PURCHASE AGREEMENT
by and among
XXXXXX HIGHLAND GROUP, INC.,
HIGHLAND PARTNERS CO (CANADA),
HIGHLAND PARTNERS (AUST) PTY LTD, and
HIGHLAND PARTNERS LIMITED
and
XXXXXXXX & STRUGGLES INTERNATIONAL, INC.,
XXXXXXXX & STRUGGLES CANADA, INC., and
XXXXXXXX & STRUGGLES AUSTRALIA, LTD.
Dated as of September 18, 2006
TABLE OF CONTENTS
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ARTICLE I Purchase and Sale of Assets . . . . . . . . . . 1
Section 1.1 Purchased Assets . . . . . . . . . . . . . . . 1
Section 1.2 Excluded Assets . . . . . . . . . . . . . . . . 2
Section 1.3 Assumed Liabilities . . . . . . . . . . . . . . 3
Section 1.4 Excluded Liabilities . . . . . . . . . . . . . 4
ARTICLE II Purchase Price . . . . . . . . . . . . . . . . 5
Section 2.1 Amount and Form of Purchase Price . . . . . . . 5
Section 2.2 Payment of Closing Payment . . . . . . . . . . 5
Section 2.3 Adjustment of Purchase Price . . . . . . . . . 5
Section 2.4 Earnout . . . . . . . . . . . . . . . . . . . . 8
Section 2.5 Collection of Receivables . . . . . . . . . . . 11
Section 2.6 Allocation of Purchase Price . . . . . . . . . 12
ARTICLE III Closing . . . . . . . . . . . . . . . . . . . . 12
Section 3.1 Closing Date . . . . . . . . . . . . . . . . . 12
Section 3.2 Closing Deliveries . . . . . . . . . . . . . . 13
Section 3.3 Third-Party Consents . . . . . . . . . . . . . 13
ARTICLE IV Representations and Warranties of Seller . . . 14
Section 4.1 Organization and Good Standing . . . . . . . . 14
Section 4.2 Authorization, Validity and Execution . . . . . 14
Section 4.3 Consents and Approvals . . . . . . . . . . . . 14
Section 4.4 No Violations . . . . . . . . . . . . . . . . . 14
Section 4.5 Financial Statements . . . . . . . . . . . . . 15
Section 4.6 Receivables . . . . . . . . . . . . . . . . . . 15
Section 4.7 No Undisclosed Liabilities . . . . . . . . . . 15
Section 4.8 Absence of Certain Changes or Events . . . . . 15
Section 4.9 Real Property. . . . . . . . . . . . . . . . . 16
Section 4.10 Intellectual Property . . . . . . . . . . . . . 17
Section 4.11 Contracts . . . . . . . . . . . . . . . . . . . 18
Section 4.12 Title, Sufficiency and Condition of Assets . . 20
Section 4.13 Litigation . . . . . . . . . . . . . . . . . . 21
Section 4.14 No Default; Compliance with Laws; Permits . . . 21
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Section 4.15 Taxes . . . . . . . . . . . . . . . . . . . . . 21
Section 4.16 Employee Benefit Plans . . . . . . . . . . . . 23
Section 4.17 Employee and Labor Matters . . . . . . . . . . 24
Section 4.18 Customers and Suppliers . . . . . . . . . . . . 25
Section 4.19 Environmental Matters . . . . . . . . . . . . . 25
Section 4.20 Related Party Transactions . . . . . . . . . . 26
Section 4.21 Insurance . . . . . . . . . . . . . . . . . . . 26
Section 4.22 Brokers and Finders . . . . . . . . . . . . . . 26
Section 4.23 Full Disclosure . . . . . . . . . . . . . . . . 26
Section 4.24 No Other Representations and Warranties . . . . 26
ARTICLE V Representations and Warranties of Purchaser . . 27
Section 5.1 Organization and Standing . . . . . . . . . . . 27
Section 5.2 Authorization, Validity and Execution . . . . . 27
Section 5.3 Consents and Approvals . . . . . . . . . . . . 27
Section 5.4 No Violation . . . . . . . . . . . . . . . . . 27
Section 5.5 Availability of Funds . . . . . . . . . . . . . 28
Section 5.6 Litigation . . . . . . . . . . . . . . . . . . 28
Section 5.7 Brokers . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI Covenants . . . . . . . . . . . . . . . . . . . 28
Section 6.1 Conduct of Business Pending the Closing . . . . 28
Section 6.2 Consents . . . . . . . . . . . . . . . . . . . 30
Section 6.3 Implementing Agreement; Further Assurances;
Cooperation . . . . . . . . . . . . . . . . . . 30
Section 6.4 Notification . . . . . . . . . . . . . . . . . 30
Section 6.5 Purchaser's Inspection Rights . . . . . . . . . 31
Section 6.6 Confidentiality; Publicity . . . . . . . . . . 31
Section 6.7 Noncompetition and Nonsolicitation . . . . . . 32
Section 6.8 Employee Matters . . . . . . . . . . . . . . . 33
Section 6.9 Continued Use of "Highland" Name . . . . . . . 35
Section 6.10 Transfer Taxes . . . . . . . . . . . . . . . . 35
Section 6.11 No Solicitation . . . . . . . . . . . . . . . . 36
Section 6.12 Additional Financial Statements . . . . . . . . 36
Section 6.13 Termination of Related Party Arrangements . . . 36
Section 6.14 Termination of All Encumbrances . . . . . . . . 36
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Section 6.15 Releases from Letters of Credit and
Guarantees . . . . . . . . . . . . . . . . . . 36
Section 6.16 Bulk Sales Law . . . . . . . . . . . . . . . . 37
Section 6.17 New York Lease Cancellation . . . . . . . . . . 37
ARTICLE VII Conditions to Closing . . . . . . . . . . . . . 37
Section 7.1 Conditions to Obligations of Purchaser . . . . 37
Section 7.2 Conditions to Obligations of Seller and the
Selling Subsidiaries . . . . . . . . . . . . . 39
ARTICLE VIII Indemnification . . . . . . . . . . . . . . . . 40
Section 8.1 Indemnification by Seller . . . . . . . . . . . 40
Section 8.2 Indemnification by Purchaser . . . . . . . . . 41
Section 8.3 Survival of Representations, Warranties and
Covenants . . . . . . . . . . . . . . . . . . . 41
Section 8.4 Limitations on Indemnification Obligations . . 42
Section 8.5 Exclusive Remedy . . . . . . . . . . . . . . . 44
ARTICLE IX Tax Matters . . . . . . . . . . . . . . . . . . 44
Section 9.1 Canadian Tax Election . . . . . . . . . . . . . 44
Section 9.2 UK Value Added Tax . . . . . . . . . . . . . . 45
Section 9.3 UK Capital Allowances . . . . . . . . . . . . . 45
ARTICLE X Termination . . . . . . . . . . . . . . . . . . 45
Section 10.1 Termination . . . . . . . . . . . . . . . . . . 45
Section 10.2 Procedure and Effect of Termination . . . . . . 46
ARTICLE XI Miscellaneous . . . . . . . . . . . . . . . . . 47
Section 11.1 Expenses . . . . . . . . . . . . . . . . . . . 47
Section 11.2 Governing Law; Consent to Jurisdiction;
Waiver of Jury Trial . . . . . . . . . . . . . 47
Section 11.3 Notices . . . . . . . . . . . . . . . . . . . . 47
Section 11.4 Entire Agreement; Amendment . . . . . . . . . . 48
Section 11.5 Assignment . . . . . . . . . . . . . . . . . . 48
Section 11.6 Interpretation . . . . . . . . . . . . . . . . 49
Section 11.7 Certain Definitions . . . . . . . . . . . . . . 49
Section 11.8 Third Party Beneficiaries . . . . . . . . . . . 50
Section 11.9 Waiver . . . . . . . . . . . . . . . . . . . . 50
Section 11.10 Severability . . . . . . . . . . . . . . . . . 50
Section 11.11 Counterparts; Delivery . . . . . . . . . . . . 50
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Section 11.12 Specific Performance . . . . . . . . . . . . . 50
Section 11.13 Headings . . . . . . . . . . . . . . . . . . . 50
Section 11.14 Schedules and Exhibits . . . . . . . . . . . . 50
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DEFINED TERMS
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2007 Earnout Amount . . . . . . . . . . . . . . . . . . . . . . . . 9
2007 Earnout Payment Date . . . . . . . . . . . . . . . . . . . . . 9
2007 Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2008 Earnout Amount . . . . . . . . . . . . . . . . . . . . . . . . 9
2008 Earnout Payment Date . . . . . . . . . . . . . . . . . . . . . 9
2008 Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . 36
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Allocation Schedule . . . . . . . . . . . . . . . . . . . . . . . . 12
Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 3
Australian License . . . . . . . . . . . . . . . . . . . . . . . . 17
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Business IP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Business Records . . . . . . . . . . . . . . . . . . . . . . . . . 2
CAA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Closing Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Computer Software . . . . . . . . . . . . . . . . . . . . . . . . . 18
Confidential Information . . . . . . . . . . . . . . . . . . . . . 31
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . 31
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Desktop Software . . . . . . . . . . . . . . . . . . . . . . . . . 18
Earnout Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . 26
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . 4
Final Net Working Capital . . . . . . . . . . . . . . . . . . . . . 5
Final Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 15
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . 14
Hazardous Substance . . . . . . . . . . . . . . . . . . . . . . . . 26
Heidrick Australia . . . . . . . . . . . . . . . . . . . . . . . . 1
Heidrick Canada . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Highland Australia . . . . . . . . . . . . . . . . . . . . . . . . 1
Highland Canada . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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Highland UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
HMRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . 42
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . 42
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 17
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ITA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Key Employee Agreement . . . . . . . . . . . . . . . . . . . . . . 38
Key Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Leased Real Property . . . . . . . . . . . . . . . . . . . . . . . 16
Letter Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 17
Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . 49
Maximum Purchase Price Amount . . . . . . . . . . . . . . . . . . . 5
Negative Purchase Price Adjustment . . . . . . . . . . . . . . . . 5
Net Working Capital . . . . . . . . . . . . . . . . . . . . . . . . 6
Non-UK Transferring Employees . . . . . . . . . . . . . . . . . . . 33
Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Ordinary Course of Business . . . . . . . . . . . . . . . . . . . . 15
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . 20
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Positive Purchase Price Adjustment . . . . . . . . . . . . . . . . 5
Preferred Provider Arrangement . . . . . . . . . . . . . . . . . . 38
Preliminary Net Working Capital . . . . . . . . . . . . . . . . . . 5
Preliminary Statement . . . . . . . . . . . . . . . . . . . . . . . 5
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . 5
Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchaser Companies . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchaser Documents . . . . . . . . . . . . . . . . . . . . . . . . 27
Purchaser Indemnified Parties . . . . . . . . . . . . . . . . . . . 40
Purchaser's Letter . . . . . . . . . . . . . . . . . . . . . . . . 6
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Restrictive Covenants . . . . . . . . . . . . . . . . . . . . . . . 34
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Revenue Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Revenue Notice of Disagreement . . . . . . . . . . . . . . . . . . 9
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Seller Companies . . . . . . . . . . . . . . . . . . . . . . . . . 1
Seller Documents . . . . . . . . . . . . . . . . . . . . . . . . . 14
Seller Indemnified Parties . . . . . . . . . . . . . . . . . . . . 41
Selling Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 1
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Transfer Regulations . . . . . . . . . . . . . . . . . . . . . . . 4
Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Transferring Employees . . . . . . . . . . . . . . . . . . . . . . 34
Transition Services Agreement . . . . . . . . . . . . . . . . . . . 38
UK Leased Real Property . . . . . . . . . . . . . . . . . . . . . . 45
UK Transferring Employees . . . . . . . . . . . . . . . . . . . . . 33
Uncollected Receivables . . . . . . . . . . . . . . . . . . . . . . 11
VAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
VAT Election . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
VATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SCHEDULES
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Schedule 1.1(a) . . . . . . . . . . . . . . . . . . . . . . Equipment
Schedule 1.1(b) . . . . . . . . . . . . . . . . . Purchased Contracts
Schedule 1.2(c) . . . . . . . . . . . . . . . . . . Excluded Contracts
Schedule 1.3(f) . . . . . . . . . . . . . . Other Assumed Liabilities
Schedule 4.1 . . . . . . . . . . . . . . . . . . . . . Qualifications
Schedule 4.3 . . . . . . . . . . . . . Seller Consents and Approvals
Schedule 4.4 . . . . . . . . . . . . . . . . . . . . . . . Violations
Schedule 4.5 . . . . . . . . . . . . . . . . . . Financial Statements
Schedule 4.6 . . . . . . . . . . . . . . . . . . . . . . Receivables
Schedule 4.7 . . . . . . . . . . . . . . . . . Disclosed Liabilities
Schedule 4.8 . . . . . . . . . . . . . . . Certain Changes or Events
Schedule 4.9(b) . . . . . . . . . . . . . . . . . Leased Real Property
Schedule 4.10(b) . . . . . . . . . . . . . . . . . . . . Business IP
Schedule 4.10(c) . . . . . . . . . . . . . . . . IP Related Contracts
Schedule 4.10(d) . . . . . . . . . . . . . . . . IP Ownership Claims
Schedule 4.10(f) . . . . . . . . . . . . . . . . . Computer Software
Schedule 4.11(a) . . . . . . . . . . . . . . . . . . . . . Contracts
Schedule 4.11(c) . . . . . . . . . . . . Contracts Requiring Consent
Schedule 4.11(d) . . . . . . . . . . . . . . Off-Limits Arrangements
Schedule 4.12 . . . . . . . . . . . . . . . . . . . . . . Encumbrances
Schedule 4.13 . . . . . . . . . . . . . . . . . . . . . . . Litigation
Schedule 4.14(a) . . . . . . . . . . . . . . Defaults and Violations
Schedule 4.14(b) . . . . . . . . . . . . . . . . . . . . . . Permits
Schedule 4.15 . . . . . . . . . . . . . . . . . . . . . . . . . Taxes
Schedule 4.16(a) . . . . . . . . . . . . . . . . . . . Benefit Plans
Schedule 4.16(d) . . . . . . . . . . . . . . . . . Severance Benefits
Schedule 4.14(f) . . . . . . . . . . . . . . . . . . . . . Employees
Schedule 4.16(g) . . . . . . . . . . . . . . Commission Arrangements
Schedule 4.17(e) . . . . . . . . . . . . . . . . . Employment Matters
Schedule 4.17(g) . . . . . . . . . Obligations under Employment Laws
Schedule 4.18 . . . . . . . . . . . . . . . . Customers and Suppliers
Schedule 4.19 . . . . . . . . . . . . . . . . . Environmental Matters
Schedule 4.20 . . . . . . . . . . . . . . . Related Party Transactions
Schedule 4.21 . . . . . . . . . . . . . . . . . . . . . . . Insurance
Schedule 5.3 . . . . . . . . . . . . Purchaser Consents and Approvals
Schedule 6.1 . . . . . . . . . . . . . . . . Conduct Pending Closing
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Schedule 6.8(a) . . . . . . . . . . . . Non-UK Transferring Employees
Schedule 6.8(b) . . . . . . . . . . . . . . UK Transferring Employees
Schedule 6.8(b)(i) . . Highland UK Obligations - Transfer Regulations
Schedule 6.8(d) . . . . . . . . . . . Partners Not Offered Employment
Schedule 6.8(g) . . . . . . . . . . . . . . . . . . . Pro Rata Bonuses
Schedule 6.8(i) . . . . . . . . . . . . . . . Seller Separation Policy
Schedule 6.8(j) . . . . . . . . . . . . . . . . . . . Certain Employee
Schedule 6.13 . . . . . . . . . Continuing Related Party Arrangements
Schedule 6.15 . . . . . . . . . . . . Letters of Credit and Guarantees
Schedule 6.17 . . . . . . . . . . . Lease Termination Payment Formula
Schedule 7.1(e) . . . . . . . . . . . . . . . . . . . . Key Employees
Schedule 7.1(h)(ix) . . . . . . . . . . . . . . . . Delivered Consents
EXHIBITS
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Exhibit A . . . . . . . . . . . . . . Source of Business Guidelines
Exhibit B . . . . . . . . . . . . . Forms of Key Employee Agreement
Exhibit C . . . . . . . . . . . . . Form of Seller's Counsel Opinion
Exhibit D . . . . . . . . . . . Form of Purchaser's Counsel Opinion
Exhibit E . . . . . . . . . . . . . . . . . . . . Seller's Knowledge
Exhibit F . . . . . . . . . . . . . . . . . . Purchaser's Knowledge
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PURCHASE AGREEMENT
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This PURCHASE AGREEMENT (this "Agreement"), dated as of
September 18, 2006, is made by and among XXXXXX HIGHLAND GROUP, INC.,
a Delaware corporation ("Seller"), HIGHLAND PARTNERS CO (CANADA), a
Nova Scotia unlimited liability company ("Highland Canada"), HIGHLAND
PARTNERS (AUST) PTY LTD, a corporation organized under the laws of New
South Wales, Australia ("Highland Australia"), and HIGHLAND PARTNERS
LIMITED, a company incorporated under the laws of England and Wales
("Highland UK" and together with Highland Canada and Highland
Australia, the "Selling Subsidiaries"), XXXXXXXX & STRUGGLES
INTERNATIONAL, INC., a Delaware corporation ("Purchaser"), XXXXXXXX &
STRUGGLES CANADA, INC., an Ontario corporation ("Heidrick Canada"),
and XXXXXXXX & STRUGGLES AUSTRALIA, LTD., an Illinois corporation
("Heidrick Australia" and together with Purchaser and Heidrick Canada,
the "Purchaser Companies"), (each, a "Party" and collectively, the
"Parties").
RECITALS
WHEREAS, Seller and the Selling Subsidiaries (collectively,
the "Seller Companies") are engaged, among other things, in the
business of retained executive search and placement under the name
"Highland Partners" (the "Business"); and
WHEREAS, the Seller Companies desire to sell to the
Purchaser Companies, and the Purchaser Companies desire to purchase
from the Seller Companies, the Business through the sale, assignment,
transfer and delivery to the Purchaser Companies of certain assets of
the Seller Companies.
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements herein
contained, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
SECTION 1.1 PURCHASED ASSETS. On the terms and subject
to the conditions set forth in this Agreement, except as set forth in
SECTION 1.2, at the Closing (as defined in SECTION 3.1), Seller and
Highland UK will sell, assign, transfer and deliver to Purchaser,
Highland Canada will sell, assign, transfer and deliver to Heidrick
Canada, and Highland Australia will sell, assign, transfer and deliver
to Heidrick Australia, and Purchaser will purchase, acquire and accept
from Seller and Highland UK, Heidrick Canada will purchase, acquire
and accept from Highland Canada, and Heidrick Australia will purchase,
acquire and accept from Highland Australia, all of the right, title
and interest of the applicable Seller Company in and to the assets,
properties, rights, contracts, claims and other assets used, held for
use or intended to be used primarily in the operation or conduct of
the Business (collectively, the "Purchased Assets"), in each case free
and clear of all Encumbrances other than Permitted Encumbrances,
including the following:
(a) All equipment, furniture, furnishings, fixtures and
other tangible personal property ("Equipment") primarily related to
the Business, including the Equipment listed on SCHEDULE 1.1(a);
(b) All contracts, agreements, commitments, leases,
licenses and arrangements, whether written or oral (collectively,
"Contracts"), (A) listed on SCHEDULE 1.1(b) or (B) to which any Seller
Company is a party or by which any Seller Company is bound that on the
Closing Date (as defined
in SECTION 3.1) are used, held for use or intended to
be used primarily in, or that arise primarily out of, the
operation or conduct of the Business;
(c) All accounts receivable, contract receivables and other
claims for money or other obligations due to each Seller Company on
the Closing Date arising out of the operation or conduct of the
Business (collectively, the "Receivables");
(d) All Business IP (as defined in SECTION 4.10(a)),
including the Intellectual Property (as defined in SECTION 4.10(a))
listed on SCHEDULE 4.10(b);
(e) All books and records, including all books of account,
ledgers, financial and accounting records, files, invoices and billing
records, research material, tangible data, documents, personnel
records with respect to Transferring Employees (as defined in SECTION
6.8(c)), invoices, customer lists, vendor lists, service provider
lists, candidate records, search databases, customer and vendor
correspondence, sales and promotional literature, catalogs and
advertising material used for the marketing of products or services
(collectively, "Business Records"), in each case that on the Closing
Date are used, held for use or intended to be used primarily in, or
that arise primarily out of, the conduct or operation of the Business
and, in each case, however evidenced (including by computer disk or
tape);
(f) All Permits (as defined in SECTION 4.14(b)) of each
Seller Company that on the Closing Date are used, held for use or
intended to be used primarily in the operation or conduct of the
Business and are transferable;
(g) All rights, claims and credits related to any Purchased
Asset or any Assumed Liability (as defined in SECTION 1.3), including
any prepaid claims, prepaid taxes and other prepaid expense items
primarily related to any Purchased Asset or any Assumed Liability, all
guarantees, warranties, indemnities, rights to receive payment for
goods and services rendered and to receive goods and services, and
similar rights in favor of any Seller Company in respect of any
Purchased Asset or any Assumed Liability;
(h) All other assets reflected on the Final Statement (as
defined in SECTION 2.3(b)(i)); and
(i) All goodwill generated by, and associated with, the
Business.
SECTION 1.2 EXCLUDED ASSETS. The Seller Companies will
not sell, assign, transfer or deliver to the Purchaser Companies the
following assets (collectively, the "Excluded Assets"):
(a) Any assets, properties, rights, contracts and claims,
wherever located, whether tangible or intangible, real or personal, of
any Seller Company that are not used, held for use or intended to be
used primarily in the operation or conduct of the Business;
(b) Except as set forth in SECTION 1.1(h), all cash, cash
equivalents, bank accounts, lockboxes and deposits, and any rights or
interests in, to or with the cash management system of any Seller
Company and its Affiliates (as defined in SECTION 11.7(a));
(c) All rights of the Seller Companies under the Contracts
set forth on SCHEDULE 1.2(c) and any other Contract not included in
the Purchased Assets and all Equipment identified on Exhibit A to
Schedule 1.1(a) as "Remains with Seller" located at facilities leased
pursuant to such Contracts;
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(d) All Intellectual Property that is not included in the
Purchased Assets, including all rights of the Seller and its
Subsidiaries to use the "Xxxxxx" and "Xxxxxx Highland Group" trade
names or trademarks, or any part or derivation thereof, together with
all goodwill associated therewith, represented thereby or pertaining
thereto;
(e) Except as expressly set forth in SECTION 6.8, all
Benefit Plans (as defined in SECTION 4.16(a)) of the Seller Companies
and any trusts, insurance arrangements or other assets held pursuant
to, or set aside to fund the obligations of Seller or its Subsidiaries
under, any such Benefit Plans;
(f) All insurance policies and all rights of the Seller
Companies of every nature and description under or arising out of such
insurance policies;
(g) All financial and accounting Business Records that form
part of Seller's and its Affiliates' general ledgers, all Tax Returns
of any Seller Company and all Business Records of any Seller Company
that do not relate primarily to any Purchased Asset or any Assumed
Liability;
(h) All intercompany receivables owed by any Affiliate of a
Seller Company to such Seller Company;
(i) Any refunds or credits with respect to any Taxes, plus
any related interest received or due from the relevant taxing
authority;
(j) Any equity interest in any Seller Company;
(k) All equity securities and warrants to acquire equity
securities of a current or former client of the Business;
(l) The Seller Companies' minute books, stock records and
corporate seals;
(m) All rights of the Seller Companies under this
Agreement, the Purchaser Documents and the Seller Documents; and
(n) All rights, claims and credits of any Seller Company to
the extent related to any other Excluded Asset or any of the Excluded
Liabilities (as defined in SECTION 1.4), including any such items
arising under insurance policies and all guarantees, warranties,
indemnities and similar rights in favor of any Seller Company in
respect of any other Excluded Asset or any of the Excluded
Liabilities.
SECTION 1.3 ASSUMED LIABILITIES. At the Closing, the
Purchaser Companies will assume and be liable for, and will pay,
perform and discharge as and when due, the following debts, claims,
liabilities, obligations, damages or expenses (whether known or
unknown, vested or unvested, asserted or unasserted, absolute or
contingent, accrued or unaccrued, assessed or unassessed, liquidated
or unliquidated, actual or potential, and due to or become due) (each,
a "Liability") of the respective Seller Companies from which the
Purchaser Companies are purchasing Purchased Assets, as and to the
extent not satisfied or extinguished as of the Closing Date
(collectively, the "Assumed Liabilities"):
(a) All Liabilities to the extent reflected or reserved
against on the Final Statement;
(b) All obligations arising with respect to the performance
after the Closing Date of the Contracts and Permits included in the
Purchased Assets, excluding any Liability resulting from any breach
thereof or hereof by any Seller Company or any Affiliate thereof on or
prior to the Closing Date;
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(c) Except as expressly set forth in SECTION 6.8(b)(i), all
Liabilities arising from or connected with the employment of any
employee of Highland UK with respect to the operation of the Transfer
of Undertakings (Protection of Employment) Regulations 2006 (as
amended) (the "Transfer Regulations") and Purchaser's operation of the
Business following the Closing Date, excluding any Liability resulting
from any breach of any employment Contract or Benefit Plan or any
breach of Applicable Law by any Seller Company or any Affiliate
thereof on or prior to the Closing Date;
(d) All Liabilities arising as a result of a failure on the
part of Purchaser to provide Highland UK with such information as is
necessary concerning any measures (within the meaning of Regulation 13
of the Transfer Regulations) that the Purchaser intends to take in
relation to any UK Transferring Employee (as defined in SECTION
6.8(b)) to enable Highland UK to discharge its obligations under
Regulations 13 and 14 of the Transfer Regulations and/or as a result
of any failure on the part of Purchaser to provide accurate
information concerning any such measures;
(e) All Liabilities arising as a result of any substantial
change by Purchaser in the working conditions (including the terms and
conditions of employment) of any UK Transferring Employee, to his/her
material detriment, which is intended to take effect after the Closing
Date; and
(f) All other Liabilities listed on SCHEDULE 1.3(f).
SECTION 1.4 EXCLUDED LIABILITIES. Except for the Assumed
Liabilities, no Purchaser Company will assume or be liable for any
Liabilities of any Seller Company (collectively, the "Excluded
Liabilities"), including:
(a) All Liabilities in respect of borrowed money or
evidenced by debt instruments, loan agreements, indentures,
debentures, notes, guarantees or similar instruments;
(b) All obligations under interest rate exchange, currency
exchange, swaps, futures or similar agreements;
(c) All guarantees, direct or indirect, in any manner
(including reimbursement agreements in respect of letters of credit),
of all or any part of any indebtedness of any third party;
(d) All intercompany payables owed by any Seller Company to
any Affiliates of such Seller Company;
(e) Except as expressly set forth in SECTION 6.8, all
Liabilities under Benefit Plans of Highland UK up to and including the
Closing Date, and all Liabilities under Benefit Plans of Seller,
Highland Canada and Highland Australia;
(f) Any Liabilities for claims arising from or connected
with the employment of any employee, including workers compensation or
similar claims and claims by an eligible spouse or dependent and, in
the case of a UK Transferring Employee, any trade union, staff council
or similar body or elected employee representative, arising or related
to the operation of the Business on or prior to the Closing Date;
(g) All Liabilities relating to obligations to, or claims
of, Transferring Employees with respect to equity securities or
warrants to acquire equity securities of a current or former client of
the Business;
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(h) All Liabilities for Taxes; and
(i) All other Liabilities of the Seller Companies relating
to the operation or conduct of the Business arising prior to the
Closing unless specifically included in the Assumed Liabilities.
ARTICLE II
PURCHASE PRICE
SECTION 2.1 AMOUNT AND FORM OF PURCHASE PRICE. The
aggregate consideration to be paid by the Purchaser Companies to the
Seller Companies in consideration of the Purchased Assets (the
"Purchase Price") will consist of:
(a) $36,600,000 (the "Closing Payment"), subject to the
adjustments set forth in SECTION 2.3, to be paid in the manner and at
the time set forth in SECTION 2.2; and
(b) the Earnout Amounts, to be paid in the manner and at
the times set forth in SECTION 2.4;
PROVIDED THAT, under no circumstances, other than an adjustment of the
Purchase Price pursuant to SECTION 2.3, shall the total Purchase
Price exceed an aggregate amount of $51,600,000 (the "Maximum Purchase
Price Amount").
SECTION 2.2 PAYMENT OF CLOSING PAYMENT. At the Closing,
Purchaser will pay to Seller, by wire transfer of immediately
available funds to an account designated by Seller on or before the
second Business Day prior to the Closing Date, an amount equal to the
Closing Payment.
SECTION 2.3 ADJUSTMENT OF PURCHASE PRICE.
(a) PURCHASE PRICE ADJUSTMENT. Subject to the provisions
of clauses (b) through (e) of this SECTION 2.3, the Purchase Price
will be adjusted following the Closing Date to the extent that the Net
Working Capital as of the Closing Date (before giving effect to the
transactions contemplated by ARTICLE I) (the "Final Net Working
Capital"), is more or less, as the case may be, than $0 (such
adjustment is referred to herein as the "Purchase Price Adjustment").
A "Positive Purchase Price Adjustment" means the amount by which the
Final Net Working Capital is more than $0, and a "Negative Purchase
Price Adjustment" means the amount by which the Final Net Working
Capital is less than $0.
(b) PRELIMINARY STATEMENT.
(i) As promptly as practicable, but in no event later
than 30 calendar days, following the Closing Date, Seller will
prepare and deliver to Purchaser a preliminary statement (the
"Preliminary Statement") setting forth in reasonable detail
Seller's calculation of the Final Net Working Capital (the
"Preliminary Net Working Capital"). The Preliminary Statement
will be prepared in accordance with United States generally
accepted accounting principles ("GAAP"). The Preliminary
Statement will be accompanied by a certificate of an officer of
Seller to the effect that, in the opinion of Seller's management,
the Preliminary Statement was prepared in accordance with the
requirements of this SECTION 2.3(b). The Preliminary Statement
as finally modified pursuant to clauses (c) through (e) of this
SECTION 2.3 to become the final statement of Final Net Working
Capital is referred to herein as the "Final Statement." All
disputes with respect to the Preliminary Statement and the Final
Statement will be resolved in accordance with clauses (c) through
(e) of this SECTION 2.3.
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(ii) From the Closing to the finalization of the Final
Statement, Purchaser will assist, in good faith, Seller and its
independent accountants in the preparation of the Preliminary
Statement and will provide Seller and Seller's independent
accountants access at all reasonable times to the personnel and
Business Records of the Business for such purpose.
(iii) From the Closing to the finalization of the
Final Statement, Purchaser will not take any actions with respect
to the accounting records of the Business that are not consistent
with the past practices of the Business.
(iv) "Net Working Capital", as used herein, means
(x) the sum of the current assets included in the
Purchased Assets,
minus
(y) the sum of the current liabilities included
in the Assumed Liabilities,
calculated (A) as if the financial position of the Business, in
whichever entity or entities then conducted, was being presented as a
single separate and independent entity, (B) in accordance with GAAP
and (C) based on the information relating to the content of the Final
Statement that is known to Purchaser or Seller on the Closing Date or
becomes known by Purchaser or Seller after the Closing Date if such
information relates to an event that occurred prior to the Closing
Date. For purposes of this Agreement, GAAP is to be applied on a
basis consistent with those accounting principles, policies, methods
and practices (in each case, to the extent consistent with GAAP)
reflected by Seller in the preparation of the Financial Statements and
the Estimated Statement.
(c) PURCHASER'S REVIEW OF PRELIMINARY STATEMENT.
(i) Purchaser will have 30 calendar days following
Seller's delivery of the Preliminary Statement to Purchaser to
review and respond to the Preliminary Statement, during which
period Seller will grant Purchaser and Purchaser's independent
accountants reasonable access during normal business hours to the
books and records of Seller and the Business relevant to the
Preliminary Statement.
(ii) Unless Purchaser has delivered to Seller a written
letter of its disagreement with the Preliminary Statement (the
"Purchaser's Letter") on or prior to 5:00 p.m. (Central Time) on
the 30th calendar day following Seller's delivery of the
Preliminary Statement to Purchaser, the Preliminary Statement
will become the Final Statement. If Purchaser's Letter is
delivered in a timely manner, then (A) any amount set forth in
the Preliminary Statement as to which Purchaser has not objected
and properly proposed an adjustment in Purchaser's Letter will be
deemed to be accepted and will become part of the Final
Statement, and (B) the Preliminary Statement will become the
Final Statement on the earlier of (1) the date that Seller and
Purchaser resolve in writing all remaining disputed matters
properly specified in Purchaser's Letter or (2) the date that the
Arbitrator (as defined in SECTION 2.3(e)(i)) delivers to Seller
and Purchaser a copy of the Final Statement and the Purchase
Price Adjustment pursuant to SECTION 2.3(e)(v).
(iii) Purchaser's Letter will (A) set forth in
reasonable detail any proposed adjustment to the Preliminary
Statement and the basis for such adjustment (including a specific
dollar amount and accompanied by a reasonably detailed
explanation), (B) only include disagreements based on mathematical
errors or based on the Preliminary Statement not being
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calculated in accordance with SECTION 2.3(b), and (C) be
accompanied by a certificate of Purchaser that it has complied
with the covenant set forth in SECTION 2.3(b)(iii).
(d) MEETING TO RESOLVE PROPOSED ADJUSTMENTS. As soon as
reasonably practicable, but in any event no later than 25 calendar
days after Purchaser's delivery of the Purchaser's Letter to Seller,
Purchaser and Seller will meet and endeavor to resolve the unaccepted
adjustments described in Purchaser's Letter. If Purchaser and Seller
reach agreement in writing on such adjustments, the Final Statement
will be the Preliminary Statement modified to reflect the adjustments
accepted pursuant to SECTION 2.3(c)(ii)(A) and those otherwise agreed
to in writing by the parties pursuant to this SECTION 2.3(d).
(e) RESOLUTION BY ARBITRATION.
(i) If Purchaser and Seller do not resolve to their
mutual satisfaction all disputed adjustments in the Purchaser's
Letter within 25 calendar days following the meeting provided for
in SECTION 2.3(d), any remaining disputed adjustments that were
properly included in Purchaser's Letter will be settled by the
Chicago, Illinois office of Xxxxx Xxxxxxxx LLP (or, if such firm
will decline to act or is, at the time of submission thereto, a
principal independent auditor of Purchaser or Seller, to another
independent accounting firm of national reputation acceptable to
Purchaser and Seller) (either Xxxxx Xxxxxxxx LLP or such other
accounting firm being the "Arbitrator") in accordance with the
following provisions of this SECTION 2.3(e). If, based solely on
the undisputed adjustments in the Preliminary Statement,
Purchaser and Seller are able to agree on a provisional
calculation of Final Net Working Capital, then within 30 calendar
days following the meeting provided for in SECTION 2.3(d), Seller
will pay Purchaser an amount equal to the Negative Purchase Price
Adjustment, or Purchaser will pay Seller an amount equal to the
Positive Purchase Price Adjustment, as applicable, which would be
due under SECTION 2.3(f) based on such provisional calculation.
(ii) On or prior to the 30th calendar day following the
meeting provided for in SECTION 2.3(d), Purchaser and Seller will
furnish the Arbitrator with a copy of the Agreement, the
Financial Statements, the Preliminary Statement and Purchaser's
Letter. Purchaser and Seller will also give the Arbitrator
access to the Business Records of the Business, as well as any
accounting work papers or other schedules relating to the
preparation of the Preliminary Statement and Purchaser's Letter.
(iii) Within 25 calendar days of submitting the
disputed adjustments to the Arbitrator pursuant to SECTION
2.3(e)(ii), Purchaser and Seller will provide to the Arbitrator
and to each other a copy of a written submission setting forth
their respective positions with respect to each remaining
disputed adjustment that was properly included in Purchaser's
Letter. Within 25 calendar days thereafter, Purchaser and Seller
may provide to the Arbitrator and to each other a written
rebuttal, which will be limited to addressing the points raised
in the opposing party's initial written submission. No
additional written submissions will be made to the Arbitrator
unless specifically requested by the Arbitrator.
(iv) The Arbitrator's engagement will be limited to (A)
reviewing the Preliminary Statement and the amounts properly
placed in dispute by Purchaser's Letter pursuant to SECTION
2.3(c); (B) reviewing the parties' written submissions provided
pursuant to SECTION 2.3(e)(iii); (C) acting as an expert and not
as an arbitrator, to determine (1) whether Seller's proposed
amount for an item in the Preliminary Statement or Purchaser's
proposed adjustment thereto in Purchaser's Letter is calculated
more nearly in accordance with SECTION 2.3(b) and (2) whether
there were mathematical errors in the Preliminary Statement,
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provided that in each case the Arbitrator may only make
determinations with respect to the items properly placed in
dispute by Purchaser's Letter pursuant to SECTION 2.3(c) and,
with respect to each such item, may not assign a value greater
than the greatest value, or less than the smallest value, for
such item claimed by any Party, as presented to the Arbitrator
pursuant hereto; (D) preparing the Final Statement, which will
include those amounts in the Preliminary Statement accepted by
Purchaser pursuant to SECTION 2.3(c)(ii)(A), those adjustments
otherwise agreed to in writing by the parties pursuant to SECTION
2.3(d), and those amounts determined by the Arbitrator to be
calculated more nearly in accordance with SECTION 2.3(b) pursuant
to its determinations in CLAUSE (C) above; and (E) calculating
the Purchase Price Adjustment. Seller and Purchaser shall each
pay one-half of the fees and expenses of the Arbitrator.
(v) The Arbitrator will complete its preparation of
the Final Statement and the Purchase Price Adjustment within 25
calendar days after receiving the written submissions, rebuttal
responses, if any, and any other written information pursuant to
SECTION 2.3(e)(iii), and will deliver a copy of the Final
Statement and the Purchase Price Adjustment to Seller and
Purchaser and, together with a report setting forth each disputed
adjustment, the Arbitrator's determination with respect thereto,
and a statement of the Arbitrator's reasons for such
determination. The Arbitrator's determination will be conclusive
and binding upon the parties and may be entered and enforced in
any court of competent jurisdiction.
(f) PAYMENT OF PURCHASE PRICE ADJUSTMENT. If the Final Net
Working Capital is (A) less than $0, Seller will pay Purchaser an
amount equal to the Negative Purchase Price Adjustment, or (B) greater
than $0, Purchaser will pay Seller an amount equal to the Positive
Purchase Price Adjustment; provided that any payment made pursuant to
the foregoing CLAUSE (A) or CLAUSE (B) shall be adjusted to take into
account any payment previously made pursuant to SECTION 2.3(e)(i).
The Purchase Price Adjustment will be paid within five Business Days
following the date on which the Preliminary Statement becomes the
Final Statement (as determined in accordance with SECTION 2.3(c)(ii)).
The Purchase Price Adjustment, together with interest thereon at an
annual rate equal to the U.S. prime interest rate of lending as set
forth in THE WALL STREET JOURNAL as of the Closing Date calculated on
the basis of the number of days elapsed from and including the Closing
Date to and excluding the date of payment, will be paid in immediately
available funds by wire transfer pursuant to instructions provided in
writing by the recipient of the funds.
SECTION 2.4 EARNOUT.
(a) DEFINED TERMS. As used in this SECTION 2.4, the
following terms will have the following meanings:
(i) "2007 Revenue" means the Revenue for the period
beginning January 1, 2007 and ending December 31, 2007, (A) as
set forth in the Revenue Notice for such period pursuant to
SECTION 2.4(b), or (B) if such amount is disputed pursuant to a
Revenue Notice of Disagreement delivered pursuant to SECTION
2.4(c), as agreed to by Purchaser and Seller pursuant to SECTION
2.4(d) if all disputed items in the Revenue Notice of
Disagreement are resolved pursuant to SECTION 2.4(d), or (C) if
Purchaser and Seller fail to resolve all disputed items in the
Revenue Notice of Disagreement pursuant to SECTION 2.4(d), as
reflected in the revised Revenue Notice delivered by the
Arbitrator pursuant to SECTION 2.4(e)(vi).
(ii) "2008 Revenue" means the Revenue for the period
beginning January 1, 2008 and ending December 31, 2008, (A) as
set forth in the Revenue Notice for such period pursuant to
SECTION 2.4(b), or (B) if such amount is disputed pursuant to a
Revenue Notice of Disagreement delivered pursuant to SECTION
2.4(c), as agreed to by Purchaser and Seller pursuant
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to SECTION 2.4(d) if all disputed items in the Revenue Notice of
Disagreement are resolved pursuant to SECTION 2.4(d), or (C) if
Purchaser and Seller fail to resolve all disputed items in the
Revenue Notice of Disagreement pursuant to SECTION 2.4(d), as
reflected in the revised Revenue Notice delivered by the
Arbitrator pursuant to SECTION 2.4(e)(vi).
(iii) "Revenue" means, for any period, the fees
invoiced by the Purchaser Companies that are allocated to the
Transferring Employees for purposes of Purchaser's "source of
business" calculation, as calculated in accordance with the
guidelines set forth in EXHIBIT A.
(iv) "2007 Earnout Payment Date" means 10 Business Days
after the date the Revenue Notice for the 12-month period ending
December 31, 2007 is delivered to Seller.
(v) "2008 Earnout Payment Date" means 10 Business Days
after the date the Revenue Notice for the 12-month period ending
December 31, 2008 is delivered to Seller.
(vi) "2007 Earnout Amount" means an amount equal to
0.70 times 107% of the amount of 2007 Revenue minus (A)
$36,000,000 and (B) the amount, if any, by which the sum of the
2007 Earnout Amount and the Closing Payment exceeds the Maximum
Purchase Price Amount. For the avoidance of doubt, it is agreed
and acknowledged that the aggregate of the 2007 Earnout Amount
and the Closing Payment will not exceed the Maximum Purchase
Price Amount under any circumstances.
(vii) "2008 Earnout Amount" means an amount equal to
107% of the average of the 2007 Revenue and the 2008 Revenue
minus (A) the sum of the 2007 Earnout Amount and $36,000,000 and
(B) the amount, if any, by which the sum of the 2007 Earnout
Amount, the 2008 Earnout Amount and the Closing Payment exceeds
the Maximum Purchase Price Amount. For the avoidance of doubt,
it is agreed and acknowledged that the aggregate of the 2007
Earnout Amount, the 2008 Earnout Amount and the Closing Payment
will not exceed the Maximum Purchase Price Amount under any
circumstances.
(viii) "Earnout Amounts" means the 2007 Earnout Amount
and the 2008 Earnout Amount, collectively.
(b) As promptly as practicable, and in any event within 30
calendar days of Purchaser's public release of its consolidated
earnings for each of the 12-month periods ending December 31, 2007,
and December 31, 2008, Purchaser will deliver to Seller a notice
(each, a "Revenue Notice") setting forth in reasonable detail
Purchaser's calculation of the 2007 Revenue and 2008 Revenue, as
applicable. Each Revenue Notice will be accompanied by a certificate
of an officer of Purchaser stating that the Revenue Notice was
prepared in accordance with the requirements of SECTION 2.4(a).
(c) Review of Revenue Notice; Disputes.
(i) Seller will have 30 calendar days following
Purchaser's delivery of a Revenue Notice to Seller to complete
its review of such Revenue Notice, during which period (and for
so long thereafter as such Revenue Notice is unresolved)
Purchaser will grant Seller and its representatives reasonable
access during normal business hours to the books and records of
Purchaser and the Business relevant to the calculation of the
2007 Revenue or the 2008 Revenue, as the case may be.
(ii) Unless Seller has delivered to Purchaser a written
letter of its disagreement with a Revenue Notice (the "Revenue
Notice of Disagreement") on or prior to 5:00
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p.m. (Central Time) on the 30th calendar day following Purchaser's
delivery of such Revenue Notice to Seller, Seller will be deemed to
have accepted and agreed to such Revenue Notice. The Revenue Notice
of Disagreement with respect to each Revenue Notice will set forth
in reasonable detail any proposed adjustment to such Revenue
Notice and the basis for such adjustment (including a specific
dollar amount and accompanied by a reasonably detailed
explanation).
(iii) If a Revenue Notice of Disagreement is delivered
pursuant to SECTION 2.4(c)(ii), then any amount set forth in the
related Revenue Notice as to which Seller has not objected in the
Revenue Notice of Disagreement in accordance with SECTION
2.4(c)(ii) will be deemed to be accepted.
(d) MEETING TO RESOLVE PROPOSED ADJUSTMENTS. As soon as
reasonably practicable, but in any event no later than 25 calendar
days, after Seller's delivery of a Revenue Notice of Disagreement to
Purchaser, Purchaser and Seller will meet and endeavor to resolve the
proposed adjustments in such Revenue Notice of Disagreement. If
Purchaser and Seller reach agreement in writing on such adjustments,
the related Revenue Notice will be modified to reflect the adjustments
accepted pursuant to this SECTION 2.4(d).
(e) RESOLUTION BY ARBITRATION.
(i) If Purchaser and Seller do not resolve to their
mutual satisfaction all disputed adjustments in a Revenue Notice
of Disagreement within 25 days following the meeting provided for
in SECTION 2.4(d), any remaining disputed adjustments that were
included in a Revenue Notice of Disagreement will be settled by
the Arbitrator in accordance with the following provisions of
this SECTION 2.4(e).
(ii) On or prior to the 30th calendar day following the
meeting provided for in SECTION 2.4(d), Purchaser and Seller will
furnish the Arbitrator with a copy of this Agreement, the related
Revenue Notice and the Revenue Notice of Disagreement. Purchaser
and Seller will also give the Arbitrator access to the books and
records of the Business, any accounting work papers or other
schedules relating to the preparation of the related Revenue
Notice and the Revenue Notice of Disagreement and all other items
reasonably requested by the Arbitrator.
(iii) Within 25 calendar days of submitting the
disputed adjustments to the Arbitrator pursuant to SECTION
2.4(e)(ii), Purchaser and Seller will provide to the Arbitrator
and to each other a copy of a written submission setting forth
their respective positions with respect to each remaining
disputed adjustment that was properly included in the Revenue
Notice of Disagreement. Within 25 calendar days thereafter,
Purchaser and Seller may provide to the Arbitrator and to each
other a written rebuttal, which will be limited to addressing the
points raised in the opposing party's initial written submission.
No additional written submissions will be made to the Arbitrator
unless specifically requested by the Arbitrator.
(iv) The Arbitrator's engagement will be limited to (A)
reviewing the related Revenue Notice and the amounts properly
placed in dispute by the Revenue Notice of Disagreement; (B)
reviewing the parties' written submissions provided pursuant to
SECTION 2.4(e)(iii); (C) acting as an expert and not as an
arbitrator, to determine (1) whether Purchaser's proposed amount
for each disputed element of the 2007 Revenue or the 2008
Revenue, as applicable, in the related Revenue Notice or Seller's
proposed adjustment thereto in the Revenue Notice of Disagreement
is calculated more nearly in accordance with SECTION 2.4(a) and
(2) whether there were mathematical errors in the related Revenue
Notice, provided that in each case the Arbitrator may only make
determinations with respect to the items properly placed
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in dispute by the Revenue Notice of Disagreement and, with respect
to each such item, may not assign a value greater than the
greatest value, or less than the smallest value, for such item
claimed by any Party, as presented to the Arbitrator pursuant
hereto; and (D) preparing a revised Revenue Notice, which will
include those amounts in the related Revenue Notice accepted by
Seller pursuant to SECTION 2.4(c)(iii), those adjustments
otherwise agreed to in writing by the parties pursuant to SECTION
2.4(d), and those amounts determined by the Arbitrator to be
calculated more nearly in accordance with SECTION 2.4(a) pursuant
to its determination in CLAUSE (C) above.
(v) Purchaser and Seller shall each pay one-half of
the fees and expenses of the Arbitrator.
(vi) The Arbitrator will complete its preparation of
the revised Revenue Notice within 25 calendar days after
receiving the written submissions, rebuttal responses, if any,
and any other written information pursuant to SECTION 2.4(e)(iii)
and will deliver a copy of the revised Revenue Notice to
Purchaser and Seller, together with a report setting forth each
disputed adjustment, the Arbitrator's determination with respect
thereto and a statement of the Arbitrator's reasons for such
determination. The Arbitrator's determination will be conclusive
and binding upon the parties and may be entered and enforced in
any court of competent jurisdiction.
(f) PAYMENT OF 2007 EARNOUT AMOUNT AND 0000 XXXXXXX XXXXXX.
Xx the 2007 Earnout Payment Date, Purchaser will pay to Seller the
2007 Earnout Amount set forth in the Revenue Notice relating to the
2007 Revenue. On the 2008 Earnout Payment Date, Purchaser will pay to
Seller the 2008 Earnout Amount set forth in the Revenue Notice
relating to the 2008 Revenue. If Seller delivers a Revenue Notice of
Disagreement to Purchaser pursuant to SECTION 2.4(c) with respect to
either the 2007 Revenue or the 2008 Revenue, on the fifth Business Day
after (1) the date on which the last disputed item in the applicable
Revenue Notice of Disagreement is resolved in writing, if all disputed
items in such Revenue Notice of Disagreement are resolved pursuant to
SECTION 2.4(d), or (2) the date on which the Arbitrator delivers its
report and the revised Revenue Notice to Purchaser and Seller pursuant
to SECTION 2.4(e)(vi), if any disputed items in the applicable Revenue
Notice of Disagreement are submitted to the Arbitrator for resolution
pursuant to SECTION 2.4(e), Purchaser will pay to Seller the
additional Earnout Amount determined to be due and owed to Seller in
accordance with SECTIONS 2.4(d) or SECTION 2.4(e), together with
interest thereon at an annual rate equal to the U.S. prime interest
rate of lending as set forth in THE WALL STREET JOURNAL as of the 2007
Earnout Payment Date (with respect to disputes regarding the 2007
Earnout Amount) and as of the 2008 Earnout Payment Date (with respect
to disputes regarding the 2008 Earnout Amount) calculated on the basis
of the number of days elapsed from and including the applicable
Earnout Payment Date to and excluding the date of payment. Each
payment pursuant to this SECTION 2.4(f) will be made in immediately
available funds by wire transfer pursuant to instructions provided in
writing by Seller.
(g) CONDUCT OF BUSINESS DURING THE EARNOUT PERIOD. During
the period from the Closing Date through December 31, 2008, Purchaser
shall track Revenue in such a manner as to allow for the calculation
of the Earnout Amounts and shall provide the Key Employees and their
leverage personnel with financial and administrative support no less
favorable than such support provided to similarly situated employees
of Purchaser.
SECTION 2.5 COLLECTION OF RECEIVABLES. Purchaser shall
use commercially reasonable efforts to collect the Receivables
included in the Purchased Assets. Within 10 days following the six
month anniversary of the Closing Date, Purchaser shall deliver to
Seller a written notice setting forth in reasonable detail the
Receivables included in the Purchased Assets for which Purchaser shall
have failed to receive payment by the six month anniversary of the
Closing Date (the "Uncollected Receivables").
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For purposes of determining whether a Receivable has been paid, Purchaser
shall apply all payments received after the Closing to the Receivables
included in the Purchased Assets to the oldest Receivable first, based upon
the date such Receivable was due, unless otherwise specified by the payor.
Within 10 days following delivery to Seller by Purchaser of such
written notice, (a) if the aggregate amount of Uncollected Receivables
exceeds the sum of (x) the amount of the reserve for doubtful accounts
reflected on the Final Statement and (y) the amount accrued on the
Final Statement for commissions with respect to the Uncollected
Receivables, which commissions are not payable until such Uncollected
Receivables are collected, (i) Seller shall pay to Purchaser an amount
equal to such excess, and (ii) Purchaser shall reassign to Seller
Purchaser's rights with respect to the Uncollected Receivables, and
(b) if the sum of (x) the amount of the reserve for doubtful accounts
reflected on the Final Statement and (y) the amount accrued on the
Final Statement for commissions with respect to the Uncollected
Receivables, which commissions are not payable until such Uncollected
Receivables are collected, exceeds the aggregate amount of the
Uncollected Receivables, Purchaser shall pay to Seller an amount equal
to such excess. In the event the Seller subsequently collects any
Uncollected Receivable that is reassigned to it, Seller shall pay to
Purchaser an amount equal to the commissions that are payable by
Purchaser with respect to the collection of such Uncollected
Receivable (provided that such payments shall not exceed the amount
accrued for such commissions on the Final Statement). Any payment
pursuant to this SECTION 2.5 shall constitute a reduction (if made by
Seller) or an increase (if made by Purchaser) to the Purchase Price
equal to the amount paid.
SECTION 2.6 ALLOCATION OF PURCHASE PRICE. As soon as
practicable after each of the Closing, the Purchase Price Adjustment,
the 2007 Earnout Payment Date and the 2008 Earnout Payment Date,
Purchaser and Seller will negotiate in good faith to agree upon a
schedule (the "Allocation Schedule") allocating the Closing Payment,
the Purchase Price Adjustment, the 2007 Earnout Amount and the 2008
Earnout Amount, as the case may be, among the Purchased Assets. Any
adjustment to the Purchase Price contemplated by Section 2.5 shall be
allocated to the Receivables. Except as otherwise required by law or
pursuant to a "determination" under Section 1313(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), Purchaser and Seller
agree to act, and will cause their Affiliates to act, in accordance
with the allocations contained in the Allocation Schedule for purposes
of all income Taxes (as defined in SECTION 4.15(i)), and neither
Purchaser nor Seller will take any position inconsistent therewith in
any income Tax Returns (as defined in SECTION 4.15(j)) or similar
filings (including IRS Form 8594), any refund claim, any litigation,
or otherwise. In the event that Purchaser and Seller are unable to
reach an agreement within 30 calendar days after the latest of (a) the
date of payment of the Purchase Price Adjustment, (b) the 2007 Earnout
Payment Date and (c) the 2008 Earnout Payment Date, then any disputed
items will be resolved within the next 30 calendar days by the
Arbitrator, the fees and costs of which will be borne equally by
Purchaser and Seller. The Allocation Schedule and IRS Form 8594 will
be revised to reflect the resolution of the Arbitrator and, once
revised, will be final and binding on all parties without further
adjustment.
ARTICLE III
CLOSING
SECTION 3.1 CLOSING DATE. The closing of the
transactions contemplated hereby (the "Closing") will take place at
8:00 a.m., Central Time, at the offices of Xxxxxx Xxxxxx LLP, 6600
Sears Tower, Chicago, Illinois, on October 2, 2006, subject to the
satisfaction or waiver of the last of the conditions set forth in
ARTICLE VII hereof, or such other date or time as the Parties shall
mutually agree in writing. The date on which the Closing occurs is
referred to herein as the "Closing Date." The Parties agree that, if
the Closing occurs on October 2, 2006, for all purposes of this
Agreement the Closing shall thereafter be deemed to have occurred at
12:01 a.m., Central Time, on October 1, 2006, and the Closing Date
shall thereafter be deemed to be October 1, 2006.
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SECTION 3.2 CLOSING DELIVERIES.
(a) BY SELLER. At or prior to the Closing, Seller will
deliver to Purchaser each of the documents and other items described
in SECTION 7.1(h).
(b) BY PURCHASER. At the Closing, Purchaser will deliver
to Seller:
(i) the Closing Payment, as provided in SECTION 2.2;
and
(ii) the documents and other items described in SECTION
7.2(g).
SECTION 3.3 THIRD-PARTY CONSENTS.
(a) Notwithstanding anything in this Agreement to the
contrary, to the extent that any Contract included in the Purchased
Assets may not be properly assigned or transferred without the consent
of a third party, or if the assignment or attempted assignment of any
such Contract would constitute a violation or breach thereof or a
violation of any law, nothing in this Agreement will constitute an
assignment or an attempted assignment thereof and, except as provided
for in SECTION 3.3(c), Purchaser will not be deemed to assume any
liabilities or obligations thereunder until properly assigned. The
Seller Companies and the Purchaser Companies will use commercially
reasonable efforts to obtain any such consents; provided, however,
that commercially reasonable efforts shall not include any requirement
of any Party to commence any litigation or offer or grant any
accommodation (financial or otherwise) to any other Person.
(b) To the extent that the consents described in
SECTION 3.3(a) are not obtained prior to Closing, each of the Seller
Companies will use commercially reasonable efforts to (i) provide the
applicable Purchaser Company with the economic benefits of any such
Contract until its termination date, (ii) cooperate in any lawful
arrangement designed to provide such benefits to the applicable
Purchaser Company and (iii) enforce, at the request of and for the
account of the applicable Purchaser Company at its expense, any rights
of such Seller Company arising from any such Contract against any
third party, including the right to elect to terminate such Contract
in accordance with the terms thereof upon the advice of Purchaser.
The failure or inability to obtain any consent subject to this SECTION
3.3(b) will not be a breach of this Agreement so long as the Seller
Companies have carried out their obligations under this SECTION
3.3(b).
(c) To the extent that a Purchaser Company is provided the
benefits of any Contract pursuant to SECTION 3.3(b), Purchaser will
perform or cause its Affiliates to perform the obligations of the
applicable Seller Company thereunder or in connection therewith, at no
cost to such Seller Company, including reimbursing the applicable
Seller Company for rent and other costs for any such Contract for
Leased Real Property, but only to the extent (i) that such action by
Purchaser would not result in any default thereunder or in connection
therewith and (ii) such performance pertains to the benefits provided
to a Purchaser Company. The Purchaser Companies will indemnify the
Seller Companies against any and all Losses (as defined in SECTION
8.1) arising out of any default by a Purchaser Company in the
performance of such obligations. The indemnification of the Seller
Companies under this SECTION 3.3 will be governed by the
indemnification provisions set forth in ARTICLE VIII hereto.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as set
forth below:
SECTION 4.1 ORGANIZATION AND GOOD STANDING. Each of the
Seller Companies is a corporation, limited liability company or other
business entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and each has all
necessary power and authority to own, lease and operate its properties
and to carry on its business as currently being conducted. Each of
the Seller Companies is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction in
which its right, title or interest in or to any of its assets or the
conduct of the Business by it makes such qualification necessary,
except where the failure to be so qualified or in good standing would
not have a Material Adverse Effect (as defined in SECTION 11.7(e)).
SCHEDULE 4.1 lists all jurisdictions in which each of the Seller
Companies is qualified to do business. True and correct copies of the
certificate of incorporation, articles of association, bylaws or other
similar organizational instruments, as amended to date, of each of the
Seller Companies, have been made available to Purchaser.
SECTION 4.2 AUTHORIZATION, VALIDITY AND EXECUTION. Each
Seller Company has all necessary power and authority (a) to execute
and deliver this Agreement and the other agreements, documents and
instruments to be executed by such Seller Company in connection with
the transactions contemplated hereby (such other agreements, documents
and instruments, the "Seller Documents"), (b) to perform (or cause to
be performed) its obligations hereunder and thereunder and (c) to
consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and the Seller
Documents, and consummation of the transactions contemplated hereby
and thereby, has been duly authorized by the Board of Directors of
each of the Seller Companies and, to the extent required by Applicable
Law or the organizational documents of any Seller Company, the
stockholder of any Seller Company, and no other corporate or
stockholder action is necessary to authorize the execution and
delivery by Seller and the Selling Subsidiaries of this Agreement and
the Seller Documents and the consummation by each of them of the
transactions contemplated hereby and thereby. This Agreement has
been, and each of the Seller Documents will be on or prior to the
Closing Date, duly executed and delivered by Seller and the Selling
Subsidiaries, as applicable, and, assuming the due execution of this
Agreement by the Purchaser Companies, is a legal, valid and binding
obligation of Seller and each of the Selling Subsidiaries, enforceable
against each in accordance with its terms, except to the extent that
its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium, receivership and similar laws
affecting the enforcement of creditors' rights generally and to
general equitable principles.
SECTION 4.3 CONSENTS AND APPROVALS. Except as set forth
in SCHEDULE 4.3, the execution, performance and delivery of this
Agreement and the consummation of the transactions contemplated hereby
do not require any of the Seller Companies to file any material
notice, registration or filing with, or obtain any material consent,
approval, authorization, exemption or Permit from (a) any foreign,
federal, state, provincial or local governmental, regulatory or
administrative body, agency or authority ("Governmental Authority") or
(b) any third party other than with respect to a Contract that is not
required to be listed or disclosed under this Article IV.
SECTION 4.4 NO VIOLATIONS. Except as set forth in
SCHEDULE 4.4, the execution and delivery of this Agreement by the
Seller Companies, the consummation of the transactions contemplated
hereby and the compliance by the Seller Companies with the provisions
hereof (a) will not violate the provisions of the certificate of
incorporation, the bylaws or any other similar organizational
instrument of any Seller Company; (b) will not violate any statute,
law, ordinance, rule or regulation of any jurisdiction
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applicable to any Seller Company, the Purchased Assets or the Business,
including those applicable to the employment and employee benefits of any
employees of the Business (each, an "Applicable Law"); (c) will not
violate any Order of any Governmental Authority applicable to any
Seller Company, the Purchased Assets or the Business; and (d) will not
result in a violation or breach of, conflict with, constitute (with or
without due notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation, payment or acceleration)
under any Contract, or result in the creation of any mortgage, lien,
pledge, security interest, charge or other encumbrance of any kind and
character ("Encumbrances") upon any of the Purchased Assets, except in
the case of clauses (b), (c) and (d) as would not have a Material
Adverse Effect.
SECTION 4.5 FINANCIAL STATEMENTS.
(a) Seller has delivered to Purchaser (i) unaudited
combined balance sheets and income statements relating to the Business
for the fiscal years ended December 31, 2003, 2004 and 2005 and for
the six months ended June 30, 2006, (ii) audited balance sheets and
income statements relating to each of Highland Australia and Highland
UK for the fiscal years ended December 31, 2003 and 2004 and (iii)
unaudited balance sheets and income statements relating to each of
Highland Australia and Highland UK for the fiscal year ended December
31, 2005 and for the six months ended June 30, 2006 (collectively, the
"Financial Statements"), a copy of each of which is included on
SCHEDULE 4.5.
(b) The Financial Statements (including the footnotes
thereto) present fairly the financial condition and results of
operations and cash flows of the Business at the respective dates
indicated and for the respective periods then ended. Each of the
Financial Statements described in clause (i) of SECTION 4.5(a) has
been prepared in accordance with GAAP, and each of the Financial
Statements described in clauses (ii) and (iii) of SECTION 4.5(a) has
been prepared in accordance with generally accepted accounting
principles in Australia or the United Kingdom, as applicable, in each
case applied on a consistent basis, except in the case of unaudited
financial statements for the absence of footnotes. The Business
Records accurately and fairly reflect, in reasonable detail, all
transactions and all items of income and expense, assets and
liabilities and accruals relating to the Business.
SECTION 4.6 RECEIVABLES. Except as set forth on SCHEDULE
4.6, all Receivables, whether reflected on the balance sheet of the
Business included in the Financial Statements or otherwise, represent
bona fide arm's length transactions in the ordinary course of business
consistent with past practices ("Ordinary Course of Business") and are
free and clear of all Encumbrances other than Permitted Encumbrances.
Since June 30, 2006, (a) there have not been any write-offs as
uncollectible of any Receivables, except for write-offs in the
Ordinary Course of Business, and (b) there has not been a material
change in the aggregate amount of such Receivables and other amounts
owing to any Seller Company in connection with the Business or the
aging thereof.
SECTION 4.7 NO UNDISCLOSED LIABILITIES. None of the
Seller Companies has any Liabilities of any nature relating to the
Business that would be required under GAAP, to be reflected on a
balance sheet or in the footnotes thereto, other than (a) Liabilities
that are reflected or reserved against in the most recent balance
sheet included in the Financial Statements or disclosed in the
footnotes thereto, (b) Liabilities incurred since the date of such
balance sheet in the Ordinary Course of Business, none of which has
had or would have a Material Adverse Effect, and (c) Liabilities
described on SCHEDULE 4.7.
SECTION 4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except
as set forth on SCHEDULE 4.8, since June 30, 2006, the Seller
Companies have conducted the Business only in the Ordinary Course of
Business, and the Business has not experienced any change which
individually or in the aggregate has had or would have a Material
Adverse Effect. Except as set forth on SCHEDULE 4.8 and except as
has had or would have a Material Adverse Effect, since that date,
none of the Seller Companies
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has taken any of the actions or permitted to occur any of the events
prohibited by SECTION 6.1 or committed to do any of the foregoing in
connection with the operation or conduct of the Business.
SECTION 4.9 REAL PROPERTY.
(a) OWNED REAL PROPERTY. None of the Seller Companies owns
any real property used, held for use or intended to be used in
connection with the Business.
(b) LEASED REAL PROPERTY. SCHEDULE 4.9(b) sets forth a
true and correct list of all real property and interests in real
property that are leased or subleased by any Seller Company (the
"Leased Real Property") and that are used, held for use or intended to
be used in connection with the Business. Seller has made available to
Purchaser true and correct copies of all such leases and subleases,
each as amended to date. Except for the Leased Real Property, there
are no other leases, subleases, licenses or other agreements under
which any Seller Company uses or occupies or has the right to use or
occupy, now or in the future, any real property in connection with the
Business. Except as set forth on SCHEDULE 4.9(b):
(i) All of the land, buildings, structures and other
improvements used by the Seller Companies in the conduct of the
Business are included in the Leased Real Property. None of the
Seller Companies is a lessor or sublessor of, or makes available
for use to any Person (other than the Selling Subsidiaries), (i)
any Leased Real Property or (ii) any portion of any premises
otherwise occupied by the Seller Companies in connection with the
Business.
(ii) Except in each case as would not have a Material
Adverse Effect, the Seller Companies have obtained all
appropriate Permits, certificates of occupancy, licenses,
easements and rights of way, including proofs of dedication,
required to use and operate the Leased Real Property in the
manner in which the Leased Real Property is currently being used
and operated; and no such Permits, certificates of occupancy,
licenses, easements and rights of way will be required as a
result of the transactions contemplated hereby to be issued after
the date hereof in order to permit the Purchaser Companies,
following the Closing, to continue to own or operate the Leased
Real Property in the same manner as currently owned or operated.
(iii) To the knowledge of Seller, the buildings,
structures, fixtures, equipment, building mechanical systems
(including electrical, heating and air conditioning systems), and
other improvements in, on or within the Leased Real Property, are
in adequate operating condition and repair for the purposes for
which they are currently used by the Business, subject to
reasonable wear and tear and continued repair and replacement in
accordance with reasonable and customary business practice, and
there are no deferred maintenance, repairs or unrepaired defects
in the structural components comprising such buildings and
building mechanical systems located thereon or therein that would
have a Material Adverse Effect.
(iv) None of the Seller Companies has received written
notice of and, to the knowledge of Seller, there is not any
pending, threatened or contemplated condemnation proceeding
affecting the Leased Real Property or any part thereof, or any
sale or other disposition of the Leased Real Property or any part
thereof in lieu of condemnation. The Leased Real Property has
not suffered any material damage by fire or other casualty which
has not heretofore been substantially repaired and restored.
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SECTION 4.10 INTELLECTUAL PROPERTY.
(a) "Intellectual Property" means any (i) patents, (ii)
trademarks, service marks, trade names, brand names, trade dress,
slogans, logos and internet domain names, (iii) inventions,
improvements, discoveries, ideas, processes, formulae, designs,
models, industrial designs, know-how, proprietary information, trade
secrets, and confidential information, whether or not patented or
patentable, (iv) copyrights, writings and other copyrightable works
and works in progress, databases and software, (v) other intellectual
property rights and foreign equivalent or counterpart rights and forms
of protection of a similar or analogous nature or having similar
effect in any jurisdiction throughout the world, (vi) registrations
and applications for registration of any of the foregoing, and (vii)
renewals, extensions, continuations, divisionals, reexaminations or
reissues or equivalent or counterpart of any of the foregoing in any
jurisdiction throughout the world. The term "Business IP" means any
Intellectual Property owned by any Seller Company that is currently
used, held for use or intended to be used primarily in the operation
or conduct of the Business.
(b) SCHEDULE 4.10(b) sets forth a true and correct list of
the following Business IP included in the Purchased Assets: (i)
utility patents and applications therefor; (ii) design patents and
applications therefor; (iii) utility models and applications therefor;
(iv) trademarks, trade names, brand names, logos, service marks
(whether registered or unregistered), and all applications therefor;
(v) registered copyrights and applications therefor; and (vi) domain
names and domain name registrations. SCHEDULE 4.10(b) identifies the
owner of each item listed thereon and, in the case of registrations
and applications, the jurisdiction, application or registration number
and date. The applicable Seller Company has properly executed and
recorded all documents necessary to perfect its title, subject to the
rights of third parties set forth in SCHEDULE 4.10(c) to all such
Business IP set forth on SCHEDULE 4.10(b), has filed all documents and
paid all Taxes, fees and other financial obligations required to be
filed or paid through the date hereof to maintain in force and effect
all Business IP set forth on SCHEDULE 4.10(b), and, except for fees
and costs required to prosecute and maintain such Business IP in
effect, none of the Seller Companies is obligated to make any payments
of any kind in respect thereof.
(c) SCHEDULE 4.10(c) sets forth a correct and complete list
of all Contracts with respect to any Intellectual Property (excluding
computer software licenses). Except pursuant to the Contracts listed
on SCHEDULE 4.10(c), none of the Seller Companies has granted any
options, licenses or agreements of any kind relating to the Business
IP or the marketing or distribution thereof or has granted access or
rights of use to any other Person other than its respective employees
with respect to any Business IP. The Letter Agreement by and among
Seller, Lelliott Xxxxxxxx Consulting Pty Ltd. and Xxxxxx Investments
Pty Limited dated May 17, 2005 (the "Letter Agreement") and the
trademark license set forth therein (the "Australian License") was
terminated effective July 21, 2006 by agreement of the parties thereto
and the Seller Companies have no continuing obligation or liability of
any nature with respect to the Letter Agreement or the arrangements
described therein, including the Australian License. Documentation
evidencing the termination of the Letter Agreement and the Australian
License has been delivered to Purchaser. Except pursuant to the
Contracts listed on SCHEDULE 4.10(c), none of the Seller Companies is
bound by or a party to any options, licenses or agreements of any kind
relating to the Intellectual Property (excluding computer software
licenses) of any other Person. Subject to the rights of third parties
set forth in SCHEDULE 4.10(c), all Business IP is owned by the Seller
Companies, free and clear of all Encumbrances other than Permitted
Encumbrances.
(d) The conduct of the Business by the Seller Companies as
presently conducted and the services provided by the Seller Companies
in connection therewith does not violate, conflict with or infringe
the intellectual property rights of any other Person. To the
knowledge of Seller, neither the conduct of any other Person's
business, nor the nature of any of the services it provides, infringes
upon any Business IP. Except as set forth on SCHEDULE 4.10(d), no
claims are pending, or to the knowledge of
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Seller, threatened, against any of the Seller Companies by any Person with
respect to the ownership, validity, enforceability, effectiveness or use of
any Business IP, and since January 1, 2003, neither Seller nor any of the
Selling Subsidiaries has received any written communication alleging
that Seller or any of the Selling Subsidiaries has violated any rights
relating to the intellectual property of any Person in the operation
or conduct of the Business.
(e) The Seller Companies have taken all reasonable steps in
accordance with customary business practice to establish policies and
procedures requiring employees and agents to maintain the
confidentiality of non-public information relating to the Business IP,
including the inventions, trade secrets, know how and other
proprietary rights of the Seller Companies, and to appropriately
restrict the use thereof. To the knowledge of Seller, none of the
Seller Companies is making unauthorized use of any confidential
information or trade secrets of any Person in connection with the
Business. To the knowledge of Seller, there has been no
misappropriation of any material trade secrets or other material
confidential or proprietary Business IP by any Person.
(f) The Seller Companies own, or have sufficient license to
use, all computer software, including source code, operating systems,
data, databases, files, documentation and other materials related
thereto, that is used primarily in or necessary for the conduct of the
Business as currently conducted ("Computer Software"), and, except as
set forth on SCHEDULE 4.10(f), the consummation of the transactions
contemplated hereby will not conflict with, alter or impair any such
rights or require the payment of any additional fees or amounts.
SCHEDULE 4.10(f) sets forth a list of all material Computer Software
(excluding Desktop Software). The Company has made available to
Purchaser true and complete copies of all Contracts under which the
Seller or any of the Selling Subsidiaries has the right to use
Computer Software (other than Desktop Software) in connection with the
Business. "Desktop Software" means any third party office
productivity Computer Software that is licensed for use on desktop or
laptop "PC-class" computers or related local area network servers
other than by a written agreement executed by the licensee. Desktop
Software includes software licensed by shrink wrap or click wrap
licenses, the Microsoft Windows class of operating system software and
Microsoft Office or similar office productivity software (including
individual programs contained therein).
SECTION 4.11 CONTRACTS.
(a) SCHEDULE 4.11(a) sets forth a true and correct list, as
of the date hereof, of all of the following Contracts (other than the
Contracts and agreements listed in SCHEDULES 4.9(b), 4.10(c), 4.16,
4.20 and 4.21) that primarily relate to the Business, true and correct
copies of which have been made available to Purchaser:
(i) Consulting, independent contractor or employment
agreements;
(ii) employee collective bargaining agreements or other
similar Contracts with any labor union, organization, association
or any related award of a Governmental Authority;
(iii) covenants of any Seller Company not to compete or
other covenants materially restricting the development, marketing
or provision of any services of the Business;
(iv) master agreements or preferred provider agreements
for the provision of executive search services to any customers
of the Seller Companies and Contracts governing search projects
of the Seller Companies that are in-process as of the date
hereof;
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(v) lease or similar Contracts with any Person under
which (A) any Seller Company is lessee of, or holds or uses, any
equipment, vehicle or other tangible personal property owned by
any Person in connection with the Business or (B) any Seller
Company is a lessor or sublessor of, or makes available for use
by any Person, any tangible personal property, that, in each
case, has an aggregate future liability or receivable, as the
case may be, in excess of $150,000 or is not terminable by the
applicable Seller Company by notice of not more than 60 days
without payment or penalty;
(vi) Contracts under which any Seller Company has
borrowed any money from, established a line of credit with, or
issued any note, bond, debenture or other evidence of
indebtedness to, any Person, in each case that individually is in
excess of $150,000;
(vii) Contracts under which (A) any Person has directly
or indirectly guaranteed indebtedness, liabilities or obligations
of the Seller Companies in connection with the Business or (B)
any of the Seller Companies has directly or indirectly guaranteed
indebtedness, liabilities or obligations of any Person, in each
case that individually is in excess of $150,000;
(viii) Contracts for any joint venture, partnership or
similar agreement;
(ix) Contracts granting an Encumbrance other than a
Permitted Encumbrance upon any assets or properties used, held
for use or intended for use in connection with the Business;
(x) Contracts providing for indemnification of any
Person with respect to liabilities relating to the Business
(other than Contracts entered into in the Ordinary Course of
Business that do not relate primarily to indemnification
obligations, but contain customary provisions incidental to such
Contracts);
(xi) powers of attorney (other than a power of attorney
given in the Ordinary Course of Business with respect to routine
Tax matters);
(xii) confidentiality agreements (other than (A)
Contracts that do not relate primarily to confidentiality or non-
disclosure obligations, but contain customary provisions
incidental to such Contracts and (B) customary Contracts entered
into in the Ordinary Course of Business that impose
confidentiality and non-disclosure obligations on parties to any
such Contracts other than the Seller Companies);
(xiii) Contracts providing for the provision of
products and services by or to any Seller Company in connection
with the Business involving payment to or by, as the case may be,
the applicable Seller Company of more than $150,000 or extending
for a term more than 180 days from the date of this Agreement
(unless terminable by the applicable Seller Company without
payment or penalty upon no more than 60 days' notice);
(xiv) Contracts with or Permits by or from any
Governmental Authority;
(xv) currency exchange, interest rate exchange,
commodity exchange or similar Contracts; and
(xvi) any other Contracts to which any Seller Company
is a party or by or to which such Seller Company or any of its
assets or business is bound or subject to in connection with
operation or conduct of the Business that has an aggregate
future liability to any Person in
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excess of $150,000 or is not terminable by the applicable Seller
Company by notice of not more than 60 days without payment or penalty.
(b) All Contracts required to be listed in the Schedules
hereto (which, for purposes of this entire SECTION 4.11, includes all
such Contracts required to be listed or disclosed under this
SECTION 4.11 and all such other Contracts required to be listed or
disclosed under any other Section of this Article IV) are valid,
binding and in full force and effect and are enforceable by the applicable
Seller Company, in accordance with their respective terms, except to the
extent that enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium, receivership and similar laws
affecting the enforcement of creditors' rights generally and to general
equitable principles. The Seller Companies have performed in all material
respects all obligations required to be performed by them to date under all
such Contracts, and none of the Seller Companies is (with or without the
lapse of time or the giving of notice, or both) in breach or default in
any material respect thereunder and, to the knowledge of Seller, no other
party to any of such Contracts is (with or without the lapse of time or
the giving of notice, or both) in breach or default in any material respect
thereunder. To the knowledge of Seller, none of the Seller Companies has
received oral or written notice of the intention of any party to terminate
any such Contract. Complete and correct copies of all such Contracts,
together with all modifications and amendments thereto, have been made
available to Purchaser.
(c) SCHEDULE 4.11(c) sets forth each Contract to which any
Seller Company is a party or by or to which any of such Seller
Company's assets or business is bound or subject in connection with
the operation or conduct of the Business (required to be listed or
disclosed under this SECTION 4.11 or under any other Section of this
Article IV) with respect to which consent of the other party or
parties thereto must be obtained by virtue of the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby to avoid the termination of such Contract, a
breach, violation, default or penalty payment thereunder or any other
change or modification to the terms thereof.
(d) SCHEDULE 4.11(d) sets forth a true and complete list of
all "off-limits" arrangements of the Seller Companies that restrict
the Seller Companies' solicitation of any Persons with respect to the
Seller Companies' search projects.
SECTION 4.12 TITLE, SUFFICIENCY AND CONDITION OF ASSETS.
The Seller Companies have good and valid title to, or a valid
leasehold interest in, all material tangible and intangible assets
used, held for use or intended for use in the conduct of the Business,
free and clear of all Encumbrances, except (i) such Encumbrances as
are set forth in SCHEDULE 4.12 (all of which shall be discharged prior
to or at the Closing), (ii) mechanics', carriers', workmen's,
repairmen's or other like liens or retention of title provisions
arising or incurred in the Ordinary Course of Business and
Encumbrances arising under (and only with respect to the equipment
leased under) equipment leases with third parties entered into in the
Ordinary Course of Business, (iii) Encumbrances for Taxes not yet due
or which are being contested in good faith and (iv) other
imperfections of title or encumbrances that do not, individually or in
the aggregate, materially impair the continued use and operation of
the assets to which they relate in the conduct of the Business as
presently conducted (the Encumbrances described in clauses (i), (ii),
(iii) and (iv) are hereinafter referred to collectively as "Permitted
Encumbrances"). Except for services and assets to be provided through
the Transition Services Agreement and except as set forth on SCHEDULE
4.12, the assets of the Seller Companies that the Purchaser Companies
will acquire as a result of their acquisition of the Purchased Assets
on the Closing Date represent all the assets necessary to conduct the
Business in substantially the same manner as presently conducted and
represent all the assets used, held for use or intended for use
primarily in the conduct of the Business. All Equipment used
regularly in the conduct of the Business is in adequate operating
condition, normal wear and tear excepted, for the purpose for which it
is currently being used by the Business.
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SECTION 4.13 LITIGATION. SCHEDULE 4.13 sets forth each
instance in which any Seller Company or any of their respective
directors or officers (in their capacity as such) is, or within the
past three years, has been, in connection with the Business, (a)
subject to any outstanding injunction, judgment, temporary restraining
order, preliminary or permanent injunction or other order, decree,
ruling or charge ("Order"), or (b) a party to, or to the knowledge of
Seller, threatened to be made a party to, any action, suit, claim,
proceeding, hearing or investigation before any Governmental
Authority, or by any third party, that, in the case of this clause
(b), (i) seeks or sought, as applicable, equitable relief, or a
payment in excess of $250,000, or (ii) questions or challenges the
validity of this Agreement or any action taken or to be taken by any
Seller Company pursuant to this Agreement or in connection with the
transactions contemplated hereby. The items listed on SCHEDULE 4.13
are not reasonably expected, either individually or in the aggregate,
to have a Material Adverse Effect.
SECTION 4.14 NO DEFAULT; COMPLIANCE WITH LAWS; PERMITS.
(a) Except as set forth on SCHEDULE 4.14(a), none of the
Seller Companies is (i) in default or violation of any term, condition
or provision of its certificate of incorporation, by-laws or other
governing instrument or (ii) in default or violation of any term,
condition or provision of any Applicable Law, Order, arbitration
award, concession or grant, except in the case of CLAUSE (ii) for
defaults or violations that would not, either individually or in the
aggregate, have a Material Adverse Effect.
(b) The Seller Companies have all licenses, permits,
exemptions, consents, waivers, authorizations, rights, certificates of
occupancy, franchises, orders or approvals of, and have made all
required registrations with, any Governmental Authority that are
material to the conduct of the Business as presently conducted
(collectively, "Permits"). All of the Permits are valid and in full
force and effect in all material respects and, except as set forth on
SCHEDULE 4.14(b), are transferable to the applicable Purchaser
Company. No violations are or have been recorded in respect of any
Permit, no event has occurred that would allow revocation or
termination or that would result in the impairment of any rights with
respect to any such Permit, and no proceeding is pending or, to the
knowledge of Seller, threatened, to revoke, limit or enforce any
Permit, except for any of the foregoing would not, either individually
or in the aggregate, have a Material Adverse Effect.
(c) Except with respect to matters set forth on SCHEDULE
4.13, none of the Seller Companies has received any written
communication since January 1, 2003 from a Governmental Authority that
alleges that any of the Seller Companies is not in compliance with any
Applicable Law, except for instances of noncompliance that would not,
either individually or in the aggregate, have a Material Adverse
Effect. This SECTION 4.14 does not relate to, and Seller makes no
representations in this SECTION 4.14 with respect to, Taxes, which are
the subject of SECTION 4.15; Benefit Plans, which are the subject of
SECTION 4.16; employee and labor matters, which are the subject of
SECTION 4.17; and environmental matters, which are the subject of
SECTION 4.19.
SECTION 4.15 TAXES.
(a) Complete and correct copies of all Tax Returns and all
amendments or modifications thereto filed or caused to be filed by any
Seller Company in connection with the Business for the period beginning
January 1, 2003 up to and including the quarter ended March 31, 2006 have
been made available to Purchaser. Each such return reflects accurately all
Liability for Taxes of the Business for the periods covered thereby and is
complete and correct in all material respects. Except as set forth on
SCHEDULE 4.15, the Seller Companies have filed all returns for Taxes required
to be filed in connection with the Business and have paid all Taxes due with
respect to such returns.
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(b) There are no Encumbrances on any of the property or
assets of the Business that arose in connection with any failure (or
alleged failure) to pay any Taxes in connection with the Business,
except for Encumbrances related to Taxes not yet due or for Taxes that
a Seller Company is contesting in good faith through appropriate
proceedings and for which appropriate reserves have been established.
(c) None of the Seller Companies is currently under
examination by the Internal Revenue Service (the "IRS") or any other
Governmental Authority with respect to Taxes. Except as set forth on
SCHEDULE 4.15, none of the Seller Companies has been contacted by or
is currently corresponding with any Governmental Authority with
respect to the requirement to file Tax Returns and/or pay any Taxes.
Except as indicated on SCHEDULE 4.15, no waivers of the statute of
limitations have been given to or requested by any Governmental
Authority.
(d) All Taxes which the Seller Companies have been required
by any Governmental Authority to collect or withhold have been duly
collected or withheld (including any Taxes required by any
Governmental Authority to be withheld by a Seller Company in respect
of any amount paid or credited or deemed to be paid or credited by it
to or for the account of or benefit of any Person, including any
employees, officers or directors) and, to the extent required when
due, have been or will be duly and timely paid or remitted to the
appropriate Governmental Authority.
(e) No claim has been made in writing by any Governmental
Authority in any jurisdiction where the Seller Companies do not file
Tax Returns that the Seller Companies are or may be subject to Taxes
in that jurisdiction.
(f) The Seller Companies have duly and timely collected all
amounts on account of any Transfer Taxes (other than Transfer Taxes
contemplated by SECTION 6.10) required by Applicable Law to be
collected by it and have duly and timely remitted to the appropriate
Governmental Authority any such amounts required by Applicable Law to
be remitted by them.
(g) The assets, properties, rights, contracts, claims and
other assets being acquired by Xxxxxxxx Canada from Highland Canada
represent all or substantially all of the assets used by Highland
Canada in the operation or conduct of the Business.
(h) Highland Australia will continue to operate the
Business in Australia through the Closing Date.
(i) Except as set forth on SCHEDULE 4.15, none of the
Seller Companies is a party to any Tax allocation or sharing
agreement.
(j) For purposes of this Agreement, "Taxes" means all
taxes, charges, fees, levies or other assessments, including all net
income, gross income, alternative or add-on minimum, environmental,
gross receipts, sales, use, goods and services, ad valorem, transfer,
toll-gate, capital stock, franchise, profits, license, withholding,
payroll, single business, employment, health insurance, Canada pension
plan premiums or contributions, excise, severance, documentary, stamp,
occupation, property, unemployment or other taxes, customs, duties,
fees, assessments or charges of any kind whatsoever, and any
installments with respect thereto, together with any interest
penalties, additions to tax or additional amounts imposed by any
taxing authority (domestic or foreign).
(k) For purposes of this Agreement, "Tax Returns means all
returns, declarations, reports, estimates, information returns,
elections, consents, notices, forms, documents and statements
(including all schedules, exhibits and other attachments thereto and
any amendments thereto) relating to Taxes.
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SECTION 4.16 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 4.16(a) sets forth a list of all employee
benefit plans and arrangements maintained or contributed to or
required to be contributed to by any Seller Company or an ERISA
Affiliate, including employee pension benefit plans, as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), any registered pension plan, as defined in
subsection 248(1) of the Income Tax Act (Canada) (the "ITA"), employee
welfare benefit plans, as defined in Section 3(1) of ERISA, deferred
compensation plans, supplemental retirement plans, superannuation
plans and complying superannuation funds, stock option plans, bonus or
profit sharing plans, stock appreciation rights plans, stock purchase
plans, medical, hospitalization, life, disability and other insurance
plans, severance or termination pay plans and policies, vacation
policies, life insurance arrangements, employment agreements,
retention agreements, severance agreements and change in control
agreements, applicable to, or for the benefit of, any employee of the
Business (collectively, the "Benefit Plans"). An "ERISA Affiliate"
shall mean any entity under "common control" with Seller or any
Selling Subsidiary within the meaning of Section 4001(14) of ERISA.
Seller has delivered or otherwise made available to Purchaser copies
of all Benefit Plans, including plan documents and all amendments
thereto, plan agreements, trust agreements, recordkeeping or service
agreements, insurance contracts, summary plan descriptions or
summaries thereof if no written plan document or summary plan
description is available, IRS determination letters, actuarial
reports, audit reports and annual reports on Form 5500 or annual
information returns for the most recent plan year.
(b) With respect to each Benefit Plan: (i) if intended to
qualify under Section 401(a) of the Code, such plan has received a
determination letter from the Internal Revenue Service stating that
the plan as amended for GUST (as defined in Internal Revenue Service
Revenue Procedures - 2002-6 and 2000-27) so qualifies and that its
trust is exempt from taxation under Section 501(a) of the Code, and
nothing has occurred since the date of such determination that would
materially adversely affect such qualification or exempt status (or if
intended to be registered under the ITA, such plan is duly registered
and nothing has occurred that would affect its registered or tax-
exempt status); (ii) such Benefit Plan has been timely amended to
reflect the Economic Growth and Tax Relief Reconciliation Act of 2001;
(iii) such Benefit Plan has been administered in accordance with its
terms and all Applicable Laws, including ERISA and the Code, except
for instances of noncompliance that would not, either individually or
in the aggregate, have a Material Adverse Effect; (iv) to the
knowledge of Seller, no breaches of fiduciary duty have occurred which
are reasonably expected to give rise to liability on the part of any
Seller Company; (v) no actions, suit, claims or disputes are pending,
or, to the knowledge of Seller, threatened, that could give rise to
material liability on the part of any Seller Company other than
routine claims for benefits; (vi) no audits, inquiries, reviews,
proceedings, claims or demands are pending with any Governmental
Authority; (vii) all material reports, returns and similar documents
required to be filed with any Governmental Authority or distributed to
any Benefit Plan participant have been duly and timely filed or
distributed; (viii) no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) has occurred that
would give rise to material liability on the part of any Seller
Company; (ix) all contributions to such Benefit Plan, all payments
under the Benefit Plans (except those to be made from a trust
qualified under Section 401(a) of the Code) and all payments with
respect to the Benefit Plans for any period ending before the Closing
Date have been paid, and to the extent unpaid, are reflected in the
Financial Statements; and (x) no Benefit Plan is (A) a "Multiemployer
Plan" within the meaning of Section 3(37) of ERISA or a multi-employer
pension plan as defined under Applicable Law in Canada, (B) a
"Multiple Employer Plan" within the meaning of Section 413(c) of the
Code, or (C) a pension plan subject to Title IV of ERISA or the
minimum funding requirements of Section 302 of ERISA or Section 412 of
the Code.
(c) With respect to each Benefit Plan that is a "welfare
benefit plan" (as defined in Section 3(1) of ERISA) or similar plan in
Canada, no such plan provides medical or death benefits with
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respect to current or former employees of the Business or any of its ERISA
Affiliates (or their dependents) beyond their termination of
employment (other than to the extent required by Applicable Law,
including Sections 601-609 of ERISA and Section 4980B of the Code).
(d) Except as set forth on SCHEDULE 4.16(d), none of the
Benefit Plans obligates any Seller Company to pay retention,
separation, severance, termination or similar benefits as a result of
any transaction contemplated by this Agreement or as a result of a
"change in control" (as such term is defined in Section 280G of the
Code) and will not accelerate the time of paying or vesting, or
increase the amount of compensation, due to any individual, and none
of the Benefit Plans otherwise limits or restricts any Purchaser
Company's ability to terminate the employment of any employee for any
reason with no liability.
(e) Seller or one of its Affiliates maintains and is
considered the sponsor of all Benefit Plans.
(f) SCHEDULE 4.16(f) contains a complete list of the
employees of the Business as of the date hereof, specifying their
position, the employer entity, age (ages of Highland Canada employees
are estimates only), salary, length of service, business location,
commission, bonus and incentive entitlements, and bonus and incentive
payments for the past two (2) years and identifying which employees
are currently receiving long-term or short-term disability benefits or
are absent from active employment on pregnancy, parental, adoption or
any Family Medical Leave Act or similar leaves and their anticipated
dates of return to active employment. Except as set forth on SCHEDULE
4.16(f), Highland UK has not made any outstanding offers of employment
or engagement.
(g) SCHEDULE 4.16(g) sets forth a summary of the standard
arrangement by which commission payments are made to employees of the
Business, as in effect on the date hereof. Except as set forth on
SCHEDULE 4.16(g), no employee of the Business is entitled, by virtue
of Contract or otherwise, to commission payments that deviate from the
standard arrangement set forth in SCHEDULE 4.16(g).
SECTION 4.17 EMPLOYEE AND LABOR MATTERS.
(a) None of the Seller Companies is bound by a collective
bargaining agreement or similar agreement with any labor or trade
union, organization or association or any related award of a
Governmental Authority, and no Seller Company has received any
application or demand for recognition by any such labor or trade
union, organization or association during the three years preceding
the date hereof. None of the employees of the Business is represented
by any union or similar trade organization or association of employees.
(b) There is, and since January 1, 2003, there has been, no
labor strike, slowdown, work stoppage or lockout, pending against or
otherwise affecting the Business (and, to the knowledge of Seller, no
such labor strike, slow down, work stoppage or lockout is threatened).
(c) To the knowledge of Seller, none of the Seller
Companies nor any of their representatives or employees has committed
any unfair labor practice in connection with the operation of the
Business. There is no unfair labor practice charge or complaint
against any of the Seller Companies, or, to the knowledge of Seller,
threatened, before the National Labor Relations Board, the Ontario
Labour Relations Board, the Industrial Relations Commission of New
South Wales, the Australian Industrial Relations Commission or any
comparable Governmental Authority or court of competent jurisdiction.
(d) To the knowledge of Seller, there is no event or
circumstance which is reasonably likely to give rise to the filing of
any unfair labor practice charge or complaint against any
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Seller Company in connection with the operation or conduct of the Business;
there are no pending, or, to the knowledge of Seller, threatened,
individual or union grievances or arbitration proceedings against any
Seller Company in connection with the operation or conduct of the
Business, and there are no outstanding or unremedied union settlements
or arbitration awards against any Seller Company in connection with
the operation or conduct of the Business.
(e) Except as set forth on SCHEDULE 4.17(e), there is no
charge or complaint against any Seller Company pending before the
United States Department of Labor, the Ontario Labour Relations Board,
any provincial Ministry of Labour, any state department of labor, the
Equal Employment Opportunity Commission, the Ontario Human Rights
Commission, the Industrial Relations Commission of New South Wales,
the Australian Industrial Relations Commission, the Human Rights and
Equal Opportunity Commission, the Equal Opportunity Commission of
Victoria, the Anti-Discrimination Board of New South Wales, any
Governmental Authority or tribunal in the United Kingdom or any
comparable federal, state, local or foreign human/civil rights
organization or other Governmental Authority or court of competent
jurisdiction, or, to the knowledge of Seller, threatened, relating to
the employment or termination of employment of any current,
prospective or former employee of the Business.
(f) Highland Canada has materially complied with all
requirements under the PAY EQUITY ACT of Ontario or any other similar
provincial pay equity legislation. Highland Canada is not required to
prepare or post any pay equity plan pursuant to the PAY EQUITY ACT of
Ontario or any other similar provincial pay equity legislation.
(g) Except as set forth on SCHEDULE 4.17(g), the Seller
Companies have discharged in all material respects their respective
obligations and have complied in all material respects with all
Applicable Laws, with respect to salary, wages, commissions, bonuses,
overtime pay, holiday pay, sick pay, vacation pay and all other
benefits for the employees of the Business for all periods through the
Closing.
SECTION 4.18 CUSTOMERS AND SUPPLIERS. SCHEDULE 4.18 sets
forth a list of the thirty largest customers and a list of the ten
largest suppliers (measured by dollar volume) of the Business during
each of the last two fiscal years. Since January 1, 2006 and as of
the date hereof, none of the thirty largest customers during 2005 has
(a) materially altered its pattern of payments in a manner
inconsistent with past practices or (b) to the knowledge of Seller,
made any material complaint regarding pricing or the quality of
services of the Business, or demanded any price adjustment material to
the Business. Since January 1, 2006 and as of the date hereof, to the
knowledge of Seller, none of the thirty largest customers during 2005
has terminated or materially reduced, or has provided notice that it
will terminate or materially reduce, its future use of the services of
any of the Seller Companies with respect to executive searches and
placement for reasons primarily relating to pricing or quality of
services provided by such Seller Company.
SECTION 4.19 ENVIRONMENTAL MATTERS. Except as set forth
in SCHEDULE 4.19, (a) the Seller Companies have been and are in
compliance with all applicable Environmental Laws, except for
instances of noncompliance that would not, either individually or in
the aggregate, have a Material Adverse Effect; (b) to the knowledge of
Seller, none of the Leased Property is contaminated with any Hazardous
Substance which could reasonably be expected to result in material
liability relating to or require any remediation under any
Environmental Law; (c) to the knowledge of Seller, no property
formerly owned or operated by Seller or any Selling Subsidiary has
been contaminated with any Hazardous Substance during or prior to such
period of ownership or operation which could reasonably be expected to
result in liability relating to or require any remediation under any
Environmental Law; (d) there are no pending, or to the knowledge of
Seller, threatened, actions, suits, claims, investigations or other
proceedings under or pursuant to any Environmental Law in connection
with the operation or
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conduct of the Business; and (e) neither Seller nor any Selling
Subsidiary would reasonably be expected to incur material liability for
any Hazardous Substance disposal or contamination of any third party
property or for release of any Hazardous Substance.
As used herein, the term "Environmental Law" means any
federal, state, provincial, local or foreign statute, law, regulation,
treaty, agreement, order, decree, permit, authorization, common law or
agency requirement relating to: (A) the protection, investigation or
restoration of the environment, health, safety or natural resources,
(B) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance, or (C) noise, odor, indoor air,
employee exposure, wetlands, pollution, contamination or any injury or
threat of injury to persons or property relating to any Hazardous
Substance.
As used herein, the term "Hazardous Substance" means any
substance that is: (A) listed, classified or regulated pursuant to
any Environmental Law; (B) any petroleum, natural gas, natural gas
liquids or coal product or by-product (including coal tar), any
combustion waste, ash, sludge, asbestos-containing material,
polychlorinated biphenyls, radioactive material, radon or any wastes
related to exploration and production; and (C) any other substance
which could reasonably be expected to be the subject of regulatory
action by any Governmental Authority in connection with any
Environmental Law.
SECTION 4.20 RELATED PARTY TRANSACTIONS. Except as set
forth on SCHEDULE 4.20, no officer or, to the knowledge of Seller,
employee of Seller or any of its Affiliates: (a) is a director,
officer, more than 10% stockholder or employee of, or consultant to,
any competitor, supplier or customer of the Business; (b) owns,
directly or indirectly, in whole or in part, any portion or rights in
the Purchased Assets; or (c) has any contractual relationship with the
Business not otherwise disclosed in SECTION 4.11 or SECTION 4.16.
SECTION 4.21 INSURANCE. SCHEDULE 4.21 contains a true and
correct list of all insurance policies owned and maintained by the
Seller Companies covering the properties, assets, employees and
operations of the Business. All such policies are in full force and
effect, all premiums due and payable thereon have been paid in full,
and no default or other circumstance exists which would create the
substantial likelihood of the cancellation or non-renewal of any such
policy prior to the Closing Date.
SECTION 4.22 BROKERS AND FINDERS. Except for BMO Capital
Markets Corp. (formerly known as Xxxxxx Xxxxxxx Corp.), no broker,
finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on
behalf of Seller or any of its Affiliates.
SECTION 4.23 FULL DISCLOSURE. No representation or
warranty made by a Seller Company in this Agreement (including those
contained in the Schedules hereto) and no statement made by a Seller
Company in any document or certificate delivered pursuant to SECTION
7.1(h), considered as a whole with all other representations,
warranties and statements made by a Seller Company in this Agreement
(including those contained in the Schedules hereto) and such documents
and certificates, contains or will contain any untrue statement of
material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was made, in
order to make the statements herein or therein not misleading.
SECTION 4.24 NO OTHER REPRESENTATIONS AND WARRANTIES.
Except as set forth in this ARTICLE IV or the documents and
certificates executed and delivered by a Seller Company pursuant to
SECTION 7.1(h), none of the Seller Companies or any of their
Affiliates or respective officers, directors, employees or
representatives makes or has made any other representation or
warranty, express or implied,
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at law or in equity, in respect of the Seller Companies, the Business
or the Purchased Assets. Any such representations or warranties are
hereby expressly disclaimed.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as set
forth below:
SECTION 5.1 ORGANIZATION AND STANDING. Each of the
Purchaser Companies is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
organization and has all necessary power and authority to own, lease
and operate its properties and to carry on its business as currently
being conducted.
SECTION 5.2 AUTHORIZATION, VALIDITY AND EXECUTION. Each
Purchaser Company has all necessary power and authority (a) to execute
and deliver this Agreement and the other agreements, documents and
instruments to be executed by such Purchaser Company in connection
with the transactions contemplated hereby (such other agreements,
documents and instruments, the "Purchaser Documents"), (b) to perform
(or cause to be performed) its obligations hereunder and thereunder
and (c) to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by each of the
Purchaser Companies of this Agreement and the Purchaser Documents, and
the consummation of the transactions contemplated hereby and thereby,
have been duly authorized by the Board of Directors of each of the
Purchaser Companies, and no other corporate or stockholder action on
the part of the Purchaser Companies is necessary to authorize the
execution and delivery by each of the Purchaser Companies of this
Agreement and the Purchaser Documents and the consummation by it of
the transactions contemplated hereby and thereby. This Agreement has
been, and each of the Purchaser Documents will be on or prior to the
Closing Date, duly executed and delivered by the Purchaser Companies,
as applicable, and, assuming the due execution of this Agreement by
the Seller Companies, is a legal, valid and binding obligation of each
of the Purchaser Companies, enforceable against each in accordance
with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization,
moratorium, receivership and similar laws affecting the enforcement of
creditors' rights generally and to general equitable principles.
SECTION 5.3 CONSENTS AND APPROVALS. Except as set forth
in SCHEDULE 5.3, the execution, performance and delivery of this
Agreement and the consummation of the transactions contemplated hereby
do not require any of the Purchaser Companies to file any material
notice, registration or filing with, or obtain any consent, approval,
authorization, exemption or Permit from, any third party or from any
Governmental Authority.
SECTION 5.4 NO VIOLATION. The execution and delivery by
the Purchaser Companies of this Agreement, the consummation by the
Purchaser Companies of the transactions contemplated hereby and the
compliance by the Purchaser Companies with the provisions hereof (a)
will not violate the provisions of the certificate of incorporation or
the bylaws of any Purchaser Company; (b) will not violate any statute,
law, ordinance, rule or regulation applicable to any Purchaser
Company; (c) will not violate any Order of any Governmental Authority
applicable to any Purchaser Company; and (d) will not result in a
violation or breach of, conflict with, constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right
of termination, cancellation, payment or acceleration) under any
Contract to which any Purchaser Company is a party or by which any
Purchaser Company is bound except in the case of clauses (b), (c) and
(d) as would not have a material adverse effect on the Purchaser
Companies, taken as a whole.
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SECTION 5.5 AVAILABILITY OF FUNDS. Purchaser has
sufficient funds available (through existing credit facilities or
otherwise) to enable the Purchaser Companies to consummate the
transactions contemplated hereby and to permit the Purchaser Companies
to perform all of their obligations under this Agreement.
SECTION 5.6 LITIGATION. There is no action, suit or
proceeding at law or in equity against any Purchaser Company pending
or, to the knowledge of Purchaser, threatened which would, if decided
adversely to any Purchaser Company, prohibit the transactions
contemplated by this Agreement or which is reasonably likely to have a
material adverse effect on any Purchaser Company's ability to
consummate the transactions contemplated by this Agreement.
SECTION 5.7 BROKERS. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of any
Purchaser Company.
ARTICLE VI
COVENANTS
SECTION 6.1 CONDUCT OF BUSINESS PENDING THE CLOSING.
During the period from the date of this Agreement to the Closing, the
Seller Companies will each: (i) conduct the Business only in the
Ordinary Course of Business and (ii) use commercially reasonable
efforts to (A) preserve intact each of the Seller Companies, (B) keep
available the services of the current officers of the Seller Companies
and employees of the Business, (C) preserve the goodwill of those
having business relationships with the Business, (D) preserve its
relationships with customers, creditors and suppliers of the Business,
(E) maintain the books, accounts and records of the Business in the
Ordinary Course of Business, and (F) comply in all material respects
with all Applicable Laws. Without limiting the generality of the
foregoing, except as set forth in SCHEDULE 6.1, the Seller Companies
will not, without the prior written consent of Purchaser:
(a) except in the Ordinary Course of Business, sell,
transfer or otherwise dispose of any of the Purchased Assets;
(b) (i) increase the compensation of any employees or
independent contractors of the Business, except pursuant to the terms
of agreements or plans currently in effect and listed in the Schedules
hereto, (ii) pay or agree to pay to any employees or independent
contractors of the Business, any pension, retirement allowance,
severance or other employee benefit not already required or provided
for under any existing plan, agreement or arrangement listed in the
Schedules hereto (iii) commit itself to any additional pension,
profit-sharing, bonus, extra compensation, incentive, deferred
compensation, stock option, stock appreciation right, group insurance,
severance, retirement or other employee benefit plan, agreement or
arrangement, or to any employment, retention or consulting agreement
with or for the benefit of any employee or independent contractor of
the Business, (iv) except as required by Applicable Law, amend in any
respect any such plan, agreement or arrangement, (v) assume, enter
into, amend, alter or terminate any labor or collective bargaining
agreement by which the Business or its employees are affected, or (vi)
hire any officer, director, employee, agent or other similar
representative for or on behalf of the Business;
(c) (i) issue any debt securities of the Selling
Subsidiaries or (ii) pledge or otherwise encumber the Purchased
Assets;
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(d) (i) acquire (by merger, consolidation or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof or any equity interest therein, or
(ii) otherwise acquire any assets other than in the Ordinary Course of
Business;
(e) adopt a plan of complete or partial liquidation or
authorize or undertake a dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization;
(f) (i) make or change any Tax election, adopt or change
any Tax accounting method, enter into any closing agreement, settle
any Tax claim or assessment, surrender any right to claim a Tax refund
or credit or take or fail to take any other action if such action or
failure to take such action would increase in any material respect the
Tax liability of the Seller Companies or the Business, or (ii) file
any income Tax Return other than those listed on SCHEDULE 6.1,
including any amended Tax Returns;
(g) change any of the accounting methods or accounting
practices unless required by GAAP or Applicable Law;
(h) offer discounts on the provision of services of the
Business, except in the Ordinary Course of Business;
(i) account for, manage or treat Receivables in any manner
other than in the Ordinary Course of Business, or (without limiting
the generality of the foregoing) write off as uncollectible any
Receivable other than in immaterial amounts or in the Ordinary Course
of Business;
(j) neglect to make any expenditures to the extent budgeted
in the most recent capital budget for the Business or consistent with
the past practice of the Business;
(k) (i) enter into new Contracts or modify, amend,
terminate or renew any Contract, relating to the Business, in each
case, which is material to the Business, except in the Ordinary Course
of Business where (A) the term of any new Contract or any such
modification, amendment or renewal does not exceed twelve months and
(B) no loans or advances are made or extended to any customers in
connection with any such Contract, modification, amendment or renewal,
and no material rights or claims therein are waived, released or
assigned, or (ii) enter into, modify, amend, or renew any Contract
relating to the Business outside the Ordinary Course of Business or on
a basis not consistent with past practice if the dollar value of such
Contract is or would be in excess of $150,000 or the Contract would
have an initial term, or renewal or extension of terms, of greater
than twelve months;
(l) settle any claims, actions, arbitrations, disputes or
other proceedings (i) that would result in the Business being enjoined
in any respect or (ii) for an amount which, in the aggregate, is in
excess of $150,000;
(m) waive any right, debt or claim of material value to the
Business;
(n) sell, assign, transfer, license, convey or permit to
lapse any rights in any of the Business IP, or disclose to any Person
(other than in the Ordinary Course of Business) or otherwise dispose
of any trade secret, process or know-how not heretofore a matter of
public knowledge, except pursuant to judicial Order or process;
(o) permit any of the insurance policies of the Seller
Companies covering the operations or conduct of the Business to be
canceled or terminated or any of the coverage thereunder to lapse,
without simultaneously securing replacement insurance policies which
are in full force and effect and provide coverage substantially
similar to or greater than under the prior insurance policies; or
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(p) authorize or enter into a Contract to do any of the
foregoing.
SECTION 6.2 CONSENTS. Prior to the Closing, Seller and
Purchaser shall use commercially reasonable efforts to make or cause
to be made promptly all registrations, filings and applications, to
give all notices and to obtain all governmental and third party
consents, Orders, qualifications and waivers necessary for the
consummation of the transactions contemplated by this Agreement or
that thereafter might be necessary to effectuate the transfer of any
Permit or authorization, provided, however, that commercially
reasonable efforts shall not include any requirement of any Party to
commence any litigation or offer or grant any accommodation (financial
or otherwise) to any other Person.
SECTION 6.3 IMPLEMENTING AGREEMENT; FURTHER ASSURANCES;
COOPERATION.
(a) Subject to the terms and conditions hereof, each Party
shall take all action required to fulfill its obligations hereunder
and shall otherwise use all commercially reasonable efforts to
facilitate the consummation of the transactions contemplated hereby.
(b) The Parties agree to execute and deliver all such other
instruments and take all such other action as any Party may reasonably
request from time to time, before or after Closing and without payment
of further consideration, in order to effectuate the transactions
provided for herein. The Parties shall cooperate fully with each
other and with their respective counsel and accountants in connection
with any steps required to be taken as part of their respective
obligations under this Agreement, including the preparation of
financial statements and Tax Returns.
(c) For a period of seven (7) years after the Closing Date,
each Party shall provide, and shall cause its appropriate personnel to
provide, when reasonably requested to do so by another Party, access
to all Tax, financial and accounting records and any other records
transferred to Purchaser or retained by Seller, as applicable, in
accordance with this Agreement and the right to make copies or
extracts therefrom at its expense. Neither Party shall, nor shall it
permit its Affiliates to, intentionally dispose of, alter or destroy
any such records without giving thirty (30) days' prior written notice
to the other Party and permitting the other Parties hereto, at their
expense, to examine, duplicate or repossess such records. Each Party
agrees to cooperate with the other party in the preparation for and
prosecution of the defense of any claim, action or cause of action
arising out of or relating to any Liability relating to the Business
that arose prior to the Closing and that, in the case of Purchaser,
has been assumed by Purchaser, or, in the case of Seller, has been
retained by Seller, including by making available evidence within the
cooperating Party's control and persons needed as witnesses employed
by the cooperating Party, as reasonably needed for such defense. The
requesting Party shall reimburse the cooperating Party for its actual
out-of-pocket costs relating to its cooperation under this SECTION
6.3(c) and for a pro rata portion of the salary (including fringe
benefits, with such pro rata portion determined based upon the time
spent in connection with such cooperation) and for travel and
subsistence expenses directly relating to the cooperation of any of
the cooperating Party's employees who assist the requesting Party.
Notwithstanding the provisions of this SECTION 6.3(c), while the
existence of an adversarial proceeding between the Parties will not
abrogate or suspend the provisions of this SECTION 6.3(c), as to
records or other information directly pertinent to such dispute, the
Parties may not utilize this SECTION 6.3(c) but rather, absent
agreement, must utilize the available rules of discovery.
SECTION 6.4 NOTIFICATION. During the period prior to the
Closing Date, each of the Parties shall, promptly after obtaining
knowledge of the occurrence or the impending occurrence of any fact or
event which would cause or constitute a Material Adverse Effect with
respect to Seller, or a material breach of any of the representations
and warranties in this Agreement made by the Seller Companies or the
Purchaser Companies, as of the Closing Date, give detailed written
notice thereof to the
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other Parties hereto; and such notifying Party shall use its commercially
reasonable efforts to prevent or promptly to remedy such breach. No
disclosure by any Party pursuant to this SECTION 6.4 shall be deemed to
amend or supplement the Schedules hereto or to cure or waive any
misrepresentation or breach of warranty.
SECTION 6.5 PURCHASER'S INSPECTION RIGHTS. Seller shall
give to Purchaser and its designated employees or representatives
prompt and full access, during regular business hours of Seller to all
facilities, properties, assets, books, documents, Contracts, Tax
Returns, employees and records of the Seller Companies relating to the
Business, and shall furnish promptly to Purchaser and its
representatives any information concerning the Seller Companies
relating to the Business as Purchaser may reasonably request;
PROVIDED, HOWEVER, that such access does not unreasonably disrupt the
normal operations of Seller.
SECTION 6.6 CONFIDENTIALITY; PUBLICITY.
(a) Prior to the Closing, each of the Purchaser Companies
agrees that any information contained in the Schedules hereto or
otherwise provided to the Purchaser Companies pursuant to this
Agreement shall be held by the Purchaser Companies as confidential
information in accordance with, and shall be subject to the terms of,
that certain Non-Disclosure Agreement between Seller and Purchaser
dated as of March 27, 2006 entered into in connection with the
transactions contemplated hereby (the "Confidentiality Agreement").
Effective upon the Closing, the Confidentiality Agreement shall
terminate with respect to information relating solely to the Business;
PROVIDED, HOWEVER, that each of the Purchaser Companies acknowledges
that any and all other information provided to it by Seller concerning
Seller's operations other than the Business shall remain subject to
the terms and conditions of the Confidentiality Agreement after the
Closing Date.
(b) The Parties acknowledge that this Agreement and the
transactions contemplated hereby are of a confidential nature and
shall not be disclosed prior to the Closing except to those employees,
consultants and advisors with a need to know such information or as
required by Applicable Law. None of the Parties hereto shall make or
cause to be made any public disclosure prior to the Closing with
respect to the transactions contemplated hereby or this Agreement
without the prior agreement of the other Parties, except as required
by Applicable Law or any listing agreement with a national securities
exchange. The Parties shall use commercially reasonable efforts to
provide the other Party with a reasonable opportunity to review and
make reasonable comments on any press release or other public
disclosure prior to the Closing. Subject to such prior consultation,
the Parties agree that each of Seller and Purchaser may issue a press
release and file a Form 8-K with the Securities and Exchange
Commission in connection with the execution of this Agreement.
(c) For a period of five years after the Closing Date,
Seller will not, and will not permit its accountants, counsel,
consultants, advisors and agents (collectively, "Representatives") and
its Affiliates to, directly or indirectly, disclose or use or
authorize, license or otherwise permit other Persons to use in any way
that is detrimental to the Purchaser Companies or the Business any
trade secrets or other information which is confidential, proprietary
or otherwise not publicly available, including any confidential data,
know-how or information relating to the business practices, products,
customers, prospects, suppliers, research and development, ideas,
designs, discoveries, inventions, techniques, equipment, marketing,
sales, methods, manuals, strategies or financial affairs (collectively,
the "Confidential Information") about the Purchaser Companies, the
Purchased Assets and the Business. The obligation of Seller, its
Affiliates and its Representatives to hold any such information in
confidence will be satisfied if each exercises the same degree of care
with respect to such information as it would take to preserve the
confidentiality of its own similar information. In the event of a breach
of the obligations hereunder by Seller, its Affiliates or its
Representatives, the Parties agree that, in addition to all other
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available remedies, Purchaser will be entitled to injunctive relief to
enforce such obligations in any court of competent jurisdiction.
Notwithstanding the foregoing, Confidential Information will not include
such information which: (A) at the time of disclosure is publicly
available or becomes publicly available through no act or omission of
Seller, its Affiliates or its Representatives; (B) is disclosed or furnished
to Seller after the Closing by a third Person that did not acquire the
information under an obligation of confidentiality; or (C) is disclosed by
Seller under compulsion of Applicable Law.
SECTION 6.7 NONCOMPETITION AND NONSOLICITATION.
(a) During the period beginning on the Closing Date and
ending on the third anniversary of the Closing Date, Seller shall not,
and shall not permit its Affiliates to, either alone or in conjunction
with any other Person (including any Affiliate), directly or
indirectly (including as a member, agent, shareholder or investor of
any Person or in any other capacity), engage in, or own, manage,
operate, join, control, or participate in the ownership, management,
operation, or control of, or provide services to or for, or provide
financial or other assistance to, any Person in, the selling,
marketing or provision of any services that are the same or
substantially similar to, or fulfill the same function as those
provided, sold or marketed by the Business at any time prior to the
Closing Date; PROVIDED, HOWEVER, that nothing in this Section shall
preclude Seller or its Affiliates from (i) owning not more than 1% of
the outstanding Capital Stock of any Person if such stock is listed on
a national securities exchange or is regularly traded in the over-the-
counter market by a member of a national securities exchange or (ii)
owning or operating the business which it currently conducts other
than the Business conducted under the name "Highland Partners." The
geographic territory to which this Section extends is any country in
which the Business has been conducted within the past three years.
(b) Seller agrees that, from the date hereof through the
third anniversary of the Closing Date, Seller shall not, and shall not
permit its Affiliates to, directly or indirectly employ or solicit,
receive or accept the performance of services by, any employee of the
Seller Companies currently employed in the operation of the Business
(excluding secretarial and clerical employees), that as of or after
the Closing Date is employed by Purchaser or any of its Subsidiaries
or Affiliates (other than those employees who have been terminated by
Purchaser or any of its Subsidiaries or Affiliates and are not under
contractual non-competition obligations to Purchaser or any of its
Subsidiaries or Affiliates that would prohibit their employment by, or
performance of services for, Seller or its Affiliates); provided,
however, that the foregoing shall not prohibit solicitations to the
public in general.
(c) If any provision contained in this SECTION 6.7 is for
any reason held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability will not affect any other
provisions of this SECTION 6.7, but this SECTION 6.7 will be construed
as if such invalid, illegal or unenforceable provision had never been
contained herein. It is the intention of the Parties that if any of
the restrictions or covenants contained in this SECTION 6.7 is held to
cover a geographic area or to be of a length of time which is not
permitted by Applicable Law, or in any way construed to be too broad
or to any extent invalid, such provision will not be construed to be
null, void and of no effect. Instead, the Parties agree that a court
of competent jurisdiction will construe, interpret, reform or
judicially modify this SECTION 6.7 to provide for a covenant having
the maximum enforceable geographic area, time period and other
provisions (not greater than those contained herein) as will be valid
and enforceable under such Applicable Law.
(d) Seller agrees that a violation of this SECTION 6.7 will
cause irreparable injury to Purchaser, and Purchaser will be entitled,
in addition to any other rights and remedies it may have at law or in
equity, to apply for an injunction enjoining and restraining Seller
and its Subsidiaries from doing or continuing to do any such act and
any other violations or threatened violations of this SECTION 6.7, and
Seller consents to the entry thereof. In the event that Seller is
found to have breached any covenant in this
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SECTION 6.7, the time period provided for in that covenant shall be
tolled for so long as Seller is in violation of that covenant.
SECTION 6.8 EMPLOYEE MATTERS.
(a) At or prior to the Closing Date, Purchaser, Heidrick
Canada or Heidrick Australia, as the case may be, shall extend offers
of employment to each of those employees of the Business set forth on
SCHEDULE 6.8(a) effective upon the Closing Date. Such offers shall be
upon terms and conditions to be determined by the applicable Purchaser
Company, subject to the final sentence of this SECTION 6.8(a),
provided that those employees listed on SCHEDULE 6.8(a) as being
offered a Key Employee Agreement shall receive offers of employment on
the terms and conditions set forth in the Key Employee Agreement (all
such employees who accept the applicable Purchaser Company's offer of
employment are referred to as the "Non-UK Transferring Employees").
The Seller Companies shall terminate the employment of all the Non-UK
Transferring Employees immediately prior to the Closing and shall
cooperate with and use their reasonable best efforts to assist the
Purchaser Companies in their efforts to secure satisfactory employment
arrangements with such employees. On and after the Closing Date, the
Purchaser Companies shall provide the Non-UK Transferring Employees
with employee benefits comparable to those that are provided to
similarly situated employees of the Purchaser Companies at such time,
except as specifically provided in this SECTION 6.8 or the applicable
Key Employee Agreement.
(b) Seller and Purchaser acknowledge and agree that,
subject to the right of any Highland UK employee to object to the
transfer, the contracts of employment of those individuals listed in
SCHEDULE 6.8(b) (or as may otherwise be agreed in writing by the
parties) shall be transferred to Purchaser as of the Closing Date in
accordance with the Transfer Regulations, and, subject to SECTION 1.4,
Purchaser will assume the obligations and liabilities of Highland UK
with respect to such employees as of the Closing Date. All such
employees who do not object to the transfer are referred to as the "UK
Transferring Employees".
(i) Subject to SCHEDULE 6.8(b)(i), Highland UK and
Purchaser shall comply with their respective obligations under
the Transfer Regulations. Each of Highland UK and Purchaser
shall indemnify the other and shall keep it fully indemnified
against all and any liabilities arising from or connected with
its own failure to comply with the Transfer Regulations,
provided, however, that if Highland UK complies with the program
set forth in SCHEDULE 6.8(b)(i), which the Parties believe to be
in compliance with the Transfer Regulations, then Purchaser shall
indemnify Highland UK against all and any Liabilities arising
from or connected with any breach of Regulations 13 and 14 of the
Transfer Regulations.
(ii) Purchaser confirms that it has provided, or will
provide prior to the Closing, Highland UK with details of any
measures it envisages taking in respect of the UK Transferring
Employees in accordance with its obligation under Regulation
13(4) of the Transfer Regulations.
(iii) Highland UK confirms that it has provided, or
will provide prior to the Closing, to Purchaser employee
liability information in accordance with its obligation under
Regulation 11 of the Transfer Regulations.
(iv) Highland UK shall not, in connection with the
consultation process carried out in accordance with Regulation 13
of the Transfer Regulations, give any undertaking, guarantee or
other commitment in respect of any UK Transferring Employee
without the prior written consent of Purchaser.
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(c) With respect to any employee benefits that are provided
to any Non-UK Transferring Employee or UK Transferring Employee
(together the "Transferring Employees") under any employee benefit
plan, program, arrangement or agreement maintained by Purchaser or its
Affiliates after the Closing, Purchaser shall cause service accrued by
such Transferring Employees during employment with Seller or its
Affiliates prior to the Closing (to the extent recognized by Seller
and its Affiliates) to be recognized by Purchaser and its Affiliates
for purposes of eligibility, participation and vesting with respect to
such employee benefits.
(d) Seller shall pay all severance benefits that may be
payable under any Benefit Plan associated with any employees of the
Seller Companies that do not become Transferring Employees; provided,
however, that Purchaser shall reimburse Seller for the amount of the
severance benefit paid to the employees set forth on SCHEDULE 6.8(d)
within five Business Days of written notice from Seller that Seller
has made such severance payments to such employees, and Seller shall
not be required to accrue a liability on the Preliminary Statement or
the Final Statement with respect to such severance benefit.
(e) To the extent that any Transferring Employees, or any
employees of the Seller Companies, are parties to Contracts with
Seller or any of its Subsidiaries or Affiliates that contain
confidentiality, invention assignment and non-solicitation provisions
relating to the Business IP ("Restrictive Covenants"), Seller agrees
that it will not, and will not permit any of its Subsidiaries or
Affiliates to enforce or attempt to enforce such Restrictive Covenants
against such employees as they relate to the Business IP after the
Closing.
(f) Seller shall comply with the requirements of the WARN
Act or any similar state, provincial or local law of the United States
or any other jurisdiction with respect to any "plant closing" or "mass
layoff," as those terms are defined in the WARN Act or such other
applicable law, which may result from Seller's termination of the
employment of any of its employees who are not Transferring Employees
in connection with the transactions contemplated hereby through the
Closing Date. Purchaser shall comply with the requirements of the
WARN Act or any similar state, provincial or local law of the United
States or any other jurisdiction with respect to any "plant closing"
or "mass layoff," as those terms are defined in the WARN Act or such
other applicable law, which may result from Purchaser's termination of
the employment of any Transferring Employees after the Closing.
(g) Except as specifically provided in this SECTION 6.8,
SECTION 1.3(d) or SECTION 1.3(e): (i) none of the Purchaser Companies
shall adopt, become a sponsoring employer of, or have any obligations
under or with respect to the Benefit Plans, and the Seller Companies
shall be solely responsible for any and all liabilities and
obligations that have been incurred under or in connection with any
Benefit Plan; (ii) the Seller Companies shall remain solely
responsible for any and all liabilities arising out of or relating to
the employment or termination of employment of any employees of the
Business who do not become Non-UK Transferring Employees or who are
not UK Transferring Employees, whether such liabilities arise before,
on or after the Closing Date; and (iii) the Seller Companies shall be
solely responsible for, and shall pay when due, any and all
liabilities arising out of or relating to the employment by any of the
Seller Companies, or termination of employment by any of the Seller
Companies, of any Transferring Employee. In addition, the Seller
Companies (A) shall pay any bonuses and similar amounts payable to
Transferring Employees that are due prior to or on the Closing Date,
or due after the Closing Date as a result of the consummation of the
Closing, in each case according to the Benefit Plans applicable to
such Transferring Employees and (B) shall accrue on the Preliminary
Statement and the Final Statement untaken entitlements to vacation,
annual leave and long service leave for the Transferring Employees,
and the amount set forth on SCHEDULE 6.8(g), representing the portion
of bonuses and similar amounts that would be payable to the
Transferring Employees at a later date for the current compensation
year attributable to actual performance through the Closing Date.
Purchaser shall pay to each Transferring Employee his or her share
of such aggregate bonus amount for the current
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compensation year on the date on which such bonus amounts would have
become due under Seller's bonus plan so long as such Transferring
Employee is still then employed by Purchaser or its Affiliates.
(h) Nothing contained in this Agreement shall create any
third party beneficiary rights in any Transferring Employee or any
beneficiary or dependents thereof, with respect to the compensation,
terms and conditions of employment and benefits that may be provided
to any Transferring Employee by Purchaser.
(i) Except to the extent set forth in any written Contract
with such employee executed in connection with the consummation of the
transactions contemplated hereby or which is assumed by Purchaser
pursuant to SECTION 6.8(b), nothing contained in this Agreement shall
confer upon any Transferring Employee any right with respect to
continued employment by any of the Purchaser Companies, nor shall
anything herein interfere with the right of the Purchaser Companies to
terminate the employment of any Transferring Employee at any time,
with or without cause, following the effective date of his or her
employment with the Purchaser Companies, or restrict the Purchaser
Companies in the exercise of their independent business judgment in
modifying any of the terms and conditions of the employment of the
Transferring Employees. Notwithstanding the foregoing, if any of the
Purchaser Companies terminates any Transferring Employee within twelve
months after the Closing, then Purchaser shall pay a separation
benefit to such Transferring Employee at least equal to the amount set
forth on SCHEDULE 6.8(i) for such Transferring Employee, provided,
however, that Seller shall be responsible for the separation benefit
payable to any Transferring Employee who is leverage personnel
assigned to a partner of the Business, if (A) such partner does not
enter into a Key Employee Agreement (or, in the case of a partner who
is a UK Transferring Employee, does not deliver a letter advising that
such partner does not object to the transfer of his or her employment
to Purchaser) and Purchaser terminates the leverage personnel assigned
to such partner within 30 days after the Closing or (B) such partner
enters into a Key Employee Agreement (or delivers a letter of non-
objection), but voluntarily terminates his or her employment with
Purchaser within three months after the Closing and Purchaser
terminates the leverage personnel assigned to that partner within 30
days thereafter.
(j) At the Closing, Purchaser shall reimburse Seller for
$50,000 of the bonus to be paid by Seller to the employee set forth on
Schedule 6.8(j) if such employee accepts employment with Heidrick
Australia.
SECTION 6.9 CONTINUED USE OF "HIGHLAND" NAME.
Notwithstanding anything to the contrary stated herein, Purchaser
grants Seller a limited, non-exclusive, perpetual, worldwide, non-
transferable, royalty-free right to use the tradename "Highland"
solely and strictly as part of the name "Xxxxxx Highland" for use
strictly in Seller's corporate name and in the names of Seller's
Subsidiaries and Affiliates.
SECTION 6.10 TRANSFER TAXES.
(a) Notwithstanding anything to the contrary contained
herein, but subject to SECTION 9.2, Purchaser and Seller shall each be
liable for and shall pay 50% of all sales, use, value added, goods and
services, documentary, stamp, gross receipts, registration, transfer,
capital, conveyance, excise, recording, license and other similar
Taxes and fees ("Transfer Taxes"), if any, arising out of or in
connection with or attributable to the transactions effected pursuant
to this Agreement, and Purchaser and Seller shall cooperate in timely
making all filings, returns, reports and forms as may be required to
comply with the provisions of such Tax Laws.
(b) Purchaser and Seller shall cooperate with each other in
attempting to minimize Transfer Taxes, if any.
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(c) Purchaser shall provide to Seller, and Seller shall
provide to Purchaser, all exemption certificates with respect to
Transfer Taxes that may be provided for under Applicable Law. Such
certificates shall be in the form, and shall be signed by the proper
Party, as provided under Applicable Law. Without limiting the
foregoing, at the Closing, Heidrick Canada and Highland Canada shall
execute jointly an election under Section 167 of the Excise Tax Act
(Canada) to have the sale of the assets of Highland Canada take place
on a GST-free basis under Part IX of the Excise Tax Act (Canada).
Xxxxxxxx Canada and Highland Canada shall make such election in
prescribed form containing the prescribed information and Heidrick
Canada shall file such election with its GST return for the reporting
period in which the sale of the assets of Highland Canada takes place.
Xxxxxxxx Canada represents that it is a "registrant" under Part IX of
the Excise Tax Act (Canada).
(d) The Parties agree that the supply of the Purchased
Assets owned by Highland Australia is a supply of a GST-free going
concern for the purposes of the A NEW TAX SYSTEM (GOODS AND SERVICES
TAX) XXX 0000 (Cth).
SECTION 6.11 NO SOLICITATION. From the date hereof
through the Closing, neither Seller nor any of the Selling
Subsidiaries, will, nor will Seller authorize or permit any Affiliate
of Seller or any officer, director or employee of Seller or any
Affiliate thereof, or any investment banker or other Representative
retained by Seller or an Affiliate of Seller, to (a) directly or
indirectly, solicit, initiate, encourage or participate in any way
(including by way of furnishing information) in any discussion or
negotiations with any Person or other entity or group (other than
Purchaser or an Affiliate of Purchaser) concerning any merger,
consolidation, sale of assets, sale of Capital Stock or similar
transactions relating to the Purchased Assets or the Business (each,
an "Acquisition Proposal"), (b) disclose, directly or indirectly, to
any Person considering an Acquisition Proposal any information
concerning the Purchased Assets or the Business, or (c) enter into any
understanding, agreement or commitment with any third party concerning
any merger, consolidation, sale of assets, sale of Capital Stock or
similar transaction relating to the Purchased Assets or the Business.
Seller will promptly notify Purchaser of any Acquisition Proposal and
will promptly provide Purchaser with such information regarding the
Acquisition Proposal as Purchaser may request.
SECTION 6.12 ADDITIONAL FINANCIAL STATEMENTS. Seller will
furnish Purchaser with an unaudited balance sheet and an unaudited
consolidated income statement for the Business for each full quarterly
period prior to the Closing Date as soon as they become available.
Seller will prepare each of the additional unaudited consolidated
financial statements (i) on a basis consistent with the Financial
Statements and (ii) in compliance with the representations and
warranties set forth in SECTION 4.5 with respect to the Financial
Statements.
SECTION 6.13 TERMINATION OF RELATED PARTY ARRANGEMENTS.
Seller and the Selling Subsidiaries shall cause all Contracts
described in SCHEDULE 4.20, other than those listed in SCHEDULE 6.13,
to be terminated immediately prior to the Closing with no further
liability or obligation on the part of any party thereto.
SECTION 6.14 TERMINATION OF ALL ENCUMBRANCES. Seller
shall, at its own expense, procure and deliver to Purchaser at or
prior to the Closing executed termination statements or releases
sufficient to terminate all Encumbrances other than Permitted
Encumbrances on the Purchased Assets, including under that certain
Amended and Restated Loan and Security Agreement by and among Seller
and certain of its Affiliates and Xxxxx Fargo Foothill, Inc., dated as
of June 25, 2003, as subsequently amended.
SECTION 6.15 RELEASES FROM LETTERS OF CREDIT AND
GUARANTEES. Purchaser shall use commercially reasonable efforts to
obtain from the respective beneficiary, in form and substance
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reasonably satisfactory to Seller, on or before the Closing, valid and
binding written complete and unconditional releases of Seller and its
Affiliates from any Liability arising on or after the Closing Date
under the letters of credit and guarantees set forth on SCHEDULE 6.15.
To secure such complete and unconditional releases, Purchaser shall
provide substitute letters of credit, guarantees or other credit
support with terms that are acceptable to the counterparty or make
other arrangements as the counterparty and Purchaser may mutually
agree. To the extent Purchaser does not obtain such complete and
unconditional releases, in form and substance reasonably satisfactory
to Seller prior to Closing, Purchaser shall indemnify, defend and hold
harmless Seller and its Affiliates for any Losses arising out of or
relating to such letters of credit and guarantees from and after the
Closing until such time as Purchaser obtains such complete and
unconditional releases.
SECTION 6.16 BULK SALES LAW. The Parties each agree to
waive compliance by the other with the provisions of the bulk sales
law of any jurisdiction.
SECTION 6.17 NEW YORK LEASE CANCELLATION. Purchaser
agrees to vacate the office located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, no later than February 28, 2007, unless Seller agrees to a later
date. Within 30 days after Purchaser vacates such office, Purchaser
shall pay to Seller a lease cancellation fee calculated in accordance
with the formula set forth in SCHEDULE 6.17.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. The
obligations of the Purchaser Companies to consummate the transactions
contemplated by this Agreement are conditioned upon the satisfaction
or waiver, at or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by Seller in this Agreement, as of the date hereof
and as of the Closing Date shall be true and correct as though made as
of such time or, to the extent that such representations and
warranties expressly relate to a specific date, as of such specific
date, except where the failure of such representations and warranties,
individually or in the aggregate, to be so true and correct (without
giving effect to any materiality or Material Adverse Effect qualifiers
set forth therein) would not have a Material Adverse Effect;
(b) COVENANTS. The Seller Companies shall have performed
or complied in all material respects with all obligations and
covenants hereunder required to be performed or complied with by the
Seller Companies at or prior to the Closing Date;
(c) NO PROHIBITIONS. No Applicable Law or Order shall have
been enacted, entered, promulgated, enforced or issued by any
Governmental Authority, and no litigation, proceeding or other legal
restraint or prohibition shall be pending, threatened or in effect,
that could reasonably be expected to (i) prevent consummation of any
of the transactions contemplated by this Agreement, (ii) cause any of
the transactions contemplated by this Agreement to be rescinded
following consummation or (iii) affect materially and adversely the
right of the Purchaser Companies to own the Purchased Assets or to
operate the Business;
(d) GOVERNMENTAL APPROVALS. All material approvals,
consents or authorizations under Applicable Laws required to be
obtained prior to the Closing from any Governmental Authority in order
to consummate the transactions contemplated hereby shall have been
obtained;
(e) KEY EMPLOYEES. Partners of the Business representing
both (i) at least twenty-five of the thirty-five billing partners of
the Business listed on SCHEDULE 7.1(e) and (ii) no less than 80%
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of the revenue of the Business for the six-month period ended June 30,
2006 (calculated excluding revenue of the Business attributable to the
employees of the Business set forth on SCHEDULE 6.8(d)) (collectively,
the "Key Employees") shall have accepted employment with the Purchaser
Companies and shall have duly executed employment agreements in the
form attached hereto as EXHIBIT B (the "Key Employee Agreement") or,
in the case of Key Employees who are UK Transferring Employees, shall
have delivered a letter advising that they do not object to the
transfer of their employment to Purchaser;
(f) TRANSITION SERVICES AGREEMENT. Seller shall have
executed a Transition Services Agreement with Purchaser providing for
Seller to provide certain services to the Purchaser Companies, and
Purchaser to provide certain services to the Seller Companies, for a
period of six months after the Closing or such other period as Seller
and Purchaser shall agree (the "Transition Services Agreement");
(g) PREFERRED PROVIDER ARRANGEMENT. Seller and Purchaser
shall have entered into an arrangement by which each agrees to refer
to the other certain assignments that the referring Party does not
wish to accept and which require services that are within expertise of
the other Party (the "Preferred Provider Agreement"); and
(h) DELIVERIES. Seller or the Selling Subsidiaries, as the
case may be, shall have delivered to Purchaser each of the following:
(i) a certificate executed by a vice president or
other executive officer of Seller, dated as of the Closing Date,
to the effect that the conditions set forth in SECTION 7.1(a) and
SECTION 7.1(b) have been satisfied;
(ii) a certificate executed by the corporate secretary
or an assistant secretary of Seller certifying as of the Closing
Date (A) a true and complete copy of the resolutions of the board
of directors of Seller authorizing the execution, delivery and
performance by Seller of this Agreement and the consummation of
the transactions contemplated hereby and (B) incumbency matters;
(iii) certificates executed by an executive officer of
each of the Selling Subsidiaries certifying as of the Closing
Date (A) a true and complete copy of the resolutions of the board
of directors of such Selling Subsidiary authorizing the
execution, delivery and performance by such Selling Subsidiary of
this Agreement and the consummation of the transactions
contemplated hereby and (B) incumbency matters;
(iv) a certificate of the Secretary of State or other
applicable Governmental Authority certifying the good standing of
each Seller Company in its jurisdiction of organization (to the
extent such a certificate is issuable in such jurisdiction) as of
a date within seven days of the Closing Date;
(v) bills of sale, general assignments of trademarks
and other instruments of assignment and transfer as may be
reasonably necessary to vest in Purchaser all of the Seller
Companies' right, title and interest in and to the Purchased
Assets, in each case, in form and substance reasonably
satisfactory to Purchaser, duly executed by Seller Companies;
(vi) a copy of the Transition Services Agreement, duly
executed by each applicable Seller Company;
(vii) copies of the Key Employee Agreements, duly
executed by the Key Employees;
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(viii) opinions of counsel from counsel to Seller in
the forms attached hereto as EXHIBIT C;
(ix) copies reasonably acceptable to Purchaser of each
of the Consents set forth in SCHEDULE 7.1(h)(ix);
(x) discharges, releases and UCC-3 termination
statements adequate to discharge all Encumbrances on the
Purchased Assets, other than Permitted Encumbrances, including an
executed ASIC Form 312 to evidence the discharge of all
Encumbrances on the Purchased Assets of Highland Australia; and
(xi) with respect to the Business conducted by Highland
Canada, a purchase certificate in each jurisdiction where such a
certificate is contemplated by Canadian law, and/or a clearance
certificate from the relevant Worker's Compensation Board,
Workplace Safety Insurance Board, or other similar entity.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF SELLER AND THE
SELLING SUBSIDIARIES. The obligations of Seller and the Selling
Subsidiaries to consummate the transactions contemplated hereby are
subject to the satisfaction or waiver, at or prior to the Closing, of
the following further conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by Purchaser in this Agreement qualified as to
materiality shall be true and correct, and those not so qualified
shall be true and correct in all material respects, as of the date
hereof and as of the Closing Date as though made as of such time, or
to the extent such representations and warranties expressly relate to
a specific date, as of such specific date;
(b) COVENANTS. The Purchaser Companies shall have
performed or complied in all material respects with all obligations
and covenants hereunder required to be performed or complied with by
the Purchaser Companies at or prior to the Closing Date;
(c) NO PROHIBITIONS. No Applicable Law or Order enacted,
entered, promulgated, enforced or issued by any Governmental Authority
or other legal restraint or prohibition preventing the purchase and
sale of the Purchased Assets shall be in effect;
(d) GOVERNMENTAL APPROVALS. All material approvals,
consents or authorizations under Applicable Laws required to be
obtained prior to the Closing from any Governmental Authority in order
to consummate the transactions contemplated hereby shall have been
obtained;
(e) TRANSITION SERVICES AGREEMENT. Purchaser shall have
executed the Transition Services Agreement with Seller;
(f) PREFERRED PROVIDER ARRANGEMENT. Purchaser and Seller
shall have entered into the Preferred Provider Arrangement; and
(g) DELIVERIES. Purchaser shall have delivered to Seller
each of the following:
(i) a certificate executed by a vice president or
other executive officer of Purchaser, dated as of the Closing
Date, to the effect that the conditions set forth in SECTION
7.2(a) and SECTION 7.2(b) have been satisfied;
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(ii) certificates executed by the corporate secretary
or an assistant secretary of each of the Purchaser Companies
certifying as of the Closing Date (A) a true and complete copy of
the resolutions of the board of directors of such Purchaser
Company authorizing the execution, delivery and performance by
such Purchaser Company of this Agreement and the consummation of
the transactions contemplated by this Agreement; and (B)
incumbency matters;
(iii) a certificate of the Secretary of State or other
applicable Governmental Authority certifying the good standing of
each Purchaser Company in its jurisdiction of organization as of
a date within seven days of the Closing Date;
(iv) instruments evidencing the assumption by the
Purchaser Companies of the Assumed Liabilities, in form and
substance reasonably acceptable to Seller, duly executed by the
Purchaser Companies;
(v) counterparts to the Key Employee Agreements duly
executed by the applicable Purchaser Company;
(vi) a counterpart to the Transition Services Agreement
duly executed by each applicable Purchaser Company; and
(vii) opinions of counsel from counsel to Purchaser in
the forms attached hereto as EXHIBIT D.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 INDEMNIFICATION BY SELLER. Subject to the
limits set forth in SECTION 8.4(a), Seller hereby agrees to indemnify,
defend and hold Purchaser, its Subsidiaries and Affiliates and their
respective officers and directors (all of such Persons are
collectively referred to herein as the "Purchaser Indemnified
Parties") harmless from and in respect of any and all losses, damages,
claims, liabilities, obligations, suits, actions, fees, Taxes,
penalties, costs and expenses of any nature whatsoever (including
reasonable legal fees and expenses), but excluding in each case,
consequential, incidental, special or punitive damages (other than
lost profits and any such damages resulting from fraud, and other than
those actually paid by an Indemnified Party to a Person other than an
Indemnified Party) (collectively, "Losses"), that any of them may
incur arising out of, in connection with, relating to or caused by:
(a) any inaccuracy or breach, or alleged inaccuracy or
breach, of:
(i) any representation or warranty of Seller contained
in this Agreement (including all representations and warranties
included in Article IV of this Agreement) or in any agreement or
certificate executed and delivered by any Seller Company pursuant
to SECTION 7.1(h); or
(ii) any covenant, undertaking or other agreement of
Seller contained in this Agreement or in any agreement or
certificate delivered and executed by any Seller Company pursuant
to SECTION 7.1(h);
(b) except as provided in the penultimate sentence of
SECTION 3.3(c), the failure to obtain any consent with respect to any
Contract which provides for or requires the consent of the other
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party thereto to be obtained in connection with, or as a result of, the
consummation of any of the transactions contemplated by this
Agreement; or
(c) any Excluded Liability.
SECTION 8.2 INDEMNIFICATION BY PURCHASER. Subject to the
limits set forth in SECTION 8.4(b), Purchaser agrees to indemnify,
defend and hold Seller, its Subsidiaries and Affiliates and their
respective officers and directors ("Seller Indemnified Parties")
harmless from and in respect of any and all Losses that any of them
may incur arising out of, in connection with, relating to or caused
by:
(a) any inaccuracy or breach, or alleged inaccuracy or
breach, of:
(i) any representation or warranty of Purchaser
contained in this Agreement or in any agreement or certificate
delivered by Purchaser pursuant to this Agreement or in any
agreement or certificate executed and delivered by any Purchaser
Company pursuant to SECTION 7.2(g); or
(ii) any covenant, undertaking or other agreement of
Purchaser contained in this Agreement or in any agreement or
certificate delivered by Purchaser pursuant to this Agreement or
in any agreement or certificate delivered and executed by any
Purchaser Company pursuant to SECTION 7.2(g);
(b) any Assumed Liability; or
(c) the operation or ownership by the Purchaser Companies
of the Business following the Closing, other than any Losses (i) for
which Seller has an indemnification obligation pursuant to SECTION 8.1
or (ii) resulting from the Business not achieving Revenue levels for
purposes of the Earnout Amounts.
SECTION 8.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. The representations and warranties of the Parties
contained in this Agreement or in any instrument delivered pursuant to
SECTION 7.1(h) or SECTION 7.2(g) will survive the Closing Date and
will remain in full force and effect (i) in the case of the
representations and warranties contained in the first sentence of
SECTION 4.1, SECTION 4.2 the first sentence of SECTION 4.12, SECTION
5.1 and SECTION 5.2, at all times from and after the Closing; (ii) in
the case of the representations and warranties contained in SECTION
4.10, until the date that is four years after the Closing; (iii) in
the case of the representations and warranties contained in SECTION
4.15, until 60 days after the expiration of the applicable statute of
limitations with respect to the matter to which the claim relates, as
such limitation period may be extended from time to time (provided
that in the case of such representations and warranties relating to
Highland UK, until the date that is seven years after the Closing);
and (iv) in the case of all other representations and warranties,
until the date which is two years following the Closing Date;
PROVIDED, HOWEVER, that, in each case, such representations and
warranties shall survive beyond their respective periods with respect
to any inaccuracy therein or breach thereof, notice of which shall
have been duly given within such applicable period in accordance with
SECTION 8.4(c). The covenants and agreements of the Parties contained
in this Agreement or in any instrument delivered pursuant to SECTION
7.1(h) or SECTION 7.2(g) will survive the Closing and will remain in
full force and effect at all times after the Closing, except any
covenant or agreement to be performed by its terms prior to the
Closing shall expire two years after the Closing. No claim for
indemnification under this ARTICLE VIII may be brought for a breach of
a representation, warranty or covenant after such representation,
warranty or covenant has expired pursuant to the foregoing.
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SECTION 8.4 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS.
Notwithstanding anything to the contrary contained herein:
(a) Seller shall not be obligated to indemnify the
Purchaser Indemnified Parties under SECTION 8.1(a)(i), (x) unless the
aggregate of all Losses for which Seller would, but for this clause
(x), be liable under SECTION 8.1(a)(i) exceeds on a cumulative basis
$350,000, at which point the Purchaser Indemnified Parties shall be
entitled to all indemnification amounts from Seller under SECTION
8.1(a)(i) in excess of the first $350,000 of Losses, provided, however
that Seller shall be required to indemnify the Purchaser Indemnified
Parties with respect to a breach of a representation or warranty only
if the losses arising therefrom exceed $1,000 and such Losses shall be
applied against the cumulative $350,000 amount only if such Losses
exceed $1,000, or (y) for any Losses in excess of an amount equal to
$7,800,000; PROVIDED, HOWEVER, that the limitations in this SECTION
8.4(a) shall not apply to any indemnification obligations arising from
the representations and warranties set forth in the first sentence of
SECTION 4.1, SECTION 4.3 and the first sentence of SECTION 4.12; and
(b) Purchaser shall not be obligated to indemnify the
Seller Indemnified Parties under SECTION 8.2(a)(i), (x) unless the
aggregate of all Losses for which Purchaser would, but for this clause
(x), be liable under SECTION 8.2(a) exceeds on a cumulative basis
$350,000, at which point Seller shall be entitled to all
indemnification amounts under SECTION 8.2(a) in excess of the first
$350,000 of Losses, provided, however that Purchaser shall be required
to indemnify the Seller Indemnified Parties with respect to a breach
of a representation or warranty only if the losses arising therefrom
exceed $1,000 and such Losses shall be applied against the cumulative
$350,000 amount only if such Losses exceed $1,000, or (y) for any
Losses in excess of an amount equal to $7,800,000; PROVIDED, HOWEVER,
that the limitations in this SECTION 8.4(b) shall not apply to any
indemnification obligations arising from the representations and
warranties set forth in SECTIONS 5.1 and 5.2.
(c) NOTICE AND OPPORTUNITY TO DEFEND.
(i) If there occurs an event which a Party (an
"Indemnified Party") asserts is an indemnifiable event pursuant
to SECTION 8.1 or SECTION 8.2, the Indemnified Party shall notify
the Party from which it is seeking indemnification (an
"Indemnifying Party") promptly. If such event involves (A) any
claim or (B) the commencement of any action or proceeding by a
third Person, the Indemnified Party will give the Indemnifying
Party prompt written notice of such claim or the commencement of
such action or proceeding. Such notice shall be a condition
precedent to any liability of the Indemnifying Party hereunder;
PROVIDED, HOWEVER, that the failure to provide prompt notice as
provided herein will relieve the Indemnifying Party of its
obligations hereunder only to the extent that such failure
materially prejudices the Indemnifying Party hereunder. In case
any such action shall be brought against any Indemnified Party
and the Indemnified Party shall notify the Indemnifying Party in
writing of the commencement thereof, the Indemnifying Party shall
be entitled to participate therein and, to the extent that it
shall wish, to assume the defense thereof, with counsel selected
by the Indemnified Party and reasonably satisfactory to the
Indemnifying Party and, after written notice from the
Indemnifying Party to the Indemnified Party of such election so
to assume the defense thereof, the Indemnifying Party shall not
be liable to the Indemnified Party for any legal expenses of
other counsel or any other expenses subsequently incurred by such
Party in connection with the defense thereof. The Indemnifying
Party shall be liable for the fees and expenses of counsel
employed by the Indemnified Party for any period during which the
Indemnifying Party has not assumed the defense thereof. The
Indemnified Party agrees to reasonably cooperate with the
Indemnifying Party and its counsel in the defense against any
such asserted liability. Such cooperation shall include the
retention and (upon the Indemnifying Party's request) the
provision to the Indemnifying Party of records that are
reasonably relevant to such third party claim, and making
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employees available at the Indemnifying Party's expense (which shall
include only reasonable out-of-pocket expenses actually incurred) on
a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Indemnified Party
shall have the right to participate at its own expense in the defense
of such asserted liability, it being understood, however, that the
Indemnifying Party shall control such defense.
(ii) No Indemnifying Party shall consent to the entry
of any judgment or enter into any settlement without the consent
of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed; provided, however, that the Indemnified Party
may refuse its consent to a bona fide offer of judgment or settlement
that the Indemnifying Party wishes to accept if such proposed judgment
or settlement (A) does not include as an unconditional term thereof
the giving by each claimant or plaintiff to each Indemnified Party of
a release from all liability in respect to such claim, or (B) would
result in the finding or admission of any violation of Applicable Law,
or (C) would impose injunctive or other equitable relief against the
Indemnified Party or could interfere with or adversely affect the
business, operations or assets of the Indemnified Party. In such
event, the Indemnified Party shall assume the defense of such matter
at the sole expense of the Indemnified Party and the obligation of
the Indemnifying Party to the Indemnified Party shall be equal to the
lesser of (i) the amount of the bona fide offer of judgment or
settlement that the Indemnified Party refused to accept plus the
costs and expenses of the Indemnified Party prior to the date the
Indemnifying Party notified the Indemnified Party of the offer of
judgment or settlement and (ii) the actual Losses incurred by the
Indemnified Party with respect to such matter.
(iii) Notwithstanding the foregoing, no Indemnifying
Party shall be entitled to assume or control the defense of any
third party claim (and the Indemnifying Party shall be liable for
the fees and expenses of counsel incurred by the Indemnified
Party in defending such third party claim) if (A) the third party
claim seeks an Order, injunction or other equitable relief or
relief for other than money damages against the Indemnified Party
that the Indemnified Party reasonably determines, after
conferring with its outside counsel, cannot be separated from any
related claim for money damages; or (B) the Indemnifying Party
shall not have taken any action to defend such third-party claim
within thirty (30) days of written notice of the claim. If the
equitable relief or other relief portion of the third party claim
can be so separated from that for money damages, the Indemnifying
Party shall be entitled to assume the defense of the portion
relating to money damages. In the case of each of (A) through
(C) above, the Indemnified Party shall have the right, but not
the obligation, to conduct and control the defense thereof for
the account of, and at the risk of, the Indemnifying Party, and
the reasonable fees and disbursements of such Indemnified Party's
counsel shall be at the expense of the Indemnifying Party.
Notwithstanding anything in this Agreement to the contrary, the
Indemnified Party, at the expense of the Indemnifying Party
(which shall include only reasonable out-of-pocket expenses
actually incurred), shall cooperate with the Indemnifying Party
and keep the Indemnifying Party fully informed of the defense of
such third-party claim conducted by such Indemnified Party. The
Indemnifying Party shall have the right to participate in the
defense of any third-party claim conducted by the Indemnified
Party with counsel employed at its own expense. The Indemnifying
Party shall have no indemnification obligations with respect to
any Third-Party Claim that shall be settled by the Indemnified
Party without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld, delayed
or conditioned.
(iv) The Parties shall, and shall cause their
Affiliates to, reasonably cooperate with each other in connection
with the prosecution, defense, settlement or performance of their
agreements in this ARTICLE VIII. Without limiting the generality
of the foregoing, as to all matters with respect to which a Party
controls pursuant to SECTION 8.4(c), upon such Party's request, the
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other Party shall, and shall cause its Affiliates to, (i) use
its reasonable best efforts to waive all professional conflicts
and take other reasonable steps necessary to allow any counsel
representing the other Party with respect to such matters to
represent the controlling Party (or its designee) with respect to
such matters, (ii) make available to the controlling Party
evidence within the other Party's control and persons needed as
witnesses employed by the other Party or its Affiliates, as
reasonably requested by the controlling Party for such
prosecution, defense, settlement or performance and (iii) sign
such documents, assign such rights, and take such actions as the
controlling Party may reasonably request attendant to the defense
or resolution of the matter.
(d) Notwithstanding anything herein to the contrary, Seller
shall not have any liability for Losses for any breach of any
representation or warranty of Seller contained in this Agreement or in
any agreement or certificate delivered and executed by any Seller
Company pursuant to SECTION 7.1(h) if, at the time of the Closing,
Purchaser had knowledge of such breach, Seller did not have knowledge
of such breach, and Purchaser failed to notify Seller of such breach
in accordance with SECTION 6.4. If a reserve (in the form of an
accrued liability or an offset to an asset or similar item) was
reflected on the Final Statement relating to any matter for which a
Purchaser Indemnified Party would otherwise be entitled to
indemnification under this ARTICLE VIII for breach of a representation
or warranty, the obligation of the Indemnifying Party to indemnify for
any Loss resulting from such matter shall be reduced by the full
amount of the reserve as reflected on the Final Statement.
(e) The obligation of any Indemnifying Party to indemnify
the Indemnified Party against any Loss arising under this ARTICLE VIII
shall be reduced (i) by the amount of any insurance proceeds actually
received from third party insurers by the Indemnified Party with
respect to such Loss or the underlying factors with respect thereto
under any applicable policy (except to the extent that such insurance
proceeds are received pursuant to a retrospective premium based
policy) and (ii) to take into account any net Tax benefits realized by
the Indemnified Party in the year of the Loss as a result of Loss or
the underlying reasons therefor and taking into account (without
duplication) the effect of receiving indemnification hereunder.
(f) Purchaser and Seller agree to treat all indemnification
payments made by Seller pursuant to this Agreement as adjustments to
the Purchase Price for all income Tax purposes and to take no position
contrary thereto in any Tax Return or proceeding before any tax
Governmental Authority, except as otherwise required by Applicable Law
or any applicable Order.
SECTION 8.5 EXCLUSIVE REMEDY. Except for rights
expressly provided in SECTIONS 2.5, 6.6(c), 6.7 and 11.12, the
indemnification provisions of this ARTICLE VIII shall be the sole and
exclusive remedy with respect to any and all claims arising out of or
relating to breaches of representations and warranties contained in
this Agreement and in certificates and instruments delivered pursuant
to SECTION 7.1(h) and SECTION 7.2(g) or any covenant, undertaking or
other agreement contained in this Agreement or in any certificate
delivered pursuant to this Agreement.
ARTICLE IX
TAX MATTERS
SECTION 9.1 CANADIAN TAX ELECTION. In accordance with
the requirements of the ITA, the regulations thereunder, the
administrative practice and policy of the Canada Revenue Agency and
any applicable equivalent or corresponding provincial or territorial
legislative, regulatory and administrative requirements, Heidrick
Canada and Highland Canada shall make, in a timely manner, a joint
election to have the rules in section 22 of the ITA, and any
equivalent or corresponding provision under applicable provincial or
territorial tax legislation, apply in respect of the Receivables of
Highland Canada, and shall designate therein that portion of the
Closing Payment allocated to the Receivables that
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are the subject of such election in accordance with the procedures set out
in SECTION 2.6 as the consideration paid by Purchaser to Seller. Highland
Canada shall file such election with its Canadian Tax Return for the
taxation year that includes the Closing Date.
SECTION 9.2 UK VALUE ADDED TAX.
(a) The Parties agree that the sale of the Purchased Assets
by Highland UK to Purchaser pursuant to this Agreement does not
constitute a supply for VAT purposes, being a sale together with the
transfer of the portion of the Business owned by Highland UK to
Purchaser as a going concern for the purposes of Section 49 of the
Value Added Tax Xxx 0000 ("VATA") and Article 5 of the Value Added Tax
(Special Provisions) Order 1995 SI 1995/1268, and that such portion of
the Business being transferred to Purchaser is capable of separate
operation. The Parties agree to cooperate with each other to use all
reasonable efforts to secure that such Article 5 shall apply to the
sale and, if appropriate, to agree the same in writing with Her
Majesty's Revenue and Customs ("HMRC"). Seller shall (unless HMRC
permits Highland UK (or any associated company) to retain such
records) deliver to Purchaser all records relating to the portion of
the Business owned by Highland UK referred to in Section 49 of VATA
within 30 days of HMRC finally refusing (taking account of any appeal
or objection) Highland UK (or any associated company) permission to
retain such records. The Parties agree that the Purchase Price is
exclusive of Value Added Tax ("VAT") such that if VAT is due in
respect of any part of the Purchase Price, Purchaser shall pay to
Highland UK the amount of VAT (together with any interest and
penalties) due against the issue of a VAT invoice in respect thereof.
Purchaser represents that it is registered for VAT.
(b) Highland UK represents that it has exercised an
election to waive exemption in respect of the Leased Real Property
listed in Item 3 of SCHEDULE 4.9(b) (the "UK Leased Real Property")
pursuant to the provisions of paragraph 2 of Schedule 10 of VATA ("VAT
Election"). Purchaser (i) represents it has made a VAT Election under
paragraph 2 of Schedule 10 of VATA in respect of the UK Leased Real
Property which has effect and written notification of which has been
provided to HMRC as required by paragraph 3(6) of Schedule 10 of VATA,
(ii) agrees not to revoke its VAT Election referred to in clause (i)
on or before Closing, (iii) agrees to provide to Seller a copy of the
VAT Election and written notification referred to in clause (i) above,
together with any acknowledgement or acceptance thereof received from
HMRC, and (iv) hereby provides formal notice to Seller pursuant to
Article 5(2A)(b) of the Value Added Tax (Special Provisions) Order
1995 that Article 5(2B) of such Order does not apply to Purchaser.
SECTION 9.3 UK CAPITAL ALLOWANCES. Purchaser and Seller
agree that the amount of the Purchase Price attributable to fixtures
and fittings at the UK Leased Real Property for all purposes,
including without limitation for the purposes of Part 2 of the Capital
Allowances Act 2001 ("CAA"), is Pound Sterling 112,627. Purchaser and
Seller agree that they will, or will cause Highland UK and the
applicable Purchasing Company, respectively, to, jointly make an
irrevocable election under Section 198 of the CAA and fix the amount
attributable to such fixtures and fittings at Pound Sterling 112,627,
and such election shall be made in accordance with Sections 200 and
201 of the CAA. The election referred to in this SECTION 9.3 shall be
made within two years of the date of this Agreement and Purchaser and
Seller shall, or shall cause Highland UK to, comply with their
respective obligations under Section 201 of the CAA.
ARTICLE X
TERMINATION
SECTION 10.1 TERMINATION. Anything herein or elsewhere to
the contrary notwithstanding, this Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time prior to
the Closing:
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(a) By the mutual consent of Seller and Purchaser;
(b) By either Seller or Purchaser:
(i) If the Closing shall not have occurred on or prior
to October 31, 2006, or
(ii) If any Governmental Authority shall have issued an
permanently restraining, enjoining or otherwise prohibiting the
material transactions contemplated by this Agreement and such
Order, ruling or other action shall have become final and non-
appealable;
(c) by Seller if (i) Purchaser breaches or fails to perform
or comply with any of its covenants or agreements contained herein and
such breaches or failures would result in the failure of a condition
set forth in SECTION 7.2(b) to be satisfied, or breaches any of the
representations and warranties made by Purchaser which would result in
the failure of the condition set forth in SECTION 7.2(a) to be
satisfied, (ii) Seller has notified Purchaser in writing of the
breach, and (iii) the breach is incapable of being cured or has
continued without cure for a period of ten days after the notice of
breach; or
(d) by Purchaser if (i) Seller breaches or fails to perform
or comply with any of its covenants or agreements contained herein and
such breaches or failures would result in the failure of a condition
set forth in SECTION 7.1(b) to be satisfied, or breaches any of the
representations and warranties made by Seller which would result in
the failure of the condition set forth in SECTION 7.1(a) to be
satisfied, (ii) Purchaser has notified Seller in writing of the breach
and (iii) the breach is incapable of being cured or has continued
without cure for a period of ten days after the notice of breach;
PROVIDED, HOWEVER, that the Party seeking termination pursuant to
clause (b), (c) or (d) is not in breach in any material respect of any
of its material representations, warranties, covenants or agreements
contained in this Agreement.
SECTION 10.2 PROCEDURE AND EFFECT OF TERMINATION.
(a) In the event of the termination and abandonment of this
Agreement by Seller or Purchaser pursuant to SECTION 10.1(b), SECTION
10.1(c) or SECTION 10.1(d) hereof, written notice thereof shall
forthwith be given to the other Party specifying the provision hereof
pursuant to which such termination is made. If the transactions
contemplated by this Agreement are terminated as provided herein:
(i) each Party will redeliver all documents, work
papers and other material of any other Party relating to the
transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the Party furnishing the same; and
(ii) all confidential information received by any Party
hereto with respect to the business of any other Party or its
subsidiaries or affiliates shall be treated in accordance with
the provisions of the Confidentiality Agreement, which shall
survive the termination of this Agreement.
(b) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this SECTION 10.2,
this Agreement shall become void and of no further force or effect,
except for the provisions of ARTICLE XI and this SECTION 10.2.
Nothing in this SECTION 10.2 shall be deemed to release any Party from
any liability for any breach by such Party of the terms and provisions
of this Agreement prior to termination.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 EXPENSES. Whether or not the transactions
contemplated hereby are consummated, and except as otherwise expressly
provided herein, each Party will pay all of its own costs and expenses
relating to the transactions contemplated by this Agreement, including
the costs and expenses of its respective counsel, financial advisors
and accountants.
SECTION 11.2 GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF JURY TRIAL.
(a) The interpretation and construction of this Agreement,
and all matters relating hereto, will be governed by the laws of the
State of Illinois applicable to contracts made and to be performed
entirely within the State of Illinois without giving effect to any
conflict of law provisions thereof, except that, notwithstanding
clause (b) below, the Federal Arbitration Act, 9 U.S.C. Section 1-16,
will govern all issues relating to the arbitrability and arbitration
of any claim or dispute relating to, and any interpretation of,
SECTION 2.3 or 2.4 and the enforcement of any determination pursuant
thereto.
(b) Each of the Parties agrees that any legal action or
proceeding with respect to this Agreement may be brought in the
federal and state courts located in the State of Illinois, and, by
execution and delivery of this Agreement, each Party hereby
irrevocably submits itself in respect of its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts
in any legal action or proceeding arising out of this Agreement. Each
of the Parties hereto hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Agreement brought in the courts referred to in the preceding
sentence. Each Party hereby consents to process being served in any
such action or proceeding by the mailing of a copy thereof to the
address set forth in SECTION 11.3 below its name and agrees that such
service upon receipt will constitute good and sufficient service of
process or notice thereof. Nothing in this paragraph will affect or
eliminate any right to serve process in any other manner permitted by
law.
(c) Each of the Parties hereby waives its rights to a trial
by jury of any legal action or proceeding arising out of this
Agreement, the Purchaser Documents or the Seller Documents or any
transaction contemplated hereby or thereby in an legal action or
proceeding brought by one Party against another.
SECTION 11.3 NOTICES. Any notice or other communications
required or permitted hereunder will be in writing and will be deemed
to have been duly given if delivered in person, transmitted via
facsimile (but only if followed by transmittal by recognized overnight
courier or hand delivery), or sent by registered or certified mail,
postage prepaid, or recognized overnight courier service addressed as
follows:
(a) If to Purchaser: Xxxxxxxx & Struggles
International, Inc.
4200 Sears Tower,
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
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with a copy to: Xxxxxx Xxxxxx LLP
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Seller: Xxxxxx Highland Group, Inc.
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxx & Lardner LLP
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, III
Tel: (000) 000-0000
Fax: (000) 000-0000
or such other address or number as will be furnished in writing by any
such person, and such notice or communication will be deemed to have
been given (a) as of the date so personally delivered or transmitted
via facsimile, (b) on the third Business Day after the mailing thereof
or (c) on the first Business Day after delivery by recognized
overnight courier service.
SECTION 11.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement,
including the Exhibits, Schedules and other documents referred to
herein, and the Confidentiality Agreement, constitutes the entire
agreement of the Parties with respect to the subject matter contained
herein and therein. This Agreement supersedes all prior agreements
and understandings between the Parties with respect to such subject
matter, other than the Confidentiality Agreement. This Agreement may
not be amended except by a written instrument executed by the Parties.
SECTION 11.5 ASSIGNMENT. This Agreement may not be
transferred, assigned, pledged or hypothecated by any Party (whether
by operation of law or otherwise) without the prior written consent of
the other Parties, except that Purchaser may assign all or a portion
of its rights and obligations under this Agreement to one or more of
its Subsidiaries; PROVIDED, HOWEVER, that in the event Purchaser
assigns all or a portion of its rights and obligations under this
Agreement, Purchaser hereby unconditionally and irrevocably guarantees
to Seller and the Selling Subsidiaries the prompt and full discharge
by such other Subsidiaries of Purchaser of all of Purchaser's
obligations under this Agreement in accordance with the terms hereof.
Purchaser also hereby agrees that, if such Subsidiaries of Purchaser
fail to perform and discharge promptly all such obligations and
liabilities in accordance with such terms, Purchaser will, forthwith,
upon demand, perform and discharge the same, and Seller need not
pursue any claims against any such Subsidiaries prior to proceeding
directly against Purchaser. The unconditional obligation of Purchaser
hereunder will not be affected, impaired or released by any extension,
waiver or amendment (other than such Subsidiaries' performance). This
Agreement will be binding upon and will inure to the benefit of the
Parties and their respective successors and permitted assigns.
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SECTION 11.6 INTERPRETATION.
(a) The words "hereof," "herein" and "herewith" and words
of similar import will, unless otherwise stated, be construed to refer
to this Agreement as a whole and not to any particular provision of
this Agreement, and Article, Section, Paragraph, Exhibits and Schedule
references are to the Articles, Sections, Paragraphs, Exhibits and
Schedules of this Agreement unless otherwise specified. Whenever the
words "include," "includes," "including" or similar expressions are
used in this Agreement, they will be deemed to be followed by the
words "without limitation." The words describing the singular number
will include the plural and vice versa, and words denoting any gender
will include all genders and words denoting natural persons will
include corporations and partnerships and vice versa. The phrase
"made available" in this Agreement will mean that the information
referred to has been made available if requested by the party to whom
such information is to be made available.
(b) The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event of an
ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the Parties and
no presumption or burden of proof will arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this
Agreement.
(c) Any reference herein to any legislation or to any
provision of any legislation shall include any amendment to, and any
modification or re-enactment of, any legislative provision substituted
therefor and all regulations and statutory instruments issued
thereunder or pursuant thereto.
(d) All references to dollar(s) or use of the $ symbol in
this Agreement refer to U.S. dollars.
SECTION 11.7 CERTAIN DEFINITIONS. For purposes of this
Agreement:
(a) "Affiliate" shall have the meaning set forth in rule
12b-2 of the Securities Exchange Act of 1934, as amended;
(b) "Business Day" means any day, other than Saturday or
Sunday, on which banking institutions in the City of Chicago, Illinois
are required to be open;
(c) "Capital Stock" means any capital stock, partnership,
membership, joint venture or other ownership or equity interest,
participation or securities (whether voting or non-voting, whether
preferred, common or otherwise, and including stock appreciation,
contingent interest or similar rights) of a Person;
(d) "knowledge" and words of similar import mean, with
respect to Seller, the actual knowledge of the persons listed on
Exhibit E hereto, and with respect to Purchaser, the actual knowledge
of the persons listed on Exhibit F hereto;
(e) "Material Adverse Effect" means any change, effect,
event, occurrence or state of facts that (i) is materially adverse to,
or has a materially adverse effect on, the business, condition
(financial or otherwise), assets, liabilities or results of operations
of the Business, taken as a whole, or (ii) materially adversely
affects the ability of Seller and Purchaser to consummate the
transactions contemplated by this Agreement in a timely manner, other
than any change, effect, event, occurrence or state of facts (A)
resulting from general economic, financial, regulatory or market
conditions in any country in which the Business is operated or
conducted, or (B) resulting from any action that is specifically
required to be taken by, or from the failure to take any action that
is specifically prohibited by, this Agreement;
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(f) "Person" means any individual, corporation,
partnership, limited liability company, association, joint stock
company, joint venture, bank, Government Authority, trust or other
organization or entity; and
(g) "Subsidiary" means any corporation or other entity
(including partnerships and other business associations and joint
ventures) with respect to which a Person directly or indirectly owns
at least a majority of the voting power represented by the outstanding
Capital Stock or other voting securities or interests having voting
power under ordinary circumstances to elect a majority of the
directors or similar members of the governing body, or otherwise to
direct the management and policies, of such corporation or other
entity.
SECTION 11.8 THIRD PARTY BENEFICIARIES. This Agreement
will not benefit or create any rights, remedies or causes of action in
or on behalf of any Person other than the Parties.
SECTION 11.9 WAIVER. Except as otherwise provided in this
Agreement, any failure of any of the Parties to comply with any
obligation, covenant, agreement or condition herein may be waived by
the Party entitled to the benefits thereof only by a written
instrument signed by the Party granting such waiver, but such waiver
or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition will not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
SECTION 11.10 SEVERABILITY. If any term, provision,
covenant or restriction of this Agreement (or any portion thereof) or
the application thereof (or any portion thereof) is held by a
Governmental Authority to be invalid, illegal or unenforceable in any
respect, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
SECTION 11.11 COUNTERPARTS; DELIVERY. This Agreement may
be executed in counterparts and multiple originals, each of which
shall be deemed an original, and all of which taken together shall be
considered one and the same agreement. Each executed signature page
to this Agreement and to each agreement and certificate delivered by a
Party pursuant to this Agreement may be delivered by any of the
methods described in SECTION 11.3, including via telecopier or e-mail,
provided that such delivery is effected in accordance with the notice
information provided for in SECTION 11.3.
SECTION 11.12 SPECIFIC PERFORMANCE. The Parties
acknowledge and agree that in the event of any breach of this
Agreement, the non-breaching Party would be irreparably and
immediately harmed and could not be made whole by monetary damages.
It is accordingly agreed that (a) the breaching Party will waive, in
any action for specific performance, the defense of adequacy of a
remedy at law and (b) the non-breaching Party shall be entitled, in
addition to any other remedy to which the non-breaching Party may be
entitled at law or in equity, to compel specific performance of this
Agreement in any action instituted in accordance with SECTION 11.2
hereof.
SECTION 11.13 HEADINGS. Headings of the Articles and
Sections of this Agreement, the Table of Contents, the Index of
Exhibits, the Exhibits, the Index of Defined Terms, and the Schedules
hereto are for convenience of the Parties only, and shall be given no
substantive or interpretative effect whatsoever.
SECTION 11.14 SCHEDULES AND EXHIBITS. The Schedules and
all Exhibits attached hereto are hereby incorporated by reference
into, and made a part of, this Agreement. Any fact or item
disclosed on any Schedule attached hereto shall be deemed disclosed
on all Schedules to which such fact or item
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may reasonably apply so long as such disclosure is in sufficient
detail to enable a Party to identify the facts or items to which
it applies.
* * *
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed, all as of the date first above written.
XXXXXX HIGHLAND GROUP, INC.
By: /s/ Xxxx X. Xxxxx
--------------------------------
Name: Xxxx X. Xxxxx
Title: Chairman and Chief Executive Officer
HIGHLAND PARTNERS CO (CANADA)
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Secretary
HIGHLAND PARTNERS (AUST) PTY LTD
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Attorney
HIGHLAND PARTNERS LIMITED
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Attorney
XXXXXXXX & STRUGGLES
INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial OFficer
XXXXXXXX & STRUGGLES CANADA, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Treasurer
XXXXXXXX & STRUGGLES AUSTRALIA, LTD.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Treasurer
-Signature Page-
