.
Section 2.07 INSTALLMENT SHARES. After the Closing, Luminant shall make
payments to the Members in an aggregate amount of up to ONE MILLION FOUR
HUNDRED FORTY THOUSAND DOLLARS ($1,440,000), which shall be paid by Luminant
in shares of Common Stock (the "Installment Shares") valued at the Fair
Market Value, such payments to be made at the time and subject to
satisfaction of the conditions set forth in this Section 2.07.
(a) Installment Shares shall be earned by each Member based on the
individual performance of each Member to the extent such Member
satisfies applicable conditions of this Section 2.07, as follows:
(i) in the case of each Member, if (A) a Change of Control of Luminant
shall occur and (B) such Member shall be employed by Luminant or
any of its Subsidiaries on the date immediately preceding the date
on which the Change of Control is consummated, the payment of the
Purchase Price Installments shall be accelerated, and the amount
payable to such Member (the "Control Installment Amount") shall be
determined by multiplying (1) ONE MILLION FOUR HUNDRED FORTY
THOUSAND DOLLARS ($1,440,000), by (2) the Percentage Interest of
such Member. Luminant shall deliver to such Member Installment
Shares with an aggregate Fair Market Value equal to the Control
Installment Amount, which Installment Shares shall be deemed issued
to such Member as of the date immediately prior to the date of
consummation of such Change of Control. Luminant shall deliver
(or cause to be delivered) to such Member the Installment Shares in
accordance with Section 2.07 (d), and in any event such Member
shall have the right to receive and shall receive such cash,
securities, assets or other consideration (the "Change of Control
Consideration") on account of such Installment Shares on the same
basis as Change of Control Consideration is paid or payable on
account of the shares of Common Stock of Luminant upon consummation
of such Change of Control in accordance with the terms of such
Change of Control transaction; or
(ii) (A) in the case of each Member (other than Xxxx Xxxxxx), if (1)
Luminant or any of its Subsidiaries has reassigned such Member to a
new position or otherwise changed the duties and responsibilities
of such Member whereby such Member no longer has the ability to
have earned Billable Value (as determined pursuant to Section
2.07(b) below) equal to or exceeding ONE MILLION DOLLARS
($1,000,000) during an Installment Period, or (2) Luminant or any
of its Subsidiaries causes such Member not to have Billable Value
equal to or exceeding ONE MILLION DOLLARS ($1,000,000) for an
Installment Period by actively interfering with her ability to do
her job, or; or (B) in the case of Xxxx Xxxxxx, if (1) Luminant or
any of its Subsidiaries has reassigned her to a
15
new position or otherwise changed her duties and responsibilities
whereby she no longer has the ability to fulfill subclause (B) or
(C) of Section 2.07(a)(iv) during any Installment Period; or (2)
Luminant or any of its Subsidiaries causes her not to fulfill
subclause (B) or (C) or Section 2.07(a)(iv) for an Installment
Period; by actively interfering with her ability to do her job; or
(C) in the case of each Member (including Xxxx Xxxxxx) (1) during
an Installment Period such Member's employment terminates for
"Good Reason" as defined in such Member's Employment Agreement; or
(2) such Member is no longer employed by Luminant or any of its
Subsidiaries due to termination of such Member's employment without
cause in accordance with such Member's Employment Agreement, then,
if any of the preceding events shall have occurred prior to the end
of an Installment Period with respect to an applicable Member,
Luminant shall deliver (or cause to be delivered) to such Member in
accordance with Section 2.07(d) Installment Shares with an
aggregate Fair Market Value equal to the product of (1) ONE MILLION
FOUR HUNDRED FORTY THOUSAND DOLLARS ($1,440,000) (if such event
occurs during the First Installment Period) or SEVEN HUNDRED TWENTY
THOUSAND DOLLARS ($720,000) (if such event occurs during the Second
Installment Period), multiplied by (2) the Percentage Interest of
such Member; in accordance with the terms of this Section 2.07;
except that such Member shall have no right to receive any
Installment Shares relating to a particular Installment Period if
such Member's employment has been terminated for cause in
accordance with such Member's Employment Agreement during such
Installment Period; or
(iii) in the case of each Member (other than Xxxx Xxxxxx), if (A) such
Member shall be employed by Luminant or any of its Subsidiaries on
the last day of an Installment Period and (B) such Member shall
have Billable Value (as determined pursuant to Section 2.07(b)
below) of ONE MILLION DOLLARS ($1,000,000) or more during the
consecutive twelve (12) month period immediately preceding the end
of the first anniversary of the Closing (the "First Installment
Period") Luminant shall deliver (or cause to be delivered) to such
Member in accordance with Section 2.07(d) Installment Shares with
an aggregate Fair Market Value equal to an amount determined by
multiplying (1) SEVEN HUNDRED TWENTY THOUSAND DOLLARS ($720,000),
by (2) the percentage interest of such Member determined pursuant
to Section 2.07(b)(iv); and (C) such Member shall have Billable
Value (as determined pursuant to Section 2.07(b) below) of ONE
MILLION DOLLARS ($1,000,000) or more during the consecutive
twelve (12) month period immediately preceding the end of the
second anniversary of the Closing (the "Second Installment Period"
and with the First Installment Period, each an "Installment
Period") Luminant shall deliver (or cause to be delivered) to such
Member Installment Shares with an aggregate Fair Market Value equal
to an amount determined by multiplying (1) SEVEN HUNDRED TWENTY
THOUSAND DOLLARS ($720,000), by (2) the percentage interest of such
Member determined pursuant to Section 2.07(b)(iv); in each case in
accordance with the terms of this Section 2.07.
(iv) in the case of Xxxx Xxxxxx, if (A) such Member shall be employed by
Luminant or any of its Subsidiaries on the last day of an
Installment Period and (B) such Member shall have a Utilization of
65% or more during the First Installment Period, Luminant shall
deliver (or cause to be delivered) to such Member Installment
Shares with an aggregate
16
Fair Market Value equal to an amount determined by multiplying (1)
SEVEN HUNDRED TWENTY THOUSAND DOLLARS ($720,000), by (2) the percentage
interest of such Member determined pursuant to Section 2.07(b)(iv), and
(C) such Member shall have a Utilization of 65% or more during the
Second Installment Period, Luminant shall deliver (or cause to be
delivered) to such Member in accordance with Section 2.07(d)
Installment Shares with an aggregate Fair Market Value equal to an
amount determined by multiplying (1) SEVEN HUNDRED TWENTY THOUSAND
DOLLARS ($720,000), by (2) the percentage interest of such Member
determined pursuant to Section 2.07(b)(iv); in each case in accordance
with the terms of this Section 2.07. For the purposes of this Section
2.07(a)(iv), the term "Utilization" shall mean, with respect to a
particular Installment Period, the percentage obtained by multiplying:
(X) a fraction: (AA) the numerator of which is the time spent (in terms
of hours and fractions thereof) by Xxxx Xxxxxx on matters relating to
customer or client engagements, customer or client proposals and the
development of internal processes with respect to the applicable
Installment Period, and (BB) the denominator of which is the total
number of working hours available to Xxxx Xxxxxx with respect to the
applicable Installment Period (based on the number of working days,
excluding vacation days, public holidays, sick days and the like, for
Xxxx Xxxxxx during the applicable Installment Period and an eight (8)
hour work day), by (Y) 100%.
(b) For purposes hereof, a Member shall be deemed to have earned Billable
Value and shall receive credit for such Billable Value, as follows:
(i) if (A) a Member is primarily responsible for obtaining the
engagement to perform work for a customer or a client, and (B) no
other Member is working on such engagement, such Member shall be
credited with 100% of the aggregate Billable Value with respect to
that customer or client engagement, whether or not any other Person
employed by Luminant or any of its Subsidiaries holding the
designation of partner (a "Partner") works on such engagement;
provided that the allocation of such aggregate Billable Value among
the Members (other than Xxxx Xxxxxx) shall be subject to change in
accordance with Section 2.07(b)(iv); or
(ii) if (A) a Member is primarily responsible for obtaining the engagement
to perform work for a customer or client, and (B) any other Member is
working on such engagement, whether or not any other Partner (which
is not a Member) works on such customer or client engagement; each
such Member (other than Xxxx Xxxxxx) shall be allocated a portion of
such aggregate Billable Value with respect to that customer or client
engagement, to be determined by multiplying such aggregate Billable
Value by a fraction (1) the numerator of which shall be the number of
hours spent by such Member (other than Xxxx Xxxxxx) working on such
engagement, and (2) the denominator of which shall be the total number
of hours worked by all Members (other than Xxxx Xxxxxx) working on
such engagement; provided that the allocation of such aggregate
Billable Value among the Members (other than Xxxx Xxxxxx) shall be
subject to change in accordance with Section 2.07(b)(iv); or
(iii) if one or more Members have worked on a customer or client
engagement and no Member is primarily responsible for having obtained
such engagement, each such
17
Member (other than Xxxx Xxxxxx) shall be allocated a portion of such
aggregate Billable Value with respect to that customer or client
engagement to be determined by multiplying such aggregate Billable
Value by a fraction (A) the numerator of which shall be the number of
hours spent by such Member (other than Xxxx Xxxxxx) with respect to
such engagement, and (B) the denominator of which shall be the total
number of hours worked by all Partners (including all Members (other
than Xxxx Xxxxxx)) with respect to such engagement; provided that the
allocation of such aggregate Billable Value among the Members (other
than Xxxx Xxxxxx) shall be subject to change in accordance with
Section 2.07(b)(iv).
(iv) Notwithstanding anything in Section 2.07 to the contrary, if the
Members' Representative shall instruct Luminant in writing within
fifteen (15) days after notice is given by Luminant in accordance with
Section 2.07(c)(A) as to the percentage interest of each Member (other
than Xxxx Xxxxxx) that Luminant shall use to allocate the Billable
Value determined pursuant to Sections 2.07(b)(i), 2.07(b)(ii) or
2.07(b)(iii) among the applicable Members (other than Xxxx Xxxxxx)
and/or Installment Shares earned pursuant to Sections 2.07(a)(iii)
and/or 2.07(a)(iv) among the applicable Members (including Xxxx
Xxxxxx), Luminant shall make the allocations and instruct its Transfer
Agent to prepare and deliver stock certificates representing the
Installment Shares, if any, in accordance with the Members'
Representative's instructions. If Luminant does not receive written
instructions from the Members' Representative in accordance with the
preceding sentence, (A) Luminant shall allocate Billable Value (1) 100%
to the responsible Member pursuant to Section 2.07(b)(i), and (2) based
on the relative hours worked by each Member in accordance with Sections
2.07(b)(ii) or 2.07(b)(iii), as applicable, or (B) Luminant shall issue
Installment Shares, if any, to such Member based on such Member's
Percentage Interest. Notwithstanding anything in this Section 2.07 to
the contrary, Xxxx Xxxxxx shall not be allocated or reallocated any
portion of Billable Value and any other Member shall not be allocated
or reallocated any portion of Utilization.
(c) Luminant shall notify the Members' Representative of Luminant's
calculation of, (A) with respect to aggregate Billable Value earned by
all Members (other than Xxxx Xxxxxx) pursuant to Section 2.07(b), and
Xxxx Xxxxxx'x Utilization pursuant to Section 2.07(a)(iv), within ninety
(90) days after the end of each Installment Period, (B) with respect to
the Control Installment Amount issuable on a Change of Control in
accordance with Section 2.07(a)(i), as soon as practicable following
such Change of Control, (C) with respect to the number of Installment
Shares issuable on an event described in Section 2.07(a)(ii) within
fifteen (15) days after Luminant receives notice of such event, and (D)
with respect to the number of Installment Shares issuable in accordance
with Sections 2.07(a)(iii) and/or 2.07(a)(iv), within ninety (90) days
after the end of each Installment Period, provided that Luminant shall
not be deemed to be in default of the requirement to give notice
hereunder if it has a dispute relating to the applicable Section.
(d) In the event that at the end of the applicable Dispute Resolution Period
set forth in Section 2.10 it is determined that Installment Shares are
issuable pursuant to the terms of this Section 2.07, no later than
fifteen (15) days thereafter Luminant shall instruct its Transfer Agent
to prepare and deliver to the applicable Members stock certificates
18
representing the applicable Installment Shares payable pursuant to this
Section 2.07. Luminant shall use its best efforts to notify its Transfer
Agent as soon as practicable after a determination that a payment of
Installment Shares is required and expedite the preparation and delivery
of stock certificates by its Transfer Agent to the applicable Members.
Notwithstanding the foregoing, Luminant shall be deemed to be in full
compliance with this Agreement and not in default in any respect if
Luminant shall deliver (or cause to be delivered) the Installment Shares
issuable hereunder to the Members' Representative, subject to the
following:
(i) Notwithstanding anything in this Section 2.07(d) to the contrary,
Luminant will use reasonable efforts to accommodate the distribution of
any Installment Shares to each Member in accordance with any
instructions received from the Members' Representative in accordance
with to Section 2.07(b)(iv) above, provided that the Members'
Representative on behalf of all the Members shall notify Luminant in
writing within fifteen (15) days after Luminant gives notice to the
Members' Representative pursuant to Section 2.07(c). In addition, the
Seller and the Members' Representative shall use its or her best
efforts to provide Luminant with all the information necessary for
Luminant to instruct its Transfer Agent to prepare and deliver the
Installment Shares for any Installment Period at one time.
(ii) If Luminant does not receive from the Seller or any Member all of
the information necessary for Luminant to notify its Transfer Agent to
make a distribution in accordance with the first or second sentence of
this Section 2.07(d), the date by which Luminant must give notice to
its Transfer Agent shall be extended to a date fifteen (15) following
the date that it receives all necessary information from the Seller or
such Member.
(iii) At its option Luminant may deposit Installment Shares, or
instructions relating to the preparation and/or delivery of stock
certificates representing Installment Shares for which it has not
received all information necessary to prepare and deliver such
certificates, into an escrow account with its Transfer Agent or a bank
with an office in New York City (the "Installment Share Agent"). Within
ten (10) days after Luminant has deposited any Installment Shares or
instructions relating thereto into escrow with the Installment Share
Agent, Luminant shall notify the Members' Representative that it has
made such deposit and the name, address, telephone number, fax number
and name of the contact person at the applicable Installment Share
Agent. Following such notice by Luminant, the Seller, the Members'
Representative or any Member shall provide the outstanding information
necessary to prepare and/or deliver a certificate or certificates for
such Installment Shares to Luminant and to the Installment Share Agent
in accordance with the applicable notice provisions of Section 11.05 of
this Agreement. Luminant shall provide such Installment Share Agent
with a general description of the outstanding information as well as
instructions to promptly deliver, or, if the Installment Share Agent is
not the Transfer Agent, to instruct the Transfer Agent to promptly
prepare and deliver, the applicable certificates for the Installment
Shares upon receipt by the Installment Share Agent of such necessary
information. If and when Luminant receives all information necessary to
instruct the Installment Share Agent to deliver, or, if the Installment
Share Agent is not the Transfer Agent, to instruct its Transfer Agent
to
19
prepare and deliver, stock certificates representing such
Installment Shares, within fifteen (15) days thereafter Luminant
will provide such information and issue appropriate instructions to
the Installment Share Agent and/or the Transfer Agent, as the case
may be. Luminant shall use its best efforts to notify the
Installment Share Agent and/or the Transfer Agent as soon as
practicable after receipt of all necessary information and to
expedite the delivery of stock certificates by the Installment
Share Agent and/or the preparation and/or delivery of stock
certificates representing such Installment Shares by the Transfer
Agent.
(e) In the event the Seller, any Member or Luminant objects to or disputes
any matter applicable to this Section 2.07, the parties agree that the
dispute resolution mechanism under Section 2.10 is the sole remedy of
all parties with respect to the subject matter hereof and any decisions
pursuant thereto shall be final and binding on all parties.
(f) [Reserved]
(g) The Installment Shares shall not be treated as Purchase Price for Tax
purposes.
SECTION 2.08 ESCROW SHARES.
(a) As collateral security for the payment of any Purchase Price Reduction
and/or Additional Purchase Price Reduction under Section 2.06, or any
indemnification obligations of the Seller pursuant to Article VII, the
Seller shall, and by execution hereof does hereby, place into escrow
pursuant to the Escrow Agreement attached hereto as Exhibit F (the
"Escrow Agreement"), the terms and conditions of which are incorporated
by reference herein, for the benefit of the Purchaser, Luminant and any
Luminant Indemnified Party, the following "Escrowed Shares:"
(i) 10% of the Share Consideration and the certificates and instruments,
if any, representing or evidencing such portion of the Share
Consideration.
(ii) all securities hereafter delivered to the Seller or any Member in
substitution for any Escrowed Shares, all certificates and instruments,
if any, representing or evidencing such securities, and all cash and
other property at any time received, receivable or otherwise
distributed in exchange therefore (excluding any cash or non-cash
dividends in respect thereof); and in the event the Seller or any
Member receives any such property, the Seller and such Member shall
immediately deliver such property to the "Escrow Agent" (as defined in
the Escrow Agreement) to be held as Escrowed Shares pursuant to the
Escrow Agreement; and
(iii) all cash and non-cash proceeds of all of the foregoing property
and all rights, titles, interests, privileges and preferences
appertaining or incident to the foregoing property.
(b) Each certificate, if any, evidencing the Seller's or any Member's
Escrowed Shares issued in its, his or her name, shall be delivered to
the Escrow Agent directly by Luminant's Transfer Agent, such certificate
bearing no restrictive or cautionary legend other than those imprinted
by the Transfer Agent at Luminant's request. The Seller, and upon
transfer of any Escrowed Shares to a Member, such Member shall promptly
deliver to the
20
Escrow Agent stock powers duly signed in blank by it, him or her with
respect to the applicable Escrowed Shares.
(c) In the sole discretion of Luminant, the Escrowed Shares shall be
available to satisfy any Purchase Price Adjustment and/or Additional
Purchase Price Adjustment pursuant to Section 2.06 and any
indemnification obligations of the Seller pursuant to Article VII until
the date which is twelve (12) months after the Closing Date in
accordance with the terms of the Escrow Agreement. The Shares held as
Escrowed Shares shall be valued in accordance with the Escrow Agreement.
SECTION 2.09 CONTINGENT PAYMENTS.
(a) Attached as Schedule 2.09 is a list as of May 31, 2000 of all of the
Customers with whom the Seller has contingent arrangements (each a
"Contingent Customer"), a summary of the applicable contract terms
relating to each contingent fee arrangement (each a "Contingent
Contract"), the gross contingent amount payable under the Contingent
Contract (the "Contingent Fees") and the total fees earned pursuant to
each Contingent Contract to and including May 31, 2000. If and when the
Seller, the Purchaser or a Member, as the case may be, receives payment
of all or a portion of any Contingent Fees, such funds shall be
allocated to the Seller, on the one hand, and the Purchaser, on the
other hand, as follows:
(i) the Seller shall receive a portion of such Contingent Fee to be
determined by multiplying (A) such Contingent Fee by (B) a fraction (1)
the numerator of which shall be the hours worked prior to and including
May 31, 2000 by all Members, employees and consultants of the Seller
(the "Seller Personnel") with respect to the Contingent Fee portion of
such Contingent Contract and (2) the denominator of which shall be the
total hours worked by all Seller Personnel and all officers, employees
and consultants of Luminant or any of its Subsidiaries (the "Luminant
Personnel") with respect to the Contingent Fee portion of such
Contingent Contract; and
(ii) the Purchaser shall receive a portion of such Contingent Fee to be
determined by multiplying (A) such Contingent Fee by (B) a fraction (1)
the numerator of which shall be the hours worked by Luminant Personnel
with respect to the Contingent Fee portion of such Contingent Contract
and (2) the denominator of which shall be the total hours worked by all
Seller Personnel and all Luminant Personnel with respect to the
Contingent Fee portion of such Contingent Contract.
(iii) Notwithstanding anything herein to the contrary, if the aggregate
Billable Value (determined in accordance with Section 2.07(b)) of all
Members for each of the fiscal quarters ending September 30, 2000 and
December 31, 2000 is less than ONE MILLION FIVE HUNDRED THOUSAND
DOLLARS ($1,500,000), the Seller shall immediately forfeit its right to
receive 40% of any Contingent Fees payable to the Seller pursuant to
Section 2.09(a)(i) and the Purchaser shall retain such Contingent Fees.
(b) The provisions of Section 2.09(a) shall apply regardless of the party
who actually receives the payment from a Contingent Customer. All
parties hereto agree that if it or he
21
receives amounts that constitute Contingent Fee, it or he will
forward the entire amount to the Purchaser within ten (10) days after
receipt of such funds. Upon the Purchaser's receipt of any funds that
constitute Contingent Fees, the Purchaser shall notify the Seller
within fifteen (15) days of its receipt of such funds and its
proposed apportionment of such funds between the Seller and the
Purchaser, which determination shall be a financial calculation for
the purposes of Section 2.10(a).
(c) Following the end of the applicable Dispute Resolution Period set forth
in Section 2.10, the Purchaser covenants to cause any Contingent Fees
received by the Purchaser during the year 2000, which are payable to the
Seller pursuant to Section 2.09(a)(i), to be distributed to the Seller
as follows (A) 60% within fifteen (15) days after the end of such
Dispute Resolution Period and (B) the balance, if any, within ninety
(90) days after the end of the fiscal year ending December 31, 2000 if
the applicable conditions under Section 2.09(a)(iii) have been
satisfied. If any Contingent Fees are received during the year 2001 or
thereafter, which are payable to the Seller pursuant to Section
2.09(a)(i), the Purchaser shall distribute those funds to the Seller
within fifteen (15) days after the end of the applicable Dispute
Resolution Period.
Section 2.10 DISPUTES.
(a) In the event of any objection or dispute arising out of any financial
calculation of any type pursuant to Sections 2.06, 2.07 or 2.09, subject
to appropriate confidentiality restrictions, the following procedures
shall apply:
(i) The Seller and the Members' Representative, on the one hand, and
Luminant and the Purchaser, on the other hand, shall have the right,
upon written request, to examine the financial books and records
related to the applicable calculations during normal business hours for
purposes of verifying the accuracy and correctness of any calculation
made pursuant to Sections 2.06, 2.07 or 2.09. Unless, within fifteen
(15) calendar days after notice of the applicable calculation has been
given in accordance with Sections 2.06, 2.07 or 2.09, as the case may
be, none of such parties shall have delivered to the other party
written notice of objection thereto, such calculation shall be deemed
to be complete, final and binding on all parties to this Agreement.
(ii) The parties hereto will use their reasonable best efforts to
resolve any such objections or disputes pursuant to Section 2.10(a). If
all objections or disputes are not finally resolved within fifteen (15)
calendar days after notice of the objection or dispute has been given
in accordance with Section 2.10(a)(i), the parties will refer the
matters in dispute to a nationally recognized accounting firm to be
agreed to by the Seller and Luminant (the "Accounting Firm") to resolve
any remaining objections. The parties will use their best efforts to
cause the Accounting Firm to resolve the objections within thirty (30)
days after such dispute has been submitted to them for resolution.
(iii) Upon such resolution, the party that originally prepared such
calculation shall revise the calculations as appropriate to accurately
reflect the resolution of the objections and dispute (as agreed by such
parties or directed by the Accounting Firm) and deliver it to
22
the other party within ten (10) business days after the final
resolution of such objections. Such revised calculation will be
final and binding on all parties.
(iv) The fees and expenses of the Accounting Firm will be borne equally
by the Purchaser and Luminant, on the one hand, and the Seller and the
Members, on the other hand.
(v) The Seller, on the one hand, and Luminant and the Purchaser, on the
other hand, will make available the work papers used in preparing the
calculations and any other information reasonably requested by the
Accounting Firm to assist the Accounting Firm in reviewing and
evaluating the calculations.
(b) In the event of any objection or dispute arising out of any provision of
Sections 2.06, 2.07 or 2.09 other than a provision relating to a
financial calculation, subject to appropriate confidentiality
restrictions, the following procedures shall apply:
(i) The Seller or the Members' Representative, on the one hand, and
Luminant and the Purchaser, on the other hand, shall have the right to
notify the other party within fifteen (15) days after the date of an
action or determination giving rise to an objection or dispute that
such party has an objection to or dispute with such action or
determination. If none of such parties shall have delivered to the
other party written notice of any objection or dispute within such time
period, such party shall be deemed to have no objection or dispute with
regard to such action or determination, and the applicable action or
determination shall be deemed to be complete, final and binding on all
parties to this Agreement.
(ii) The parties hereto will use their reasonable best efforts to
resolve any such objections or disputes pursuant to Section 2.10(b). If
any objections or disputes are not finally resolved within fifteen (15)
calendar days after notice of the objection or dispute has been given
in accordance with Section 2.10(b)(i), the objections and disputes
shall be settled by arbitration in accordance with the rules then in
effect of the American Arbitration Association at the time of the
dispute. After an award is rendered by the arbitrator(s), a judgment
may be entered in any court of competent jurisdiction. The arbitration
shall occur in New York City, New York to the exclusion of all other
locations. The arbitrators cannot add to or subtract from the terms of
this Agreement. The parties agree that the arbitrators may include
provisions for the payment of costs and expenses, including reasonable
attorneys' fees as part of any ruling or award made thereunder. The
parties acknowledge that arbitration shall be the sole, final, binding
and exclusive remedy of the parties with respect to any such matter for
which arbitration is undertaken. In preparation for the arbitration
process described herein, the parties shall be given at least one
hundred twenty (120) days for discovery and each party may utilize all
methods of discovery authorized by the procedural rules and statutes of
the State of New York for civil litigation and may enforce the right to
obtain such discovery in the manner provided by such rules and
statutes.
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ARTICLE III
CLOSING
Section 3.01 LOCATION AND DATE. The consummation of the transaction contemplated
by this Agreement and the Transaction Documents (the "Closing") shall be deemed
to have take place at the offices of Xxxxxx, Xxxxxx & Xxxxxxxxx, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx June 22, 2000, providing that all conditions to
Closing shall have been satisfied or waived, which date shall be referred to as
the "Closing Date."
Section 3.02 DELIVERIES AT THE CLOSING. At the Closing:
(a) the Seller and/or the Members, as applicable, will deliver to the
Purchaser and Luminant the agreements, certificates, instruments and
documents referred to in Section 6.01;
(b) the Purchaser and Luminant will deliver to the Seller and/or the
Members, as applicable, the agreements, certificates, instruments and
documents referred to in Section 6.02;
(c) Luminant on behalf of the Purchaser will deliver to the Seller the Cash
Consideration and a letter from Luminant to its Transfer Agent
confirming the issuance of the Share Consideration and directing the
Transfer Agent to prepare and deliver stock certificates representing
the Share Consideration in such denominations as the Seller shall have
notified Luminant prior to Closing (taking into account the Escrowed
Shares pursuant to Section 2.08).
(d) Luminant and the Seller will deliver a letter or other documents as
necessary to cause the Transfer Agent to deliver the Escrowed Shares to
the Escrow Agent pursuant to the Escrow Agreement.
Section 3.03 ALLOCATION.
(a) For Tax purposes only, the parties hereto covenant and agree that:
(i) the fair market value of the tangible personal property of the
Seller that is shown on the May Balance Sheet as adjusted to and
including the Closing Date is equal to the net book value shown on such
balance sheet for such tangible personal property and that they will
reflect this agreement in any allocation of Purchase Price made by
them;
(ii) following the Closing Date, the Seller and the Purchaser will
attempt, in good faith, to reach mutual agreement on the allocation of
Purchase Price (as determined for Tax purposes) among the Purchased
Assets on or before September 15, 2000 (the "Allocation Schedule");
(iii) if an Allocation Schedule is agreed to on or before September 15,
2000, the Allocation Schedule shall be amended from time to time to
reflect any increase or decrease in the Purchase Price that occurs
after September 15, 2000; and
24
(iv) the Seller and the Purchaser shall: (A) timely file all forms and
Tax Returns (including IRS Form 8594 (Asset Allocation Statement) and
any supplemental Form 8594 to reflect any increase of decrease in the
Purchase Price that occurs after the initial filing) required to be
filed in connection with the Allocation Schedule, as amended, (B) be
bound by such Allocation Schedule, as amended, for all Tax purposes,
(C) prepare and file all Tax Returns in a manner consistent with such
Allocation Schedule, as amended, and (D) take no position inconsistent
with such Allocation Schedule, as amended, in any audit or other
proceeding relating to Taxes without the written consent of the Seller,
on the one hand, or the Purchaser, on the other hand, which consent
shall not be unreasonably withheld.
(b) Notwithstanding anything in this Agreement to the contrary, if no
Allocation Schedule is agreed to on or before September 15, 2000, the
Seller and the Purchaser shall independently substantiate the allocation
of the Purchase Price and shall have no further obligation to each other
with respect to cooperation and consistent treatment of the allocation
of Purchase Price.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 REPRESENTATIONS AND WARRANTIES OF THE SELLER. To induce the
Purchaser and Luminant to enter into this Agreement and consummate the
transactions contemplated hereby, the Seller represents and warrants to the
Purchaser and Luminant (subject to any exceptions set forth in any Schedule
referred to herein) as follows:
(a) DUE ORGANIZATION. The Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of New
York. Schedule 4.01(a) hereto contains a list of all jurisdictions in
which the Seller is authorized or qualified to do business. The Seller
is in good standing as a foreign corporation in each jurisdiction in
which it does business and failure to qualify would have a Material
Adverse Effect. The Seller has delivered to the Purchaser true, complete
and correct copies of the limited liability company operating agreement
of the Seller, as amended, restated and supplemented from time to time
(the "Operating Agreement"). None of the Members are in violation of the
Operating Agreement. The books of limited liability company proceedings
of the Seller which have been kept by the Seller have been kept in
accordance with prudent business practices.
(b) AUTHORIZATION; VALIDITY. The Seller has all requisite right, power and
authority to enter into and perform its obligations pursuant to the
terms of this Agreement and the Transaction Documents to which it is a
party and the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement, and the Transaction Documents
to which it is a party, by the Seller and the performance by the Seller
of the transactions contemplated herein and therein have been duly and
validly authorized by all necessary limited liability company action.
The Members are the sole members of the Seller and hold 100% of the
outstanding membership interests therein and there have not
25
been issued and there are not outstanding any options, puts, calls,
warrants or rights or other securities of the Seller. This Agreement,
and the Transaction Documents to which the Seller is a party, are
legal, valid and binding obligations of the Seller, enforceable in
accordance with its terms, subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally and (ii) general principles of equity (regardless of
whether such principles of equity are asserted in an action or
proceeding at law or in equity) or the discretion of the court before
which any action or proceeding may be brought.
(c) NO CONFLICTS; CONSENTS.
(i) The execution, delivery and performance of this Agreement, and the
Transaction Documents to which the Seller is a party and the
consummation of the transactions contemplated hereby and thereby, and
the fulfillment of the terms hereof and thereof: (A) will not result in
a violation or breach of the Operating Agreement or any other
organizational document of the Seller and (B) subject to the matters
referred to in clause (ii) of this Section 4.01(c) below, will not
result in a violation or breach of (or give rise to any right of
termination, revocation, cancellation or acceleration under or
increased payments under), or constitute a default (with or without due
notice or lapse of time or both) under, or result in the creation of
any mortgage, lien, charge, security interest or encumbrance of any
kind (a "Lien") other than a Permitted Lien, upon any of the properties
or assets of the Seller under (1) any of the terms, conditions or
provisions of any Contract or any license, waiver, exemption, order,
franchise, permit, concession or governmental authorization (each a
"Permit") to which the Seller is a party or by which any of it or his
properties or assets may be bound, or (2) any judgment, order, decree,
statute, law, regulation or rule applicable to the Seller or its assets
or properties.
(ii) Except for consents, approvals, orders, authorizations,
registrations, declarations or filings as set forth in Schedule
4.01(c)(ii), no consent, approval, order or authorization of, or
registration, declaration or filing with, any Person not a party
hereto, including any government or any court, administrative agency or
commission or other governmental authority or agency, federal, state or
local or foreign (a "Governmental Entity"), is required in connection
with the execution, delivery and performance of this Agreement and any
Transaction Document by the Seller or the consummation by the Seller of
the transactions contemplated hereby and thereby.
(d) [RESERVED]
(e) FINANCIAL STATEMENTS. Schedule 4.01(e) includes (A) true, complete and
correct copies of the Seller's unaudited balance sheet as of December
31, 1999 (the end of its most recent completed fiscal year), and income
statement for the year ended December 31, 1999 (collectively, the
"Financials"), (B) true, complete and correct copies of the Seller's
unaudited balance sheet (the "Interim Balance Sheet") as of March 31,
2000 (the "Balance Sheet Date") and income statement, for the three
(3)-month period then ended (collectively, the "Interim Financials"),
and (C) true, complete and correct copies of the Seller's unaudited
balance sheet (the "May Balance Sheet") as of May 31, 2000 and income
statement, for the sixty-one (61) day period then ended (collectively,
the "May
26
Financial Statements," and together with the Financials and the
Interim Financials, the "Seller Financial Statements"). The Seller
Financial Statements shall have been prepared in accordance with GAAP
consistently applied throughout the periods indicated and present
fairly the results of operation for the periods indicated (except as
may be indicated in the notes thereto or Schedule 4.01(e)), subject
to (1) normal year-end audit adjustments, which individually or in
the aggregate will not be material, (2) the exceptions stated on
Schedule 4.01(e), and (3) to the omission of footnote information.
Since the dates of the Seller Financial Statements, there have been
no material changes in the Seller's accounting policies.
(f) LIABILITIES AND OBLIGATIONS.The Seller is not liable for or subject to
any liabilities except for those "Liabilities": (A) reflected on the
Interim Balance Sheet and not previously paid or discharged; (B) arising
in the ordinary course of its business consistent with past practice
under any Contract specifically disclosed on any Schedule to this
Agreement or not required to be disclosed thereon because such Contract
is deemed immaterial in accordance with the terms of this Agreement; (C)
incurred since the Balance Sheet Date in the ordinary course of business
consistent with past practice, which liabilities are not, individually
or in the aggregate, material, and (D) set forth on Schedule 4.01(f)(1).
Schedule 4.01(f)(2) includes a summary description of all plans or
projects involving the opening of new operations, expansion of any
existing operations or the acquisition of any property or business, to
which management of the Seller has made any material expenditure in the
two-year period prior to the date of this Agreement, which if pursued
would require additional material expenditures of capital. For purposes
of this Agreement, the term "Liabilities" shall include without
limitation any direct or indirect liability, indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation
or responsibility, either accrued, absolute, contingent, mature,
unmatured or otherwise and whether known or unknown, fixed or unfixed,
xxxxxx or inchoate, liquidated or unliquidated, secured or unsecured.
(g) BOOKS AND RECORDS. The Seller has made and kept (and has given or will
give the Purchaser access to) books and records and accounts, which, in
the case of all financial books, records and accounts, in reasonable
detail accurately, fairly and completely reflect the activities of the
Seller. With respect to non-financial books and records, such books and
records in reasonable detail accurately and fairly reflect the
activities of the Seller in all material respects and do not omit any
information regarding any action, event or occurrence that would have a
Material Adverse Effect on the Business, the Purchased Assets, the
Assumed Liabilities or the transactions contemplated in this Agreement
or any Transaction Document. The Seller has not engaged in any
transaction, maintained any bank account, or used any corporate funds
except for transactions, bank accounts, and funds which have been and
are reflected in its normally maintained books and records.
(h) POWERS OF ATTORNEY. Schedule 4.01(h) sets forth the name of each person,
corporation, firm or other entity holding a general or special power of
attorney from the Seller with respect to the Business, the Purchased
Assets or the Seller's securities and a description of the terms of such
power. To the knowledge of the Seller, there are no outstanding powers
of attorney executed on behalf of the Seller relating to the Purchased
Assets.
27
(i) ACCOUNTS AND NOTES RECEIVABLE. Schedule 4.01(i)(1) is a complete and
accurate list as of May 31, 2000, and Schedule 4.01(i)(2) is a complete
and accurate list as of a date two days prior to the Closing Date, of
all Accounts Receivable and notes receivable of the Seller (including
without limitation receivables from and advances to employees and the
Members). No claims, or rights of set-off have been asserted, or to the
knowledge of the Seller, have been threatened, relating to the amount or
validity of any Accounts Receivable and notes receivable, other than
rebates and returns in the ordinary course of business.
(j) PERMITS. There are no Permits necessary to conduct the Business as
currently being conducted.
(k) REAL PROPERTY. Schedule 4.01(k) contains an accurate description of all
real property (including street address, owner, and Seller's use
thereof) owned and leased by the Seller or its Affiliates used in the
conduct of the Business. To the knowledge of the Seller no party to any
lease of the property listed on Schedule 4.01(k) has declared a default
thereunder. The Seller does not have any information from any Member,
from the lessor under any lease, or from the lessee under any lease,
with regard to the real property used in connection with the Business,
that would lead the Seller to believe that the lessor or lessee under
any such lease will terminate such lease after the consummation of the
transactions contemplated by this Agreement
(l) PERSONAL PROPERTY. The Seller currently owns or leases all personal
property necessary to conduct the Business as presently conducted.
Schedule 4.01(l) sets forth a complete and accurate list of all personal
property included on the Interim Balance Sheet and May Balance Sheet and
all other personal property owned or leased by the Seller with a current
book value in excess of FIVE THOUSAND DOLLARS ($5,000), material to the
operation of the Business of the Seller as of May 31, 2000 and acquired
since May 31, 2000 to Closing, including an indication as to which
assets are currently owned or leased, or were formerly owned or leased,
by the Seller or Affiliates of the Seller or any Member. All material
equipment of the Seller including those listed on Schedule 4.01(l) is in
good working order and condition, ordinary wear and tear excepted. All
leases set forth on Schedule 4.01(l) are in full force and effect and
constitute valid and binding agreements of the Seller, and the Seller is
not in breach of any of their respective terms that would have a
Material Adverse Effect. All personal property owned by the Seller and
the Seller's interests under any leases of personal property, are held
free and clear of any Liens other than Permitted Liens.
(m) INTELLECTUAL PROPERTY. Except as set forth in Schedule 4.01(m) or in
circumstances under which there would be no Material Adverse Effect on
the Business or the Purchased Assets:
(i) the Seller owns, possesses licenses for, or has valid legal rights
to use, all Intellectual Property as is necessary to conduct the
Business as currently conducted, free and clear of all Liens other
than Permitted Liens;
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(ii) to the knowledge of the Seller, no third party has or is
misappropriating, infringing, diluting or violating any Intellectual
Property of the Seller;
(iii) to the knowledge of the Seller, the conduct of the Business as
currently conducted and the Seller's use of the Purchased Assets does
not infringe upon any Intellectual Property of any Person;
(iv) no claim, action or proceeding is pending, or, to the knowledge of
the Seller, threatened that (A) alleges that the Seller's activities,
conduct of its Business or use of any Purchased Assets infringes upon,
misappropriates, violates, dilutes or otherwise constitutes the
unauthorized use of, the Intellectual Property rights of any Person,
(B) challenges the ownership, use, validity or enforceability of any
Contract relating to any Intellectual Property of Seller, or (C)
challenges or questions the validity or effectiveness of any license,
instrument or agreement relating to Intellectual Property to which the
Seller is a party or by which it is bound;
(v) all material Contracts relating to Intellectual Property to which
the Seller is a party are in full force and effect in accordance with
their terms;
(vi) the Seller has no material obligations to compensate any Person for
the use of any Intellectual Property nor has the Seller granted to any
Person any license, option or other rights to use in any manner any
Intellectual Property of the Seller, whether requiring the payment of
royalties or not;
(vii) none of the Intellectual Property owned by the Seller is subject
to any outstanding order, ruling, decree, judgment or stipulation by or
with any court, tribunal, arbitrator, or other Governmental Entity that
could have a Material Adverse Effect on the Seller; and
(viii) none of the trademarks, trade names, services marks and Internet
domain names (including logos, designs, company names, business names,
fictitious names and other Business identifiers) constituting Purchased
Assets have been registered and no applications for registration have
been filed, in the United States Patent and Trademark Office or the
equivalent thereof in any state of the United States or in any foreign
country.
(n) CUSTOMERS. Schedule 4.01(n) is a complete and accurate list of all
customers and clients of the Seller (collectively, the "Customers") as
of the Closing. None of the Seller's Customers have canceled or
substantially reduced, or, to the knowledge of the Seller and any
Member, is currently attempting or threatening to cancel or
substantially reduce, any Contracts with the Seller. The Seller has
received no material Customer complaints concerning its products and/or
services, nor have any of its products or services been the subject of
any claims except for normal warranty claims. To the extent that the
Seller is performing services for Customers pursuant to an agreement or
arrangement that is not a written Contract, neither the Seller nor any
Member has any information that would lead it to believe that any
Customer will terminate or materially reduce the level of services
currently being provided to such Customer by the Seller after
29
the consummation of the transactions contemplated by this Agreement.
The Seller has not notified any Customer of the transactions
contemplated by this Agreement, except for those Customers that have
been identified to the Purchaser and Luminant by the Seller as
Customers with whom the Seller has had discussions regarding the
transactions contemplated by this Agreement.
(O) CONTRACTS AND COMMITMENTS.
(i) Schedule 4.01(o) is a complete and accurate list of all contracts,
letters, agreements, leases, licenses, obligations, instruments,
offers, commitments, understandings or other arrangements, notes,
bonds, mortgages or indentures, written or oral (each a "Contract"), to
which the Seller is a party or by which it or its properties are bound
(including without limitation Contracts with Customers, joint venture
or partnership agreements, Contracts with any labor organizations,
employment agreements, consulting agreements, loan agreements,
indemnity or guaranty agreements, bonds, mortgages, options to purchase
land, liens, pledges or other security agreements, and non-competition
agreements or other agreements that restrict or limit the Business of
the Seller) that (A) may give rise to obligations or liabilities, (B)
generate revenues or income, (C) require the expenditure of revenues or
income, or (D) to which any Seller or Affiliate is a party or the
Seller or Affiliate is a party or any officer or employee of the Seller
is a party as of May 31, 2000 and entered into since May 31, 2000. The
Seller has delivered to the Purchaser true and complete copies of all
written Contracts.
(ii) The Seller has complied with all of its commitments and obligations
and is not in default under any of the Contracts.
(iii) Except as set forth in Schedule 4.01(o), all of the Contracts were
negotiated at arm's length with third parties not affiliated with the
Seller, any Member or any officer or employee of the Seller.
(iv) Each written Contract is legal, valid, binding and enforceable and
is in full force and effect in accordance with its terms.
(v) Except as set forth on Schedule 4.01(c)(ii), neither the Seller nor
any Member has any information that would lead it to believe that as a
result of the consummation of the transactions contemplated hereby (A)
any Contract constituting a Purchased Asset will be cancelable pursuant
to the terms thereof by the other party thereto, or (B) the terms of
such Contract or obligations of any party thereto will change in a way
materially adverse to Luminant or any of its Subsidiaries. To the
knowledge of the Seller and the Members, no other party to any Contract
constituting a Purchased Asset is in material default thereunder, or no
notice of default has been received by the Seller or any Member.
(vi) Except as set forth on Schedule 4.01(o), to the Seller's knowledge,
none of the Contracts being acquired by the Purchaser as Purchased
Assets have been awarded to the Seller on the basis of the Seller being
a "women's business enterprise" ("WBE") or "woman-owned business
concern" as defined in 48 C.F.R. Section 52.204-5, or a "minority
30
business enterprise" ("MBE") or "minority-owned business concern" as
defined in 48 C.F.R. Section 52.219-8. To the knowledge of the Seller
and the Members none of such Contracts will be cancelable pursuant to
the terms thereof by the other party thereto because neither the
Purchaser nor Luminant with qualify as a WBE or MBE.
(vii) As to each Contract with a Customer in progress that has not been
completed (the "Contracts in Progress") as of the date of this
Agreement, Schedule 4.01(o) sets forth as of the date of this Agreement
the status of completion of each Contract in Progress.
(p) GOVERNMENT CONTRACTS. The Seller is not a party to any government
contracts.
(q) INSURANCE. Schedule 4.01(q) sets forth a true and complete list, as of
May 31, 2000 and since May 31, 2000, of all insurance policies carried
by the Seller and its Affiliates relating to the Business and all
insurance loss runs or workmen's compensation claims received for the
past two (2) policy years. The Seller has delivered to the Purchaser
true and complete copies of all current insurance policies, all of which
are in full force and effect. All premiums payable under all such
policies have been paid and the Seller is otherwise in full compliance
with the terms of such policies (or other policies providing
substantially similar insurance coverage). To the knowledge of the
Seller and any Member, there have been no threatened terminations of, or
material premium increases with respect to, any of such policies.
(r) [RESERVED]
(s) NEW YORK LAWS.The Seller has taken all action, if any, required to be
taken by it to comply with any New York take-over law or bulk sales act.
(t) LABOR AND EMPLOYMENT MATTERS. With respect to the members, officers and
employees of, and consultants and service providers to, the Seller:
(i) the Seller is and has been in compliance in all material respects
with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours,
including without limitation any such laws respecting employment
discrimination, workers' compensation, family and medical leave, the
Immigration Reform and Control Act, and occupational safety and health
requirements, and has not and is not engaged in any unfair labor
practice;
(ii) there is not now, nor within the past two (2) years has there been,
any unfair labor practice complaint against the Seller pending or, to
the knowledge of the Seller or the Members, threatened before the
National Labor Relations Board or any other comparable authority;
(iii) there is not now, nor within the past two (2) years has there
been, any labor strike, slowdown or stoppage actually pending or, to
the knowledge of the Seller or the Members, threatened against or
directly affecting the Seller;
(iv) the employees of the Seller are not and have never been represented
by any labor union, and no collective bargaining agreement is binding
and in force against the Seller or
31
currently being negotiated by the Seller and to the knowledge of the
Seller or the Members, no labor representation organization effort
exists nor has there been any such activity within the past two (2)
years; and
(v) all persons classified by the Seller as independent contractors do
satisfy and have satisfied the requirements of law to be so classified.
(U) EMPLOYEE BENEFIT PLANS AND RELATED MATTERS; ERISA.
(i) Schedule 4.01(u)(i) contains a complete and accurate list of all
Benefit Plans and Benefit Arrangements. Schedule 4.01(u)(i)
specifically identifies all Benefit Plans (if any) that are Qualified
Plans.
(ii) With respect, as applicable, to Benefit Plans and Benefit
Arrangements:
1) the Seller has made available true, correct, and complete copies of
the following documents with respect to all Benefit Plans and Benefit
Arrangements to the Purchaser: (1) all current plan or arrangement
documents and amendments to each; (2) the most recent Forms 5500 or
5500C/R and any attached financial statements and related actuarial
reports; (3) the last Internal Revenue Service ("IRS") determination
letter that covered the qualification of the entire plan; (4) summary
plan descriptions and summaries of material modifications, and any
prospectuses that describe the Benefit Arrangements or Benefit Plans;
(5) employee manuals or handbooks containing personnel or employee
relations policies; (6) the most recent quarterly listing of workers'
compensation claims and a schedule of workers' compensation claims of
the Seller for the last three (3) fiscal years; and (7) any other
documents the Purchaser has reasonably requested;
2) to the knowledge of the Seller, the Qualified Plans qualify under
Section 401(a) of the Code; each Benefit Plan and Benefit Arrangement
has been maintained in material compliance with its constituent
documents and with all applicable provisions of domestic and foreign
laws, including federal and state securities laws and any reporting
and disclosure requirements; with respect to each Benefit Plan, no
transactions prohibited by Code Section 4975 or ERISA Section 406 and
no breaches of fiduciary duty described in ERISA Section 404 have
occurred, except to the extent that such transaction or breach would
not have a Material Adverse Effect on the Seller; and, to the
knowledge of the Seller or the Members, no such transaction or breach
has occurred;
3) there are no pending claims (other than routine benefit claims) or
lawsuits that have been asserted or instituted by, against, or
relating to, any Benefit Plan or Benefit Arrangements, nor, to the
knowledge of the Seller, is there any basis for any such claim or
lawsuit. No Benefit Plans or Benefit Arrangements are or have been
under audit or examination (nor has notice been received of a
potential audit or examination) by any domestic or foreign
governmental agency or entity, and no matters are pending with
respect to any Benefit Plan under the IRS's Employee Plans Compliance
Resolutions System or any successor or predecessor program;
32
4) no Benefit Plan or Benefit Arrangement contains any provision or is
subject to any law that would accelerate or vest any benefit or
require severance, termination or other payments or trigger any
liabilities as a result of the transactions this Agreement
contemplates; no Related Employer has declared or paid any bonus or
incentive compensation contingent upon the transactions this
Agreement contemplates;
5) all Benefit Plans and Benefit Arrangements materially comply with the
requirements of Part 6 of Title I of ERISA ("COBRA"), Code Section
5000, and the Health Insurance Portability and Accountability Act;
the Related Employers have no liability under or with respect to
COBRA for their own actions or omissions or those of any predecessor;
no employee or former employee (or beneficiary of either) of a
Related Employer is entitled to receive any benefits, including,
without limitation, death or medical benefits (whether or not
insured) beyond retirement or other termination of employment, other
than as applicable law requires;
6) no liability under Title IV of ERISA has been incurred by the Seller
or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the Seller or any
ERISA Affiliate of incurring any liability under such Title; and
7) neither the Seller nor any ERISA Affiliate maintains or has ever
maintained any Benefit Plan covered by Section 302 of ERISA or
Section 412 of the Code.
(iii) Schedule 4.01(u)(iii) sets forth an accurate list with respect to
each officer and employee of the Seller as of the date hereof
(excluding the Members), whether employed pursuant to a written
employment agreement or otherwise, of the rate of compensation (and the
portions thereof attributable to salary, bonus, and other compensation
respectively).
(iv) The Seller has authorized the termination of its Qualified Plan
under Section 401(a) of the Code.
(V) TAXES.
(i) (A) All material Tax Returns required to be filed by or on behalf of
the Seller (taking into account valid extensions) have been filed; (B)
all such Tax Returns filed are complete and accurate in all material
respects, and all Taxes owed by or with respect to the Seller (whether
or not shown to be due on such Tax Returns) have been paid unless such
Taxes are not yet due and payable; and (C) no written claim (other than
a claim that has been finally settled) has been made by a taxing
authority that the Seller is subject to an obligation to file Tax
Returns or to pay or collect Taxes imposed by any jurisdiction in which
such entity does not file Tax Returns or pay or collect Taxes. As used
in this Agreement, "Taxes" shall include all federal, state, local
and foreign income, franchise, property, gross receipts, withholding,
sales, use, excise and other taxes, tariffs or governmental charges
of any nature whatsoever, including interest and penalties, and
additions thereto; and "Tax Returns" shall mean all federal, state,
local
33
and foreign tax returns, declarations, statements, reports, schedules,
forms and information returns relating to Taxes and any amendment
thereof.
(ii) The Seller has duly and timely withheld all Taxes required to be
withheld in connection with its Business and the Purchased Assets, and
such withheld Taxes have been either duly and timely paid to the proper
governmental authorities or properly set aside in accounts for such
purpose.
(iii) The Seller is not a party to or bound by or has any obligation
under any Tax allocation, sharing, indemnification or similar agreement
or arrangement; the Seller is not or has not been at any time a member
of any group of companies filing a consolidated, combined or unitary
income tax return; and the Seller does not have any liability for Taxes
of another Person as successor or transferee.
(iv) The Seller is not currently under audit by any taxing authority and
the Seller has made available to the Purchaser and Luminant correct and
complete copies of all income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by the Seller
since January 1, 1999.
(v) There are (and as of immediately following the Closing there will
be) no Liens, except for Permitted Liens, on the Purchased Assets or
the Business relating to or attributable to Taxes.
(vi) None of the Purchased Assets are treated as "tax exempt use
property" within the meaning of Section 168(h) of the Code.
(vii) None of the Assumed Liabilities is an obligation, Contract,
agreement, plan or arrangement, including but not limited to the
provisions of this Agreement, covering any employee or former employee
of the Seller, individually or collectively, by which the Purchaser
will be bound or will otherwise be obligated to make payment of any
amount (or portion thereof) that would not be deductible pursuant to
Sections 280G, 404 or 162 of the Code.
(viii) The Seller has been treated as a partnership for U.S. federal
income tax purposes at all times since its formation on January 1,
1999, and up to and including the Closing Date. No Person has ever
elected that the Seller be treated as an association for federal income
tax purposes under Treasury Regulation Section 301.7701-3.
(w) CONFORMITY WITH LAW; LITIGATION. To the knowledge of the Seller, it has
not violated any law or regulation or any order of any court or federal,
state, municipal or other Governmental Entity having jurisdiction over
it that would have a Material Adverse Effect. Except as set forth on
Schedule 4.01(w), there are no claims, actions, suits or proceedings,
pending or, to the knowledge of the Seller and the Members, threatened
against or affecting the Seller at law or in equity, or before or by any
Governmental Entity having jurisdiction over it and no notice of any
claim, action, suit or proceeding, whether pending or threatened, has
been received. There are no judgments, orders, injunctions, decrees,
stipulations or awards (whether rendered by a court or administrative
agency or by arbitration) against the Seller or against the Purchased
Assets
34
or Business. The Seller has not, at any time, been convicted of any
crimes, filed for bankruptcy protection or reorganization, or engaged
in criminal acts involving fraud, dishonesty or acts of gross
negligence. No action, suit, claim or proceeding is pending or, to
the knowledge of the Seller threatened, which seeks to enjoin or
prohibit the transactions contemplated by this Agreement or any
Transaction Document.
(x) NO IMPROPER PAYMENTS. Neither the Seller nor any agent of the Seller,
nor, any Person associated with or acting for or on behalf of the
Seller, has directly or indirectly (a) made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to
any person or entity, private or public, regardless of what form,
whether in money, property, or services (i) to obtain favorable
treatment for business secured, (ii) to pay for favorable treatment for
business secured, (iii) to obtain special concessions or for special
concessions already obtained, or (iv) in violation of any legal
requirement, or (b) established or maintained any fund or asset that has
not been recorded in the books or records of the Seller. To the
knowledge of the Seller and the Members, all of its agents, consultants
and employees are in full compliance with the Foreign Corrupt Practices
Act of 1977, CODIFIED AS AMENDED at 15 U.S.C. Sections 78m(b)(2),
78dd-1, 78dd-2, and 78ff(c).
(y) [RESERVED]
(z) ABSENCE OF CHANGES. Since the Balance Sheet Date, the Seller has
conducted its Business in the ordinary course and except as contemplated
herein or as set forth on Schedule 4.01(z), there has not been:
(i) any change in the Business or Purchased Assets that, by itself or
together with other changes, has had or would have a Material Adverse
Effect;
(ii) any damage, destruction or loss (whether or not covered by
insurance) with respect to the Business or Purchased Assets that has
had or would have a Material Adverse Effect;
(iii) any increase in the compensation, bonus, accrued or earned bonus,
sales commissions or fee arrangements payable or to become payable by
the Seller to any of its officers, members, employees, consultants or
agents, nor has the Seller entered into or amended any Benefit
Arrangement, Benefit Plan, employment, severance or other agreement
relating to compensation or fringe benefits;
(iv) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character that has had or would have
a Material Adverse Effect;
(v) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of the Seller to any Person,
including without limitation the Members and their Affiliates;
(vi) any cancellation of, or agreement to cancel, any indebtedness, any
other obligation owing to the Seller, including without limitation any
indebtedness or obligation of any Member or any Affiliate thereof,
PROVIDED that the Seller may negotiate and adjust bills in the course
of good faith disputes with Customers in a manner consistent with past
practice and in the ordinary course of business;
35
(vii) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights of the Seller or requiring consent of any Person to
the transfer and assignment of any such assets, property or rights;
(viii) any purchase or acquisition of, or agreement, plan or arrangement
to purchase or acquire, any property, rights or assets outside of the
ordinary course of business of the Seller;
(ix) any waiver of any material rights or claims of the Seller;
(x) any breach, amendment or termination of any material Contract or
other right to which the Seller is a party;
(xi) any transaction by the Seller outside the ordinary course of
business;
(xii) any capital commitment by the Seller, either individually or in
the aggregate, exceeding FIVE THOUSAND DOLLARS ($5,000);
(xiii) any change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by the Seller
or the revaluation by the Seller of any of its assets other than
changes in Tax accounting methods or practices required by law;
(xiv) any creation or assumption by the Seller of any mortgage, pledge,
security interest or lien or other encumbrance on any asset (other than
Permitted Liens);
(xv) any entry into, amendment of, relinquishment, termination or non-
renewal by the Seller of any contract, lease transaction, commitment or
other right or obligation requiring aggregate payments by the Seller in
excess of FIVE THOUSAND DOLLARS ($5,000);
(xvi) any loan by the Seller to any Person, any incurring by the Seller
of any secured indebtedness, any incurring of any other unsecured
indebtedness other than in the ordinary course of business and
immaterial in amount, any guaranteeing by the Seller of any
indebtedness, any issuance or sale of any debt securities of the Seller
or any guaranteeing of any debt securities of others;
(xvii) the commencement or notice or, to the knowledge of the Seller,
threat of commencement of any lawsuit or proceeding against or
investigation of the Seller or any of its affairs; or
(xviii)negotiation or agreement by the Seller, the Members or any
officer or employee thereof to do any of the things described in the
preceding clauses (i) through (xvii) (other than negotiations with the
Purchaser and its representatives regarding the transactions
contemplated by this Agreement).
(aa) DISCLOSURE. The Seller has delivered to the Purchaser true and complete
copies of each written Contract applicable to the Business. The
Schedules hereto prepared by the Seller
36
and delivered to the Purchaser and Luminant are complete and accurate
in all material respects.
(bb) SUBSIDIARIES. The Business of the Seller is not conducted through any
Subsidiary and the Seller has no Subsidiaries and does not presently
own, of record or beneficially, or control, directly or indirectly, any
capital stock, securities convertible into capital stock or any other
equity interest in any Person, nor is the Seller, directly or
indirectly, a participant in any joint venture, partnership or other
noncorporate entity related in any manner to the business of the Seller
and the Purchased Assets.
(cc) CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES. Except as set forth on
Schedule 4.01(cc), no Member (A) owns any property or right, tangible or
intangible, which is used in the Business or (B) has any claim or cause
of action against the Seller in connection with the Business.
(dd) TITLE TO PURCHASED ASSETS. With respect to the Purchased Assets:
(i) the Seller is the true and lawful owner of, and has good title to,
all of the Purchased Assets, free and clear of all Liens other than
Permitted Liens;
(ii) upon execution and delivery by the Seller to the Purchaser of the
instruments of conveyance referred to in Section 6.01(f), the Purchaser
will become the true and lawful owner of, and will receive good title
to, the Purchased Assets, free and clear of all Liens other than
Permitted Liens;
(iii) the Purchased Assets are reasonably adequate for the conduct of
the Business as presently conducted. The Purchased Assets set forth on
Schedule 2.02 comprise all of the equipment used in connection with the
Business as presently conducted; and
(iv) none of the Purchased Assets constitutes a fixture, and the removal
thereof will not constitute a default or trigger any additional
liability under any lease or sublease to which the Seller or any Member
is a party.
(ee) PREDECESSOR STATUS; ETC. Schedule 4.01(ee) sets forth a true and
complete list of all legal names, trade names, fictitious names or other
names (including, without limitation, any names of divisions or
operations) of the Seller and all its predecessor companies during the
five-year period immediately preceding the Closing, including without
limitation the names of any entities from whom the Seller has acquired
material assets. During the five-year period immediately preceding the
Closing, the Seller has operated only under the names set forth on
Schedule 4.01(ee) in the jurisdiction or jurisdictions set forth on
Schedule 4.01(ee) and has not been a subsidiary or division of another
corporation or a part of an acquisition which was later rescinded.
(ff) LOCATION OF CHIEF EXECUTIVE OFFICE(S); PURCHASED ASSETS. Schedule
4.01(ff) sets forth the location of the Seller's chief executive offices
and the location of all Purchased Assets held on the date hereof by the
Seller.
37
(gg) PERSONNEL TURNOVER. Since January 1, 1999, three(3) people who were
employees of the Seller have stopped being employed by for the Seller.
Since January 1, 2000, no other Person employed by the Seller on such
date has stopped being employed by the Seller.
(hh) AFFILIATE AGREEMENTS. The Members are the only persons who are, in the
reasonable judgment of the Seller, Affiliates of the Seller within the
meaning of Rule 145 promulgated under the Securities Act.
Section 4.02 REPRESENTATIONS AND WARRANTIES OF THE MEMBERS. To induce the
Purchaser and Luminant to enter into this Agreement and to consummate the
transactions contemplated hereby, each Member severally and not jointly
represents and warrants to the Purchaser and Luminant (subject to any exceptions
set forth in any Schedule referred to herein) as follows:
(a) AUTHORIZATION; VALIDITY. Such Member has the sole authority to vote his
membership interests in the Seller to approve the execution and delivery
of this Agreement and approval of the transactions contemplated herein
and the transactions contemplated in the Transaction Documents to which
the Seller is a party. Such Member has the full legal right and
authority to enter into this Agreement and the Transaction Documents to
which such Member is a party and the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement, and the
Transaction Documents to which he is a party, by such Member and the
performance by such Member of the transactions contemplated herein and
therein have been duly and validly authorized by such Member. This
Agreement, and the Transaction Documents to which such Member is a
party, are legal, valid and binding obligations of such Member
enforceable in accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium o other laws affecting creditors'
rights generally and (ii) general principles of equity (regardless of
whether such principles of equity are asserted in an action or
proceeding at law or in equity) or the discretion of the court before
which any action or proceeding may be brought.
(b) NO CONFLICTS; CONSENTS. The execution, delivery and performance of this
Agreement, and the Transaction Documents to which such Member is a party
and the consummation of the transactions contemplated hereby and
thereby, and the fulfillment of the terms hereof and thereof:
(i) (A) will not result in a violation or breach of the Operating
Agreement or any other organizational document of the Seller and
(B) will not result in a violation or breach of (or give rise to
any right of termination, revocation, cancellation or acceleration
under or increased payments under), or constitute a default (with
or without due notice or lapse of time or both) under, or result
in the creation of any Lien other than a Permitted Lien, upon any
of the properties or assets of such Member under (1) any of the
terms, conditions or provisions of any Contract to which such
Member is a party, or (2) any judgment, order, decree, statute,
law, regulation or rule applicable to such Member.
38
(ii) To the knowledge of such Member, no consent, approval, order or
authorization of, or registration, declaration or filing with, any
Person not a party hereto, including any government or any court,
administrative agency or commission or Governmental Entity, is
required with respect to the execution and delivery of this
Agreement and any Transaction Document to which it or he is or
will be a party or the consummation by such Member of the
transactions contemplated hereby and thereby.
(c) POWERS OF ATTORNEY. Schedule 4.02(c) sets forth the name of each person,
corporation, firm or other entity holding a general or special power of
attorney from a Member with respect to the Business, the Purchased
Assets or securities of the Seller (including, but not limited to, any
pledge of, agreement to transfer, option to acquire, or to vote, a
Member's membership interest in the Seller). To the knowledge of such
Member, there are no outstanding powers of attorney executed on behalf
of any Member relating to the Purchased Assets.
(d) BROKERS AND FINDERS. Such Member does not have any liability or
obligation to pay any fees or commissions to any broker, finder or agent
with respect to the transactions contemplated by this Agreement.
(e) LITIGATION. Such Member has not, at any time, been convicted of any
crimes (except for minor traffic violations), filed for personal
bankruptcy or been the officer or director of an entity that has filed
for bankruptcy, or engaged in criminal acts involving fraud, dishonesty,
acts of gross negligence or moral turpitude. To the knowledge of such
Member no action, suit, claim or proceeding is pending or threatened
which seeks to enjoin or prohibit the transactions contemplated by this
Agreement or any Transaction Documents.
(f) CUSTOMERS; CONTRACTS. Such Member does not have any information that
would lead him to believe that any Customer will terminate or materially
reduce the level of services currently being provided to such Customer
by the Seller after the consummation of the transactions contemplated by
this Agreement. Except as set forth on Schedule 4.01(c)(ii), such Member
has no information that would lead it to believe that as a result of the
consummation of the transactions contemplated hereby (A) any Contract
constituting a Purchased Asset will be cancelable pursuant to the terms
thereof by the other party thereto, or (B) the terms of such Contract or
obligations of any party thereto will change in a way materially adverse
to Luminant or any of its Subsidiaries. To the knowledge of such Member,
no other party to any Contract constituting a Purchased Asset is in
material default thereunder, or no notice of default has been received
by such Member.
Section 4.03 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE MEMBERS TO
LUMINANT. The Seller (as to the Seller) and each Member (as to such Member only)
severally and not jointly represents and warrants to Luminant as follows:
(a) SECURITIES LAW REPRESENTATIONS. The Seller and such Member (A) has such
knowledge, sophistication and experience in business and financial
matters that the Seller and such Member is capable of evaluating the
merits and risks of an investment in the
39
Shares, (B) is acquiring the Shares for investment only and not with
a view to resale and distribution and has not entered into any
contract, undertaking, agreement or arrangement, written or oral,
with any other Person to sell, transfer or grant participation in any
Shares, except for the Collar, (C) has not been offered the Shares
through advertising or general solicitation, (D) fully understands
the nature, scope, and duration of the limitations on transfer
contained herein and under the Securities Act including Rule 144 and
Rule 145 promulgated thereunder, and (E) can bear the economic risk
of any investment in the Shares and can afford a complete loss of
such investment. The Seller and such Member has had an adequate
opportunity to ask questions and receive answers (and has asked such
questions and received answers to its satisfaction) from the officers
of Luminant and the Purchaser concerning the business, operations and
financial condition of Luminant and the Purchaser.
(b) NO PROSPECTUS.The Seller and such Member acknowledges and agrees that
neither the Purchaser nor Luminant has or will provide the Seller or the
Members with a prospectus for the Seller's and the Members use in
selling Shares, except as specifically provided herein.
(C) INVESTOR QUESTIONNAIRES. The Seller and such Member is an accredited
investor within the definition of accredited investor under Rule 501(a)
of Regulation D promulgated under the Securities Act. The Seller and
such Member has completed, executed and delivered an Investor
Questionnaire in the form attached hereto as Exhibit D and all
information therein is accurate and complete.
(D) RESIDENCY; TAXPAYER. Such Member is a citizen of the United States and a
resident of the state set forth opposite his name on Schedule 2.06. Such
Member is a U.S. taxpayer.
Section 4.04 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. To induce the
Seller and the Members to enter into this Agreement and consummate the
transactions contemplated hereby, the Purchaser represents and warrants to the
Seller and the Members (subject to any exceptions set forth in any Schedule
referred to herein) as follows:
(a) DUE ORGANIZATION. The Purchaser is duly organized, validly existing and
in good standing under the laws of the State of New York. The Purchaser
is in good standing as a foreign corporation in each jurisdiction in
which it does business and failure to qualify would have a Material
Adverse Effect.
(b) AUTHORIZATION; VALIDITY. The Purchaser has all requisite right, power
and authority to enter into and perform its obligations pursuant to the
terms of this Agreement and the Transaction Documents to which it is a
party and the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement, and the Transaction Documents
to which it is a party, by the Purchaser and the performance by the
Purchaser of the transactions contemplated herein and therein have been
duly and validly authorized by all necessary corporate action. This
Agreement, and the Transaction Documents to which the Purchaser is a
party, are legal, valid and binding obligations of the Purchaser
enforceable in accordance with its terms, subject to (i) bankruptcy,
insolvency,
40
reorganization, moratorium or other laws affecting creditors' rights
generally and (ii) general principles of equity (regardless of
whether such principles of equity are asserted in an action or
proceeding at law or in equity) or the discretion of the court before
which any action or proceeding may be brought.
(c) NO CONFLICTS; CONSENTS. The execution, delivery and performance of this
Agreement, and the Transaction Documents to which the Purchaser is a
party, the consummation of the transactions contemplated hereby and
thereby, and the fulfillment of the terms hereof and thereof:
(i) (A) will not result in a violation or breach of the certificate of
incorporation or by-laws of the Purchaser and (B) will not result
in a violation or breach of (or give rise to any right of
termination, revocation, cancellation or acceleration under or
increased payments under), or constitute a default (with or without
due notice or lapse of time or both) under, (1) any of the terms,
conditions or provisions of any Contract or Permit to which the
Purchaser is a party or by which any of its properties or assets
may be bound, or (2) any judgment, order, decree, statute, law,
regulation or rule applicable to the Purchaser.
(ii) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Person not a party hereto,
including any Governmental Entity, is required in connection with
the execution, delivery and performance by the Purchaser of this
Agreement and any Transaction Document to which it is a party or
the consummation by the Purchaser of the transactions contemplated
hereby and thereby.
(d) BROKERS AND FINDERS. The Purchaser has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to
the transactions contemplated by this Agreement.
(e) DISCLOSURE. All Schedules hereto prepared by the Purchaser and delivered
to the Seller are accurate and complete in all material respects; and
copies of all documents delivered by the Purchaser in connection with
the transactions contemplated herein are complete copies of such
documents.
Section 4.05 REPRESENTATIONS AND WARRANTIES OF LUMINANT. To induce the Seller
and the Members to enter into this Agreement and consummate the transactions
contemplated hereby, Luminant represents and warrants to the Seller and the
Members (subject to any exceptions set forth in any Schedule referred to
herein or the applicable subsection of this Section 4.05), as follows:
(a) DUE ORGANIZATION. Luminant is duly organized, validly existing and in
good standing under the laws of the State of Delaware. Luminant is in
good standing as a foreign corporation in each jurisdiction in which it
does business and failure to qualify would have a Material Adverse
Effect.
(b) AUTHORIZATION; VALIDITY. Luminant has all requisite right, power and
authority to enter into and perform its obligations pursuant to the
terms of this Agreement and the Transaction Documents to which it is a
party and the transactions contemplated hereby
41
and thereby. The execution and delivery of this Agreement, and the
Transaction Documents to which it is a party, by Luminant and the
performance by Luminant of the transactions contemplated herein and
therein have been duly and validly authorized by all necessary
corporate action. This Agreement, and the Transaction Documents to
which Luminant is a party, are legal, valid and binding obligations
of Luminant enforceable in accordance with its terms, subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and (ii) general principles of
equity (regardless of whether such principles of equity are asserted
in an action or proceeding at law or in equity) or the discretion of
the court before which any action or proceeding may be brought.
(c) NO CONFLICTS; CONSENTS. The execution, delivery and performance of this
Agreement, and the Transaction Documents to which Luminant is a party,
the consummation of the transactions contemplated hereby and thereby,
and the fulfillment of the terms hereof and thereof:
(i) (A) will not result in a violation or breach of the certificate of
incorporation or by-laws of Luminant and (B) will not result in a
violation or breach of (or give rise to any right of termination,
revocation, cancellation or acceleration under or increased
payments under), or constitute a default (with or without due
notice or lapse of time or both) under (1) any of the terms,
conditions or provisions of any Contract or Permit to which
Luminant is a party or by which any of its properties or assets
may be bound, or (2) any judgment, order, decree, statute, law,
regulation or rule applicable to Luminant.
(ii) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Person not a party hereto,
including any Governmental Entity, is required in connection with
the execution, delivery and performance by the Purchaser of this
Agreement and any Transaction Document to which it is a party or
the consummation by Luminant of the transactions contemplated
hereby and thereby.
(d) SHARES.The Shares to be delivered pursuant to this Agreement to the
Seller or the Members, as the case may be, will be duly authorized, and
upon receipt of payment therefore in accordance with the terms hereof,
upon delivery will be validly issued, fully paid and nonassessable.
(e) BROKERS AND FINDERS. Luminant has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
(f) SEC FILINGS. Luminant has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC
under the Securities Act and the Exchange Act since September 21, 1999
and up to the date hereof and it will file all such documents required
to be filed before the Closing (the "Filed Luminant SEC Documents"). As
of its filing date, each Filed Luminant SEC Document filed, as amended
or supplemented, if applicable, (I) complied in all respects with the
applicable requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations thereunder and (II) did not,
at the time it was filed, contain any untrue
42
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
(g) FINANCIAL STATEMENTS. Each of the consolidated financial statements
(including, in each case, any related notes and schedules) contained or
to be contained in the Filed Luminant SEC Documents (I) complies as to
form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto,
(II) was prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated (except as may be indicated in the
notes to such financial statements or, in the case of unaudited
statements, as permitted by the SEC on Form 10-Q under the Exchange Act)
and (III) fairly presents the consolidated financial position of
Luminant and its Subsidiaries as of the respective dates thereof and the
consolidated results of its operations, stockholders' equity and cash
flows, in each case for the respective periods indicated, consistent
with the books and records of Luminant and its Subsidiaries, except that
the unaudited interim financial statements are subject to normal
year-end adjustments which are not expected to be material in amount.
(h) LIABILITIES AND OBLIGATIONS. Except (I) as discussed in the Filed
Luminant SEC Documents, and (II) for normal and recurring liabilities
incurred since the date of the latest Balance Sheet included in the
Filed Luminant SEC Documents in the ordinary course of business (which
shall include borrowings under Luminant's credit facility), Luminant and
its Subsidiaries do not have any liabilities which would have a Material
Adverse Effect on Luminant and the Subsidiaries, taken as a whole.
(i) ABSENCE OF CERTAIN EVENTS AND CHANGES. Except as otherwise contemplated
by this Agreement or any Transaction Documents or as set forth in its
Filed Luminant SEC Documents, since March 31, 2000 Luminant has no
knowledge of any event, change or development which would have a
Material Adverse Effect on Luminant and its Subsidiaries, taken as a
whole.
(j) CONFORMITY WITH LAW; LITIGATION. To the knowledge of Luminant and except
as set forth in its Filed Luminant SEC Documents, neither it nor any of
its Subsidiaries has violated any law or regulation or any order of any
court or federal, state, municipal or other Governmental Entity having
jurisdiction over it that would have a Material Adverse Effect. Except
as disclosed in the Filed Luminant SEC Documents, there are no claims,
actions, suits or proceedings, pending or, to the knowledge of Luminant,
threatened against or affecting Luminant at law or in equity, or before
or by any Governmental Entity having jurisdiction over it and no notice
of any claim, action, suit or proceeding, whether pending or threatened,
has been received. Except as disclosed in the Filed Luminant SEC
Documents, there are no judgments, orders, injunctions, decrees,
stipulations or awards (whether rendered by a court or administrative
agency or by arbitration) against Luminant of its Subsidiaries that
would have a Material Adverse Effect on Luminant and its Subsidiaries,
taken as a whole. No action, suit, claim or proceeding is pending or, to
the knowledge of Luminant threatened, which seeks to enjoin or prohibit
the transactions contemplated by this Agreement or any Transaction
Document.
43
(k) CAPITALIZATION. Since the date of the latest Filed Luminant SEC Document
for which capitalization information is presented there have been no
material changes to the capitalization of Luminant as set forth in such
Filed Luminant SEC Document, except for exercises of options granted
pursuant to the terms of Luminant's equity incentive plan and the
transactions contemplated by this Agreement.
(l) PERSONNEL TURNOVER. For the period from April 1, 2000 through May 31,
2000, the annualized voluntary turnover of billable personnel employed
in the eastern region of the United States of Luminant and its
Subsidiaries (excluding resignations and planned terminations of
employees (A) formerly employed by Brand Dialogue, (B) in Luminant's and
its Subsidiaries' media practice group, (C) in Luminant's and its
Subsidiaries' contract staffing practice, and (D) who stopped being
employees within the first ninety (90) days of their employment) did not
exceed 19%. Luminant has no information that would lead it to believe
that there has been a material adverse change in voluntary turnover of
billable personnel in the eastern region of the United States of
Luminant and its Subsidiaries (excluding resignations and planned
terminations of employees (A) formerly employed by Brand Dialogue, (B)
in Luminant's and its Subsidiaries' media practice group, (C) in
Luminant's and its Subsidiaries' contract staffing practice, and (D) who
stopped being employees within the first ninety (90) days of their
employment) from May 31, 2000 to and including the Closing Date.
(m) DISCLOSURE. All Schedules hereto prepared by Luminant and delivered to
the Seller are accurate and complete in all material respects; and
copies of all documents delivered by Luminant in connection with the
transactions contemplated herein are complete copies of such documents.
(n) SECOND QUARTER REVENUE. Luminant does not have any knowledge that would
lead it to believe that it will report consolidated Second Quarter
revenue in an amount that will be materially less than the Second
Quarter revenue estimates for Luminant and its Subsidiaries reported as
of the Closing Date by Xxxxxxxxx & Xxxxx.
ARTICLE V
COVENANTS
Section 5.01 ACCESS TO INFORMATION. Between the date of this Agreement and the
Closing Date, the Seller and the Members will afford to the officers and
authorized representatives of the Purchaser and Luminant access to (i) all of
the sites, properties, books and records of the Seller and (ii) such additional
financial and operating data and other information as to the business and
properties of the Seller as the Purchaser or Luminant may from time to time
reasonably request, including without limitation, access upon reasonable request
to the Seller's employees, Customers and creditors for due diligence inquiry.
The Seller and the Members will cooperate with the Purchaser, Luminant and their
respective representatives, auditors and counsel in the preparation of any
documents or other material which may be required in connection with this
Agreement. No information or knowledge obtained in any investigation pursuant to
this Section 5.01 shall affect or be deemed to modify any representation or
warranty contained in this
44
Agreement or any Transaction Document or the conditions to the obligations of
the parties to consummate the transactions contemplated hereby or thereby.
Section 5.02 NON-DISCLOSURE; CONFIDENTIALITY; PUBLICITY.
(a) Each party hereto (the "Receiving Party") recognizes and acknowledges
that it has had in the past, currently has, and in the future may
possibly have, access to certain confidential or proprietary information
("Confidential Information") of the other party (the "Disclosing
Party"), such as technology, models, data, know-how, trade secrets,
Customer lists, financial information and statistical data, operational
policies and pricing and cost information that are valuable, special and
unique assets of the Disclosing Party. Each Receiving Party (other than
the Purchaser and Luminant) agrees that, (and in the case of the
Purchaser and Luminant each of them agree that unless the Closing takes
place), it or he will not use or disclose Confidential Information of
the Disclosing Party to any Person (including Affiliates of such
Receiving Party) for any purpose or reason whatsoever, except to
officers, directors, members, employees and authorized representatives
of the Receiving Party, including counsel and other advisers, for the
purpose of negotiating and performing the transactions contemplated in
this Agreement and the Transaction Documents or to perform their duties
as employees of, Luminant or any of its Subsidiaries, including the
Purchaser, following the Closing, provided that such officers,
directors, members, employees, representatives and advisers (other than
counsel) are bound by or otherwise agree to abide by the confidentiality
provisions of this Section 5.02. Notwithstanding anything herein to the
contrary, no information disclosed by or on behalf of a Disclosing Party
shall be deemed confidential information if (i) such information becomes
known to the public generally other than through unauthorized disclosure
by the Receiving Party or by Persons to whom the Receiving Party has
made the confidential information available, (ii) disclosure is required
by law or the order of any Governmental Entity; (iii) the Receiving
Party reasonably believes that such disclosure is required in connection
with the defense of a claim (including a claim for indemnification)
against the Disclosing Party, (iv) such information is independently
developed by the Receiving Party, provided that such development was
accomplished by or on behalf of the Receiving Party without the use of,
or reference to, the Disclosing Party's confidential information, or (v)
is disclosed with the consent of the Disclosing Party, provided,
further, that prior to disclosing any confidential information pursuant
to clause (ii) above, the Receiving Party shall take reasonable steps to
give the Disclosing Party sufficient prior notice to allow the
Disclosing Party to contest the order or requirement and shall cooperate
with efforts to prevent such disclosure. Upon the Closing, this Section
5.02 supercedes the Confidentiality Agreement dated November 16, 1999
between Luminant and the Seller.
(b) Notwithstanding Article VII or any other provision of this Agreement to
the contrary, because of the difficulty of measuring economic losses to
the Seller, on the one hand, and the Purchaser and Luminant, on the
other hand, as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to
the Seller, on the one hand, or the Purchaser and/or Luminant, on the
other hand, for which it would have no other adequate remedy, the
parties hereto agrees that the foregoing covenant may be enforced by the
Seller, on the one hand, or the Purchaser or
45
Luminant, on the other hand, in the event of breach by other parties,
by injunctions and restraining orders.
(c) Prior to the Closing, the Seller, the Members, the Purchaser and
Luminant will consult with each other before issuing any press release
or otherwise making any public statements with respect to the
transactions contemplated hereby and shall not issue any such press
release or make any such public statement prior to such consultation,
except as may be required by the federal securities laws or other law,
rule or regulation of any Governmental Entity or by obligations pursuant
to any listing agreement with The NASDAQ Stock Market. All parties agree
to use reasonable efforts to consult with each other regarding any press
release or public statement required by law prior to publishing or
filing such release or statement.
Section 5.03 CONDUCT OF BUSINESS PENDING CLOSING. Between May 31, 2000 and the
Closing Date, the Seller and the Members will (except as requested or agreed by
the Purchaser):
(a) carry on its Business in substantially the same manner as it has
heretofore been conducted;
(b) not introduce any new method of management, operation or accounting
except any change in Tax accounting required by law;
(c) maintain its properties and facilities related to or affecting the
Business, including the Purchased Assets and those held under Leases, in
as good working order and condition as at present, ordinary wear and
tear excepted;
(d) perform all of its obligations under agreements relating to or affecting
the Purchased Assets, the Assumed Liabilities and the Business;
(e) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(f) use all commercially reasonable efforts to maintain and preserve its
business organization intact, retain its present officers and key
employees and maintain its relationships with Customers, creditors and
others having business relations with it related to or affecting the
Purchased Assets and the Business;
(g) maintain compliance with all laws, rules and regulations, consent
orders, and all other orders of applicable courts and Governmental
Entities;
(h) maintain present debt and lease instruments and not enter into new or
amended debt instruments or Leases; and
(i) maintain salaries, bonus and commission levels as set forth on Schedule
4.01(u)(iii) for all officers, employees, members, agents,
representatives and independent contractors.
46
Section 5.04 PROHIBITED ACTIVITIES. Between May 31, 2000 and the Closing Date
and to the extent relating to the Business or the Purchased Assets, neither the
Seller nor any Member will, without the prior written consent of the Purchaser:
(a) make any material changes to the Operating Agreement of the Seller;
(b) make any distribution (whether in cash, securities or property) in
respect of its membership interests whether now or hereafter outstanding
or purchase, redeem or otherwise acquire or retire for value any
membership interests or issue, deliver or sell, authorize or propose the
issuance, delivery or sale of any membership interests, rights, options,
warrants, calls, conversion rights or commitments or other securities of
any kind (including debt securities), or authorize or propose any change
in its equity capitalization;
(c) enter into any Contract or incur or agree to incur any liability or make
any capital expenditures, or guarantee any indebtedness, including
Contracts to provide services to Customers related to or affecting the
Purchased Assets or the Business, except in the ordinary course of
business and that are not material individually or in the aggregate;
(d) create or assume any Lien other than Permitted Liens upon any Purchased
Assets or the Business whether now owned or hereafter acquired;
(e) sell, assign, lease, pledge or otherwise transfer or dispose of any
property or equipment constituting Purchased Assets;
(f) acquire or negotiate for the acquisition of (by merger, consolidation,
purchase of a substantial portion of assets or otherwise) any business
or the start-up of any new business, or otherwise acquire or agree to
acquire any assets that are material, individually or in the aggregate,
to the Business;
(g) merge or consolidate or agree to merge or consolidate with or into any
other Person;
(h) waive any material rights or claims of the Seller that would have a
Material Adverse Effect on the Purchased Assets or the Business,
provided that the Seller may negotiate and adjust receivables in the
course of good faith disputes with Customers in a manner consistent with
past practice;
(i) commit a breach of or amend or terminate any Contract or other right
that would have a Material Adverse Effect on the Purchased Assets or the
Business;
(j) enter into any other transaction that might reasonably be expected to
affect the Purchased Assets or the Business that is (i) not negotiated
at arm's length with a third party not affiliated with the Seller or any
Member or any Affiliate thereof (ii) outside the ordinary course of
business consistent with past practice, or (iii) prohibited hereunder;
(k) commence a lawsuit other than for routine collection of bills, related
to the Business or the Purchased Assets;
(l) revalue any of the Purchased Assets related to the Business;
47
(m) make any tax election other than in the ordinary course of business and
consistent with past practice or required by law, change any tax
election, adopt any tax accounting method other than in the ordinary
course of business and consistent with past practice, change any tax
accounting method, file any tax return (other than any estimated tax
returns, payroll tax returns or sales tax returns) or any amendment to a
tax return, enter into any closing agreement, settle any tax claim or
assessment, or consent to any tax claim or assessment, that might affect
the Business, without the prior written consent of the Purchaser, except
to the extent that such action would not have an adverse Tax effect on
the Purchaser or its Affiliates;
(n) admit any new members;
(o) hire any additional employees or engage any additional consultants,
except in the ordinary course of business;
(p) except as set forth in Schedule 5.18(b), change compensation, bonus or
commission levels or accelerate, or grant, any bonus or compensation
payments to any member, officer, employee, consultant or agent of the
Seller;
(q) adopt, amend or terminate any Benefit Plan or Benefit Arrangement; or
(r) take, or agree (in writing or otherwise) to take, any of the actions
described in Sections 5.04(a) through (q) above, or any action that
would make any of the representations and warranties of the Seller or
the Members contained in this Agreement untrue or result in any of the
conditions set forth in Sections 6.01 or 6.02 not to be satisfied.
Section 5.05 EXCLUSIVITY. None of the Seller, the Members or any officer,
employee, consultant, agent or representative of the Seller or any Member will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Closing or the termination of this Agreement in
accordance with its terms, directly or indirectly: (A) solicit, encourage or
initiate the submission of proposals or offers from any Person for, (B)
participate in any discussions pertaining to, or (C) furnish any information to
any Person other than the Purchaser or Luminant relating to, any acquisition or
purchase of all or a material amount of the assets of, or any equity interest
in, the Seller or a merger, consolidation or business combination of the Seller.
In addition to the foregoing, if the Seller or any Member receives any
unsolicited offer or proposal, or has actual knowledge of any unsolicited offer
or proposal, relating to any of the above, the Seller or such Member shall
immediately notify the Purchaser thereof, including the identity of the Person
making such offer or proposal and the specific terms of such offer or proposal.
Section 5.06 NOTIFICATION OF CERTAIN MATTERS. Each party hereto shall give
prompt notice to the other parties hereto of (a) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of it contained herein to be
untrue or inaccurate in any material respect at or prior to the Closing and (b)
any material failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such party hereunder.
The delivery of any notice pursuant to this Section 5.06 shall not, without the
express written consent of the other parties be deemed to (A)
48
modify the representations or warranties hereunder of the party delivering
such notice, (B) modify the conditions set forth in Sections 6.01 or 6.02
hereof, or (C) limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
Section 5.07 RESTRICTIONS. The Seller and each Member acknowledges and agrees
that none of the Shares have been registered under the Securities Act or any
state blue sky or securities laws. The Seller and each Member covenants and
agrees with Luminant that neither the Seller nor any Member will not dispose of
any Shares except pursuant to (A) an effective registration statement under the
Securities Act or (B) an applicable exemption from registration under the
Securities Act and applicable state blue-sky and securities laws. In connection
with any sale by the Seller or a Member pursuant to clause (B) of the preceding
sentence , the Seller or such Member shall furnish to Luminant an opinion of
counsel reasonably satisfactory to Luminant to the effect that such exemption
from registration is available in connection with such sale, except that no
opinion shall be required to be furnished to Luminant in connection with
transfers of Shares by the Seller to any Member or pursuant to the Collar. All
stock certificates representing Shares shall bear legends to the foregoing
effect. The Seller and each Member acknowledges that except as provided in
Article VIII of this Agreement, it or he has no right to require Luminant to
register the Shares. The Seller and each Member understands and agrees that each
certificate representing Shares shall bear the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH
LAWS."
And shall bear the following legends as applicable:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE ESCROW AGREEMENT DATED AS OF JUNE 22, 2000 (THE "ESCROW
AGREEMENT"), BY AND AMONG THE ISSUER, NEW YORK CONSULTING
PARTNERS, LLC, AMERICAN STOCK TRANSFER & TRUST COMPANY AS ESCROW
AGENT, AND XXXXXXXXX XXXX-XXXXXXXXX AS MEMBERS' REPRESENTATIVE."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CONTRACTUAL RESTRICTIONS ON TRANSFER PURSUANT TO THAT CERTAIN
ASSET PURCHASE AGREEMENT DATED AS OF MAY 31, 2000 (THE "ASSET
PURCHASE AGREEMENT"), BY AND AMONG THE ISSUER AND NEW YORK
CONSULTING PARTNERS, LLC AND THE OTHER SIGNATORIES THERETO. YOU
MAY OBTAIN A COPY OF THE ASSET PURCHASE AGREEMENT BY CONTACTING
THE SECRETARY OF THE ISSUER."
and the Seller and each Member agrees to transfer Shares only in accordance with
the provisions of such legends. After the Shares are no longer Restricted
Securities and the federal and
49
applicable state securities laws do not require all or part of such legend be
placed upon a certificate, or the subject matter of the legend is not longer
applicable, Luminant shall, upon receipt by Luminant of evidence reasonably
satisfactory to it that such requirement has terminated and upon the written
request of the Seller or a Member issue certificates for the Shares that do
not bear such legend.
Section 5.08 FURTHER ASSURANCES. Following the Closing Date, each party shall,
from time to time, execute and deliver such additional instruments, documents,
conveyances or assurances and take such other actions as shall be reasonably
necessary, or otherwise reasonably requested by another party hereto, to
carry-out the transactions contemplated by this Agreement and the Transaction
Documents and render effective the consummation of the transactions contemplated
hereby and thereby. In connection therewith, if required, the members, tax
matters member, managing member, president or chief financial officer of the
Seller will execute any documentation reasonably required by Luminant's
independent public accountants (in connection with such accountant's audit of
the Seller) or the NASDAQ National Market. The Sellers and each Member will also
cooperate and use their reasonable efforts to have the present officers,
members, consultants and employees of the Seller cooperate with the Purchaser,
Luminant and its Subsidiaries on and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any tax
return filing obligations, actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the Closing
Date.
Section 5.09 [RESERVED]
Section 5.10 NON-COMPETITION OR NON-DISCLOSURE AGREEMENTS OR COVENANTS BINDING
ON EMPLOYEES OR INDEPENDENT CONTRACTORS OF THE SELLER. The Seller agrees to
release, and hereby does release any non-disclosure or confidentiality
agreements or non-competition agreements or the non-disclosure, confidentiality,
restrictive covenants and/or non-competition provisions of any other agreements
binding on any employee or independent contractors of the Seller if such
employee is offered employment or such independent contractor is engaged by
Luminant or any of its Subsidiaries, including the Purchaser, in connection with
the transactions contemplated by this Agreement. The Seller covenants and agrees
that it will not release its employees or independent contractors from and shall
enforce any non-disclosure, confidentiality, restrictive covenant or
non-competition agreements or provisions binding on its employees or independent
contractors if any of its employees or independent contractors seek employment
or become employed by any Person or business which competes with the Business.
Section 5.11 CONTRACTS IN PROGRESS. The Seller and the Members shall forward
promptly to the Purchaser any monies, checks or instruments received by the
Seller or such Member after the Closing Date with respect to the Contracts in
Progress on account of work performed on or after June 1, 2000 (other than
Contingent Contracts that shall be treated in accordance with Section 2.09) and
the Purchaser shall forward promptly to the Seller or the Members any monies,
checks or instruments received by the Purchaser, Luminant or any of its
Subsidiaries after the Closing Date with respect to Accounts Receivable relating
to work performed to and including May 31, 2000. From and after the Closing, the
Seller and each Member shall refer all Customer and other inquiries relating to
the Business to the Purchaser.
Section 5.12 TRADEMARK; USE OF NAME.
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(a) Pursuant to the terms of this Agreement, the trademark "NYCP," any logo
currently used in connection with that trademark (a "Logo") and the
Internet domain name "xxxx.xxx" are Excluded Assets. Notwithstanding
anything in this Agreement to the contrary, the Seller and the Members
covenant and agree that at no time hereafter shall the trademark "NYCP,"
a Logo or the Internet domain name "xxxx.xxx" be used or published by
the Seller or any Member, nor shall the Seller or any Member authorize
or allow any other Person to use or publish the trademark "NYCP," a Logo
or the Internet domain name "xxxx.xxx" in connection with, (A) any
Competing Business, so long as any Member is subject to the
non-competition provisions of his or her employment agreement with
Luminant, the forms of which are attached hereto as Schedule 6.01(e),
and (B) the offering, sale or provision of consulting services during
the Restricted Period.
(b) The Seller and the Members covenant and agree that from and the after
the Closing Luminant and its Subsidiaries have a perpetual,
non-exclusive, royalty free license to continue to use the trademark
"NYCP" and any Logo with respect to such trademark for legal related
purposes (including, but not limited to, use of "NYCP" in its filings
with the SEC) but not for the purpose of conducting any business or
other activities using such trademark or Logo.
(c) The Seller and the Members covenant and agree that from and the after
the Closing Luminant and its Subsidiaries have a non-exclusive, royalty
free license to use the Internet domain name "xxxx.xxx" until December
31, 2000.
(d) The Purchaser and Luminant agree that from and after the Closing the
Seller has a perpetual, non-exclusive, royalty free license to continue
to use the trademark and name "New York Consulting Partners" for legal
related purposes but not for the purpose of conducting any business or
other activities using such name.
SECTION 5.13 FIRPTA COMPLIANCE. On the Closing Date, the Seller and each Member
shall deliver to the Purchaser a properly executed Certification of Non-Foreign
Status Entity Transferor or Certification of Non-Foreign Status Individual
Transferor, as applicable (collectively, the "FIRPTA Certificates") in the
applicable form attached hereto as Exhibit E.
Section 5.14 RESERVE FOR CERTAIN LIABILITIES. The Seller and the Members shall,
so far as is practicable, apply as much of the Cash Consideration as it or they
receives under this Agreement as may be necessary to pay the Seller's
liabilities which exist on the Closing Date, other than Assumed Liabilities.
Notwithstanding anything in this Agreement to the contrary, the Seller shall
retain TWO HUNDRED THOUSAND DOLLARS ($200,000) in a bank account or in another
account from which the funds will be readily accessible until July 1, 2000 to
pay any Excluded Liabilities.
Section 5.15 [RESERVED]
Section 5.16 STOCK EXCHANGE LISTING. Luminant shall file any required
notifications or other applications with NASDAQ regarding the issuance of the
Shares and listing on the NASDAQ National Market.
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Section 5.17 BOOKS AND RECORDS. Notwithstanding the transfer of the books and
records of the Seller to the Purchaser pursuant to this Agreement, the Seller
and each Member shall continue to have access to such books and records
following Closing upon reasonable written notice to Luminant during normal
business hours for the sole purpose of preparing tax returns or otherwise
responding to audits thereof or inquiries regarding same until the date that is
six (6) months after the expiration of the longest applicable federal or state
statute of limitation relating to taxes. After the Closing, the Seller shall be
entitled to retain copies of the books and records being transferred to the
Purchaser and Luminant as Purchased Assets at Closing, subject to the
confidentiality and non-disclosure obligations of Section 5.02 hereof and the
other applicable provisions of this Agreement.
Section 5.18 EMPLOYMENT MATTERS. Luminant and/or the Purchaser covenant and
agree as follows:
(a) As soon as practicable after the Closing, Luminant shall make option
grants to the employees named on Schedule 5.18(a) in the amounts
indicated opposite each employee's name pursuant to Luminant's standard
option plan on terms comparable to those that apply to first time hires
of the Luminant;
(b) Contemporaneously with the Closing, the Purchaser shall make employment
offers to each Person listed on Schedule 5.18(b) in accordance with the
salary set forth on Schedule 5.18(b), provided that such Person has
satisfied a performance criteria substantially comparable to the
criteria used by the Seller as of the Closing Date to evaluate employee
performance and make compensation adjustments for its employees;
provided, further, that if such Person has not satisfied such
performance criteria, the Purchaser shall make an employment offer to
such Person on substantially the same salary terms as those provided by
the Seller to such Person on the Closing Date; and
(c) The Purchaser shall assume the obligations in respect of the Person
named on Schedule 5.18(c) who has recently graduated from graduate
school in accordance with the terms described on such Schedule so long
as the Person named thereon accepts employment with the Purchaser or
Luminant or any of its Subsidiaries and continues to be an employee of
the Purchaser or Luminant or any of its Subsidiaries during the period
specified on Schedule 5.18(c). With respect to the Persons named on
Schedule 5.18(c) who are not currently attending graduate school, the
Purchaser shall offer such Person financial assistance to attend
graduate school on a basis and terms substantially comparable to the
financial assistance offered by the Seller to its employees on the date
of this Agreement as set forth in Schedule 5.18(c), provided all of the
following conditions are satisfied: (A) such Person is an employee of
the Purchaser, Luminant or any of its Subsidiaries prior to starting
graduate school, does not become employed by any other Person while
attending graduate school (other than for part-time employment with a
Person that is not a Competing Business or part-time employment of ten
(10) hours or less per week with a Competing Business) and rejoins the
Purchaser, Luminant or any of its Subsidiaries as an employee after
graduating from graduate school in accordance with his arrangement with
the Purchaser, Luminant or such other Subsidiary, (B) the Purchaser,
Luminant or such Subsidiary shall determine, in its sole discretion,
that it desires such Person to return to work for it following his
graduation from graduate
52
school, (C) such Person graduates from graduate school with a masters
in business administration degree, and (D) such Person agrees to return
to work for Luminant for at least a period of two (2) years following
his graduation from graduate school.
Section 5.19 HEDGE TRANSACTION. Notwithstanding anything to the contrary in this
Agreement or the policies of Luminant, Luminant acknowledges that its Board has
authorized a deviation from those policies entitling the Seller and/or the
Members to enter into a Collar with respect to 200,000 of the Initial Shares,
and to pledge those Initial Shares in connection with the entering into of such
Collar.
Section 5.20 REPORTS UNDER EXCHANGE ACT. With a view to making available to the
Seller and the Members the benefits of Rule 144 promulgated under the Securities
Act, or any successor law thereto with comparable requirements, so long as the
Seller or any Member holds "Restricted Securities" (as defined in Rule
144(a)(3)), Luminant agrees to:
(a) use commercially reasonable efforts to file with the SEC in a timely
manner (or within an available filing extension) all reports and other
documents required to be filed by Luminant pursuant to the Exchange Act;
and
(b) so long as the Seller or any Member own Shares that are not otherwise
freely tradable, promptly upon request, provide to the Seller or any
Member:
(i) a written statement that it has filed the reports required to be
filed by it pursuant to the Exchange Act; and
(ii) a copy of its most recent annual or quarterly report and such
other reports and documents filed pursuant to the Exchange Act.
Section 5.21 TAX COOPERATION. The Seller, the Members and the Purchaser shall,
and shall cause their respective affiliates to, (x) provide each other with such
assistance as may reasonably be required in connection with the preparation of
any Tax Returns, the conduct of any audit or other examination by any taxing
authority or judicial or administrative proceedings relating to any liability
for Taxes, (y) retain and provide each other with all records or other
information, including payroll records, that may be relevant to the preparation
of any Tax Returns, the conduct of any audit or examination or other Tax
proceeding and (z) provide each other with any final determination of any such
audit, examination or other proceeding that affects any amount required to be
shown on any Tax Return filed by the other party for any Taxable period. The
Seller, the Members and the Purchaser shall retain all relevant documents,
including prior years' Tax Returns, supporting work schedules and other records
or information that may be relevant to such Tax Returns and shall not destroy or
other wise dispose of any such records until such time as the statute of
limitations (including extension) with respect to such Tax Return expires.
Section 5.22 LEASES. Neither the Seller nor any of its Affiliates will give
notice to any lessor of termination of any lease so long as the Seller receives
remuneration from Luminant or any of its Subsidiaries with respect to such
lease.
SECTION 5.23 VISA APPLICATIONS. From and after the Closing, the Seller shall use
its best efforts to file any documentation necessary to transfer promptly to
Luminant the current work
53
permits and permanent residency or "greencard" applications with respect to
the Persons set forth on Schedule 5.23. In connection with such transfer of
permits and applications, so long as such Person continues to be an employee
of the Purchaser, Luminant or any of its Subsidiaries, the Purchaser,
Luminant or such Subsidiary, as applicable, shall use its best efforts to
assist and cooperate with the Seller with respect to the transfers of such
work permits and permanent residency or "greencard" applications. In the
event that such permits and applications are transferred to the Purchaser,
Luminant or such Subsidiary, as applicable, within three (3) months from the
Closing Date, so long as such Person continues as an employee of the
Purchaser, Luminant or such Subsidiary, as applicable, (A) the Purchaser,
Luminant or such Subsidiary shall assume all obligations of an employer
relating to such permits and applications, and, (B) if such Person shall have
applied or shall apply for permanent residency or a "greencard," the
Purchaser, Luminant or such Subsidiary shall sponsor such Person for his
permanent residency or "greencard."
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE
Section 6.01 CONDITIONS TO CLOSING OBLIGATIONS OF THE PURCHASER AND LUMINANT.
The obligations of the Purchaser and Luminant to consummate the transactions
contemplated in this Agreement and the Transaction Documents at the Closing
shall be subject to the satisfaction prior to the Closing of each of the
following conditions, each of which may be waived only if it is legally
permissible to do so and at the sole discretion of the Purchaser and Luminant:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All of the
representations and warranties of the Seller and Members contained in
this Agreement and the Transaction Documents to which each of them is a
party that are qualified as to materiality shall be true, correct and
complete, and those that are not so qualified shall be true, correct and
complete in all material respects, as of the date of this Agreement and
as of the time of the Closing as though made at and as of such time,
except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and
warranties that are qualified as to materiality shall be true, correct
and complete, and those that are not so qualified shall be true, correct
and complete in all material respects, on and as of such earlier date)
with the same effect as though such representations and warranties had
been made on and as of such date.
(b) NO LITIGATION. No statute, rule, regulation, executive order, decree,
temporary restraining order, investigation, suit, proceeding,
preliminary or permanent injunction or other order shall have been
enacted, entered, promulgated, enforced or issued by any Governmental
Entity that presents a substantial risk of the restraint or prohibition
of the transactions contemplated by this Agreement or any of the
Transaction Documents or the obtaining of material damages or other
relief from the Purchaser or Luminant in connection therewith, and there
shall be no action, suit, claim or proceeding of any nature pending or
threatened against the Purchaser, Luminant, the Seller or Members, their
respective properties or any of their respective officers, directors or
members, that would have a Material Adverse Effect on the Business or
Purchased Assets.
54
(c) NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
changes in the business, operations, affairs, Customer relationships,
properties, assets, existing and potential liabilities, obligations,
profits or condition (financial or otherwise) of the Seller since the
date of this Agreement, and the Purchaser and Luminant shall have
received a certificate signed on behalf of the Seller and by the Members
dated the Closing Date to such effect.
(d) [RESERVED]
(e) EMPLOYMENT AGREEMENTS. Each of the Members (other than the Xxxxxxxxx X.
X. Xxxxxxxxx Year 2000 Family Trust) shall have entered into an
employment agreement with Luminant substantially in the form attached as
Schedule 6.01(e).
(f) DELIVERABLES OF THE SELLER AND MEMBERS. The Seller and/or the Members,
as applicable, shall have delivered to the Purchaser on or before the
Closing the following:
(i) the Blanket Conveyance, General Assignment and Xxxx of Sale in
the form of Exhibit A attached hereto;
(ii) such other instruments of sale, transfer, conveyance, and
assignment as the Purchaser or its counsel, reasonably may
request;
(iii) the FIRPTA Certificates in the form attached hereto as Exhibit E;
(iv) the Escrow Agreement in the form attached hereto as Exhibit F; and
(v) executed and conformed copies of such other certificates, letters
and documents as the Purchaser and Luminant may reasonably request
and as are customary for transactions such as those contemplated
by this Agreement.
(g) PERFORMANCE OF OBLIGATIONS OF THE SELLER AND MEMBERS. The Seller and
each Member shall have performed or complied in all material respects
with all terms, obligations, covenants and conditions of this Agreement
and any Transaction Document to which it or he is a party and which are
required to be complied with, performed or satisfied on or before the
Closing and the Purchaser and Luminant shall have received a certificate
signed by Seller and by each Member to such effect.
Section 6.02 CONDITIONS TO CLOSING OBLIGATIONS OF THE SELLER AND MEMBERS. The
obligations of the Seller and the Members to consummate the transactions
contemplated in this Agreement and the Transaction Documents at the Closing
shall be subject to the satisfaction prior to the Closing of each of the
following conditions, each of which may be waived only if it is legally
permissible to do so and at the sole discretion of the Seller and Members:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All of the
representations and warranties of the Purchaser and Luminant contained
in this Agreement and the Transaction Documents to which each of them is
a party that are qualified as to materiality shall be true, correct and
complete, and those that are not so qualified shall be true, correct and
complete in all material respects, as of the date of this
55
Agreement and as of the time of the Closing as though made at and as
of such time, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties that are qualified as to materiality
shall be true, correct and complete, and those that are not so
qualified shall be true, correct and complete in all material respects,
on and as of such earlier date) with the same effect as though such
representations and warranties had been made on and as of such date.
(b) NO LITIGATION. No statute, rule, regulation, executive order, decree,
temporary restraining order, investigation, suit, proceeding,
preliminary or permanent injunction or other order shall have been
enacted, entered, promulgated, enforced or issued by any Governmental
Entity that presents a substantial risk of the restraint or prohibition
of the transactions contemplated by this Agreement or any of the
Transaction Documents or the obtaining of material damages or other
relief from the Seller or any Member in connection therewith, and there
shall be no action, suit, claim or proceeding of any nature pending or
threatened against the Purchaser, Luminant, the Seller or Members, their
respective properties or any of their respective officers, directors or
members, that would have a Material Adverse Effect on the Business or
Purchased Assets.
(c) NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
changes in the business, operations, affairs, properties, assets,
existing and potential liabilities, obligations, profits or condition
(financial or otherwise) of the Purchaser or Luminant since the date of
this Agreement, and the Seller and the Members shall have received a
certificate signed on behalf of the Purchaser and Luminant dated the
Closing Date to such effect.
(d) [RESERVED]
(e) DELIVERABLES OF THE PURCHASER OR LUMINANT. Luminant or the Purchaser
shall have delivered to the Seller and the Members on or before the
Closing the following:
(i) the Blanket Conveyance, General Assignment and Xxxx of Sale in
the form of Exhibit A attached hereto;
(ii) (A) an Assumption of Liabilities Agreement in the form attached
hereto as Exhibit B and (B) such other instruments of assumption
as either the Seller or the Members, or their counsel reasonably
may request;
(iii) the Escrow Agreement in the form attached hereto as Exhibit F;
(iv) the Cash Consideration and a letter from Luminant to its Transfer
Agent confirming the issuance of the Share Consideration and
directing the Transfer Agent to prepare and deliver stock
certificates representing the Share Consideration taking into
account the Escrowed Shares pursuant to Section 2.08; and
(v) executed and conformed copies of such other certificates, letters
and documents as the Seller and the Members may reasonably request
and as are customary for transactions such as those contemplated
by this Agreement.
56
(f) EMPLOYMENT AGREEMENTS. Luminant shall have entered into an employment
agreement with each Member (other than the Xxxxxxxxx X. X. Xxxxxxxxx
Year 2000 Family Trust) substantially in the form attached as Schedule
6.01(e).
(g) PERFORMANCE OF OBLIGATIONS OF THE PURCHASER AND LUMINANT.The Purchaser
and Luminant shall have performed or complied in all material respects
with all terms, obligations, covenants and conditions of this Agreement
and any Transaction Document to which it is a party and which are
required to be complied with, performed or satisfied on or before the
Closing and the Seller shall have received a certificate signed by
Purchaser to such effect.
ARTICLE VII
INDEMNIFICATION
Section 7.01 GENERAL INDEMNIFICATION BY THE SELLER AND THE MEMBERS. The Seller
and its successors and assigns (the "Seller Indemnifying Parties"), covenant and
agree to indemnify, defend, protect and hold harmless the Purchaser, Luminant
and their respective officers, directors, employees, stockholders, Affiliates,
agents, successors and assigns (individually, a "Luminant Indemnified Party" and
collectively, "Luminant Indemnified Parties") from, against and in respect of
any and all liabilities, losses, claims, damages, causes of action, lawsuits,
administrative proceedings (including informal proceedings), investigations,
audits, demands, assessments, adjustments, judgments, settlement payments,
deficiencies, penalties, fines, interest (including interest from the date of
such damages) and costs and expenses (including without limitation costs of
investigation and reasonable attorneys' fees and disbursements of every kind,
nature and description) (collectively, the "Damages") suffered, sustained,
incurred or paid by a Luminant Indemnified Party in connection with, resulting
from, or arising out of, directly or indirectly:
(a) any breach of any representation or warranty of the Seller and/or the
Members set forth in this Agreement or any Transaction Document to which
it or he is a party or any schedule or certificate, delivered by or on
behalf of the Seller and/or any Member in connection herewith or
therewith; or
(b) any Excluded Liability; or
(c) any breach or nonfulfillment of any covenant, obligation, condition or
agreement on the part of the Seller or any Member required to be
performed prior to or after the Closing Date set forth in this Agreement
or any Transaction Document to which it or he is a party; or
(d) the Business, operations or assets of the Seller prior to the Closing or
the actions or omissions of the Seller's members, officers, employees,
independent contractors, agents or representatives prior to the Closing
Date (in each case other than Assumed Liabilities); or
(e) any liability for Taxes pursuant to the terms of Section 2.04 of this
Agreement; or
57
(f) bulk transfer laws or similar laws that may be applicable to the
transactions contemplated in this Agreement; or
(g) [Reserved]; or
(h) arising out of any instructions received by the Purchaser or Luminant in
writing from the Members' Representative; or
(i) incident to any of the foregoing or to the enforcement of this
Section 7.01;
PROVIDED, HOWEVER, that in no such case shall this Section 7.01 be construed to
limit the legal or indemnity rights that a Luminant Indemnified Party may have
pursuant to any Transaction Document.
Section 7.02 INDEMNIFICATION BY LUMINANT. Luminant and its successors and
assigns (the "Luminant Indemnifying Parties"), covenant and agree to indemnify,
defend, protect and hold harmless the Seller, the Members, the Seller's
officers, employees, Affiliates, agents, successors and assigns (individually, a
"Seller Indemnified Party" and collectively, "Seller Indemnified Parties") from,
against and in respect of Damages suffered, sustained, incurred or paid by a
Seller Indemnified Party in connection with, resulting from, or arising out of,
directly or indirectly:
(a) any breach of any representation or warranty of the Purchaser and/or
Luminant set forth in this Agreement or any Transaction Document to
which the Purchaser and/or Luminant is a party or any schedule or
certificate, delivered by or on behalf of the Purchaser and/or Luminant
in connection herewith or therewith; or
(b) any breach or non-fulfillment of any covenant or agreement on the part
of Luminant or the Purchaser required to be performed by it either prior
to or after the Closing in this Agreement or any Transaction Document to
which Luminant or the Purchaser is a party under this Agreement; or
(c) any Assumed Liability; or
(d) incident to any of the foregoing or to the enforcement of this Section
7.02;
PROVIDED, HOWEVER, that in no such case shall this Section 7.02 be construed to
limit the legal or indemnity rights that a Seller Indemnified Party may have
pursuant to any Transaction Document.
Section 7.03 DEFENSE. Any Indemnifying Party shall reimburse any Indemnified
Party for any legal or other expenses incurred by such Indemnified Party for
which it is entitled to reimbursement under this Article VII relating to the
investigation or defense of the subject Claim as such expenses are incurred.
SECTION 7.04 INDEMNIFICATION PROCEDURES--THIRD PARTY CLAIMS.
58
(a) Promptly after receipt by a Seller Indemnified Party or Luminant
Indemnified Party, as the case may be (each an "Indemnified Party" and
collectively, the "Indemnified Parties"), of notice of the commencement
of any action or the written assertion of any claim (a "Claim"), such
Indemnified Party shall notify the Seller Indemnifying Party or Luminant
Indemnifying Party, as the case may be (each an "Indemnifying Party" and
collectively, the "Indemnifying Parties") in writing of the commencement
or the written assertion thereof. Failure by an Indemnified Party to so
notify the Indemnifying Party shall relieve the Indemnifying Party from
the obligation to indemnify such Indemnified Party only to the extent
that the Indemnifying Parties suffers actual and material prejudice as a
result of such failure but in no event shall such failure to notify the
Indemnifying Party (i) constitute prejudice suffered by the Indemnifying
Parties if it has otherwise received notice of the actions giving rise
to such obligation to indemnify or (ii) relieve it from any liability or
obligation that it may otherwise have to such Indemnified Party under
this Agreement or any Transaction Document.
(b) The Indemnifying Party shall have the right, upon written notice to the
Indemnified Party (the "Defense Notice") within thirty (30) days after
receipt from the Indemnified Party of notice of such Claim, which notice
by the Indemnifying Party shall specify the counsel it will appoint to
defend such Claim ("Defense Counsel"), to conduct at its expense the
defense against such Claim in its own name, or if necessary in the name
of the Indemnified Party; provided, however, that the Indemnified Party
shall have the right to approve the Defense Counsel, which approval
shall not be unreasonably withheld; in which event the Indemnifying
Party shall not be liable to such Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except
that if the Indemnifying Party elects not to assume such defense or
counsel for the Indemnified Party advises that there are issues which
raise actual conflicts of interest between the Indemnifying Party and
the Indemnified Party (except that the fact that one party is an
Indemnifying Party and one party is an Indemnified Party shall not in
and of itself constitute such a conflict of interest), the Indemnified
Party may retain counsel satisfactory to it, and the Indemnifying Party
shall pay all reasonable fees and expenses of such counsel for the
Indemnified Party, PROVIDED, FURTHER, that (i) the Indemnifying Party
shall be obligated to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction (except to the extent that local
counsel, in addition to regular counsel, is required in order to
effectively defend against such action or proceeding); (ii) if the
Indemnifying Party shall fail to give such notice, it shall be deemed to
have elected not to conduct the defense of the subject claim, in which
event the Indemnified Party shall have the right to conduct such defense
in good faith at the expense of the Indemnifying Party, (iii) the
Indemnified Party may exercise its right at its expense to participate
in the defense assisted by counsel of its own choosing, (iv) the
Indemnified Parties shall cooperate in the defense of any such matter
and (v) the Indemnifying Party shall not be liable for any settlement
effected without its prior written consent.
(c) [Reserved]
(d) Neither the Indemnifying Party nor any Indemnified Party will enter into
any compromise, settlement, consent to the entry of any judgment in any
pending or
59
threatened action or proceeding or cease to defend against such action
or proceeding, without the prior written consent of the Indemnified
Parties, on the one hand, or the Indemnifying Party, on the other hand,
as the case may be, which consent shall not be unreasonably withheld.
(e) The Indemnifying Party shall not be entitled to control, and the
Indemnified Party shall be entitled to have sole control over, the
defense, settlement or compromise of any action or proceeding to the
extent that action or proceeding seeks an order, injunction or other
equitable relief against the Indemnified Party which, if successful,
could materially and adversely interfere with the business, assets,
properties or condition (financial or otherwise) of the Indemnified
Party (and the cost of such defense shall constitute Damages for which
the Indemnified Party is entitled to indemnification hereunder). If the
Indemnified Party shall control the defense, settlement or compromise of
such action or proceeding pursuant to this Section 7.04(e), the
Indemnifying Party shall be entitled to participate therein at its own
expense.
(f) Any judgment entered or settlement agreed upon in the manner provided
herein shall be binding upon the Indemnifying Party and Indemnified
Parties, and shall conclusively be deemed to be an obligation with
respect to which the Indemnified Party is entitled to prompt
indemnification hereunder.
(g) The "Members' Representative" shall have all authority to receive notice
and the power to make all decisions with respect to claims for
indemnification under this Article VII and the actions and decisions of
the Members' Representative shall be binding upon the Seller and all
Members.
Section 7.05 INDEMNIFICATION PROCEDURE--OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party action or proceeding
may be asserted by giving the Indemnifying Party reasonably prompt written
notice thereof, and the Indemnifying Party will have a period of thirty (30)
days within which to satisfy such Damages. If the Indemnifying Party does not so
respond within such thirty (30) day period, the Indemnifying Party will be
deemed to have rejected such claim for indemnification, in which event the
Indemnified Party will be free to pursue such remedies as may be available to
the Indemnified Party under Sections 7.07 and 7.08(b). A failure by an
Indemnified Party to give timely, complete or accurate notice as provided in
this Section 7.05 will not affect the rights or obligations of any party
hereunder except and only to the extent that, as a result of such failure, any
party entitled to receive such notice suffers actual and material prejudice as a
result of such failure but in no event shall such failure to notify the
Indemnifying Party (i) constitute prejudice suffered by the Indemnifying Parties
if it has otherwise received notice of the actions giving rise to such
obligation to indemnify or (ii) relieve it from any liability or obligation that
it may otherwise have to such Indemnified Party under this Agreement or any
Transaction Document.
Section 7.06 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations, warranties and covenants made by the parties hereto in or
pursuant to this Agreement or in any Transaction Document to which it or he
is a party shall be deemed to have been made on the date of this Agreement
(except as otherwise provided herein) and, if a Closing occurs, as of the
Closing Date. The representations, warranties, covenants, and agreements
60
included in this Agreement shall survive for a period of twenty-four (24)
months, except that (A) the covenants and/or obligations set forth in
Sections (1) 3.03 (Allocations), (2) 5.01 (Access and Information), (3)
5.02(c) (Publicity), (4) 5.03 (Conduct of Business Pending Closing); (5) 5.04
(Prohibited Activities); (6) 5.05 (Exclusivity); (7) 5.06 (Notification of
Certain Matters); (8) 5.07 (Restrictions), (9) 5.10 (Non-Competition or
Non-Disclosure Agreements or Covenants Binding on Employees or Independent
Contractors of the Seller); (10) 5.11 (Contracts-in-Progress), (11) Section
5.16 (Stock Exchange Listing), (12) 5.17 (Books and Records), (13) 5.18
(Employment Matters); (14) 5.20 (Reports Under Exchange Act); (15) 5.19
(Hedge Transaction), (16) 5.22 (Leases), (17) 5.23 (Visa Applications); (18)
Article VIII (Registration Rights); and (19) Article X (Non-Competition),
shall each survive for a period that is the longer of (X) twenty-four (24)
months; (Y) the time specified therein or (Z) the time that all obligations
of all parties under the applicable Section or Article, as the case may be,
have been fully performed in accordance with the applicable terms and are not
subject to any dispute; (B) the representations set forth in Sections 4.01(v)
(Taxes), 4.01(u) (Employee Benefit Plans and Related Matters; ERISA), and
4.03 (Representations and Warranties of the Seller and Members to Luminant),
and 4.05(d) (Shares) shall survive until the date that is ninety (90) days
after the expiration of the longest applicable federal or state statute of
limitations; and (C) the obligations set forth in Sections 2.04 (Taxes),
5.02(a) (Non-Disclosure; Confidentiality), 5.08 (Further Assurances), 5.12
(Trademark; Use of Name), Section 5.21 (Tax Cooperation) and Articles VII
(Indemnification) and XI (Miscellaneous), shall survive indefinitely.
Section 7.07 LIMITATION AND EXPIRATION.
(a) Notwithstanding Section 7.01 the Seller Indemnifying Party shall not be
liable to indemnify and defend any Luminant Indemnified Party unless and
until the aggregate amount of Damages incurred by all Luminant
Indemnified Parties exceeds $25,000 (the "Indemnification Threshold"),
at which time the Seller Indemnifying Party will be obligated to
indemnify the Luminant Indemnified Parties with respect to the aggregate
amount of all Damages in excess of that Indemnification Threshold;
provided, that the Indemnification Threshold shall not apply to (A)
breaches of the covenants of the Sellers or any Member set forth in this
Agreement to be performed after the Closing Date, (B) Damages arising
out of the bad faith, willful misconduct, intentional fraud or gross
negligence of the Seller or any Member, or (C) Damages for which
insurance payments are available under Section 7.09, or (D) any Excluded
Liabilities, or (E) breaches of Article X.
(b) Notwithstanding Section 7.02 the Luminant Indemnifying Party shall not
be liable to indemnify and defend any Seller Indemnified Party unless
and until the aggregate amount of Damages incurred by all Seller
Indemnified Parties exceeds the Indemnification Threshold, at which time
the Luminant Indemnifying Party will be obligated to indemnify the
Seller Indemnified Parties with respect to the aggregate amount of all
Damages in excess of that Indemnification Threshold; provided, that the
Indemnification Threshold shall not apply to (A) breaches of the
covenants of Luminant or the Purchaser set forth in this Agreement to be
performed after the Closing Date or (B) Damages arising out of the bad
faith, willful misconduct, intentional fraud or gross negligence of the
Luminant or the Purchaser, or (C) Damages for which insurance payments
are available under Section 7.09, or (D) any Assumed Liabilities.
61
(c) The aggregate amount of the Seller Indemnifying Parties' liability under
this Article VII shall not exceed ONE MILLION ONE HUNDRED FIFTY-TWO
THOUSAND DOLLARS ($1,152,000), provided, that this Section 7.07(c) shall
not apply to any Excluded Liabilities, Purchase Price Reduction,
Additional Purchase Price Reduction or Contingent Fees, or to any breach
of Section 5.12 or breach of Article X; and
(d) The aggregate amount of the Luminant Indemnifying Parties' liability
under this Article VII shall not exceed ONE MILLION ONE HUNDRED
FIFTY-TWO THOUSAND DOLLARS ($1,152,000), provided, that this Section
7.07(d) shall not apply to any Assumed Liabilities, Purchase Price
Increase, Installment Shares or Contingent Fees, or to any breach of
Section 5.12.
Section 7.08 REMEDIES.
(a) Except as provided in Section 7.08(b), the indemnification provided for
in this Article VII shall (except as prohibited by ERISA) be the
exclusive remedy against any Indemnifying Party.
(b) Notwithstanding anything herein to the contrary, Section 7.08(a) shall
not limit the ability of a party to (A) seek injunctive relief for a
breach of this Agreement, (B) seek relief for claims against any third
party, (C) seek relief for breach of any of the provisions of Section
4.03 (Representations and Warranties of the Seller and the Members to
Luminant); Section 4.05(d) (Shares), Section 5.02 (Non-Disclosure;
Confidentiality; Publicity), Section 5.06 (Notification of Certain
Matters),Section 5.07 (Restrictions), Section 5.08 (Further Assurances);
Section 5.10 (Non-Competition or Non-Disclosure Agreements or Covenants
Binding on Employees or Independent Contractors of the Seller), Section
5.11 (Contracts in Progress), Section 5.12 (Trademark; Use of Name),
Section 5.16 (Stock Exchange Listing), Section 5.17 (Books and Records),
Section 5.18 (Employment Matters), Section 5.20 (Reports Under Exchange
Act), Section 5.21 (Tax Cooperation), Section 5.23 (Visa Applications)
and Articles II, VII, VIII, X and XI of this Agreement, or (D) seek
relief for breach of any Transaction Document.
Section 7.09 REDUCTION OF XXXXXXX.Xx the extent any Damages are reduced by
receipt of payment (A) under insurance policies which are not subject to
retroactive adjustment or other reimbursement to the insurer in respect of such
payment, or (B) from third parties not Affiliated with the Indemnified Party,
such payments (net of the expenses of the recovery thereof) (such net payment
being referred to herein as a "Reimbursement") shall be credited against such
Damages; provided, however, the pendency of such payments shall not delay or
reduce the obligation of the Indemnifying Party to make payment to the
Indemnified Party in respect of such Damages.
Section 7.10 SUBROGATION. The Indemnifying Party shall be subrogated to the
Indemnified Party's rights of recovery to the extent of any Damages satisfied by
the Indemnifying Party for which the Indemnified Party has insurance available.
The Indemnified Party shall execute and deliver such instruments and papers as
are necessary to assign such rights and assist in the exercise thereof,
including access to books and records of the Indemnified Party as necessary for
that purpose.
62
Section 7.11 RIGHT TO SET OFF. The Purchaser and Luminant shall have the right,
but not the obligation, to set off, in whole or in part, amounts finally
determined under Article VII to be owed to a Luminant Indemnified Party against
any Installment Shares that may become due and payable hereunder and the
Escrowed Shares in accordance with the terms of the Escrow Agreement.
Section 7.12 [RESERVED]
Section 7.13 INDEMNIFICATION PAYMENT AS PURCHASE PRICE ADJUSTMENT. All payments
made pursuant to this Article VII shall be treated as adjustments to the
Purchase Price for Tax purposes.
ARTICLE VIII
REGISTRATION RIGHTS
Section 8.01 SHELF REGISTRATION. If (A) any Installment Shares shall become
issuable to the Seller or any Member, as the case may be, in accordance with
Section 2.07, (B) Luminant has on file with the SEC a shelf registration
statement on Form S-3 (or successor or replacement form) under the Securities
Act for Common Shares to be issued in a primary offering, from time to time, (C)
the registration statement has been declared effective and no stop order has
been issued with respect thereto, (D) in the opinion of Luminant, the
registration statement and prospectus included therein, do not contain a
material misstatement of fact or omit to state any fact required to be stated
therein or necessary to make the statements therein not misleading, (E) in the
judgment of Luminant, there is no reason to suspend use of the prospectus due to
pending material corporate developments or similar material events that have not
yet been publicly disclosed and as to which Luminant believes public disclosure
will be prejudicial to Luminant, and (F) there are no other prohibitions at law
to such issuance, Luminant shall deliver to the Seller or any Member, as the
case may be, Installment Shares that have been registered under the Securities
Act.
Section 8.02 PIGGYBACK REGISTRATION RIGHTS. At any time following the Closing
Date, whenever Luminant proposes to register any Common Stock for its own or
others' account under the Securities Act for a public offering, other than (i)
any shelf registration of shares to be used as consideration for acquisitions of
additional businesses by Luminant, (ii) registrations relating to employee
benefit plans and (iii) registrations relating to rights offerings made to the
stockholders of Luminant, Luminant shall give the Seller and each of the Members
prompt written notice of its intent to do so. Upon the written request of the
Seller or any Member given within thirty (30) days after receipt of such notice,
Luminant shall cause to be included in such registration all of the Shares
issued to the Seller or the Members pursuant to this Agreement which the Seller
or such Member requests, provided that Luminant shall have the right to reduce
the number of shares included in such registration if Luminant is advised by any
managing underwriter of an underwritten offering of the securities being offered
pursuant to any registration statement under this Section 8.02 that the number
of shares of Common Stock to be sold by all Persons other than Luminant is
greater than the number of such shares of Common Stock which can be offered
without adversely affecting the offering, in which event Luminant
63
may reduce the number of Shares offered for the account of the Seller and the
Members pro rata (based upon the number of Shares proposed to be sold by each
Member) to a number deemed satisfactory by such managing underwriter,
provided, that, for each such offering made by Luminant such reduction shall
be made first by reducing the number of Shares to be sold by the Seller, the
Members and other Persons (other than the Founding Stockholders, United
Airlines, Young & Rubicam, Commonwealth Principals II, LLC (and its members)
and Xx. Xxx Xxxxxx and their respective successors and assigns) on a pro rata
basis, and next by reducing the shares of the Founding Stockholders, United
Airlines, Young & Rubicam, Commonwealth Principals II, LLC (and its members)
and Xx. Xxx Xxxxxx, and their respective successors and assigns in accordance
with each of the applicable registration rights granted to those Persons
prior to the date of this Agreement.
Section 8.03 REGISTRATION EXPENSES. All fees and expenses incident to Luminant's
performance of or compliance with this Article VIII shall be borne by Luminant
whether or not the registration statement becomes effective. Such fees and
expenses shall include, without limitation, (A) all registration and filing fees
(including, without limitation, fees and expenses (1) with respect to filings
required to be made with the National Association of Securities Dealers, Inc.
and (2) with respect to compliance with federal securities or blue sky laws
(including, without limitation, fees and disbursements of counsel in connection
with blue sky qualifications of the Shares under the laws of such jurisdictions
as the managing underwriters may designate)), (B) printing expenses (including,
without limitation, expenses of printing certificates for Shares in a form
eligible for deposit with The Depositary Trust Company and of printing
prospectuses if the printing of prospectuses is required), (C) messenger,
telephone and delivery expenses, (iv) reasonable fees and disbursements of
counsel for the Seller and one special counsel for all the Members in connection
with the registration, (v) fees and disbursements of all independent certified
public accountants (including the expenses of any special audit and "comfort"
letters required by or incident to such performance) and (vi) Securities Act
liability insurance obtained by Luminant in its sole discretion.
Section 8.04 UNDERWRITING AGREEMENT. In connection with each registration
pursuant to Sections 8.01 or 8.02 covering an underwritten registered public
offering, Luminant and the Seller and each Member, as applicable, agree to enter
into a written agreement with the managing underwriters in such form and
containing such provisions as are customary in the securities business for such
an arrangement between such managing underwriters and companies of Luminant's
size and investment stature, including indemnification provisions and lock-up
arrangements.
Section 8.05 AVAILABILITY OF RULE 144. Luminant shall not be obligated to
register Shares held by the Seller or any Member at any time when the resale
provisions of Rule 144(k) (or any successor provision) promulgated under the
Securities Act are available to the Seller or any Member for such Shares.
Section 8.06 MARKET STANDOFF. In consideration of the granting to the Seller and
the Members of the registration rights under this Article VIII, the Seller and
each Member agrees that it and he will not sell, transfer or otherwise dispose
of, including without limitation through put or short sale arrangements, any
Shares for a period of six (6) months following the Closing Date except for the
Collar and transfers by the Seller to any Member.
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ARTICLE IX
[RESERVED]
ARTICLE X
NON-COMPETITION
Section 10.01 PROHIBITED ACTIVITIES. As further consideration for the purchase
and sale of the Shares and the other transactions contemplated by this
Agreement, the Seller agrees as follows:
(a) The Seller will not, from the Closing Date through and until the end of
the Restricted Period, directly or indirectly, promote, be employed by,
lend money to, invest in, or engage in any Competing Business within the
Market Area. That prohibition includes, but is not limited to, acting,
either singly or jointly or as agent for, or as consultant to, any one
or more Persons, directly or indirectly (as a partner, joint venture
participant, stockholder (other that the Shares), member, independent
contractor, representative or otherwise) that constitutes such a
Competing Business. The Seller further agrees not to use, organize,
incorporate, or otherwise create any business organization or Internet
domain name using, any name confusingly similar to, "Luminant,"
"InterActive8," "New York Consulting Partners" or any other name under
which Luminant or any Subsidiary does business, consistent with the
provisions of this Article X. The Seller's use of the trademark "NYCP,"
any Logo and Internet domain name "xxxx.xxx" shall be governed by
Section 5.12, and compliance with Section 5.12 by the Seller shall not
be a breach of the covenant in the preceding sentence.
(b) If, during the Restricted Period, the Seller is offered or desires to do
business, whether alone or with any other Person, directly or
indirectly, that involves activities similar to those conducted by
Luminant or any of its Subsidiary, the Seller will inform Luminant in
writing of such event, the identity of the other Person, if any, the
Seller's proposed activities, and the proposed starting date. The Seller
will also inform any other Person of the terms of this Article X.
Luminant will analyze the proposed activities and make a good faith
determination as to whether it would threaten Luminant's legitimate
competitive interests. If Luminant, in its sole discretion, determines
that the proposed activities would not pose an unacceptable threat to
its interests, Luminant will notify the Seller that it does not object
to such activities.
(c) During the Restricted Period, the Seller agrees that it will not,
directly or indirectly, whether for itself or for, or on behalf of, any
other Person solicit any Person who is, or was, within the Restricted
Period, a customer or client of Luminant or any of its subsidiaries,
including the Customers, or hire away or endeavor to entice away from
Luminant or any of its Subsidiaries any officer, employee, consultant or
any other Person whom Luminant or any of its Subsidiaries engage to
perform services and including, but not limited to, any consultants,
technicians, marketing personnel or sales representatives
65
or any contractor, subcontractor, supplier, or vendor; or hire any
Person whom Luminant or any of its Subsidiaries employs or employed
within the prior twelve (12) months.
(d) The Seller agrees that Luminant and its Subsidiaries provide services
both at its facilities and at the locations of its customers or clients
and that, by the nature of its business and operations, its and their
Market Area is worldwide.
(e) The Seller understands and agrees that the rights and obligations set
forth in this Article X will continue and will survive through the
Restricted Period.
Section 10.02 DAMAGES. Because of the difficulty of measuring economic losses to
Luminant and its Subsidiaries as a result of a breach of the foregoing covenant,
and because of the immediate and irreparable damage that could be caused to
Luminant and its Subsidiaries for which it would have no other adequate remedy,
the Seller agrees that the foregoing covenant may be enforced by Luminant or any
of its Subsidiary in the event of breach by the Seller, by injunctions and
restraining orders.
Section 10.03 REASONABLE RESTRAINT.The parties agree that the foregoing
covenants in this Article X impose a reasonable restraint on the Seller in light
of the activities and business of Luminant and its Subsidiaries on the date of
the execution of this Agreement and the current plans of Luminant; but it is
also the intent of Luminant and the Seller that such covenants be construed and
enforced in accordance with the changing activities and business of Luminant and
its Subsidiaries throughout the Restricted Period.
Section 10.04 SEVERABILITY; REFORMATION. The covenants in this Article X are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
Section 10.05 INDEPENDENT COVENANT. All of the covenants in this Article X shall
be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of Luminant against
the Seller, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Luminant of such covenants. The
parties expressly acknowledge that the terms and conditions of this Article X
are independent of the terms and conditions of any other agreements including,
but not limited to, any Employment Agreements entered into in connection with
this Agreement. It is specifically agreed that the Restricted Period shall be
computed by excluding from such computation any time during which the Seller is
found by a court of competent jurisdiction to have been in violation of any
provision of this Article X. The covenants contained in Article X shall not be
affected by any breach of any other provision hereof by any party hereto and
shall have no effect if the transactions contemplated by this Agreement are not
consummated.
Section 10.06 MATERIALITY. The parties to this Agreement hereby agree that the
covenants set forth in this Article X are a material and substantial part of the
transactions contemplated by this Agreement, supported by adequate
consideration.
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ARTICLE XI
MISCELLANEOUS
Section 11.01 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable.
Section 11.02 SPECIFIC ENFORCEMENT. The Seller and the Members, on the one
hand, and the Purchaser and Luminant, on the other, acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state thereof having jurisdiction, this being
in addition to any other remedy to which they may be entitled at law or equity.
Section 11.03 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto which are made a part hereof) and the other Transaction
Documents contain the entire understanding of the parties with respect to the
transactions contemplated hereby.
Section 11.04 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 11.05 NOTICES. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be validly given, made or served, if in writing and delivered
personally, by telecopy (except for legal process) or sent by registered mail,
postage prepaid, if to:
THE SELLER OR ANY MEMBER:
New York Consulting Partners, LLC
1370 Avenue of the Xxxxxxxx,
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxx Xxxx-Xxxxxxxxx, Managing Member
Facsimile: (000) 000-0000 or (000) 000-0000
WITH COPIES TO:
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Xxxxxxxxx Xxxx-Xxxxxxxxx
0000 Xxxxxxxx
Xx. 00X
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Skadden, Arps, Slate, Xxxxxxx & Xxxx
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
PURCHASER OR LUMINANT:
Luminant Worldwide Corporation
00000 Xxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxxx
Facsimile: (000) 000-0000
IN THE CASE OF NOTICE REQUIRED TO BE GIVEN BY THE
MEMBERS' REPRESENTATIVE PURSUANT TO 2.06(F) OR
2.07(D), AS THE CASE MAY BE, ORIGINALS TO:
Luminant Worldwide Corporation
00000 Xxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Corporate Controller
Facsimile: (000) 000-0000
IN EACH CASE, WITH A COPY TO:
Xxxxxx, Xxxxxx & Xxxxxxxxx:
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
MEMBERS' REPRESENTATIVE:
Xxxxxxxxx Xxxx-Xxxxxxxxx
0000 Xxxxxxxx
Xx. 00X
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
WITH A COPY TO:
68
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Attention: Xxxx X. Xxxxxx, Esq. (at New York
address and facsimile number listed above)
or to such other address, facsimile number or telex number as any party may,
from time to time, designate in a written notice given in a like manner. Such
notice, request, claim, demand, waiver, consent, approval or other communication
shall be deemed to have been given (A) as of next business day if given by
overnight delivery service; (B) within three (3) days after deposit with the
U.S. postal service if given by certified or registered mail return receipt
requested; (C) on the same day if given by facsimile and electronic confirmation
of delivery has been received, or (D) when actually received by the addressee if
given by any other means. Notwithstanding anything to the contrary herein, all
instructions that are provided to Luminant pursuant to Section 2.06(f)(ii) or
2.07(d)(ii), as the case may be, shall be given by certified or registered mail
return receipt requested in accordance with the above notice provisions.
Section 11.06 AMENDMENTS. This Agreement may not be amended, modified or changed
without the written agreement of all parties hereto. This Agreement or no
provision hereof may be waived, or discharged without a written agreement signed
by the party or parties against whom enforcement of any waiver or discharge is
sought or by parties with the right to consent to such waiver, change,
modification or discharge on behalf of such party.
Section 11.07 SUCCESSORS AND ASSIGNS. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns. None of the parties hereto may assign any of
its or his rights and obligations under this Agreement without the prior written
consent of the other parties hereto, except that the Purchaser may assign its
rights and obligations hereunder to Luminant or any wholly-owned Subsidiary of
Luminant, and the Seller may transfer any Shares subject to Section 5.07 of this
Agreement to the Members or any Member.
Section 11.08 EXPENSES AND REMEDIES. All costs and expenses incurred in
connection with this Agreement and the Transaction Documents, and the
transactions contemplated hereby and thereby, including, but not limited to, the
fees and disbursements of each party's attorneys, accountants and other
advisors, shall be borne by the party incurring such cost or expense, except
that Luminant shall pay up to TWENTY-FIVE THOUSAND DOLLARS ($25,000) of legal
fees of the Seller's counsel.
Section 11.09 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York. Each of the Seller, the Members, the Purchaser and
Luminant irrevocably submits to the personal exclusive jurisdiction of the
United States District Court for the Southern District of New York for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby (and, to the extent permitted under
applicable rules of procedure, agrees not to commence any action, suit or
proceeding relating hereto except in such court). Each of the Seller, the
Members, the Purchaser and Luminant agree that service of any process, summons,
notice or document hand delivered or sent by registered mail to such party's
respective address set forth in Section 11.05 will be effective service of
process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to
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jurisdiction as set forth in the immediately preceding sentence. Each of the
Seller, the Members, the Purchaser and Luminant irrevocably and
unconditionally waive any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the United States District Court for the Southern
District of New York, and hereby further irrevocably and unconditionally
waive and agree not to plead or claim in such court that any such action,
suit or proceeding brought in such court has been brought in an inconvenient
forum.
Section 11.10 THIRD PARTY BENEFICIARIES. Nothing contained in this Agreement is
intended to confer upon any person or entity other than the parties hereto and
their respective successors and permitted assigns, any benefit, right or
remedies under or by reason of this Agreement.
Section 11.11 MUTUAL DRAFTING. This Agreement is the mutual product of the
parties hereto, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of each of the parties, and shall not be
construed for or against any party hereto.
Section 11.12 FURTHER REPRESENTATIONS. Each party to this Agreement acknowledges
and represents that it has been represented by its own legal counsel in
connection with the transactions contemplated by this Agreement, with the
opportunity to seek advice as to its legal rights from such counsel. Each party
further represents that it is being independently advised as to the tax
consequences of the transactions contemplated by this Agreement and is not
relying on any representation or statements made by the other party as to such
tax consequences.
SECTION 11.13 MEMBERS' REPRESENTATIVE.
(a) Each Member, by signing this Agreement, designates Xxxxxxxxx
Xxxx-Xxxxxxxxx or, in the event that Xxxxxxxxx Xxxx-Xxxxxxxxx is unable
or unwilling to serve, Xxxxxx Xxxxx, to be the "Members' Representative"
for purposes of this Agreement and the Escrow Agreement, and each of
them accepts his or her appointment as the Members' Representative and
covenants to act in accordance with the provisions of this Agreement and
the Escrow Agreement applicable to the Members' Representative, and such
Person's execution of this Agreement and the Escrow Agreement in her or
his capacity as a Member shall also constitute such Person's execution
and delivery of the relevant Agreement in the capacity of Members'
Representative. The Members shall be bound by any and all actions taken
by the Members' Representative on their behalf.
(b) The Purchaser and Luminant shall be entitled to rely upon any
communication or writings given or executed by the Members'
Representative. All notices to be sent to Members pursuant to this
Agreement and the Escrow Agreement may be addressed to the Members'
Representative and any notice so sent shall be deemed notice to all of
the Members hereunder. The Members hereby consent and agree that the
Members' Representative is authorized to accept notice on behalf of the
Members pursuant hereto.
(c) Each Member hereby appoints and constitutes the Members' Representative
and her or his successor such Member's true and lawful attorney-in-fact,
with full power in his or her name and on his or her behalf to act
according to the terms of this Agreement and the Escrow Agreement in the
absolute discretion of the Members' Representative; and in
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general to do all things and to perform all acts including, without
limitation, executing and delivering all agreements, certificates,
receipts, instructions and other instruments contemplated by or
deemed advisable in connection with this Agreement. This power of
attorney and all authority hereby conferred is granted subject to the
interest of the other Members hereunder and in consideration of the
mutual covenants and agreements made herein, and shall be irrevocable
and shall not be terminated by any act of any Member, by operation of
law, whether by such Member's death or any other event.
Section 11.14 BULK TRANSFER LAW. Each of the parties hereto waives compliance by
the others with the provisions of the bulk transfer laws of New York and the
provisions of any statute of any other state or jurisdiction regulating bulk
sales or transfers which may be applicable to the sale of the Purchased Assets.
Section 11.15 GENDER AND NUMBER. Within this Agreement, words of any gender
shall be held and construed to include any other gender, and words in the
singular number shall be held and construed to include the plural, unless the
context otherwise requires.
Section 11.16 ARBITRATION. Excluding the right of a party to seek injunctive or
other equitable relief or as otherwise provided in this Agreement, all claims
(pursuant to federal or state statutes or by common law), controversies,
differences or disputes between or among Luminant and the Purchaser, on the one
hand, and the Seller and/or any Member, on the other hand, arising out of or
relating to this Agreement or related or referenced Schedules or the alleged
breach thereof including, but not limited to, indemnification claims under
Sections 7.01 and/or 7.02 shall be settled by arbitration in accordance with the
rules then in effect of the American Arbitration Association. After an award is
rendered by the arbitrator(s), a judgment may be entered in any court of
competent jurisdiction. The arbitration shall occur in New York City, New York
to the exclusion of all other locations. The arbitrators cannot add to or
subtract from the terms of this Agreement. The parties agree that the
arbitrators may include provisions for the payment of costs and expenses,
including reasonable attorneys' fees as part of any ruling or award made
thereunder. The parties acknowledge that arbitration shall be the sole, final,
binding and exclusive remedy of the parties with respect to any matter for which
arbitration is undertaken. In preparation for the arbitration process described
herein, the parties shall be given at least one hundred twenty (120) days for
discovery and each party may utilize all methods of discovery authorized by the
procedural rules and statutes of the State of New York for civil litigation and
may enforce the right to obtain such discovery in the manner provided by such
rules and statutes.
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IN WITNESS WHEREOF, the Seller, each Member, the Purchaser and
Luminant have caused this Agreement to be duly executed as of the day and year
first above written.
INTERACTIVE8, INC. LUMINANT WORLDWIDE
CORPORATION
By: /s/ XXXXX XXXXXXXXXXXX
----------------------
Name: Xxxxx Xxxxxxxxxxxx By: /s/ XXXXX XXXXXXXXXXXX
Title: Vice President of Finance ----------------------
Name: Xxxxx Xxxxxxxxxxxx
Title: Vice President of Finance
NEW YORK CONSULTING PARTNERS, LLC
By: /s/ XXXXXXXXX XXXX-XXXXXXXXX By: /s/ XXXXXXXXX XXXX-XXXXXXXXX
---------------------------- ----------------------------
Name: Xxxxxxxxx Xxxx-Xxxxxxxxx Name: Xxxxxxxxx Xxxx-Xxxxxxxxx
Title: Managing Member
By: /s/ XXXXXX XXXXX By: /s/ XXXX XXXXXXX
---------------- ----------------
Name: Xxxxxx Xxxxx Name: Xxxx Xxxxxxx
By: /s/ XXXX XXXXXX By: XXXXX XXXXXX
--------------- ------------
Name: Xxxx Xxxxxx Name: Xxxxx Xxxxxx
[SIGNATURES CONTINUED ON NEXT PAGE]
Xxxxxxxxx X. X. Xxxxxxxxx Year 2000 Family Trust
By: /s/ XXXXXX XXXXXXXXX
--------------------
Name:
--------------------
Title:
---------------------
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