EXHIBIT 10.1
AMENDMENT NO. 1
TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT (this "Amendment") is
entered into as of this 23rd day of August, 2005, by and among RelationServe
Media, Inc., a Nevada corporation ("Buyer"), xxxxxxxx.xxx, inc., a Delaware
corporation ("Globe") and SendTec, Inc., a Florida corporation ("Seller").
Capitalized terms used and not defined herein shall have the respective meanings
ascribed to them in the Asset Purchase Agreement (as defined below).
RECITALS:
WHEREAS, Buyer, Globe and Seller are parties to that certain Asset
Purchase Agreement dated as of August 10, 2005 (the "Asset Purchase Agreement");
and
WHEREAS, Buyer, Globe and Seller desire to amend the Asset Purchase
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. AMENDMENT.
(a) Section 7.14 of the Asset Purchase Agreement is deleted in its
entirety;
(b) Section 8.3(b) of the Asset Purchase Agreement shall delete the
words "5 years" and insert the words "12 months" in their place;
(c) Section 8.3(c) of the Asset Purchase Agreement shall be deleted in
its entirety and shall be replaced with the following:
"COMPETITIVE BUSINESS" shall mean: (i) any advertising agency or
similar business that, in either case, is primarily engaged in, and
derives the majority of its annual revenues from, managing or
procuring Internet-based advertising services on behalf of
third-parties in exchange for a fee; or (ii) any business engaged in
the development, sale, or support of offline (i.e. non-Internet)
direct-response marketing technology on behalf of third-parties.
Notwithstanding anything herein to the contrary, Competitive
Business shall not include the delivery by Globe (or any of its
Affiliates) of marketing services and/or products (including without
limitation, the sale or licensing of marketing tools, the generation
of leads and/or the sale, licensing, acquisition or sharing of
data), which services and products are understood and agreed to
involve marketing activities and not the management or procurement
of advertising services.
(d) Section 8.3(d) shall be amended to replace the first word thereof
with "The Globe";
(e) Section 8.3(g) shall be added to the Asset Purchase Agreement as
follows:
"The Globe and Seller agree that during the Non Competition Period,
neither of them shall, directly or indirectly:
(i) solicit, raid, entice or induce any present or former (since
September 1, 2004) client, customer or vendor of the Seller
("Customer") or of Buyer to become a client, customer or
vendor of any other person or entity for any Competitive
Business, or authorize, encourage or assist the taking of such
actions by any other person or entity; or
(ii) solicit, raid, entice or induce any employee, agent,
consultant, advisor, independent contractor or person
otherwise engaged by Seller at any time since September 1,
2004 or of Buyer ("Personnel") to become employed or otherwise
engaged by any other person or entity for the purpose of any
Competitive Business or rendering services the same as, or
similar to, those services as from time-to-time had been
provided by such Personnel to or on behalf of Seller or Buyer
or authorize, encourage or assist the taking of such actions
by any other person or entity; or
(iii) contact or communicate with any Customer or Personnel for any
business purpose restricted hereby without the presence or
prior consent of Buyer.";
(f) Section 8.6 shall be amended by deleting the word "Seller" within
the parenthetical and replacing it with the word "SendTec";
(g) The preamble of ARTICLE 5, "REPRESENTATIONS AND WARRANTIES OF SELLER
AND GLOBE" preceding the individual section paragraphs of Article 5
thereof is deleted in its entirety and shall be replaced with the
following: "The Seller and Globe, jointly and severally, represent
and warrant to the Buyer as of the date hereof (except as otherwise
indicated) as follows:";
(h) Each of the specific representations that are set forth on EXHIBIT A
hereto shall replace the identical numbered representation and
warranty that is set forth in Article 5 of the Asset Purchase
Agreement, with each such identical numbered representation and
warranty (or subparagraph thereof as the case may be) amended in its
entirety to read as set forth on Exhibit A hereto and all
representations and warranties that are not included on Exhibit A
(including any subparagraphs) remaining unchanged and in full force
and effect.
(i) Notwithstanding Section 11.1 or anything else to the contrary in the
Asset Purchase Agreement, the parties agree that the representations
and warranties set forth on EXHIBIT A attached hereto, as well as
each other representation and warranty made by Seller Management in
the Redemption Agreement, may be updated by any member(s) of Seller
Management prior to Closing in accordance with Section 7(a) of the
Redemption Agreement (without any liability to Globe) for the period
between the date they are first deemed given pursuant to Article 5
of the Asset Purchase Agreement (which is understood and agreed to
be the date hereof) and the Closing Date (including for this
purpose, the closing of the Redemption Agreement) for any schedules
or changes to the Operational Representations made to Globe pursuant
to the Redemption Agreement, provided that (i) Buyer is informed in
writing of such updating under the Redemption Agreement and (ii)
proceeds to Closing without claiming that such update is a breach of
an Operational Representation as opposed to an update thereof. If
any one or more of such Operational Representations is updated by
any member(s) of Seller Management pursuant to the Redemption
Agreement, then the Operational Representations set forth on EXHIBIT
A hereto and, to the extent not set forth on Exhibit A, the Asset
Purchase Agreement, shall, without further action, be automatically
updated to precisely match the updated Operational Representation(s)
made by such member(s) of Seller Management, with all other
representations and warranties not so revised continuing in full
force and effect unchanged.
(j) Section 9.10 is deleted in its entirety and shall be replaced with
the following: "MANAGEMENT AGREEMENTS. Each of the individuals
listed on Schedule 9.10 hereto shall have delivered to Buyer a duly
executed copy of that certain: (a) Representation Certification
substantially in the form annexed hereto as Exhibit D hereto; (b)
Employment Agreement, substantially in the form annexed hereto as
Exhibit E hereto; and (c) Stock Agreement, substantially in the form
annexed hereto as Exhibit F hereto. In addition, Seller Management
shall have executed and delivered to Buyer an escrow agreement on
terms and conditions satisfactory to Buyer, including, without
limitation, terms providing for a minimum of 200,000 shares of
Buyer's common stock being placed in escrow for the purpose of
permitting Buyer to satisfy any losses suffered by Buyer as a result
of the breach by any member(s) of Seller Management of any one or
more Operational Representations set forth in the Redemption
Agreement (the agreements referred to in this Section 9.10 being
collectively referred to herein as the "Management Agreements")."
(k) Section 10.7 is deleted in its entirety and shall be replaced with
the following: "SELLER MANAGEMENT. Seller Management shall have
executed and delivered to Globe the Redemption Agreement and the
Termination Agreement, each on terms acceptable to Globe. Seller
Management shall have executed and delivered an escrow agreement on
terms and conditions satisfactory to Globe and Seller, including,
without limitation, terms providing for a minimum of 200,000 shares
of Buyer's common stock being placed in escrow for the purpose of
permitting Buyer to satisfy any losses suffered by Buyer as a result
of the breach by any member(s) of Seller Management of any one or
more Operational Representations set forth in the Redemption
Agreement (the "Management Escrow Agreement")."
(l) Section 11.1 is amended by deleting the words "and employee benefit
matters" in (i) and inserting the word "and" between "Tax matters"
and "environmental matters" and deleting the "'" between such
phrases.
3
(m) Section 11.1 is amended by deleting ", and (ii) any representation
of Globe or Seller with respect to title matters shall survive for
five years".
(n) Section 11.2 (d) is deleted in its entirety and shall be replaced
with the following: "subject to Section 11.10 hereof, any breach of
any representation or warranty that is also made by any member of
Seller Management in the Redemption Agreement (an "Operational
Representation")."; and
(o) Section 11.10 shall be added to the Asset Purchase Agreement as
follows: "In the event that a Claim is made against Globe or Seller
that is in whole or in part based upon breach of an Operational
Representation, Globe shall give prompt written notice thereof to
Seller Management in accordance with the requirements of the
Redemption Agreement, with notice thereof to Buyer, identifying the
basis therefore. Buyer agrees that Buyer's first recourse for breach
of any Operational Representation shall be pursuant to the
Redemption Agreement, the Management Escrow Agreement and any Seller
Management property then held in escrow under the Management Escrow
Agrement (collectively, "Escrow Property"). In the event that Buyer
is able to satisfy in full any Claim for breach of an Operational
Representation against the Escrow Property, then Buyer's sole
recourse shall be against such Escrow Property. If, however, the
value of the Escrow Property is less than the amount of the losses
arising from the breach of an Operational Representation by any
member(s) of Seller Management, then Buyer shall be entitled to
recourse against the Holdback Cash and the Escrowed Shares then in
the possession of the Holdback Escrow Agent, with such rights as are
provided in Section 3.2(d). Seller and Globe agree that without the
prior written consent of Buyer, neither Seller nor Globe shall
modify or amend the Redemption Agreement, nor waive any rights
thereunder, if such action would have an adverse effect on Buyer's
rights. Buyer agrees that without the prior written consent of
Seller and Globe, Buyer shall not modify, waive, or amend any of
Buyer's rights under or with respect to the Redemption Agreement,
the Escrow Agreement or the Escrow Property.
2. RATIFICATION. Except as specifically provided in this Amendment, the Asset
Purchase Agreement is ratified and confirmed as written and shall remain in full
force and effect. The provisions of Article 8 of the Asset Purchase Agreement
and other provisions which by their terms are intended to have effect following
the Closing Date, as amended hereby, shall survive the Closing for the periods
set forth. To the extent that this Amendment incorporates any terms or requires
reference to external facts or conditions, the provisions of Section 13.2
"Entire Agreement" are hereby amended for the purposes of such incorporation and
references.
3. EXECUTION IN COUNTERPARTS. This Amendment may be executed by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and both of which when taken together shall constitute one and
the same agreement.
4. GOVERNING LAW. This Amendment shall be governed by the internal laws of the
State of Delaware without regard to principles of conflicts of law.
4
[SIGNATURES APPEAR ON NEXT PAGE]
5
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
and year first above written.
BUYER:
RELATIONSERVE MEDIA, INC.
By: /s/ Xxxxxx Xxxxxx Xxxxx
------------------------------------------
Title: Chief Executive Officer
GLOBE:
xxxxxxxx.xxx, inc.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Title: President
SELLER:
SENDTEC, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Title: Secretary/Treasurer
6
EXHIBIT A
5.3 NON-CONTRAVENTION. Except as listed on SCHEDULE 5.3, the execution and
delivery by Seller and Globe of this Agreement and the Seller Transaction
Documents and the consummation by the Seller and Globe of the Contemplated
Transactions will not . . . ; (b) conflict with or result in the breach or
termination of (or constitute a default for any event which, with notice or
lapse of time or both would constitute a default) under, or give to others any
rights of termination or cancellation of, or accelerate the performance required
by, or maturity of, or result in the creation of any Encumbrance pursuant to any
of the terms, conditions or provisions of, any Contract which either Seller or
Globe is a party; (c) constitute a violation of, or be in conflict with, or
constitute or create a default under, or result in the creation or imposition of
any Encumbrance (except a Permitted Encumbrance). [EXCEPT AS NOTED ABOVE,
REMAINDER OF 5.3 IS UNCHANGED].
5.5 [UNCHANGED].
5.6 ABSENCE OF CERTAIN CHANGES AND EVENTS. Since June 30, 2005 (the "Balance
Sheet Date"), the business of Seller has been conducted only in the ordinary
course of business consistent with past practice of Seller (the "Ordinary
Course"). Without limiting the foregoing, except as set forth on Schedule 5.6,
since the Balance Sheet Date, there has not been, occurred or arisen:
(a) any material adverse change, taken as a whole, in the assets,
liabilities, financial condition or results of operation of Seller;
(b) any sale, lease or other disposition of any properties or
assets of Seller in excess of $10,000 individually or in the aggregate
except in the Ordinary Course;
(c) any material change in the methods of doing business that has
had or would reasonably be expected to have a Material Adverse Effect (as
defined below);
(d) any material change in the accounting principles or practices
or the method of application of such principles or practices used by
Seller, or any change in depreciation or amortization policies or rates
previously adopted, that has had or would reasonably be expected to have a
Material Adverse Effect;
(e) any Encumbrance imposed or agreed to be imposed on or with
respect to any of the Acquired Assets other than Permitted Encumbrances;
(f) any material modification, waiver, change, amendment, release,
rescission or termination of, or accord and satisfaction with respect to,
any material term, condition or provision of any Contract, other than any
satisfaction by performance in accordance with the terms thereof in the
Ordinary Course;
(g) any casualty, loss, damage or destruction (whether or not
covered by insurance), or taking by eminent domain or other action by any
Governmental Authority, that has had or would reasonably be expected to
have a Material Adverse Effect;
(h) any adverse pending, or threatened dispute of any kind with
any contractor, subcontractor, customer, supplier, employee, landlord,
subtenant or licensee of Seller that is reasonably likely
7
to result in any material reduction in the amount, or any change in the
material terms or conditions or any material customer, supplier or other
relationship of Seller that has had, or would reasonably be expected to
have a Material Adverse Effect;
(i) other than in the Ordinary Course, any increase in the
compensation payable or to become payable to any of Seller's officers,
employees, agents or consultants (including, without limitation, any
increase pursuant to any bonus, pension, profit-sharing or other plan or
commitment), or the entering into or modification of any employment
contract or other agreement concerning the compensation of any officer, or
employee, or the making of any loan to, or engagement in any transaction
with, any officers, directors or shareholders of Seller, or the
establishment of any new, or the modification of any existing, employee
benefit, compensation or stock plan of Seller that affects the employees of
Seller;
(j) any capital expenditure or commitment therefor by Seller in
excess of $25,000 in the aggregate for additions, alterations or
modifications to the property, plant or equipment of Seller;
(k) the incurrence or entering into of any transaction, contract
or commitment by Seller with respect to its business, other than items
incurred or entered into (as the case may be) in the Ordinary Course;
(l) any payment, discharge or satisfaction of any claim,
Encumbrance or liability by Seller in excess of $25,000 individually or in
the aggregate, other than in the Ordinary Course;
(m) any organized labor strike or grievance that has had or could
reasonably be expected to have a Material Adverse Effect;
(n) any license, sale, transfer, pledge, mortgage or other
disposition of any tangible or intangible asset or Intellectual Property of
Seller in excess of $25,000 individually or in the aggregate other than in
the Ordinary Course;
(o) any cancellation of any Indebtedness or claims or any
amendment, termination, diminution or waiver of any rights of material
value to Seller in excess of $25,000 individually or in the aggregate; and
(p) any agreement or understanding, whether in writing or
otherwise, for Seller to take any of the actions specified in (a) through
(o) above.
For purposes of this Schedule, the term "Material Adverse Effect" shall mean any
material adverse effect on the business, operations, financial condition, or
results of operations of the Business.
5.7 TITLE TO PROPERTIES.
(a) ACQUIRED ASSETS. Seller has, and upon Closing, will transfer to Buyer,
good, clear and valid title to, and possession of, all of the Acquired Assets
owned by Seller, free and clear of any Encumbrances (other than Permitted
8
Encumbrances). Seller has, and upon Closing, will transfer to Buyer, valid and
subsisting leasehold interests or licenses in, and possession of, all of the
Acquired Assets that are leased by Seller. Seller has the full right, power and
authority to sell, convey, transfer, assign and deliver the Acquired Assets,
without the need to obtain the consent or approval of any third party, except as
listed on Schedule 5.7(a). At and as of the Closing, Seller will convey the
Acquired Assets to Buyer by deeds, bills of sale, certificates of title and
other instruments of assignment and transfer effective in each case to vest in
Buyer, and Buyer will have, good and valid title to all of the Acquired Assets,
free and clear of any and all Encumbrances, except for Permitted Encumbrances.
The Acquired Assets are, in all material respects, in good condition and repair
and are adequate and sufficient for Seller's intended purposes, ordinary wear
and tear excepted. The Acquired Assets will transfer to Buyer under this
Agreement (and other documents contemplated hereby), and constitute, all of the
material assets and properties (personal and mixed, tangible and intangible) and
rights necessary or desirable to permit Buyer to conduct the Business consistent
with Seller's past business practice.
(b) LEASES. (i) Schedule 1.1(h) contains a list of all material agreements under
which real property is leased by Seller and used in connection with the
Business. All of the Leased Real Property including any buildings, structures
and appurtenances thereon, are, to Seller's knowledge, in good operating
condition and repair, ordinary wear and tear excepted, are in such condition as
to permit surrender by Seller to the lessors thereof without any material cost
or expense for repair or restoration if any of the Real Property Leases were
terminated on the date hereof, are adequate and suitable for the uses for which
intended by Seller, each has adequate rights of ingress and egress for operation
of the Business in the Ordinary Course and there does not exist any condition
that interferes in any material way with the use or the economic value thereof.
(ii) Schedule 1.1(g) contains a list of all leases or material agreements under
which Seller, with respect to the Business, is lessee of or holds or operates
any items of machinery, equipment, motor vehicles, computer equipment, printers,
office furniture or fixtures owned by any third party, true, complete and
correct copies (or, in the case of oral leases or agreements, descriptions) of
which leases and agreements have been furnished to Buyer. Seller is the owner
and holder of all of the leasehold estates purported to be granted by such
leases or agreements and all other leases or agreements under which Seller is
lessee of or holds or operates any such items owned by a third party, and each
of such leases and agreements is in full force and effect and constitutes a
legal, valid and binding obligation of the respective parties thereto
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity. There is not under any of such
leases any existing default or, to the knowledge of Seller, event, condition or
occurrence which, with the giving of notice or lapse of time, or both, would
constitute a default thereunder. Except as provided on Schedule 5.7(c)(ii)
hereto, to Seller's knowledge, each of the items of machinery, equipment,
printers, office furniture and fixtures covered by the Personal Property Leases
is in good operating condition and repair, is in such condition as to permit
surrender thereof by Seller to the lessors without any material cost or expense
for repair, ordinary wear and tear excepted, or restoration if such leases were
terminated on the date hereof, is suitable for the uses for which intended by
9
Seller in the Ordinary Course and there does not exist any condition that
interferes in any material way with the use or economic value thereof.
5.8 ABSENCE OF LIABILITIES. Except for the Assumed Liabilities, and except as
set forth on Schedule 5.8 there are no material liabilities or obligations of
Seller of any nature (whether liquidated, unliquidated, accrued, absolute or
contingent (within the meaning of GAAP), and whether due or to become due)
probable of assertion relating to the Business except for:
(a) liabilities set forth or reflected (or reserved against) in the Balance
Sheet that have not been paid or discharged since the date thereof;
(b) liabilities or obligations arising under agreements or other commitments
listed on Schedule 5.8(b);
(c) current liabilities arising in the Ordinary Course subsequent to the
Balance Sheet Date, that are accurately reflected on its books and records
in a manner consistent with past practice; or
(d) the Excluded Liabilities (which shall be retained by Seller); or
(e) liabilities or obligations that do not or would not, either individually or
in the aggregate, have a Material Adverse Effect
5.9 [UNCHANGED]
5.10 [UNCHANGED]
5.11 INTELLECTUAL PROPERTY.
(a) SCHEDULE 5.11(a) hereto sets forth a complete and accurate list of all
registered Intellectual Property used in the Business as presently
conducted by Seller and any applications therefor. Except to the extent set
forth in SCHEDULE 5.11(a), Seller owns or has the right to use all of the
Intellectual Property used in the Business as presently conducted, and the
consummation of the transactions contemplated by the Transaction Documents
will not alter or impair any such right. All Intellectual Property is
valid, subsisting, in full force and effect, enforceable (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in
equity), and has not been abandoned as of the date hereof. Except as has
not or is not reasonably likely to have a Material Adverse Effect, Seller
has taken all reasonable action to maintain and protect each item of
Intellectual Property. The Intellectual Property is free and clear of any
Encumbrances other than Permitted Encumbrances and, except for generally
commercially available, non-custom, off-the-shelf software application
programs, or except as set forth on SCHEDULE 5.11(a), is fully assignable
by Seller to any Person, without payment, consent of any person or other
condition or restriction. No registered Intellectual Property has been or
is now involved in any cancellation, dispute or litigation, and, to the
knowledge of Seller, no such action is threatened.
10
Except as set forth in SCHEDULE 5.11(a), no patent of Seller included in
the Intellectual Property has been or is now involved in any interference,
reissue, re-examination or opposition proceeding.
(b) LICENSE AGREEMENTS. SCHEDULE 5.11(a) sets forth a complete and accurate
list of all licenses, sublicenses, consents, royalties or other agreements
concerning Intellectual Property to which Seller is a party or by which any
of the assets of Seller is bound (other than generally commercially
available, non-custom, off-the-shelf software application programs having a
retail acquisition price of less than $10,000 per license) relating to the
Business (collectively, "LICENSE AGREEMENTS"). All of the License
Agreements are valid and binding obligations of Seller enforceable in
accordance with their terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting the enforcement of creditors' rights generally and general
equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity, and to Seller's knowledge,
except for generally commercially available, non-custom, off-the-shelf
software application programs, there exists no event or condition which
will result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default by Seller under any such License
Agreement. Seller has performed all obligations required to be performed by
it, and Seller is not in default (or alleged to be in default) under any
Contract relating to any of the foregoing in any way that is reasonably
likely to have a Material Adverse Effect. No party to any Contract relating
to Intellectual Property has given Seller notice of its intention to
cancel, terminate or fail to renew such License Agreement.
(c) NO INFRINGEMENT. Except as disclosed in SCHEDULE 5.11(c): (i) to the
knowledge of Seller, the conduct of Seller's businesses as currently
conducted does not infringe any Intellectual Property rights of any Person,
and the Intellectual Property rights of Seller are not being infringed by
any Person, except for such infringements in (i) or (ii) that would not
have a Material Adverse Effect; and (ii) there is no litigation or order
pending or outstanding, or, to the knowledge of Seller, threatened, that
seeks to limit or challenge or that concerns the ownership, use, validity
or enforceability of any Intellectual Property or Seller's use of any
Intellectual Property owned by a third party, and, to the knowledge of
Seller, there is no valid basis for the same.
(d) ROYALTIES. No royalties, honoraria or other fees are payable by Seller to
any Person for the use of or right to use any Intellectual Property, except
as set forth in SCHEDULE 5.11(d).
(e) INTELLECTUAL PROPERTY. For purposes of this Section 5.11, the term
"Intellectual Property" includes the following that are owned by or
licensed to Seller: (i) all domain names, websites, service marks, trade
dress, logos, copyrights; (ii) computer software; (iii) trade secrets; (iv)
confidential and proprietary (A) technical information, (B) know-how,
processes, (C) techniques, (D) research and development information, and
(E) business and marketing plans; (v) patents; (vi) license rights and
sublicense rights to all patents and trademarks; (vii) other intangible
assets registered in the name of Seller or any Affiliate currently used by
Seller in connection with business of Seller; and (viii) all registrations
and applications of patents, copyrights, trademarks and service marks, and
all licenses (as licensee or licensor) and other agreements related
thereto.
11
5.12 PERMITS. The Permits (as defined below) listed in SCHEDULE 5.12 constitute
all of the material licenses, permits, certificates, approvals, exemptions,
franchises, registrations, variances, accreditations or authorizations currently
used in or required for the operation of the Business as operated by Seller
prior to the Closing Date except for any Permits the absence of which would not
have a Material Adverse Effect. The Permits are valid and in full force and
effect and there are no pending proceedings against Seller which could result in
the termination, revocation, limitation or impairment of any of the Permits.
Seller has not received notice of any violations in respect of any of the
Permits. For purposes of this Schedule, the term "Permits" means all franchises,
licenses, permits, consents, authorizations, approvals and certificates, or any
waiver of the foregoing, issued or granted by any Governmental Authority, to the
extent transferable to Buyer under applicable Laws as listed on Schedule 4.13.
5.13 LABOR AND EMPLOYMENT MATTERS.
(a) SCHEDULE 5.13 contains a list of each employee of Seller (such employees,
the "Seller Employees"). Except as set forth on Schedule 5.13, there are no
employment, consulting, severance or indemnification contracts between
Seller and any of the Seller Employees. Except as provided on Schedule
5.13, Seller has paid all accrued wages, salary, and commissions, and paid
or made available all vacation and sick pay, accrued as of the date of this
Agreement for all of the Seller Employees, agents and representatives of
Seller. Seller is in material compliance with Laws respecting employment
and employment practices, terms and conditions of employment and wages and
hours.
(b) Seller maintains no employee welfare benefit plans or employee pension
benefit plans (within the meaning of Section 3(1) or Section 3(2),
respectively, of the Employee Retirement Income Security Act of 1974, as
amended (ERISA). Seller shall be solely liable for all obligations with
respect to all employee welfare benefit plans (within the meaning of
Section 3(1) of ERISA) of which Seller is or ever has been a party or by
which it is or ever has been bound.
(c) To Globe's knowledge, there are no pending investigations against Seller by
the U.S. Department of Labor or any other Governmental Agency. There is no
unfair labor practice charge or complaint against Seller pending before the
National Labor Relations Board or any strike, picketing, boycott, dispute,
slowdown or stoppage pending or threatened against Seller. No collective
bargaining agreement or modification thereof is currently being negotiated
by Seller. No grievance or arbitration proceeding is pending under any
expired or existing collective bargaining agreements of Seller. No material
labor dispute with Seller Employees exists or, to the knowledge of Globe,
is imminent.
5.14 CONTRACTS. SCHEDULE 5.14 sets forth a complete and accurate list of all
written Contracts to which Seller is a party. As used in this Agreement, the
word "Contract" means:
(a) agreement for the purchase, sale, lease, or license of services,
products, or assets that are not cancelable without penalty and that require
total future payments in excess of $75,000 in any fiscal year in any instance,
or entered into other than in the Ordinary Course (but excluding, for the
avoidance of doubt, any such agreement whereby payments are contingent in
nature);
12
(b) agreements to purchase all or substantially all of its requirements for
a particular product or service from a particular supplier or suppliers, or to
supply all of a particular customer's or customers' requirements for a certain
service or product;
(c) agreement or other commitment pursuant to which any Person has agreed
to indemnify or hold harmless any other Person;
(d) agreement with any current or former Affiliate, shareholder, officer,
director, employee, or consultant, or with any Person in which any such
Affiliate, shareholder, officer, director, employee, or consultant has an
interest;
(e) joint venture or teaming agreement;
(f) agreement with any domestic or foreign government or agency or
department thereof; or
(g) agreement imposing non-competition or exclusive dealing obligations.
Seller has delivered to the Buyer true, correct and complete copies of all such
Contracts, together with all amendments, modifications and supplements thereto.
Except as provided in SCHEDULE 5.14, each of the Contracts listed on SCHEDULE
5.14 hereto is in full force and effect, the Seller is not in breach of any of
the provisions of any such Contract (to the extent that any such breach has or
is reasonably likely to have a Material Adverse Effect), nor, to Seller's
knowledge, is Seller or any other party to any such Contract in material default
thereunder, nor, to Seller's knowledge, does any event or condition exist which
with notice or the passage of time or both would constitute a default thereunder
that is reasonably likely to have a Material Adverse Effect. Seller has
performed in all material respects all obligations required to be performed by
Seller to date under each such Contract. Except as set forth in SCHEDULES
5.14(A) and 5.14(B), no approval or consent of any Person is needed in order
that such Contracts continue in full force and effect following the consummation
of the transactions contemplated by this Agreement, and no such Contract
includes any provision the effect of which may be to enlarge or accelerate any
obligations of the Seller thereunder or give additional rights to any other
party thereto or shall in any other way be affected by, or terminate or lapse by
reason of, the transactions contemplated by this Agreement or the Seller's
Transaction Documents.
5.15 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE 5.15: (a) Seller is
in material compliance with all applicable Environmental Laws; (b) there is no
Environmental Claim pending against the Seller with regard to the Acquired
Assets, including, without limitation, the Seller's leasehold interest in the
current St. Petersburg, Florida location of Seller, or Business; (c) Seller has
obtained all material Permits, approvals, identification numbers, licenses or
other authorizations required under any applicable Environmental Laws with
regard to the Acquired Assets or Business (the "Environmental Permits") and is
in material compliance with their requirements; (d) to the knowledge of Seller,
there are no underground or aboveground storage tanks or any surface
impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials
are being or have been treated, stored or disposed of on any real property
Seller currently owns or leases for the Business other than in material
compliance with applicable Environmental Laws; (e) Seller has not undertaken or
13
completed any investigation or assessment or remedial or response action
relating to any release, discharge or disposal of or contamination with
Hazardous Materials at any site, location or operation of Seller, either
voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law; and (f) there have been no actions,
suits, demands, demand letters, claims, liens, notices of non-compliance or
violation, notices of liability or potential liability, investigations,
proceedings, consent orders or consent agreements relating in any way to
Environmental Laws, any Environmental Permits or any Hazardous Materials (the
"Environmental Claims") against Seller that remain outstanding or unresolved.
5.16 [UNCHANGED]
5.17 INSURANCE. SCHEDULE 5.17 lists all insurance policies and binders of
liability, theft, fidelity, life, fire, product liability, health, unemployment,
workers' and workmen's compensation, errors and omissions and other types of
insurance, self insurance practices and performance bonds covering Seller
(collectively, the "Policies"). All of such Policies are valid, enforceable and
in full force and effect. All premiums with respect to such Policies are
currently paid, and no basis exists for early termination thereof on the part of
the insurer. Seller is not in default with respect to its obligations under any
of such Policies, nor has Seller received any written notification from any
insurer or agent of any intent to cancel or not to renew or increase the
premiums on any such Policies. To Seller's knowledge, no facts or circumstances
exist which would relieve the insurer under any Policy of its obligation to
satisfy in full any valid claim of the Seller thereunder. Seller has not, during
the last 5 fiscal years, been denied or had revoked or rescinded any policy of
insurance.
5.18 SUPPLIERS AND CUSTOMERS. SCHEDULE 5.18 identifies each contractor,
subcontractor, customer and supplier of Seller that in each case is material to
the Business. For purposes of this Section, a material customer is one that
produced more than 10% of Seller's revenues during the last year and a material
supplier is one to which Seller paid more than $75,000 during the last year.
Schedule 5.18 lists the products and services supplied by Seller to each
material customer. Except as set forth on EXHIBIT 5.18, there are no material
suppliers, or sole-source suppliers of significant goods or services (other than
electricity, gas, telephone or water) to Seller, with respect to which
alternative sources of supply are not readily available on comparable terms and
conditions. No material supplier or material customer of the business of Seller
has, during the past 12 months, cancelled or otherwise terminated its services
or supplies to Seller or its use or purchase of the products or services of
Seller, or has communicated any threat in writing to Seller to do so. No such
supplier or customer has given Seller written notice that it intends to cancel,
reduce or otherwise terminate its relationship with Seller or the usage or
purchase of the products of Seller, or that the transactions contemplated by
this Agreement will result in any such cancellation, reduction or termination.
5.19 [UNCHANGED]
5.20 CERTAIN LINE ITEMS AND RELATED ITEMS.
(a) ACCOUNTS RECEIVABLE. To Seller's knowledge, all accounts receivable of
Seller received in connection with the Business (the "Receivables") have arisen
only from bona fide transactions entered into in the Ordinary Course, are the
14
legal and binding claims of Seller, free and clear of all Encumbrances (other
than Permitted Encumbrances), have been recorded in accordance with GAAP and are
not subject to any counterclaim, set-off or defense (except to the extent
reserved against). Since the Balance Sheet Date, no customer has given Seller
written notice that it intends to assert any material right to a discount,
allowance or chargeback with respect to any products or services, except for any
discounts, allowances or chargebacks that have not had and would not reasonably
be expected to have a Material Adverse Effect. The Receivables are current as of
the date hereof. Seller has delivered to the Buyer a complete and accurate aging
list of all Receivables as of a date not more than 5 days prior to the date of
this Agreement.
(b) ACCOUNTS PAYABLE. The accounts payable related to Seller, as reflected
on the Financial Statements or thereafter and recorded by Seller, have arisen
only from bona fide transactions entered into in the Ordinary Course. Except as
provided in Schedule 5.20(b), all payment terms in connection therewith are
consistent with past practices of Seller.
15
