PURCHASE AGREEMENT dated as of July 6, 2007 by and among Chandler Chicco Agency, LLC, a New York limited liability company (“CCA NY”), BioSector 2 LLC, a New York limited liability company (collectively, the “Company Parties” and each individually a...
EXECUTION
COPY
PURCHASE
AGREEMENT dated
as
of July 6, 2007 by and among Xxxxxxxx Chicco Agency,
LLC, a
New York limited liability company (“CCA
NY”),
BioSector 2 LLC, a New York limited liability company (collectively, the
“Company
Parties”
and
each individually a “Company
Party”),
the
members of the Companies listed on Schedule I hereto (the
“Members”,
and
individually a “Member”),
inVentiv
Health, Inc., a Delaware corporation (“Parent”),
and
Xxxxxxxx
Chicco
LLC, a Delaware limited liability company (“Purchaser”).
The
Company Parties, the Members, Parent and Purchaser are sometimes are referred
to
herein collectively as the “Parties”
and
each individually as a “Party.”
WHEREAS,
the
Members own all of the membership interests of the Company Parties and
all of
the equity interests in Xxxxxxxx
Chicco Agency SARL, an entity organized under the laws of France, and BioSector
2, Limited, an entity organized under the laws of the United Kingdom
(collectively with the Company Parties, the “Companies”);
and
WHEREAS,
each
Member desires to sell to the Purchaser, and Purchaser is willing to purchase
from such Member, such membership interests, subject to the terms and conditions
of this Agreement;
WHEREAS,
in order to induce the Members to enter into this Agreement, Parent is
executing
a guaranty of Purchaser’s obligations hereunder simultaneously with the
execution of this Agreement;
WHEREAS,
in order to induce Purchaser and Parent to enter into this Agreement, Xxxxxx
Xxxxxxxx (“Xxxxxxxx”)
and
Xxxxxxx X. Chicco (“Chicco”)
are
entering into new employment agreements with CCA
NY
(the
“Employment
Agreements”)
simultaneously with the execution of this Agreement; and
WHEREAS,
certain terms used in this Agreement are defined in Section 10.1.
NOW,
THEREFORE, in consideration of the mutual covenants, representations and
warranties made herein and other good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, the Parties agree as
follows:
ARTICLE
I
PURCHASE
AND SALE TRANSACTION
Section
1.1. Sale
of Membership and Equity Interests.
On and
subject to the terms and conditions of this Agreement, at the closing of
the
transactions contemplated hereby (the “Closing”),
each
Member will sell, assign, transfer and deliver to Purchaser, and Purchaser
will
purchase from such Member, the membership and equity interests of the Companies
(“Membership
Interests”),
set
forth opposite such Member’s name on Schedule I hereto constituting all of the
outstanding Membership Interests owned by such Member.
Section
1.2. Purchase
Price.
(a) The
consideration to be paid by Purchaser for the Membership Interests (the
“Purchase
Price”)
shall
be, in the aggregate, (i) the difference between (A) [***] and
(B)
the amount of Indebtedness, if any, outstanding immediately following the
Closing (after giving effect to the last sentence of this Section 1.2)
in cash,
payable as directed by the Representative (subject to the last sentence
of this
Section 1.2) by electronic funds transfer at the Closing, subject to adjustment
as provided in Section 1.4 (the “Initial
Cash Purchase Price”),
to an
account specified in writing by the Representative to Purchaser no later
than
three business days prior to the Closing for allocation among the Members,
(ii)
a number of unregistered shares of the common stock, par value $0.001 per
share,
of Parent (“Parent
Common Stock”)
equal
to the quotient of (x) [***]
divided by (y) the Fair Market Value of one share of Parent Common Stock
as of
June 27, 2007 (the “Initial
Shares”)
and
(iii) all amounts payable or distributable to the Members and the participants
in the Phantom Equity Plan in accordance with Schedule I to this Agreement
and
Schedule I to the Phantom Equity Plan pursuant to Section 1.5 below.
Notwithstanding the foregoing, (x) the portion of the fee payable to AdMedia
Partners, Inc. ("AdMedia")
under
the letter agreement dated October 16, 2006 between AdMedia and CCA NY
(the
"AdMedia
Engagement Letter")
shall
be accrued by CCA NY as a pre-Closing expense and paid directly by Purchaser,
for the account of CCA NY, to AdMedia and (y) at Purchaser's election,
a portion
of the Initial Cash Purchase Price sufficient to discharge all or any portion
of
the Indebtedness outstanding as of the Closing Date may be paid by Purchaser
directly to the holders of such Indebtedness.
(b) On
the
Closing Date (as defined below), Purchaser shall deliver to the transfer
agent
for the Parent Common Stock irrevocable instructions to deliver the Initial
Shares to The Bank of New York, as escrow agent (the “Escrow
Agent”)
pursuant to an escrow agreement dated as of the Closing Date among Purchaser,
the Members and the Escrow Agent (the “Escrow
Agreement”),
in
substantially the form annexed hereto as Exhibit
A.
The
Initial Shares shall be held in escrow until the [***] anniversary
of the Closing Date as more fully set forth in the Escrow
Agreement.
(c) Except
as
set forth in the Phantom Equity Plan, no Member shall pay or transfer any
portion of the Purchase Price or any rights thereunto to any Person who
provides
services to the Business at the time of or any time following the Closing.
Such
consideration is not in lieu of, and shall not reduce any compensation
to which
the participants are entitled in respect of services, is fully vested as
of the
date hereof and shall be made at the times provided for in the Phantom
Equity
Plan irrespective of whether such beneficiaries continue to render services
to
any of the parties hereto or their Affiliates.
(d) On
the
Closing Date, Purchaser shall deliver to the Representative a proposed
allocation of (i) the Purchase Price among the Companies (the "Entity
Allocation")
and
(ii) the Purchase Price consistent with the requirements of Section 1060
of the
Code and Treasury Regulations Section 1.1060-1(b)(4) and in such detail
as
Purchaser may determine to be appropriate, or a method for arriving at
such an
allocation (the “Purchase
Price Allocation”).
The
parties shall attempt to reach an agreement regarding the Entity Allocation
and
the Purchase Price Allocation as soon as possible following Buyer’s delivery of
the Entity Allocation and the Purchase Price Allocation to the Representative
pursuant to the preceding sentence. In the event the parties agree on the
Entity
Allocation and the Purchase Price Allocation, Purchaser and the Representative
shall prepare and file all the all returns, declarations, reports, estimates,
information returns, and statements (“Returns”)
that
may be required with respect to the transaction provided for herein pursuant
to
Section 1060 of the Internal Revenue Code of 1986, as amended (the “Code”),
any
Treasury Regulations promulgated thereunder, any other similar provision
of the
Code and any other similar, applicable foreign, state or local Tax Law
or
regulation, including IRS Form 8594 based on and consistent in all respects
with
the Entity Allocation and the Purchase Price Allocation. Purchaser and
the
Representative shall each provide to the others, on a timely basis, information
that may be reasonably required for the purpose of preparing such Returns.
In
the event the parties are not able to reach an agreement on the Entity
Allocation or the Purchase Price Allocation within thirty (30) days following
the Closing, the Entity Allocation and the Purchase Price Allocation shall
be
determined as promptly as practicable by the Neutral Accountant, provided
that
Purchaser's proposed Entity Allocation shall be used to complete title
transfer
documentation and transfer, stamp or similar tax returns or declarations
at the
Closing.
Section
1.3. Closing
Date.
Subject
to the satisfaction of the conditions set forth in this Section 1.3 and
Sections
6.1 and 6.2 (or the waiver thereof by the Party entitled to waive such
conditions), the Closing shall take place at the offices of Akerman Senterfitt
LLP, 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 on July 6,
2007.
The Closing shall be effective as of 12:01 a.m. on July 7, 2007 (the
“Closing
Date”).
As
part of the Closing, (i) each Member will deliver to Purchaser such evidence
of
ownership of the Membership Interests by such Member, as is reasonably
satisfactory to Purchaser accompanied by a duly executed assignment assigning
such Membership Interests to Purchaser and otherwise in good form for transfer,
(ii) Purchaser shall pay to such Member the portion of the Initial Cash
Purchase
Price payable to such Member as set forth on Schedule I, (iii) Parent shall
issue irrevocable instructions to the transfer agent for the Parent Common
Stock
to issue the Initial Shares in the name of such Member as set forth on
Schedule
I and deliver them to the Escrow Agent and (iv) the Parties shall make
the
deliveries described in Article VI. Purchaser shall not be required to
purchase
any Membership Interests unless all Membership Interests are properly tendered
in accordance with the terms of this Agreement.
Section
1.4. Working
Capital Adjustment.
The
Purchase Price shall be subject to adjustment after the Closing Date as
follows:
(a) Within
60
days after the Closing Date, Purchaser shall prepare and deliver to Xxxxxxxx,
as
representative for the Members (in such capacity, the “Representative”)
a
statement (the “Closing
Working Capital Statement”)
calculating the Working Capital (as defined below) of the Companies as
of the
Closing Date (the “Closing
Working Capital Amount”).
For
purposes of this Agreement, “Working
Capital”
shall
mean the current assets of the Companies and the Subsidiaries as of the
Closing
Date (including accounts receivable (net of allowance for doubtful accounts)
and
work in process), exclusive of deferred tax assets, less the current liabilities
of the Companies and the Subsidiaries as of the Closing Date (including
all GAAP
accruals, whether or not traditionally reflected on the Companies’ or any
Subsidiary’s balance sheet as a current liability) and all other liabilities of
the Companies and the Subsidiaries as of the Closing Date and shall be
calculated in accordance with GAAP and accounting policies and procedures
consistent with those employed in the preparation of Parent’s publicly filed
financial statements. Notwithstanding the foregoing, (i) current assets of the
Companies and the Subsidiaries for purposes of this computation shall include
all of the Companies’ and the Subsidiaries’ rent security deposits outstanding
and (ii) current liabilities shall exclude the current portion of Indebtedness
that is deducted in determining the Purchase Price pursuant to clause (i)(B)
of
Section 1.2(a). Working Capital shall be calculated on a combined basis
and,
with respect to the Subsidiaries, a consolidated basis.
Purchaser shall provide the Representative, and a single accounting firm
for the
Representative, reasonable access to all (i) work papers and written procedures
used to prepare the Closing Working Capital Statement and (ii) Books and
Records
and personnel to the extent reasonably necessary to enable the Representative
and such accounting firm to conduct a sufficient review of the Closing
Working
Capital Statement and verify the calculation of the Closing Working Capital
Amount. If the Representative disputes the Closing Working Capital Amount
as
shown on the Closing Working Capital Statement prepared by the Purchaser,
the
Shareholder shall deliver to the Purchaser within 30 days after receipt
of the
Closing Working Capital Statement a statement (the “Dispute
Notice”)
setting forth the Representative’s calculation of the Closing Working Capital
Amount and describing in reasonable detail the basis for the determination
of
such different Closing Working Capital Amount. The parties shall use reasonable
efforts to resolve such differences regarding the determination of the
Closing
Working Capital Amount within a period of 30 days after the Representative
has
given the Dispute Notice. If the parties resolve such differences, the
Closing
Working Capital Amount agreed to by the parties shall be deemed to be the
“Final
Closing Working Capital Amount”
and
the
Closing Working Capital Statement agreed to by the Parties shall be deemed
to be
the “Final
Closing Working Capital Statement.”
(b) If
Purchaser and the Representative do not reach a final resolution on the
Closing
Working Capital Amount within 30 days after the Representative has given
the
Dispute Notice, unless Purchaser and the Representative mutually agree
to
continue their efforts to resolve such differences, the Neutral Accountant
shall
resolve such differences, pursuant to an engagement agreement among the
Purchaser, the Representative and the Neutral Accountant (which Purchaser
and
the Representative agree to execute promptly), in the manner provided below.
Purchaser and the Representative shall each be entitled to make a presentation
to the Neutral Accountant, pursuant to procedures to be agreed to among
Purchaser, the Shareholder and the Neutral Accountant (or, if they cannot
agree
on such procedures, pursuant to procedures determined by the Neutral
Accountant), regarding such party’s calculation of the Closing Working Capital
Amount; and the Neutral Accountant shall be required to resolve the differences
between Purchaser and the Representative and determine the Closing Working
Capital Amount within 20 days after the engagement of the Neutral Accountant.
The Closing Working Capital Amount determined by the Neutral Accountant
shall be
deemed to be the Final Closing Working Capital Amount and the Closing Working
Capital Statement, as adjusted to reflect such determination, shall be
deemed to
be the Final Closing Working Capital Statement. Such determination by the
Neutral Accountant shall be conclusive and binding upon the parties, absent
fraud or manifest error. Nothing in this Section 1.4(b) shall be construed
to
authorize or permit the Neutral Accountant to:
(i) determine
any questions or matters whatsoever under or in connection with this Agreement
except for the resolution of differences between Purchaser and the
Representative regarding the determination of the Closing Working Capital
Amount; or
(ii) resolve
any such differences by making an adjustment to the Closing Working Capital
Statement that is outside of the range defined by amounts as finally proposed
by
the Purchaser and the Representative.
Purchaser,
on the one hand, and the Representative, on the other hand, shall each
pay one
half of the fees and expenses of the Neutral Accountant.
(c) If
the
Final Closing Working Capital Amount is less than [***],
then the Members shall pay to Purchaser in accordance with the percentages
of
the Initial Cash Payment to which they are entitled in accordance with
Schedule
I an amount equal to the difference between [***] and
the
Final Closing Working Capital Amount. If the Final Closing Working Capital
Amount is more than [***], then Purchaser shall pay to the Members in accordance
with the percentages of the Initial Cash Payment which they are entitled
to in
accordance with Schedule I an amount equal to the difference between the
Final
Closing Working Capital Amount and [***].
Any
payment pursuant to this Section 1.4(c) shall be made in cash by wire
transfer of immediately available funds into one or more accounts designated
in
writing by Purchaser or the Representative, as the case may be, within five
business days after the date on which the Final Closing Working Capital
Amount
is determined.
Section
1.5. Earnout
Payments.
(a)
[***]
The
Members and the Phantom Equity Participants (as defined below) shall be
entitled
to additional consideration from Purchaser (any such additional consideration
an
“Earnout
Amount”)
determined as follows:
[***]
[***]
[***]
As
used
herein:
[***]
[***]
[***]
[***]
[***]
[***]
shall be delivered to the Representative for allocation among the Members
and
the participants in the Phantom Equity Plan in accordance with Schedule
I to
this Agreement and Schedule I to the Phantom Equity Plan (which, at Purchaser's
request, shall be specified in written instructions delivered to Purchaser
by
the Representative). At Purchaser’s option, up to [***]
may
be satisfied by the issuance to the Members and the Phantom Equity Plan
participants in accordance with Schedule I to this agreement and Schedule
I to
the Phantom Equity Plan of unregistered shares of Parent Common Stock having
an
aggregate Fair Market Value equal to [***] The
shares of Parent Common Stock issued in satisfaction of any portion of
an
Earnout Amount are referred to as “Earnout
Shares”
and,
together with the Initial Shares, as the “Parent
Shares”.
In no
event will any Parent Shares be issued hereunder if the issuance of such
Parent
Shares would cause (A) the sum of (1) the total number of Parent Shares
issued
pursuant to this Agreement, (2) the number of shares of Parent Common Stock,
if
any owned by Members and the participants in the Phantom Equity Plan immediately
prior to the Closing and (3) the shares of Parent Common Stock, if any,
issued
to Members and the participants in the Phantom Equity Plan pursuant to
employment-related incentive grants to exceed 19.9% of the number of shares
of
Parent Common Stock outstanding immediately prior to the Closing or (B)
the
voting power of the securities described in the preceding clauses (A)(1)
through
(3) to exceed 19.9% of the voting power of the voting securities of Parent
outstanding immediately prior to the Closing. [***] Each Party acknowledges
and
agrees that neither Purchaser, the Members nor any other Person makes any
guarantee or representation to any other Party that any Earnout Amount
will be
realized. Any Earnout Amount that is paid in cash or Earnout Shares to
Members
or their designees shall be treated as a component of the Purchase
Price.
(b)
Purchaser shall at its expense deliver to Representative within 90 days
after
the completion of:
(i) [***]
(ii) [***]
(iii) [***]
(c)
Purchaser shall provide Representative and the accounting firm selected
by
Representative on behalf of the Members with reasonable access to all books
and
records and working papers to the extent reasonably necessary to enable
Representative and such accounting firm to verify such calculations after
the
delivery thereof.
(d)
Such
calculations shall be binding on the parties to this Agreement unless the
Representative, within 30 days after the delivery of the calculations by
Purchaser to the Representative, notifies Purchaser in writing that it
objects
to any item or computation in connection with the calculations and specify
in
reasonable detail the basis for such objection. If the Representative delivers
such a notice and the Representative and Purchaser are unable to agree
upon the
calculations within 20 days after any notice of objection has been given
by the
Representative to Purchaser, then (i) [***] within five business days after
receipt of such notice and (ii) at the election of either Purchaser or
the
Representative, the dispute shall be submitted to the Neutral Accountant
for a
final determination in accordance with the procedures set forth in Section
1.4(b), which determination shall be final and binding upon the parties,
absent
fraud or manifest error. The Members on the one hand and Purchaser on the
other
hand shall each bear one-half of the fees, costs and expenses of the Neutral
Accountant in the event such an election is made.
(e)
For
purposes of this Agreement:
[***]
(f)
[***]
Parent shall not be required to give such instructions until the third
business
day after the Representative has notified Purchaser in writing of the address
to
which such shares of Parent Common Stock are to be delivered.
(g)
[***]
(iv) [***]
(v) [***]
(vi) [***]
(vii) [***]
(viii) [***]
(ix) [***]
(x) [***]
(xi) [***]
(xii) [***]
(h) In
the
event of a merger, consolidation or other transaction prior to the Final
Earnout
Amount Determination Date (a “Conversion
Transaction”)
as a
result of which substantially all of the outstanding shares of Parent Common
Stock are converted into the right to receive, in whole or in part, equity
securities, if such equity securities are traded on the New York Stock
Exchange,
the American Stock Exchange, The Nasdaq Stock Market or another securities
exchange or interdealer quotation system reasonably acceptable to the Member
(“Listed
Equity Securities”),
(i)
any issued Parent Shares, including shares held pursuant to the Escrow
Agreement, shall be eligible to participate in any Conversion Transaction
on the
same basis as other outstanding shares of Parent Common Stock and [***].
For
such
purpose, such Listed Equity Securities shall be valued at their aggregate
Fair
Market Value as of the Final Earnout Amount Determination Date. In the
event
that, in any Conversion Transaction, substantially all of the outstanding
shares
of Parent Common Stock are converted into the right to receive equity securities
that are not Listed Equity Securities (or are converted into the right
to
receive a combination of such equity securities and cash), then the Earnout
Amount, if any, shall be required to be satisfied entirely in cash. [***]
Section
1.6. Lock-Up
Agreement.
During
the applicable Restricted Period, the Members shall not sell, pledge, hedge
or
otherwise dispose of any economic interest in any of the Parent Shares
(including by entering into any covered or uncovered short transaction)
except
pursuant to and in accordance with the terms of a Conversion Transaction,
in
which event the restrictions contained in this Section 1.6 shall apply
to any
Listed Equity Securities issued in exchange for Parent Shares. “Restricted
Period”
means
(i) with respect to the Initial Shares, the period ending on the first
anniversary of the Closing Date and (ii) with respect to the Earnout Shares,
if
any, the period ending on the first anniversary of the Final Earnout Amount
Determination Date.
Section
1.7. Transferability;
Legending of Parent Shares; Resale Registration.
(a) The
Members acknowledge that the Parent Shares are being acquired pursuant
to an
exemption from registration under the Securities Act of 1933, as amended
(the
“Securities
Act”)
and
that the Parent Shares may be transferred only pursuant to an effective
registration statement or an exemption from registration under the Securities
Act. Each Member represents that they are familiar with Rule 144 under
the
Securities Act. No Members shall be permitted to transfer any Parent Shares
in
the absence of an effective registration statement unless such Member has
furnished Parent with an opinion of counsel, reasonably satisfactory to
Parent,
that such disposition does not require registration of such Parent Shares
under
the Securities Act.
(b)
It is
understood that the certificates evidencing the Parent Shares may bear
a legend
to the following effect:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT THERETO OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT.
The
certificates evidencing the Parent Shares may also bear any legends required
by
applicable blue sky laws.
(c)
(i)
Parent may, at its option, but without any obligation to do so, include
in any
non-underwritten registration of shares of Parent Common Stock any or all
Parent
Shares issued or to be issued for the account of the Members hereunder.
The
inclusion of any Parent Shares that are subject to the restrictions set
forth in
Section 1.6 in a registration statement filed by Parent, or a prospectus
supplement or amendment thereto, shall not affect the operation of Section
1.6
except as otherwise agreed by Parent in its sole discretion. For so long
as any
Parent Shares are included in an effective registration statement, the
Members
agree not to dispose of such Parent Shares in a transaction that would
require
the filing of a Form 144.
(ii)
(A)
Parent will indemnify and hold harmless, to the fullest extent permitted
by law,
the Members, their officers, directors and agents, affiliates, advisors,
brokers
and employees, each person who controls any Member (within the meaning
of
Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934 (the “Exchange
Act”))
and the
officers, directors, agents, affiliates, advisors, brokers and employees
of any
such controlling person, from and against all damages, as incurred, arising
out
of or based upon any untrue or alleged untrue statement of a material fact
contained in a registration statement pursuant to which any of the Parent
Shares
are registered for resale (each a “Resale
Registration Statement”),
any
prospectus or form of prospectus or in any amendment or supplement thereto
or in
any preliminary prospectus, or arising out of or based upon any omission
or
alleged omission to state therein a material fact required to be stated
therein
or necessary to make the statements therein not misleading, except to the
extent
the same are based upon information with respect to any Member furnished
in
writing to Parent by such Member expressly for use therein; provided,
however,
that
Parent will not be liable to such Member to the extent that any such damages
arise out of or are based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any preliminary prospectus if either
(x)(i) such Member failed to send or deliver a copy of the prospectus with
or
prior to the delivery of written confirmation of the sale by such Member
of a
Parent Share to the person asserting the claim from which such damages
arise and
(ii) the prospectus would have corrected such untrue statement or alleged
untrue
statement or such omission or alleged omission or (y) such untrue statement
or
alleged untrue statement or such omission or alleged omission is corrected
in an
amendment or supplement to the prospectus previously furnished by or on
behalf
of Parent with copies of the prospectus as so amended or supplemented delivered
by Parent, and such Member thereafter fails to deliver such prospectus
as so
amended or supplemented prior to or concurrently with the sale of a Parent
Share
to the person asserting the claim from which such damages arise; provided,
further,
however,
that
the indemnity agreement contained in this Section 1.7(c)(ii)(A) will not
apply
to amounts paid in settlement of any such damages if such settlement is
effected
without the consent of Parent (which consent will not be unreasonably withheld).
The rights of the Members hereunder will not be exclusive of the rights
of the
Members under any other agreement or instrument.
(B)
Each
Member
will
indemnify and hold harmless, to the fullest extent permitted by law, Parent
and
its Affiliates (including, from and after the Closing, the Companies and
Subsidiaries), the officers, directors and agents, affiliates, advisors,
brokers
and employees of such Member, each underwriter of securities covered by
a Resale
Registration Statement, each person who controls any such Person (within
the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act),
and the officers, directors, agents, affiliates, advisors, brokers and
employees
of any such underwriter or controlling person, from and against all damages,
as
incurred, arising out of or based upon any untrue or alleged untrue statement
of
a material fact contained in any registration statement, prospectus or
form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged omission
to
state therein a material fact required to be stated therein or necessary
to make
the statements therein not misleading, but only to the extent the same
are
contained in information with respect to such holder furnished in writing
to
Parent by such Member expressly for use therein; provided,
however,
that
the indemnity agreement contained in this Section 1.7(c)(ii)(B) will not
apply
to amounts paid in settlement of any such damages if such settlement is
effected
without the consent of such Member (which consent will not be unreasonably
withheld). The rights of Parent and its Affiliates hereunder will not be
exclusive of the rights of Parent and its Affiliates under any other agreement
or instrument. In no event will the liability of any Member hereunder be
greater
in amount than the dollar amount of proceeds (net of payment of all expenses
and
underwriters' discounts and commissions) received by such Member upon the
sale
of the Parent Shares giving rise to such indemnification
obligation.
Section
1.8. Authority
of Representative.
(a)
Each Member hereunder irrevocably appoints the Representative to represent
it
and act as its attorney-in-fact and agent with respect to any and all matters
relating to, arising out of, or in connection with , the Transaction Documents,
including (i) for purposes of any action taken or omitted on behalf of
such
Member thereunder and (ii) any adjustment, disposition, settlement or other
handling of any amounts or claims under Sections
1.4 and 1.5
and all
rights or obligations arising under Article VIII. Except to the extent
otherwise
explicitly set forth herein or in any other Transaction Documents, all
actions,
omissions, notices, communications and determinations by or on behalf of
a
Member shall be given or made by the Representative and all such actions,
omissions, notices, communications and determinations by the Representative
pursuant or with respect to any provision of a Transaction Document shall
conclusively be deemed to have been authorized by, and shall be binding
upon and
made on behalf of such Member. Purchaser shall be entitled to rely on any
action
or decision of the Representative as the act, omission, notice, communication
or
determination of each Member. The Members hereby agree to jointly and severally
indemnify and hold harmless the Representative from and against (i) any
Losses
incurred without gross negligence or willful misconduct on the part of
the
Representative and arising out of or in connection with the acceptance,
performance or nonperformance of his duties hereunder and (ii) any related
out-of-pocket costs and expenses (including reasonable attorneys’ fees). If the
person serving as the Representative dies or becomes legally disabled,
Xxxxxxx
Xxxxxx or, if he is unable or unwilling to serve, an individual selected
by a
majority-in-interest of the rights to allocation of consideration pursuant
to
Schedule I will be elected as the successor Representative. The Representative
shall have sole responsibility for allocating the Purchase Price among
the
Members and the participants in the Phantom Equity Plan and neither Parent,
Purchaser nor any of their Affiliates (including, following the Closing,
the
Companies) shall have any obligation or liability therefor
whatsoever.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES REGARDING THE MEMBERS
Each
Member represents and warrants to Purchaser that the following statements
are
correct and complete as of the date hereof and as of the Closing
Date.
Section
2.1. Authorization
of Transactions.
Such
Member has full power and authority to execute and deliver this Agreement
and
the other Transaction Documents and to perform such Member’s obligations
hereunder and thereunder. This Agreement and each other Transaction Document
constitutes the valid and legally binding obligation of such Member, enforceable
in accordance with its terms and conditions.
Section
2.2. Conflicts;
Consents of Third Parties.
The
execution and delivery by such Member of this Agreement and the other
Transaction Documents to which such Member is a party, the consummation of
the transactions contemplated hereby or thereby, and compliance by such
Member with the provisions hereof or thereof will not (i) conflict with,
violate, result in the breach or termination of, or constitute a default
under
any Contract to which such Member is a party or by which such Member
or such Member’s properties or assets is bound, or require a Consent from
any Person in order to avoid any such conflict, violation, breach, termination
or default; (ii) violate any Law or any Order by which such Member is bound;
(iii) result in the creation of any Lien upon the properties or assets of
such Member; or (iv) if such Member is other than an individual, conflict
with,
or result in the breach of, any provision of the certificate of
incorporation or bylaws or comparable organizational documents
(collectively, “Organizational
Documents”)
of
such Member. No governmental franchise, easement, permit, right, application,
filing, registration, license or other authorization (each a “Permit”),
Order, waiver, declaration or filing with, or notification to any Person,
including without limitation any Governmental Body, is required on the
part of
such Member in connection with the execution, delivery and performance
of this
Agreement or the other Transaction Documents to which it is a party, or
the
compliance by such Member with any of the provisions hereof or
thereof.
Section
2.3. Broker’s
Fees.
Such
Member 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 for which any Company or Subsidiary or the Purchaser could become
liable or obligated. Such Member shall be solely responsible for any obligations
described in this Section 2.3 and will indemnify and hold the Purchaser
Indemnitees (as defined below) harmless from and against any Losses (as
defined
below) resulting from or arising out of or any such obligations or matters.
Section
2.4. Membership
Interests.
Such
Member holds of record and owns beneficially the number of Membership Interests
set forth next to such Member’s name on Schedule I free and clear of any Lien.
Such Member is not a party to any option, warrant, purchase right, or other
contract or commitment that could require such Member to sell, transfer,
or
otherwise dispose of any membership interest of any Company (other than
this
Agreement). Such Member is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any membership
interest
of any Company.
Section
2.5 Private
Placement.
Such
Member is an “accredited investor” within the meaning of Rule 501 under the
Securities Act and has sufficient knowledge and experience in investing
in
companies similar to Parent in terms of Parent's market capitalization
and other
relevant factors so as to be able to evaluate the risks and merits of his
investment in Parent and he is able financially to bear the risks thereof.
Such
Member has had an opportunity to discuss the terms of the offering and
sale of
the Parent Shares and Parent's business, management and financial affairs
with
Parent's management and to obtain any additional information regarding
the
foregoing which Parent possesses or can acquire without unreasonable effort
or
expense. The Parent Shares to be issued to such Member are being acquired
for
such Member’s own accounts and not with a view to, or the intention of, any
distribution in violation of the Securities Act or any applicable state
securities laws. Such Member understands that (i)
the
Parent Shares have not been registered under the Securities Act by reason
of the
issuance of the Shares in a transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof or
Rule 505
or 506 promulgated under the Securities Act, (ii)
the
Parent Shares must be held indefinitely unless a subsequent disposition
thereof
is registered under the Securities Act or is exempt from such registration,
(iii)
the
Parent Shares will bear a legend to such effect and (iv)
Parent
will issue stop transfer instructions to its transfer agent to such
effect.
·
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES REGARDING THE COMPANIES AND SUBSIDIARIES
The
Company Parties and the Members represent and warrant to Purchaser jointly
and
severally that, except as set forth in the Disclosure Schedule attached
hereto
(the “Disclosure
Schedule”),
the
following statements are correct and complete as of the date hereof and
as of
the Closing Date. The Disclosure Schedule makes explicit reference to the
particular representation or warranty as to which exception is taken, which
in
each case shall constitute the sole representation and warranty as to which
such
exception shall apply, provided that the disclosures in the Disclosure
Schedule
that are set forth expressly therein with particularity will apply to all
representations and warranties. The disclosure of the existence of a contract
on
the Disclosure Schedule shall not, without more, constitute the disclosure
of
any particular provisions of such contract or the actual or potential
consequences thereof.
Section
3.1. Organization
and Good Standing.
Each
Company is duly organized, validly existing and in good standing under
the laws
of its jurisdiction of organization and has all requisite power and authority
to
own, lease and operate its properties and to carry on its business, and
each
Subsidiary is duly organized, validly existing and in good standing under
the
laws of its jurisdiction of organization and has all requisite power and
authority to own, lease and operate its properties and to carry on its
business.
Each Company and Subsidiary is duly qualified or authorized to do business
as a
foreign entity and is in good standing under the laws of each jurisdiction
in
which it owns or leases real property and each other jurisdiction in which
the
conduct of its business or the ownership of its properties requires such
qualification or authorization, except where the failure to be so qualified
or
authorized would not have a Company Material Adverse Effect. Section 3.1
of the
Disclosure Schedule sets forth a true, correct and complete list of each
jurisdiction in which each Company and Subsidiary is qualified or authorized
to
do business as a foreign entity.
Section
3.2. Authorization
and Enforceability.
Each
Company has all requisite power and authority to execute and deliver this
Agreement and each other Transaction Document to which it is a party, and
to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by each Company of each of the Transaction Documents
to
which it is a party have been duly authorized by all necessary corporate
action
on the part of such Company. This Agreement and the other Transaction Documents
have been duly and validly executed and delivered by each Company and constitute
legal, valid and binding obligations of such Company, enforceable against
such
Company in accordance with their respective terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought
in a
proceeding at law or in equity).
Section
3.3. Capitalization;
Subsidiaries.
Each
Member has been validly admitted as a member of each Company and granted
the
percentage interest of membership interests of such Company as set forth
in the
operating agreement of such Company. All membership interests of each Company
are owned beneficially by the Members. No membership interests have been
issued
in violation of any preemptive rights. No Company has any outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, preemptive rights or other contracts or commitments
that could require such Company to issue, sell, or otherwise cause to become
outstanding any of its membership interests or securities convertible or
exchangeable for, or any options, warrants, or rights to purchase, any
of such
membership interests. There are no outstanding obligations of any Company
to
repurchase, redeem or otherwise acquire any of its membership interests.
There
are no outstanding or authorized ownership appreciation, phantom equity,
profit
participation or similar rights with respect to any Company. Section 3.3
of the
Disclosure Schedule sets forth any direct or indirect interest in any
corporation, partnership, joint venture or other Person owned by any
Company.
Section
3.4. Records.
(a)
The
Companies have delivered to Purchaser true, correct and complete copies
of the
articles of organization or other charter document (certified by the Secretary
of State or other appropriate official of the applicable jurisdiction of
organization) and operating agreement (certified by the secretary, assistant
secretary or other appropriate officer) of each Company and each
Subsidiary.
(b)
Except as described in Section 3.4(b) of the Disclosure Schedule, neither
any
Company or Subsidiary nor the equityholders of any Company or Subsidiary
have
taken any material action of a governance nature.
(c)
Each
Company and Subsidiary maintains a standard system of accounting established
and
administered in accordance with GAAP. The books, records and accounts of
each
Company and Subsidiary accurately and fairly reflect, in reasonable detail,
the
transactions and the assets and liabilities of such entity with respect
to its
business. Neither any Company nor any Subsidiary has engaged in any material
transaction with respect to its business, maintained any bank account for
its
business or used any of its funds, except for transactions, bank accounts
and
funds which have been and are reflected in its normally maintained books,
records and accounts. Each Company and Subsidiary maintains a system of
internal
accounting control sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management’s general or specific
authorization, (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP (or in the case of foreign
entities, in accordance with International Accounting Standards), (iii)
access
to assets, properties, books, records and accounts is permitted only in
accordance with management’s general or specific authorization, and (iv) the
recorded accounting for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
Section
3.5. Conflicts;
Consents of Third Parties.
The
execution and delivery by each Company of this Agreement and the other
Transaction Documents to which it is a party, the consummation of the
transactions contemplated hereby or thereby, and compliance by each Company
with
the provisions hereof or thereof will not (i) conflict with, or result
in the
breach of, any provision of the Organizational Documents of such Company
or any
of its Subsidiaries; (ii) conflict with, violate, result in the breach or
termination of, or constitute a default under any Contract to which such
Company
or any of its Subsidiaries is a party or by which such Company or any of
its
Subsidiaries or its properties or assets is bound, or require a Consent
from any
Person in order to avoid any such conflict, violation, breach, termination
or
default; (iii) violate any Law or any Order by which such Company or any
of its
Subsidiaries is bound; or (iv) result in the creation of any Lien upon
the properties or assets of such Company or any of its Subsidiaries. No
Permit, Order, waiver, declaration or filing with, or notification to any
Person, including without limitation any Governmental Body, is required
on the
part of such Company or any of its Subsidiaries in connection with the
execution, delivery and performance of this Agreement or the other Transaction
Documents to which it is a party, or the compliance by such Company or
any of
its Subsidiaries with any of the provisions hereof or thereof.
Section
3.6. Financial
Statements.
Included in Section 3.6 of the Disclosure Schedule are (i) the reviewed
balance sheets of the Companies and the Subsidiaries as at December 31,
2004,
2005 and 2006 and the related reviewed statements of income and of cash
flows of
the Companies and the Subsidiaries for the years then ended and (ii) the
unaudited and unreviewed balance sheet of the Companies and the Subsidiaries
as
at April 30, 2007 and the related statements of income of the Companies
and the
Subsidiaries for the four-month period then ended and for the comparable
periods
in the prior year (such reviewed and unaudited and unreviewed statements,
including the related notes and schedules thereto, are referred to herein
as the
“Financial
Statements”).
The
Financial Statements have been prepared from the books and records of the
Companies and the Subsidiaries and fairly present in all material respects
the
financial position and results of operations, shareholders’ equity and cash
flows of the Companies and the Subsidiaries as at the dates and for the
periods
reflected thereon in accordance with GAAP applied on a consistent basis
(or in
the case of foreign entities, in accordance with International Accounting
Standards) throughout the periods indicated, except as may be indicated
in the
notes thereto and except, in the case of the unaudited and unreviewed financial
statements, for the failure of the unaudited and unreviewed financial statements
to include the footnotes required by GAAP, and subject to normal year-end
adjustments that will not individually or in the aggregate be material.
The
financial forecasts for the Seller for the fiscal years 2007 included
in Section 3.6 of the Disclosure Schedule (the “Projections”)
were
prepared based upon reasonable assumptions and reflect management’s good faith
best estimate of the projected operating performance of the Companies and
the
Subsidiaries for such periods. The Projections are the most current financial
forecasts prepared by the Companies and the Subsidiaries. All assumptions,
projections and forecasts used in the preparation of the Projections are
set
forth therein and described in reasonable detail. No event has occurred
and no
facts or circumstances have arisen which make the assumptions, projections
or
forecasts, taken as a whole, upon which the Projections are based unreasonable
or unrealistic. Purchaser acknowledges and agrees that (i) the Companies
and the
Subsidiaries and the Members make no guarantee or representation that the
results estimated in the Projections will be realized, (ii) the factors
upon
which the assumptions and estimate were based may change from the date
hereof
and (iii) the results estimated in the Projections may differ materially
from
actual results.
Section
3.7. No
Undisclosed Liabilities.
No
Company or Subsidiary has any Liabilities except (a) to the extent
specifically reflected and accrued for or specifically reserved against
in the
Balance Sheet and (b) for Liabilities incurred subsequent to the Balance
Sheet
Date in the ordinary course of business consistent with past custom and
practice.
Section
3.8. Absence
of Certain Developments.
Since
December 31, 2006 (and, with respect to clause (e) below, December 31,
2005):
(a) there
has
not been any Company Material Adverse Change nor has there occurred any
event
which is reasonably likely to result in a Company Material Adverse
Change;
(b) there
has
not been any damage, destruction or loss, whether or not covered by insurance,
with respect to the property and assets of any Company or Subsidiary having
a
replacement cost of more than $5,000 for any single loss or $10,000 in
the
aggregate for any related losses;
(c) no
Company or Subsidiary has made any change in the rate of compensation,
commission, bonus or other direct or indirect remuneration payable, or
paid or
agreed or orally promised to pay, conditionally or otherwise, any bonus,
incentive, retention or other compensation, retirement, welfare, fringe
or
severance benefit or vacation pay, to or in respect of any director, officer,
employee, distributor or agent of any Company or Subsidiary, other than
increases in the ordinary course of business consistent with past practice
in
the base salaries of employees of the Companies and the Subsidiaries other
than
officers or senior managers;
(d) no
Company or Subsidiary has entered into any employment, deferred compensation,
severance or similar agreement (nor amended any such agreement);
(e) there
has
not been any change by any Company or Subsidiary in accounting or Tax reporting
principles, methods or policies or any settlement of any Tax
controversy;
(f) no
Company or Subsidiary has conducted its business other than in the ordinary
course consistent with past practice;
(g) no
Company or Subsidiary has entered into any other material
transaction;
(h) no
Company or Subsidiary has hired employees or engaged independent contractors
to
provide services for clients of the such Company or Subsidiary other than
in the
ordinary course of business consistent with, and at a level consistent
with,
past practice;
(i) no
Company or Subsidiary has materially breached any Contract or materially
amended
any Contract;
(j) no
Company or Subsidiary has failed to promptly pay and discharge current
Liabilities except where disputed in good faith in an appropriate
manner;
(k) no
Company or Subsidiary has made any loans, advances or capital contributions
to,
or investments in, any Person or paid any fees or expenses to any Affiliate
of
such Company or Subsidiary other than intercompany transactions in the
ordinary
course of business consistent with past practice;
(l) no
Company or Subsidiary has mortgaged, pledged or subjected to any Lien any
of its
assets, or acquired any assets or sold, assigned, transferred, conveyed,
leased
or otherwise disposed of any assets of such Company or Subsidiary except
for
assets acquired or sold, assigned, transferred, conveyed, leased or otherwise
disposed of in the ordinary course of business consistent with past
practice;
(m) no
Company or Subsidiary has discharged or satisfied any Lien, or paid any
obligation or Liability, except in the ordinary course of business consistent
with past practice and which, in the aggregate, are not material to the
Companies and the Subsidiaries;
(n) no
Company or Subsidiary has canceled or compromised any debt or claim or
amended,
canceled, terminated, relinquished, waived or released any Contract or
right
except in the ordinary course of business consistent with past practice
and
which, in the aggregate, are not material to the Companies and the
Subsidiaries;
(o) no
Company or Subsidiary has made or committed to make any capital expenditures
or
capital additions or improvements in excess of $10,000 individually or
in the
aggregate, except as set forth in the Disclosure Schedule, or otherwise
in the
ordinary course of business consistent with past practices;
(p) no
Company or Subsidiary has entered into any prepaid services transactions
with
any of its customers or otherwise accelerated revenue recognition or the
sales
of its services for periods prior to the Closing;
(q) no
Company or Subsidiary has amended any of its Organizational
Documents;
(r) no
Company or Subsidiary has issued any equity securities or any security
exercisable or exchangeable for or convertible into equity securities of
the
such Company or Subsidiary; and
(s) no
Company or Subsidiary has entered into any agreements to do or perform
in the
future any actions referred to in this Section 3.8 which have not been
consummated as of the date hereof.
Section
3.9. Taxes.
(a) Each
Company and Subsidiary has timely filed with the appropriate taxing authorities
all Tax Returns that it has been required to file. All such Tax Returns
are
true, correct and complete in all respects. All Taxes owed by the Companies
and
the Subsidiaries (whether or not shown on any Tax Return) have been paid.
Adequate reserves have been established on the Financial Statements to
provide
for the payment of any Taxes which are not yet due and payable with respect
to
the Companies and the Subsidiaries for taxable periods or portions thereof
ending on or before December 31, 2006. No Company or Subsidiary is the
beneficiary of any extension of time within which to file any Tax Return.
No
claim has ever been made by an authority in a jurisdiction where any Company
or
Subsidiary does not file Tax Returns that it is or may be subject to taxation
by
that jurisdiction. There are no Liens on any of the assets of any Company
or
Subsidiary that have arisen in connection with any failure (or alleged
failure)
to pay any Tax.
(b) Each
Company and each Subsidiary has withheld and paid to the appropriate taxing
authority or other Governmental Body all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(c) No
Company or Subsidiary has waived or extended any statute of limitations
in
respect of Taxes or agreed to any extension of time with respect to the
assessment, payment or collection of any Tax.
(d) To
the
extent that any Company or Subsidiary incurs Taxes after the date hereof
with
respect to periods or portions thereof ending on or prior to the Closing
Date,
such Company or Subsidiary shall pay all such Taxes on or prior to the
Closing
Date in compliance with all applicable laws and regulations, or if such
Taxes
are not yet due and payable on such date, the amount of such Taxes shall
be
accrued on the Closing Date Balance Sheet.
(e) None
of
the properties or assets of any Company or Subsidiary is property which,
for Tax
purposes, is required to be treated as owned by another Person. No Company
or
Subsidiary is an obligor on, and none of its assets have been financed
directly
or indirectly by, any tax-exempt bonds. No property or assets of any Company
or
Subsidiary is “tax-exempt use property” within the meaning of Section 168(h) of
the Code.
(f) No
deficiency or proposed adjustment which has not been settled or otherwise
resolved for any amount of Taxes has been asserted or assessed by any taxing
authority or other Governmental Body against any Company or Subsidiary.
There
has not been, within the past five calendar years, an audit, examination
or
written notice of potential examination of any Tax Returns filed by any
Company
or Subsidiary.
(g) There
is
no action, suit, examination, investigation, Governmental Body proceeding,
or
audit or claim for refund in progress, pending, proposed or threatened
against
or with respect to any Company or Subsidiary regarding Taxes.
(h) Neither
the Companies nor any of their Subsidiaries has agreed to or been required
to
make any adjustment pursuant to Section 481(a) of the Code or any corresponding
provision of state, local or foreign law by reason of any change in accounting
method initiated by it or on its behalf; no taxing authority has proposed
any
such adjustment or change in accounting method; and no Company or Subsidiary
has
an application pending with any taxing authority requesting permission
for any
change in accounting method. No Company or Subsidiary will be required
(A) as a
result of a change in method of accounting for a taxable period ending
on or
prior to the Closing Date, to include any adjustment under Section 481(c)
of the
Code in taxable income for any taxable period (or portion thereof) beginning
after the Closing or (B) as a result of any “closing agreement,” as described in
Section 7121 of the Code, to include any item of income or exclude any
item of
deduction from any taxable period (or portion thereof) beginning after
the
Closing.
(i) No
Company or Subsidiary has been a member of an affiliated group (as defined
in
Section 1504 of the Code), filed or been included in a combined, consolidated
or
unitary income Tax Return, and is not a partner, member, owner or beneficiary
of
any entity treated as a partnership or a trust for Tax purposes. No Company
or
Subsidiary has liability for Taxes of any person under Treasury Regulations
Section 1.1502-6 or similar state or local laws, as a successor or transferee,
by contract or otherwise.
(j) No
Company or Subsidiary is a party to or bound by any Tax allocation or Tax
sharing agreement and has no contractual obligation to indemnify any other
Person with respect to Taxes.
(k) No
Company or Subsidiary is nor has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during
the
applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
(l) True,
correct and complete copies of all income and sales Tax Returns filed by
or with
respect to each Company and Subsidiary for taxable periods ending on or
after
December 31, 2004 have been furnished or made available to
Purchaser.
(m) No
Company or Subsidiary has participated in any reportable transaction as
contemplated in Treasury Regulations Section 1.6011-4.
(n) No
Company or Subsidiary has taken any action that is not in accordance with
past
practice that could defer a liability for Taxes of such Company or Subsidiary
from any taxable period ending on or before the Closing Date to any taxable
period ending after such date.
(o) No
Company or Subsidiary is required to include any item of income for any
taxable
period ending after the Closing as a result of an installment sale, open
transaction or prepaid amount received on or prior to Closing Date.
(p) No
Company or Subsidiary has distributed any equity or had any equity distributed
in transaction that could be governed in whole or part by Section 355 or
361 of
the Code.
(q) No
Company or Subsidiary is subject to Tax, or has a permanent establishment,
in
any foreign jurisdiction.
(r) No
Company or Subsidiary has any pending ruling requests filed by it or on
its
behalf with any taxing authority or Governmental Body.
(s) No
Company or Subsidiary has ever been a personal holding company within the
meaning of Section 542 of the Code.
Section
3.10. Real
Property.
(a) No
Company or Subsidiary owns in fee any real property or interest in real
property. Section 3.10 of the Disclosure Schedule sets forth a complete
list of
all real property and interests in real property leased by any Company
or
Subsidiary (individually, a “Real
Property Lease”
and
the
real properties specified in such leases being referred to herein individually
as a “Company
Property”
and
collectively as the “Company
Properties”)
as
lessee. The Company Properties constitutes all interests in real property
currently used or currently held for use in connection with the Business
or
which are necessary for the continued operation of the Business as the
Business
is currently conducted and proposed to be conducted. A Company or Subsidiary
has
a valid and enforceable leasehold interest under each of the Real Property
Leases, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights and remedies generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). No Company
or
Subsidiary has received any written notice of any default or event that
with
notice or lapse of time, or both, would constitute a default under any
of the
Real Property Leases and each Company and Subsidiary and, to the Company's
Knowledge, each other party thereto is in compliance with all obligations
of
such party thereunder. All of the Company Property, buildings, fixtures
and
improvements thereon owned or leased by the Companies and Subsidiaries
are in
good operating condition and repair (subject to normal wear and tear).
The
Companies have delivered or otherwise made available to Purchaser true,
correct
and complete copies of the Real Property Leases, together with all amendments,
modifications or supplements, if any, thereto.
(b) Each
Company and Subsidiary has all certificates of occupancy and Permits of
any
Governmental Body necessary or useful for the current use and operation
of each
Company Property used by it, and such Company or Subsidiary has fully complied
with all conditions of the Permits applicable to it. No default or violation,
or
event that with the lapse of time or giving of notice or both would become
a
default or violation, has occurred in the due observance of any
Permit.
Section
3.11. Tangible
Personal Property; Title; Sufficiency of Assets.
(a) Section
3.11 of the Disclosure Schedule lists all leases of personal property
(“Personal
Property Leases”)
involving annual payments in excess of $5,000 relating to personal property
used
by any Company or Subsidiary or to which any Company or Subsidiary is a
party or
by which the properties of any Company or Subsidiary are bound. The Companies
has delivered or otherwise made available to the Purchaser true, correct
and
complete copies of the Personal Property Leases, together with all amendments,
modifications or supplements thereto.
(b) Each
Company and Subsidiary has a valid leasehold interest under each of the
Personal
Property Leases under which it is a lessee, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity), and there is no default under any Personal
Property Lease by such Company or Subsidiary, or, to the Knowledge of the
Companies, by any other party thereto, and no event has occurred that with
the
lapse of time or the giving of notice or both would constitute a default
thereunder, and such Companies or Subsidiary and to the Knowledge of the
Companies, each other party thereto is in compliance in all material respects
with all obligations of such Company or Subsidiary or such other party,
as the
case may be, thereunder.
(c) Each
Companies and Subsidiary has good and marketable title to all the Assets
used in
the Business as of the date hereof (which include, without limitation,
all of
the assets reflected in the Balance Sheet), free and clear of any and all
Liens
other than the Permitted Encumbrances. All tangible personal property included
in such assets, and all of the items of tangible personal property used
by any
Company or Subsidiary under the Personal Property Leases, are in working
order
and in a state of good maintenance and repair (ordinary wear and tear excepted)
and are in all material respects suitable for the purposes used. The assets
of
the Companies and the Subsidiaries include all assets, rights and interests
reasonably required for the continued conduct of the Business by the Companies
and the Subsidiaries as now being conducted and proposed to be
conducted.
Section
3.12. Intellectual
Property.
(a) Each
Company or Subsidiary owns, free and clear from all Liens (other than Permitted
Encumbrances) or otherwise possesses legally enforceable rights to use
all of
the Intellectual Property reasonably necessary to the conduct of business
of
such Company or Subsidiary as currently conducted or proposed to be conducted.
The Intellectual Property owned by each Company or Subsidiary (“Owned
Intellectual Property”)
and
the Intellectual Property licensed to the Companies or their Subsidiaries
comprise all of the Intellectual Property that is used in or is reasonably
necessary to conduct the business of the Companies and the Subsidiaries
as
currently conducted or proposed to be conducted.
(b) Section
3.12(b)(i) of the Disclosure Schedule sets forth a true, complete and correct
list of all Owned Intellectual Property for which a registration or application
has been filed with a Governmental Body, including patents, trademarks,
service
marks and copyrights, issued by or registered with, or for which any application
for issuance or registration thereof has been filed with, any Governmental
Body.
Section 3.12(b)(ii) of the Disclosure Schedule sets forth a complete and
correct
list of all trademarks, service marks and other trade designations that
are
Owned Intellectual Property and not otherwise identified in Section 3.12(b)(i)
of the Disclosure Schedule. Section 3.12(b)(iii) of the Disclosure Schedule
also
sets forth a complete and correct list of all written or oral licenses
and
arrangements (other than ordinary course licenses of commercially available
software), (A) pursuant to which the use by any Person of Intellectual
Property is permitted by any Company or Subsidiary or (B) pursuant to which
the use by any Company or Subsidiary of Intellectual Property is permitted
by
any Person (collectively, the “Intellectual
Property Licenses”).
The
Intellectual Property Licenses are in full force and effect.
(c) The
continued operation of the Business as presently conducted or reasonably
expected to be conducted does not interfere with, infringe upon, misappropriate,
or otherwise come into conflict with, any Intellectual Property rights
of third
parties.
(d) There
is
no claim or demand of any Person pertaining to, or any proceeding which
is
pending or, to the Knowledge of the Companies, threatened, that challenges
the
rights of any Company or Subsidiary in respect of any Owned Intellectual
Property, or claims that any default exists under any Intellectual Property
License.
(e) All
of
the copyrights in any of the products of any Company or Subsidiary (including
but not limited to any works of authorship incorporated in or distributed
with
such products) are owned by or licensed to such Company or Subsidiary and,
if
licensed, are subject to Intellectual Property Licenses that are in full
force
and effect.
(f) All
Employees of any Company or Subsidiary and all other Persons involved in
the
development of Owned Intellectual Property, including computer programs
and
software (including source code, object code and databases), have entered
into
confidentiality and assignment of inventions agreements substantially in
the
form included in Section 3.12 of the Disclosure Schedule.
(g) No
Company or Subsidiary has created any Intellectual Property under contract
with
U.S. government customers.
Section
3.13. Contracts.
(a)
Section 3.13 of the Disclosure Schedule sets forth all of the Contracts
to which
any Company or Subsidiary is a party or by which it is bound and categorizes
such Contracts by the types described below: (i) Contracts relating to
the
employment of any Person, or any bonus, deferred compensation, pension,
profit
sharing, stock option, employee stock purchase, retirement, retention,
severance, change of control or other employee benefit plan or arrangement;
(ii)
Contracts other than those described in clause (i) with any current or
former
officer, director or employee of any Company or Subsidiary, or any Affiliate
of
any Company or Subsidiary or any such Person; (iii) Contracts with any
employee
or labor union or association representing any employee; (iv) Contracts
relating to capital expenditures other than Contracts not exceeding $2,500
individually or $5,000 in the aggregate; (v) Contracts entered into within
the
last five years relating to the acquisition or disposition of any equity
interests in or, except in the ordinary course of business, assets of any
Person; (vi) joint venture or partnership agreements; (vii) Contracts limiting
the ability of any Company or Subsidiary to engage in any line of business
or to
compete with any Person or to conduct business in any geographical area
or to
solicit any Person for employment; (viii) Contracts relating to the
confidentiality or limitation on use of any information; (ix) Contracts
relating
to any indebtedness of any Company or Subsidiary (other than accounts payable
to
trade creditors in the ordinary and usual course of business consistent
with
past custom and practice), including credit facilities, promissory notes,
security agreements, and other credit support arrangements; (x) Contracts
relating to any loan (other than accounts receivable from trade debtors
in the
ordinary and usual course of business consistent with past custom and practice)
or advance to (other than ordinary course travel allowances to the employees
of
any Company or Subsidiary), or investments in, any Person; (xi) Contracts
relating to any guarantee or other contingent Liability in respect of any
indebtedness or obligation of any Person (other than the endorsement of
negotiable instruments for collection in the ordinary and usual course
of
business consistent with past custom and practice); (xii) all customer
Contracts; (xiii) any license agreement relating in whole or in part to
Intellectual Property (other than standard “off-the-shelf” or “shrink-wrap”
license agreements); (xiv) any Contract which involves aggregate payments
of
$2,500 or more or which is not cancelable without penalty within 120 days,
(xv)
any Contracts not described above outside the ordinary and usual course
of
business consistent with past custom and practice; and (xvi) all other
Contracts. There are no outstanding powers of attorney executed on behalf
of any
Company or Subsidiary.
(b) Correct
and complete copies of the items required to be set forth in Section 3.13
of the
Disclosure Schedule have previously been furnished to Parent. All of the
Companies’ and any of their Subsidiaries’ Contracts (including all Real Property
Leases) shall, following the Closing, remain enforceable by the applicable
Companies and Subsidiaries and binding on the other parties thereto, without
the
Consent of any third party. No Company or Subsidiary is in default, nor
has any
event occurred which, with the giving of notice or the passage of time
or both,
would constitute a default, under any Contract or any other obligation
owed by
any Company or Subsidiary, and no event has occurred which, with the giving
of
notice or the passage of time or both, would constitute a default by any
other
party to any such Contract. Each of the Contracts disclosed in Section
3.13 of
the Disclosure Schedule is in full force and effect, is valid and enforceable
in
accordance with its terms and is not subject to any claims, charges, setoffs
or
defenses.
Section
3.14. Employee
Benefits.
(a) Section
3.14 of the Disclosure Schedule sets forth a complete and correct list
of (i)
all “employee benefit plans,” as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”),
and
any other pension plans or employee benefit agreements, arrangements, programs
or payroll practices (including without limitation severance pay, other
termination benefits or compensation, vacation pay, company awards, salary
continuation for disability, sick leave, retirement, deferred compensation,
bonus or other incentive compensation, stock purchase arrangements or policies,
hospitalization, medical insurance, life insurance and scholarship programs)
that is currently in effect or was maintained, sponsored or contributed
to by
any Company or Subsidiary within the last six years, or to which any Company
or
Subsidiary contributes or is obligated to contribute thereunder with respect
to
employees of any Company or Subsidiary, or that has been approved before
the
date hereof but is not yet effective (“Employee
Benefit Plans”)
and
(ii) all “employee pension plans,” as defined in Section 3(2) of ERISA,
maintained by any Company or Subsidiary or any trade or business (whether
or not
incorporated) which are under control, or which are treated as a single
employer, of any Company or Subsidiary under Section 414(b), (c), (m) or
(o) of
the (“ERISA
Affiliate”)
or to
which any Company or Subsidiary or any ERISA Affiliate contributed or is
obligated to contribute thereunder (“Pension
Plans”)
within
the last six years. Section 3.14 of the Disclosure Schedule identifies,
in
separate categories, Employee Benefit Plans or Pension Plans that are
(i) subject to Section 4063 and 4064 of ERISA (“Multiple
Employer Plans”),
(ii)
multiemployer plans (as defined in Section 4001(a)(3) of ERISA) (“Multiemployer
Plans”)
or
(iii) “benefit plans”, within the meaning of Section 5000(b)(1) of the Code
providing continuing benefits after the termination of employment (other
than as
required by Section 4980B of the Code or Part 6 of Title I of ERISA and
at the
former employee’s or his beneficiary’s sole expense).
(b) Neither
any Company or Subsidiary nor any ERISA Affiliate maintains, sponsors,
or
contributes, or has, within the past six years, maintained, sponsored or
had any
obligation to contribute to, for the benefit of current or former employees
a
defined benefit plan subject to Title IV of ERISA, (ii) any Multiemployer
Plan
or (iii) any Multiple Employer Plan.
(c) Each
of
the Employee Benefit Plans and Pension Plans intended to qualify under
Section
401 of the Code (“Qualified
Plans”)
so
qualifies and has received a determination letter from the IRS to such
effect
and the trusts maintained thereto are exempt from federal income taxation
under
Section 501 of the Code and nothing has occurred or is expected to occur
with
respect to the operation of any such plan which caused or would cause the
loss
of such qualification or exemption or the imposition of any liability,
penalty
or tax under ERISA or the Code.
(d) All
contributions and premiums required by Law or by the terms of any Employee
Benefit Plan or Pension Plan or any agreement relating thereto have been
timely
made (without regard to any waivers granted with respect thereto) to any
funds
or trusts established thereunder or in connection therewith, and no accumulated
funding deficiencies exist in any of such plans.
(e) There
has
been no violation of or failure to comply with ERISA or the Code with respect
to
the filing of applicable returns, reports, documents and notices regarding
any
of the Employee Benefit Plans or Pension Plans with the DOL, the IRS, the
PBGC
or any other Governmental Body or the furnishing of such notices or documents
to
the participants or beneficiaries of the Employee Benefit Plans or Pension
Plans.
(f) True,
correct and complete copies of the following documents, with respect to
each of the Employee Benefit Plans and Pension Plans, have been delivered
to
Purchaser: (A) any plans and related trust documents (all amendments thereto),
investment management agreements, administrative service contracts, group
annuity contracts, insurance contracts, collective bargaining agreements
and
employee handbooks, (B) the most recent Forms 5500 for the past three years
and
schedules thereto, (C) the most recent financial statements and actuarial
valuations for the past three years, (D) the most recent IRS determination
letter, (E) the most recent summary plan descriptions (including letters
or
other documents updating such descriptions) and (F) written descriptions
of all
non-written agreements relating to the Employee Benefit Plans and Pension
Plans.
(g) There
are
no pending Legal Proceedings which have been asserted or instituted or,
to the
Knowledge of the Companies, threatened against any of the Employee Benefit
Plans
or Pension Plans, the assets of any such plans or of any related trust
or any
Company or Subsidiary, the plan administrator or any fiduciary of the Employee
Benefit Plans or Pension Plans with respect to the operation of such plans
(other than routine, uncontested benefit claims), and there are no facts
or
circumstances which could form the basis for any such Legal Proceeding.
No
Employee Benefit Plan or Pension Plan is under audit or investigation by
the
IRS, DOL, or any other Government Body and no such completed audit, if
any, has
resulted in the imposition of Tax, interest, or penalty.
(h) Each
of
the Employee Benefit Plans and Pension Plans complies with and has been
maintained in accordance with its terms and all provisions of applicable
Law,
including ERISA and the Code, and all reporting and disclosure requirements
have
been satisfied on a timely basis.
(i) The
Companies, each Subsidiary and any ERISA Affiliate which maintains a “group
health plan” within the meaning of Section 5000(b)(1) of the Code and each plan
sponsor or administrator has complied with the COBRA reporting, disclosure,
notice, election, and other benefit continuation and coverage requirements
of
Section 4980B of the Code or Part 6 of Title I of ERISA and the applicable
regulations thereunder and any comparable state laws, and has not incurred
any
direct or indirect liability, and is not subject to any loss, assessment
or
excise tax, penalty, loss of federal income tax deduction or other sanction
arising on account of or in respect of any direct or indirect failure at
any
time to comply with any such federal or state benefit continuation coverage
requirements.
(j) Neither
any Company or Subsidiary nor a “party in interest” or “disqualified person”
with respect to the Employee Benefit Plans or Pension Plans has engaged
in a
“prohibited transaction” within the meaning of Section 4975 of the Code or
Section 406 of ERISA which has subjected or could subject any Company or
Subsidiary, any ERISA Affiliates, Purchaser, Parent or any trustee,
administrator or other fiduciary to a tax penalty on prohibited transaction
or
any other liabilities with respect thereto.
(k) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming
due to
any employee; (ii) increase any benefits otherwise payable under any Employee
Benefit Plan or Pension Plan; or (iii) result in the acceleration of the
time of
payment or vesting of any such benefits.
(l) No
security issued by any Company or Subsidiary forms or has formed any part
of the
assets of any Employee Benefit Plan or Pension Plan.
(m) The
consummation of the transactions contemplated by this Agreement will not
give
rise to any liability for termination of any agreements related to any
Employee
Benefit Plan or Pension Plan.
(n) No
amounts payable under any Employee Benefit Plan and Pension Plan or any
other
agreement will fail to be deductible for federal income tax purposes by
virtue
of Section 280G of the Code.
(o) Each
Employee Benefit Plan or Pension Plan that purports to provide benefits
which
qualify for tax-favored treatment under Sections 79, 105, 106, 117, 120,
125,
127, 129, and 132 of the Code satisfies the requirements of said
Section(s).
(p) Each
Employee Benefit Plan or any other agreement that purports to defer income
complies with Section 409A of the Code.
(q) Each
Employee Benefit Plan, or Pension Plan, its related trust and insurance
agreement may be unilaterally amended or terminated on no more than 90
days
notice.
Section
3.15. Labor.
(a) No
Company or Subsidiary is a party to any labor or collective bargaining
agreement
and there are no labor or collective bargaining agreements which pertain
to
employees of any Company or Subsidiary.
(b) No
employees of any Company or Subsidiary are represented by any labor
organization. No labor organization or group of employees of any Company
or
Subsidiary has made a pending demand for recognition, and there are no
representation proceedings or petitions seeking a representation proceeding
presently pending or, to the Knowledge of the Companies, threatened to
be
brought or filed, with the National Labor Relations Board or other labor
relations tribunal. There is no organizing activity involving any Company
or
Subsidiary pending or, to the Knowledge of the Companies, threatened by
any
labor organization or group of employees of any Company or
Subsidiary.
(c) There
are
no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations or
(ii)
grievances or other labor disputes pending or, to the Knowledge of the
Companies, threatened against or involving any Company or Subsidiary. There
are
no unfair labor practice charges, grievances or complaints pending or,
to the
Knowledge of the Companies, threatened by or on behalf of any employee
or group
of employees of any Company or Subsidiary.
(d) There
are
no complaints, charges or claims against any Company or Subsidiary pending
or,
to the Knowledge of the Companies, threatened which could be brought or
filed,
with any public or Governmental Body based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment
by
any Company or Subsidiary, of any individual.
(e) Each
Company and Subsidiary is in compliance with all Laws and Orders relating
to the
employment of labor, including all such Laws and orders relating to wages,
hours, the Worker Adjustment and Retraining Notification Act and any similar
state, local or foreign “plant closing” Law (“WARN”),
collective bargaining, discrimination, civil rights, safety and health,
worker’s
compensation, payment of overtime wages and the collection and payment
of
withholding and/or social security taxes and any similar tax.
(f) To
the
Knowledge of the Companies, no executive, key employee, or group of employees
currently has any plans to terminate employment with any Company or Subsidiary
independently of or as a result of this Agreement.
Section
3.16. Litigation.
Except
as set forth in Section 3.16 of the Disclosure Schedule, there is no suit,
action, proceeding, investigation, complaint or claim pending or, to the
Knowledge of the Companies, threatened against any Company or Subsidiary
(or to
the Knowledge of the Companies, pending or threatened against any of the
officers, directors or key employees of any Company or Subsidiary in relation
to
any Company or Subsidiary or its business) before any court or other
Governmental Body or any arbitral tribunal, nor to the Knowledge of the
Companies, is there any reasonable basis for any such suit, action, proceeding,
investigation, complaint or claim. No Company or Subsidiary has received
any
written opinion or memorandum or legal advice from legal counsel retained
by any
Company or Subsidiary to the effect that it is exposed, from a legal standpoint,
to any Liability. No Company or Subsidiary is engaged in any legal action
to
recover monies due it or for damages sustained by it. Section 3.16 of the
Disclosure Schedule sets forth a list of all closed litigation matters
to which
any Company or Subsidiary was a party during the five (5) years preceding
the
date hereof, the date such litigation was commenced or concluded, and the
nature
of the resolution thereof (including amounts paid in settlement or judgment).
No
Company or Subsidiary is subject to any Order of any Governmental
Body.
Section
3.17. Compliance
with Laws; Permits.
Each
Company and Subsidiary is, and has at all times been, in compliance with
all
Laws applicable to it or the operation, use, occupancy or ownership of
its
assets or properties or the conduct of its business, and no Company or
Subsidiary has received notice (written or oral) from any Governmental
Body of,
and has no Knowledge of, any failure to so comply. Each Company and Subsidiary
holds all Permits necessary under Law for the conduct of such Company's
or
Subsidiary's business as currently conducted or proposed to be conducted,
and
the operations of the Companies and the Subsidiaries are not being conducted
in
violation of any Permit held by any of them. There is no investigation
by a
Governmental Body pending against or, to the Knowledge of the Companies,
threatened against any Company or Subsidiary.
Section
3.18. Environmental
Matters.
(a)
The
operations of the Companies and the Subsidiaries are in compliance with
all
applicable Environmental Laws and all Permits issued pursuant to Environmental
Laws or otherwise (“Environmental
Permits”);
(b)
The
Companies and the Subsidiaries have obtained and currently maintain all
Environmental Permits required under all applicable Environmental Laws
necessary
to operate the Business;
(c)
No
Company or Subsidiary is the subject of any outstanding written Order or
Contract with any Governmental Entity or other Person respecting
(i) Environmental Laws, (ii) Remedial Action or (iii) any Release
or threatened Release of a Hazardous Material;
(d)
Neither any Company nor any Subsidiary has received any written communication
alleging either that it may be in violation of any Environmental Law or
Environmental Permit or that it may have any liability under any Environmental
Law;
(e)
Neither any Company nor any Subsidiary has incurred, assumed or undertaken
any
current contingent liability in connection with any Release of any Hazardous
Materials into the indoor or outdoor environment (whether on-site or off-site)
and there are no facts, circumstances or conditions relating to, arising
out of
or attributable to it that could give rise to liability under Environmental
Laws;
(f)
There
is not located at any of the properties of any Company or Subsidiary any
(i)
underground storage tanks, (ii) asbestos-containing material or (iii) equipment
containing polychlorinated biphenyls; and
(g)
The
Companies have provided to Parent all environmentally related audits, studies,
reports, analyses, and results of investigations that have been performed
with
respect to the currently or previously owned, leased or operated properties
of
the Companies and the Subsidiaries.
Section
3.19. Insurance.
Section
3.19 of the Disclosure Schedule includes a correct and complete list and
description, including policy number, coverage and deductible, of all insurance
policies owned by any Company or Subsidiary, correct and complete copies
of
which policies have previously been delivered to Purchaser. Such policies
are in
full force and effect, all premiums due thereon have been paid and no Company
or
Subsidiary is in default thereunder. No Company or Subsidiary has received
any
notice of cancellation or intent to cancel or increase or intent to increase
premiums with respect to such insurance policies nor is there any basis
for any
such action. All such insurance policies contain coverage that is reasonably
adequate and prudent in light of the risks inherent in the Business. Section
3.19 of the Disclosure Schedule also contains a list of all pending claims
and
any claims in the past two (2) years with any insurance company by any
Company
or Subsidiary and any instances within the previous two (2) years of a
denial of
coverage of any Company or Subsidiary by any insurance company.
Section
3.20. Receivables;
Payables.
(a)
The
accounts receivable of the Companies and the Subsidiaries reflected in
the
Financial Statements and/or Final Closing Working Capital Statement have
arisen
in bona fide arm’s-length transactions in the ordinary and usual course of
business consistent with past custom and practice, and, subject to the
allowance
for doubtful accounts set forth in the Financial Statements or, if applicable,
Final Closing Working Capital Statement, all such receivables are valid
and
binding obligations of the account debtors without any counterclaims, setoffs
or
other defenses thereto and are collectible in the ordinary and usual course
of
business consistent with past custom and practice. All such reserves, allowances
and discounts were and are adequate and consistent in extent with the reserves,
allowances and discounts previously maintained by the Companies and the
Subsidiaries in the ordinary and usual course of business consistent with
past
custom and practice and determined in accordance with GAAP. All work-in-process
or accrued billing reflected in the Financial Statements and/or Final Closing
Working Capital Statement has been performed pursuant to a written customer
order or contract therefor and shall become accounts receivable in due
course,
which shall be collectible for the full amount in the ordinary and usual
course
of business consistent with past custom and practice within sixty (60)
days
after billing at the full recorded amount thereof.
(b)
All
accounts payable of the Companies and the Subsidiaries reflected on the
Financial Statements and/or Final Closing Working Capital Statement are
the
result of bona fide transactions in the ordinary course of business and
have
been paid or are not yet due and payable, except for accounts payable that
are
being disputed in good faith in an appropriate manner.
Section
3.21. Related
Party Transactions.
Except
as described in Section 3.21 of the Disclosure Schedule, no Company or
Subsidiary has loaned or borrowed any amounts from and or has outstanding
any
indebtedness or other similar obligations to or owing from any Affiliate
of any
Company or Subsidiary. Neither any Company or Subsidiary nor any Affiliate
of
any Company or Subsidiary nor any officer or employee of any of them (i)
owns
any direct or indirect interest of any kind in, or controls or is a director,
officer, employee or partner of, or consultant to, or lender to or borrower
from
or has the right to participate in the profits of, any Person which is
(A) a
competitor, supplier, customer, landlord, tenant, creditor or debtor of
any
Company or Subsidiary, (B) engaged in a business related to the business
of any
Company or Subsidiary, or (C) a participant in any transaction to which
any
Company or Subsidiary is a party or (ii) is a party to any Contract with
any
Company or Subsidiary. No Company or Subsidiary has any Contract or
understanding with any officer, director, employee or shareholder of any
Company
or Subsidiary, or any Affiliate of any such Person that relates, directly
or
indirectly, to the subject matter of any Transaction Document or the
consideration payable thereunder or that contains any terms, provisions
or
conditions relating to the Companies’ entry into or performance of any
Transaction Document (including any terms, provisions or conditions the
consequences of which are dependent upon any of the matters addressed by
Section
1.5).
Section
3.22. Customers;
Projects.
Section
3.22 of the Disclosure Schedule is a complete and correct list of all clients
and customers of the Companies and the Subsidiaries as of January 31, 2007.
Except as set forth on Section 3.22 of the Disclosure Schedule, no client
or
customer has cancelled or otherwise terminated reduced, or threatened to
cancel
or terminate or reduce, its relationship with any Company or Subsidiary.
Section
3.22 of the Disclosure Schedule includes a complete and accurate list of
all
projects or engagements (collectively, “Projects”)
for
which any Company or Subsidiary is currently engaged or proposed to be
engaged.
All current Projects (i) are bona fide business relationships or projects
that a
Company or Subsidiary is currently working on, and (ii) are proceeding
according
to plan and budget and are expected to be completed in a timely manner,
for the
full benefit thereof and without loss to any Company or Subsidiary or
Parent.
Section
3.23. No
Misrepresentation.
No
representation or warranty of any Company and/or any Member contained in
this
Agreement or any other Transaction Document or in any Schedule hereto or
thereto
or in any certificate or other instrument furnished to Purchaser pursuant
to the
terms hereof or thereof contains any untrue statement of a material fact
or
omits to state a material fact necessary to make the statements contained
herein
or therein not misleading.
Section
3.24. Financial
Advisors.
Except
for obligations to AdMedia under the AdMedia Engagement Letter, no Company
or
Subsidiary has 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. The Members shall be solely responsible for any obligations
described
in this Section 3.24 and will jointly and severally indemnify and hold
the
Purchaser Indemnitees harmless from and against any Losses resulting from
or
arising out of or any such obligations or matters.
Section
3.25 Private
Placement.
Each
Member is an “accredited investor” within the meaning of Rule 501 under the
Securities Act. Each Member has sufficient knowledge and experience in
investing
in companies similar to Parent in terms of Parent's market capitalization
and
other relevant factors so as to be able to evaluate the risks and merits
of its
investment in Parent and it is able financially to bear the risks thereof.
Each
Member has had an opportunity to discuss the terms of the offering and
sale of
the Parent Shares and Parent's business, management and financial affairs
with
Parent's management and to obtain any additional information regarding
the
foregoing which Parent possesses or can acquire without unreasonable effort
or
expense. The Parent Shares are being acquired for the Members' own accounts
and
not with a view to, or the intention of, any distribution in violation
of the
Securities Act or any applicable state securities laws. Each Member understands
that (i) the Parent Shares have not been registered under the Securities
Act by
reason of the issuance of the Parent Shares in a transaction exempt from
the
registration requirements of the Securities Act pursuant to Section 4(2)
thereof
or Rule 505 or 506 promulgated under the Securities Act, (ii) the Parent
Shares
must be held indefinitely unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration, (iii) the
Parent
Shares will bear a legend to such effect and (iv) Parent will issue stop
transfer instructions to its transfer agent to such effect.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
Purchaser
represents and warrants to the Members that the following statements are
correct
and complete as of the date hereof.
Section
4.1. Organization.
(a)
Purchaser is a limited liability company duly organized, validly existing
and in
good standing under the laws of the State of Delaware. Purchaser is duly
qualified or authorized to do business as a foreign company and is in good
standing under the laws of each jurisdiction in which it owns or leases
real
property and each other jurisdiction in which the conduct of its business
or the
ownership of its properties requires such qualification or authorization,
except
where the failure to be so qualified or authorized would not have a material
adverse effect on the business or assets of Purchaser.
(b) Purchaser
is a wholly-owned Subsidiary of Parent. Purchaser has conducted no material
operations.
Section
4.2. Authorization
of Transaction.
The
execution, delivery and performance of the Transaction Documents to which
Purchaser is a party have been duly authorized by all necessary action
by or on
behalf of Purchaser. Purchaser has full power and authority to execute
and
deliver this Agreement and each other Transaction Document to which it
is a
party, and to perform its obligations hereunder and thereunder. This Agreement
and each Transaction Document to which Purchaser is or will be a party
has been
or will be duly and validly executed and delivered and constitutes the
valid and
legally binding obligation of Purchaser, enforceable against Purchaser
in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally and subject, as to enforceability, to general principles
of
equity (regardless of whether enforcement is sought in a proceeding at
law or in
equity). Purchaser is not required to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any Governmental Body
in
order to consummate the transactions contemplated by this Agreement and
each
such Transaction Document.
Section
4.3. Noncontravention.
Neither
the execution and the delivery by Purchaser of this Agreement and the other
Transaction Documents to which it is a party, nor the consummation of the
transactions contemplated hereby and thereby on the part of Purchaser,
will
(i) violate any Law or any Order by which Purchaser is bound or any
provision of its organizational documents or (ii) result in a breach of,
constitute a default under, result in the acceleration of, create in any
party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any Contract to which Purchaser is a party or by which Purchaser
is bound
or to which any of its assets is subject. No Order, Permit or waiver, or
declaration or filing with any Governmental Body is required on the part
of
Purchaser in connection with the execution, delivery and performance of
this
Agreement or the other Transaction Documents to which it is a party, or
the
compliance by Purchaser with any of the provisions hereof or
thereof.
Section
4.4. Brokers’
Fees.
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. Purchaser shall be solely responsible for any obligations described
in this Section 4.4 and will jointly and severally indemnify and hold the
Shareholders harmless from and against any Losses resulting from or arising
out
of or any such obligations or matters.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF PARENT
Parent
represents and warrants to the Members that the following statements are
correct
and complete as of the date hereof and as of the Closing Date.
Section
5.1. Organization.
Parent
is a corporation duly organized, validly existing and in good standing
under the
laws of the State of Delaware. Parent is duly qualified or authorized to
do
business as a foreign corporation and is in good standing under the laws
of each
jurisdiction in which it owns or leases real property and each other
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to be so qualified or authorized would not have a material adverse
effect on the business or assets of Parent.
Section
5.2. Authorization
of Transaction.
The
execution, delivery and performance of the Transaction Documents to which
Parent
is a party have been duly authorized by all necessary action by Parent.
Parent
has full power and authority to execute and deliver this Agreement and
each
other Transaction Document to which it is a party, and to perform its
obligations hereunder and thereunder. This Agreement and each Transaction
Document to which Parent is a party has been or will be duly and validly
executed and delivered and constitutes the valid and legally binding obligation
of Parent, enforceable against Parent in accordance with its terms, subject
to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws
affecting creditors’ rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Parent is not
required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Body in order to
consummate the transactions contemplated by this Agreement and each other
Transaction Document.
Section
5.3. Noncontravention.
Neither
the execution and the delivery by Parent of this Agreement and each other
Transaction Document to which it is or will be a party, nor the consummation
of
the transactions contemplated hereby and thereby on the part of Parent,
will
(i) violate any Law or any Order by which Parent is bound or any provision
of its organizational documents or (ii) result in a breach of, constitute
a
default under, result in the acceleration of, create in any party the right
to
accelerate, terminate, modify, or cancel, or require any notice under any
Contract to which Parent is a party or by which Parent is bound or to which
any
of its assets is subject. No Order, Permit or waiver, or declaration or
filing
with any Governmental Body is required on the part of Parent in connection
with
the execution, delivery and performance of this Agreement or the other
Transaction Documents to which it is a party, or the compliance by Parent
with
any of the provisions hereof or thereof.
Section
5.4. Status
of the Shares.
The
Parent Shares have been duly authorized and, when issued in accordance
with the
terms of this Agreement, will be validly issued, fully paid and non-assessable
shares of Parent Common Stock and
will
be free and clear of all Liens created by or through Parent. The issuance
and
delivery of the Parent Shares is not subject to any preemptive right of
shareholders of Parent that has not been waived or to any right of first
refusal
or other right in favor of any person that has not been waived.
Section
5.5. SEC
Documents.
Since
December 31, 2005, Parent has filed all required reports, schedules, forms,
statements and other documents with the SEC (such documents being referred
to
herein collectively as the “Parent
SEC Documents”).
As of
their respective dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act, or the Securities
Exchange
Act of 1934, as amended (the “Exchange
Act”),
as
the case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to the Parent SEC Documents, and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a
material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Parent included in the Parent SEC
Documents, as of their respective dates, complied in all material respects
with
applicable accounting requirements and the published rules and regulations
of
the SEC with respect thereto, were prepared in accordance with GAAP (except,
in
the case of unaudited statements, as permitted by Form 10 Q of the SEC)
applied
on a consistent basis during the periods involved (except as may be indicated
in
the notes thereto) and fairly present the financial position of Parent
and its
consolidated subsidiaries as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case
of
unaudited statements, to normal year end audit adjustments and other adjustments
described therein).
Section
5.6. Brokers’
Fees.
Parent
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.
Parent shall be solely responsible for any obligations described in this
Section
5.6 and will jointly and severally indemnify and hold the Members harmless
from
and against any Losses resulting from or arising out of or any such obligations
or matters.
ARTICLE
VI
CONDITIONS
TO CLOSING
Section
6.1. Conditions
Precedent to Obligations of Purchaser at the Closing.
The
obligation of Parent and Purchaser to consummate the transactions contemplated
by this Agreement is subject to the fulfillment, on or prior to the Closing
Date, of each of the following conditions (any or all of which may be waived
by
Parent and Purchaser in whole or in part to the extent permitted by applicable
Law):
(a) all
representations and warranties of any Company and/or any Member contained
herein
shall be true and correct on and as of the Closing Date, except to the
extent
expressly made as of an earlier date;
(b) each
Company and Member shall have performed and complied in all material respects
with all obligations and covenants required by this Agreement to be performed
or
complied with by such Companies or Member on or prior to the Closing
Date;
(c) there
shall not have been or occurred any Company Material Adverse Change since
December 31, 2006;
(d) no
Legal
Proceedings shall have been instituted or threatened or claim or demand
made
against any Company, any Member, Parent or Purchaser seeking to restrain
or
prohibit or to obtain substantial damages with respect to the consummation
of
the transactions contemplated hereby;
(e) there
shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation
of
the transactions contemplated hereby;
(f) any
waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976,
as amended (the “HSR
Act”),
applicable to the transactions contemplated by this Agreement shall have
expired
or been terminated;
(g) the
Employment Agreements shall be in full force and effect and none of the
employees party thereto shall have become employed by any Person other
than the
Companies or indicated that he does not intend to continue employment with
the
Companies following the Closing;
(h) Each
Member shall have delivered to Purchaser the following:
(i) assignments
representing all issued and outstanding Membership Interests, owned by
such
Member, executed
to transfer all Membership Interests to Purchaser;
(ii) a
copy of
IRS Form W-9 duly and properly executed by such Member;
(iii) an
affidavit described in Section 1445(b)(2) of the Code from such Member
in form
and substance reasonably satisfactory to Purchaser;
(iv) stock
transfer forms, board resolutions and forms 288 (a), each as reasonably
requested by Purchaser or its counsel to effectuate the transfer of the
equity
interests of BioSector 2, Limited to Purchaser;
(v) share
transfer deeds, minutes of Partners' decisions by unanimous written consent,
amended articles of association, power of attorney for legal formalities
and
delegation of powers, each as reasonably request by Purchaser to effectuate
the
transfer of the equity interests of Xxxxxxxx Chicco Agency SARL; and
(vi) such
other documents, instruments or certificates as shall be reasonably requested
by
Purchaser or its counsel.
(i) The
Representative shall have delivered to Purchaser the following:
(i) a
certificate executed by the Representative dated the Closing Date to the
effect
that each of the conditions specified in Section 6.1(a) through (c) is
satisfied
in all respects;
(ii) a
legal
opinion of counsel for the Companies in form satisfactory to Purchaser
covering
the matters set forth on Exhibit
B
hereto,
subject to the good faith negotiation of the parties;
(iii) (A)
articles of organization (or similar organizational document), as amended
through the Closing Date, of each Company and each Subsidiary, certified
as of a
recent date by an appropriate official of the jurisdiction of incorporation
or
formation, (B) good standing certificates for each Company and each Subsidiary
certified as of a recent date by the Secretary of State of each State in
which
it is authorized to conduct business, or, in the case of Subsidiaries formed
outside the United States, certified by a similar government official or
body,
and (C) copies of the by-laws (or similar organizational document) of each
Company and each Subsidiary, as in effect on the Closing Date, certified
by the
Secretary of such Company or Subsidiary;
(iv) a
non
competition agreement in the form attached hereto as Exhibit D from each
Participant (as defined in the Phantom Equity Plan) with the duration specified
for such Participant previously disclosed to Purchaser;
(v) confirmation
from AdMedia that, except for the payment to be made pursuant to the last
sentence of Section 1.2(a), no Company or Subsidiary will have any post-Closing
liability to AdMedia under the AdMedia Engagement Letter;
(vi)
letters
in form and substance reasonably satisfactory to Purchaser from all holders
of
Indebtedness (including, without limitation, Indebtedness arising under
that
certain line of credit and those certain term loans from Valley National
Bank
and all related UCC filings) of any Company or Subsidiary that would be
reflected on the balance sheet of any Company or Subsidiary as of the Closing
Date or that is secured by any of the assets of any Company or Subsidiary,
except for Indebtedness constituting equipment or leasehold financing that
may
permissibly remain outstanding in accordance with the terms of Parent's
credit
facilities, confirming the full payment and satisfaction of such Indebtedness
(by way of application of a portion of the Purchase Price for such purpose
or
otherwise); and evidence that all Liens have been released and appropriate
UCC
and USPTO termination statements filed with respect thereto;
(vii) confirmation
that any and all indebtedness owing from directors, officers, employees
or
members of each of the Companies and the Subsidiaries has been cancelled or
has been fully repaid as of the time of the Closing (by way of application
of a
portion of the Purchase Price for such purpose or otherwise);
(viii) evidence
that
(A)
all
equity interests of any Company in Puissance Enterprises, LLC (“Puissance”)
have
been transferred to third parties;
(B)
all
guaranties or obligations of any Company related to Puissance have been
cancelled without any adverse accounting or other impact on any Company;
(C)
all
obligations of Puissance to any Company have been cancelled without any
adverse
accounting or other impact on any Company (other than the reduction in
total
assets arising from such cancellation); and
(D) the
employment or consulting relationship of each employee of or consultant
to any
Company who are relatives of either Member (“Related
Personnel”)
have
been terminated without any adverse accounting or other impact on the
Company.
(ix)
an
assignment of all interest in the tradename “BrandTectonics” from
BrandTectonics, L.L.C. to CCA NY and of all interest in the tradename
“Determinus” from Determinus, L.L.C. to CCA NY; and
(x) such
other documents, instruments or certificates as shall be reasonably requested
by
Purchaser or its counsel.
(j) all
the
directors and officers of the Companies and the Subsidiaries other than
those
listed on Schedule III shall have resigned effective as of the Closing
and
individuals designated by Purchaser shall have been elected or appointed
as
directors and officers of the Companies and the Subsidiaries, effective
as of
the Closing.
Section
6.2. Conditions
Precedent to Obligations of the Members at the Closing.
The
obligations of the Members to consummate the transactions contemplated
by this
Agreement are subject to the fulfillment, prior to or on the Closing Date,
of
each of the following conditions (any or all of which may be waived by
the
Representative in whole or in part to the extent permitted by applicable
Law):
(a) all
representations and warranties of Purchaser and Parent contained herein
shall be
true and correct on and as of the Closing Date;
(b) Purchaser
and Parent shall have performed and complied in all material respects with
all
obligations and covenants required by this Agreement to be performed or
complied
with by Purchaser or Parent, as applicable, on or prior to the Closing
Date;
(c) the
Purchaser shall have delivered to the Representative a certificate executed
by
an officer of Purchaser dated the Closing Date, to the effect that each
of the
conditions specified in Section 6.2(a) and (b) is satisfied in all
respects.
(d) no
Legal
Proceedings shall have been instituted or threatened or claim or demand
made
against the Companies, any Member, Parent or Purchaser seeking to restrain
or
prohibit or to obtain substantial damages with respect to the consummation
of
the transactions contemplated hereby;
(e) the
Parent Guaranty shall be in full force and effect;
(f) there
shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation
of
the transactions contemplated hereby;
(g) any
waiting period under the HSR Act applicable to the transactions contemplated
by
this Agreement shall have expired or been terminated;
(h) Purchaser
shall have delivered to the Representative an opinion of counsel for Purchaser
and Parent in the form of Exhibit
C,
subject
to the good faith negotiation of the parties; and
(i) there
shall not have been or occurred any material adverse change in the assets,
financial condition or results of operation of Parent or Purchaser since
December 31, 2006.
ARTICLE
VII
COVENANTS
Section
7.1. General.
If any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including
the
execution and delivery of such further instruments and documents) as any
other
party reasonably may request.
Section
7.2. No
Solicitation.
During
the Closing Period, each Company, each Subsidiary and the Members shall,
and
shall cause their respective employees, directors, agents and Affiliates
to,
immediately suspend any existing negotiations or discussions relating to
any
sale, joint venture or other transfer of actual or beneficial ownership
of any
securities, operations or any assets of any Company or Subsidiary (other
than
goods and services of sold in the ordinary course of business) (collectively,
an
“Acquisition
Transaction”),
and
neither any Company nor any Member shall, and each Company and each Member
shall
cause its employees, directors, agents and Affiliates not to, (i) solicit
any proposals or offers relating to an Acquisition Transaction or
(ii) negotiate or engage in discussions with any third party concerning any
proposal or offer for an Acquisition Transaction.
Section
7.3. Conduct
of the Business.
Except
as otherwise expressly permitted by this Agreement or as otherwise consented
to
by Parent and Purchasers in writing, the Companies and the Members shall
refrain
from (and cause their Affiliates to refrain from) taking or omitting any
action
which, if taken or omitted prior to the date hereof, would cause the
representations in Section 3.8 to be untrue.
Section
7.4. Information.
Each
Company, each Subsidiary and each Member shall (and shall cause its accountants,
counsel, consultants, employees and agents to) give Parent and Purchaser
and
their respective accountants, counsel, consultants, employees and agents,
reasonable access during normal business hours to, and furnish them with
all
documents, records, work papers and information with respect to, all properties,
assets, books, contracts, commitments, reports and records of, the Companies
and
the Subsidiaries, as Parent and Purchaser shall from time to time reasonably
request. In addition, each Company, each Subsidiary and each Member shall
permit
Parent and Purchaser, and their accountants, counsel, consultants, employees
and
agents, reasonable access to such personnel of the Companies and the
Subsidiaries during normal business hours as may be reasonably necessary
in
connection with their review of the properties, assets and business affairs
of
the Companies and the Subsidiaries and the above-mentioned documents, records
and information. Parent and Purchaser shall have the right, upon giving
reasonable advance notice, to enter upon and inspect the properties of
the
Companies and the Subsidiaries.
Section
7.5. Maintenance
of Properties; Damage and Destruction.
(a)
During the Closing Period, each Company and each Subsidiary shall
(i) maintain their assets in the condition and state of repair normally
maintained by it in the conduct of its business, keep in service its officers
and employees and preserve the goodwill of the Business; (ii) maintain its
books, accounts and records in the ordinary course of business;
(iii) comply in all material respects with all Contractual obligations; and
(iv) comply in all material respects with all applicable Laws.
(b)
If a
material portion of the assets and properties of the Companies and the
Subsidiaries shall be substantially damaged or destroyed by fire or other
cause
on or prior to the Closing Date, the Representative shall promptly notify
Purchaser and furnish to Purchaser a statement of the amount of insurance,
if
any, payable on account thereof. In the event of damage or destruction
of a
portion of the assets and properties of the Companies and the Subsidiaries
having a Company Material Adverse Effect or that may reasonably be expected
to
have a Company Material Adverse Effect, Purchaser may elect to terminate
this
Agreement.
Section
7.6. HSR
Filing.
The
Companies and Parent have each filed a premerger notification and report
form
under the HSR Act with respect to the transactions contemplated by this
Agreement. Each party shall bear its own counsel fees and all other expenses
relating to their respective premerger notification and report forms under
the
HSR Act, but Parent shall pay all related filing fees. Each of the parties
agrees to use commercially reasonable efforts to promptly respond to any
request
for additional information pursuant to Section (e)(1) of the HSR Act. Nothing
contained in this Agreement shall be construed so as to require Parent,
the
Companies or any of their respective subsidiaries or Affiliates, to sell,
license, dispose of, or hold separate, or to operate in any specified manner,
any of their respective assets or businesses (or to agree to any of the
foregoing). The obligations of each party under Section 7.6 to use commercially
reasonable efforts with respect to antitrust matters shall be limited to
compliance with the reporting provisions of the HSR Act and with its obligations
under this Section 7.6.
Section
7.7. Litigation
Support.
Following the Closing, in the event and for so long as any party actively
is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i)
any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstances, status, condition, activity, practice, plan, occurrence,
event,
incident, action, failure to act, or transaction on or prior to the Closing
Date
involving any Company or Subsidiary, each of the other parties will cooperate
reasonably with such party and such party’s counsel in the contest or defense,
make available their personnel, and provide such testimony and access to
their
books and records as shall be necessary in connection with the contest
or
defense, all at the sole cost and expense of the contesting or defending
Party
(unless the contesting or defending Party is entitled to indemnification
therefor hereunder).
Section
7.8. Confidentiality.
From
and after the date hereof (unless this Agreement is terminated in accordance
with its terms), each Member will, and will cause such Member's Affiliates
to,
hold in strict confidence, and will not, and will cause such Member's Affiliates
not to, disclose to any third party or use for any purpose, any and all
information with respect to the Companies and the Subsidiaries, their business,
the Transaction Documents or the transactions contemplated thereby
(collectively, “Confidential
Information”).
Notwithstanding the foregoing, each Member may, and may permit such Member's
Affiliates to, disclose Confidential Information (i) if compelled to disclose
the same by judicial or administrative process or by other requirements
of Law
(but subject to the following provisions of this Section), (ii) if the
same
hereafter is in the public domain through no fault of such Member or (iii)
if
the same is later acquired by such Member from another source that is not
under
an obligation to another Person to keep such information confidential.
If such
Member or any of such Member's Affiliates is requested or required (by
oral
questions, interrogatories, requests for information or documents in legal
proceedings, subpoena, civil investigative demand or other similar process)
to
disclose any Confidential Information, such Member shall provide Purchaser
with
prompt written notice of any such request or requirement so that Member
may seek
a protective order or other appropriate remedy and/or waive compliance
with the
provisions of this Section. If, in the absence of a protective order or
other
remedy or the receipt of a waiver by Purchaser, such Member or such Affiliate,
as the case may be, nonetheless, based on the written advice of outside
counsel,
is required to disclose Confidential Information to any tribunal or in
accordance with applicable Law, such Member or such Affiliate, without
liability
hereunder, may disclose that portion of such information which such counsel
advises such Member or such Affiliate it is legally required to disclose.
Each
Member acknowledges and agrees that money damages would not be an adequate
remedy for any breach of his agreements contained in this Section 7.8 and
that in addition to any other remedies available to Purchaser, Purchaser
shall
be entitled to the remedies of injunction, specific performance and other
equitable relief for any threatened or actual breach of this Section 7.8.
Section
7.9. Non-Competition.
As a
material inducement to Parent and Purchaser to enter into this Agreement,
each
of Xxxxxxxx and Chicco (each, an “Obligated
Party”)
agrees
as follows:
(a) During
the Non-Competition Period, the Obligated Party will not, and the Obligated
Party will cause his or her Affiliates not to, engage or participate, directly
or indirectly, as principal, agent, executive, director, proprietor, joint
venturer, trustee, employee, employer, consultant, stockholder, partner
or in
any other capacity whatsoever, in the conduct or management of, or own
any stock
or any other equity investment in or debt of, or provide any services of
any
nature whatsoever to or in respect of (1) any business that is competitive
with
the Business or (2) any Person that is a customer or client of the Company
at
any time during the Non-Competition Period or during the 12 months prior
to the
date of this Agreement, provided that nothing herein shall prevent an Obligated
Party from making passive investments in up to 2% of the common stock of
any
publicly traded company.
(b) During
the Non-Competition Period, no Obligated Party will, and each Obligated
Party
will cause his or her Affiliates not to, for such Affiliate’s own benefit or for
the benefit of any Person other than a Company or Subsidiary, (i) solicit,
or
assist any person or entity to solicit, any officer, director, executive
or
employee of t a Company or Subsidiary to leave his or her employment, (ii)
hire
or cause to be hired any person who is then, or who will have been at any
point
in time during the Non-Competition Period, an officer, a director, an executive
or an employee of a Company or Subsidiary, or (iii) engage any Person who
is
then, or who will have been at any point in time during the Non-Competition
Period, an officer, director, executive or employee of a Company or Subsidiary
as a partner, contractor, sub-contractor or consultant.
(c) During
the Non-Competition Period, no Obligated Party will, and each Obligated
Party
will cause his Affiliates not to, (i) solicit, or assist any person or
entity
other than the Company or its Subsidiaries to solicit, any Person that
is a
client or customer of the Company or its Subsidiaries, or has been a client
or
customer of the Company or its Subsidiaries during the prior twelve (12)
months,
to provide any services competitive with those provided by the Company
or its
Subsidiaries or (ii) interfere with any of the business relationships of
the
Company or its Subsidiaries.
(d) The
Obligated Parties acknowledge that (i) the markets served by the Companies
and
the Subsidiaries are national and international in scope and are not dependent
on the geographic location of the executive personnel or the businesses
by which
they are employed; and (ii) the above covenants are manifestly reasonable
on
their face, and the parties expressly agree that such restrictions have
been
designed to be reasonable and no greater than is required for the protection
of
Purchaser and are a significant element of the consideration
hereunder.
(e) If
the
final judgment of a court of competent jurisdiction declares that any term
or
provision of this Section 7.9 is invalid or unenforceable, the parties
agree
that the court making the determination of invalidity or unenforceability
shall
have the power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable
that
comes closest to expressing the intention of the invalid or unenforceable
term
or provision, and this Agreement shall be enforceable as so modified after
the
expiration of the time within which the judgment may be appealed.
(f) Each
Obligated Party agrees and acknowledges that in order to assure Parent
and
Purchaser that each of the Companies and the Subsidiaries will retain the
value
of its operations, it is necessary that such Obligated Party undertake
not to
utilize such Obligated Party’s special knowledge of such business operations and
such Obligated Party’s relationships with customers to compete with Purchaser.
Each Obligated Party further acknowledges that:
(i)
such
Obligated Party is engaged in, is knowledgeable about, and provides services
in
connection with all aspects of the Companies’ and the Subsidiaries'
business;
(ii)
such
Obligated Party will occupy a position of trust and confidence with the
Companies and the Subsidiaries and is familiar with, and will continue
to become
familiar with, the Companies’ and their Subsidiaries’ trade secrets and with
other Confidential Information (as defined in Section 7.8) concerning the
Business;
(iii)
the
agreements and covenants contained in Section 7.8 and this Section 7.9
are
essential to protect the value and goodwill of the Business; and
(iv)
the
provisions contained in Section 7.8 and this Section 7.9 are integral to
the
transactions contemplated hereby and that Parent and Purchaser would not
enter
into such transactions without the protections afforded by Section 7.8
and this
Section 7.9.
Section
7.10. Names
and Logos.
From
and after the Closing, no Obligated Party will, and each Obligated Party
will
cause his or her Affiliates not to, use any names or logos incorporating
“Xxxxxxxx Chicco,” “Xxxxxxxx,” “Chicco,” “BrandTectonics” or “Determinus” or any
derivatives thereof in connection with the provision of public relations
or
related services. The covenant contained in the preceding sentence shall
survive
the expiration of the Non-Competition Period. Within five business days
following the Closing, the Members shall cause BrandTectonics, L.L.C. to
amend
its certificate of formation to change its name to a name not incorporating
“BrandTectonics” and shall cause Determinus, L.L.C. to amend its certificate of
formation to change its name to a name not incorporating “Determinus”.
Section
7.11. Certain
Additional Actions.
The
Members shall cause each automobile lease to which any Company (or any
Affiliate
thereof) is a party that relates to an automobile used by any Related Personnel
to be cancelled or transferred within fifteen (15) days following the Closing
Date such that no Company (or any Affiliate thereof) has any post-closing
liability in respect thereof. Except to the extent otherwise determined
by
Purchaser, the Members shall cause each life insurance policy under which
any
Company or Subsidiary is the named beneficiary or otherwise entitled to
recovery
(each a "Key
Man Policy")
to be
cancelled without cost to any Company or Subsidiary, or distributed to
the
Member whose life is insured thereunder, within fifteen (15) days following
the
Closing Date.
ARTICLE
VIII
INDEMNIFICATION
Section
8.1. Indemnity
Obligations of the Members.
Each
Member covenants and agrees severally to defend, indemnify and hold harmless
Purchaser and its Affiliates (including Parent and, following the Closing,
the
Companies and the Subsidiaries) and the respective officers, directors,
employees, agents, advisers and representatives of the foregoing (collectively,
the “Purchaser
Indemnitees”),
from
and against, and to pay or reimburse Purchaser Indemnitees for, any and
all
claims, liabilities, obligations, losses, fines, costs, proceedings or
damages
(whether absolute, accrued, conditional or otherwise and whether or not
resulting from third party claims), including all reasonable fees and
disbursements of counsel incurred in the investigation or defense of any
of the
same or in asserting any of their respective rights hereunder (collectively,
“Losses”),
based
on, resulting from, arising out of or relating to:
(i) any
misrepresentation or breach of any warranty of the Company or any Member
contained in this Agreement; provided that in determining whether any such
misrepresentation or breach occurred, any dollar amount thresholds, materiality
qualifiers and Company Material Adverse Effect qualifier contained in any
representation or warranty herein shall be disregarded;
(ii) any
failure of any Company or such Member to perform any covenant or agreement
made
or contained in this Agreement or fulfill any material obligation in respect
thereof;
(iii)
except (A) as specifically set forth on the Final Closing Working Capital
Statement and (B) obligations of any Company or Subsidiary to be paid or
performed after the Closing Date under the Contracts disclosed in the Disclosure
Schedule (except to the extent such obligations, but for a breach or default
by
a Company or Subsidiary, would have been paid, performed or otherwise discharged
on or prior to the Closing Date or to the extent the same arise out of
any such
breach or default), any Liabilities of a Company, a Subsidiary or any Affiliate
or a Company or Subsidiary of any kind or nature whatsoever caused by any
transaction, status, event, condition, occurrence or situation existing,
arising
or occurring on or prior to the Closing Date; or
(iv)
the matters disclosed or required to be disclosed in Section 3.16 of the
Disclosure Schedule.
The
Members shall not be required to indemnify Purchaser Indemnitees with respect
to
any claim for indemnification (other than a claim for indemnification based
on a
breach of the representations and warranties contained in Article II or
in
Sections 3.1, 3.2, 3.9, 3.11(c), 3.14, 3.18 or 3.24) resulting from or
arising
out of matters described in clause (i) above pursuant to this Section 8.1
(and not resulting from or arising out of matters described in clauses (ii)
through (iv) above) unless and until the aggregate amount of all such claims
against the Members exceeds [***] (the “Threshold
Amount”),
in
which case the Members shall be required to indemnify Purchaser Indemnitees
for
the full amount of such claims including the Threshold Amount. Claims thereafter
may be asserted regardless of amount. For purposes of determining whether
the
Threshold Amount has been exceeded, no claim for indemnification resulting
from
or arising out of matters described in clause (i) above pursuant to this
Section
8.1 (and not resulting from or arising out of matters described in clauses
(ii)
through (iv) above) will be taken into account if such claim, together
with any
related claim or group of claims, does not give rise to Losses in excess
of [***].
The
Members' maximum liability (exclusive of liabilities based on claims for
indemnification based on a breach of the representations and warranties
contained in Article II or in Sections 3.1, 3.2, 3.9, 3.11(c), 3.14, 3.18
or
3.24) to Purchaser Indemnitees under clause (i) above (and not resulting
from or
arising out of matters described in clauses (ii) through (iv) above) shall
not
exceed [***].
Section
8.2. Indemnity
Obligations of Purchaser.
Purchaser covenants and agrees to defend, indemnify and hold harmless the
Members from and against any and all Losses based on, resulting from, arising
out of or relating to:
(i) any
misrepresentation or breach of warranty of Purchaser or Parent contained
in the
Transaction Documents; provided that in determining whether any such
misrepresentation or breach occurred, any dollar amount thresholds and
materiality qualifiers contained in any representation or warranty herein
shall
be disregarded;
(ii) any
failure of any Purchaser or Parent to perform any covenant or agreement
made or
contained in the Transaction Documents or fulfill any other obligation
in
respect thereof; or
Purchaser
shall not be required to indemnify the Members with respect to any claim
for
indemnification (other than a claim for indemnification based on a breach
of the
representations and warranties contained in Sections 4.1, 4.2, 5.1 or 5.2)
resulting from or arising out of matters described in clause (i) above
pursuant to this Section 8.2 (and not resulting from or arising out of
matters
described in clause (ii) above) unless and until the aggregate amount of
all claims against Purchaser exceeds the Threshold Amount, in which case
Purchaser shall be required to indemnify the Members for the full amount
of such
claims including the Threshold Amount. Claims thereafter may be asserted
regardless of amount. Purchaser’s maximum liability (exclusive of liabilities
based on claims for indemnification based on a breach of the representations
and
warranties contained in Sections 4.1, 4.2, 5.1 or 5.2) to the Members under
clause (i) above (and not resulting from or arising out of matters described
in
clause (ii) above) shall not exceed the Effective Purchase
Price.
Section
8.3. Indemnification
Procedures.
(a)
Third
Party Claims.
In the
case of any claim asserted by a third party against a party entitled to
indemnification under this Agreement (the “Indemnified Party”), notice shall be
given by the Indemnified Party to the party required to provide indemnification
(the “Indemnifying Party”) as soon as practicable after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought. If the
Indemnifying Party acknowledges that the third party claim is within the
scope
of the indemnification obligations of the Indemnifying Party, the Indemnified
Party shall permit the Indemnifying Party (at the expense of such Indemnifying
Party) to assume the defense of any third party claim or any litigation
with a
third party resulting therefrom; provided, however, that (a) the counsel
for the Indemnifying Party who shall conduct the defense of such claim
or
litigation shall be subject to the approval of the Indemnified Party (which
approval shall not be unreasonably withheld or delayed), (b) the
Indemnified Party may participate in such defense at such Indemnified Party’s
expense (which shall not be subject to reimbursement hereunder except as
provided below), and (c) the failure by any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
indemnification obligation under this Agreement except and only to the
extent
that such Indemnifying Party is actually and materially damaged as a result
of
such failure to give notice. Except with the prior written consent of the
Indemnified Party, no Indemnifying Party, in the defense of any such claim
or
litigation, shall consent to entry of any judgment or enter into any settlement
that provides for injunctive or other nonmonetary relief affecting the
Indemnified Party or that does not include as an unconditional term thereof
the
giving by each claimant or plaintiff to such Indemnified Party of a general
release from any and all liability with respect to such claim or litigation.
If
the Indemnified Party shall in good faith determine that the conduct of
the
defense of any claim subject to indemnification hereunder or any proposed
settlement of any such claim by the Indemnifying Party might be expected
to
affect adversely the ability of the Indemnified Party to conduct its business,
or that the Indemnified Party may have available to it one or more defenses
or
counterclaims that are inconsistent with one or more of those that may
be
available to the Indemnifying Party in respect of such claim or any litigation
relating thereto, the Indemnified Party shall have the right at all times
to
take over and assume control over the defense, settlement, negotiations
or
litigation relating to any such claim at the sole cost of the Indemnifying
Party; provided, however, that if the Indemnified Party does so take over
and
assume control, the Indemnified Party shall not settle such claim or litigation
without the prior written consent of the Indemnifying Party, such consent
not to
be unreasonably withheld or delayed. If the Indemnifying Party does not
accept
the defense of any matter as above provided within thirty (30) days after
receipt of the notice from the Indemnified Party described above, the
Indemnified Party shall have the full right to defend against any such
claim or
demand at the sole cost of the Indemnifying Party and shall be entitled
to
settle or agree to pay in full such claim or demand. In any event, the
Indemnifying Party and the Indemnified Party shall reasonably cooperate
in the
defense of any claim or litigation subject to this Article VIII and the
records
of each shall be reasonably available to the other with respect to such
defense.
(b)
Non-Third
Party Claims.
With
respect to any claim for indemnification hereunder which does not involve
a
third party claim, the Indemnified Party will give the Indemnifying Party
written notice of such claim. The Indemnifying Party may acknowledge and
agree
by notice to the Indemnified Party in writing to satisfy such claim within
twenty (20) days of receipt of notice of such claim from the Indemnified
Party.
If the Indemnifying Party shall dispute such claim, the Indemnifying Party
shall
provide written notice of such dispute to the Indemnified Party within
such
20-day period, setting forth in reasonable detail the basis of such dispute.
Upon receipt of notice of any such dispute, the Indemnified Party and the
Indemnifying Party shall use reasonable efforts to resolve such dispute
within
thirty (30) days of the date such notice of dispute is received. If the
Indemnifying Party shall fail to provide written notice to the Indemnified
Party
within twenty (20) days of receipt of notice from the Indemnified Party
that the
Indemnifying Party either acknowledges and agrees to pay such claim or
disputes
such claim, the Indemnifying Party shall be deemed to have acknowledged
and
agreed to pay such claim in full and to have waived any right to dispute
such
claim. Once (a) the Indemnifying Party has acknowledged and agreed to pay
any
claim pursuant to this Section 8.3, (b) any dispute under this Section
8.3 has
been resolved in favor of indemnification by mutual agreement of the
Indemnifying Party and the Indemnified Party, or (c) any dispute under
this
Section 8.3 has been finally resolved in favor of indemnification by order
of a
court of competent jurisdiction or other tribunal (including an arbitrator
contemplated by this agreement) having jurisdiction over such dispute,
then the
Indemnifying Party shall pay the amount of such claim to the Indemnified
Party
within twenty (20) days of the date of acknowledgement by the Indemnifying
Party
or final resolution in favor of indemnification, as the case may be, to
such
account and in such manner as is designated in writing by the Indemnified
Party.
Section
8.4. Expiration
of Representations and Warranties.
All
representations and warranties contained in this Agreement shall survive
the Closing
until [***];
provided,
however,
that
(i) the representations and warranties stated in Sections 3.9, 3.14 and
3.18 shall survive the Closing for the period ending on the date that is
30 days
after the expiration of the applicable statute of limitations period and
(ii)
the representations and warranties stated in Article II and in Sections
3.1,
3.2, 3.11(c), 3.24, 4.1, 4.2, 5.1 and 5.2 shall survive
indefinitely.
Section
8.5. Exclusive
Remedy.
Absent
fraud or criminal activity and except as provided under Sections 7.8 and
7.9 and in Article IX, the indemnifications provided for in this Article
VIII
shall be the sole and exclusive post-Closing remedies available to any
party
against any other party for any claims under or based upon this Agreement.
The
Members acknowledge that the representations and warranties contained in
the
Transaction Documents shall not be deemed waived or otherwise affected
by any
investigation by or on behalf of Purchaser or Parent.
Section
8.6. Set
Off.
If a
Member shall have any Liability to Purchaser or any other Purchaser Indemnitee,
including Parent or any of their Subsidiaries (pursuant to this Article
VIII,
Article IX or otherwise), Purchaser or such other Purchaser Indemnitee,
as the
case may be, shall be entitled, in addition to any other right or remedy
they
may have, to exercise rights of set-off against any payments or securities
payable or deliverable to the Members in connection with the Transaction
Documents or otherwise, including without limitation pursuant to Section
1.5 of
this Agreement.
Section
8.7. Calculation
of Losses.
For
purposes of this Article VIII, the amount of any Loss shall be calculated
net of
any Tax benefit actually realized by the Indemnified Party during the same
Tax
year.
ARTICLE
IX
CERTAIN
TAX MATTERS
Section
9.1. Taxable
Periods That Begin Before and End After the Closing Date.
For
purposes of this Agreement, (a) in the case of any taxable period of the
Companies and the Subsidiaries that commences prior to and includes (but
does
not end on) the Closing Date (a “Straddle
Period”),
the
amount of any Taxes based on or measured by income or receipts of the Companies
and the Subsidiaries for the Pre-Closing Tax Period shall be determined
based on
an interim closing of the books as of the close of business on the Closing
Date
and the amount of other Taxes of the Companies and the Subsidiaries for
a
Straddle Period which relate to the Pre-Closing Tax Period shall be deemed
to be
the amount of such Tax for the entire taxable period multiplied by a fraction
the numerator of which is the number of days in the taxable period ending
on the
Closing Date and the denominator of which is the number of days in such
Straddle
Period; and (b) the amount of Taxes of the Companies and the Subsidiaries
for
the Pre-Closing Tax Period, whether with respect to a Straddle Period or
not,
shall also be determined as if the taxable period of any partnership or
other
pass-thru entity in which any Company or Subsidiary holds a beneficial
interest
terminated as of the close of business on the Closing Date.
Section
9.2. Tax
Returns; Tax Sharing Agreements.
(a) The
Representative will prepare any income Tax Return of the Companies and
the
Subsidiaries for taxable periods ending on or before the Closing Date.
The
Representative shall permit Purchaser to review and comment on each such
Tax
Return prior to filing and shall make such revisions to such Tax Returns
as are
reasonably requested by Purchaser. Parent will prepare or cause to be prepared
and file or cause to be filed all other Tax Returns of the Companies and
the
Subsidiaries which are filed after the Closing Date. Purchaser will allow
the
Representative to review and comment on any Straddle Period Tax Return
and shall
make such revisions to such Tax Returns as are reasonably requested by
the
Representative. Subject to Section 9.3, the Members agree jointly and severally
to remit to the Companies the amount of any Taxes due with respect to taxable
periods ending on or before the Closing Date and the amount of any Taxes
allocable to the Pre-Closing Tax Period under Section 9.1 with respect
to a
Straddle Period Tax Return within
the later of 10 days of Parent or the Companies’ request therefor or 10 days
prior to the date on which the Tax liability is required to be
satisfied.
(b)
All
Tax sharing agreements or similar agreements with respect to or involving
the
Companies and the Subsidiaries shall be terminated as of the Closing Date
and,
after the Closing Date, the Companies and the Subsidiaries shall not be
bound
thereby or have any liability thereunder.
Section
9.3. Tax
Indemnity.
(a) The
Members will jointly and severally indemnify and hold Parent, Purchaser
and the
Companies and each of their respective successors and assigns (each, a
“Tax
Indemnitee”)
harmless against all Losses attributable to (i) any Tax of the Companies
and the
Subsidiaries for any Pre-Closing Tax Period, (ii) Taxes of any member of
an
affiliated, consolidated, combined or unitary group of which the Companies
(or
any predecessor) is or was a member on or prior to the Closing Date, including
pursuant to Section 1.1502-6 of the Treasury Regulations or any analogous
or
similar state, local or foreign income Tax law or regulation, (iii) Taxes
of any
Person other than the Companies and the Subsidiaries that are imposed on
the
Companies as a transferee or successor, by contract, or otherwise, which
Taxes
related to an result from an event or transaction occurring prior to the
Closing
and (iv) any breach of the covenants in this Article IX; provided,
however,
that in
any such case the Members will be liable only to the extent that such Taxes
exceed the amount, if any, reserved for such Taxes as reflected in Final
Closing
Working Capital Amount. The limitations on indemnification contained in
Article
VIII will not apply to any claim for indemnification under this Article
IX. If a
Party has any indemnification obligations with respect to any Loss under
both
this Article IX and Article VIII, the indemnification obligations under
this
Article IX will control and be their exclusive obligation. Subject to Section
9.3(b), the Members shall reimburse Parent, Purchaser and the Companies
for any
Losses which are the responsibility of any Members pursuant to this Section
9.3(a) within ten days after the Parent or the Companies’s request thereof.
(b)
After
the Closing, Parent shall inform the Representative within fifteen (15)
days of
its receipt of any notice of any Tax audit, assessment, adjustment, examination
or proceeding (“Tax
Contest”)
relating in whole or in part to Taxes for which a Tax Indemnitee may be
entitled
to indemnity from the Members hereunder; provided,
however,
that
the failure of Parent to provide such notice shall not affect the Members’
indemnity obligations under Section 9.3(a) except to the extent that the
Member
is materially prejudiced. If the Representative notifies Parent within
thirty
(30) days following receipt of notice of such Tax Contest that the
Representative intends to exercise his contest rights under this Section
9.3(b),
the Representative shall have the right to control such Tax Contest at
his
expense and to employ counsel of his choice. Parent shall have the right
to
participate in any such Tax Contest at its own expense, shall be entitled
to
control the disposition of any issue in any such Tax Contest that does
not
affect a potential liability of the Members, and shall be entitled to jointly
control with the Representative the defense and disposition of any issue
in any
such Tax Contest that relates to any Straddle Period. Parent shall control
any
other Tax Contests. With respect to a Tax Contest which the Representative
is
entitled to control, the Representative shall have the right to determine
all
issues relating to the Tax Contest except that the Representative shall
not
settle any Tax Contest without the prior consent of Parent (which consent
may
not be unreasonably withheld). Parent shall deliver to the Member any power
of
attorney reasonably required to allow the Representative and his counsel
to
represent Parent and the Companies in connection with any Tax Contest that
the
Representative is entitled to control hereunder and shall use its reasonable
efforts to provide the Representative with such assistance as may be reasonably
requested by the Representative in connection with any such Tax Contest.
The
Parties each agree to consult with and to keep the other Parties hereto
informed
on a regular basis regarding the status of any Tax Contest to the extent
that
such Tax Contest could affect a liability of such other Party (including
indemnity obligations hereunder).
(c)
To
the extent allowable under applicable law, all amounts payable under Article
VIII and this Section 9.3 will be treated for Tax purposes as adjustments
to the Purchase Price.
(d) Parent,
the Companies and the Members shall cooperate fully, as and to the extent
reasonably requested by one another, in connection with the preparation
and
filing of Tax Returns and any audit, litigation or other proceeding with
respect
to Taxes. Such cooperation shall include the retention and (upon another’s
request) the provision of records and information which are reasonably
relevant
to any such audit, litigation or other proceeding and making employees
available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. Parent and the Companies on the one
hand,
and the Members on the other, agree (i) to retain all books and records
with
respect to Tax matters pertinent to the Companies and the Subsidiaries
relating
to any taxable periods, and (ii) to give the other party reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if so requested, the Parent, the Companies, or the Member,
as the
case may be, shall allow the requesting party to take possession of such
books
and records. The parties hereto agree, upon request, to use reasonable
efforts
to obtain any certificate or other document from any taxing authority or
any
other Person as may be necessary to mitigate, reduce or eliminate any Tax
that
could otherwise be imposed.
ARTICLE
X
MISCELLANEOUS
Section
10.1. Certain
Definitions.
For
purposes of this Agreement, the following terms shall have the meanings
specified in this Section 10.1:
“Affiliate”
means,
with respect to any Person, any other Person directly or indirectly controlling,
controlled by or under common control with such Person, and in the case
of any
natural Person shall include all relatives and family members of such Person.
For purposes of this definition, a Person shall be deemed to control another
Person if such first Person and/or any relatives or family members of such
First
Person directly or indirectly owns or holds five percent (5%) or more of
the
ownership interests in such other Person.
“Books
and Records”
means
all books and records of the Companies and the Subsidiaries, including
manuals,
price lists, mailing lists, lists of customers, sales and promotional materials,
purchasing materials, documents evidencing intangible rights or obligations,
personnel records, accounting records and litigation files (regardless
of the
media in which stored), in each case relating to or used in the
Business.
“Business”
means
the business of the Companies and the Subsidiaries as conducted or proposed
to
be conducted as of the date hereof, including, without limitation, all
activities involving the provision of public relations or related services
to
clients in the pharmaceutical, medical device, biotechnology and life sciences
industries.
“Closing
Period”
means
the period from the date of the Agreement through the Closing Date.
“Code”
shall
mean the Internal Revenue Code of 1986, as amended.
“Company
Material Adverse Change”
or
“Company
Material Adverse Effect”
means
any change or effect that is materially adverse to (i) the business,
properties, results of operations, prospects or condition (financial or
otherwise) of the Companies and the Subsidiaries, (ii) the ability of the
Companies or any Member to perform its obligations under this Agreement
or
(iii) the ability of the Companies and the Subsidiaries to conduct the
Business after the Closing Date as the Business is being conducted as of
the
date hereof.
“Consent”
means
any consent, approval, authorization, waiver, permit, grant, franchise,
concession, agreement, license, exemption or order of, registration,
certificate, declaration or filing with, or report or notice to, any Person,
including any Governmental Body.
“Contract”
means
any contract, agreement, indenture, note, bond, loan, mortgage, license,
instrument, lease, commitment or other arrangement or agreement.
“EBIT”
means,
for any Applicable EBIT Period, [***]
“Environmental
Law”
means
any foreign, federal, state or local statute, regulation, ordinance, or
rule of
common law as now or hereafter in effect in any way or any other legally
binding
requirement relating to the environment, natural resources or protection
of
human health and safety including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601
et seq.),
the
Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.),
the
Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.),
the
Clean Water Act (33 U.S.C. § 1251 et seq.),
the
Clean Air Act (42 U.S.C. § 7401 et seq.)
the
Toxic Substances Control Act (15 U.S.C. § 2601 et seq.),
the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136
et seq.),
and
the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.),
and
the regulations promulgated pursuant thereto.
“Fair
Market Value”
means,
as to the Parent Common Stock, (i) the average closing price of the Parent
Common Stock as quoted on NASDAQ over a period of 20 consecutive trading
days
the latest of which shall be the second trading day prior to the date as
of
which “Fair Market Value” is being determined and (ii) as to other securities
for purposes of Section 1.5(e), the average closing price of the security
being
valued as quoted on the relevant exchange or interdealer quotation system
over a
period of 20 consecutive trading days the latest of which shall be the
second
trading day prior to the date as of which “Fair Market Value” is being
determined.
“GAAP”
means
United States generally accepted accounting principles as in effect from
time to
time.
“Governmental
Approval”
means
any Consent of, with or to any Governmental Body.
“Governmental
Body”
means
any government or governmental or regulatory authority or body thereof,
or
political subdivision thereof, whether federal, state, local or foreign,
or any
agency, instrumentality or authority thereof, or any court or arbitrator
(public
or private).
“Hazardous
Material”
means
any substance, material or waste which is regulated by the United States,
the
foreign jurisdictions in which the Companies conducts business, or any
state,
local or foreign governmental authority including, without limitation,
petroleum
and its by-products, asbestos, and any material or substance which is defined
as
a “hazardous waste,” “hazardous substance,” “hazardous material,” “restricted
hazardous waste,” “industrial waste,” “solid waste,” “contaminant,” “pollutant,”
“toxic waste” or “toxic substance” under any provision of Environmental
Law.
“Indebtedness”
of any
Person means, without duplication, (i) the principal, accreted value,
accrued
and unpaid interest, prepayment and redemption premiums or penalties
(if any),
unpaid fees or expenses and other monetary obligations in respect of
(A)
indebtedness of such Person for money borrowed and (B) indebtedness evidenced
by
notes, debentures, bonds or other similar instruments for the payment
of which
such Person is responsible or liable; (ii) all obligations of such Person
issued
or assumed as the deferred purchase price of property, all conditional
sale
obligations of such Person and all obligations of such Person under any
title
retention agreement (but excluding trade accounts payable and other accrued
current liabilities arising in the ordinary course of business consistent
with
past custom and practice (other than the current liability portion of
any
indebtedness for borrowed money)); (iii) all obligations of such Person
under
leases required to be capitalized in accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any obligor on any letter of
credit,
banker’s acceptance or similar credit transaction; (v) all obligations of such
Person under interest rate or currency swap transactions (valued at the
termination value thereof); (vi) all
obligations of the type referred
to
in clauses (i) through (v)
of any
Persons for the payment of which such Person is responsible or liable,
directly
or indirectly, as obligor, guarantor, surety or otherwise, including
guarantees
of such obligations; and (vii)
all
obligations of the type referred to in clauses (i) through
(vi)
of
other Persons secured by (or for which the holder of such obligations
has an
existing right, contingent or otherwise, to be secured by) any Lien on
any
property or asset of such Person (whether or not such obligation is assumed
by
such Person).
“Intellectual
Property”
means
(a) all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names,
and
corporate names, together with all translations, adaptations, derivations,
and
combinations thereof and including all goodwill associated therewith, and
all
applications, registrations and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations
and
renewals in connection therewith, (d) all mask works and all applications,
registrations and renewals in connection therewith, (e) all trade secrets
and
confidential information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier
lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g)
all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).
“IRS”
means
the United States Internal Revenue Service.
“Knowledge”
or
words of similar effect, regardless of case, means, with respect to the
Companies and/or the Subsidiaries, the actual subjective knowledge of each
member of senior management of the Companies and/or the Subsidiaries after
conducting such investigation as such person determines in good faith to
be
appropriate under the circumstances.
“Law”
means
any federal, state, local or foreign law (including common law), statute,
code,
ordinance, rule, regulation or other requirement.
“Legal
Proceeding”
means
any judicial, administrative or arbitral actions, suits, proceedings (public
or
private), claims or governmental proceedings.
“Liability”
means
any liability (whether known or unknown, whether asserted or unasserted,
whether
absolute or contingent, whether accrued or unaccrued, whether liquidated
or
unliquidated, and whether due or to become due), including any liability
for
Taxes.
“Lien”
means
any lien (including any Tax lien), pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction or any other encumbrance, restriction or
limitation whatsoever.
“Neutral
Accountant”
means
an independent auditing firm of nationally or regionally recognized standing
selected by the mutual agreement of Purchaser and the Representative within
15
days of the date on which the Neutral Accountant is proposed to begin serving
or, if Purchaser and the Representative are unable to agree within such
period,
an independent auditing firm of nationally or regionally recognized standing
selected jointly by two other such firms, one of which shall be specified
by
Purchaser and one of which shall be specified by the Representative, within
15
days after the expiration of such period.
“Non-Competition
Period”
means
the period from the Closing Date through the fifth anniversary thereof.
“Order”
means
any order, injunction, judgment, decree, ruling, writ, assessment or arbitration
award.
“Permitted
Encumbrances”
means
(i) statutory liens for current Taxes, assessments or other governmental
charges
not yet delinquent or the amount or validity of which is being contested
in good
faith by appropriate proceedings and that are set forth on Schedule IV,
provided
an appropriate reserve has been established therefor; (ii) mechanics’,
carriers’, workers’, repairers’ and similar Liens arising or incurred in the
ordinary course of business that are not material to the business, operations
and financial condition of the property so encumbered or the Companies
and the
Subsidiaries and that are set forth on Schedule IV; (iii) zoning, entitlement
and other land use and environmental regulations by any Governmental Body,
provided that such regulations have not been violated; and (iv) such other
imperfections in title, charges, easements, restrictions and encumbrances
which
do not materially detract from the value of or materially interfere with
the
present use of the assets subject thereto or affected thereby and that
are set
forth on Schedule IV.
“Person”
means
any individual, corporation, partnership, firm, joint venture, association,
joint-stock company, trust, unincorporated organization, Governmental Body
or
other entity.
"Phantom
Equity Plan"
means
The Phantom Common Stock Plan annexed to Schedule I to this
Agreement.
“Pre-Closing
Tax Period”
means
any taxable period ending on or before the Closing Date and the portion,
ending
on the Closing Date, of any Straddle Period.
“Release”
means
any release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, migration or leaching into the indoor or outdoor
environment, or into or out of any property.
“Subsidiary”
means
any Person of which a 50% or more of the outstanding voting securities
or other
equity interests are owned, directly or indirectly, by one or more Companies
and/or Subsidiaries, including Xxxxxxxx Chicco Agency, Limited and Litmus
Medical Marketing and Education Ltd..
“Tax”
or
“Taxes”
shall
mean means any federal, state, provincial, local or foreign income, alternative
minimum, accumulated earnings, personal holding company, franchise, capital
stock, net worth, capital, profits, windfall profits, gross receipts, value
added, sales, use, goods and services, excise, customs duties, transfer,
conveyance, mortgage, registration, stamp, documentary, recording, premium,
severance, environmental (including taxes under Section 59A of the Code or
any analogous or similar provision of any state, local or foreign law or
regulation), real property, personal property, ad valorem, intangibles,
unclaimed property, rent, occupancy, license, occupational, employment,
unemployment insurance, social security, disability, workers’ compensation,
payroll, health care, withholding, estimated or other similar tax, duty
or other
governmental charge or assessment or deficiencies thereof, and including
any
interest, penalties or additions to tax attributable to the
foregoing.
“Tax
Return”
means
any return, report, declaration, form, claim for refund or information
return or
statement relating to Taxes, including any schedule or attachment thereto,
and
including any amendment thereof.
“Transaction
Documents”
means,
with respect to any Person, this Agreement together with any other agreements,
instruments, certificates and documents executed by such Person in connection
herewith or therewith or in connection with the transactions contemplated
hereby
or thereby (including without limitation any Employment Agreement executed
by
such Person).
“Treasury
Regulations”
means
the regulations promulgated under the Code, including temporary and proposed
regulations.
Section
10.2. Publicity .
No
party shall issue any press release or make any other public announcement
relating to the subject matter of this Agreement without the prior written
consent of Parent.
Section
10.3. Payment
of Sales, Use or Similar Taxes; Transfer Taxes.
The
Members shall be responsible for and pay in a timely manner all sales,
use,
value added, documentary, stamp, gross receipts, registration, transfer,
conveyance, excise, recording, license and other similar Taxes and fees
(“Transfer
Taxes”),
arising out of or in connection with or attributable to the transactions
effected pursuant to the Transaction Documents. Each party hereto shall
prepare
and timely file all Tax Returns required to be filed in respect of Transfer
Taxes that are the primary responsibility of such party under applicable
Law;
provided,
however,
that
such party’s preparation of any such Tax Returns shall be subject to the other
party’s approval, which approval shall not be unreasonably withheld or
delayed.
Section
10.4. Expenses.
Except
as otherwise provided in this Agreement, each party shall bear all costs
and
expenses incurred by such party in connection with the negotiation and
execution
of this Agreement and each other Transaction Document, whether or not the
transactions contemplated hereby and thereby are consummated.
Section
10.5. Specific
Performance.
The
Members and the Companies acknowledge and agree that the breach of this
Agreement would cause irreparable damage to Purchaser and that Purchaser
will
not have an adequate remedy at law. Therefore, the obligations of the Members
and the Companies under this Agreement, including, without limitation,
the
Members’ obligations to sell the Membership Interests to Purchaser, shall be
enforceable by a decree of specific performance issued by any court of
competent
jurisdiction, and appropriate injunctive relief may be applied for and
granted
in connection therewith (without the requirement of the posting of a bond
or
other surety). Such remedies shall, however, be cumulative and not exclusive
and
shall be in addition to any other remedies which any party may have under
this
Agreement or otherwise.
Section
10.6. Submission
to Jurisdiction; Consent to Service of Process.
The
parties hereto hereby irrevocably submit to the exclusive jurisdiction
of any
federal or state court located in New York, New York over any dispute arising
out of or relating to this Agreement or any of the transactions contemplated
hereby and each party hereby irrevocably agrees that all claims in respect
of
such dispute or any suit, action or proceeding related thereto may be heard
and
determined in such courts. The parties hereby irrevocably waive, to the
fullest
extent permitted by applicable Law, any objection which they may now or
hereafter have to the laying of venue of any such dispute brought in such
court
or any defense of inconvenient forum for the maintenance of such dispute.
Each
of the parties hereto agrees that a judgment in any such dispute may be
enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by law.
Section
10.7. Entire
Agreement; Amendments and Waivers.
This
Agreement (including the schedules and exhibits hereto) represents the
entire
understanding and agreement between the parties hereto with respect to
the
subject matter hereof and can be amended, supplemented or changed, and
any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by Purchaser, in the case of an amendment,
supplement, modification or waiver sought to be enforced against Purchaser
or
Parent, or the Representative, in the case of an amendment, supplement,
modification or waiver sought to be enforced against any Member or the
Companies. No action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be deemed
to
constitute a waiver by the party taking such action of compliance with
any
representation, warranty, covenant or agreement contained herein. The waiver
by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach
or as a
waiver of any other or subsequent breach. No failure on the part of any
party to
exercise, and no delay in exercising, any right, power or remedy hereunder
shall
operate as a waiver thereof, nor shall any single or partial exercise of
such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided
by
law.
Section
10.8. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York without regard to conflicts of law principles
thereof.
Section
10.9. Table
of Contents and Headings.
The
table of contents and section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
Section
10.10. Notices.
All
notices and other communications under this Agreement shall be in writing
and
shall be deemed given when delivered personally or mailed by certified
mail,
return receipt requested, to the parties (and shall also be transmitted
by
facsimile to the Persons receiving copies thereof) at the following addresses
(or to such other address as a party may have specified by notice given
to the
other party pursuant to this provision):
If
to any
Company, to:
Xxxxxxxx
Chicco Agency
000
Xxxx
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Mr.
Xxxxxx Xxxxxxxx
Telecopier:
212-229-8496
With
a
copy to:
Xxxxxx
Xxxxxxx & Xxxxxxx LLP
0
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
H.
Xxxxxx Xxxxx, Jr., Esq.
Telecopier:
000-000-0000
If
to the
Representative or any Member, to the Representative or such Member in care
of:
Xxxxxxxx
Chicco Agency
000
Xxxx
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx Xxxxxxxx
Telecopier:
212-229-8496
With
a
copy to:
Xxxxxx
Xxxxxxx & Xxxxxxx LLP
0
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
H.
Xxxxxx Xxxxx, Jr., Esq.
Telecopier:
000-000-0000
If
to
Parent, to:
000
Xxxxxxxxxx Xxxx
Xxxxxxx
Xxxxx Xxxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attention:
Chief Executive Officer
With
a
copy to:
Akerman
Senterfitt LLP
000
Xxxxxxx Xxxxxx
Xxxxx
0000
Xxx
Xxxx,
Xxx Xxxx 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxx X. Xxxxxxxxxx, Esq.
If
to
Purchaser, to:
Xxxxxxxx
Chicco LLC
in
care
of inVentiv Health Inc.
000
Xxxxxxxxxx Xxxx
Xxxxxxx
Xxxxx Xxxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attention:
Chief Executive Officer
With
a
copy to:
Akerman
Senterfitt LLP
000
Xxxxxxx Xxxxxx
Xxxxx
0000
Xxx
Xxxx,
Xxx Xxxx 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxx X. Xxxxxxxxxx, Esq.
Any
such
notice or communication shall be deemed to have been received (i) when
delivered, if personally delivered or transmitted by electronic mail, with
receipt acknowledgment by the recipient by return electronic mail, (ii)
when
sent, if sent by facsimile on a business day during normal business hours
(or,
if not sent on a business day during normal business hours, on the next
business
day after the date sent by facsimile), (iii) on the next business day after
dispatch, if sent by nationally recognized, overnight courier guaranteeing
next
business day delivery, and (iv) on the 5th
business
day following the date on which the piece of mail containing such communication
is posted, if sent by mail.
Section
10.11. Severability.
If any
provision of this Agreement is invalid or unenforceable, the balance of
this
Agreement shall remain in effect.
Section
10.12. Assignment
of Works.
Each
Member agrees that all Work Product belongs in all instances to the Companies
and the Subsidiaries. To the extent any Member previously had or retained
any
right, title or interest of any kind or nature whatsoever in any Work Product,
such Member hereby assigns all such right, title and interest to the applicable
Company or Subsidiary and agrees to take any such action as may be reasonably
requested by Purchaser or Parent following the Closing to confirm such
Company's
or Subsidiary's exclusive right, title and interest in and to the Work
Product.
For purposes hereof, “Work
Product”
means
all inventions, innovations, improvements, technical information, systems,
software developments, methods, designs, analyses, drawings, reports, service
marks, trademarks, trade names, logos and all similar or related information
(whether patentable or unpatentable) which relates to any business conducted
or
proposed to be conducted by the Companies or the Subsidiaries as of the
date
hereof.
Section
10.13. Binding
Effect; Assignment.
This
Agreement shall not be assigned by any Member or the Companies, and neither
any
Member’s or the Companies’ obligations hereunder, or any of them, shall be
delegated, without the consent of Parent. Subject to the preceding sentence,
this Agreement shall be binding upon and inure to the benefit of the parties
and
their respective successors and assigns. Except as provided in Article
IX,
nothing in this Agreement shall create or be deemed to create any third
party
beneficiary rights in any person or entity not a party to this Agreement.
Section
10.14. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together will constitute one and the
same
instrument.
Section
10.15. Headings.
The
section headings contained in this Agreement are inserted for convenience
only
and shall not affect in any way the meaning or interpretation of this
Agreement.
*
*
*
Signatures
on following page
XXXXXXXX
CHICCO AGENCY, LLC
By /s/
XXXXXX CHANDLER______________
Name:
Xxxxxx Xxxxxxxx
Title:
BIOSECTOR
2 LLC
By /s/
XXXXXX CHANDLER______________
Name:
Xxxxxx Xxxxxxxx
Title:
INVENTIV
HEALTH, INC.
By /s/
XXXXX BASSIN___________________
Name:
Xxxxx Xxxxxx
Title:
Chief Financial Officer
XXXXXXXX
CHICCO LLC
By /s/
XXXXX BASSIN___________________
Name:
Xxxxx Xxxxxx
Title:
Vice President and Secretary
MEMBERS:
/s/
XXXXXX CHANDLER______________
Name:
Xxxxxx Xxxxxxxx
/s/
XXXXXXX X. CHICCO_____________
Name:
Xxxxxxx X. Chicco
