Exhibit 10.2
ASSET PURCHASE AGREEMENT
BETWEEN
AMERICAN NETWORK SERVICES, INC.
AND
ESQUIRE COMMUNICATIONS LTD.
June 18, 1997
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made this 18th day of June, 1997, by and among American
Network Services, Inc., a Georgia corporation ("Seller"), Xxxx X. Xxxxxx, Xxxxx
Xxxxxxxxx, Xxxxxxx Xxxx and Xxxx Xxxxxxx (collectively the "Principals") and
Esquire Communications Ltd., a Delaware corporation ("Buyer").
WHEREAS, Seller desires to sell, and Buyer desires to purchase,
substantially all the assets of Seller relating to the operation of Seller's
DepoNet(R) court reporting referral network and all other lines of business,
proposed lines of business and strategic plans (the "Business") upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants and agreements herein contained, the parties hereto hereby
agree as follows:
1. SALE AND TRANSFER OF ASSETS
1.1. Based upon and subject to the terms, conditions, agreements,
representations and warranties hereinafter set forth, the Seller does hereby
agree to sell, assign, transfer, deliver and convey to Buyer and Buyer does
hereby agree to purchase, acquire, accept and take possession of, all of
Seller's right, title and interest in and to all assets, properties, rights and
business of Seller of every kind and description wherever located (except for
the Excluded Assets, as hereinafter defined) used in or related to the Business
(all of which are hereinafter sometimes referred to as the "Assets"), including
without limitation, the following assets of Seller:
(a) All trade accounts receivable of Seller relating to the
Business;
(b) All office supplies, office machines, office furniture,
machinery, equipment, fixtures, inventory, leasehold improvements and
computer hardware and software systems, including those described on Schedule
1.1(b) hereto;
(c) All vendor and customer lists, work-in-process and
computerized information of the Seller with respect to the Business;
(d) All general intangibles relating to the Business including,
without limitation, the DepoNet(R) name, any other trade name, any
design and logo relating to the name, contracts and commitments with members,
the Purchase and Redemption Agreement among Seller, the Principals and C. Xxxxx
Xxxxxxx dated May 24, 1996 (the "Xxxxxxx Agreement"), licenses and claims;
(e) All books, records, forms, promotional materials and
documents of Seller relating to the foregoing, including, without
limitation, accounting, payroll and tax records and telephone and telecopier
numbers (including 800 number); and
(f) The stock of Seller's subsidiary, Lawyers Choice
Incorporated, and all lines of business, proposed lines of business and
strategic plans of Seller unrelated to the DepoNet(R) court reporting referral
system, including but not limited to Seller's Lawyers ChoiceSM, Expert PlusSM,
MCI consulting, factoring and receivables management programs.
1.2. The following assets and any and all contract rights relating
thereto (the "Excluded Assets") shall be specifically excluded from the Assets
to be acquired by Buyer hereunder:
(a) All cash, cash equivalents and accounts;
(b) All receivables other than trade accounts receivable;
(c) All utility deposits, lease deposits, or similar items;
(d) All tax refunds, including income, franchise, sales and
use taxes;
(e) Rights under insurance policies, indemnity agreements and
the like, to the extent that the liability covered by such instruments has not
been assumed by Buyer hereunder; and
(f) Stock records, minute books and such other books and
records of Seller which Seller is required by law or governmental
regulations to maintain, other than those related to Lawyers Choice
Incorporated.
1.3. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER AND THE
PRINCIPALS CONTAINED HEREIN AND AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE
ASSETS ARE BEING SOLD ON AN "AS- IS, WHERE-IS" BASIS, WITHOUT ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
2. ASSUMPTION OF LIABILITIES AND OBLIGATIONS
2.1. The Assets are being sold, conveyed, transferred and assigned to
the Buyer free and clear of all liens, security interests, mortgages, claims,
restrictions, charges and encumbrances (collectively, "Liens") whatsoever. The
Buyer does not assume, accept or undertake any obligations, duties, debts or
liabilities of Seller of any kind whatsoever pursuant to this Agreement or
otherwise, except that from and after the date hereof Buyer hereby agrees to
assume and to pay and discharge the following obligations and liabilities (the
"Assumed Liabilities") of Seller (to the extent Seller is not in default and
solely to the extent to be performed on or after the date hereof):
(a) All accounts payable and liabilities and obligations with
respect to the Business incurred in the normal course of business; and
(b) All liabilities and obligations arising under the
severance agreements with Xxxx Xxxxxx and Xxxxx Xxxxxxxxx, the
agreements with members, paragraph 7 of the Xxxxxxx Agreement, Seller's 401(k)
and Health Plans administered by Great West Insurance Company, accrued vacation
and sick leave of employees, employee bonuses which have been accrued on
Seller's April 30, 1997 balance sheet, the office lease (the "Office Lease") and
the lease for the postage meter set forth on Schedule 2.1 hereto.
2.2. Except as provided in paragraph 2.1 and notwithstanding anything
else to the contrary contained herein, Buyer is not assuming and shall not be
liable for any liabilities of Seller, including, without limitation, any
liabilities (i) under contracts and leases which shall not have been assigned to
Buyer pursuant to this Agreement (including, but not limited to, any union
agreements); (ii) for indebtedness for borrowed money; (iii) by reason of or
arising as the result of any default or breach by Seller of any contract, for
any penalty assessed against Seller under any contract or relating to or arising
out of any event occurring prior to the date hereof which with the passage of
time or after giving of notice, or both, would constitute or give rise to such a
breach, default or penalty, whether or not such contract is being assigned to
and assumed by Buyer pursuant to this Agreement; (iv) the existence of which
would constitute a breach of any representation, warranty, covenant or agreement
of Seller or the Principals contained herein; (v) to any shareholder or
affiliate of Seller or to any present or former employee, officer or director of
or consultant to Seller (or independent contractor retained by Seller),
including, without limitation, any bonuses, vacation or sick pay, any
termination or severance pay related to Seller's employees, and any post
retirement medical benefits or other compensation or benefits; (vi) relating to
the execution, delivery and consummation of this Agreement and the transactions
contemplated hereby, including, without limitation, any and all taxes incurred
as a result of the sale contemplated by this Agreement, except for any sales,
use or transfer taxes described in Section 7 hereof; (vii) for any taxes accrued
or incurred prior to the date hereof or relating to any period (or portion of a
period) prior thereto; (viii) relating to or arising out of any environmental
matter, including, without limitation, any violation of any environmental law or
any other law relating to health and safety of the public or the employees of
Seller; or (ix) relating to, or arising out of, services rendered by Seller, or
the conduct or operation of the business of Seller, prior to the date hereof.
3. PURCHASE PRICE
3.1. The total purchase price (the "Purchase Price") being paid by Buyer
for the Assets is as follows:
(a) On the date hereof, Buyer is paying to Seller $6,440,000
by means of a wire transfer in such amount to an account number and depository
designated by Seller.
(b) On the date hereof, Buyer is delivering to the Principals,
in such proportions as directed by Seller, an aggregate of 750,000 shares
(the "Shares") of Common Stock of the Buyer, par value $.01 per share (the
"Common Stock"). The Shares shall not be registered under the Securities Act of
1933, as amended (the "Securities Act"). The owners of the Shares will be
afforded registration rights pursuant to a Registration Rights Agreement (the
"Registration Rights Agreement") in substantially the form of Exhibit A
attached hereto.
3.2. On the date hereof, there is being deducted from the Purchase Price
payable pursuant to Section 3.1(a) hereof the aggregate amount of all prepaid
fees paid by members to Seller; provided, however, that to the extent Buyer does
not terminate agreements with such members and/or the fees are actually earned
by Buyer, then promptly thereafter on a monthly basis Buyer shall pay any such
amounts to Seller. All adjustments customary in acquisitions, including
utilities, compensation, rent and other items reflected on Schedule 3.2 attached
hereto, shall be apportioned between Buyer and Seller as of the date hereof.
3.3. The Purchase Price shall be allocated by Buyer to the Assets in
accordance with Buyer's determination. Each party hereto agrees to reflect the
Assets upon its books for tax reporting purposes in accordance with such
determination and to file all tax returns in accordance with and based upon such
determination.
3.4. On the date hereof, (a) the adjustments contemplated by Schedule
3.2 shall be estimated and accounted for based on such estimates and (b) the
ratio of trade accounts receivable to Assumed Liabilities shall be substantially
equivalent to the ratio of the trade accounts receivable to the Assumed
Liabilities balance as of April 30, 1997, as reflected on the balance sheet of
Seller previously provided by Seller to Buyer. Within 60 days after the date
hereof, Buyer shall prepare and furnish to Seller a statement (the "Statement")
reflecting the actual adjustments required as of the date hereof.
3.5 Seller shall have the right to review the Statement and to object to
any items contained therein within 30 days after its receipt thereof. If Seller
does not so object within 30 days, Buyer's determination shall be final and
binding on the parties. If Seller objects to any items within such 30 days,
Seller and Buyer shall consult with each other and attempt to reach an
agreement. If they are unable to reach any agreement within 60 days, the matter
shall be referred to an independent accounting firm mutually selected by Buyer
and Seller, whose determination shall be final and binding on Buyer and Seller.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE PRINCIPALS
As an inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated herein, Seller and the Principals jointly and
severally represent and warrant as follows:
4.1. Seller is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation. Seller has the
power and the authority and all licenses and permits required by federal
governmental authorities and state and local governmental authorities of the
State of Georgia to own and operate its properties and carry on its business as
now being conducted. Except for Lawyers Choice Incorporated, the Seller does not
have any subsidiaries and does not own beneficially or of record any equity
interest in any corporation, partnership or other business organization or
entity.
4.2. Seller has the corporate power and authority and the Principals
have the legal capacity to execute and perform this Agreement and all other
agreements to be entered into in connection with the transactions contemplated
hereby. All the issued and outstanding shares of capital stock of the Seller are
owned beneficially and of record by the Principals.
4.3. The execution, delivery and performance of this Agreement and all
other agreements to be entered into in connection with the transactions
contemplated hereby have been duly authorized by the Board of Directors and
shareholders of the Seller and by all necessary corporate action, and do not
violate or conflict with any provisions of the Certificate of Incorporation or
Bylaws of the Seller or any agreement, instrument, law, order or regulation to
which Seller or the Principals is a party or by which Seller or any Principal is
bound. No consent, approval or authorization of, or filing with or notification
to, any lender, security holder, governmental agency or other person or entity
is required by Seller or the Principals in connection with the execution,
delivery and performance by the Seller and the Principals of this Agreement and
the consummation of the transactions contemplated hereby.
4.4. This Agreement, and all other instruments delivered by Seller and
the Principals in connection herewith, upon delivery will have been duly
executed by the Seller or the Principals and will be legal, valid and binding
obligations of Seller and the Principals, enforceable in accordance with their
respective terms.
4.5. The Seller is the owner of and has good, valid and marketable title
to the Assets (other than those Assets which are being leased by Seller from
third parties as described on Schedule 4.5) free and clear of all Liens. The
Assets to be sold and conveyed to Buyer hereunder constitute all of the assets
used in, related to or required by Seller in the normal operation and conduct of
the Business, other than the Excluded Assets and those Assets which are leased
as set forth on Schedule 4.5. To the knowledge of Seller and the Principals, the
fixed assets included in the Assets are in good repair and operating condition.
4.6. There is no action, suit, litigation or proceeding pending, or to
the knowledge of Seller or the Principals, threatened against or relating to the
Assets or Business nor does Seller or any Principal know of any basis for any
such action, or of any governmental investigation relating to the Assets or the
Business.
4.7. There does not exist any order, writ, injunction or decree that has
been issued by, or requested of, any court or governmental agency which is
against, or binding on, Seller or any Principal which do or may adversely
affect, limit or control the Assets or Buyer's use thereof.
4.8. Seller and the Principals have obtained all required approvals or
authorizations of this Agreement and any other agreements to be entered into in
connection with the transactions contemplated hereby which are required by law
or otherwise in order to make this Agreement or any other agreements entered
into in connection with the transactions contemplated hereby binding upon Seller
and the Principals.
4.9. Except as described on Schedule 4.9 attached hereto with respect to
the "Image Maker" service xxxx, to the knowledge of Seller and the Principals,
the utilization of the Assets being sold and conveyed to Buyer hereunder do not
infringe upon or violate in any way the rights evidenced by any outstanding
patents, trademarks or trade names, whether registered or unregistered, held or
owned by any third parties.
4.10. Seller's relationships with its customers are in all material
respects good, and Seller and the Principals are not aware of any facts or
circumstances, other than the transactions contemplated by this Agreement, which
might alter, negate, impair or in any way adversely affect the continuity of any
such customer relationships.
4.11. Except as reserved against on its December 31, 1996 balance sheet,
the accounts receivable of Seller are actual and bona fide receivables
representing obligations for the total amount thereof which arose in the
ordinary course of business, and are collectible in full in accordance with
their terms.
4.12. There are no Liens for any federal, state, county or local
franchise, income, excise, property, business, sales, commercial rent,
employment or other taxes upon the Assets. Seller has timely filed all federal,
state, county and local franchise, income, excise, property, business, sales,
commercial rent and employment and other tax returns which are required to be
filed through the date hereof, and has paid, or will pay, all taxes which are
due and payable on or before the date hereof.
4.13. Schedule 4.13 contains a complete and accurate list of all
personnel utilized in the Business, including full and part-time persons,
in-house and outside personnel, and employees and independent contractors.
Except as specifically provided herein, Buyer will not be liable for any
existing obligations to the foregoing persons, including, but not limited to,
obligations for severance pay or other fringe benefits for such persons.
4.14. The Seller has furnished to Buyer a balance sheet of the Seller as
at December 31, 1996 (the "Balance Sheet Date"), and the related statements of
income, stockholders equity and cash flows for the year then ended, together
with the notes thereto (collectively, the "Financial Statements"), as reviewed
by independent public accountants. The Financial Statements have been prepared
in conformity with generally accepted accounting principles heretofore adopted
by, and applied consistently with the past practices of, the Seller and fairly
present the financial position, results of operations and cash flows of the
Seller as at, or for the period ended on, such date. Seller's annual revenues,
gross profit and EBITDA, determined in accordance with generally accepted
accounting principles, consistently applied, for its fiscal year ended December
31, 1996 were not less than $3,010,983, $2,926,926 and $569,957, respectively.
Since the Balance Sheet Date, (a) Seller has conducted the Business in a
consistent manner in the regular and ordinary course, (b) except for the
suspension of the Lawyers ChoiceSM program, there has not been any material
adverse change in the Business or its operations, or the financial condition of
Seller, (c) there has not been any material damage, destruction or loss
affecting the Business, (d) Seller has not sold, leased or otherwise disposed of
any of its assets which are material, individually or in the aggregate, (e)
Seller has not increased the compensation of any of its employees or paid any
bonuses, and (f) Seller has not accelerated the collection of accounts
receivable or deferred the payment of liabilities.
4.15. Each of the agreements to which Seller is a party or to which it
is subject or by which it is bound is listed on Schedule 4.15 attached hereto
(true and complete copies of which have been furnished to Buyer) and is a valid
and subsisting contract of all of the parties thereto in full force and effect
without modification. Seller has performed all obligations required to be
performed by it and is not in default under any agreement, instrument or other
document to which it is a party or to which it is subject or by which it is
bound, and no event has occurred thereunder which, with or without the lapse of
time or the giving of notice, or both, would constitute a default by it
thereunder. Except as disclosed on Schedule 4.15, no other party is in default
under any such agreement, instrument or other document. Each of the court
reporting services agreements between Seller and each of its members provides
that the agreement is terminable by Seller on 30 days prior notice and none of
such agreements has been amended to change the provisions allowing termination
on 30 days prior notice.
4.16. There are no labor strikes, disputes, slow downs, work stoppages
or other labor troubles or grievances pending or, to Seller's or the Principals'
knowledge, threatened against or involving Seller. Seller is not a party to any
union agreements. No unfair labor practice complaint before the National Labor
Relations Board, no discharge or grievance before the Equal Employment
Opportunity Commission and no complaint, charge or grievance of any nature
before any similar or comparable state, local or foreign agency, in any case
relating to Seller or the conduct of its business is pending or, to Seller's or
the Principals' knowledge, threatened.
4.17. To the knowledge of Seller and the Principals, Seller has complied
and is in compliance with all laws, orders and regulations of any federal or
State of Georgia governmental authority applicable to Seller, the Business,
assets or property or its operations, including, without limitation, laws
relating to zoning, building codes, antitrust, occupational safety and health,
environmental protection and conservation, water or air pollution, toxic and
hazardous waste and substances control, consumer product safety, product
liability, hiring, wages, hours, employee benefit plans and programs, collective
bargaining and withholding and social security taxes, except where non-
compliance would not have a material adverse effect on the Business, assets or
properties or its operations taken as a whole.
4.18. Seller and the Principals do not know of any
facts or circumstances not disclosed or otherwise known to Buyer
(other than general economic or industry conditions) which indicate that the
Assets or the future operations, profits or business of Seller may be materially
adversely affected or which
otherwise should be disclosed to Buyer in order to make any of
the representations or warranties made herein on the part of the
Seller and the Principals not misleading. No representation or warranty by
Seller or the Principals contained in this Agreement, and no statement contained
in any Schedule, Exhibit, certificate or other instrument furnished to Buyer
under or in connection with this Agreement, contains any untrue statement of any
material fact, or omits to state any material fact necessary in order to make
the statements contained herein or therein not misleading.
4.19. The Principals are acquiring the Shares for their own account and
not with a present view to, or for sale in connection with, any distribution
thereof in violation of the Securities Act. Each of the Principals consents to
the placement of the following legend on each certificate representing the
Shares and acknowledges that stop transfer instructions will be placed with the
Buyer's transfer agent:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
TRANSFERRED OR SOLD UNLESS (i) A REGISTRATION STATEMENT UNDER
SUCH ACT (OR AN EXEMPTION FROM SUCH REGISTRATION) IS THEN IN
EFFECT WITH RESPECT THERETO, (ii) A WRITTEN OPINION FROM
COUNSEL FOR THE ISSUER OR OTHER COUNSEL FOR THE HOLDER
REASONABLY ACCEPTABLE TO THE ISSUER HAS BEEN OBTAINED TO THE
EFFECT THAT NO SUCH REGISTRATION IS REQUIRED OR (iii) A 'NO
ACTION' LETTER OR ITS THEN EQUIVALENT HAS BEEN ISSUED BY THE
STAFF OF THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT
TO SUCH TRANSFER OR SALE."
4.20. Seller and the Principals understand that the Shares will not be
registered at the date hereof under the Securities Act for the reason that the
sale provided for in this Agreement is exempt pursuant to Section 4 of the
Securities Act and that the reliance of the Buyer on such exemption is
predicated in part on the Seller's and Principals' representations set forth
herein. Seller and the Principals represent that they are experienced in
evaluating companies such as the Buyer, have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of their investment, and have the ability to suffer the total loss of
their investment in the Shares. Seller and the Principals are accredited
investors within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act. Seller and the Principals further represent that they have had
access during the course of the transaction and prior to their acquisition of
the Shares to such information relating to the Buyer as they have desired and
that they have had the opportunity to ask questions of and receive answers from
the Buyer concerning the transaction and to obtain additional information (to
the extent the Buyer possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to them or to which they had access.
Seller and the Principals understand that the Shares may not be sold,
transferred or otherwise disposed of without registration under the Securities
Act or an exemption therefrom and that in the absence of an effective
registration statement covering the Shares or an available exemption from
registration under the Securities Act, the Shares must be held indefinitely.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller and the Principals to enter into this
Agreement and to consummate the transactions contemplated herein, Buyer
represents and warrants as follows:
5.1. Buyer and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation. The Buyer and each of its subsidiaries has the power and the
authority and all licenses and permits required by governmental authorities to
own and operate its properties and carry on its business as now being conducted.
5.2. The Buyer has the corporate power and authority to execute and
perform this Agreement and all other agreements to be entered into in connection
with the transactions contemplated hereby.
5.3. The execution, delivery and performance of this Agreement and all
other agreements to be entered into in connection therewith have been duly
authorized by the Board of Directors of the Buyer and by all necessary corporate
action, and do not violate or conflict with any provisions of the Certificate of
Incorporation or Bylaws of the Buyer or any agreement, instrument, law or
regulation to which the Buyer is a party or by which Buyer is bound.
5.4. No approval or authorization of this Agreement or any other
agreement to be entered into in connection with the transactions contemplated by
this Agreement is required by law or otherwise in order to make this Agreement
or any other agreements entered into in connection herewith binding upon the
Buyer. Upon the execution and delivery of this Agreement and any other agreement
in connection therewith, such agreements will constitute legal, valid and
binding obligations of Buyer, enforceable in accordance with their respective
terms.
5.5. The Shares to be issued pursuant to this Agreement, when so issued,
will be duly and validly authorized and issued, fully paid and non-assessable
and Seller will acquire good and valid title thereto, free and clear of any
Liens created by the Buyer (other than restrictions arising under the Securities
Act and state securities laws).
5.6. The duly authorized capital stock of Buyer consists of 25,000,000
shares of Common Stock, par value $.01 per share, and 1,000,000 shares of
Preferred Stock, par value $.01 per share, of which 4,247,329 shares of Common
Stock are issued and outstanding and 15,000 shares of Preferred Stock are issued
and outstanding. All of the issued and outstanding shares of capital stock of
Buyer have been duly and validly issued, are fully paid and nonassessable and
are free of preemptive rights. None of such shares has been issued in violation
of the Securities Act or the securities or blue sky laws of any country, state,
territory or other jurisdiction (whether domestic or foreign). Except as
disclosed on Schedule 5.6 attached hereto or in Buyer's Annual Report on Form
10-KSB for the year ended December 31, 1996, there are no outstanding options,
warrants or other rights to subscribe for or purchase or otherwise acquire any
shares of capital stock (or securities directly or indirectly convertible into
or exchangeable or exercisable for shares of capital stock) of Buyer, nor,
except for potential acquisitions of, and financings related to, additional
court reporting businesses and issuance of options pursuant to Buyer's stock
option plan, any plans, contracts, agreements or commitments binding upon Buyer
providing for the issuance or granting of rights to acquire any shares of
capital stock (or securities directly or indirectly convertible into or
exchangeable or exercisable for shares of capital stock) of Buyer.
5.7. No actions, disputes or proceedings at law or in equity are pending
or, to the knowledge of Buyer, threatened, against Buyer or any of its assets or
properties which will have, in the aggregate, a material adverse affect on the
business, financial condition or operation of Buyer.
5.8. Buyer has furnished to the Seller a copy of Buyer's Annual Report
on Form 10-KSB for its fiscal year ended December 31, 1996 and a copy of Buyer's
Quarterly Report on Form 10-QSB for the fiscal period ended March 31, 1997, each
as filed with the Securities and Exchange Commission (the "SEC"). Each of the
10-KSB and the 10-QSB was prepared and filed in accordance with the rules and
regulations of the SEC. As of its date, each of the 10-KSB and the 10-QSB did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Buyer included in the 10-KSB and the
10-QSB were prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as otherwise noted in such financial
statements) and present fairly the consolidated financial condition, results of
operations and cash flows of Buyer as of the date and for the period indicated.
Since March 31, 1997, (a) Buyer has conducted its business in a manner generally
consistent with prior practice and in the ordinary course, (b) there has not
been any material adverse change in the business, operations or financial
condition of Buyer, and (c) there has not been any material damage, destruction
or loss affecting the business, assets, properties or rights of Buyer.
5.9. To the knowledge of Buyer, Buyer and its subsidiaries have complied
and are in compliance with all applicable laws, orders and regulations of any
governmental authority applicable to Buyer and its subsidiaries, including but
not limited to the provisions thereof relating to zoning, building codes,
antitrust, occupational safety and health, environmental protection and
conservation, consumer product safety, product liability, hiring, wages, hours,
collective bargaining, employment benefit plans and programs, withholding, and
social security and other taxes, except where such non-compliance would not have
a material adverse affect on Buyer and its subsidiaries taken as a whole.
5.10. The business relationships of Buyer and its subsidiaries with
their customers are in all material respects good and Buyer is not aware of any
facts or circumstances which might alter, negate, impair or in any way
materially adversely affect the continuity of any such business relationships.
5.11. No representation or warranty by Buyer contained in this
Agreement, and no statement contained in any Schedule, Exhibit, certificate or
other instrument furnished to Seller under or in connection with this Agreement,
contains any untrue statement of any material fact, or omits to state any
material fact necessary in order to make the statements contained herein or
therein not misleading.
6. CLOSING DOCUMENTS
6.1.1 Concurrently herewith, Seller shall deliver to Buyer appropriate
assignments and bills of sale with respect to the Assets being sold hereunder,
together with the following documents:
(a) An opinion dated as of the date hereof from counsel for
Seller;
(b) Certified copies of the resolutions of the Board of
Directors and shareholders of Seller authorizing and approving this Agreement;
(c) A good standing certificate dated within thirty days prior
to the date hereof, as to the due incorporation, legal existence and
qualification of Seller in the State of Georgia;
(d) Letter authorizing Buyer to endorse checks;
(e) Acknowledgment of assignment of Agreement by Buyer to its
lenders; and
(f) Consent of landlord to assignment of Office Lease.
6.1.2 Within 60 days after the date hereof, Seller shall provide to
Buyer an amendment to its Certificate of Incorporation changing its name or a
Certificate of Dissolution so that Buyer may utilize the corporate name of
Seller after the date hereof.
6.2. Concurrently herewith, Buyer shall deliver the Purchase Price,
consisting of cash and the Shares, together with the following documents:
(a) An opinion dated as of the date hereof from counsel for
Buyer;
(b) Certified copies of the resolutions of the Board of
Directors of Buyer authorizing and approving this Agreement.
(c) The Registration Rights Agreement duly executed by Buyer;
(d) Assumption Agreements duly executed by Buyer, pursuant to
which Buyer has assumed the Office Lease and the lease for the postage meter;
and
(e) Amendment (the "Amendment") to Stockholders Agreement
dated as of October 23, 1996 by and among Buyer and various of its Stockholders
relating to Board of Directors seat for Xxxx Xxxxxx.
7. COSTS
Each party covenants and agrees that it shall be responsible for and
bear its respective costs and expenses in connection with, or arising out of,
the negotiation or consummation of this Agreement and the transactions
contemplated hereby. Buyer shall be responsible for any sales, use or transfer
taxes applicable to the transactions provided for herein.
8. INDEMNIFICATION
8.1. INDEMNIFICATION BY SELLER. Subject to the limitations set forth
below, Seller and the Principals jointly and severally hereby agree to indemnify
Buyer against and hold it harmless from any and all losses, liabilities, costs,
damages, claims and expenses (including, without limitation, reasonable
attorneys fees and expenses) ("Damages") which Buyer may sustain at any time by
reason of (i) noncompliance with any bulk sales or transfer law applicable to
the transactions contemplated hereby, (ii) any liability or contract of, or
claim against, Seller, whether contingent or absolute, direct or indirect, known
or unknown, matured or unmatured (including but not limited to liabilities for
taxes), except for Assumed Liabilities, (iii) any liability or claim arising in
any way from any service rendered, or action taken by, or relating to the
operations of, Seller prior to the date hereof, except for the Assumed
Liabilities, (iv) any liability of or claim against Seller under any
environmental laws relating to any event, action or failure to act which
occurred prior to the date hereof, or (v) the breach or inaccuracy of or failure
to comply with any of the warranties, representations, conditions, covenants or
agreements of Seller or the Principals contained in this Agreement or in any
agreement or document delivered pursuant hereto or in connection herewith. If
Buyer is indemnified for any accounts receivable of Seller which are not
collected, then Buyer shall assign such accounts to Seller. Notwithstanding
anything above to the contrary:
(a) Seller and the Principals shall be required to indemnify
and hold Buyer harmless from and against only those Damages which in the
aggregate exceed $75,000.
(b) In no event shall the aggregate liability of Seller and
the Principals for Damages hereunder exceed $1,000,000, except for any
liability arising by reason of any intentional breach or misstatement or
intentional failure to comply with any of the warranties, representations,
conditions, covenants or agreements of Seller or the Principals contained in
this Agreement or any document delivered pursuant hereto or in connection
herewith.
(c) In no event shall the aggregate liability of Seller and
the Principals for Damages hereunder exceed the amount of cash paid
pursuant to Section 3.1(a) hereof and the aggregate fair market value of the
Shares received by Seller hereunder. For purposes hereof, the fair market value
of the Shares shall mean the lesser of the last sale price of a share of Buyer's
Common Stock on the Nasdaq Stock Market on (i) the date hereof or (ii) the date
or dates upon which Buyer makes any claim for indemnification hereunder.
(d) At Seller's election, Seller shall have the right to
reimburse Buyer for Damages by returning to Buyer Shares having an aggregate
fair market value equal to the amount of the Damages.
8.2. INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold Seller
and each of the Principals harmless from and against any and all Damages which
in the aggregate exceed $75,000 which Seller may sustain at any time by reason
of (i) any Assumed Liability or claim related thereto, (ii) the breach or
inaccuracy of or failure to comply with any warranties, representations,
conditions, covenants or agreements of Buyer contained in this Agreement or in
any agreement, certificate or document delivered pursuant to or in connection
with this Agreement or arising out of the closing of the transactions
contemplated hereby and (iii) any liability or claim arising in any way from any
service rendered or action taken by, or relating to the operations of, Buyer
from and after the date hereof, specifically including, but not limited to, the
termination or non-renewal by Buyer of any of the agreements with members of the
DepoNet(R) referral system for court reporters assigned by Seller to Buyer
hereunder.
8.3. PROCEDURES FOR INDEMNIFICATION. This Section 8 provides the sole
and exclusive remedies for recovery by an Indemnified Party (as defined below)
from the Indemnifying Party (as defined below) based upon the breach or
inaccuracy of or failure to comply with any of the warranties, representations,
conditions, covenants or agreements of the Indemnifying Party contained in this
Agreement or in any agreement or document delivered pursuant hereto or in
connection herewith, other than the Registration Rights Agreement and the
Amendment. In the event that any claim is asserted against any party or parties
hereto, or any party or parties hereto is made a party defendant in any action
or proceeding, and such claim, action or proceeding involves a matter which is
the subject of this indemnification, then such party or parties (collectively,
the "Indemnified Party") shall promptly give written notice to the other party
or parties hereto (collectively, the "Indemnifying Party") of such claim, action
or proceeding, specifying in reasonable detail the basis for indemnification and
providing the Indemnifying Party such information with respect thereto as
reasonably requested and such Indemnifying Party shall have the right to join in
the defense of said claim, action or proceeding at such Indemnifying Party's own
cost and expense and, if the Indemnifying Party agrees in writing to defend such
claim, then at the option of the Indemnifying Party, such Indemnifying Party may
take over the defense of such claim, action or proceeding, except that, in such
case, the Indemnified Party shall have the right to join in the defense of said
claim, action or proceeding at its own cost and expense. An Indemnified Party
shall not settle or compromise any action or proceeding without the prior
written consent of the Indemnifying Party and shall consent to any compromise or
settlement approved by the Indemnifying Party if the Indemnifying Party shall
pay or make adequate provision for the full amount thereof.
8.4. TIME LIMITATIONS. The Indemnifying Party will not have any
liability to the Indemnified Party under or in connection with this Section 8
unless written notice asserting a claim for indemnification is given to the
Indemnifying Party prior to 18 months from the date hereof.
8.5. ADDITIONAL LIMITATIONS. It is expressly understood that neither
Seller nor any of the Principals shall have any liability of any type whatsoever
to Buyer, directly or indirectly, pursuant to this Section 8 of the Agreement or
otherwise, arising from or as a result of any representation or warranty made by
Seller, or any representative of Seller, to Freed Xxxxxx Xxxxx and Xxxxxx, P.C.
("FMS&M"), in connection with FMS&M's review of the books and records of Seller,
including but not limited to the representations and warranties made by Xxxx X.
Xxxxxx and/or Xxxxxxx Xxxx in that certain letter to FMS&M dated on or about
June 12, 1997.
9. NON-COMPETITION
9.1. Each of the Seller and the Principals agrees that for the period
specified below, they will not, directly or indirectly, within a radius of 100
miles of metropolitan Atlanta, Georgia, or 100 miles surrounding Seller's
existing place of business or in any county or city in which Seller conducted
its business, including without limitation all counties and cities in which
there have been members, clients, agents, employees or independent contractors
of Seller (the "Territory"), (i) engage in any business the same as or similar
to, or engage in competition with, the Business, (ii) render services to or have
any interest, as a shareholder, owner, agent, consultant, lender or guarantor or
any other interest, in any other person engaged in the rendering of services,
which are currently being rendered by Seller in competition with the Business,
or similar services, or (iii) engage in competition with, or sell, services as
are referred to in clause (ii) of this paragraph; provided, however, that the
foregoing shall not be deemed to prevent the Seller or the Principals from
investing in securities if such class of securities in which the investment is
so made is listed on a national securities exchange, is issued by a company
registered under Section 12(g) of the Securities Exchange Act of 1934 or is
traded on the Nasdaq Stock Market or over-the-counter, so long as such
investment holdings do not, in the aggregate, constitute more than 5% of the
voting stock of any company's securities. The period for the non-compete shall
be two years from the date hereof for each of Messrs. Bird and Xxxxxxx and two
years after Xx. Xxxxxx is no longer a director of Buyer for each of Seller and
Messrs. Durham and Rainwater.
9.2. Neither Seller nor any Principal nor any affiliate of any of them,
for a period of two years from and after the date hereof, shall, directly or
indirectly, (i) hire, offer to hire, entice away, retain, employ or solicit or
attempt to solicit (either for itself or as agent for another) for employment or
induce, persuade or encourage any person to leave Buyer's employ who, prior to
the date hereof was, or during such two year period will be, employed or
retained by Buyer as a consultant, independent contractor, reporter, agent,
employee or otherwise or (ii) divert or attempt to divert from Buyer any
business whatsoever by influencing or attempting to influence any member, client
or supplier of Buyer.
9.3. Seller and the Principals acknowledge and agree that any breach of
this Section 9 is likely to result in irreparable injury to Buyer, that monetary
damages will be an inadequate remedy of such breach and that, accordingly, in
addition to any other remedy that Buyer may have, Buyer shall be entitled to
enforce the specific performance of this Section 9 and to seek both permanent
and temporary relief in the event of any breach hereof.
9.4. The parties acknowledge that the time, scope, geographic area and
other provisions of this Section 9 have been specifically negotiated by
sophisticated commercial parties and agree that all such provisions are
reasonable under the circumstances of the transactions contemplated by this
Agreement. If any portion of this Section 9 shall be determined to be invalid
and unenforceable as written, each such portion shall be enforced to the extent
reasonable under the circumstances and such determination shall not affect the
validity or enforceability of the balance hereof, and such balance shall remain
in full force and effect. It is understood that Seller and the Principal are
entering into this non-competition agreement in order to induce Buyer to enter
into this Agreement.
10. BROKERS
Each party represents and warrants to the other (and agrees to indemnify
and hold harmless the other against breach of any such representation and
warranty) that it has not engaged any broker, finder or similar person or entity
in connection with the transactions provided for herein.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties contained herein, and all other
representations and warranties of the Seller, the Principals and Buyer contained
in the instruments executed in connection with the consummation of the
transactions provided for herein, shall survive the execution of this Agreement,
the consummation of the sale contemplated hereby and any investigation made by
any party hereto and shall terminate 18 months after the date hereof; provided,
however, that the parties shall be liable for all claims for indemnification
made in writing prior to the expiration of such 18 month period of time in
accordance with the procedures set forth in Section 8.
12. NOTICES
All notices, requests, demands, documents and other communications given
or due hereunder shall hereafter be made in writing and shall be deemed to have
been duly given when hand delivered, when received if sent by telecopier or by
same day or overnight recognized commercial courier service or three days after
being mailed by certified or registered mail, postage prepaid:
if to the Seller or Principals to:
Xxxx X. Xxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
with a copy to:
Xxxxxxx X. Xxxxx
Robins, Kaplan, Xxxxxx & Xxxxxx L.L.P.
0000 Xxx Xxxxxxx Xxxxx
000 Xxxx Xxxxx Xxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
and if to the Buyer to:
Xxxxxxx Xxxxx
Esquire Communications Ltd.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
with a copy to:
Xxxxxx X. Xxxxxxx
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
13. COMPLETE AGREEMENT
This Agreement and the accompanying schedules and exhibits contain the
complete agreement between the parties hereto with respect to the sale
contemplated hereby and supersede all prior covenants and understandings between
the parties hereto with respect to such sale. This Agreement shall not be
amended or modified except by a writing signed by each party to be charged and
this Agreement may not be discharged except by performance in accordance with
its terms or by a writing signed by each party to be charged.
14. SEVERABILITY
In case any one or more of the provisions hereof shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
15. WAIVER, REMEDIES
No waiver of any breach of any provision of this Agreement shall be held
to be a waiver of any other or subsequent breach, and the failure of a party to
enforce at any time any provision hereof shall not be deemed a waiver of any
right of any such party to subsequently enforce such provision or any other
provision hereunder. All remedies afforded in this Agreement shall be taken and
construed as cumulative, that is, in addition to every other remedy provided
herein or by law.
16. COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. COOPERATION; COVENANTS AFTER CLOSING
Seller and the Principals will cooperate with Buyer, and Seller and the
Principals will use their best efforts to have the officers, directors and other
employees of Seller cooperate with Buyer, at Buyer's request and expense, on and
after the date hereof, in endeavoring to effect the collection of accounts
receivable owing to Seller at the date hereof which are included within the
Assets and in furnishing information, evidence, testimony and other assistance
in connection with any actions, proceedings, arrangements or disputes involving
the Business and based upon contracts, arrangements, commitments or acts of
Seller which were in effect or occurred on or prior to the date hereof. Buyer
will cooperate with Seller and use its best efforts to have the appropriate
employees of Buyer cooperate with and assist Seller in connection with the
preparation of Seller's 1997 tax returns and any audit of such returns or any
tax returns for prior years. Buyer agrees that prior to the destruction of any
business records which deal with matters prior to the date hereof and which are
transferred to Buyer pursuant to this Agreement, Buyer will advise Seller, in
writing, of such intended destruction. If, within thirty days of such notice,
Seller notifies Buyer that Seller wishes to have such records preserved, Buyer
will deliver such records to Seller, at Seller's expense. After the date hereof,
Seller will continue to pay any amounts due under the Xxxxxxx Agreement in
accordance with its terms. For as long as Xxxx Xxxxxx is a director of Buyer,
Xxxxx Xxxxxxxxx shall have the right to attend all meetings of the Board of
Directors of Buyer, at Buyer's expense. From and after the date hereof, Buyer,
at its sole cost and expense, will need to have prepared for it audited
financial statements of Seller for periods prior to the date hereof. Seller and
the Principals agree to cooperate with Buyer and its accountants so that such
financial statements may be prepared and will make available to Buyer and its
accountants appropriate books and records of Seller for such prior periods. In
addition, Seller and the Principals will cause to be delivered to Buyer's
accountants an appropriate representation letter signed by an officer of Seller
similar to the representation letter furnished to Buyer's accountants in
connection with the preparation of the April 30, 1997 financial statements of
Seller.
18. AUTHORIZATION; MAIL
Seller agrees that Buyer shall have the right and authority to collect
for the account of Buyer all receivables and other items which shall be
transferred to Buyer as provided herein, and to endorse with the name of Seller
any checks received on account of any such receivables or other items. Seller
agrees that it will promptly transfer and deliver to Buyer any cash or other
property that Seller may receive in respect of any such receivables or other
items. Seller authorizes and empowers Buyer from and after the date hereof (i)
to receive and open mail addressed to Seller and (ii) to deal with the contents
thereof in a reasonable manner befitting the contents, provided such mail and
the contents thereof relate to the Assets or otherwise to the Business as
conducted by Buyer or to any of the Assumed Liabilities. Seller agrees to
deliver to Buyer promptly upon receipt any mail, checks or other documents
received by it pertaining to the Assets or otherwise to the business of Seller,
as conducted by Buyer, or any of the Assumed Liabilities. Buyer agrees to
deliver to Seller promptly after receipt any mail which it receives to which it
is not entitled by reason of this Agreement or otherwise and to which Seller is
entitled.
19. FURTHER ASSURANCES
Each of the Buyer and Seller agrees at any time and from time to time
after the date hereof, upon the request of the other party, to do, execute,
acknowledge and deliver, or to cause to be done, executed, acknowledged and
delivered, all such further acts, assignments, transfers, powers of attorney and
assurances as may be required for the better assigning, transferring, conveying,
and confirming to Buyer, or to its successors and assigns, of any or all of the
Assets and to carry out the terms and conditions of this Agreement.
20. CONFIDENTIALITY
Seller and the Principals, on the one hand, and Buyer, on the other
hand, severally agree not to, directly or indirectly, without the prior written
consent of the other, use or disclose to any person, firm or corporation, any
information, trade secrets, confidential customer information, technical data or
know-how relating to the products, processes, methods, equipment or business
practices of the other.
21. BENEFIT OF PARTIES; ASSIGNMENT
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns. The
Agreement may not be assigned by Seller (except to the Principals) or by the
Principals except with the prior written consent of Buyer. On the date hereof,
Buyer may freely assign this Agreement to a wholly-owned subsidiary of Buyer;
provided, however, that Buyer shall guarantee the obligations of such
subsidiary. Buyer may also freely assign this Agreement after the date hereof,
including as collateral security to its lenders. Nothing herein contained shall
confer or is intended to confer on any third party or entity which is not a
party to this Agreement any rights under this Agreement.
22. GOVERNING LAW
This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be entirely performed in such State.
23. ARBITRATION
Any controversy or claim arising out of or relating to the
interpretation, enforcement or breach of this Agreement or relating to the
transactions contemplated hereby (other than actions for equitable relief) shall
be resolved by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. Arbitration shall be by a single
arbitrator experienced in the matters at issue and selected by the parties in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration shall be held in such place in Atlanta, Georgia as
may be specified by the arbitrator (or any place agreed to by the parties and
the arbitrator). The decision of the arbitrator shall be final and binding as to
any matters submitted under this Section 23; provided, however, if necessary,
such decision may be enforced in any court having jurisdiction over the subject
matter or over any of the parties to this Agreement. All costs and expenses
incurred in connection with any such arbitration proceeding (including
reasonable attorneys fees) shall be borne by the party against which the
decision is rendered. If the arbitrator's decision is a compromise, the
determination of which party shall bear the costs and expenses incurred in
connection with such arbitration proceeding shall be made by the arbitrator on
the basis of the arbitrator's assessment of the relative merits of the parties'
positions.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Agreement to be executed by their authorized representatives as
of the day and year first above written.
AMERICAN NETWORK SERVICES, INC.
By:---------------------------
---------------------------
Xxxx X. Xxxxxx
-----------------------------
Xxxxx Xxxxxxxxx
-----------------------------
Xxxxxxx Xxxx
-----------------------------
Xxxx Xxxxxxx
Esquire Communications Ltd.
By:-----------------------------
